Veolia Environnement SA v Suez Australia Holding Pty Ltd
[2021] FCA 344
•1 April 2021
FEDERAL COURT OF AUSTRALIA
Veolia Environnement SA v Suez Australia Holding Pty Ltd [2021] FCA 344
File number: NSD 254 of 2021 Judgment of: MARKOVIC J Date of judgment: 1 April 2021 Catchwords: PRACTICE AND PROCEDURE – application for an interlocutory injunction restraining the defendants from entering into binding agreements or transactions to sell the Australian waste management business of the parent company of the first and fourth defendants (Suez SA) to the fifth defendant – where plaintiff filed draft takeover bid for Suez SA – where plaintiff alleges knowing involvement by defendants in fraudulent scheme to frustrate takeover bid contrary to the interests of Suez SA and its shareholders in contravention of French law – whether prima facie case established – insufficient evidence to demonstrate prima facie – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth) s 22 Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618
Mineralogy Pty Limited v Sino Iron Pty Limited [2016] WASCA 105
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 60 Date of hearing: 1 April 2021 Counsel for the Plaintiff: Mr N Hutley SC and Mr D Sulan and Mr C Mitchell Solicitor for the Plaintiff: Corrs Chambers Westgarth Counsel for the First and Fourth Defendants: Mr J A C Potts SC and Mr J R Willis Solicitor for the First and Fourth Defendants: Baker McKenzie Counsel for the Second and Third Defendants Mr P J Brereton SC and Ms N Oreb Solicitor for the Second and Third Defendants Clayton Utz Counsel for the Fifth Defendant Mr J Giles SC and Mr G O’Mahoney Solicitor for the Fifth Defendant Gilbert + Tobin ORDERS
NSD 254 of 2021 BETWEEN: VEOLIA ENVIRONNEMENT SA
Plaintiff
AND: SUEZ AUSTRALIA HOLDING PTY LTD ACN 070 452 890
First Defendant
MARK RUDOLF CHRISTIAAN VENHOEK
Second Defendant
GREGORY MARK OATLEY (and others named in the Schedule)
Third Defendant
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
1 APRIL 2021
THE COURT ORDERS THAT:
1.Pursuant to s 17(4) of the Federal Court of Australia Act 1976 (Cth), to the extent and for so long as public health regulations and statutes operate to limit or exclude members of the public from being able to attend the Court at the various locations that we are hearing the matter, the sitting of the Court shall continue, notwithstanding the inability of members of the public to be so present, who have not applied to the Registry or an associate to observe the hearing by video link or audio link, while submissions are being given pursuant to the Federal Court of Australia Act 1976 (Cth).
2.Unless the Court otherwise orders, no person, being a member of the public, who is observing the hearing of the proceeding by accessing any audio or video link, including by link to the platform Microsoft Teams may:
(a)make any audio or video recording or photograph of the hearing or any part of it; or
(b)participate in, or interrupt, the hearing,
provided that nothing in this order shall prevent any person, based on what he or she has seen or heard during the hearing:
(c)making his or her own notes or record of the proceeding; or
(d)publishing a fair report of the proceeding.
3.The Court notes that a contravention of Order 2 may constitute a contempt of court and be punishable by imprisonment, fine and/or sequestration of property.
4.The oral application made by the plaintiff for interlocutory relief in the form of paragraph 4 of the amended originating process filed on 1 April 2021 until 7 April 2021 is dismissed.
5.The costs of today’s application are reserved.
6.Adjourn the proceeding to 7 April 2021 at 10.15 am.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)MARKOVIC J:
This is an application made by Veolia Environnement SA (Veolia) for an interlocutory injunction to be put in place until Wednesday, 7 April 2021. Veolia commenced this proceeding on 26 March 2021 by the filing of an originating process. At that time orders were made for service of the originating process on the defendants with the time for service being abridged, and the matter was brought back before me today.
The defendants to the proceeding are Suez Australia Holding Pty Limited (Suez Australia) and Suez Recycling and Recovering Pty Limited (Suez Recycling), the first and fourth defendants, who are wholly owned subsidiaries of Suez SA (referred to collectively as the Australian Suez companies), Mark Rudolph Christian Venhoek and Gregory Mark Oatley, the directors of the Australian Suez companies, and Cleanaway Waste Management Limited (Cleanaway), a potential purchaser of Suez SA’s Australian waste management business.
Veolia subsequently filed an amended originating process in which it seeks the following by way of interlocutory relief:
4.An interlocutory injunction, pursuant to rule 1.32 of the Federal Court Rules 2011 (Cth) and sections 1324(1), (4) and (7) of the Corporations Act 2001 (Cth), requiring each of the First, Second, Third, Fourth and Fifth Defendants to provide the Plaintiff with 10 business days’ notice (by email addressed to [email protected] and [email protected]) before any of the First, Fourth and Fifth Defendants or their associated or related parties execute any form of binding agreement or enter into any form of binding transaction, at any time prior to 2 July 2021, which would have the effect of:
(a)selling, disposing of or alienating Suez SA’s Australian waste management business to the Fifth Defendant or its nominee (by share sale, asset sale or otherwise); or
(b)granting an option, or providing a right, to the Fifth Defendant or its nominee to enter into any such transaction.
(Notice).
Any Notice must identify the parties to, and the structure of, the proposed transaction, including whether the transaction will be in the form of a share sale or asset sale.
5.Leave to bring proceedings against the Second and Third Defendants in the name of the First or Fourth Defendants, pursuant to sections 181, 236 and 237 of the Corporations Act 2001 (Cth).
(Underlining and strikeout omitted.)
Veolia does not, however, move for that relief today. Rather, because of evidence filed by, in particular, the Australian Suez companies and Cleanaway today in response to the application, it seeks an injunction for a shorter period. It does so in order to allow it to meet that evidence which concerns matters of which it became aware, it says, for the first time today.
BACKGROUND
Before proceeding further, it is convenient to set out the background to this application.
Veolia is a company registered in France. Since 5 October 2020 it has been a shareholder in Suez SA, having acquired a 29.9% stake from Engie SA (Engie).
In October 2019 Suez SA announced its adoption of a comprehensive strategic plan called Shaping SUEZ 2030 (2030 Strategic Plan). Among other things, that plan included “portfolio rotation for which businesses have been identified accounting for 15 to 20 per cent of [its] Capital employed” but did not identify which specific businesses were to be included in that rotation. It also referred to its international markets noting that the Suez Group targeted growth in selected countries where it would deploy its full value proposition, and further expand into innovative services.
On 30 August 2020 Veolia offered to acquire Engie’s 29.9% stake, at the time an existing shareholder in Suez SA, at a price of 18 euros per share and publicly announced the fact that it had made that offer.
On 10 September 2020 Suez SA issued a press release headed “Board of directors of Suez considers Veolia’s hostile approach is against the best interests of the company, and its stakeholders”. In that press release the board of directors of Suez said that, after a meeting, they had unanimously concluded that what they described as the hostile approach announced by its competitor, Veolia, was against the best interests of Suez SA and all its stakeholders, in particular its shareholders, its employees and its clients, and affirmed its full support to the management team to execute and accelerate the 2030 Strategic Plan.
On 23 September 2020, in a further press release, Suez SA announced that its board of directors had decided “in the context of Veolia’s hostile project” that the sustainability of Suez Eau France within Suez Group was to be legally protected, and that it would move those assets into a Dutch “stichting” structure which would ensure that the assets remained a core part of Suez SA.
As set out above, on 5 October 2020 Veolia acquired a 29.9 % stake in Suez SA. On the same day Veolia also announced its intention “to take control of Suez” and “to file a voluntary takeover bid for the remaining Suez shares” which offer would be in cash without cap, reserving to Veolia the possibility of adding to the part offered in cash a capped part in Veolia shares. Veolia also noted that the price of the public offer would be that paid to Engie; that is 18 euros per share (coupon attached).
Other matters were set out in Veolia’s release which I do not need to refer to, save to observe that Veolia expressly noted that it reserved “the right not to file a public tender offer in the event of major adverse circumstances impacting the Suez Group or of a sale by Suez of any strategic asset, namely the Spanish and Chilean water assets, WTS, regulated water assets in the United States of America, waste management assets in France, the UK and Australia, or any other measure significantly affecting these assets”.
It seems that in October and November 2020, Suez SA took steps to facilitate the preparation of the making of competing offers from other potential bidders.
Ultimately on 7 January 2021 Veolia filed a draft takeover bid with the Autorité des Marchés Financiers (AMF). That document noted that “in Australia and New Zealand, Suez and Veolia have strong complementariness in a rapidly evolving geography of sustainable waste management and intelligent water management. The two groups have highly complementary positions in water in Australia ... and in waste”.
On 26 January 2021 Veolia issued a press release titled “Veolia will oppose any sale of Suez strategic assets opposing its industrial plan”. In that release Veolia noted that it wished “to remind the list of SUEZ assets it considers strategic”. These included waste activities in Australia.
In February 2021 Suez SA commenced proceedings in the Commercial Court of Nanterre. In a press release, dated 8 February 2021, Suez SA announced that that court had “forbidden Veolia from filing its hostile public offer announced on February 7, following Veolia’s attempt to violate its commitment to amicability”. As I understand it, that order was set aside for want of jurisdiction. An appeal filed by Suez SA was not pursued.
On 8 February 2021 Veolia formally submitted its public offer for the balance of the shares in Suez SA to the AMF. In that document Veolia undertook irrevocably to purchase all of the shares in Suez SA, and the offer was to be invalid only if Veolia failed to obtain shares representing a portion of capital or voting rights higher than 50 per cent. Conversely the offer was binding if at the end of the process Veolia held between 50 and 100% of the shares in Suez SA.
On 4 March 2021 an article was published in the Australian Financial Review which stated that “Australia’s largest management group, Cleanaway ... [had] approached global giant, Suez, about potentially buying its Australian assets in a two billion dollar plus deal that would attract fierce scrutiny from the competition regulator”. On that same day Cleanaway announced to the market that it had expressed its interest to Suez in a potential acquisition of its Australian waste management assets, should SUEZ pursue a sale of the business.
There followed correspondence between Veolia and Suez SA with Veolia notifying Suez SA that, in its view, the planned disposal of the Australian waste assets was contrary to Suez’s corporate interest and purpose, amounted to a radical change in strategy and directly affected the interests of shareholders.
On 13 March 2021 Veolia commenced a proceeding in the Commercial Court of Nanterre against seven parties including, as second and fourth defendants respectively, Suez Australia and Cleanaway (French proceeding). The summons to appear in emergency proceedings which was filed commencing the proceeding includes:
3.Yet Australia is one of the countries that Suez considered strategic in its Shaping Suez 2030 plan, as Bertrand Camus recalled during the presentation of this plan to analysts, where he said: "Let's go back to our first growth priority, which will be our development outside the EU. Suez International's growth strategy is twofold: firstly, to anchor our global activities in key countries. We have defined six: the United States, Chile, Morocco, India, China and Australia, where we will deploy our entire value proposition […]”
…
8.In these circumstances, it seems necessary, in order to preserve the interests of Suez shareholders and to allow them to express their views on this scorched earth and obstructionist strategy before it is too late, to suspend for a few weeks, until the annual general meeting, the conclusion of agreements definitively committing Suez to a process of disposing of strategic assets in general and for Veolia in particular.
…
15.Suez specializes in environmental services. Its Raison d'être, presented at the General Meeting of May 12, 2020 and transcribed since then in the articles of association of Suez Groupe, recalls the group's roots in water and waste services. Stating that "for 160 years, SUEZ's businesses - water services, wastewater treatment, waste collection and recovery - have been essential", Suez says: "We recover wastewater and waste to transform them into new resources".
16.Since October 2019, Suez has been committed to a strategic plan, called Shaping Suez 2030 which aims to carry out, by the end of fiscal year 2023, a "rotation [of the] portfolio [of Suez], for activities representing 15-20% of capital employed", that is to say an overall amount of asset disposals of between 3 and 4 billion euros by that time . On September 16, 2020, the first year of the plan's implementation, Suez announced that it had already "reached approximately 40% of the asset turnover target announced last October". In fact, the objectives of this plan for the first year have been largely exceeded, since it has resulted, at the end of September 2020, in disposals representing "a total amount of approximately 2.3 billion euros".,
(Footnotes omitted.)
That summons is returnable before the Commercial Court of Nanterre on 6 April 2021. The evidence before me is that this was the earliest date that could be obtained for hearing. According to Eric Haza, the chief legal officer of Veolia, the nature of that hearing will likely be procedural with the only outcome to be to set a new hearing date.
There was also evidence before me, given on behalf of the directors of the Australian Suez companies, that it was open for Veolia to make an urgent application for emergency orders in the French proceeding to restrain Suez SA from causing or permitting its Australian assets to be sold at least any time after 4 March 2021, and to have that application heard and determined before this proceeding had been commenced on 24 March 2021. That evidence also indicated that the French Commercial Court has the capability and willingness to hear urgent applications of this kind within three to five days of filing, and to determine those applications within a week of hearing them. In any event, that proceeding is not listed before the Commercial Court of Nanterre until 6 April 2021.
There was also evidence given on behalf of the Australian Suez companies, and on behalf of Cleanaway in relation to, among other things, the timing of the commencement of negotiations with Cleanaway for the purchase of some or all of the Australian assets. It is in relation to that evidence that Veolia says it is prejudiced if the relief it seeks is not made.
In summary, the evidence is that discussions or negotiations commenced between representatives of Cleanaway and Suez in April 2020 with initial calls in early to mid-April 2020.
According to evidence filed on behalf of the Australian Suez companies, the proposal to sell the Australian assets was presented to the entirety of Suez SA’s board of directors on or about 30 July 2020.
The evidence on behalf of Cleanaway was that, since early April 2020, representatives of Cleanaway and Suez have participated in numerous discussions and negotiations directed towards the potential acquisition of Suez’s Australian waste management assets.
Upon being asked the defendants were not prepared to agree to an interim interlocutory order until Wednesday, 7 April 2021 to permit Veolia to meet the evidence about the timing of the commencement of negotiations. Accordingly, Veolia seeks an injunction for a short period. That is, as set out above, until Wednesday, 7 April 2021 when I or another judge of the Court would be available to hear the next phase of the application. Because of that opposition, it is necessary for Veolia to satisfy the Court that it has met the requirements necessary to obtain interlocutory injunctive relief, even for that short period.
STATUTORY FRAMEWORK AND PRINCIPLES
The principles were not in dispute.
Veolia must first make out a prima facie case. In that respect, the Court will not normally attempt to resolve disputed questions of fact or difficult questions of law; it is sufficient that the applicant shows a sufficient likelihood of success, to justify in the circumstances, the preservation of the status quo pending the trial: see Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65] (O’Neill); Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 at 622.
The second matter about which the Court must be satisfied is that the balance of convenience favours the making of the orders sought: see O’Neill at [19]. The court may consider whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the respondent would suffer if an injunction were granted: see Mineralogy Pty Limited v Sino Iron Pty Limited [2016] WASCA 105 at [87].
CONSIDERATION
The first question to address is whether Veolia has established a prima facie case. In each case the defendants submitted that it had not. Veolia submits that it has a prima facie case under both French and Australian law.
Veolia submits that three prima facie causes of action arise under French law against Suez SA or its board of directors or both in connection with their opposition to their takeover bid, and the adverse effect that their defensive conduct has already had, and will continue to have, on the interests of Suez SA and its shareholders as a whole. Veolia further submits that these three causes of action in turn give rise to a fourth prima facie cause of action under French law against each of the defendants to this proceeding for knowing involvement in a “fraudulent” scheme, which is contrary to the interests of Suez SA and its shareholders as a whole. It is necessary to set out a summary of those three causes of action.
The first is said to arise under Article L.233-32-1 of the French Commercial Code and the European Takeover Directive which provide that a board of directors must act in the best interests of the company, and that if the company is the subject of a takeover bid the board may take any decision, the implementation of which may cause the tender offer to fail but must not act contrary to the company’s best interests.
Veolia submits that there is a prima facie case as the board of Suez SA is acting against the best interests of Suez SA by selling assets, including its Australian waste management business, that are fundamental to, and at the core of, its raison d’être which it says for Suez SA is that “for 160 years Suez’s businesses - water services, waste water treatment, waste collection and recovery - have been essential”; selling core assets in a manner that is inconsistent with its own strategic plan; selling core assets in order to declare extraordinary dividends in favour of its shareholders contrary to its raison d’être and its strategic plan; and selling assets that have been publicly described by Veolia as part and parcel of the industrial synergies that it is aiming to create by bringing together the Veolia and Suez Groups.
The second is said to arise under Article 231-3 of the General Regulation of the AMF which requires parties to a takeover to respect the “free interplay” of offers and equal treatment. In particular, Veolia refers to Article 231-7 which requires the target company to ensure that its decisions do not compromise the interests of shareholders.
Veolia submits that there is a prima facie case that Suez SA has contravened Article 231-7 by taking deliberate steps to defeat its bid, and disposing of assets that both Veolia and Suez SA have considered to be strategic. Veolia also contends that there is a prima facie case that Suez SA has acted in a manner that compromises the interests of its shareholders as a whole by the disposal of a core strategic asset in pursuit of a short-term goal of defeating a takeover.
The third matter arises from French laws which recognise a cause of action for “fraud against the rights of Veolia” and abuse by Suez SA of its rights and causing prejudice to Veolia. Veolia explains that these causes of action are engaged when an otherwise lawful act is knowingly implemented with a view to circumventing the rule of law.
Veolia submits that here the otherwise lawful act is the disposal of Suez SA’s Australian waste management assets, and the relevant rules of law being circumvented by Suez SA and its directors are the requirement that directors must act in the best interests of the company and the right of a takeover party to equal treatment.
Veolia also submits that French law provides that if a principal actor, in this case Suez SA or its board of directors or both, intends to circumvent a rule of law, other persons and entities may be found to share the same intention to circumvent the rule of law if they have been notified that, in this case, the asset disposal is being implemented to circumvent the rule. It submits that if such a person knowingly took part in a scheme aimed at “fraudulently” violating a third party’s rights, the third party would be entitled to injunctive relief under French law to prevent the breach.
It is based on this alleged breach that Veolia seeks its injunctive relief. It says that each of the defendants is on notice of its case that the disposal of Suez SA’s Australian waste management assets is part of a fraudulent scheme against the rights of the Suez SA shareholders, and an abuse by Suez SA of its rights aimed at causing prejudice to Veolia. It submits that the purpose and effect is contrary to the interests of Suez SA itself, and its shareholders as a whole, and that each of the defendants has separately acquired that knowledge through the proceeding commenced in the Commercial Court of Nanterre on 13 March 2021 in which Suez Australia and Cleanaway are parties. It also says that the Court would infer that the directors, as directors of Suez Australia, are also aware of the contentions in the French proceeding, and that their knowledge should be imputed to Suez Recycling as a matter of law.
Veolia also contends that it has a prima facie case to bring a derivative action for injunctive relief against the directors of the Australian Suez companies to prevent breaches of s 181 of the Act. In its amended originating application, Veolia seeks leave to proceed under s 236 and s 237 of the Corporations Act 2001 (Cth) (Corporations Act). However, that relief has not, as at this point in time, been pressed. I do not propose to set out the principles that underpin an allegation of breach of s 181 of the Corporations Act. There was no apparent dispute about those principles.
Veolia submits that here the evidence establishes a prima facie case that the directors would be acting for an improper purpose if they were to use their powers as directors of the Australian Suez companies to give effect to a transaction that would result in the sale, transfer or alienation of Suez SA’s Australian waste management assets. It says that would be so in circumstances where the substantial purpose of the transaction was defeating a takeover of Suez SA, the transaction was contrary to Suez SA’s raison d’être and strategic plan, and thus not in the interests of Suez SA or its shareholders as a whole, and the transaction exposed Suez SA to an action by its shareholders, including Veolia, for breaches of French law.
Veolia submits that it has made out a prima facie case of breach of each of those contended causes of action.
As I have said, the defendants oppose any injunction. They do so principally because they say that Veolia has not established that it has a prima facie case or that there is a serious question to be tried. They raise a number of matters in support of that contention. Having considered those matters and Veolia’s submissions, I accept the defendants’ contention. That is for the following reasons.
The Australian Suez companies, in particular, observe that the nature of the final relief sought, that is an injunction restraining them from entering into binding agreements or transactions to sell Suez SA’s Australian waste management business to Cleanaway, is sought pursuant to s 22 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) or s 1324 of the Corporations Act. However, they also point out that, as no contravention of the Corporations Act is alleged against the Australian Suez companies, it must be the case that Veolia is proceeding pursuant to s 22 of the Federal Court Act.
The only alleged breach by the Australian companies, which is also a breach alleged against the balance of the defendants, is the alleged breach of French law because of their participation in, or to use a term more familiar to this jurisdiction, their being knowingly concerned in, the breaches by Suez SA of French law. That is, the allegation is that it is Suez SA and its directors who are acting with impropriety of purpose in contravention of French law, and the Australian Suez companies and, indeed, the other defendants are said to have knowledge of that because of the information that is available, much of which is publicly available information.
The underlying breach by Suez SA is said to be that it is acting contrary to the interests of the company as a whole, and its shareholders. Based on the evidence before me, principally publicly available documents and assertions included in pleadings, it is equally open to draw an inference that the steps being taken by Suez SA were neither steps taken to undermine Veolia’s takeover offer nor contrary to the interests of Suez SA or its shareholders as a whole but steps taken to defend a takeover offer that might be properly taken. That is, I am unable to draw the inference that is urged on me based on the material before the Court, even on a prima facie basis.
An issue was also raised about the nature of the relief sought, and whether this Court has either jurisdiction or power to make an order restraining conduct that is said to be in breach of a French law in the present circumstances. No party could take me to any case either in support of the proposition that there was no jurisdiction or power, or that there was.
An analogy was drawn by senior counsel appearing for Veolia with the power to restrain conduct in breach of a contract governed by foreign law. However, in my view, this is a different situation given that the alleged breach is actionable only in a French court. But, in any event, that is not a matter that I need to determine conclusively given the conclusion that I have reached above.
There are other issues that arise that have led me to conclude as I have.
First, to the extent that there is said to be a breach by Suez SA of Article 233-32-1 because of a sale of assets contrary to the raison d’être of Suez SA, the evidence establishes that the raison d’être has not yet been adopted by Suez SA in its articles of association. According to Veolia’s evidence, in order for the raison d’être to have some force and to require the company to act in accordance with it, it must be adopted by the company in general meeting and included in its articles of association. In the case of Suez SA that has not happened. While the raison d’être has been presented to shareholders and is set out on its website, it has not yet been included in Suez SA’s articles of association.
Secondly, insofar as the alleged breach of Article 231-7 is concerned, namely that Suez SA has contravened that Article by taking deliberate steps to defeat Veolia’s bid and by disposing of assets which both Veolia and Suez SA both consider to be strategic, I am again not satisfied that the evidence before me permits of the inference urged on me, or establishes a prima facie case in that regard. As I have already observed, based on the evidence it is also open to infer that the steps taken were not designed to stymy Veolia’s bid but to defend the takeover action. Nor does the evidence only permit a finding that the steps taken by Suez SA are designed to cause prejudice to Veolia. Once again, it is equally open to infer that Suez SA, in taking the steps it is taking, is rather acting in its own interests.
Thirdly, it is necessary to say something about the case against the directors of the Australian Suez companies and the alleged breach of s 181 of the Corporations Act. It is said that the conduct which constitutes the breach is conduct which ultimately would cause damage to the shareholder in the Australian Suez companies, Suez SA. However, the duty owed by the Australian directors is owed to the Australian Suez companies. There is no evidence before me of any breach by those directors of their duties owed to those companies. For that reason I am not satisfied that Veolia has made out a prima facie case of breach as alleged.
The final matter to address is the debate between the parties about the level of knowledge in the context of the allegation that the defendants are knowingly concerned in a scheme aimed at fraudulently violating a third party’s rights; that is that they are knowingly concerned in a scheme by Suez SA aimed at violating Veolia’s rights.
There was evidence given by the solicitor for Veolia about the test for fraud or abuse of rights under French law. Relevantly, the evidence was that the persons whose actions are challenged must have the intent to circumvent the rule, and that if a principal actor has the intent to circumvent the rule then French law provides that other persons and entities may also be found to share the same intention to circumvent the rule if they have been notified that, in this case, the asset disposal is being implemented to circumvent a rule of law.
Veolia submits that I would infer that the defendants had the necessary notice based on the documents I had been taken to which, as I have already observed, were principally publicly available information or pleadings filed in the French proceeding as well as the material filed in this proceeding. On that basis Veolia said that the defendants had all of the available facts, and thus knowledge. However, given the conclusion I have drawn about the nature of that material and the inferences that are available from it, I am not satisfied that is so. In any event, the evidence before me about the level of knowledge that is required was unclear.
Because of the conclusion I have reached, it is not necessary for me to address the balance of convenience but I make the following observations.
The only party who made any detailed submissions in relation to that matter was Cleanaway, who is the proposed purchaser of the assets. It submits that issues could arise between now and 7 April 2021 which could cause detriment to the transaction that is under negotiation. I accept there can be vagaries in commercial transactions but it is difficult to see how much could occur between now and Wednesday, particularly in circumstances where the negotiations have been ongoing for some time.
The other matter to address is the French proceeding commenced by Veolia in the Commercial Court of Nanterre. In that proceeding Veolia effectively seeks the same relief as is sought in this proceeding. That is a more powerful reason why the balance of convenience and discretion would not favour the granting of relief sought by Veolia, although I note that there is a question of timing with that proceeding. Clearly, the Commercial Court of Nanterre is the appropriate court to consider the nature of the claims that ground the application for interlocutory relief made in this proceeding.
CONCLUSION
For those reasons I refuse the application to grant an injunction until Wednesday of next week.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate:
Dated: 12 April 2021
SCHEDULE OF PARTIES
NSD 254 of 2021 Defendants
Fourth Defendant:
SUEZ RECYCLING & RECOVERY PTY LTD (ACN 002 902 650)
Fifth Defendant:
CLEANAWAY WASTE MANAGEMENT LIMITED ACN 101 155 220
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