Soljan, G. v Plycam P/L

[1994] FCA 932

JUDGMENT NO. ........ ........ . n. q32 J ?? .u*

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) NO. NG 3568 of 1994

1

GENERAL DIVISION 1

BETWEEN:  GRAEME SOLJAN

Applicant

AND :  PLYCAM PTY LIMITED & ORS

Respondent

7 November 1994

PEASONS FOR JUDGMENT

LOCKHART J.

On 2 November 1994, the Court made certain orders against the respondents to this proceeding ex parte. The relevant orders were those numbered 5 and 6, which in effect restrained the respondents for a short period, as the matter was ex parte, from disposing of or dealing with any of the assets of the first respondent, Plycam Proprietary Limited, except in so far as it was necessary to do so for the course of carrying on the ordinary course of its business. The Court also restrained the second, third and fourth respondents from disposing of or dealing with any interest they may have in shares held by them in Plycam. That order also was for a very limited time because it was ex parte.

applicant, Mr Graeme Soljan, seeks a continuation until the

The matter came back before the Court last Friday, but
due to the pressure of business, the Court could not reach the
matter then and it was put over until 9.30 this morning. The

hearing of the proceeding or further order of the injunctions 5 and 6 granted on 2 November. The continuance of those injunctions is resisted by the respondents. I may deal first with the question of whether or not the order previously made and still in existence ought to be discharged.

The primary ground advanced for that is because the case to a degree upon the entitlements of the applicant and certain of the respondents to their shares in Plycam, and in particular upon the first order sought in the initiating process, the application by Mr Soljan, an order pursuant to section 260(2) (e) of the Corporations Law that the second, third and fourth respondents had purchased Mr Soljanfs shares in Plycam.

What was not disclosed to the Court at the time the ex
parte order was made was the fact, that has become disclosed

since by an affidavit from the respondents, namely that the

shares held by Mr Soljan in Plycam were the subject of an	agreement of 9 May between Mr Betzina, the fourth respondent,
and Mr Soljan, whereby Mr Betzina lent to Mr Soljan $20,000 to be repaid one month later, interest free, and in which by clause 5, Mr Soljan granted a charge over his shares in Plycam to Mr Betzina.
Had that been disclosed to the Court, it is doubtful if the orders would have been made in the state of the evidence in which it was at that time or in the form in which they were made. Now, whether that be so or not, certainly it is a material non-disclosure, and in my view it is self-sufficient to warrant the instant discharge of the order. I make no comment upon whether the non-disclosure was accidental or deliberate; I have no knowledge of that. These matters always arise fairly urgently, and sometimes things are overlooked that should not be overlooked, and I therefore say nothing in relation to the conduct of anybody about the non- disclosure. The fact is there was material non-disclosure and I accordingly discharge the orders previously made.
I am now asked by counsel for Mr Soljan to make orders afresh in terms of the orders 5 and 6 previously made to operate until the final hearing or further order. The case for Mr Soljan in brief is that he was the owner of the relevant business and shares in Plycam and that he sought to form what is sometimes called a partnership in corporate form
with certain of the respondents so that he would sell shares to them in Plycam and they would pay moneys to him for the
shares and also contribute loan moneys to the business.
It is in some ways rather the classic instance of partnership in corporate form. The business run by Plycam is a restaurant near Taylors Square, Sydney. I have very limited information in the evidence as to whether the business is successful or not. It has a number of creditors, including the Commissioner of Taxation, who is owed a substantial sum for unpaid group tax, but it does not follow of course from that that the business is in jeopardy at all. It may be a prosperous business for all I know. What is known is that Mr Soljan himself had acquired the business for nothing. That fact does not appear to have been disclosed to the purchasers, but there is a contest as to what was said about that matter, and I say nothing further about it. Whatever the position be there, it obviously has been the cause for some bad blood between the applicant and the second, third and fourth respondents.
Mr Soljan has been effectively excluded since July this year from any role in relation to the conduct of the affairs of Plycam and it is that which grounds his application to the Court for relief as sought in the application.
The sooner this matter is brought on for a final hearing, the better. It is not a matter that raises, it seems to me as
presently advised, complex issues of law, though there certainly are some issues of fact that are in conflict, but much will no doubt be as most cases are, not seriously in dispute when it ultimately comes for resolution. The question is what should be done in the meantime. If no intervention of the Court occurs, the evidence indicates plainly from the affidavit of the third respondent, Mr OfCallaghan, and in particular in paragraph 13 of his affidavit, that the business
will be transferred to another company called "Taylorls Square Proprietary Limited" which has been incorporated. Two shares have been issued, one held by Mr Betzina and one held by Mr OrCallaghan.
The transfer will be for no consideration and on certain other terms that are set out in paragraph 13 of Mr OfCallahan's affidavit. Counsel for Mr Soljan describes the exercise, if it is conducted, as, in effect, an assets stripping exercise of Plycam. Whether that be a correct description or not, certainly the effect of the proposals could be to leave Mr Soljan, if he ultimately succeeds in this case, with a somewhat hollow shell in Plycam, against which he may have no recourse.
Nothing is totally satisfactory when injunctive relief on an interlocutory footing is being considered, but I think the best that the Court can do is to try and get this case on for
as urgent a final hearing as possible, and in the meantime to freeze the position in substance consistently with the orders
(5) and (6) that were made previously, provided, of course,
that the undertaking as to damages is proffered by Mr Soljan.

Accordingly, the Court orders that:

1.   Upon the applicant, by his counsel, giving the usual

undertakings as to damages orders in terms of paragraphs

( 5 ) and (6) of the orders of 2 November 1994 be made, the

orders to operate until the final hearing of the proceeding or further order, but with liberty to any party to apply in the meantime on two days1 notice to vary or discharge those orders;

2 .    With the consent of the parties the matter be referred to mediation pursuant to order 7 2 of the Courtls rules;

1. The applicant file and serve points of claim on or before Friday, 11 November 1994;

2. The respondents file and serve their points of defence and points of cross-claim, if any, on or before 2 5 November 1994;

3. Any reply and any defence to cross-claim to be filed by

   the applicant by 2 December 1994;

5.   Each party give mutual discovery of documents to the other by 9 November 1994 and inspection to take place within 7 days thereafter;

7 .    Each party file and serve affidavits on which they seek to rely in support of their respective cases at the same time as their respective pleadings are filed;

8.    The matter be adjourned to 16 December 1994, at 9.30 am for further directions and liberty to apply to any party in the meantime on two daysr notice.

I certify that this and the

preceding six (6) pages are a true copy of the reasons for judgment herein o f the Honourable Mr. Justice Lockhart.

s s o c a t 51,lcebt

Dated: 7 November 1994

Counsel for the Applicant	Mr D H Murr
Solicitors for the Applicant :	Holman Webb
Counsel for the Respondent	Mr C D Freeman
Solicitors for the Respondent :	C R Fitzsimons
Date of Hearing	7 November 1994

Date of Judgment 7 November 1994