Sutton Developments Pty Ltd v Nine West Melbourne Pty Ltd
[2006] FCA 338
•22 FEBRUARY 2006
FEDERAL COURT OF AUSTRALIA
Sutton Developments Pty Ltd v Nine West Melbourne Pty Ltd [2006] FCA 338
CORPORATIONS – leave to commence proceedings in the name of another company – whether conditions satisfied
SUTTON DEVELOPMENTS PTY LTD v NINE WEST MELBOURNE PTY LTD
VID 1579 of 2005
YOUNG J
22 FEBRUARY 2006
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1579 OF 2005
BETWEEN:
SUTTON DEVELOPMENTS PTY LTD (ACN 051 406 832)
APPLICANTAND:
NINE WEST MELBOURNE PTY LTD (ACN 065 980 654)
RESPONDENTJUDGE:
YOUNG J
DATE OF ORDER:
22 FEBRUARY 2006
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
Upon the Applicant (“Sutton”):
(a)executing and delivering to the solicitors for the Respondent the deed poll annexed to these orders and undertaking by its Counsel to comply with it; and
(b)undertaking by its Counsel to procure that all solicitors, barristers and witnesses (expert and lay) retained for Nine West Australia Pty Limited (ACN 065 208 077) (“NWA”) in connection with proceedings 10115 of 2005 in the Supreme Court of Victoria (“Proceedings”) render charges to Sutton only and not to NWA and agree not to seek payment from NWA in relation thereto, and confirm that their duties to NWA are in no way affected by entering into a retainer with Sutton,
THE COURT ORDERS BY CONSENT THAT:
1.Sutton has leave, pursuant to s 237(2) of the Corporations Act 2001 (Cth) to proceed with the Proceedings in the name of and on behalf of NWA;
2.Sutton may not take any step in the Proceedings until the security referred to in the deed poll has been provided and the Trustee has agreed to comply with the matters referred to in clause 2 of the deed poll;
3.The Respondent’s motion seeking an order that these proceedings be stayed pursuant to s 53 of the Commercial Arbitration Act1984 (Vic) dated 15 December 2005 be dismissed;
4.There be no order as to the costs of the motion referred to in paragraph 3 above, or of the costs of these proceedings;
5.Liberty to apply is reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1579 OF 2005
BETWEEN:
SUTTON DEVELOPMENTS PTY LTD (ACN 051 406 832)
APPLICANTAND:
NINE WEST MELBOURNE PTY LTD (ACN 065 980 654)
RESPONDENT
JUDGE:
YOUNG J
DATE:
22 FEBRUARY 2006
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
In this matter, Merkel J made an interim order on 20 December 2005 pursuant to s 241(1)(a) of the Corporations Act 2001 (Cth) (“the Act”). The order was made upon the provision of certain undertakings to the Court by the applicant, Sutton Developments Pty Limited. The substance of the order was that his Honour granted leave on an interim basis to the applicant to file a generally endorsed writ in the Supreme Court of Victoria in the name, and on behalf, of Nine West Australia Pty Limited (“Nine West Australia”) against Nine West Group Inc and others. The generally endorsed writ was subsequently issued.
I have before me the next step in the process of obtaining a final order granting leave under ss 236 and 237 of the Act. When the matter was before me on 15 February 2006, the parties had not reached final agreement as to the undertakings and/or conditions that should attend any grant of leave. On that day, I heard submissions as to whether ss 236 and 237 were otherwise satisfied. The submissions were made on the basis that the parties expected, or at least hoped, that they would be able to agree upon undertakings and/or conditions attending the grant of leave.
I reserved my decision as to whether the statutory conditions that must be satisfied for leave to be granted had been demonstrated and adjourned the application to 22 February 2006. I did so to allow the parties time to reach agreement on appropriate undertakings and/or conditions. The parties have now reached agreement upon an appropriate set of undertakings and minutes of proposed consent orders which have been submitted to me.
There are two relevant undertakings. The first is, in effect, that the applicant will execute and deliver to the respondent’s solicitors a deed poll which is attached to the minutes. The deed poll contains certain indemnities given by the applicant in favour of Nine West Australia. It is otherwise unnecessary to set out or to refer in any detail to the terms of the deed poll.
The second undertaking is an undertaking by counsel on behalf of the applicant to procure that all solicitors, barristers, expert witnesses and lay witnesses retained by Nine West Australia in connection with the newly issued proceedings in the Supreme Court render charges to the applicant only, and not to Nine West Australia. Further, such persons are not to seek payment from Nine West Australia in relation to the proceedings in the Supreme Court, and their duties to Nine West Australia are in no way affected by entering into a retainer with the applicant.
Upon these two undertakings being given to the Court, the parties submit that the Court should, by consent, make, inter alia, an order granting leave to the applicant, pursuant to s 237(2) of the Act, to proceed with the newly issued proceedings in the Supreme Court in the name, and on behalf, of Nine West Australia.
I am satisfied that the conditions for a grant of leave set out in s 237 have been met. It is probable that Nine West Australia would not itself bring the proceedings as it is a deadlocked joint venture company. I am satisfied that the applicant is acting in good faith, and that it is in the best interest of Nine West Australia that leave be granted. I am also satisfied that the procedural requirement in s 237(2)(e) has been met, namely that at least 14 days before making the application, the applicant gave written notice to Nine West Australia of its intention to apply for leave, and of the reasons for applying. Finally, I am satisfied that there is a serious question to be tried.
In the course of the hearing, I raised with counsel the question whether it was appropriate for this Court to accept undertakings of the kind I have described where the leave relates to the conduct of proceedings in the Supreme Court. My concern was that the ongoing supervision of the undertakings by this Court may be less than convenient in circumstances where the underlying proceedings are being conducted in another Court.
Counsel for both parties submitted that it was appropriate for the Court to accept the undertakings notwithstanding this potential difficulty. They submitted, which I do not doubt, that this Court has power to make the necessary order. They also submitted that Merkel J had already granted interim leave, and I was effectively concluding an application that his Honour had embarked upon by making interim orders on 20 December 2005. They submitted that it is not unusual for a Court to retain, after final orders and undertakings have been made, the responsibility for dealing with any application arising from an alleged breach of the undertakings.
It was also submitted that if any question of breach of the undertakings did arise in future, this Court would always retain, at that point of time, a discretion under s 1337H of the Act to transfer the application regarding the alleged breach of the undertakings to the Supreme Court if it considered that it would be in the interests of justice to do so. However, that step might not be taken readily because it would be an undertaking to this Court which would be under consideration.
On balance, I am satisfied, in view of the parties’ consent and the submissions made to me, that it is in the interests of justice that I accept the two undertakings that have been proffered and that I make the consent orders.
Accordingly, I will make orders in the form of the minute of consent orders that have been provided to me. I will initial those orders, and place a copy on the file. The orders deal with all outstanding matters, including costs.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young. Associate:
Dated: 31 March 2006
Counsel for the Applicant: L Glick SC with M Osborne Solicitors for the Applicant: Schetzer Brott and Appel Counsel for the Respondent: P Cawthorn Solicitors for the Respondent: Mallesons Stephen Jaques Date of Hearing: 22 February 2006 Date of Judgment: 22 February 2006
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