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Slea Pty Ltd v Connective Services Pty Ltd

Slea Pty Ltd v Connective Services Pty Ltd

Case [2019] VSC 201 3 April 2019

Appeal

Interlocutory Orders

Injunction

Corporate Law & Governance

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

S CI 2011 04332

SLEA PTY LTD	Plaintiff
v
CONNECTIVE SERVICES PTY LTD & ORS (ACCORDING TO THE ATTACHED SCHEDULE)	Defendants

S ECI 2018 00073

CONNECTIVE SERVICES PTY LTD & ANOR (ACCORDING TO THE ATTACHED SCHEDULE)	Plaintiffs
v
GLENN ANDREW LEES & ORS (ACCORDING TO THE ATTACHED SCHEDULE)	Defendants

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JUDGE:	KENNEDY J
WHERE HELD:	Melbourne
DATE OF HEARING:	13 - 14 March 2019
DATE OF JUDGMENT:	3 April 2019
CASE MAY BE CITED AS:	Slea Pty Ltd v Connective Services Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 201

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CORPORATIONS – Application to amend statement of claim in oppression proceeding and derivative proceeding – Whether amendments can be granted in derivative proceeding without fresh application for leave to bring proceeding under s 237 Corporations Act 2001 (Cth) – Whether no real prospects of success - Amendments granted, in part.

PRACTICE & PROCEDURE – Injunction – Interlocutory injunction to restrain sale of business and for order setting limits on proposed application to court to approve sale - Orders refused where undertakings given.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff in the Oppression Proceeding and the Plaintiffs in the Derivative Proceeding	Mr J Delaney QC with Ms K Foley and Mr G Kosminsky	Arnold Bloch Liebler
For the First, Second and Fourth to Ninth Defendants in the Oppression Proceeding, and the Fifth to Tenth Defendants in the Derivative Proceeding	Mr D Batt QC with Mr D Guidolin	Quinn Emanuel Urquhart & Sullivan
For the Third Defendant in the Oppression Proceeding, and the Twelfth Defendant in the Derivative Proceeding	No appearance	-
For the First to Third Defendants in the Derivative Proceeding	Mr M Borsky QC with Ms G Crafti	Gilbert & Tobin
For the Fourth Defendant in the Derivative Proceeding	No appearance	-

TABLE OF CONTENTS

Background......................................................................................................................................... 1

General chronology...................................................................................................................... 1
Previous history..................................................................................................... 1
Sale process (2018-2019)........................................................................................ 5

Other matters of evidence.......................................................................................................... 10
Incomplete production........................................................................................ 10
Objections to Mr Korda’s evidence................................................................... 11

Current form of pleadings/relief sought................................................................................ 12
Preliminary issue........................................................................................................................ 14

Application to Amend Pleadings.................................................................................................. 15

Preliminary issue re: Derivative Proceeding.......................................................................... 21
Resolution............................................................................................................. 23
Provisions.............................................................................................................. 23
Analysis................................................................................................................ 24

ImproperPurpose...................................................................................................................... 26
Plaintiffs’ Submissions........................................................................................ 26
Defendants’ Submissions.................................................................................... 27
Resolution............................................................................................................. 28

Acting Beyond Power................................................................................................................. 32
Resolution............................................................................................................. 33

Injunction Application.................................................................................................................... 34

Preliminary issue........................................................................................................................ 34
Whether an order ought to be made which places limits on time for making proposed application to sanction the sale process.................................................................................................. 35
Whether injunctive relief otherwise appropriate................................................................... 37
Plaintiffs’ Submissions........................................................................................ 37
Defendants’ Submissions.................................................................................... 37
Legal Principles.................................................................................................... 38
Preliminary ‘effect’ point..................................................................................... 40
Whether injunctive relief ought to be granted................................................. 41

Conclusion......................................................................................................................................... 44

HER HONOUR:

This is an application for orders pursuant to an Amended Summons filed on 13 February 2019 by Slea Pty Ltd (Slea)(the plaintiff in proceeding S CI 2011 04332 [Oppression Proceeding]) and Connective Services Pty Ltd and Connective OSN Pty Ltd (the Connective companies)(the plaintiffs in proceeding S ECI 2018 00073 [Derivative Proceeding]).

The relief…

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.

Continue reading Slea Pty Ltd v Connective Services Pty Ltd

Details

AGLC: Slea Pty Ltd v Connective Services Pty Ltd [2019] VSC 201
Case: [2019] VSC 201
Decision Date: 3 April 2019

CaseChat Overview and Summary

Slea Pty Ltd brought an action against Connective Services Pty Ltd in the Federal Court of Australia, seeking relief for oppression and in a derivative proceeding. The plaintiffs sought leave to amend their statement of claim to add new causes of action and to seek additional relief, including an interlocutory injunction to prevent the sale of the company's business. The defendants opposed the amendments, arguing that the plaintiffs had no real prospects of success in their claims and that the amendments were not in the interests of justice. The plaintiffs also sought an interlocutory injunction to restrain the sale of the company's business and to set limits on the proposed application to the court to approve the sale.

The court was required to determine whether the plaintiffs could amend their statement of claim in the derivative proceeding without first making a fresh application for leave to bring the proceeding under section 237 of the Corporations Act 2001 (Cth). The court also had to consider whether the plaintiffs had a real prospect of success in their claims and whether it was in the interests of justice to grant the interlocutory injunction. The court noted that the plaintiffs had already been granted leave to bring the derivative proceeding, and that the amendments sought were not fundamental changes to the nature of the proceeding. The court found that the amendments could be granted without a fresh application for leave, but that the plaintiffs did not have a real prospect of success in their claims for oppression. However, the court was satisfied that there were genuine issues to be tried in the derivative proceeding, and that it was in the interests of justice to grant the amendments.

The court refused to grant the interlocutory injunction to restrain the sale of the company's business, as the plaintiffs had given undertakings to the court that they would not proceed with the sale without first obtaining the court's approval. The court considered that the undertakings provided sufficient protection to the defendants and other interested parties, and that it was not necessary to grant the injunction. The court granted the amendments to the statement of claim, in part, and refused the interlocutory injunction. The court ordered that the plaintiffs' amended statement of claim be served on the defendants, and that the defendants file their defence within 28 days.

Orders