CATTO v NICRON RESOURCES LTD; SMYTHE AND ANOR v NICRON RESOURCES LTD [1992] NSWCA 37

CATTO v NICRON RESOURCES LTD; SMYTHE AND ANOR v NICRON RESOURCES LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CLARKE JA 22 September 1992

[1992] NSWCA 37

Clarke JA (On notice of motion) CLZ Investment Pty Ltd filed a notice of motion in which it sought leave to be granted the right to be heard in the appeal proceedings without becoming a party and a number of other orders the effect of which would be to enable the respondent company to proceed immediately with its reduction of capital.

During discussion yesterday when the matter came on for hearing I expressed the opinion that CLZ could only get relief if it was added as a party, in other words if it was simply granted leave to be heard the court would not give it substantive relief. In order to meet that situation and to cover some problems which I also raised, the applicant, CLZ, filed an amended notice of motion in which it still pressed the application that it be heard but alternatively sought to be added as a respondent to the appeal. It also sought orders somewhat different from the orders originally set out in the amended notice of motion.

However, the effect of both notices of motion was in substance that CLZ was seeking to achieve the result that the respondent company could proceed immediately to reduce its capital.

The reason for the application is plain enough. CLZ stands to be paid a very large sum of money indeed upon the implementation of the reduction of capital. If there had been no appeal the probabilities are that it would already have received that money. Each day by which its receipt of the moneys is delayed costs it in the sense that it fails to gain interest on the investment of the moneys or otherwise benefit from being in possession of those moneys.

I recognise that in these circumstances the delay is prima facie prejudicing CLZ quite considerably. At one stage I did not think that was the position because it was likely to benefit from dividends that might be paid out by the company in respect of its operations until the reduction of capital is able to go ahead which will occur if the appeal fails. However, it has been pointed out to me that the respondent will have to borrow the moneys to pay out all the shareholders whose shares will be cancelled under the reduction and in these circumstances it is unlikely that the benefit to CLZ, of remaining a shareholder for a further period, will be of the same dimension as the reasonable investment return on the money in its own hands. My recognition of the prejudice that is flowing to CLZ does not mean that I think it should be given some form of relief. If there had been a stay of the order it may be - and here I am expressing a very tentative opinion - that CLZ could have been heard in an application to remove the stay but there is in fact no stay. What occurred was that the appellants made an application for a stay and entered into a compromise agreement with the respondent in respect of that application. That compromise agreement involved the court making a number of orders, one direction and granting leave to the parties to restore the proceedings on notice.