Paddington Gold Pty Ltd v Wave Pty Ltd (Subject to a Deed of Company Arrangement)

Paddington Gold Pty Ltd sought an interlocutory injunction against Wave Pty Ltd, which was subject to a deed of company arrangement, in the Federal Court of Australia. The dispute revolved around the fairness and legality of the deed of company arrangement, particularly concerning the treatment of various creditor claims, including the potential for insolvent trading claims. Paddington argued that the deed unfairly disadvantaged them by providing a fixed sum of $50,000, equating to 0.3 cents in the dollar, while other creditors with claims above $30,000 received a dividend of between 5.6 and 5.9 cents in the dollar.

The primary legal issue before the court was whether Paddington had a sufficient colour of a right to final relief to support the interlocutory injunction it sought against the deed of company arrangement. This required Paddington to demonstrate a serious question regarding the fairness and legality of the deed, particularly concerning the treatment of its claims. The court had to assess whether the complaints made by Paddington were made with sufficient particularity and whether they raised a serious question that could potentially lead to the deed being brought to an end.

The court examined the complaints made by Paddington, including the administrators' assessment of potential insolvent trading claims and the commercial rationale behind the proposed deed of company arrangement. The court noted that while the complaints were not in a highly particularised form, they were discernible enough to warrant consideration given the urgency of the application. The court found that Paddington had raised a serious question regarding the fairness of the deed, particularly in light of the potential insolvent trading claims and the disproportionate treatment of Paddington compared to other creditors. Consequently, the court held that Paddington had demonstrated a sufficient colour of a right to final relief, thereby granting the interlocutory injunction sought.