FEDERAL COURT OF AUSTRALIA Owston Nominees No 2 Pty Limited v Branir Pty Limited [2002] FCA 1308 OWSTON NOMINEES NO 2 PTY LIMITED & ANOR v BRANIR PTY LIMITED & ORS NG 3184 of 1995 ALLSOP J 21 OCTOBER 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 3184 OF 1995 BETWEEN: OWSTON NOMINEES NO 2 PTY LIMITED (ACN 001 769 099) FIRST APPLICANT WARREN PERRY ANDERSON SECOND APPLICANT AND: BRANIR PTY LIMITED (ACN 061 718 876) FIRST RESPONDENT TOVEHEAD PTY LIMITED (ACN 003 745 140) SECOND RESPONDENT ABURIZAL BAKRIE THIRD RESPONDENT JUDGE: ALLSOP J DATE OF ORDER: 21 OCTOBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The notice to produce dated 25 September 2002 to the first and third respondents be set aside. 2. The applicants pay the first and third respondent's costs of the argument today. 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 NG 3184 OF 1995 BETWEEN: OWSTON NOMINEES NO 2 PTY LIMITED (ACN 001 769 099) FIRST APPLICANT WARREN PERRY ANDERSON SECOND APPLICANT AND: BRANIR PTY LIMITED (ACN 061 718 876) FIRST RESPONDENT TOVEHEAD PTY LIMITED (ACN 003 745 140) SECOND RESPONDENT ABURIZAL BAKRIE THIRD RESPONDENT JUDGE: ALLSOP J DATE: 21 OCTOBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 I have before me a debate concerning the legitimacy of the continuation of a call on a notice to produce dated 25 September 2002 to the first and third respondents, Branir Pty Limited (Branir) and Mr Bakrie respectively. 2 I do not propose to set out in detail the course of the events since this matter was first brought back before me some weeks ago. However, it is important to identify a couple of things. 3 First, it is important to understand that a considerable period of time had elapsed from the making of the Full Court's orders on 20 December 2001 and their entry earlier this year, by which time Mr Anderson's interests (that is, the interests of the first and second applicants) brought the matter back to the Court. The orders, which had been taken out, had not been complied with, although there had been no time for compliance identified in the orders; the sanctuary land had not as yet been subdivided (for want of a better expression) and the shares in Branir had not been issued, debt free. As to the former of those matters, the question of the sanctuary, steps were in train and no real debate was had before me as to that matter not proceeding at an appropriate rate, bearing in mind the needs of Northern Territory conveyancing. The problem was with the issue of the shares in Branir. There were various matters raised in the correspondence which have not been specifically raised before me today, but some delay might have been explained by the need for financial and tax considerations in the organising of the issue of the shares. 4 The second matter that needs to be identified is that there was an outstanding interlocutory injunction which on its face had not been discharged. This interlocutory injunction had been made by the learned primary judge prior to the appeal. In its terms, it related to a restraint upon the Bakrie interests, if I may use that expression for convenience, dealing with the sanctuary land pending the resolution of the case. That order could be seen as supportive of his Honour's orders that Mr Anderson's interests obtain the sanctuary land carved out of the larger properties of the property known as Tipperary. That matter of the proper construction of his Honour's order concerning the restraint on the sanctuary land was dealt with by me some little time ago when I heard the parties and made plain my view and, for more abundant caution, I made an order in like terms to that made by his Honour pending the dealing with the real property in question. I should note now, as I noted at the time I made that order, that there was no opposition by Mr Bakrie's interests to that course. 5 This second matter is important to identify because, at around the same time, further orders were sought by the interests of Mr Anderson restraining the sale of the totality of the lands comprising Tipperary. A notice of motion was filed in Court on 25 September 2002 seeking that restraint. The matter was then brought back before me shortly thereafter. It should be remembered that 27 September 2002 was a Friday and 30 September 2002 was a Monday. 6 During the discussion that I had with counsel in Court in relation to this further notice of motion, I indicated my view in the presence of both counsel that the difficulties that were involved were partly procedural and partly substantive. I was concerned that the motion was being brought within the original proceedings when, on one view, it might be said not to properly support the orders that were made by the learned primary judge. That is, that shares in Branir be issued. 7 Branir was a company which had a shareholding interest in other entities. The long and short of the issue of a little over 40% of the shares in Branir to Mr Anderson's family trust company, Owston Nominees No 2 Pty Ltd (Owston), was that it gained an approximate 20% economic interest in Tipperary itself and in a feedlot in Indonesia to which the cattle from Tipperary were usually shipped for slaughter. 8 Thus Mr Anderson's company had a corporate interest in the land being Tipperary through a short chain of shareholding. I indicated to counsel that the grant of these orders raised a question as to whether the only basis upon which the orders ought be made would be a form of, for want of a better expression, a putative oppression suit, because even if it be the case that Mr Bakrie, through Branir or any other company which he controlled, was selling Tipperary, it said nothing about Mr Anderson's or Owston's interests in the shares in Branir unless there was some impropriety which might be said to be an oppression, or an affectation of Mr Anderson's economic interest through the shareholding. 9 I also said on Friday 27 September 2002, that I did want to understand that I was going to hear a matter which was concerned with commercial interests other than pride. I said that because, unfortunately, and I make no criticism of parties or their legal representatives, the relationship between Mr Anderson and Mr Bakrie, once close in a personal and a commercial sense, has long since broken down into acrimony and outright distrust. These matters are clear from the decision of the learned primary judge and my reasons in the Full Court last year. 10 On 30 September 2002 orders were made in effect granting the injunctions up until the time of the issue of the shares. They were made, in effect, by consent. That is an important phrase to understand for today's application. 11 The orders arose out of correspondence which is annexed to the affidavit of Kellie Clare Wheelahan of 21 October 2002, which was read before me. On 26 September 2002, Messrs Blake Dawson Waldron wrote to Messrs Holding Redlich, those firms being the solicitors for the Bakrie and the Anderson interests, respectively. The letter, relevantly, was as follows: We refer to our telephone discussions on 25 September 2002 and to the orders sought in your clients' notice of motion which is returnable on 30 September 2002. Our instructions in relation to the orders sought in the Notice of Motion are as follows. This proposal is made on a without admissions basis and is conditional upon your confirmation that your clients will not call upon the Notices [sic] to Produce to the First and Third Respondents: 1. Our clients consent to the orders sought in paragraph 5(a), (b), (c), (d) and (g) of the Notice of Motion provided that the words "further order" are deleted and replaced with "shares in the First Respondent are issued in accordance with the orders of the Court made on 19 September 2002"; 2. Our clients consent to the orders sought in paragraph 5(e) of the Notice of Motion, provided that the words "further order" are deleted and replaced with "shares in the First Respondent are issued in accordance with the orders of the Court made on 19 September 2002" and with the addition of the following words: "Provided that nothing in this order shall prevent the entry into and registration of a sublease by the First Respondent to Windbox Pty Limited"; 3. Our clients consent to the orders sought in paragraph 5(f) of the Notice of Motion, provided that the words "further order" are deleted and replaced with "shares in the First Respondent are issued in accordance with the orders of the Court made on 19 September 2002" and with the addition of the following words: "Provided that nothing in this order shall prevent the entry into and registration of a sublease by the First Respondent to Panoy Pty Limited". [emphasis added] 12 The importance of the above letter for today's purposes was the conditional nature of the offer which was made concerning the calling on the notice to produce. 13 The answer to this letter first came in a letter of Holding Redlich of 27 September 2002 sent at 11.13 am the following day, Friday 27 September 2002, which I set out in full: We refer to your letter of 26 September 2002 in relation to the proposals by your client to consent to certain orders. We also note that you forwarded to us by courier on 26 September 2002: 1. A sub-lease between Branir Pty Limited and Windbox Pty Limited for Murranji Station for a period of three years; and 2. A sub-lease between Branir Pty Limited and Panoy Pty Limited for Buchanan Downs Station also for a period of three years. We note that neither sub-lease appears to have been executed by Branir Pty Limited. There is nothing to indicate whether consents to the sub-leases have been obtained from the Minister under the Pastoral Lands Act and our client is unable to tell from the documents which have been furnished to us whether they comply with the Head Lease and any other relevant legislation. Further, our client is not able to determine whether the rentals which are proposed in the sub-leases are within the range of market rentals. Our client is concerned that the effect of the sub-leases is to dispose of a substantial portion of the property assets of Branir Pty Limited for a considerable period of time. Our client is presently making urgent enquiries as to the range of market rentals for the properties which are the subject of the sub-leases. Insofar as the proposed Consent Order referred to in your letter of 26 September 2002 are concerned, we note that you propose that the injunction be discharged upon our client being issued with shares in Branir in accordance with the Orders of the Court made on 19 September 2002. Our client will seek to exercise its rights as a shareholder to obtain access to the books and records of the company for the purpose of valuing its shares and to establish that the company is being properly administered in the interests of all shareholders. As you are aware, our client has been deprived of all information relating to the administration of the company and its financial position for many years. If your client Branir Pty Limited was prepared to make its books and records available to our client now, upon the terms that a Court would order under section 247A of the Corporations Act were our client registered as a shareholder, the hiatus between the perfection of the shareholding and access to the books and records could be eliminated. Please could you obtain your client's instructions in this regard. Alternatively, we suggest that any Consent Order extend for a sufficient period after our client becomes a shareholder to enable it to exercise its rights to obtain access to the books and records of the company. We note that the form of injunction sought does not prejudice your client because it requires only the giving of fourteen days [sic] notice to our client of an intention by the company to dispose of the assets referred to in paragraphs 5(a) to (g) of the Notice of Motion. Please could you let us know whether your clients would be amenable to Consent Orders on this basis. 14 The letter did not accept in terms the offer made by Blake Dawson Waldron in the letter of 26 September 2002, nor perhaps was it a rejection of the offer. 15 On 27 September 2002 at 3.48 pm, another letter was sent by Holding Redlich to Blake Dawson Waldron: We refer to your letter dated 26 September 2002 and your subsequent provision of the draft of the leases. We have now had time to consider the terms of those leases. We also refer to our letter to you earlier today. Our client has not had sufficient time to make any extensive enquiries in relation to the commercial matters referred to in our letter of today's date but is prepared to accept for present purposes that the proposed rentals in the sub-leases appear to be within the range commercial rentals based upon the facts currently available to our clients. We are instructed to agree to your clients' proposals as set out in paragraphs numbered 1, 2 and 3 of your letter of 26 September 2002. For the avoidance of doubt, our instructions to do so are not in any way to be construed as a consent to the sub-leases referred to in your letter of 26 September 2002. Insofar as the question of costs is concerned, we presume your clients will pay our clients' costs up to and including today. 16 Importantly, this letter was sent after the matter was before me at 1 o'clock that afternoon. At 1 o'clock that afternoon, amongst other things, Mr Robinson called on the notice to produce to the first and third respondents and a partial answer was made, being the production of the constitution of Branir. The notice to produce, which is exhibit A before me, was otherwise stood over to Monday 30 September 2002 for any further answer to the call. Thus, I finished with the matter at lunchtime on 27 September looking forward to a debate between the parties as to the entitlement of Mr Anderson's interest to these orders on Monday 30 September 2002 and the further answer to the notice to produce together with the calling of any further subpoenas that needed to be called on for the purposes of the hearing on Monday. 17 As I indicated earlier, later on the afternoon of Friday 27 September 2002, Holding Redlich sent another letter to Blake Dawson Waldron, set out [15] above. 18 Blake Dawson Waldron then responded later in the afternoon of 27 September 2002, in terms which I set out below: We refer to our facsimile dated 27 September 2002. We note that you have accepted our client's proposal set out in our facsimile dated 26 September 2002. Please forward to us the Short Minutes of Orders which you propose to have entered as soon as possible. We are instructed to oppose any application that our clients pay your clients' costs. In our view, our clients are entitled to their costs in respect of the Notice of Motion, including costs on an indemnity basis from 5 pm on 26 September 2002, and we will make such an application if your clients press for their costs to be paid. However, in the interests of avoiding further legal costs, and to resolve the matter without any further delay, we are instructed that our clients will agree to bear their own costs of the motion, on the basis that your clients bear their own costs. Please note that this is an open letter which will be tendered in support of any application. 19 The correspondence of that afternoon made clear that there was still an issue about costs which would have to be sorted out. 20 When the matter was called on, on 30 September 2002, Mr Kunç, and Mr Robinson indicated that the matter had been in substance dealt with and I made orders effectively by consent, in terms of injunctions, in effect restraining the sale of the land which is Tipperary. After I pronounced those orders orally, Mr Robinson made, in effect, a further call on the notice to produce. It matters not as to whether it properly speaking was a further call or a request for the previous call to be better answered. Mr Kunç said that there was nothing to produce because his side did not understand their having to produce anything. He made reference to a misapprehension. 21 That misapprehension reflects the subject of what is before me today. It is said by Mr Bakrie's side, through Mr Kunç, that the acceptance by Holding Redlich on behalf of the applicants of the matters in the second last paragraph of the letter of 27 September 2002 sent at 3.48 pm ([15] above) was a contractual agreement recognising the basis upon which the three paragraph offer in the letter of Blake Dawson Waldron of 26 September 2002 ([11] above) was made. That is, that there would be no call on the notice to produce – the notice to produce to the first and third respondents. Mr Robinson says that there is no contract for various reasons. I do not propose to deal with this matter on the basis of whether there was a formal binding contract or not. I am inclined to the view that there was not. 22 However, I am of the view that it should have been clear that what was being put forward by Blake Dawson Waldron was a method of dealing with orders, in respect of which there might be real debate as to their legitimacy, by making it without admission and placing upon it the restriction that there was to be no call on the notice to produce. I think that is fairly clear from the correspondence. 23 Whether or not there was a contract I do not think matters. As I said, I am inclined to think that there was not and even if there was, on its terms there would probably be nothing to prevent Mr Anderson issuing another notice to produce because the terms of the condition were not that the notice would not be called on and no further notice to produce issued, just that the notice would not be called on. But I think, in fairness to Mr Greiner or Ms Wheelahan or whoever wrote the letter, in the light of urgent and important correspondence on behalf of their clients in the circumstances in which the letter was written, I doubt whether there could have been any misunderstanding that they were seeking to deal with the matter on the basis of giving up the orders but not having the notice to produce called on or any likely call on it. 24 In that light, I do not think it matters that the call was originally made and partially answered. The agreement to do away with the substantive debate about the orders succeeded that call, that is it was quarter to four in the afternoon when the letter from Holding Redlich was sent, being the letter at [15]. 25 The real question is whether I should, in the control of these proceedings, have a costs debate on precisely the same foundation as would have been held on the basis of the orders being sought in the notice of motion. I think it was plain what Blake Dawson Waldron were saying and I think the appropriate way to deal with the relationship between the parties is that the orders were proffered on a basis which was clear, even if not contractual. 26 There is now a debate about the costs of obtaining those orders, those orders being proffered, in effect, by consent plainly on the basis of a limitation. 27 I think it important to say that what I am about to say is no intended criticism of any of the solicitors involved. The solicitors for both sides in the week of 25, 26 and 27 September 2002 and on Monday 30 September 2002, were dealing with the matter on an urgent basis for two clients who, I think it not inappropriate to say and it is not said in any way critically of them, are both strong-willed and forceful businessmen. Nevertheless, the solicitors, it seems to me, carried out the resolution of the issues at the end of this week and the beginning of the following week with some dispatch and their customary skill. 28 I think it plain from the correspondence that Blake Dawson Waldron were proffering orders on a basis. Whether or not the speed and urgency with which this matter was dealt with at the end of that week precluded the precise terms of contracts being drawn up to deal with every aspect of the future resolution of this conflict, in particular costs, does not matter. The orders were proffered and were taken in a context, it seems to me, of a fairly clear desire not to have the notice to produce called on. 29 My view is that the costs debate should proceed on 30 October 2002 giving substantial effect to what was plain from the correspondence of "KW1", being the letter of Blake Dawson Waldron of 26 September 2002 ([11] above). That to some degree changes the basis of what would normally be the way a costs application of this kind is heard. It is often the case that the fact that a substantive motion is settled does not save the Court one minute of time if costs are not settled because the whole of the fight can be heard and debated in ascertaining who would have won the motion in any event. 30 The difference in this case here, I think, is that in the correspondence it was tolerably clear that these orders were proffered conditionally and I think that the respondents should be held to that, having obtained the benefit of the proffering of the orders on that basis. 31 In the conduct of commercial litigation with experienced and competent solicitors, there is still room for a lack of precision in correspondence being sent on an urgent basis and in an attempt to resolve the difficult commercial interests of their clients. I do not think that the interests of these parties should be analysed with the fine eye of a Chancery or common law lawyer looking for a contract. As I said, I think the appropriate way to look at the matter is the substantive basis upon which these orders were obtained and I do not think there is any doubt that they were obtained on a basis which should remain. 32 For these reasons, to the extent I need to make an order to encapsulate my views, I think I should simply now set aside the notice to produce. 33 The applicants are to pay the first and third respondent's costs of the argument today. I certify that the preceding thirty three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 4 November 2002 Counsel for the Applicant: D Robinson Solicitor for the Applicant: Holding Redlich Counsel for the Respondent: F Kunç Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 21 October 2002 Date of Judgment: 21 October 2002