FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No 3441 of 1995 GENERAL DIVISION ) BETWEEN: ALEXANDER ROBERT MACKAY MACINTOSH Applicant AND: ILECARD PTY LTD Respondent FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No 3169 of 1995 GENERAL DIVISION ) BETWEEN: JEREMY JAMES LEES and ANOR Applicant AND: MINPRO AUSTRALIA NL and ANOR Respondents CORAM: SACKVILLE J. PLACE: SYDNEY DATE: 24 AUGUST 1995 REASONS FOR JUDGMENT Matter number NG 3441 of 1995 is an application brought under s.444F(4) of the Corporations Law. That section applies where a company has executed a deed of company arrangement. Subsection (4) empowers the court to order the owner or lessor of property that is used or occupied by, or is in the possession of, the company not to take possession of the property or otherwise recover it. The applicant is the administrator of two companies, namely, Minpro Australia NL and Black Hill Minerals Ltd. He seeks an order that the respondent, Ilecard Pty Ltd, be restrained from taking possession of, or otherwise recovering, the property which is the subject of the licensing agreement between Ilecard and Minpro Pty Ltd, dated 24 November 1993, pending further order of the court. Although the licensing agreement was initially made by Ilecard Pty Ltd with Minpro Pty Ltd, it has since been assigned to Minpro Australia NL. There are a number of hurdles that the applicant must overcome in order to succeed in its application. The first is that it must be shown that s.444F(4) empowers the Court to make an order restraining the owner of intellectual property rights from taking possession of those property rights. That question of construction has been raised but not resolved in the present proceedings. I did not understand Mr O'Neill, who appears on behalf of the respondent, Ilecard, to dispute that there is at least an arguable issue as to the construction of s.444F(4). The second hurdle that must be overcome by the applicant is that the Court is empowered by ss.444F(5) to make an order under subsection (4) only it is satisfied that, "(b)having regard to: (i) the terms of the deed; and (ii) the terms of the order; and (iii) any other relevant matter; the interests of the owner or lessor will be adequately protected." It will therefore be necessary for the applicant to demonstrate that the interests of Ilecard, the owner of the intellectual property rights, will be "adequately protected". There is material that has been put before the Court which suggests that Ilecard's interests may be protected, at least to a certain extent. This protection follows from the terms of the deed of company arrangement between the applicant and Minpro Australia NL. Clause 4(a)(ii) of that agreement provides that "4(a) The Administrator must apply the Assets in the order of priority specified in section 556 of the Corporations Law except that: (i)... (ii)amounts remaining payable by the Company in respect of any asset which is subject of a sale referred to in Recital B or in respect of any property owned or leased by another person and used, occupied or possessed by the Company shall rank immediately prior to amounts payable to other Creditors..." Mr O'Neill, who appears for Ilecard, has pointed out that this provision may not provide adequate protection to Ilecard, having regard to its interests under the licence agreement. There may be considerable force in this contention. However, on the state of the material before me at present, I think that there is enough to show a serious issue to be tried. In other words, the material that has been presented is at least capable of suggesting that Ilecard's interests as owner of the intellectual property rights will be adequately protected by the priority provisions of the deed of company arrangement, having regard to the terms of the licence agreement. In order to obtain interlocutory relief, the applicant must also demonstrate that the balance of convenience lies in his favour. Mr Dicker, who appears for the applicant, has pointed to a number of matters indicating that the applicant may suffer significant prejudice in his capacity as administrator of Minpro Australia NL, if relief is not granted. These matters relate to arrangements that have been made in the form of heads of agreement and an offer to sell assets of Minpro NL. Mr Dicker has submitted that the arrangements in place for the sale of those assets, of which the intellectual property rights form an integral part, might be irrevocably prejudiced if it were open to Ilecard to take action to recover possession of the intellectual property rights. Although Mr O'Neill submitted that there was little commercial purpose in the granting of interlocutory relief, I think that enough has been shown to indicate that, at least at this stage, the balance of convenience lies in granting interlocutory relief, and I propose to do so. However, it is plainly in the interests of the parties that the matter be resolved as soon as possible. It seems to me that the appropriate course is for the final hearing of the application to take place as soon as possible. I shall set in train a regime designed to produce that result. However, it must be acknowledged that it may not be within the capacity of the Court to provide a final hearing at a very early stage. Accordingly, I shall build in to the regime the opportunity for the respondent to make an application to dissolve the orders that I have made today, having regard to any evidence that it may put on in connection with such an application. At that point, should the respondent wish to canvass some of the matters that I have determined today on the basis of the material before me, it should be free to do so. I therefore order, pursuant to s.444F(4) of the Corporations Law, that the respondent be restrained, until further order of the Court, from taking possession, or otherwise recovering, the intellectual property rights which are the subject of the licensing agreement between the respondent and Minpro Pty Ltd, dated 24 November 1993, as assigned to Minpro Australia NL, (administrator appointed). I direct the respondent to serve and file any affidavits upon which it intends to rely in connection with the substantive proceedings on or before 15 September 1995. I direct the applicant to file and serve any affidavits in reply on or before 29 September 1995. I grant liberty to the respondent to apply on 72 hours notice to dissolve or modify the orders that have been made today. I graft the parties leave to approach the registry with a view to securing a date for a one day final hearing of this matter. In that connection, I will have my associate make some inquiries. Accordingly, no approach should be made until my associate contacts the respective instructing solicitors as to the outcome of his inquiries. These orders are made on the basis of an undertaking as to damages in the usual form given by the applicant. As to the second matter, which is number NG 3169 of 1995, by consent, the application in that matter is dismissed. Costs are reserved and I direct that the hearing of the argument as to costs take place on the same occasion of the final hearing of the application in matter number NG 3441 of 1995. I certify that this and the preceding 5 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville. Associate: Dated: 1 September, 1995 Heard:24 August, 1995 Place: Sydney Decision: 24 August, 1995 Appearances:Mr M. Dicker, instructed by Allen Allen & Hemsley, Solicitors, appeared for the applicant in matter No. NG 3441 of 1995 and for the respondents in matter No. NG 3169. Mr O'Neill, of Corrs Chambers Westgarth, Solicitors, appeared for the respondent in matter no. NG 3441/95 and for the applicants in matter no. NG 3169/95.