Citation: Melewar Steel Ventures Limited v ANZ Nominees Limited; Terpu v ANZ Nominees Limited [2008] NSWSC 345
Court: Supreme Court of New South Wales, Equity Division
Date: 16 April 2008
Judge(s): Windeyer J
Background
The two matters arose from share financing arrangements entered into between the plaintiffs and Opes Prime Stockbroking Limited (Opes), a stockbroking firm that subsequently went into receivership and administration. Under separate written agreements, each plaintiff transferred shares to Opes: the Melewar plaintiff transferred approximately 32 million shares in Gindalbie Metals Limited, while the Terpu plaintiffs transferred shares in Conquest Mining Limited. Opes in turn transferred those shares to ANZ Nominees Limited (Nominees), which held them as bare trustee for ANZ Banking Group Limited (ANZ Bank).
The plaintiffs claimed they had been misled into believing they would retain beneficial ownership of the transferred shares and could redeem them upon repaying their outstanding loan balances. They alleged the true legal effect of the documents, which gave absolute legal title to the transferees, had been concealed or misrepresented.
Interlocutory injunctions restraining Nominees and ANZ Bank from disposing of the shares had been granted on an urgent basis in early April 2008. Both matters came before Windeyer J for the question of whether those injunctions should be continued.
Legal Issues
- Whether there was a serious question to be tried on the plaintiffs' claims, including allegations of fraud, misleading and deceptive conduct, breach of fiduciary duty, and mistake of fact
- Whether ANZ Bank or Nominees had sufficient notice of the plaintiffs' claimed interest in the shares so as to affect the priority of that interest
- Whether damages would be an adequate remedy, such that an interlocutory injunction was not necessary
- Whether the proceedings should be cross-vested to the Federal Court in Victoria, where related Opes Prime litigation was on foot
Decision
Windeyer J refused the applications to continue the interlocutory injunctions in both matters. The judgment must be read alongside the earlier decision of Bergin J in the Melewar matter ([2008] NSWSC 295), which had granted an interim order on urgent grounds but expressly contemplated further evidence, particularly on the adequacy of damages.
The plaintiffs' claims were framed around the agreements being set aside on grounds of fraud, misleading and deceptive conduct, breach of fiduciary duty, and mistake of fact. In the Terpu matter, a constructive trust was sought over the relevant shares held by Nominees. In the Melewar matter, the same relief was sought without the fiduciary duty component.
A central consideration was whether damages would be a sufficient remedy. The court's refusal to continue the injunctions reflected a conclusion that, on the balance of convenience and the adequacy of damages assessment, the plaintiffs had not established a sufficient basis to maintain the freezing of the shares. The court did not determine the underlying merits of the fraud and misleading conduct claims, leaving those to be resolved at a final hearing on pleadings.
On the cross-vesting application, Windeyer J declined to transfer the proceedings to the Federal Court in Victoria at that stage. While acknowledging the risk of inconsistent decisions across the Opes-related litigation, his Honour observed that the present claims depended substantially on their own facts, particularly regarding the conduct alleged and the particular notice issues. The cross-vesting motion was stood over rather than dismissed outright, preserving the parties' ability to revive it after pleadings were complete.
Orders Made
- Applications for continuation of the interlocutory injunctions dismissed in each matter
- Exhibits returned to parties for retention for the final hearing
- Notice of motion seeking cross-vesting to the Federal Court in Melbourne stood over, with leave to restore on seven days' notice after pleadings completed
- Each action to proceed on pleadings, with the plaintiff directed to file and serve a statement of claim within 21 days
Key Takeaways
- In refusing to continue the injunctions, the Supreme Court applied the established interlocutory principles, including the adequacy of damages as a remedy, and found those principles were not satisfied on the facts before it.
- Claims that share transfer agreements should be set aside for fraud, misleading and deceptive conduct, or breach of fiduciary duty do not automatically support the continuation of freezing-style injunctions over the transferred shares; the court must still be satisfied on the balance of convenience and the insufficiency of damages.
- Notice to a third-party transferee bearing on the priority of an equitable interest was identified as a relevant issue in both matters, but its resolution was left for final hearing rather than determined at the interlocutory stage.
- Where related proceedings are on foot in another jurisdiction, cross-vesting is not automatic; the Supreme Court here declined to transfer, noting that each case turned materially on its own facts and that a prompt hearing in the New South Wales court was equally achievable.
- Following the collapse of Opes Prime, the precise legal characterisation of the share transfer documents (mortgage versus absolute transfer) was identified as a live issue in the Victorian Federal Court proceedings, though that question was not raised in these New South Wales proceedings.
Legislation and Cases Referenced
Legislation
- Australian Securities and Investments Commission Act 2001 (Cth), ss 12CB, 12DA, 12DB, 12DF, 12GD, 12GM
Cases
- Melewar Steel Ventures Limited v ANZ Nominees Limited [2008] NSWSC 295
- CMG Equity Investments v ANZ Banking Group Limited [2008] FCA 455
- El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717
- McMillan Inc v Bishopgate Investment Trust plc (No 3) [1995] 3 All ER 747