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  4. Century Yuasa Batteries Pty Ltd v Century Batteries Holdings Pty - [2004] QSC 271

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Century Yuasa Batteries Pty Ltd v Century Batteries Holdings Pty[2004] QSC 271

Century Yuasa Batteries Pty Ltd v Century Batteries Holdings Pty[2004] QSC 271

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Century Yuasa Batteries P/L v Century Batteries Holdings Pty [2004] QSC 271

PARTIES:

IN THE MATTER OF CENTURY YUASA BATTERIES PTY LIMITED
ACN OR ARBN 009 685 232
and
IN THE MATTER OF CENTURY BATTERIES HOLDINGS PTY
ACN OR ABN 108 861 847

CENTURY YUASA BATTERIES PTY LIMITED
ACN 009 685 232
(applicant)
v
GERARD TUREK
(first respondent)
MATTHEW MARTIUS JUSKIEDY DIJONG
(second respondent)
CENTURY BATTERIES HOLDINGS PTY
ACN 108 861 847
(third respondent) 
CENTURY STANDBY PTY LTD
ACN 108 284 859
(fourth respondent)
CENTURY BATTERIES MOTIVE POWER PTY LTD
ACN 108 531 246
(fifth respondent)
CENTURY BATTERIES AUTOMOTIVE PTY LTD
ACN 108 531 237
(sixth respondent)
ROADSIDE BATTERIES PTY LTD
ACN 056 606 903
(seventh respondent)
CENTURY BATTERIES SERVICES PTY LTD
ACN 108 531 255
(eighth respondent)
CENTURY BATTERIES MANUFACTURING PTY LTD
ACN 108 531 219
(ninth respondent)
CYB PROPERTY HOLDINGS PTY LTD
ACN 104 585 668
(tenth respondent)
BATTERY WORLD AUSTRALIA PTY LTD
ACN 050 399 605
(eleventh respondent)
CENTURY BATTERIES LOANS AND INVESTMENTS LIMITED
(twelfth respondent)
ROBIN O'HAIR
(thirteenth respondent)
RUSSELL REARDON
(fifteenth respondent)

FILE NO:

BS 4919 of 2004

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane

DELIVERED ON:

27 August 2004

DELIVERED AT:

Brisbane

HEARING DATE:

23 August 2004

JUDGE:

Muir J

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – STAYING PROCEEDINGS – where parallel proceedings are on foot in another jurisdiction – relevant principles in exercising discretion as to whether proceedings should be stayed

Corporations Act 2001, s 232, s 233, s 247A, s 436A, s 436R, s 1317H(1)

Trade Practices Act 1974, s 82, s 87

Commonwealth Bank v White (No 3) [2000] VSC 259

Henry v Henry (1999) 185 CLR 571

Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346

Law Developments Pty Ltd v Della [2003] NSWCA 140

Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491

Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460

Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd [1992] 34 FCR 287

The Environmental Group Ltd v Croudance (unreported, 7 August 1998)

Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

COUNSEL:

S D Robb QC, with him P W Hackett for the applicant/first respondent

J C Bell QC, with him G D Sheahan for the respondent/ applicant 

SOLICITORS:

Maurice Blackburn Cashman for the applicant/first respondent

Corrs Chambers Westgarth for the respondent/applicant

The application

  1. By an application filed on 27 July 2004, Gerard Turek, the first respondent in these proceedings sought –
  1. an order that the proceedings be dismissed or stayed as being vexatious and oppressive because of the existing proceedings instituted by Century Yuasa Batteries Pty Limited (“Century”) in the High Court of New Zealand;
  1. alternatively, an order that the proceedings be stayed pursuant to the International Arbitration Act 1974 until arbitration proceedings commenced by him against Century are concluded;
  1. the discharge of an order made on 21 June 2004 restraining the arbitration;
  1. an order that any Mareva Injunction against any party to the arbitration be discharged;
  1. an order that Century provide security for costs in the sum of $500,000.
  1. At the commencement of today’s hearing Mr Robb QC, who lead Mr Hackett for the applicant, announced that the only relief to be pursued was an order that the proceedings be stayed until judgment is delivered in the proceedings in the High Court of New Zealand.
  1. For convenience, the applicant first respondent will be referred to either as “the applicant” or “Turek”.

The Queensland proceedings

  1. By an originating application under ss 232, 233 and 247A of the Corporations Act filed on 7 June 2004, the applicant, Century made application in this Court against Gerard Turek, the second respondent Matthew Dijong and the third respondent Century Batteries Holdings Pty (“Holdings”) for orders which included:

(1)an injunction restraining the respondents from transferring or otherwise dealing with assets of Holdings;

(2)an injunction restraining the respondents from inducing or encouraging any employee of Century to terminate the employee’s employment with Century;

(3)an order that each respondent provide Century with, or alternatively, permit Century to inspect all documents within their power or possession relating to Holdings’ business, the transfer of assets to Holdings, any bank account operated by Century or Holdings, the shareholding of Holdings, any property owned by Holdings and any legal, financial or business advice provided to Century or Holdings;

(4)a declaration that Century is the beneficial owner of all of the issued shares in the capital of Holdings;

(5)an order that Turek and Dijong transfer to Century any shares held by them in the capital of Holdings;

(6)a declaration that Century is the beneficial owner of all of Holdings’ assets and undertakings;

(7)an order removing Turek as a director of Holdings.

  1. An additional 11 respondents have since been added.

The factual background to the dispute as disclosed by the affidavit material

  1. Century was incorporated under the name Repco Century (Sth Qld) Pty Ltd on 11 July 1958. The 2,752,000 ordinary issued shares in its capital are held as follows:
  1. Yuasa Corporation – 1,375,000;
  1. PT Sapta Panji Minggala – 1,375,000
  1. Swashfield Pty Ltd – 2,000
  1. Yuasa Corporation is a subsidiary of GS Yuasa Corporation which is listed on the Japanese Stock Exchange. Four of Century’s directors, including a Mr Sasabe, are nominees of Yuasa Corporation and three are nominees of PT. Dijong, the second respondent, was also a director and the Company Secretary. He was Swashfield’s nominee. Until 31 May 2004, when his employment was terminated, Turek was employed by Century as its Group General Manager under an agreement dated 17 August 2001. Sasabe and Dijong, at relevant times, were the only directors resident in Australia.
  1. The businesses of the Century group were carried on in Australia through a number of directly owned subsidiaries which held the assets relating to their respective operations. One of these, Roadside Batteries Pty Ltd, held the shares in Century Yuasa Batteries (NZ) Pty Ltd which carried on the group’s business in New Zealand.
  1. Turek contends that the termination of his employment agreement was wrongful and effected in an attempt to avoid an obligation by Century to pay him approximately $7,600,000 by way of an agreed success fee which becomes due at the end of 2004. It is asserted that Dijong has a like entitlement. Turek has commenced arbitration proceedings in New South Wales in respect of the termination by Century of his employment and in New Zealand in respect of his success fee entitlement.
  1. Holdings was incorporated in Queensland on 27 April 2004 as a wholly owned subsidiary of Century which held its two issued shares. Turek was its sole director and was instrumental in procuring its incorporation.
  1. On 11 May 2004 Turek, as sole director of Holdings, caused it to issue 6,287,974 ordinary shares in its capital to Century pursuant to an application for shares. The share certificate issued in respect of these shares states that one dollar had been paid on each share.
  1. By a letter of offer dated 21 May 2004, a company incorporated in New Zealand, Century Batteries Loans and Investments Limited (“CBLI”), applied for 6,900,000 ordinary shares in the capital of Holdings at a subscription price of $1 per share. Turek, as sole director of Holdings, accepted the offer and issued the shares.
  1. Minutes “of the Board” of Holdings dated 24 May 2004 signed by Turek record Turek’s reasons for the allotment. Essentially, it was to obtain funds to enable Holdings to invest in “Super Cheap’s float offering”. The minutes also record, in effect, that the requisite funds had not been able to be obtained from Century, Century’s shareholders or from Century’s financiers. “Super Cheap” is a group of companies carrying on business in automotive parts and products. It is one of Century’s major customers in Australia and New Zealand.
  1. On 27 May 2004 the registered office of Holdings was changed from Cobalt Street, Carole Park, Brisbane to 54 Forester Street, Launceston, Tasmania. Dijong has business interests in Tasmania.
  1. CBLI is a wholly owned subsidiary of Century Yuasa Batteries (NZ) Limited (“Century NZ”). Dijong, Turek and Sasabe are directors of Century NZ as are Messrs O'Hair, Reardon and Tomlinson.
  1. Until late 2003 O'Hair, a barrister practising in the Australian Capital Territory, was a member of Century’s “advisory committee” and its principal legal advisor.
  1. In March, April and May 2004, Dijong and Turek caused a complex series of transactions to be implemented which resulted: in the businesses of the Australian operating subsidiaries being acquired by other companies, the shares in which were wholly held by Holdings; the shares in Holdings being held as to 47.68% by Century and as to 53.32% by CBLI; Century NZ holding 100% of the shares in CBLI; Century NZ’s shares being held as to 83.08% by Roadside Batteries Pty Ltd, (a wholly owned subsidiary of Holdings) and as to 16.92% by a company controlled by Dijong.
  1. As mentioned earlier, Mr Turek is the sole director of Holdings. He is the sole director also of four of the new wholly owned operating subsidiaries of Holdings and is a director of Roadside Batteries together with Messrs Dijong and Sasabe. Messrs Dijong and Sasabe are directors of the other two wholly owned operating subsidiaries of Holdings. The directors of CBLI are Messrs Reardon and O'Hair. The directors of Century NZ are Dijong, Turek, Reardon and Sasabe.
  1. Century contends that the Australian and New Zealand restructuring I have described was neither discussed nor agreed to by its Board of Directors. In a letter dated 26 May 2004 to Mr Turek, Mr Akiyama, Managing Director of Yuasa Corporation, asked that there be a meeting between Turek, Dijong and the “Yuasa and Gemala people” to explain details of the restructuring and that at the meeting, Turek provide copies of all relevant documentation, professional advices and details of “the status of the transfer of assets, liabilities and employees from ‘Century to Holdings’”.
  1. Turek responded in a letter dated 28 May of 14 or so pages addressed to the directors of Century. In the letter he:
  1. asserted that based on the accounts ending March 2004 there has been no “diminishment” of the value in Century as a result of the restructuring;
  1. queried whether the addressees had “the required representation letters from the entities holding the shares in Century”;
  1. made a series of allegations of illegal conduct on the part of the directors (other than Dijong) in relation to the affairs of the Century Group;
  1. required the directors to “have a confirmed meeting appointment before entering any of our facilities” in the future;
  1. accused Mr Sasabe of misusing information confidential to Century at the direction of Mr Furumi and Mr Bomoto (directors of Century appointed by Yuasa Corporation);
  1. accused Mr Bomoto of seeking to allow Yuasa Corporation to compete with Century in breach of licence agreements;
  1. asserted that equity had been raised to effect an urgent transaction required to secure the group’s financial growth and to prevent mis-management of the nature of that which “almost sank the company in 2000”;
  1. asserted that another purpose of the re-structuring was to get a CIS credit from the Federal Government;
  1. intimated that financial information would be withheld from the addressees so as to prevent “insider trading” and misuse of confidential information;
  1. said that he “refute(d) the statement that there was not a resolution and consultation” without giving any particulars or further identification of those matters. 
  1. Turek swears that the restructuring “was undertaken solely for the benefit of [Century] and at its suggestion.” He swears also that Century is the ultimate holding company for 100% of the “share capital of the companies that are the third respondent and that are the proposed fourth to eleventh respondents. … None of [Century’s] assets as a result of the abovementioned restructure was transferred or made over to any person other than (Holdings) and the proposed fourth to eleventh respondents.” The explanation does not take into account the extent to which shares in Century NZ are held by entities other than Holdings and the extent to which shares in Holdings are held other than by Century.
  1. Turek swears that there was both written and oral authorization for the restructuring transactions. The written authorization identified is a minute dated 13 February 2004 signed by Dijong and Sasabe as the members of Century’s Australian local board, by Dijong, Sasabe and another as the Australian committee of the Board of Century NZ and by Sasabe and Dijong on behalf of three other members of the Century group of companies. The document is not distinguished by either clarity or precision of expression.
  1. The oral authorization is said by Turek to consist of:
  1. Turek saying at a meeting of the Executive Committee of Century at the end of January 2004 that he wanted formal authorization “on the restructure and for seeking capital.  … I will need this for the New Zealand Board, consultants, etc.”.  Dijong is said to have replied “We’ll get you one” and Sasabe is alleged to have said words to the effect “That’s OK”;
  1. The matter being discussed between Turek and “the members of the local Board repeatedly over a long period”;
  1. Sasabe in about October/November 2003 giving Dijong and Turek a presentation on “the new GS Yuasa organisation structure” and saying “Gerry please consider this … for our restructure.”
  1. Additionally, Turek swears that “the majority of the transactions involving the New Zealand companies were authorised by the New Zealand Board [of Century NZ] which comprised Messrs Sasabe, Dijong, O'Hair and Tomlinson”. He contends that the Australian and New Zealand transactions were effected for commercial purposes and had commercial justification.
  1. Mr Sasabe swears that he has a limited understanding of written English, and that he signed the minute believing, from misrepresentations by Dijong, that the document concerned the provision of security to St George Bank.

The proposed claims and relief to be sought in the Queensland proceedings

  1. The gist of the allegations in the draft statement of claim intended to be filed and served in the Queensland proceedings are as follows.
  1. Century carried on the business of manufacturing batteries for use in motor vehicles and for industrial uses in Australia and New Zealand. That business in Australia was carried on by a number of wholly owned subsidiaries. It carried on its business in New Zealand through Century NZ, a wholly owned subsidiary of Roadside Batteries, one of the Australian wholly owned subsidiaries.
  1. Dijong and Turek, in concert with others, procured the carrying out of a restructuring by a complex series of transactions, the end result of which was to:
  1. Strip Century’s Australian operating subsidiaries of their assets and transfer them to companies the shares in which were held by Holdings;
  1. Transfer the shares in Roadside Batteries to Holdings;
  1. Cause CBLI to be incorporated as a company in which Century had no interest;
  1. Cause Holdings to cease being a wholly owned subsidiary of Century and to cause CBLI to hold 53% of the shares in the capital of Holdings.
  1. The new entities carrying on Century’s former businesses were granted leases and licences of land by Century for no consideration.
  1. Turek and Dijong made false representations to Century’s financier, St George Bank, which caused the Bank to appoint receivers to Century, Holdings, Roadside Batteries and the fourth to eighth defendants, Century Yuasa Batteries Properties Holdings and Battery World, causing Century loss.
  1. Turek, on behalf of Holdings, made false and misleading statements to employees of Century inducing them, in breach of contract, to become employees of Holdings. In consequence of the misrepresentations some 362 employees of Century took up employment with Holdings causing Century loss.
  1. After the commencement of these proceedings on 8 June 2004 and the making of orders by the Court in the proceedings on 21 June 2004, Turek resolved to appoint administrators to Holdings and the fourth to eighth defendants, purportedly pursuant to s 436R of the Corporations Act 2001. Such appointments were invalid and unjustified.
  1. The employment of each of Turek and Dijong was terminated by the Board of Century on 13 May 2004. Each of Turek, Dijong and O'Hair was in breach of his duty as employee and/or director and in breach of his statutory duties as an officer of Century.
  1. The draft statement of claim claims relief, including –
  1. Against Turek –
  1. An order that he transfer to Century any shares in Holdings held on his behalf;
  1. An order removing him as director of Holdings and of the fourth to eighth respondents;
  1. An order requiring him to cause Holdings and the fourth to eighth respondents to transfer to Century all of their assets and undertakings;
  1. A declaration that he has contravened the Corporations Act 2001 in various ways;
  1. An order for compensation pursuant to s 1317H(1) of the Corporations Act 2001;
  1. Damages at common law;
  1. Damages pursuant to s 82 of the Trade Practices Act 1974 and, further or alternatively, compensatory orders pursuant to s 87 of Trade Practice Act;
  1. A declaration that any property held or moneys received by him as a consequence of the “restructure of [Century] is held on trust for [Century]”;
  1. A declaration that his employment was validly terminated.

 

  1. Against Dijong, orders corresponding to those set out in paragraphs (i), (iv), (v), (vi), (vii), (viii), and (ix) above;
  1. Against Holdings;
  1. Rectification of its share register to record Century as the owner of all of its issued shares;
  1. A declaration that Century is the beneficial owner of all of the assets and undertakings of Holdings;
  1. An order requiring Holdings to transfer to Century all of its assets and undertakings, including any shares in the fourth to eighth respondents, Roadside Batteries, CYB Property Holdings and Battery World Australia which it holds or which are held on trust on its behalf;
  1. A declaration that the transfer of Century’s shareholdings in the fourth to eighth respondents to Holdings was invalid;
  1. A declaration that the issue by Holdings of shares to Century was invalid;
  1. Damages for breach of contract, and pursuant to s 82 of the Trade Practices Act 1974;
  1. Orders pursuant to s 87 of the Trade Practices Act 1974 for breach of the Trade Practices Act;
  1. A declaration that the issue by Holdings of shares to the tenth respondent was invalid and of no effect;
  1. An order cancelling the tenth respondent’s shares in Holdings.

 

  1. Against the fourth to eighth respondents:
  1. A declaration that Century is the beneficial owner of all the assets and undertakings of those companies;
  1. An order for rectification of the respective share registers;
  1. Damages pursuant to s 82 of the Trade Practices Act 1974 and further or alternatively orders pursuant to s 87 of the Trade Practices Act;
  1. A declaration that certain licence and lease agreements entered into between those companies or some of them and Century are invalid.

 

  1. Against O'Hair:
  1. A declaration that O'Hair contravened specified provisions of the Corporations Act 2001 and an order for compensation pursuant to s 1317H(1);
  1. Damages and declaratory relief.

 

  1. Against CBLI:
  1. A declaration that the issue by Holdings of shares to it was invalid;
  1. An order cancelling CBLI’s share in Holdings.

 

  1. Against all respondents:
  1. A declaration that the restructure was ultra vires;
  1. An order for all necessary accounts and enquiries.

The New Zealand proceedings

  1. Turek, Dijong, Holdings, Roadside Batteries, CBLI, O'Hair and Reardon are defendants in the New Zealand proceedings. The fourth, fifth, sixth, eighth, ninth, tenth and eleventh respondents in the Queensland proceedings are not parties to the New Zealand proceedings and the seventh to sixteenth defendants inclusive in the New Zealand proceedings are not parties to the Queensland proceedings. Each of those seven respondents however is a wholly owned subsidiary of Holdings.
  1. A Statement of Claim filed in New Zealand on 20 June 2004 alleged that the restructuring and the transactions involved therein were effected without the knowledge or consent of the Board of Century in breach of Turek and Dijong’s fiduciary duties and that the third to fifteenth defendants dishonestly assisted Turek and Dijong in that regard.
  1. On 22 June 2004, the plaintiffs made application for Mareva injunctions and Anton Pillar orders which were granted the following day. The sixth to eighteenth respondents were joined as parties on 2 July 2004 when an amended statement of claim was delivered. An application for security for costs by the fifth to ninth, twelfth to fifteenth and seventeen and eighteenth defendants was filed on 14 July. Applications for security for costs by other defendants were filed on 21 July and all the security for costs applications were heard on 9 August 2004. Pursuant to consent orders, receivers and managers were appointed to the fifth to twelfth defendants on 15 July 2004.
  1. Defences of the second, tenth and sixteenth defendants were served on 23 July 2004.

A comparison of the Queensland and New Zealand proceedings

  1. The pleadings in the New Zealand action focus on the transactions by which: Turek, Dijong and O'Hair, together with Reardon and Tomlinson, deprived Roadside Batteries of its voting shares in Century NZ and procured that the voting shares in Century NZ be held by companies owned and controlled by Dijong; trademarks of Century were transferred to companies controlled by Dijong for undervalue or no consideration; assets of Century NZ were used wrongfully to secure a line of credit by Westpac Bank and by which Century became contractually bound to act as Century NZ’s agent on unfavourable terms.
  1. The pleadings, in considerable detail, allege breaches of duty against each of Turek and Dijong in relation to these transactions. It is alleged against O'Hair and Reardon that they dishonestly assisted Turek and Dijong to breach their fiduciary duties. All of the respondent companies are companies which were incorporated in New Zealand.

The applicant’s argument

  1. Mr Robb based his client’s application on the following principles articulated by Lockhart J in Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd:[1]

“The Court has a general power to control its own proceedings, and that power extends to enable it to order a temporary stay of proceedings in various circumstances including the case where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first: …”

  1. After citing authority for the foregoing proposition and referring to a list of factors relevant for consideration on an application for a stay of the nature in question given by Bowen CJ in Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd,[2] his Honour set out the following list of relevant considerations:

“.Which proceeding was commenced first.

.Whether the termination of one proceeding is likely to have a material effect on the other.

.The public interest.  

.The undesirability of two courts competing to see which of them determines common facts first.

.Consideration of circumstances relating to witnesses.

.Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted.

.The undesirability of substantial waste of time and effort if it   becomes a common practice to bring actions in two courts    involving substantially the same issues.

.How far advanced the proceedings are in each court.  

.The law should strive against permitting multiplicity of proceedings in relation to similar issues.

.Generally balancing the advantages and disadvantages to each party.”

  1. Lockhart J’s expression of principle and formulation of relevant consideration has been referred to with approval in a number of subsequence decisions.[3]
  1. Mr Robb acknowledged that, as there was not a complete identity of parties, relief or causes of action in the two proceedings, both matters, eventually, would need to be tried. It was thus accepted that a permanent stay was inappropriate and, for this reason, it was submitted that the principles governing the stay of a proceedings in on forum non conveniens grounds discussed in cases such as Voth v Manildra Flour Mills Pty Ltd[4] and Regie National des Usines Renault SA v Zhang[5] were inapplicable.
  1. I trust I will do justice to Mr Robb’s submissions by summarising them as follows. Although there is no close correspondence between the two proceedings in either parties or causes of action, the key to the resolution of both proceedings is the same. The central question in both cases is the authority of those procuring the Australian and New Zealand transactions to act as they did. The natural person respondents to the Australian and New Zealand proceedings contend that they acted with authority. In particular, the validity of the transaction or transactions involving CBLI, Holdings and Roadside Batteries are central to both cases. If those transactions are unwound, Century will regain control of both the Australian businesses (and the companies which now own them) and of Century NZ as well as CBLI.
  1. This “very substantial overlap of the factual issues”, if the Queensland proceedings are allowed to continue, will involve the applicant in substantial and costly duplication of work as well as inconvenience. That will be avoided if the Queensland proceedings are postponed until the conclusion of the New Zealand proceedings.
  1. The fact that the parties in the two proceedings are not identical is not of much importance as the corporate respondents to the Queensland proceedings which are not parties to the New Zealand proceedings and the corporate respondents to the New Zealand proceedings which are not parties to the Queensland proceedings are all wholly owned subsidiaries of Holdings. It follows that, as a matter of practicality, the resolution of the New Zealand proceedings will give rise to issue estoppels against the subsidiaries. The New Zealand proceedings are much further advanced than the Queensland proceedings. Messrs Dijong and O'Hair have participated in them and substantial affidavits setting out the parties’ respective version of events have already been filed. If Messrs Dijong and O'Hair do not defend the Queensland proceedings, the applicant, who is unable to compel them to give evidence on his behalf, may be substantially prejudiced in the event that the Queensland trial precedes the trial of the New Zealand action.

Reasons for rejecting the application

  1. The proposition that a temporary stay of local proceedings may be granted to allow common factual issues to be determined in foreign proceedings even where there is not a complete identicality of issues and parties is not in doubt.[6] In deciding whether such a stay should be granted regard must be had to the interests of all the parties, the interests of justice and where relevant, the public interest.[7] In arriving at such a determination it will normally be appropriate to have regard to considerations such as those listed by Lockhart J in Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited.
  1. I am not persuaded, however, that it is appropriate to order a temporary stay of the Queensland proceedings.
  1. The issues in both proceedings concern the ownership and control of corporations with substantial assets carrying on businesses which employ some hundreds of employees. Receivers have been appointed over the assets and undertaking of Century and a number of its subsidiaries. Until an order made by me on 23 August, some of the companies were in administrations commenced pursuant to section 436A of the Corporations Act. The existence of the litigation, obviously, will have a detrimental effect on the financial well being of the Century group. It creates uncertainty about the security of the employment of employees of members of the group. Also, until the issues in dispute are resolved, there will be uncertainty as to ownership of shares and assets of the respondent corporations.
  1. The evidence shows that it is impractical for the Receiverships to terminate until the Queensland proceedings are determined. This is an additional reason why it is highly desirable that the litigation be determined as soon as is reasonably practicable. To stay the Queensland proceedings at this stage would delay their resolution substantially. Not only would a trial of the Queensland proceedings need to await the giving of judgment in the New Zealand High Court and, most probably, the determination of an appeal or appeals, any Queensland trial would be postponed whilst interlocutory steps were taken. At the conclusion of the interlocutory process, a trial date would need to be obtained. It is common ground that a trial in New Zealand is not be able to be had before May 2005.
  1. Although it is true that the question of the authority of those procuring the subject transactions is important to the resolution of both proceedings, as are questions relating to the validity of the transactions by which Holdings ceased to be a wholly owned subsidiary of Century, the allegations and claims in the two sets of proceedings are substantially different. Century has formulated its draft pleadings in the two proceedings with a view to ensuring that issues relevant to Australian entities can be dealt with in the Queensland proceedings and issues relevant to the New Zealand entities can be dealt with in the New Zealand proceedings. The draft Queensland pleadings relate almost exclusively to acts and transactions within Queensland and the new draft New Zealand pleadings are confined entirely, or almost so, to acts and transactions in New Zealand.
  1. It does not appear to be alleged that the “restructuring” of the Australian business was conditional upon or caused by the matters alleged to have lead to the “restructuring” in New Zealand. The reasons advanced for the latter exercise are quite specific in nature and the relevant decisions were taken, on the applicant’s case, by a board which included O'Hair and Tomlinson for commercial reasons peculiar to the New Zealand transaction. The restructuring of the Australian assets appears to have been decided upon in Queensland by persons resident in Queensland in respect of a group of corporations, the holding company of which had its registered office as well as its head office in Queensland. On the applicant’s case, authority for the transaction was given in Queensland by Dijong and Sasabe. It is thus far from clear that the determination of the issues identified by Mr Robb as central to the resolution of the proceedings in New Zealand will resolve the corresponding questions in the Queensland proceedings.
  1. The New Zealand part of the subject transactions, if not able to be viewed as discrete from the Australian transactions, is probably to be perceived as one limb of a much broader and more substantial series of transactions. The New Zealand business was but one branch of Century’s business and the shares in the company which conducted it were held by a Queensland subsidiary of Century. On the face of it, it would be odd if the resolution of the questions affecting the Australian businesses was required to await resolution of issues in respect of the New Zealand branch of the business.
  1. In relation to these questions, Mr Bell QC, who with Mr Sheahan, appears for Century, submitted with some force that the issue of shares in the capital of Holdings was procured in respect of an Australian company in Australia and was thus more of an Australian issue than a New Zealand one. It is obvious also that the existence of authority for all or part of the subject transactions, whilst potentially of great importance, does not necessarily provide legal justification for their implementation. Questions concerning the bona fides of the natural persons implementing the subject transactions and of whether relevant conduct was in breach of their duties as directors and/or officers are likely to be of even greater importance.
  1. The proceedings were commenced urgently in circumstances in which those in control of Century were seeking to protect or secure the assets of the group and to obtain information concerning the details of the subject transactions. Although it is contended that, in a broad way, the whole board of Century, as distinguished from the local boards, approved the transactions, it does not appear to be suggested that the detail of the challenged transactions was submitted to Century’s board for approval or made accessible to the board.
  1. It was appropriate to commence proceedings in both New Zealand and Queensland. The Queensland proceedings were commenced first. They have lagged behind the New Zealand proceedings but no inexcusable delay on Century’s part is alleged. The delay is explicable by the fact that Messrs O'Hair and Dijong have participated in the New Zealand proceedings but have not cooperated in the conduct of the Queensland proceedings. Mr O'Hair, in particular, appears to have avoided service of documents in respect of the Queensland proceedings. Now that service has been effected and Century has gained a more detailed knowledge of the subject transactions, there would not appear to be any reason why the Queensland action cannot proceed with expedition.
  1. I do not consider there to be a great deal of substance in the applicant’s concerns about the incurring of additional costs and the duplication of effort. There must be separate proceedings and therefore separate pleadings. Discovery must be given in both proceedings and a degree of duplication is inevitable. That duplication can, by the exercise of a little thought and cooperation between the parties, be prevented from resulting in significant additional costs. The discovery affidavits in the New Zealand proceedings can, in this computerised era, readily be adapted as a base for affidavits of disclosure in the Queensland proceedings. There will be some overlap in inspection because of the use of different solicitors in the two jurisdictions but much of this would be unavoidable in any event.
  1. The reality is that the disputes between the parties concern dealings with Australian corporations and Australian assets in Australia subject to Australian laws, and dealings with New Zealand corporations and New Zealand assets in New Zealand subject to New Zealand laws. The inevitable consequence of this is that, absent agreement, disputes can be resolved only in separate proceedings in the two jurisdictions. Any concerns about the incurring of unnecessary cost and expense are, in my view, greatly outweighed by the necessity for expeditious hearings. The value and importance of the matters in issue in the litigation is also relevant to the weight which should be given to those concerns.
  1. In any event, it would be premature to grant a stay at this stage. A statement of claim, although drafted and provided to the applicant, is yet to be delivered in the Queensland proceedings. A new statement of claim is about to be delivered in the New Zealand proceedings. There, defences will need to be amended and perhaps counterclaims added. Here, there will need to be defences and possibly counterclaims. Until, at the very earliest, close of pleadings, it will remain difficult to express a fully informed view on all matters relevant to the question of a temporary stay. It is possible though to conclude now that whatever emerges by way of defences and counterclaims, it would make little sense to stay the Queensland proceedings before close of pleadings.
  1. It is relevant that the applicant is the only party to the proceedings to have brought the application which is not supported by the other respondents in the proceedings. Should the application succeed, Century would be deprived of the opportunity of progressing the Queensland proceedings, not only against the applicant but against all the other respondents. It would be prevented, for example, from obtaining default judgments. The other parties would be prevented from bringing applications or attempting to expedite proceedings. Those matters, in themselves, suggest that it would be inappropriate to grant the application.
  1. The interests of the parties will be best served by orders calculated to advance the Queensland proceedings with all due expedition. I will hear submissions with a view to making orders which will facilitate a trial this year. I can see no reason why costs should not follow the event, but the parties may make submissions in that regard. Finally, I observe that I have recounted factual matters and made observations on them merely to state matters which are relevant to the determination of this application for a temporary stay. It is not appropriate that I express any views on the merits of either side’s claims in the proceedings and I do not do so.

Footnotes

[1] [1992] 34 FCR 287, particularly at 290, 291.

[2] (1978) 35 FLR 346.

[3] eg., Law Developments Pty Ltd v Della [2003] NSWCA 140; The Environmental Group Ltd v Croudance (unreported, 7 August 1998), Santow J; and Commonwealth Bank v White (No 3) [2000] VSC 259.

[4] (1990) 171 CLR 538.

[5] (2002) 210 CLR 491.

[6] Henry v Henry (1999) 185 CLR 571 at 590.

[7] Spiliada Maritime Corporation v Cansulex Ltd  [1987] 1 AC 460 at 483; Henry v Henry (supra) at 590-591 and Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (supra) at 352, 353.

Close

Editorial Notes

  • Published Case Name:

    Century Yuasa Batteries P/L v Century Batteries Holdings Pty

  • Shortened Case Name:

    Century Yuasa Batteries Pty Ltd v Century Batteries Holdings Pty

  • MNC:

    [2004] QSC 271

  • Court:

    QSC

  • Judge(s):

    Muir J

  • Date:

    27 Aug 2004

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Commonwealth Bank v White [2000] VSC 259
2 citations
Jump To
Cite 1 - [2000] VSC 259
Cite 2 - [2000] VSC 259
Henry v Henry (1999) 185 CLR 571
2 citations
Jump To
Cite 1 - (1999) 185 CLR 571
Cite 2 - (1999) 185 CLR 571
Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346
2 citations
Jump To
Cite 1 - (1978) 35 FLR 346
Cite 2 - (1978) 35 FLR 346
Law Developments Pty Ltd v Della [2003] NSWCA 140
2 citations
Jump To
Cite 1 - [2003] NSWCA 140
Cite 2 - [2003] NSWCA 140
Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491
2 citations
Jump To
Cite 1 - (2002) 210 CLR 491
Cite 2 - (2002) 210 CLR 491
Spiliada Maritime Corporation v Cansulex Ltd (1987) 1 AC 460
2 citations
Jump To
Cite 1 - (1987) 1 AC 460
Cite 2 - (1987) 1 AC 460
Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287
2 citations
Jump To
Cite 1 - (1992) 34 FCR 287
Cite 2 - (1992) 34 FCR 287
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
2 citations
Jump To
Cite 1 - (1990) 171 CLR 538
Cite 2 - (1990) 171 CLR 538

Cases Citing

Case NameFull CitationFrequency
Bovey v McCarthy [2005] QDC 3281 citation
Imagatec Pty Ltd v Gosley-Fuller [2012] QDC 152 citations
Zabusky v Virgtel Ltd[2013] 1 Qd R 285; [2012] QCA 1074 citations
1

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