Industrial Relations Commission of New South Wales in Court Session CITATION : Anthony Skinner v HAL Data Services Pty Limited & ors [2000] NSWIRComm 25 FIRST APPLICANT Anthony Philip Skinner SECOND APPLICANT Aidan Family Investments Pty Ltd FIRST RESPONDENT HAL Data services Pty Ltd SECOND RESPONDENT Andrew John Grant THIRD RESPONDENT PARTIES : Christoper Peter Dawson FOURTH RESPONDENT George James Matis FIFTH RESPONDENT Grant Family Investments Pty Ltd SIXTH RESPONDENT Dawson Family Investments Pty Ltd SEVENTH RESPONDENT Matis Investment Pty Ltd FILE NUMBER: IRC4543 of 1998 CORAM: Maidment J CATCHWORDS : Alleged unfair contract - Respondent seeking winding up of applicant company in Supreme Court - Application for anti-suit orders - Jurisdiction - Basis of issuing such orders. LEGISLATION CITED : Industrial Relations Act 1996 Workplace Rrelations Act 1996 (Cwth) s 170 ML CSR Ltd v New Zealand Insurance Co Ltd (1994) 36 NSWLR 138 CSR Ltd v Cigna Insurance Australia Ltd (1996-97) 189 CLR 345 CASES CITED : Dickins v Gibb Nominee Services P/L [1991] 43 IR 276 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 617. Australian Workers' Union & ors v Yallourn Energy P/L, (unreported Merkel J, FCA 65, 15 February 2000) HEARING DATES: 03/10/2000 EXTEMPORE JUDGMENT DATE : 03/16/2000 APPLICANTS Mr Hatcher of counsel SOLICITOR Mr Terrett of Terrett Lawyers LLP LEGAL REPRESENTATIVES: RESPONDENTS Mr Kite of senior counsel Mr Murphy of counsel SOLICITOR Peter Alter of Morgan Lewis Alter, Solicitors JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MAIDMENT J DATE: 16 MARCH 2000 Matter No IRC98/4543 Anthony Philip Skinner v HAL Data Services Pty Limited & ors. Summons for relief under s 106 of the Industrial Relations Act 1996. Interlocutory Judgment 1 In early 1993 Anthony Philip Skinner, Andrew John Grant, Christopher Peter Dawson and George James Matis agreed to form a company for the purpose of conducting a computer broking business. HAL Data Services Pty Limited ("HAL") thus came into existence. 2 Each of the four founders became both a director and an employee of HAL. The paid up capital of HAL was $20,000, each of the founders having acquired 5,000 $1 shares. 3 In about 1996 the shareholdings were re-arranged such that each of the founders held 1,000 shares and their individual family company each held 4,000. 4 By resolutions of 20 August, 1998 the employment of Mr Skinner was terminated and he was removed from his position as director of HAL, he remains a shareholder. 5 Mr Skinner, and his family company, Aidan Family Investments Pty Ltd ("Aidan"), have brought proceedings against HAL, the other three founders of it and their respective family companies. The monetary relief which is sought by Mr Skinner essentially goes to payment in lieu of notice in respect of his contract of employment and, in addition the value of his 1,000 shares in HAL to be paid in return for the transfer of his shares to the respondents. 6 The relief sought by Aidan is essentially payment of the money equivalent of its 4,000 shares in HAL to be made in return for the transfer of those shares to the respondents. 7 In 1999 10 consecutive hearing days to commence on 28 February 2000 were scheduled for the s.106 hearing. The evidence was taken during those 10 days and the hearing is adjourned until 14 June for the purpose of addresses. 8 Meanwhile, by Summons No. 1469/00 filed and issued in the Equity Division of the Supreme Court on 22 February 2000, HAL initiated winding up proceedings against Aidan. The return date of the Summons is 23 March 2000. A debt of $62,187.88 is alleged being interest on money loaned to Aidan by HAL. 9 In proceedings before Windeyer J , Aidan unsuccessfully sought that the summons be set aside. 10 In these proceedings HAL seeks an anti-suit injunction in the following terms: An Order that the First Respondent, HAL Data Services Pty Limited, be restrained from taking any further steps against the Second Applicant, Aidan Family Investments Pty Limited in proceedings No. 1469/00 in the Sydney Registry of the Equity Division of the Supreme Court of New South Wales until further order of the Court. 11 The following grounds are relied upon: If the Summons is not stayed, then either:- (a) Aidan will be compelled to pay the sum of $62,186.88 to HAL and will thereby be deprived of funds to pursue the enforcement of any judgment which this Honourable Court may make in AFI's favour in these proceedings; or (b) Aidan will suffer the appointment of a liquidator which will prevent the First Applicant from exercising any further control over the Second Applicant. 12 In CSR Ltd v New Zealand Insurance Co Ltd (1994) 36 NSWLR 138, Rolfe J , in a forum non conveniens context, was asked to make an order as follows: The plaintiffs be restrained from taking any further step (including service of originating process) in proceedings by the first plaintiff . . . . against the first and third defendants . . . . in the Superior Court of New Jersey, Law Division, Middlesex County. 13 His Honour commented that (at 152B): The remedy of anti-suit injunction in relation to proceedings in a foreign court has been described as an extraordinary remedy, which is only granted in the most exceptional cases and after the exercise of great judicial restraint. This is so notwithstanding the grant of an injunction will preclude a situation in which the party seeking it is obliged to fight the same matter in two courts. 14 And held that (at 152G): In my opinion it is appropriate to grant an anti-suit injunction notwithstanding the Court is not satisfied the proceedings in another jurisdiction were commenced with the improper motive of being vexatious, oppressive or harassing, but where the consequence of their institution, in all the circumstances, is such that the inconvenience to and pressure upon the other litigant rises to a point where it can be described properly as vexatious, oppressive or harassing. In each case it becomes a matter of fact and degree, which must surely be the position for otherwise the authorities would not admit of the remedy in, for example, "most exceptional circumstances" and "after the exercise of great judicial restraint". 15 The Court of Appeal having refused leave to appeal, the High Court of Australia, in CSR Ltd v Cigna Insurance Australia Ltd (1996-97) 189 CLR 345 (at 402), upheld an appeal from that refusal, set aside the orders of Rolfe J and stayed the NSW proceedings pending the outcome of those in the US. The majority, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ , observed (381 at 391): It was pointed out in the joint majority judgment in Voth that it was common ground in the judgments of the majority in the earlier case of Oceanic Sun ((1988) 165 CLR 197) that "the traditional power to stay proceedings … on inappropriate forum grounds, is to be exercised in accordance with the general principle empowering a court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process and the rational for the exercise of the power to stay is the avoidance of injustice… in the particular case" ( Voth (1990) 171 CLR 538 at 554). It is clear from the rational for the exercise of the power to stay proceedings and, also, from the words "oppressive", "vexatious" and "abuse of process" in Voth , in Oceanic Sun and in the earlier cases considered in Oceanic Sun , including St Pierre v South American Stores (Gath & Chaves) Ltd ([1936] 1 KB 382), that the power to stay proceedings on grounds of forum non conveniens is an aspect of the inherent or implied power which, in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice (See Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 617, 639-640; Hamilton v Oades (1989) 166 CLR 486 at 502; Jago v District Court (NSW) (1989) 168 CLR 23 at 25, 74; Williams v Spautz (1992) 174 CLR 509 at 518; Walton v Gardiner (1993) 177 CLR 378 at 392-393; Ridgeway v The Queen (1995) 184 CLR 19 at 60, 74-75.). The counterpart of a court's power to preve nt its processes being abused is its power to protect the integrity of those processes once set in motion (See, eg, with respect to the power to grant a Mareva injunction, Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 619, 621, 639; Witham v Halloway (1995) 183 CLR 525 at 535. See also Ridgeway v The Queen (1995) 184 CLR 19 at 60.). And in some cases, it is that counter part power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if "an estate is being administered …or a petition in bankruptcy has been presented …or winding up proceedings have been commenced … an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets" (Societe Nationale Industrielle Auroapatiale v Lee Kui Jak [1987] AC 871 at 892. See also Bank of Tokyo Ltd v Karoon [1987] AC 45 at 60, per Robert Goff LJ, and the cases there cited; Allstate Ltd v ANZ Banking Group Ltd [No 1] (1996) 64 FCR 1 at 26, and the cases there cited.). Similarly, as Gummow J pointed out in National Mutual Holdings Pty Ltd v Sentry Corporation ((1989) 22 FCR 209 at 232. See also, eg, Laker Airways Ltd v Sabena, Belgium World Airlines (1984) 731 F 2d 909 at 927; Re Siromath Pty Ltd [No3] (1991) 25 NSWLR 25 at 29-30), a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with the proceedings pending in that court. The inherent power to grant anti-suit injunctions in not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories ((See Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 639 and the cases there cited. See further Hamilton v Oades (1989) 166 CLR 486 at 502; Jago v District Court (NSW) (1989) 168 CLR 23 at 25-26, 74; Ridgeway v The Queen (1995) 184 CLR 19 at 60, 75.). Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes. 16 There is no controversy in these proceedings that this Court is empowered to grant, in appropriate circumstances, a Mareva type injunction ( Dickins v Gibb Nominee Services P/L [1991] 43 IR 276). That remedy, however, is only available when necessary to prevent an abuse of its process, (see Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 617). 17 Mr Hatcher , having noted that their Honours in CSR Ltd v Cigna , in describing the anti-suit injunction remedy, had referred to the power to grant a Mareva injunction as an example of the court's power to protect its processes (eg Jackson v Sterling Industries ), submitted that the two remedies were of such a like nature that, on the authority of Dickins v Gibb Nominee Services , the remedy is within power. Mr Kite did not concede that the remedy is within power. 18 Merkel J , in Australian Workers' Union & ors v Yallourn Energy P/L , (unreported FCA 65, 15 February 2000), considered an application for an interlocutory anti-suit injunction which was directed at preventing the respondent from pursuing actions in tort against the applicants pending the outcome of proceedings in the Federal Court by which the applicants sought, inter alia , declaratory relief based on the proposition that the alleged tortious industrial action is protected action under s.170ML of the Workplace Relations Act 1996 (Cth). 19 His Honour said (at para 53): As was observed in CSR Ltd v Cigna Insurance Australia Ltd (1996-97) 189 CLR 345 at 392 the inherent power to grant anti-suit injunctions is not confined and is not to be restricted to defined and closed categories. An early example of an anti-suit injunction can be found in the well established jurisdiction of courts to restrain the presentation of winding up petitions on the ground of inability to pay its debts where there is a genuine dispute as to the indebtedness or as to the standing of the applicant to bring the petition as well as where the petition is being presented for an improper motive: 20 As far as I am aware there is no decision of this Court or its predecessors in which an anti-suit injunction has been held to be within power. In view of the conclusion I reach it is not necessary for me to determine whether or not the remedy is within the power of this Court, I proceed as though it is. 21 Mr Hatcher contended that institution of the winding up proceedings in circumstances in which 10 consecutive hearing days commencing 28 February were scheduled, of itself grounds the issuing of an anti-suit injunction. He submitted that the existence of those proceedings constitutes exceptional circumstances as required by the authorities. In this context he submitted to the effect that the existence of a winding up application is an exceptional circumstance which the High Court referred specifically to in CSR Limited v Cigma and which was cited in AWU v Yallourn Energy as being a typical case where such an anti-suit order issues. 22 He contended that the winding up proceedings impose inconvenience to and pressure upon the applicants to the point where they can be described properly as vexatious, oppressive or harassing. 23 Further, Mr Hatcher argued that the remedies available to Aidan under s.106 include the variation of the terms of the loan such as to retrospectively deny HAL the right to demand payment of the interest. He submits that as the consequence of such a remedy would be to remove the basis upon which the winding up proceedings were commenced those proceedings should not be permitted to go forward until the s.106 application is determined. 24 The consequences of the Summons not being stayed are said to be either: Aidan will be compelled to pay the sum of $62,187.88 to HAL and will thereby be deprived of funds to pursue the enforcement of any judgment which this Honourable Court may make in AFI's favour in these proceedings; or Aidan will suffer the appointment of a liquidator which will prevent the First Applicant from exercising any further control over the Second Applicant. 25 The first asserted consequence does not go so far as to state that Aidan would not have any funds with which to pursue enforcement should it be successful under s.106. Nor is it asserted that Aidan lacks funds to meet the debt. The assertion is somewhat nebulous. 26 As to the second asserted consequence I repeat that it is not asserted that Aidan lacks funds to meet the debt. The asserted mischief is that a liquidator might take a different approach to the case than that thus far taken and that the proceedings would thus be interfered with. 27 The test in anti-suit injunction applications I would apply, assuming jurisdiction, is that propounded by the majority in CSR Ltd v Cygma (1996-97) 189 CLR 345 (at 392), namely that the power should be exercised "when necessary for the protection of the court's own proceedings or processes". 28 I do not accept the proposition that the existence of a winding up application, of itself, necessarily amounts to exceptional circumstances as referred to in the authorities. Nor do I accept, on the evidence at hand, that the winding up proceedings impose inconvenience to and pressure upon the applicants to the point where they can be described properly as vexatious, oppressive or harassing. That being the case I would not grant the relief in the absence of other circumstances. 29 As the s.106 remedy sought by Aidan is payment of the money equivalent of its 4,000 shares in HAL to be made in return for the transfer of those shares to the respondents, it is difficult to categorise this injunction application as being based upon forum non conveniens . The right of HAL to demand payment of the debt is not an issue in the s.106 proceedings. This Court may have statutory authority to re-write the terms of the loan agreement between HAL and Aidan such as to retrospectively deny HAL the right to demand payment of the interest on the loan, however such a remedy has not been sought. In any event monetary orders under s.106(5) can adequately compensate Aidan for any unfairness found to have been visited upon it. 30 It seems to me that the issue of whether or not the proceedings in the Equity Division should be allowed to continue pending the outcome of the s.106 application is a matter for that Court. I express no opinion on the matter. 31 The motion is dismissed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.