Quotila Pty Ltd v South Australian Marine Products Industries Pty Ltd [2010] FCA 1141

FEDERAL COURT OF AUSTRALIA

Quotila Pty Ltd v South Australian Marine Products Industries Pty Ltd [2010] FCA 1141 Citation: Quotila Pty Ltd v South Australian Marine Products Industries Pty Ltd [2010] FCA 1141

Parties: QUOTILA PTY LTD (ACN 005 763 502) v SOUTH AUSTRALIAN MARINE PRODUCTS INDUSTRIES PTY LTD (ACN 107 786 201), CHARLES JOHN FRANCHINA and TERRY STEPHEN ROMARO

File number: SAD 131 of 2010

Judge: BESANKO J

Date of judgment: 22 October 2010

Catchwords: PRACTICE AND PROCEDURE — corporations — application for interlocutory injunction to restrain pro rata rights issue — where plaintiff a founding member of company with 45 per cent stake in first defendant — where relationship between plaintiff and other founding member of first defendant had broken down — where directors of first defendant resolved to issue shares on pro rata basis — where plaintiff did not take up share entitlement — where plaintiff alleged directors' resolution passed for improper purpose of diluting plaintiff's shareholding in first defendant contrary to s 181 of the Corporations Act 2001 (Cth) — where plaintiff alleged resolution was oppressive or unfairly prejudicial contrary to s 232 of the Corporations Act 2001 (Cth) — whether plaintiff had prima facie case — whether damages an adequate remedy — whether balance of convenience favoured injunction. HELD: Injunction granted subject to submissions on undertaking as to damages. The plaintiff had established a prima facie case that shares had been issued for an improper purpose contrary to s 181. Consequences of issue of shares might not be adequately compensated by an award of damages or compensation. Hardship or inconvenience to defendants did not outweigh hardship or inconvenience to plaintiff.