FEDERAL COURT OF AUSTRALIA Winpar Holdings Limited, in the matter of National Consolidated Limited (ACN 004 222 404) v National Consolidated Limited [2002] FCA 940 IN THE MATTER OF NATIONAL CONSOLIDATED LIMITED ACN 004 222 404 WINPAR HOLDINGS LIMITED AND ANOR v NATIONAL CONSOLIDATED LIMITED N 3010 of 2001 ALLSOP J 30 JULY 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 3010 of 2001 in the matter of National Consolidated Limited ACN 004 222 404 BETWEEN: WINPAR HOLDINGS LIMITED ACN 003 035 523 FIRST PLAINTIFF MILLY ELKINGTON SECOND PLAINTIFF AND: NATIONAL CONSOLIDATED LIMITED ACN 004 222 404 DEFENDANT JUDGE: ALLSOP J DATE OF ORDER: 30 JULY 2002 WHERE MADE: SYDNEY THE COURT 1. GRANTS LEAVE to the plaintiffs to discontinue the proceedings. 2. ORDERS that the plaintiffs pay the defendant's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 3010 of 2001 in the matter of National Consolidated Limited ACN 004 222 404 BETWEEN: WINPAR HOLDINGS LIMITED ACN 003 035 523 FIRST PLAINTIFF MILLY ELKINGTON SECOND PLAINTIFF AND: NATIONAL CONSOLIDATED LIMITED ACN 004 222 404 DEFENDANT JUDGE: ALLSOP J DATE: 30 JULY 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The plaintiffs in this matter sought leave to discontinue the proceedings. The defendant consented to that course. Accordingly leave is granted to discontinue. 2 The defendant seeks an order that the plaintiffs pay its costs. The plaintiffs say that there should be no order as to costs. 3 Some history of the matter is necessary. At 2.30 pm on Friday 2 November 2001 the solicitor for the plaintiffs brought an urgent ex parte application to the Court. It came before me as company Judge on that day. The application contained the request for the following relief: 1. An order to restrain the defendant from holding the general meeting on 16 November 2001 for which a notice dated 24 October 2001 was given. 2. In the alternative to the relief sought in paragraph 1 above, a declaration that Austrim Nylex Limited is not entitled to vote at such general meeting. 3. Further in the alternative to the relief sought in paragraph 1 above, a declaration that the holders of the cumulative non-redeemable preference shares in the defendant are entitled to vote at such meeting. 4. An order for short service of this application. 5. Directions as to the future conduct of this application. 6. Such further or other orders as this Court deems fit. 7. Costs. 4 No claim for interlocutory relief was made. In the orders which I made for service of relevant process I required the plaintiffs to serve the transcript so that the defendant would be aware that there was no interlocutory claim made. 5 The plaintiffs in effect, in the absence of any claim for interlocutory relief, wanted an urgent final hearing to dispose of the question as to whether the Court should restrain the defendant from holding a general meeting on 16 November 2001. 6 The matter came before me the following week. It became apparent that the defendant, which was located in Melbourne, had views about two important matters: first, that the matter should be transferred to the Supreme Court of Victoria and, secondly, that the matter could not proceed on an urgent basis to a final hearing in the Court prior to 16 November 2001. 7 I do not propose to track in detail the correspondence between the parties about their respective positions before and immediately after the commencement of the suit. However, it is sufficient to say at this point that I have little doubt that the plaintiffs were in early November aware that the proposition that the matter should be, and could justly be, heard within a week would be disputed by the defendant and that the defendant would ask for the matter to be transferred to Melbourne. 8 I say both these things because at the time the matter was commenced before me there was pending in the Supreme Court of Victoria before Warren J an application in the matter of National Consolidated Limited brought by Austrim Nylex Limited as plaintiff against Irene Julianna Kroll and others under s 664F of the Corporations Act 2001 (Cth) for the acquisition of the securities covered by compulsory acquisition notices issued on 15 January 2001 by the plaintiff Austrim Nylex Limited in relation to the compulsory acquisition of securities, being preference shares in National Consolidated Limited, held by the various defendants. The various defendants to the proceedings included the plaintiffs to these proceedings. 9 In these proceedings, the general meeting was sought to be prevented by various arguments exposed in the affidavit supporting the originating process filed on 2 November 2001. I do not propose to examine those arguments. One of the matters which the defendant raised in the week following the appearance by the plaintiffs' solicitor before me on 2 November was the question as to whether these proceedings raised issues which would be before her Honour in the Victorian proceedings. Counsel for the defendant persuaded me that I should make an order transferring the matter to Victoria by the reason of the real possibility of some identity of issues arising in the Victorian proceedings as in the Federal Court proceedings. As a result I made an order conditional upon her Honour being willing to take this matter into her list. That did not eventuate. Her Honour preferred to deal with the acquisition proceedings before turning her attention to any issue raised by these proceedings. On that basis I kept the matter in the Federal Court. 10 After I had indicated my views that there would be no urgent final hearing of the matter prior to 16 November 2001 and after I had indicated my view that if it was at all possible, her Honour should hear this case, the parties both expressed the view that no further steps should be taken in the proceedings pending the outcome of the acquisition proceedings. Her Honour has now made orders and handed down her reasons in the acquisition proceedings. Briefly, she made orders for the compulsory acquisition as sought by the plaintiff before her. It is unnecessary to deal with her Honour's reasons. 11 The orders of her Honour make the suit by the plaintiffs moot. Upon her Honour's orders taking effect, the plaintiffs will cease to hold the securities in the defendant which gives them their standing to sue. In these circumstances, the parties have agreed to have the matter discontinued. 12 Mr Cotman SC, who appeared for the plaintiffs, said there should be no order as to costs as the matter was appropriately brought on the basis that the relief sought could have been given after a short final hearing. 13 I do not intend to traverse all the arguments put before me. In essence I think that Mr Cotman's clients brought an urgent claim, with a degree of speculation, to restrain a not too distant meeting, and did not seek interlocutory relief. They sought an urgent final hearing. There was really only a little over a week in which to prepare and finalise that hearing. I think it was somewhat unrealistic, and certainly speculative to a degree, to think that the defendant would be in a position and willing to engage in that final hearing so soon or that the Court could be persuaded to do this over the opposition of the defendant. 14 In part because of the recognition of the futility of the orders originally sought, should there be no urgent hearing, the originating process was amended on 9 November 2001 to include a paragraph 3A in the following terms: A declaration to the effect that the meeting of the defendant proposed to be convened on 16 November 2001 ought to be conducted pursuant to provisions of sections 217 to 227 of the Corporations Act. 15 This prayer for relief identified a claim to the effect that even if the meeting went ahead as proposed it would not be lawful as being wrongfully conducted otherwise than on the provisions of the Corporations Act referred to. If no interlocutory relief was to be sought and whilst it was to a degree speculative to think that a final hearing would be agreed to with the defendant in a little over a week, this claim, as to the status of the meeting, which was unlikely to be restrained, could have been made at any time, and in particular after the resolution of the Victorian proceedings. 16 It was plain from correspondence before and shortly after the commencement of the proceedings in this Court that the defendant would seek to have the matter moved to Victoria. Costs and expense were outlaid in the debate about that matter. 17 In the end, what the plaintiffs did was commence an action which they saw as tactically appropriate to commence when they did. It could have been commenced in Victoria. They could have sought to have the matter brought before Warren J as a matter of urgency. The defendant was brought to Court in a matter in respect of which the plaintiffs could foresee that they would lose their standing if the compulsory acquisition orders were made and in respect of which it was plainly foreseeable that an application would be made to transfer the proceedings to Melbourne. 18 In these circumstances, and taking into account all the submissions of the parties put to me in writing and orally, I am of the view that it is appropriate in the exercise of my discretion under s 43 under the Federal Court of Australia Act 1976 (Cth) to order that the plaintiffs pay the defendant's costs of proceedings. 19 I have read the reasons of Warren J on the question of costs in the acquisition proceedings delivered on 25 July 2002. Nothing her Honour there said alters the view I have expressed above. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 30 July 2002 Counsel for the Plaintiffs: Mr N A Cotman SC Solicitor for the Plaintiffs: Stephen Blanks and Associates Counsel for the Defendant: Mr J P Moore Solicitor for the Defendant: Clayton Utz Date of Hearing: 16 July 2002 Date of Judgment: 30 July 2002