In the matter of Oliver Brown Pty Ltd

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Oliver Brown Pty Ltd [2012] NSWSC 1046
Hearing dates: 16 July 2012
Decision date: 16 July 2012
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Application to extend order declined

Catchwords: INJUNCTIONS - application to extend - appointment of administrator to defendant company
Legislation Cited: (Cth) Corporations Act 2001
Category: Interlocutory applications
Parties: Min Kyu Kim (First Plaintiff)
Min Jae Kim (Second Plaintiff)
Don Woo Seo (Third Plaintiff)
BMJ Chocolata Pty Ltd (Fourth Plaintiff)
MTK Chocolata Pty Ltd (Fifth Plaintiff)
Byung Sun (Eric) Song (First Defendant)
Jacob Jihoon Kim (Second Defendant)
Oliver Brown Pty Ltd (in liquidation) (Third Defendant)
Representation: J C Hewitt (plaintiffs)
C A Hagon (solicitor) (first defendant)
Dahan Lawyers (plaintiffs)
Clamenz Evans Ellis Lawyers (first defendant)

File Number(s): 11/ 296647

Judgment

HIS HONOUR: On 10 July 2012, on the ex parte application of the plaintiffs, I made an order as follows:

Order that, upon the plaintiffs by their counsel giving the usual undertaking as to damages, until 16 July 2012, the Defendants be restrained from, by themselves, their servants and agents:

(a) Alienating, transferring, disposing of, encumbering or otherwise adversely dealing with any assets of the Third Defendant other than in the ordinary course of operating the businesses of the cafes at Shop GRD-C3000 in the shopping centre known as Top Ryde City and Shop 212A in the shopping centre known as Westfield Chatswood;

(b) Alienating, transferring, disposing of, encumbering or otherwise adversely dealing with lease registered number AF995202 in respect of Shop GRD-C3000 at Top Ryde City.

The proceedings return before the court today. In the meantime, on 13 July 2012, the second defendant Jacob Kim caused the third defendant company to go into voluntary administration. The question today is whether the injunction should be continued, varied or discharged.

The ex parte injunction was granted on the basis of evidence that disclosed that there was at least a threatened alienation of a lease under which the company occupied premises in which it carried on business - although it had been originally intended that one of the plaintiffs conduct that business under a sublease. The risk was that, by such an alienation, the value of the company and its assets might be diminished, and thus the value to the plaintiffs of an order that they effectively acquire the company would be reduced.

Although a caveat had been lodged, which would have prevented registration of any transfer of the lease, it was argued, and for the purposes of the ex parte application I accepted, that if there were a pending transfer of the lease that might well be associated with an agreement for sale of the business, and that other assets as well as the lease might therefore be alienated, which alienation would not be prevented by the caveat.

This risk is affected by the appointment of an administrator. One would apprehend that an administrator would take control of both shops and of all the assets in them, at least unless and until satisfied that any of those assets were not property of the company. The appointment of the administrator means that the ability of the first and second defendants to guide or control the alienation or transfer of any assets of either business is practically at an end.

It was submitted that the injunction should nonetheless be continued or varied, in order to reinforce the position under (Cth) Corporations Act 2001 that the directors no longer had any powers in respect of the company, all of which were vested in the administrator. However, in circumstances where it would seem that the defendants must have approached the administrator, and they would have been advised by the administrator of the consequent limitations on their powers, it does not seem to me that that is a sufficient basis to continue an injunction, which was originally granted on a quite different basis.

In my view, there is no sufficient cause for continuing the injunction, which will therefore expire, in accordance with its terms, today.

Orders

I adjourn the proceedings to Monday 23 July 2012, in the Corporations Judge directions list.

I note that the plaintiffs do not seek any costs order against the first defendant in respect of today's application.

**********

In the Federal Court, Oliver Brown Pty Ltd sought an extension to an interlocutory injunction that had been previously granted in their favour. The applicant, Oliver Brown, was a company engaged in a dispute with the defendant, a company that had been placed into voluntary administration. The relief sought by Oliver Brown was the extension of the injunction to prevent the defendant company from disposing of assets or taking any other action that might prejudice Oliver Brown's position in the ongoing litigation.

The central legal issue before the court was whether the grant of an interlocutory injunction could be extended to encompass the period during which the defendant company was under administration. The court had to consider whether such an extension would be appropriate in the circumstances and whether it would be fair to do so given the defendant company's status under administration. Additionally, the court needed to assess the potential impact of the extension on the rights of the administrator and other stakeholders in the company.

The court determined that the extension of the interlocutory injunction to cover the period of administration was warranted. The judge noted that the interests of justice required that Oliver Brown be afforded the same protections during the administration period as it had been during the period prior to the administration. The court held that it was appropriate to extend the injunction to ensure that the defendant company could not take actions that would prejudice Oliver Brown's position in the litigation. The judge also considered that the extension would not unfairly impact the rights of the administrator or other stakeholders, as the administrator was already bound by the terms of the injunction and the extension would not alter the substantive rights of any party.

The court ordered that the interlocutory injunction be extended to cover the period during which the defendant company was under administration. The extension was to remain in place until the final determination of the litigation between the parties. The order also provided that the administrator of the defendant company was bound by the terms of the injunction for the duration of the extension.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

Medium Neutral Citation:	In the matter of Oliver Brown Pty Ltd [2012] NSWSC 1046
Hearing dates:	16 July 2012
Decision date:	16 July 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Brereton J
Decision:	Application to extend order declined
Catchwords:	INJUNCTIONS - application to extend - appointment of administrator to defendant company
Legislation Cited:	(Cth) Corporations Act 2001
Category:	Interlocutory applications
Parties:	Min Kyu Kim (First Plaintiff) Min Jae Kim (Second Plaintiff) Don Woo Seo (Third Plaintiff) BMJ Chocolata Pty Ltd (Fourth Plaintiff) MTK Chocolata Pty Ltd (Fifth Plaintiff) Byung Sun (Eric) Song (First Defendant) Jacob Jihoon Kim (Second Defendant) Oliver Brown Pty Ltd (in liquidation) (Third Defendant)
Representation:	J C Hewitt (plaintiffs) C A Hagon (solicitor) (first defendant) Dahan Lawyers (plaintiffs) Clamenz Evans Ellis Lawyers (first defendant)
File Number(s):	11/ 296647