Jindra v Tech-Rentals Pty Ltd
[2000] VSC 122
•6 April 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL & EQUITY DIVISION | Not Restricted |
CORPORATIONS LIST
No. 7981 of 1998
| HEIKE JINDRA & OTHERS | Plaintiffs |
| v | |
| TECH-RENTALS PTY LTD and | Defendants |
| AUSTRALIAN PACIFIC TECHNOLOGY LIMITED | |
| TECH-RENTALS PTY LTD and | Plaintiff by Counterclaim |
| HEIKE JINDRA & OTHERS | Defendants by Counterclaim |
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JUDGE: | Warren J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 and 28 March 2000 | |
DATE OF JUDGMENT: | 6 April 2000 | |
CASE MAY BE CITED AS: | Heike Jindra & Ors v Tech-Rentals Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 122 | |
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Injunction – application to vary interlocutory injunction – granting of interlocutory injunction not opposed at first instance – issue as to whether any change in circumstances – issue as to whether inappropriate to grant injunction at first instance – right of directors at common law to have access to documents and records of
company – Corporations Law, s.290 – delay – exercise of discretion.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiffs | Mr R. Kendall QC with | Tress Cocks & Maddox |
| For the First Defendant | Mr M. Shand QC with | Bazzani Brand Lawyers |
| For the Second Defendant | Mr A.C. Archibald QC with Mr N. Murdoch | Norton Gledhill |
HER HONOUR:
This is an application to vary an injunction granted on an unopposed basis over one year ago and in the context of an imminent trial date.
Events preceding the injunction
By a shareholders' agreement made 24 August 1994 ("the shareholders' agreement") between the first to fourth plaintiffs on the one part ("the Jindra interests"), the first defendant ("Tech‑Rentals") and the second defendant ("APT") on the other part, APT acquired 49 per cent of the shares in Tech‑Rentals and became the only A class shareholder in that company. The Jindra interests retained 51 per cent of the shares in Tech‑Rentals. The shareholders' agreement contained provisions in relation to the rights of APT in the event that certain future criteria were not met. One of those rights included the right of APT to appoint a total of four directors to the board of Tech‑Rentals. The Jindra interests retained the right to appoint no more than two directors at any time. On 27 September 1997 APT purported to exercise its right of appointment of additional directors pursuant to the shareholders' agreement and under Article 59(2) of the Articles of Association of Tech‑Rentals, APT appointed two more directors in addition to its two existing appointees. This step gave APT control of the board of Tech-Rentals. On 27 September 1997, the reconstituted board terminated the appointment of the fourth plaintiff, Paul Jindra, as managing director of Tech-Rentals. However, Mr Jindra remained on the board as a director. On 1 December 1998 the Jindra interests issued this proceeding seeking declarations and ancillary injunctions in relation to the shareholders' agreement.
Events on 9 March 1999
Subsequently, a members' meeting of Tech‑Rentals was held on 9 March 1999, at which the Jindra interests purported to appoint the Paul Jindra, Michael Vondracek, William Saunders and Peter John McDougall (all being persons associated with the Jindra interests) as directors of Tech‑Rentals. In addition, the Jindra interests purported to resolve at the meeting that the then managing director of Tech‑Rentals Mr Kenneth Jones, his personal assistant Ms Donna Trafford and the company secretary, Mr Hutchison, be suspended from all duties forthwith. About the time of the members' meeting on 9 March 1999, Paul Jindra attended at the head office of Tech‑Rentals at 12 Maroondah Highway, Ringwood, accompanied by a number of private security guards and purported to take over the running of the company. Mr Jindra alleged on 9 March 1999 and subsequently that in acting as he did on that occasion he believed he was acting in accordance with a lawful resolution of the company passed at the members' meeting on 9 March 1999. Shortly after the arrival of Paul Jindra on 9 March 1999 at the premises of Tech-Rentals a facsimile transmission was taken by him from a machine at the premises. Apparently, it was the resolution of the members' meeting and Mr Jindra relied upon the faxed resolution as providing him with authority to act as he did. There were allegations of violence made against Mr Jindra and those persons who accompanied him in relation to the employees of the company whom they attempted to remove. Ultimately, on 9 March 1999 the premises of Tech-Rentals were occupied by persons representing the interests of APT and the Jindra interests resulting in a stand-off situation and warranting attendance by the police.
Eventually, APT and Tech‑Rentals sought and obtained ex parte orders from Byrne, J during the evening of 9 March 1999. The effect of the ex parte orders was to return the control of the premises of Tech-Rentals and the running of the company to its elected board and existing management as in place prior to the members' resolution of 9 March 1999, that is, control was returned to the APT interests.
Court Orders on 12 and 19 March 1999
On 12 March 1999 Beach, J granted an interim judgment until 19 March 1999 or further order restraining the plaintiffs, Michael Vondracek, William Saunders and Peter McDougall from denying Tech-Rentals, its servants agents and employees, including Kenneth Jones, Greg Moult and Donna Trafford access to and occupation of the premises of Tech-Rentals and restraining those parties from otherwise interfering with or disrupting the conduct of the business of Tech-Rentals. The orders further restrained those parties from remaining on the premises except that Mr Saunders was allowed to remain for such period as "may reasonably be necessary" to attend any meeting of directors of Tech-Rentals in discharge of his duties as alternate director for Paul Jindra. Beach, J further ordered that until 19 March 1999 or further order Paul Jindra , Vondracek, Saunders and McDougall be restrained from purporting to act as directors of the first defendant (except that Mr Saunders was allowed to do all such things necessary to discharge his duties as alternate director for Paul Jindra). The authenticated order of Beach, J made 12 March 1999 recorded in other matters that "in consenting to the continuation of the injunction obtained ex part on 9 March 1999 … the plaintiffs do so entirely without prejudice to their right to contest that injunction in whole or in part hereafter". The plaintiffs were represented on the occasion before Beach, J.
Byrne, J made further orders in the matter on 19 March 1999. The orders provided:
"Until the hearing and determination of the proceedings or further order, the plaintiffs and the fifth, sixth and seventh defendants by counterclaim, Mchael Vondracek, William Saunders and Peter McDougall by themselves their servants agents or otherwise be restrained from –
(a) denying the first defendant, its servants agents and employees including without limiting the foregoing Ken Jones, Greg Moult and Donna Trafford access to and occupation of the premises of the first defendant situate and known as 12 Maroondah Highway Ringwood in the State of Victoria;
(b) interfering with or disrupting the occupation of those premises by the first defendant its servants agents and employees including those aforesaid;
(c) interfering with or disrupting the conduct of the business of the first defendant except that Paul Jindra shall be at liberty to do all such things as may reasonably be necessary to discharge his duties as a director of the first defendant;
(d) removing from the aforesaid premises any property belonging to the first defendant including without limitation any copy computer files;
(e) remaining on or at the aforesaid premises, except with the prior written consent of the managing director of the first defendant, Mr I Kenneth Jones, or except that Paul Jindra and William Saunders shall be at liberty to remain on or at the premises for such period as may reasonably be necessary to attend any meeting of directors of the first defendant in discharge of their duties as director and alternate director for Paul Jindra respectively.
Until the hearing and determination of the proceedings or further order, the first plaintiff and the fifth, sixth and seventh defendants by counterclaim Michael Vondracek, William Saunders and Peter John McDougall, by themselves their servants agents or otherwise be restrained from purporting to act as directors of the first defendant except that William Saunders shall be at liberty to do all such things as are reasonably necessary to discharge his duties as alternate director for Paul Jindra.
Liberty is reserved to the plaintiffs and the fifth, sixth and seventh defendants by counterclaim Michael Vondracek, William Saunders and Peter John McDougall to apply to the Court for the discharge or variation of the orders referred to in paragraphs 1 and 2 as they may see fit.
Liberty to apply generally is reserved to all parties."
The authenticated order of Byrne, J made 19 March 1999 recorded in other matters that "In not opposing the orders … the first to seventh defendants by counterclaim do so without prejudice to the liberty reserved to them to apply for the discharge or variation of the orders referred to in paragraphs one and two as they may see fit". I was informed that upon the return of the matter before Byrne, J on 19 March 1999 the continuation of the interlocutory injunction was not opposed. However, as the learned judged was seized of the matter on both 9 and 19 March 1999 it can be reasonably assumed that he had before him and considered the affidavits relied upon by the first defendant as applicant for the interlocutory injunction. It can be reasonably inferred also that as the application was granted on an unopposed basis as distinct from on a consent basis Byrne, J was satisfied that it was appropriate in any event to grant the interlocutory relief sought.
The matter returns to the court by summons dated 2 March 2000 whereby the plaintiffs and first to fourth defendants by counterclaim seek to vary the orders made by Byrne, J on 19 March 1999. It is said that the purpose of the variation is to allow the plaintiffs to exercise their rights as directors of Tech-Rentals to inspect documents of that company. It is also said that since 19 March 1999 new circumstances have arisen that warrant the variation sought.
Mr R. Kendall QC who appeared with Mr A. Phillips for the plaintiffs on the application sought the variation of the orders made by Byrne, J on 19 March 1999 on two bases. Firstly, that the plaintiff directors ("the Jindra directors") had a statutory right under s.290 of the Corporations Law to have access to the books and records of the first defendant. The section provides:
"s.290(1) Personal access. A director of a company, registered scheme or disclosing entity has a right of access to the financial records at all reasonable times".
Mr Kendall relied upon both the statutory right enshrined in s.290(1) of the Corporations Law and also the common law right of the Jindra directors to have access to the financial records of the first defendant.
Mr Kendall relied upon the principle as stated by Street CJ in Edman v Ross (1922) 22 NSWSR 351 at 361 in relation to the right of a director to inspect documents. In that case the court was concerned with an interlocutory application for an injunction restraining the defendants from interfering with the plaintiff in the exercise of his duties as a director and managing director of a company and from preventing him from having access to the books and accounts of the company. At 361 of the judgment the Chief Justice stated the principle as follows:
"The right to inspect documents and, if necessary, to take copies of them is essential to the proper performance of a director's duties, and, though I am not prepared to say that the Court might not restrain him in the exercise of this right if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially to injure the company, it is true nevertheless, that its exercise is, generally speaking, not a matter of discretion with the Court and that he cannot be called upon to furnish his reasons before being allowed to exercise it. In the absence of clear proof to the contrary the Court must assume that he will exercise it for the benefit of his company."
The principle stated by Street CJ in Edman v Ross has been followed subsequently (see Conway and Ors v Petronius Clothing Co Limited & Ors (1978) 1 WLR 72; Deluge Holdings Pty Ltd & Anor v Bowlay & Ors (1991) 6 ACSR 36). It was submitted by Mr Kendall that in its present form the orders made by Byrne, J on 19 March 1999 preclude the Jindra directors from exercising both their common law and statutory right to inspect documents. The submission raises two issues. Firstly, whether the right in fact has been prevented from exercise or frustrated and, secondly, whether, if it has, the order was properly made by Byrne, J on 19 March 1999 to the effect alleged.
Before turning to consider these matters it is relevant to consider the history of the proceeding and the conduct of the parties after the orders made by Byrne, J on 19 March 1999 up until the present.
Events post 19 March 1999
Following the event described by some of the parties as "the raid" on the premises of Tech‑Rentals carried out by Paul Jindra and others on 9 March 1999, that led directly to the making of the orders on 19 March 1999 that the Jindra interests now seek to vary, an extensive and detailed regime was put in place at board level to give effect to those orders. The regime was created by resolution of 29 March 1999 that permitted the accounting records and other documents of the company (other than privileged material) to be open for inspection at the company premises, subject to certain conditions made necessary by this litigation and by fears raised by the previous conduct of the Jindra interests, particularly "the raid" of 9 March 1999. The conditions imposed were not onerous. They stipulated that notice of the particular documents required should be given; that those persons inspecting documents was be limited to two at any one time; that such persons would not conduct themselves so as to disrupt the running of the business of the company and would comply with directions given by the managing director or the company secretary.
In an affidavit sworn by Kenneth Jones, the managing director of the first defendant, he deposed as to 19 occasions between March 1999 and August 1999 when opportunities had been provided to the Jindra directors to inspect documents at their request at the premises of the first defendant. On 17 of those 19 occasions the opportunity had been taken up. The matters to which Mr Jones deposed in this regard were not rebutted.
In January 2000 the solicitors for the plaintiffs wrote to the solicitors for the first defendant and requested the provision of an extensive list of documents. Mr Jones on behalf of the company responded by advising that notwithstanding the short notice and the likelihood that some of the documents had been provided already on discovery in the proceedings the first defendant would nevertheless accommodate the request shortly thereafter. By letter dated 23 February 2000 from Mr William Saunders on behalf of the Jindra interests to Mr. Jones of Tech‑Rentals a large quantity of documentation was requested of the company. By letter dated 25 February 2000 Mr. Jones responded, advising that the material could be inspected on 6 March 2000. On 29 February 2000 the main supporting affidavit was sworn in this application and the summons seeking variation of the injunctive orders was issued on 2 March 2000. In support of the application Mr Paul Jindra deposed by affidavit dated 29 February 2000 as to certain matters. Significantly, Mr Jindra did not depose as to the fact that the request had been made by the plaintiffs for production of documents and which had received a favourable response from Mr Jones. Importantly the plaintiffs issued the present application without having availed themselves of the opportunity to inspect the documents they sought by way of letter dated 23 February 2000. On 6 March 2000 the plaintiffs attended the premises of the first defendant in order to inspect documents (that is, four days after the issue of the summons) and alleged that their efforts were frustrated by the fact that they were subject to surveillance cameras and listening devices. Mr Jones refuted these matters on affidavit.
The application to vary the injunction ordered 19 March 1999
I now consider the basis on which the application is made.
Under the common law the plaintiffs are required to demonstrate that directors of Tech‑Rentals have been denied access to the records of the company. Under s.290 of the Corporations Law the plaintiffs need show only that the directors of Tech‑Rentals have been denied access to the financial records of the company. On the basis of the affidavits filed on behalf of both parties and, also, upon consideration of the affidavits before the court on the occasion of the making of the injunction on 19 March 1999 I am satisfied that the plaintiffs have not demonstrated on a sufficient basis that any directors of Tech-Rentals have been denied access to either the records of the company or, more specifically, the financial records of the company. Indeed, on the basis of the affidavits filed I am reasonably satisfied that no restraint has been imposed upon any director of Tech-Rentals such as to offend the principle stated by Street CJ in Edman v Ross, supra, 361.
In any event, I am required to exercise a discretion as to whether the injunction granted on 19 March 1999 should be varied. In the exercise of the discretion I am satisfied that the status quo should be maintained.
I am satisfied on the affidavit material before me that the regime has operated satisfactorily and without complaint from the Jindra interests. At no time were those interests excluded from the company or prevented from seeing something they wanted to see (other than privileged material). Their many and extensive requests for documents were complied with. More could not reasonably have been done. Indeed, on some occasions, opportunities for inspection were not taken up. It is significant that prior to the inspection which occurred on 6 March 2000, the last attendance to inspect was on 30 August 1999. I note that for all the "grave concern" he now expresses, Paul Jindra has attended to inspect only three times since the regime was introduced, including on 6 March 2000.
The only documents requested on 23 February 2000 but which were not produced to the Jindra interests on 6 March 2000, despite the short notice and the very large volume requested, were certain privileged documents consisting of solicitors' bills and documents which did not exist consisting of divisional accounts.
It is difficult to comprehend the purpose of the Jindra interests served by the granting of the orders sought in the summons. The regime presently in place has worked well. There has been small effort to take advantage of it in the six months leading up to the bringing of this application. All reasonable requests have been complied with. It is far from clear precisely what it is that the Jindra interests actually want by way of further information. The observation can be made that it would be very unusual for non‑executive directors of a company to have, at their convenience, free access to all of a company's records, equipment and staff. Such access, especially in the light of past events, may have the potential to disrupt the running of the company's business.
Significantly, there has been no material change in circumstances between the time Byrne, J made orders on 19 March 1999 and the present (noting that those orders were made unopposed on the basis that the Jindra interests did so without prejudice to the liberty reserved to them to apply for their discharge or variation.) While the Court has a discretion to vary or discharge an interlocutory injunction, it should not permit an attempt to re‑litigate the merits of the original order: see Cole & ors. v Bosi1jevac & ors. (unreported, Federal Court, Heerey, J, 22.3.96). Ordinarily, a variation of an injunction will only be granted where new facts come into existence or are discovered which render its enforcement unjust. See Adam P Brown MWe Fashions Pty. Ltd. v Philip Morris Inc. (1981) 148 CLR 170 at 178. No such circumstances exist here.
There is nothing in the material before me which indicates that the Jindra interests would sustain any prejudice in the event that the application is refused. It is asserted that Mr. Jindra and Mr. Saunders feel that they may be in breach of their duties as directors. However, there is no factual foundation for that assertion. Nor is there any basis for any assertion that the Jindra shareholding interest may be prejudiced. The affidavit material filed in support of the application does not show any instance of an attempt by the applicant directors to carry out their duties which has been stymied by the Orders of 19 March 1999. On the contrary, the affidavit material filed by the Company demonstrates the applicants have had extensive access to Company Information and the Company records and that they may continue to do so. In any event, there is no suggestion that damages would not be an adequate remedy in the event that some such prejudice were to be suffered.
Further to my being satisfied that the fears that the Jindra interests say motivate this application are without foundation additional observations can be made. There does not appear in the material before me an expression of what it is the Jindra interests actually desire to achieve if the more general access to documents is granted. Secondly, at no time have Paul Jindra, his alternates or William Saunders or his predecessor on the board of the company called for an explanation, at a board meeting or otherwise, from the company's auditors or management as to the specific accounting issues that they say are of concern. Thirdly, I observe that in any event access to documents by the applicants was facilitated by orders and directions made by Gillard, J on 2 July 1999. There does not appear to be an explanation or complaint regarding access as a result of those orders. The plaintiffs themselves have not taken reasonable steps to avail themselves of the qualifications to the Orders so as to demonstrate any unfairness or prejudice. Indeed since inspecting the Company's documents in August 1999 as part of discovery in this proceeding, the applicants have made no attempt to take advantage of the procedure available to them under paragraph 1(c) of the Orders, save for the, one. inspection requested on 23 February 2000 which took place on 6 March 2000, after the filing of this application.
Byrne, J was satisfied that the balance of convenience on 19 March 1999 favoured the making of the orders of that date. Nothing has been put before me on the present application to support a shift in the balance of convenience. The orders of 19 March 1999 protect the company against conduct of the kind that happened on 9 March 1999. They restrain the plaintiffs and defendants by counterclaim from engaging in specified conduct, until the hearing and determination of the proceedings or further order. In summary. the restrained conduct is as follows:
(a) denying the Company's staff access to and occupation of the Company premises,
(b) interfering with or disrupting the occupation of the premises by the Company staff,
(c) interfering with or disrupting the conduct of the Company's business (with exceptions),
(d) removing Company property from the promises, and
(e) remaining at the Company premises (with exceptions).
I am satisfied that the balance of convenience still favours a continuation of the orders of 19 March 1999. I do so on two bases. First, the alleged actions of the plaintiffs and defendants by counterclaim on 9 March 1999, involving the physical handling and assault of several staff members. There is a reasonable risk that such events had an adverse, traumatic effect on many of the company's staff. There was much debate before me as to whether or not any further involvement or intervention by the Jindra interests in the management and conduct of the affairs of Tech‑Rentals prior to trial would cause apprehension and fear among existing staff of retribution for loyalty to AFT interests and the like. It was argued on behalf of the defendants that these circumstances have heightened the stress and distraction the staff are experiencing in the day to day running of the business as a result of the acrimony of the shareholders' dispute and this litigation against the Company. It is important for the continued successful operation of the Company's business that the Company premises and staff are undisturbed. In other words, I am satisfied that the status quo should be preserved. In any event, it is inappropriate at an interlocutory stage to determine whether or not the company is being appropriately managed or whether the Jindra interests should have the capacity to interfere. Those matters are properly matters for trial.
It was further submitted on behalf of the defendants that there are at present several companies who have recently approached or are currently in negotiations for the purchase of the Company. In my view I need not be satisfied as to the efficacy or otherwise of such negotiations. Nevertheless, the prospect of further negotiations provides an additional basis whereby the status quo should not be varied.
I observe, further, that the orders made by Byrne, J on 19 March 1999 contain qualifications (in paragraphs 1(c) and (e)), sufficient and reasonable, to permit a director to discharge their duties in that capacity. Paragraph 1 (e) provides for a procedure open to the directors which would allow them access to the records of the Company in addition to the reports and financial information provided to all directors in the Board papers. Furthermore, the requirement for the consent of the managing director to any of the directors remaining on the premises was neither surprising nor unreasonable since he was and is vested with direct responsibility for the management of the Company.
Significantly, at the time of granting the injunction on 19 March 2000 Byrne, J made orders and directions in the proceeding to facilitate an expeditious trial. Ultimately, Byrne, J in July 1999, fixed the matter for trial in November 1999. It transpired that there was an offer made to purchase the first defendant. In October 1999 the parties sought the vacation of the November trial date on the basis that the proceeding had settled and terms of settlement had been signed but were conditional upon the sale of the company proceeding. As events transpired the sale did not proceed and the parties returned before Byrne, J on 16 December 1999 and sought further orders and directions including the re‑fixing of the matter for trial. By that time the estimated duration of the trial stood at 20 days. Accordingly the matter was fixed for trial on 2 May 2000 on an estimate of 20 days.
It was submitted that the events surrounding the proposed sale of Tech‑Rentals gave rise to the new circumstances relied upon in support of the application to vary the injunction ordered o 19 March 1999. The prospective purchaser of Tech-Rentals was Network. The purchase by Network of the company was conditional upon a satisfactory due diligence report to be prepared by independent accountants KPMG. During September and October 1999 a due diligence report was prepared by KPMG. It appears that the accountants were critical of the conduct of the first defendant and ultimately the sale did not proceed. By way of subpoena dated 13 December 1999 the plaintiffs sought production of documents from both Network and KPMG including the due diligence reports. Presumably, due to the vacation period, the documents were not produced to the Prothonotary in answer to the subpoenae until about 4 January 2000. On or after that date the plaintiffs inspected and obtained copies of the due diligence reports.
It is alleged by the plaintiffs that as a result of the opportunity to examine the due diligence reports a number of matters came to their attention for the first time. They included the fact of the due diligence reports themselves, the threatened dismissal of a valued employee Mr Brooker, the style of management of the managing director Mr Kenneth Jones, the circumstances in which a valued employee Mr Moult ceased to be employed by the company, the extent of legal costs incurred by the company in the defence and conduct of these proceedings, the capitalisation of costs and expenses, the management of delinquent debtors including an alleged debt of $500,000 that was more than 90 days overdue, disregard of taxation advice, the failure to lodge taxation returns, the understatement of depreciation of assets and the revelation of the payment of an incentive to Mr Jones. The latter matter related to an alleged incentive arrangement between APT and Mr Jones. Broadly speaking it was alleged by the plaintiffs that all these matters that came to light as a result of the due diligence report and had not been brought previously to the attention of the board of directors of the first defendant. In particular, it was said that the incentive arrangement between APT and Mr Jones was a secret agreement unknown to the board of directors. The plaintiffs alleged, further, that there had been a failure by the first defendant to provide company accounts for the periods ending 31 December 1997 and 31 December 1998. The first defendant by affidavit of its managing director, Mr Jones, deposed that such accounts did not exist and, therefore, could not be produced.
In consideration of the matters that are said to have come to light recently as a result of the production of the due diligence reports on subpoena on or about 4 January 2000 consideration must be given to the matters that are said to arise from those reports and to constitute "new matters" such as to warrant the variation of the injunction ordered on 19 March 1999. I observe that all of the matters said to constitute "new matters" arising from the due diligence reports are matters concerned with the conduct and management of the company including matters of employment. It is apparent from the affidavits before me that the matters complained of have in fact been matters that were known about for some time by the plaintiffs. In any event, all of the matters complained about by the plaintiffs as constituting "new matters" such as to constitute a basis for varying the existing injunction have been known to the plaintiffs since early January 2000. The matter was not brought before the court until some two months later. Such step was taken in the knowledge that a trial date was imminent on 2 May 2000. I am satisfied that the matters said to constitute "new matters" are not new matters. Secondly, even if they are "new" they have been brought before the court too late, especially in light of the pending trial date. Thirdly, even if the matters are "new" matters they do not have sufficient bearing such as to warrant interference with the discretion exercised by Byrne, J 1999 when an injunction was granted. Fourthly, I am satisfied that all these matters are appropriately ventilated at trial, such trial now being only three weeks hence.
Further, I consider that on the basis of the affidavits filed in support of the injunction application granted on 19 March 1999 combined with the prevailing circumstances at that time I can be satisfied that there was a serious question to be tried as to whether the plaintiffs were in fact or were likely to "materially injure the company". In light of circumstances Byrne, J was satisfied it was appropriate that the injunction be granted in the form that it was. In determining to grant the injunction Byrne, J would have been satisfied that there was a serious question to be tried as to the lawfulness of the members' resolution of 9 March 1999 and the conduct of the plaintiffs on that day. There was and remains a serious question to be tried as to whether the resolutions of shareholders, and the means adopted to carry out the attempt, namely physical force, were unlawful. The defendants submitted that the purported resolutions of shareholders on 9 March 1999 were void and unlawful for a number of reasons. Firstly, the members had no power to resolve upon management issues or to interfere with the exercise of the powers of directors in the management of the business. It was said that the articles, (art. 64) clearly provided that the business of the company would be managed by the directors, subject only to the law and to any other express articles. See Winthrop Instruments Ltd v Winns Ltd [197512 NSWLR 666 at 683D; ANZ Executors v Qintex Australia Ltd [ 1991] 2 Qd R 360 at 375 and the authorities there cited. Secondly, by their resolutions of 9 Much 1999, the members did purport to resolve on management issues and to interfere with management. Thirdly, no meeting of the Board of Directors of the Company took place on or about 9 March 1999 to address the subject matter of the resolution affecting the managing director and his staff. The defendants argued that the means adopted were unlawful because they involved unauthorized entry into the Company's premises, wilful damage to the property of the Company and injuries to employees ‑ conduct which was serious, unacceptable and in contumelious disregard of the rights of the Company and its staff. These matters all remain issues for trial and there is no change as to those issues since the orders made on 19 March 1999.
There is the further fact that on the making of the orders on 19 March 1999 the plaintiffs were represented by counsel. There was no attempt to ventilate opposition on that occasion. Mr Paul Jindra deposed on affidavit that the reason there was no opposition to the granting of the injunction was the expectation that the matter would proceed to trial relatively shortly thereafter. There is no evidence before me to indicate that there was an expectation of an immediate trial. In any event the matter was not fixed for trial until November 1999. At no time did the plaintiffs seek to re‑visit the terms of the injunction. They argue that there was no basis for doing so until they became aware of the contents of the due diligence reports. In my view the conduct of the plaintiffs in attempting to challenge the injunction at this point verges on dilatoriness. There has been considerable delay. The delay must be viewed in the context of the fact that there is a trial of the proceeding fixed to commence approximately less than three weeks hence. I am satisfied that even if different circumstances had been made out I would not exercise the discretion to vary the injunction as sought by the plaintiffs as the application is brought on too late and with an imminent trial date.
For these reasons the application will be dismissed.
There is a remaining matter to be considered concerning an application by the plaintiffs to rely upon additional affidavits. Notwithstanding that this matter was listed for trial on 2 May 2000 the plaintiffs sought to pursue their application by summons filed 2 March 2000. In the context of busy Commercial and Corporations Lists the plaintiffs prevailed upon the court to allocate two days for the hearing of the interlocutory application to vary the injunction. As a result, the plaintiffs' application was heard over two days on 27 and 28 March 2000. At the end of submissions I reserved by judgment. On Tuesday 4 April 2000 my Associate commenced the process of advising the parties that I would deliver judgment on 6 April 2000. The plaintiffs' solicitors informed my Associate by facsimile transmission that there was further evidence that they wished to place before the court on affidavit. The filing of the affidavit material was objected to by the defendants. A mention hearing was convened urgently on the morning of 5 April 2000. Mr Kendall QC sought leave to rely upon two further affidavits both sworn by William Saunders on 5 April 2000. The substance of the matters deposed to was that it was alleged by Mr Saunders that the Australian Manufacturing Workers' Union had complained to Tech‑Rentals, in particular, Mr Jones in relation to employment relations between the company and its employees. I received the affidavit subject to objection and informed the parties that I will rule upon the matter in the course of my reasons. Having had the opportunity to consider the two further affidavits of Mr Saunders sworn 5 April 2000 I am satisfied that a reasonable inference can be drawn that the matters deposed to therein could reasonably have been brought to the attention of the court during the hearing of the interlocutory application on 27 and 28 March 2000. So much can be derived from the fact that discussions between the company and the union had been ongoing for some weeks. In any event, by way of further affidavit in opposition, Mr Jones deposed in an affidavit sworn 6 April 2000 as to his knowledge information and belief of intervention by an unidentified board member in the matters raised by the union. Further, Mr Jones refuted the allegations made by the union against the management of the company. Ultimately, I am satisfied that the matters deposed to by Mr Saunders in his recent affidavit should properly have been before the court on 27 and 28 March 2000. Furthermore, the matters deposed to by Mr Saunders do no more than heighten the level of dispute between the parties and demonstrate that the balance of convenience remains with the defendants. Furthermore, it would be inappropriate at an interlocutory stage to form a view as to the veracity of the matters deposed to by Mr Saunders compared with the matters deposed to by Mr Jones in their most recent affidavits. Ultimately, I am satisfied that the further affidavits sought to be relied upon by the plaintiffs were produced too late. In any event, I am satisfied that the matters deposed to by Mr Saunders do not provide a sufficient basis to vary the injunction granted by Byrne, J on 19 March 2000.
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