Virgtel Limited v Zabusky - [2006] QSC 241

SUPREME COURT OF QUEENSLAND

CITATION:

Virgtel Limited & Anor v Zabusky & Ors [2006] QSC 241

PARTIES:

VIRGTEL LIMITED (ACN 107 156 972)
(first applicant)
VIRGTEL GLOBAL NETWORKS NV
(second applicant)
v
HARVEY ZABUSKY
(first respondent)
AMALIA ZABUSKY
(second respondent)
EREZ ZABUSKY
(third respondent)
COMMSLOGIC PTY LTD (ACN 109 057 543)
(fourth respondent)
SOFTQUEST SOLUTIONS PTY LTD
(ACN 057 679 599)
(fifth respondent)
VIRGIN TECHNOLOGIES LIMITED
(sixth respondent)

FILE NO/S:

SC No 6547 of 2005

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

1 September 2006

DELIVERED AT:

Brisbane

HEARING DATE:

31 August 2006

JUDGE:

de Jersey CJ

ORDER:

Application of the respondent filed by leave on 31 August 2006 be dismissed, with costs to be assessed

CATCHWORDS:

CORPORATIONS – RAISING OF CAPITAL – UNDERTAKINGS TO COURTS – VARIATIONS – variations of undertakings given to court – whether a basis justifying variations sufficiently established

COUNSEL:

P H Morrison QC, with D J Williams, for the first and second applicants
D A Savage SC, with C Wilson, for the first to fifth respondents
No appearance for the sixth respondent

SOLICITORS:

Gadens Lawyers for the first and second applicants
Provestlaw for the first to fifth respondents
No appearance for the sixth respondent

On 9 November 2005, the first to fifth respondents gave undertakings to the court that they would not, pending trial, deal with their assets. They now seek an order releasing the fourth defendant (Commslogic Pty Ltd) from the undertakings, or that they be varied, in order to facilitate a raising of capital in circumstances where the financial position of Commslogic is unpromising.

The applicants oppose any variations, substantially on the ground of the respondents’ incomplete disclosure of what they propose. Mr Morrison QC, who appeared for the applicants, said that it may be that if given full disclosure, the applicants would not oppose a variation, but at present, they are disinclined to take that course.

The order made on 9 November 2005 was premised on the applicants’ giving the usual undertaking as to damages, backed up by the deposit of $500,000 in the applicants’ solicitor’s trust account.

The undertakings then given by the respondents are as follows:

“Not to do the following acts:
(a)removing, or causing or permitting to be removed or taking any steps to remove, any of their assets out of the jurisdiction of this Court; or
(b)disposing of, transforming, transferring, charging, dissipating or diminishing or in any way dealing with their assets within the jurisdiction unless for the following purposes:
(i)to enable them to pay and to continue to pay the reasonable legal expenses of defending these or any other legal proceedings and any appeal there from;
(ii)to enable them to pay and to continue to pay the reasonable legal expenses incurred to protect their assets or vindicate their other legal rights to protect their assets by commencement and prosecution of any other proceedings or to defend any such proceeding commenced against any of them;
(iii)to meet their taxation liabilities and those…

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.

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Details

Case: [2006] QSC 241
Decision Date: 1 September 2006

CaseChat Overview and Summary

In the case of Virgtel Limited v Zabusky, the parties involved were Virgtel Limited, a company, and Zabusky, an individual. The dispute revolved around the company's capital raising activities and the subsequent variations of undertakings that had been given to the court. This legal matter was heard in the Federal Court of Australia. The primary issue before the court was whether there was a sufficiently established basis for the variations of the undertakings that had been made to the court by the company.

The court had to assess whether the applicant had provided adequate grounds for the variation of the undertakings, which had been made in the context of the company's capital raising efforts. The company had initially provided an undertaking to the court concerning its capital raising activities, and later sought to vary these terms. The court needed to determine if there was a valid reason for allowing these changes, considering the implications for the company's obligations and the interests of other stakeholders involved.

In reaching its decision, the court examined the evidence and arguments presented by both parties. Ultimately, the court concluded that the basis for varying the undertakings was not sufficiently established. Consequently, the court dismissed the application filed by the respondent, Zabusky, on 31 August 2006, and ordered that costs be assessed. This ruling underscores the importance of providing compelling justification for any proposed variations to undertakings made to the court, especially in matters concerning corporate capital raising activities.

Orders

Orders of the court

Application of the respondent filed by leave on 31 August 2006 be dismissed, with costs to be assessed

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

Full text does not contain this section.

CITATION:	Virgtel Limited & Anor v Zabusky & Ors [2006] QSC 241
PARTIES:	VIRGTEL LIMITED (ACN 107 156 972) (first applicant) VIRGTEL GLOBAL NETWORKS NV (second applicant) v HARVEY ZABUSKY (first respondent) AMALIA ZABUSKY (second respondent) EREZ ZABUSKY (third respondent) COMMSLOGIC PTY LTD (ACN 109 057 543) (fourth respondent) SOFTQUEST SOLUTIONS PTY LTD (ACN 057 679 599) (fifth respondent) VIRGIN TECHNOLOGIES LIMITED (sixth respondent)
FILE NO/S:	SC No 6547 of 2005
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	1 September 2006
DELIVERED AT:	Brisbane
HEARING DATE:	31 August 2006
JUDGE:	de Jersey CJ
ORDER:	Application of the respondent filed by leave on 31 August 2006 be dismissed, with costs to be assessed
CATCHWORDS:	CORPORATIONS – RAISING OF CAPITAL – UNDERTAKINGS TO COURTS – VARIATIONS – variations of undertakings given to court – whether a basis justifying variations sufficiently established
COUNSEL:	P H Morrison QC, with D J Williams, for the first and second applicants D A Savage SC, with C Wilson, for the first to fifth respondents No appearance for the sixth respondent
SOLICITORS:	Gadens Lawyers for the first and second applicants Provestlaw for the first to fifth respondents No appearance for the sixth respondent