Tan Hung Luu v 888 Links Group Pty Ltd & Ors [2006] NSWSC 1127

Tan Hung Luu v 888 Links Group Pty Ltd & Ors [2006] NSWSC 1127

Although the plaintiff did not have a reasonably arguable case that the directors lacked power to issue the shares, there was a serious question to be tried that the real purpose, or a substantial and impermissible purpose, of the share issue was to dilute the plaintiff's shareholding. The interlocutory injunction was nevertheless refused because the balance of convenience did not favour relief: the defendants' undertakings limited the manner of any issue, the plaintiff could challenge the issue and obtain setting-aside or other relief at final hearing if successful, while restraining the issue could cause loss to the company by preventing it from raising capital, and the plaintiff's...

Jurisdiction
Australia
Judgment Date
28 September 2006
Procedural Posture
Corporations Proceedings Seeking Interlocutory Injunction Concerning Proposed Issue of Shares / Interlocutory Process Filed on 26 September 2006
Outcome
Interlocutory injunction refused.
Legal Topics
['issue of Shares' "directors' Powers" 'improper Purpose' 'dilution of Shareholding' 'interlocutory Injunction' 'balance of Convenience' 'oppression and Winding Up Proceedings']
['corporations Law' 'equity'] ['issue of Shares' "directors' Powers" 'improper Purpose' 'dilution of Shareholding' 'interlocutory Injunction' 'balance of Convenience' 'oppression and Winding Up Proceedings']

Case Brief

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Procedural Posture

Corporations Proceedings Seeking Interlocutory Injunction Concerning Proposed Issue of Shares / Interlocutory Process Filed on 26 September 2006

Legal Issues

  1. 1 ['Whether there was a serious question to be tried that the directors lacked power to cause the first defendant to issue 200,000 ordinary shares.' "Whether there was a serious question to be tried that the directors were exercising the power to issue shares for the improper purpose of diluting the plaintiff's shareholding." 'Whether the balance of convenience favoured granting an interlocutory injunction restraining the share issue.']

Ratio Decidendi

Although the plaintiff did not have a reasonably arguable case that the directors lacked power to issue the shares, there was a serious question to be tried that the real purpose, or a substantial and impermissible purpose, of the share issue was to dilute the plaintiff's shareholding. The interlocutory injunction was nevertheless refused because the balance of convenience did not favour relief: the defendants' undertakings limited the manner of any issue, the plaintiff could challenge the issue and obtain setting-aside or other relief at final hearing if successful, while restraining the issue could cause loss to the company by preventing it from raising capital, and the plaintiff's...

Court Disposition

Interlocutory injunction refused.

Orders

  • ['Refuse the relief sought in the interlocutory process filed on 26 September 2006.' 'Note the undertaking of the defendants to the Court that no shares will be issued otherwise than for cash.' 'Note the undertaking of the defendants to the Court that if the share issue is not fully taken up by the members to whom...