Branalex Debstina Pty Ltd v Rossmore Mushrooms Pty Ltd & Ors [2010] NSWSC 146

New South Wales Supreme Court

CITATION : Branalex Debstina Pty Ltd v Rossmore Mushrooms Pty Ltd & Ors [2010] NSWSC 146

HEARING DATE(S) : 26 February 2010

JUDGMENT DATE : 26 February 2010

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 26 February 2010

DECISION : Application dismissed.

CATCHWORDS : CORPORATIONS – EQUITY – INTERLOCUTORY INJUNCTIONS – Whether there is a serious question to be tried – whether balance of convenience favours preserving the status quo until final determination if granting the injunction may permit the carrying on of an insolvent business.

LEGISLATION CITED : Corporations Act 2001 (Cth) – s 233(1)

CATEGORY : Procedural and other rulings

Branalex Debstina Pty Ltd (Plaintiff) Rossmore Mushrooms Pty Ltd (First Defendant) PARTIES : Phil's Champignons Pty Ltd (Second Defendant) Eang Pao a.t.f. the Pao Khou Family Trust (Third Defendant) Leap Khou a.t.f. the Pao Khou Family Trust (Fourth Defendant)

FILE NUMBER(S) : SC 2009/00290642

B. DeBuse (Plaintiff) COUNSEL : M.J. Dawson, A.W. Smith (Second Defendant) L.J. Reid (Third and Fourth Defendants)

Marsdens (Campbelltown) (Plaintiff) SOLICITORS : Tress Cox (Second Defendant) Kazi Portolesi Lawyers (Third and Fourth Defendants)

2009/290642 Branalex Debstina Pty Ltd v Rossmore Mushrooms Pty Ltd & Ors

JUDGMENT – Ex tempore

26 February, 2010

1 By Originating Process filed on 21 September 2009 the Plaintiff, Branalex Debstina Pty Ltd ("Branalex") commenced proceedings against Rossmore Mushrooms Pty Ltd ("Rossmore Mushrooms"), Phil's Champions Pty Ltd, and Eang Pao and Leap Khou as trustees for the Pao Khou Family Trust. 2 The Plaintiff sought an order winding up Rossmore Mushrooms. Consequential relief included a declaration that a partnership between Branalex and each of the Defendants, styled "Rossmore Mushroom Farms", had been dissolved or, alternatively, an order for the dissolution of that partnership. Also sought was a declaration that a Joint Venture Agreement between the parties had been repudiated by Phil's Champignons. 3 It appears that at the time of the filing of the Originating Process the parties were aligned in accordance with the record, i.e that Branalex was opposed to the other parties in the venture, namely Rossmore Mushrooms, Phil's Champignons and Messrs Pao and Khou, who were all Defendants. Since the commencement of the proceedings it appears that the allegiances have changed so that Messrs Pao and Khou are now aligned in interest with Branalex. 4 It is necessary to say something about the background of the dispute. It is extremely complicated, particularly the interrelationship of entities and their respective obligations in the Venture. A Joint Venture Agreement was entered into on 16 May 2008 between Rossmore Mushrooms, Phil's Champignons, Messrs Eang Pao and Leap Khou as trustees of the Pao Khou Family trust, and Branalex. The Venture was for the purpose of growing and marketing mushrooms in commercial quantities in Australia and Australasia. 5 The Joint Venture Agreement is badly drafted in many respects. One issue of contention is as to who exactly are the joint venturers. Pursuant to clause 1(a), it appears that Rossmore Mushrooms and Phil's Champignons alone are the joint venturers. However, it is quite clear from other terms of the Joint Venture Agreement that the other parties have particular obligations to perform and have particular roles to fulfil in the operation. It is convenient now to set out the principal clauses which are the subject of the dispute. Clause 1(b) provides "FORMATION OF JOINT VENTURE: … (b) Rossmore Mushrooms shall underwrite and provide ALL FINANCIAL backing and support for the JOINT VENTURE;