FEDERAL COURT OF AUSTRALIA
Romanovski v RCG (Aust) Pty Ltd [2023] FCA 210
File number: VID 85 of 2023 Judgment of: MOSHINSKY J Date of judgment: 7 March 2023 Catchwords: CORPORATIONS – oppression – application for interlocutory injunction to restrain removal of the first plaintiff as a director – application for access to books or financial records of a company – application for discovery Legislation: Corporations Act 2001 (Cth), ss 198F, 247A, 290 Cases cited: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Praetorin Pty Ltd v TZ Ltd (2009) 76 ACSR 236
Re Medical Training and Development Pty Ltd [2021] NSWSC 981
Re Tai-Ao Aluminium (Australia) Pty Ltd (2004) 51 ACSR 465
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 36 Date of hearing: 6 March 2023 Counsel for the Plaintiffs: Mr A McClelland KC with Mr AR Kirby Solicitor for the Plaintiffs: Kennedys (Australasia) Partnership Counsel for the Fourteenth, Fifteenth, Sixteenth and Seventeenth Defendants: Dr COH Parkinson KC with Mr JWG Grant Solicitor for the Fourteenth, Fifteenth, Sixteenth and Seventeenth Defendants: HWL Ebsworth Lawyers Counsel for the First to Thirteenth Defendants: The First to Thirteenth Defendants did not appear ORDERS
VID 85 of 2023 BETWEEN: BLAGOJCE (BILL) ROMANOVSKI
First Plaintiff
LEAROM PTY LTD (ACN 083 094 937)
Second Plaintiff
AND: RCG (AUST) PTY LTD (ACN 634 250 927)
First Defendant
CBS NSW (AUST) PTY LTD (ACN 634 390 962)
Second Defendant
CBS VIC COMMERCIAL PTY LTD (ACN 123 772 118) (and others named in the Schedule)
Third Defendant
ORDER MADE BY:
MOSHINSKY J
DATE OF ORDER:
7 MARCH 2023
THE COURT NOTES THAT: Counsel for the plaintiffs, on behalf of the plaintiffs, have given the usual undertaking as to damages.
THE COURT ORDERS THAT:
1.Until the hearing and determination of this proceeding or further order of the Court:
(a)the defendants must reinstate the first plaintiff’s monthly payments of $54,500, with the balance of the February 2023 payment and the March 2023 payment to be paid by 15 March 2023;
(b)the tenth and eleventh defendants by their servants, agents and howsoever otherwise are restrained from taking any step, or further step, to incur any further debt in respect of the Johnston Street and Clarendon Street Properties;
(c)the first to thirteenth defendants (the Companies) by their servants, agents and howsoever otherwise are restrained from making any further use of the first plaintiff’s registration as a building surveyor (including by the application of his signature on any documentation) in connection with any permit that any of those defendants and related Checkpoint entities (including those which are not defendants in the proceeding) are engaged to issue anywhere in Australia.
2.By 4.00 pm on 10 March 2023, the defendants provide the following documents to the plaintiffs:
(a)a copy in native format of the data and…
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- Case
- [2023] FCA 210
- Decision Date
CaseChat Overview and Summary
The court found that the plaintiff had established a prima facie case for the relief sought. The court accepted that the material disclosed a prima facie case of oppression, in particular, the plaintiff's expectation that he would remain involved in the management of the company while he continued to have an equity interest in the company. The court also found that the interlocutory relief sought was in aid of the final relief sought. The court considered that if the payments were not resumed, this would increase the amount claimed by the plaintiff for his share of the company. The court further found that the balance of convenience favoured the making of an interlocutory injunction.
The court ordered that the defendants must reinstate the plaintiff's monthly payments, restrain them from incurring any further debt in respect of certain properties, and restrain them from making any further use of the plaintiff's registration as a building surveyor. The court also ordered the defendants to provide the plaintiffs with certain documents, including accounting software data, insurance policies, communications with insurance brokers or insurers, constitutions, emails, and bank statements. The court further ordered the defendants to provide additional documents relating to the fit out of a property, finance facilities for vehicles, use of the plaintiff's registration as a building surveyor, proceedings to which the plaintiff is a party, and communications with certain individuals concerning the plaintiff's removal as a director. The court also ordered the defendants to provide ongoing discovery of certain documents. Finally, the court ordered the parties to agree on an independent valuer to value the plaintiff's interest in the companies and to confer and seek to agree orders for the conduct of an independent valuation.
Orders
Orders of the court
1. Until the hearing and determination of this proceeding or further order of the Court:
(a) the defendants must reinstate the first plaintiff’s monthly payments of $54,500, with the balance of the February 2023 payment and the March 2023 payment to be paid by 15 March 2023;
(b) the tenth and eleventh defendants by their servants, agents and howsoever otherwise are restrained from taking any step, or further step, to incur any further debt in respect of the Johnston Street and Clarendon Street Properties;
(c) the first to thirteenth defendants (the Companies) by their servants, agents and howsoever otherwise are restrained from making any further use of the first plaintiff’s registration as a building surveyor (including by the application of his signature on any documentation) in connection with any permit that any of those defendants and related Checkpoint entities (including those which are not defendants in the proceeding) are engaged to issue anywhere in Australia.
2. By 4.00 pm on 10 March 2023, the defendants provide the following documents to the plaintiffs:
(a) a copy in native format of the data and documents held in the Companies’ MYOB accounting software as at that date;
(b) copies of any current insurance policies in the name of:
(i) the first plaintiff; and/or
(ii) one or more of the Companies naming the first plaintiff as an insured;
(c) copies of all communications between one or more of the defendants and any insurance broker or insurer concerning any extant or new insurance claim or insurance notification concerning the first plaintiff;
(d) copies of the constitutions for each of the Companies;
(e) a copy of all historic emails in the email boxes for the email accounts:
(i) diorg@check-point.com.au;
(ii) naomir@check-point.com.au;
(f) copies of the bank statements for each bank account or finance facility in the name of one or more of the Companies from 1 July 2021 to date.
3. By 4.00 pm on 17 March 2023, the defendants provide the following documents to the plaintiffs:
(a) quotations, invoices and receipts in connection with the fit out of the Clarendon Street property;
(b) documents relating to the finance facilities for the vehicles with the registration numbers ANW555, VJRB, AOS804 and JRB-03;
(c) documents recording or evidencing the use, since 9 February 2023, of the first plaintiff’s registration as a building surveyor (including by the application of his signature on any documentation) in connection with any permit that any of the Companies and related Checkpoint entities (including those which are not defendants in the proceeding) are engaged to issue anywhere in Australia;
(d) a list of all proceedings to which the first plaintiff is a party in respect of projects of the Companies;
(e) copies of all communications with Davidson Advisory and/or Lisa Brooks since 1 July 2022 concerning the removal of the first plaintiff as a director of, or from the management of, the Companies.
4. The Companies shall further provide the following documents to the plaintiffs by 4.00 pm on 17 March 2023 and the 15th day of each month thereafter (or the next business day if the 15th day is not a business day):
(a) a copy in native format of the data and documents held in the Companies’ MYOB accounting software as at that date;
(b) the then most recent bank statements for each bank account or finance facility in the name of one or more of the Companies that have not already been provided;
(c) any actual or projected cashflow and budgets prepared by that date and not already provided;
(d) any month to date and year to date reports prepared in or for the foregoing month;
(e) any management reports prepared in or for the foregoing month;
(f) any distribution calculations prepared in or for the foregoing month.
5. For the avoidance of doubt, paragraph 4 above is intended to satisfy the Companies’ obligation to make continuing discovery of the matters covered by paragraph 6(a) to (d) of the orders made on 24 February 2023.
6. In relation to paragraph 6 of the orders made on 24 February 2023 and paragraphs 2 to 4 above, the defendants provide a list of documents, verified by an affidavit, in accordance with rr 20.16 and 20.17 of the Federal Court Rules 2011. For the avoidance of doubt, it is sufficient for the list to identify categories of documents where it is impractical to list particular documents.
7. The parties seek to agree, by 4.00 pm on 17 March 2023, upon an independent valuer to value the plaintiffs’ interest in the Companies. The parties notify the chambers of Justice Moshinsky of the details of any agreed valuer. If the parties are unable to agree, an independent valuer will be selected by a Registrar of the Court.
8. The parties confer and seek to agree orders for the conduct of an independent valuation, and provide any agreed orders to the chambers of Justice Moshinsky by 4.00 pm on 17 March 2023.
9. The matter be listed for a case management hearing on a date to be fixed.
10. The further hearing of the plaintiffs’ interlocutory application be adjourned to a date to be fixed.
11. Costs be reserved.
12. There be liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The fourteenth to seventeenth defendants rely on the following material:(a)two affidavits of Mr Casey;(b)an affidavit of Jessica Minter, a solicitor; and(c)a bundle of professional indemnity insurance policies taken out by the Companies with Liberty Specialty Markets.Consideration There are a number of discrete issues between the parties. I will consider each in turn. It is convenient to start with the injunction orders that are sought by the plaintiffs. There is no dispute between the parties as to the applicable principles for the grant of an interlocutory injunction. It is necessary for the plaintiffs to establish a prima facie case to relief and that the balance of convenience favours the making of an interlocutory injunction: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 per Kitto, Taylor, Menzies and Owen JJ; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19] per Gleeson CJ and Crennan J, at [65] per Gummow and Hayne JJ. The first injunction order sought by the plaintiffs is an order that the defendants reinstate the first plaintiff’s monthly payments of $54,500. (There is a slight discrepancy in the figures in the material – this is the figure that appears in Mr Casey’s second affidavit at paragraph 60.) The evidence shows that there were regular payments of this amount to each of the three directors. The payments were suspended (for all three directors) on 9 February 2023. Mr Giambattista and Mr Casey indicate in their affidavit material that they are now prepared to resume these payments. Accordingly, there is no practical difficulty in the Companies making these payments. The fourteenth to seventeenth defendants contend that the plaintiffs have not made out a prima facie case for the relief that they seek. Further, they submit that where an interlocutory injunction is sought in respect of private rights, it is necessary as the starting point to identify the legal or equitable rights which are to be determined at trial and in respect of which final relief is sought: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [8]-[21] per Gleeson CJ, [59]-[61] per Gaudron J, [86]-[92], [98]-[100] per Gummow and Hayne JJ. They submit that the interlocutory relief sought is not sufficiently connected with the final relief that is sought. I do not accept these submissions. In my view, the plaintiffs have established a prima facie case for the relief sought in the originating application. The material discloses a prima facie of oppression. In particular, the material establishes (on a prima facie basis) an expectation on the part of Mr Romanovski that he would remain involved in the management of the Companies while he continued to have an equity interest in the Companies. This is apparent, for example, from paragraphs 8 and 9 of Mr Romanovski’s fifth affidavit. Further, I consider that the injunctive order sought is in aid of the final relief sought in the proceeding. If the payments are not resumed, then this will increase the amount claimed by Mr Romanovski for his share of the Companies. Further, if the payments are not resumed, this may well affect Mr Romanovski’s ability to fund the litigation in which he contends he has been oppressed.