Gumala Enterprises Pty Ltd v Gumala Investments Pty Ltd
[2015] WASC 304
•7 AUGUST 2015
GUMALA ENTERPRISES PTY LTD -v- GUMALA INVESTMENTS PTY LTD [2015] WASC 304
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 304 | |
| Case No: | CIV:2216/2015 | 7 AUGUST 2015 | |
| Coram: | MARTINO J | 7/08/15 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | GUMALA ENTERPRISES PTY LTD GUMALA INVESTMENTS PTY LTD GUMALA ABORIGINAL CORPORATION |
Catchwords: | Removal of trustee Appointment of directors Interlocutory injunction Turns on own facts |
Legislation: | Nil |
Case References: | Castlemaine Tooheys Ltd v The State of South Australia [1986] HCA 58; (1986) 161 CLR 148 Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 Vatcher v Paull [1915] AC 372 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
GUMALA INVESTMENTS PTY LTD
First Defendant
GUMALA ABORIGINAL CORPORATION
Second Defendant
Catchwords:
Removal of trustee - Appointment of directors - Interlocutory injunction - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr G J Carter
First Defendant : Mr M S Ferguson
Second Defendant : Mr T M Retallack
Solicitors:
Plaintiff : Greg Carter
First Defendant : Squire Patton Boggs
Second Defendant : Culshaw Miller
Cases referred to in judgment:
Castlemaine Tooheys Ltd v The State of South Australia [1986] HCA 58; (1986) 161 CLR 148
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Vatcher v Paull [1915] AC 372
- MARTINO J:
(These reasons were delivered extemporaneously on 7 August 2015 and have been edited from the transcript.)
1 By an originating summons filed on 5 August 2015, the plaintiff, Gumala Enterprises Pty Ltd, applies for the following orders on an urgent basis:
1. Until further order, the second defendant be restrained from enforcing its decision made on 23 July 2015 to:
(a) remove the plaintiff as trustee of the Gumala Enterprises Trust; and
(b) appoint Perpetual Trustees as a replacement trustee under the Gumala Enterprises Trust.
2. Until further order, the first defendant be restrained from relying on the decision of the second defendant on 3 August 2015 to approve, under article 71(2)(b) of the plaintiff's articles of association, the appointment by the first defendant of Gordon Cole, Bronwyn Barnes and Allan Butson as independent directors of the board of the plaintiff.
3. Until further order, the first defendant be restrained from enforcing the appointment of:
(a) Gordon Cole, Bronwyn Barnes and Allan Butson as independent directors of the board of the plaintiff; and
(b) Stephen Dew, Ailsa Roy and Darren Ingie as non-independent directors of the board of the plaintiff.
3 The plaintiff is the trustee of the Gumala Enterprises Trust. It carries on various business activities as trustee of that trust. Those business activities include bulk earthworks, plant and equipment hire, logistics, heavy vehicle maintenance, mechanical repairs, waste control, training and assessing indigenous engagement, indigenous heritage surveys and tourism. Its activities are significantly in the Pilbara area, but it also has plans on expanding its activities including internationally.
4 The first defendant, Gumala Aboriginal Corporation, is the sole shareholder in the plaintiff. It is also the sole shareholder in the second defendant, Gumala Investments Pty Ltd. The first defendant and the second defendant are the only beneficiaries of the Gumala Enterprises Trust, and the second defendant is the appointer under the trust. The second defendant is itself trustee of the Gumala Foundation, which was established for the benefit of three Aboriginal language groups who represent the traditional owners of land in the Pilbara region.
5 The first relief sought on an interim basis by the plaintiff is restraining the second defendant from enforcing its decision to appoint Perpetual Trustees as a replacement trustee for the plaintiff as trustee of the Gumala Enterprises Trust. That was a decision made on 23 July 2015.
6 Under clause 3.3 of the Gumala Enterprises Trust deed, the appointer has power by notice in writing to remove and appoint a trustee. The appointer is the second defendant and that is what it has done. The plaintiff challenges the validity of that decision on the basis that the exercise was a fraud on the power and it says that there is a serious question to be tried as to whether the power was bona fide used for a proper purpose, that it was based on a genuine and real concern as to matters put forward by the second defendant, whether its reasons were as expressed were valid and whether it was in bad faith.
7 I accept for the purposes of today's hearing that the power to appoint the new trustee and to replace the plaintiff needed to be exercised in good faith for the purpose for which was given and not for an ulterior purpose.1 The second defendant has explained in answers to questions raised by the plaintiff the reasons for its decision. It is concerned as to the activities of two people, who I will not name in these reasons because nothing has been found against them and there are investigations taking place. But one of those persons was, at least until recently, on the board of the plaintiff and was a senior executive of the first defendant. The second defendant says it is also concerned as to disharmony in the second defendant.
8 The plaintiff criticises the decision but, in my view, it is not established that there is a serious question to be tried, that there has been a fraud on the exercise of power. In considering the relief that the plaintiff is seeking, the principles upon which interlocutory injunctions are granted are well known from cases such as Castlemaine Tooheys Ltd v The State of South Australia2 and, as explained by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd,3 the plaintiff must show that there is a serious question to be tried and that the balance of convenience favours the granting of the injunction. These matters are closely interrelated.
9 The prima facie case that the plaintiff must show does not mean that it is more probable than not that it will succeed at trial. It is sufficient if it shows that there was a sufficient likelihood of success to justify in the circumstances the preservation of the status quo. In my view, the plaintiff has not satisfied that test.
10 Further, it seems to me that the disadvantages that the plaintiff says will flow from the appointment of Perpetual as trustee are not as it puts forward. It is concerned that it may be that, under existing agreements with RJV Mining Services and under an agreement with PMG Gumala Auto Services and Terrace Court, that the change in the trustee will entitle the other party to acquire shares of the plaintiff in the enterprise. It is also concerned as to future developments.
11 These are concerns only at the moment and, even if there were to be a valid legal right for those transfers to take place, it is not clear to me on the evidence presently available that that is what would happen. Further, I think it is also very, very significant, as I said earlier in these reasons, that the first defendant is the sole shareholder of the plaintiff and that the first defendant and the second defendant are the beneficiaries of the trust of which the plaintiff has to date been trustee.
12 They oppose the relief that the plaintiff seeks.
13 I turn now to the second and third orders that the plaintiff seeks concerning the appointment of directors to the plaintiff. The articles of the plaintiff provide in clause 71:
(1) The board of directors of the company must, while Gumala Aboriginal Corporation remains a member of the company, comprise a minimum of two independent directors appointed in accordance with this article provided, however, that if at any time or from time to time there are no independent directors, because independent directors cannot be obtained or for any other reason, then the other directors will have full management powers over the affairs of the company and may exercise all powers conferred upon the directors hereunder, but those directors must make reasonable efforts to procure the appointment of independent directors in accordance with this article as soon as reasonably practicable. The other directors will be persons nominated and appointed by Gumala Aboriginal Corporation.
(2) The independent directors must be people:
(a) of good reputation with appropriate professional or business qualifications relevant to the business of the company, with no family affiliation with any members of the Gumala Aboriginal Corporation; and
(b) of whom the appointment has first been approved in writing by Gumala Investments Pty Ltd.
(3) The shareholders in the company will not be entitled to pass an ordinary resolution removing any director from office, unless Gumala Investments Pty Ltd has first approved in writing the removal of such director.
(4) Any notice of nomination, appointment, resignation or revocation of a director shall be in writing and may be given by facsimile, telex, telegram or pre-paid cable and signed by the person so nominating, appointing, resigning as or revoking the nomination or appointment of the director.
14 The plaintiff criticises a meeting of the first defendant held on 28 July 2015 as being ineffective and one of the reasons being that a quorum was not present for the whole of the meeting. I do not accept that criticism. The minutes show that until there was a full quorum there was discussion held, but I do not regard that as a meeting for the purposes of the matter before me.
15 But as I see it, that criticism and all criticisms of that meeting are of no substance for the purposes of this application because, on 30 July 2015, the first defendant wrote to the second defendant nominating and appointing directors named therein and then, on 3 August 2015, the second defendant replied giving its approval for appointment of directors, but not supporting the removal of existing traditional owner directors.
16 The criticisms of the letter made by counsel for the plaintiff, that is, the letter dated 30 July 2015, appear to me to be overly legalistic and, as I read that letter, it is complying expressly with the provisions of the articles to which I have referred and, in my view, the procedure that has been followed complies with those articles.
17 The counsel for the plaintiff also submitted that article 71(2)(a) should be read that independent directors must have no appearance of conflict of any kind with the business engaged in by the plaintiff. I can see no basis to read that clause as meaning anything other than it says, which I have quoted.
18 In my view, there is no serious question to be tried as to the validity of the proposed appointment of directors and the plaintiff has not made out a case for the relief that it seeks in paragraphs 2 and 3 of the application.
19 For these reasons, I dismiss the interim application that I have heard today. The action itself remains on foot, but the parties need to give some consideration to what should now happen with the action. So, I will give the parties some time to consider that and list the matter for mention before me on a suitable date one morning in two to three weeks' time.
1Vatcher v Paull [1915] AC 372.
2Castlemaine Tooheys Ltd v The State of South Australia [1986] HCA 58; (1986) 161 CLR 148.
3Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110.
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