WCP LTD v GAMBOTTO and ANOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, MEAGHER and HANDLEY JJA 26 May 1993, 26 May 1993 [1993] NSWCA 285 INJUNCTIONS — preservation of status quo pending special leave application — lack of prejudice to opponent. INJUNCTIONS — third parties to action. Clarke JA There is before the court an amended notice of motion filed by Giancarlo Gambotto and Eliana Sandri (whom I shall call "the claimants"). They have instituted proceedings in the Equity Division of this Court and were successful in obtaining a declaration and order from McLelland J, the effect of which was that article 20A in the Articles of Association of the defendant were invalid. The defendant in the court below, WCP Limited (whom I shall call "the opponent"), appealed from that decision and in due course this Court reversed his Honour and made an order declaring that the insertion of Article 20A in the opponent's Articles of Association were valid and effective. The claimants have filed the notice of motion seeking an order to secure their position, to the intent that their proposed application for special leave to appeal to the High Court not be rendered nugatory. As part of that motion they seek an order that Acmex Investments No 4 Pty Ltd be added as a defendant in these proceedings and a respondent to the appeal which has, of course, been heard. I would read that application as meaning that the claimants seek an order that Acmex be added as an opponent in these proceedings. The evidence demonstrates that once this court delivered its judgment on 7 May the shares which had been in contention were transfered by the opponent to Acmex and appropriate notices given. There can no longer be an order restraining the opponent WCP from transfering the shares to Acmex but what the claimants seek is orders restraining Acmex from dealing with the shares and restraining WCP from registering any transfer by Acmex. At the start of the hearing today Mr Gambotto, who appeared for himself was permitted to present argument on behalf of his co-claimant, sought leave to amend the notice of motion to add claims for further orders based essentially upon the assertion that the appeal which had been brought to this Court was an abuse of process. I will enlarge upon that matter in a moment. Mr McClintock, who appeared for WCP, did not oppose the notice of motion being amended to include those claims but made it quite plain that it would be his argument that there was no possible legal basis upon which these additional orders could be made. Before dealing with the various claims in the notice of motion I should mention that there is in the court papers a form of order bearing the stamp of the court, which indicates that interlocutory injunctions were granted until 4 pm on 24 May 1993 and that Acmex was added as a defendant. I will assume, in view of what Mr McClintock has said, that O.1, if it was made, as it appears to have 2 UNREPORTED JUDGMENTS been, was made in error and that this Court should consider afresh whether Acmex should be joined. I should also note that the interlocutory injunction was continued until 4pm today. It is appropriate that I deal initially with the abuse of process claims. What Mr Gambotto submits is that McLelland J did not make any orders when delivering his reasons for judgment and that the orders which he subsequently made on the same day as he had delivered judgment, and which were initialled by him, reflected a compromise agreement between the parties. In other words, his Honour's reasons for judgment did not extend to the making of orders and those orders which were made were not purely the execution of his Honour's decision but were a consequence of a contractual arrangement between the parties. He went further, insofar as he added that when formal orders were entered in October in terms substantially identical to the orders initialled by McLelland J, those formal orders themselves reflected a contractual arrangement between the parties. Accordingly, so the argument went the judgment under appeal was a judgment of a consensual nature and the opponent WCP had acted deceitfully in pressing an appeal from those orders. There are many difficulties with this submission, not the least of which is an absence of evidence to support the assertion that the orders made by his Honour reflected a contractual or consensual arrangement. Mr Gambotto urges upon the court the view that the only proper inference to be drawn from the facts that his Honour did not specifically in his reasons make a declaration and that the initialled document handed up by the parties later in the day as the basis of his orders and that the formal documents reproduced or reflected those orders, was that the orders actually made were consensual and not simply the carrying into effect of the decision reached by his Honour. lam simply unable to draw that inference. In fact, it seems to me that the court could comfortably draw a quite different inference. That is, that the orders made by McLelland J after handing down his reasons were simply the orders necessary to carry into effect his decision. But even if I did not draw that inference, there is simply no basis upon which the inference for which Mr Gambotto contends could be drawn. If indeed it was the position that the parties had compromised their dispute and agreed upon consent orders, then that fact could have been proved. Yet we have no evidence which even suggests that that occurred. In view of the terms of his Honour's judgment and the orders made, I think that whatever inference is properly drawn it would be quite wrong to accept as correct the inference for which Mr Gambotto contends. I for myself see no evidence of any abuse of process. I see no evidence of any deceitful conduct by the opponent in pressing the appeal and, to quote from one of the orders sought, I reject the notion that, even at a prima facie level, there has been a flagrant abuse of judicial process which has been brought today to the attention of the court. I would add, albeit that it is quite unnecessary to do so, the observation that there was never any suggestion during the hearing of the appeal of the point which Mr Gambotto now wishes to advance on behalf of the claimants. As both claimants were represented by experienced and competent counsel who contested the appeal on its merits I am firmly of the view that the submissions which have been made are without any foundation in fact, and should accordingly be rejected. URJ WCP LTD v GAMBOTTO and ANOR (Clarke JA) 3 I return then to the orders which had originally been sought and which had been made on an interlocutory basis. The claimants assert that unless Acmex be restrained from transfering the shares which are now registered in its name and which the claimants formerly held, it may transfer those shares to a bona fide purchaser for value without notice, in which event the appeal could be considered to be completely nugatory. There seems to me to be merit in this submission, although it is necessary to weigh in the balance any prejudice that might be caused to Acmex by making an order restraining it from transfering those shares. Mr McClintock has been unable to persuade me that there could be any suggestion of prejudice to Acmex, bearing in mind that it has no present intention of transfering or disposing of those shares. He has, however, pressed upon the court a submission that the claimants, by their failure to seek an interlocutory injunction at an earlier time, have created a situation in which if an injunction was now granted the opponent WCP would be severely prejudiced. The argument related in substance to the obligations of WCP to pay the consideration to the other minority shareholders for the registration of the transfer of the shares subsequent to the court's decision. I found the argument a trifle difficult to follow, but in the end I think that the prejudice which was suggested would be more likely to flow from an upholding of the appeal than any injunction now granted. For my part, I find it difficult to see how enjoining Acmex from transfering the relevant shares and WCP from registering the transfer could in any way prejudice those companies in a relevant sense. For my part, therefore, I would be disposed to make an order in terms of the interlocutory orders made, with these amendments. I would delete from O.2(a) the words "mortgaging and charging". I would add to 2(b) the words "by Acmex Investments No 4 Pty Ltd", and I would add to 2(c) the words "to a transferee from Acmex Investments No 4 Pty Ltd". In these circumstances I think it is also appropriate that Acmex Investments No 4 Pty Ltd be added as a party to this motion. I note that in that respect Mr McClintock has announced his appearance for that company. I would also reserve liberty to either party to apply upon twelve hours' notice to the other and I would order that the injunction continue until 5pm on 28 May 1993 and thereafter if an application for leave to appeal to the High Court be filed before that time until that application is dealt with by the High Court, or until order of that court. Of course, there is a need for the claimants to act with expedition and it is the intent of what I have said that if there is any failure on their part to so act it would be open to the claimants to come back to this court in the liberty to apply and seek to have the injunction terminated. Perhaps a more appropriate way of dealing with the timeousness of the injunction is to add: if leave is granted by the High Court the injunction continue until the disposal of the appeal, subject to any order of the High Court. On the question of costs, which seem to me to include the reserved costs of the previous hearing, I would think that the appropriate order, bearing in mind each party has had some success, is that the costs be costs in the appeal to this court. The effect of that order is that if this court's order stands the costs will be paid by the claimants. If this court's order is ultimately reversed, the costs will be paid by the opponent WCP. 4 UNREPORTED JUDGMENTS Meagher JA I agree with what the presiding judge has said, except on two points. In my view, no order should be made in terms of CL2(a) of the interlocutory order of 18 May. That is to say, no order should be made against Acmex Investments No 4, although a limited injunction should be made against WCP Limited as in para2(b) and para2(c) of that order. I cannot see any point in making any orders against Acmex because if any transfer from Acmex is intended to be registered, orders under (b) and (c) will block that registration and as long as registration is blocked there can be no question of a bona fide purchaser for value without notice because the legal estate would never have shifted. The other order which I would not make is the order as to costs. In my view, the only appropriate order for costs which should be made is an order that the claimants, Mr Gambotto and Miss Sandri, should pay all the costs of today's hearing and all reserved costs. The basic fact is a simple motion which should have occupied this court for ten minutes at the most was in fact elongated into a two or three hour torment, a process of elongation which was procured by the arguments from the claimants, which were as silly as they were tedious. Otherwise, I agree with what his Honour said. Handley JA I agree with the reasons that have been expressed by the presiding judge. It is well established that an intermediate appellate court has jurisdiction to preserve the status quo pending a further appeal to a court of final jurisdiction. Where failure to preserve the status quo would or might render the appeal to the final appellate court nugatory, it is the duty of the intermediate appellate court if approached by the would-be appellant to either stay existing orders or grant interlocutory injunctions in order to preserve the subject matter of the appeal. This matter has been settled in England since the decisions in Wilson v Church (1879) 11 ChD 576 and Polini v Gray (1879) 12 ChD 438. I therefore agree with the interlocutory injunctions proposed by the presiding judge. An objection was taken to the power of this court to add a new party at this stage of the proceedings who could not have been a party to the proceedings previously, either in the Equity Division or in this Court, in order to grant an effective injunction to preserve the status quo pending the further appeal to the High Court. The existence of jurisdiction to add additional parties and to grant injunctions against them to preserve the subject matter of the appeal is clear on principle and is established by the decision in Tait v The Queen (1962) 108 CLR 620, where in order to prevent the execution of the applicant for murder the High Court granted an interlocutory injunction restraining the Chief Secretary of the State of Victoria and the Sheriff or his deputy from executing the applicant pending the hearing of his special leave application to the High Court. Subject to the above, I agree with what has fallen from the presiding judge. ADJOURNED TO 9.30 AM ON THURSDAY 27 MAY 1993 FOR FURTHER ORDERS Orders accordingly. Representation: Counsel for the Claimants: G Gambotto in person Solicitors for the Claimants: AC Boyce Neilson and Co URJ WCP LTD v GAMBOTTO and ANOR (Handley JA) Counsel for the Opponent: B McClintock Solicitors for the Opponent: Norton Smith and Co