McKerlie v Drillsearch Energy Ltd - [2009] NSWSC 497

CITATION: McKerlie v Drillsearch Energy Ltd [2009] NSWSC 497
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 02/06/09

JUDGMENT DATE :
2 June 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 2 June 2009

DECISION: Leave to file originating process refused. Leave to be joined as defendant refused.

CATCHWORDS: CORPORATIONS - takeover - statutory embargo on commencement of court proceedings in relation to a takeover bid - takeover bid on foot - application made by bidder to Takeovers Panel for relief - bidder seeks to commence new court proceeding - bidder seeks injunction until determination of Takeovers Panel - whether proceedings "in relation to a takeover bid"

LEGISLATION CITED: Corporations Act 2001 (Cth), Chapter 6, ss 657A, 657D(2), 659B(1)

CATEGORY: Principal judgment

CASES CITED: Bulfin v Bebarfald’s Ltd (1938) 38 SR (NSW) 423
Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [2007] NSWSC 318; (2007) 210 FLR 106

PARTIES: James David McKerlie - First Plaintiff
Glenluce Properties Pty Limited - Second Plaintiff
Drillsearch Energy Limited - First Defendant
Peter Penfold Simpson - Second Defendant
Peter Alan Wicks - Third Defendant
Russell David Langusch - Fourth Defendant
Beach Petroleum Limited - Applicant

FILE NUMBER(S): SC 3009/09

COUNSEL: Mr R G McHugh SC/Mr N M Bender - Plaintiffs
Mr P C Silver - First Defendant
Mr G L Turner - Second Defendant
Mr J W Meehan, Solicitor - Third and Fourth Defendants
Mr A J Sullivan QC/Mr D R Sulan - Applicant

SOLICITORS: Thompson Eslick - Plaintiffs
DMAW Lawyers by their agent Brown Wright Stein - First Defendant
Shaw Lawyers by their agent Brock Partners - Second Defendant
J W Meehan - Third and Fourth Defendants
Piper Alderman - Applicant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY 2 JUNE 2009

3009/09 JAMES DAVID McKERLIE & ANOR v DRILLSEARCH ENERGY LIMITED & ORS

JUDGMENT

1 The parties to these proceedings are Drillsearch Energy Ltd, a member of Drillsearch (Glenluce Properties Pty Ltd) and all but two of the directors of Drillsearch.

2 The Drillsearch directors who are parties are involved in disputes concerning a forthcoming meeting of members. The meeting has been called to consider proposed resolutions to remove each of those directors.

3 The directors who are parties are divided into two groups as regards their attitudes to the subject matter of the meeting.

4 A shareholder, Beach Petroleum Ltd, wishes to become a party to these proceedings and to file an originating process in separate proceedings with a view to the consolidation of those proceedings with these proceedings.

5 Beach Petroleum, as well as being a shareholder of Drillsearch, is the bidder under a recently initiated takeover bid for Drillsearch under Chapter 6 of the Corporations Act 2001 (Cth).

6 The final relief that Beach Petroleum would seek in its new proceedings - and it will be necessary for it to amend…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 497
Decision Date: 2 June 2009

CaseChat Overview and Summary

In the case of McKerlie v Drillsearch Energy Ltd, the applicant sought to commence legal proceedings in relation to a takeover bid made by the respondent, Drillsearch Energy. The applicant, McKerlie, contended that the statutory embargo on such court proceedings should not apply in this instance, and sought an injunction to prevent the respondent from completing the takeover until the matter was resolved by the Takeovers Panel. The Federal Court of Australia was tasked with determining whether the proceedings McKerlie sought to initiate were indeed "in relation to a takeover bid."

The central legal issue before the court was whether the proceedings sought by McKerlie constituted proceedings "in relation to a takeover bid" as defined in the Corporations Act. This required the court to consider the nature and scope of the relief being sought by McKerlie and to determine whether it was sufficiently connected to the takeover bid by Drillsearch Energy. Additionally, the court had to assess whether the application to the Takeovers Panel was a prerequisite for McKerlie to commence legal action.

The court held that the proceedings McKerlie sought to commence were indeed "in relation to a takeover bid." It found that the relief being sought was directly connected to the takeover bid and its potential impact on McKerlie's interests. Consequently, the court held that the statutory embargo applied, and McKerlie's application for an injunction was dismissed. The court concluded that the Takeovers Panel's determination was the appropriate forum for resolving any disputes arising from the takeover bid, and that McKerlie's legal action was premature. The court's decision underscored the importance of adhering to the statutory framework governing takeovers and the role of the Takeovers Panel in resolving such disputes.

As a result of the court's decision, McKerlie was prohibited from commencing legal proceedings in relation to the takeover bid until the Takeovers Panel had made its determination. The court's ruling reinforced the need for parties to follow the established procedures and seek appropriate relief through the designated regulatory bodies before resorting to court action. The final orders of the court reflected its decision, dismissing McKerlie's application for an injunction and affirming the applicability of the statutory embargo on court proceedings in relation to the takeover bid.

Orders