Global Realty Development Corp v Dominion Wines Ltd (in liq) [2005] VSC 474

What the court decided

Mandie J heard the urgent application on 2 December 2005, dismissed it that day and gave reasons later [1]. Global Realty Development Corp, a creditor of Dominion Wines Ltd, sued Dominion Wines, its liquidator Mark Mentha and Plunkett Killeen Pty Ltd for a section 600B order setting aside a resolution, passed at a creditors' meeting on 3 November 2005, to wind Dominion Wines up [4], [6]. Pending the outcome, Global Realty sought interlocutory relief restraining completion of a contract to sell Dominion Wines' land and winery to Plunkett, with settlement due on 5 December 2005 [2]. As administrator, Mr Mentha had made the sale agreement with Plunkett, conditional on the creditors voting for liquidation [10]–[11]. With the creditors divided between number and value, Mr Mentha as chairman carried the resolution by his casting vote [12].

Global Realty began the proceeding in the Supreme Court of New South Wales on 23 November 2005, its evidence seeking to explain its delay after the meeting [3], [14]. Barrett J transferred it to Victoria and dismissed an application for substantially the same injunction [3]. As Mandie J recounted, Barrett J found a serious question to be tried [16]. Barrett J noted the heavy onus on Global Realty, as a foreign plaintiff, to show it could meet the usual undertaking as to damages; it had declined to adduce evidence of its assets within the jurisdiction, and its offer of $50,000 as security was manifestly inadequate [17].

The defendants submitted that Global Realty's second attempt, in Victoria, to obtain the same interlocutory relief was an abuse of process [19]. They relied on DA Christie Pty Ltd v Baker [1996] 2 VR 582 ('Christie'), a Victorian Court of Appeal decision on a renewed application, after a refusal, for an extension of time [20]. Mandie J held that Christie was not direct authority in the present circumstances, because Hayne JA, in the majority there, had left open whether renewing an interlocutory application is an abuse [20]–[21]. Mandie J added that a litigant who applies again takes serious and self-created risks of an adverse exercise of the court's discretion [21].

The renewed application rested on the same material, save for a statement that $5M security could be made available; the $5M had still not arrived when Mandie J heard the application [23]. Global Realty gave no adequate explanation for not arranging security before Barrett J gave judgment [22]–[23]. Mandie J tended to view a second application made in those circumstances as an abuse warranting dismissal on that ground alone, but preferred to determine all the issues raised, holding that the repetition weighed heavily in the discretion [24].

Mandie J observed, on that interlocutory application, that section 600B lays down no criteria and that a court would generally not interfere with a casting vote given on a chairman's honest and relevant assessment [26]. Adopting what Barrett J had said, Mandie J found a serious question, though not a particularly strong one, partly because a certain contract for $4.1M was set against an uncertain proposed deed of company arrangement [27]. Mandie J left the merits undecided, including whether Mr Mentha had fettered his powers as administrator, and thought that the application was "primarily determined by the balance of convenience and other discretionary considerations" [27].

Mandie J was particularly influenced by Plunkett's position as an innocent third party that contracted at arm's length in good faith, for whom damages would probably not be an adequate remedy [29]. Mandie J called the making of the application at the last minute "entirely unsatisfactory" [29]. An injunction was probably not in the interests of the creditors as a whole, who might lose the certainty of a price $1.1M above the only other offer [30]. There was evidence that a secured creditor had said it would appoint a receiver to sell Dominion Wines' assets if an injunction were granted [31]. Mandie J concluded that the balance of convenience very strongly favoured the defendants, with delay and the repeated application as further matters against relief [32]. Mandie J dismissed the application with costs, finding relief neither just nor convenient [33].

Why it matters

Mandie J held that Christie fixes no rule for all renewed interlocutory applications [21], but tended to treat this renewal as an abuse and gave the repetition heavy weight in the discretion [24]. In my view, a creditor seeking to stop a liquidator's sale should have its evidence and security ready at the first hearing and move well before settlement, given the weight Mandie J gave to an application made just before settlement [29]. Readers should check the current text of the Act before relying on this single judge's discretionary decision.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.