MVRFT Pty Ltd v GPO No 1 Martin Place Pty Limited (No 2) [2018] FCA 1352

FEDERAL COURT OF AUSTRALIA

MVRFT Pty Ltd v GPO No 1 Martin Place Pty Limited (No 2) [2018] FCA 1352 File number: NSD 2280 of 2017

Judge: PERRAM J

Date of judgment: 3 September 2018

Catchwords: PRACTICE AND PROCEDURE – application for release of undertaking – application to set aside notice to produce – where Defendants allege undertaking erroneously included two entities

Cases cited: Danthanarayana v GR8 Constructions Pty Ltd [2012] FCA 231; 201 FCR 347

Date of hearing: 31 August 2018

Registry: New South Wales

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 13

Counsel for the Plaintiffs: Mr S A Wells with Mr J R Anderson

Solicitor for the Plaintiffs: Lazarus Legal Group

Counsel for the Defendants: Mr V Bedrossian

Solicitor for the Defendants: Kreisson Legal

ORDERS NSD 2280 of 2017

BETWEEN: MVRFT PTY LTD First Plaintiff

ROBERT VAN MEER Second Plaintiff

AND: GPO NO 1 MARTIN PLACE PTY LIMITED First Defendant

SWAZE PTY LTD Second Defendant

GPO SYDNEY ADMINISTRATION PTY LTD (and others named in the Schedule) Third Defendant

JUDGE: PERRAM J DATE OF ORDER: 3 SEPTEMBER 2018

THE COURT ORDERS THAT:

1. The parties are to bring in short minutes of order giving effect to the reasons delivered by Justice Perram on 3 September 2018 within seven (7) days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRAM J: 1 This oppression suit was commenced on 12 December 2017. Although there are many corporate parties named in the proceeding, the substantive dispute is between Mr Van Meer (on the Plaintiffs' side) and Mr Petroulas (on the Defendants'). The subject matter of their disagreement is the food court and restaurant precinct in the GPO Building on Martin Place in the central business district of Sydney. Mr Van Meer alleges, and Mr Petroulas denies, that the latter has made off with the former's interest in that business. 2 On 11 May 2018 the Court refused the Defendants' application to stay the suit because of a dispute resolution clause in a shareholders' agreement: MVRFT Pty Ltd v GPO No 1 Martin Place Pty Limited [2018] FCA 643. These reasons assume a familiarity with this earlier judgment. 3 At that time, the Defendants proffered an undertaking to the Court that Mr Petroulas would issue to Mr Van Meer or his nominee entity MVRFT Pty Ltd 30% of the share capital in a number of specifically identified corporations which it then appeared were conducting the business. Mr Petroulas did this in support of the stay application. The purpose of the undertaking was to persuade the Court that Mr Petroulas would give Mr Van Meer or his nominee 30% of the shares in the multiple entities which were then actually operating the various businesses in the food court. 4 Mr Petroulas now says that two of the companies were nominated in error and that he and the other named Defendants (which he controls) should be released from their undertaking to that extent. This is opposed by Mr Van Meer. The two entities are Res Butler Pty Ltd ('Res Butler') and Grand Performance Online Pty Ltd ('Grand Performance'). 5 At the time of the stay application neither party had submitted that Res Butler or Grand Performance were conducting any of the businesses in the food court. Notwithstanding that the purpose of the undertaking was to give Mr Van Meer or his nominee 30% of the shares in the businesses conducting the food court, the undertaking nevertheless extended to require Mr Petroulas to give Mr Van Meer or his nominee 30% of entities named Grand Intermezzo Pty Limited and Grand Maximus Pty Limited. These were the former company names of Res Butler and Grand Performance respectively. 6 This was plainly an error on Mr Petroulas' part. Since the time of the stay application, however, Mr Van Meer has broadened his attack on Mr Petroulas' business interests. He now suspects that Res Butler and Grand Performance may have been involved in the alleged misappropriation of Mr Van Meer's interests in the food court. He has therefore declined to release the undertaking insofar as it relates to Res Butler and Grand Performance. 7 The undertaking therefore operates as something of a procedural windfall to Mr Van Meer. He would like perhaps to broaden his attack to include the affairs of Res Butler and Grand Performance. If he were to do so, on that new front it would, no doubt, be a distinct advantage to have at the outset of those hostilities an undertaking that the Mr Petroulas would grant Mr Van Meer or his nominee 30% of the shares in Res Butler and Grand Performance. One can well understand why, in those circumstances, he does not wish to allow Mr Petroulas to retreat from his promise to grant him 30% of the shares in them. 8 It may be that Mr Van Meer eventually establishes an entitlement to 30% of Res Butler and Grand Performance. Perhaps he may even get an interim order to that effect (I make no comment). The point for present purposes, however, is that he has not done that just yet. And, until he does, what he has is a procedural windfall which I do not think it would be fair for him to retain. 9 I do not disregard, of course, Mr Van Meer's surely correct submission that the affidavit evidence led by the Defendants about the financial affairs of Res Butler and Grand Performance was obscure and, to an extent, unsatisfactory. But even so, I do not think it would be fair to require the Defendants to prove, as the Defendants' counsel Mr Bedrossian succinctly put it, that there was no case against them as the price to be paid for release from an erroneously proffered undertaking. 10 An undertaking may be released for a host of reasons. Each case will be guided by the interests of justice in the particular circumstances of that case: Danthanarayana v GR8 Constructions Pty Ltd [2012] FCA 231; 201 FCR 347 at 355 [43]-[44] per Foster J. 11 Those interests are clear in this case. The Defendants will be released from their undertaking. 12 It will be apparent from this reasoning that the financial positions of Res Butler and Grand Performance are not relevant to the reasons why the Court should release the Defendants from their undertaking. Nevertheless, prior to the hearing of the present application, the Plaintiffs issued a notice to produce requiring the Defendants to produce documents relating to the financial position of Res Butler and Grand Performance. It was returnable at the hearing. As will now be apparent, documents of that kind are not relevant to the issue which is really only about Mr Petroulas' mistake. The notice to produce should be set aside as the Defendants sought. 13 The parties should bring in an appropriate minute of order give effect to these reasons. I will hear them on the issue of costs at the next case management hearing on 10 September 2018. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.