Gambotto v Samantha Gold NL S189/1994 [1994] HCATrans 184 (21 December 1994)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S189 of 1994

B e t w e e n -

GIANCARLO GAMBOTTO

Plaintiff

and

SAMANTHA GOLD N.L.

Defendant

Application for an interlocutory

injunction

DEANE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 21 DECEMBER 1994, AT 10.01 AM

Copyright in the High Court of Australia

MR G. GAMBOTTO: I appear in person, Your Honour. Your Honour, this is an application for an interlocutory injunction. The matter is as detailed in the recent statement of claim filed on 19 December.

HIS HONOUR: Yes, I have read that.

MR GAMBOTTO: There is also an additional affidavit which has been filed yesterday.

HIS HONOUR: That is the affidavit of 20 December, in handwriting?

MR GAMBOTTO: No, there are actually three affidavits that have been filed yesterday: one is relating to service, one is relating to the interlocutory injunction and an additional handwritten affidavit.

HIS HONOUR: I have read all of those.

MR GAMBOTTO: First of all, Your Honour, I would like to spend two seconds of your time in pointing out section 220 of the Corporations Law and most specifically 220(1):

A document may be served on a company by leaving it at, or by sending it by post to, the registered office of the company.

The defendant company is, of course, a corporation.

HIS HONOUR: I am dealing with this application ex parte; that means without the company being here.

MR GAMBOTTO: I just thought I would add this to my affidavit as to service. Your Honour having read all the affidavits in the matter and the statement of claim, Your Honour is aware that the takeover offer by Samantha for the shares of all shareholders in Resolute Resources is an offer under the statute, under the law, the Corporations Law.

By referring Your Honour to Division 6, section 701 of the Corporation Law - - -

HIS HONOUR: The first thing you have to direct your attention to is that you must persuade me that there is a prima facie case in the sense that if the evidence remains as it is, there is a probability that you will succeed in the action on the trial. That is something you need to do.

MR GAMBOTTO: So I do not have to address urgency at all or the granting of the interlocutory injunction?

HIS HONOUR: You will eventually, but I suggest initially you seek to persuade me that you have a good point.

MR GAMBOTTO: I shall endeavour to do so, Your Honour. Actually my thinking on this matter stands from a previous case I have had before this honourable Court earlier this year and unfortunately, without going into great detail, some submissions of mine regarding the very points that I am making in this application for an interlocutory injunction and statement of claim are the very points that were not accepted by this honourable Court earlier in the year.

I still think that I have this strong argument I believed I had at that time and in addition to the strong argument which obviously I was given no chance to detail, apart from the argument as to admissibility of my amendment to the amended notice of appeal in that matter, is the fact that various developments have taken place, not least of which of course is this honourable Court's decision as to the right of free speech as of late in the Theophanous matter. I feel confident that I would be able to put up quite a persuasive case to this honourable Court on the constitutional angle.

HIS HONOUR: That case being what, that the Corporations Law is invalid by reason of section 92 of the Constitution?

MR GAMBOTTO: Exactly. Is invalid, in my respectful view, Your Honour, it is invalid and unconstitutional on two grounds: one is the ground of general rights conferred by the Constitution upon the people of the Commonwealth, and more specifically, of course, as I explained in my statement of claim, the rights that I view as being inherent to section 92 of the Constitution in so far as the liberties referred to therein apply to my property and anybody else's property, of course - I do not think the Constitution was written exactly for me.

More than that, Your Honour, I cannot really go into great detail because what I am after here, Your Honour, is an interlocutory injunction. Now, the interlocutory injunction I have explored all the documents at my disposal in the very short space of time that I had and the interlocutory injunction does not appear to me to be in any way deleterious to the completion of the compulsory acquisition by the defendant company, should this Court find it should so proceed.

HIS HONOUR: But, Mr Gambotto, unless you persuade me that if the evidence remains in its present state there is a probability that you will succeed in obtaining a declaration that the Corporations Law is invalid, I can go no further.

MR GAMBOTTO: The position, Your Honour, is this, that what Your Honour - - -

HIS HONOUR: I am not going to interrupt you again. I am simply saying that, to assist you to direct whatever submissions you want to make to the primary question, if that question is answered favourably to you we then go on to questions of balance of convenience and so on.

MR GAMBOTTO: I did not really come here prepared for that sort of thing. I am just a layman so I should beg Your Honour's forgiveness in so far as that is concerned. I had no idea that I had to put a case to Your Honour beyond a case of making it show that my asking for an interlocutory injunction which stands returnable before the Court anyway is not simply a waste of time. In so far as the primary - - -

HIS HONOUR: You would need to persuade me of that anyway.

MR GAMBOTTO: Unless I get this interlocutory injunction, Your Honour, the shares by 9 January, according to my reckoning, will be compulsorily acquired and incorporated into Samantha and therefore I will have no lien any longer on the shares, unless I can prove fraud, which I do not allege in this statement of claim.

HIS HONOUR: Again, for the last time, I will put this to you. You should at least seek to persuade me that it is arguable that the relevant provisions of the Corporations Law are invalid by reason of either section 92 of the Constitution or some implied rights under the Constitution.

MR GAMBOTTO: Your Honour, that is easy done. I am thankful to Your Honour for pointing the way to me. I thought I had to present a full legal case, legal argument for it. That is easily done in so far as saying this, Your Honour, that we have a section here that enables - I mean the law deals with companies and shareholders, and when I say the law, I mean the Corporations Law. There are takeover provisions and there are provisions for offers made by corporations, whether partial, total or so forth.

Now, this is not a partial offer that I can, as a shareholder, refuse. This is made under a provision of a takeover and the takeover is governed by section 701 of the Corporations Law. Section 701 gives the steps that have to be taken by any company being the offeror in a takeover offer to take after certain limits have been reached. Now, once those limits have been reached, if I have not accepted any offer, I then become a dissenting shareholder. And section 701 empowers the offeror company to take over my shares as a dissenting shareholder in spite of my objection to it. As such, the section negates my proprietorship of the shares in question. In other words, it dispossesses me of my shares in a statutory way and vests them in the hands of a third party and the section goes further than that. I may remain a dissenting shareholder and not even be paid for my shares because the section provides the purchase price for my shares or whatever consideration is payable for my shares to be held in trust by my company Resolute until I shall claim them.

In other words, what I allege, Your Honour, without a lot of legal argument, and certainly not precedents, is the fact that the section itself interferes with my proprietary rights to those shares. Now if, eventually, on the presentation of our case before this Court, I will be held to have proprietary rights, then of course Your Honour can well see that - and in very lay terms I put it to Your Honour, of course - if it does interfere with my proprietary rights and I have a right to property, then it is unconstitutional I can only put it to that extent in so far as the Constitution itself is concerned.

Now, of course, when we deal with section 92 which relates to certain freedoms held by the people, I take it one of those freedoms is to deal with my property as I wish as long as I do not interfere in a criminal way with the rights of others. My wish not to sell to this company is purely based on that. I do not allege any irregularities on the part of the Company in its takeover provisions; I do not allege anything whatever, apart from underlining my deeply held personal view, Your Honour.

The Constitution does, in effect, provide me with implied or explicit proprietary rights and section 92 is designed to allow me to deal with my property in any way I wish.

A law is supposedly set up by the Parliament of the Commonwealth for achieving the good government of the people of the Commonwealth. I do not see, Your Honour - and this is a very emotive point with me but, nevertheless, based on reality - how section 701 of the Corporations Act can, in any way whatever, be deemed to be in the interest of the good government of the people of the Commonwealth.

If anything at all can be ascribed to the section is that it is a law expressly designed for the good government of corporations and not shareholders. Shareholders, apart from share holding companies, remain the individual members of the Commonwealth. I have yet to see how this section, put it on a plain basis, in any way, shape or form would, by its effectiveness, be of benefit to the people of the Commonwealth.

Your Honour, that is my main point apart from what I detailed to Your Honour very briefly and in a very lay manner regarding the general principle of implied rights in the Constitutions regarding the freedoms I allege are granted on to all of us by section 92 of the Constitution.

Does Your Honour require me to go any further with this argument?

HIS HONOUR: That is a matter for you, Mr Gambotto.

MR GAMBOTTO: Basically, without going into great detail, as I said, earlier in the year I prepared quite a detailed case for my intended submissions to this honourable Court regarding a very similar instance which, however, I should point out, Your Honour, was not blessed by the beneficial provisions of section 701 of the Corporations Law.

Now, in plain truth, Your Honour, that is exactly it. What I am saying is the Parliament in its wisdom saw fit to bless us all with a bulky three-volume Corporations Law. Parliament, in its wisdom - and the people in the Parliament, Your Honour, are also people, they are not saints or gods - thought fit that when dealing with the provisions of the Corporations Law, it would, for the benefit of the proper running of corporations, it would provide for compulsory acquisitions of dissenting shareholders' share holdings. I do not see that as being of any benefit whatever to the people of the Commonwealth.

I think I have covered my primary point, Your Honour, as well as I could. If Your Honour does not agree with what I said to Your Honour - - -

HIS HONOUR: Thank you, Mr Gambotto.

MR GAMBOTTO: Thank you. Does Your Honour wish me to add anything to the facts in the affidavit or the facts of service?

HIS HONOUR: No, I have read the affidavits and I am not troubled about service.

MR GAMBOTTO: Thank you, Your Honour.

HIS HONOUR: This is an application for interlocutory relief brought by the plaintiff, Mr Giancarlo Gambotto in proceedings instituted in this Court against Samantha Gold N.L. The interlocutory injunction sought is an order restraining Samantha Gold N.L. from proceeding with any further action pursuant to the compulsory acquisition provisions of the Corporations Law in respect of 18,285 shares held by the plaintiff in Resolute Resources Limited.

As I followed the argument, the plaintiff bases any claim for relief both in the suit and in the present proceeding for an interlocutory injunction upon two distinct grounds. The first of those grounds is that the provisions of the Corporations Law allowing for compulsory ac2quisition pursuant to a takeover scheme, particularly s.701, are invalid for the reason that they are inconsistent with the guarantee of the freedom of interstate trade, commerce and intercourse contained in s.92 of the Constitution. The second of those grounds is that those provisions are invalid for the reason that they are inconsistent with implied or express rights arising under or contained in the Constitution. In advancing those grounds, Mr Gambotto at one stage adverted to an argument which would seem to raise a third ground. That argument is that the compulsory acquisition provisions of the Corporations Law are not laws for the peace order and good government of the Commonwealth but are laws for the government of corporations.

The application for interlocutory relief has been heard by me ex parte. It is well settled that before such relief can properly be granted in a case such as the present there are three distinct requirements which need to be satisfied. They are:

(1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief;

(2) that the plaintiff will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and

(3) that the balance of convenience favours the granting of an injunction.

As I indicated to Mr Gambotto in the course of his argument, it is the first of those three requirements which should be first addressed on the present application.

I have given careful consideration to what has been said by Mr Gambotto in the course of argument and to the grounds on which he claims to be entitled to interlocutory relief and, ultimately, to relief in the suit. I have come to a firm conclusion that those grounds cannot sustain the grant of either interlocutory or final relief. Put differently, it seems to me that the proceedings which Mr Gambotto has instituted will inevitably fail if the only grounds on which relief can be claimed are those which have been propounded before me. In that regard, I note that Mr Gambotto has indicated that he does not suggest that there is any irregularity in the sense of failure to comply with the provisions of the Corporations Law involved in the relevant actions of Samantha Gold NL.

Accordingly, the application for interlocutory relief is refused.

Now, Mr Gambotto, there now arises the question of what should be done in relation to these proceedings. There are two courses open. One is to simply allow them to go on in this Court; the other is to remit them to another court. Now, in relation to that, it seems to me - and I will hear what you have to say on this - that this Court is an inappropriate court to deal with these proceedings at first instance. As you are no doubt aware our primary function is to hear appeals. There is the Supreme Court of Western Australia and the Federal Court with jurisdiction in matters such as this and I would, prima facie, think the matter should be remitted to one of those courts. Now, what have you to say in relation to that?

MR GAMBOTTO: I thank Your Honour for pointing out to me what properly should be done in the matter seeing that I cannot get access to an interlocutory injunction, the position being, Your Honour, that unless I am allowed to dispute or to oppose this takeover scheme by way of constitutional grounds, I will not succeed in any action and it is plain enough that it would be ludicrous on my part to go before a Federal Court or a Supreme Court.

In so far as the grounds that I alleged to Your Honour, I think or, at least, I am sure that the Only court that is properly entitled to deal with my

allegations as to the Constitution is this Court. That is why the action was brought and was filed in this Court, for two reasons: one was of the interstate implications giving me grounds of original jurisdiction application and two, of course, is that my arguments had to do with the Constitution.

HIS HONOUR: Mr Gambotto, I will allow the matter to remain in this Court for the time being pending a decision by you as to what you want to do with it. One possibility would be to file a notice of discontinuance.

MR GAMBOTTO: Yes. Well, I would say that on Your Honour's grounds for judgment or reasons for judgment I would concur with that because it would be useless for me to fight an action whereby, at the end, all I am entitled to would be what I am entitled to today.

HIS HONOUR: I would suggest from your own point of view that you decide what you want to do very quickly because - - -

MR GAMBOTTO: No, I am quite adamant - having heard Your Honour in Your Honour's reasons, I am quite adamant not to proceed with the application or the writ.

HIS HONOUR: In that case I would suggest that you file a notice of discontinuance as quickly as possible to avoid the defendant becoming entitled to costs.

MR GAMBOTTO: The defendant, according to my understanding, has been served today because I was told by the post office that my writ would reach them today.

HIS HONOUR: Any way, the only order I will make at this stage then is that the application for interlocutory relief is refused.

MR GAMBOTTO: Thank you, indeed, Your Honour.

AT 10.35 AM THE MATTER WAS ADJOURNED SINE DIE