FEDERAL COURT OF AUSTRALIA
Mackay Sugar Limited v Wilmar Sugar Australia Limited [2016] FCA 789
File number: QUD 449 of 2016 Judge: GREENWOOD J Date of judgment: 4 July 2016 Catchwords: CORPORATIONS – consideration of an urgent interlocutory application for an injunction to restrain particular members of Queensland Sugar Limited from putting resolutions contained in a notice of meeting to a vote of members of the company to be held at 2.30 pm on 5 July 2016 Legislation: Corporations Act 2001 (Cth – ss 9, 136, 137, 232, 1322 Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Bancorp Investments Limited v Primac Holdings Ltd (1984) 9 ACLR 263
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
Lion Nathan Australia Proprietary Limited v Coopers Brewery Limited (2005) 55 ACSR 583
Samsung Electronics Company Limited v Apple Inc & Anor (2011) 217 FCR 238
Date of hearing: 1 July 2016 Date of last submissions: 1 July 2016 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 66 Counsel for the Applicants: Mr M Hodge and Ms F Lubett Solicitor for the Applicants: McCullough Robertson Counsel for the First Respondent: Mr J Giles SC and Mr S Fitzpatrick Solicitor for the First Respondent: Minter Ellison Counsel for the Second Respondent: Mr S Monks Solicitor for the Second Respondent: King & Wood Mallesons Counsel for the Third Respondent: Mr S Webster Solicitor for the Third Respondent: Allens ORDERS
QUD 449 of 2016 BETWEEN: MACKAY SUGAR LIMITED ACN 090 152 211
First Applicant
ISIS CENTRAL SUGAR MILL COMPANY LIMITED ACN 009 657 078
Second Applicant
BUNDABERG SUGAR LIMITED ACN 077 102 526
Third Applicant
AND: WILMAR SUGAR AUSTRALIA LIMITED 098 999 985
First Respondent
MSF SUGAR LIMITED ACN 009 658 708
Second Respondent
QUEENSLAND SUGAR LIMITED ACN 090 152 211
Third Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
4 JULY 2016
THE COURT ORDERS THAT:
1.The interlocutory application of the first respondent is dismissed.
2.The costs of and incidental to the interlocutory application are reserved for later determination.
3.The parties are directed to put on short submissions within 7 days as to the disposition of the costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GREENWOOD J:
By these proceedings, Wilmar Sugar Australia Limited (“Wilmar”), the first respondent in the principal proceeding, seeks an injunction until judgment in aid of what would be, according to paragraph 18 of Mr Glasgow’s affidavit in support of the interlocutory application, its cross-claim in the principal proceeding for a declaration and other relief, that the proposed amendments to the constitution of Queensland Sugar Limited (“QSL”) are oppressive to, unfairly prejudicial to, or unfairly discriminatory against, Wilmar for the purposes of s 232(e) and Part 2F.1 of the Corporations Act 2001 (Cth).
Having regard to the grounds upon which Wilmar seeks to make good a prima facie case that resolution 2 is…
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- AGLC
- Mackay Sugar Limited v Wilmar Sugar Australia Limited [2016] FCA 789
- Case
- [2016] FCA 789
- Decision Date
CaseChat Overview and Summary
The legal issues before the court involved the interpretation and effect of the proposed resolutions under the Corporations Act 2001. Specifically, the court needed to determine whether resolution 2 could legally operate to reverse resolution 1 in the event that the proposed changes were found to be oppressive, unfairly prejudicial, or discriminatory. Wilmar argued that resolution 2 was beyond the power of QSL's constitution as it did not involve a "special resolution" by members, as required by Section 9 of the Corporations Act. Furthermore, Wilmar contended that the explanatory material provided to members was not transparent about the combined effect of the resolutions and the mechanism by which resolution 2 would reverse resolution 1.
The court dismissed the interlocutory application, finding that Wilmar had not demonstrated a sufficient case to warrant an injunction. The reasoning of the court was based on established principles regarding the interpretation of corporate constitutions and the requirements for special resolutions, as well as the need for balance between the parties' interests. The court also noted that the strength of Wilmar's case had to be considered alongside the balance of convenience. Consequently, the court held that the proposed meeting should proceed as scheduled. The costs of the interlocutory application were reserved for later determination, and the parties were directed to submit their views on the costs within seven days.
Orders
Orders of the court
1. The interlocutory application of the first respondent is dismissed.
2. The costs of and incidental to the interlocutory application are reserved for later determination.
3. The parties are directed to put on short submissions within 7 days as to the disposition of the costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
As to the implications of the earlier decision for the proposed amendments and the role of resolution 2 and resolution 1 the Members’ statement says this at points 4 and 5:4Given the amendments approved at the 8 December Meeting were found by the court to be oppressive, the Requisitioning Members intend to see a declaration from the Federal Court of Australia in Queensland that the changes proposed in Annexure A are not, within the meaning of section 232(e) Corporations Act 2001 (Cth) (Corporations Act), oppressive to, unfairly prejudicial to, or unfairly discriminated against, members of QSL. The BIM Mills do not currently intend to appoint any industry directors until the proceedings in relation to the Federal Court declaration have been determined at first instance.5In the event that the proposed changes are subsequently found by a court to be oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members of QSL, then:(a)as provided for by Resolution 2, if Resolution 1 has been approved by a special majority of QSL members, the constitution will be modified by repealing the amendments set out in Annexure A and restoring the constitution in the form it took immediately before Resolution 1 was approved; or(b)if the meeting requisitioned for the purposes of voting on the proposed changes to the company’s constitution has not yet been held at the time a court finds the proposed changes to be oppressive, (within the meaning of section 232(e) Corporations Act), then the Requisitioning Members intend to withdraw the Requisition Notice. Wilmar advances two grounds on which it is said the general meeting should not proceed. The first is that resolution 2 cannot have the effect under the Corporations Act it purports to bring about and therefore the notice of meeting which leads the reader to approach the notice material on the footing that it can operate that way is misleading. Second, the explanatory material distributed by QSL does not fully and fairly inform members on the reason for the combined effect of the resolutions and, in particular, the mechanism by which resolution 2 is intended to reverse Resolution 1 in the event of a finding of oppression. The principles I apply in determining these questions are the principles identified by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at paragraphs [65] to [72], and Gleeson CJ and Crennan J in ABC v O’Neill at [19] adopting the observations of Gummow and Hayne JJ. I also apply the observations of the Full Court of this court in Samsung Electronics Company Limited v Apple Inc (2011) 217 FCR 238. It is important, of course, to recognise that the strength of the applicants’ case is not considered in isolation from questions of balance of convenience. These principles are very well settled. As to the first ground, Wilmar says, put simply, that a provision of the constitution can only be modified or repealed by “special resolution” of the members, that is, at least 75 per cent of the votes cast by members entitled to vote on the resolution (see Section 9 of the Corporations Act). It says that a modification or repeal of a provision of the constitution by operation of a contingent event such as a subsequent declaration by a court as to a relevant matter is not an amendment by “special resolution”. Thus, Resolution 2 is said to be beyond power. That is said to follow as a matter of construction of s 136 of the Corporations Act and a recognition that there must be a relationship between the modification or repealing of the provision and members “acting” by special resolution rather than a later change upon an event when membership itself may have changed.