Background
REST directly owned 1.73% of Australia Pacific Airports Corporation Ltd, which holds long-term leases over Melbourne and Launceston airports. REST belonged to a shareholder bloc managed by Dexus. After APAC alleged that Dexus had improperly disclosed confidential information, APAC issued a default notice under the shareholders’ deed that could trigger a compulsory sale of the bloc’s shares.
The Supreme Court of New South Wales upheld the default notice and dismissed REST’s cross-claim that the notice was ineffective against its shares. REST appealed, principally disputing the construction of “Shareholder” in the deed and the conclusion that Dexus’s breach was attributable to REST. Pending appeal, REST sought injunctions preventing the non-Dexus shareholders from accepting an offer for REST’s shares or nominating a qualified buyer.
The Court’s Holding
Price AJA dismissed REST’s notice of motion. Although REST’s construction challenge concerned a difficult question and was reasonably arguable, that was not enough: interlocutory relief pending appeal also required the balance of convenience to favour the proposed restraints and adequate protection for those restrained.
The requested orders could disrupt the deed’s integrated sale process by separating REST’s shares from the other Dexus-bloc shares and allowing contractual acceptance periods or acquisition rights to lapse. REST’s proposed undertaking as to damages was confined to its directly held shares and did not protect respondents against losses affecting the wider sale process. REST was willing to give broader protective undertakings, but Dexus was not; undertakings from REST alone could not eliminate the resulting risks.
The asserted tax and transaction consequences did not outweigh those concerns. The evidence did not establish that capital-gains tax or landholder-duty consequences would be irreversible, and the shares could be protected and retransferred if the appeal succeeded. Costs were reserved for determination on written submissions.
Key Takeaways
- An arguable appeal does not by itself justify an injunction pending appeal; the court must also weigh comparative prejudice and whether refusal would substantially impair the appeal.
- A proposed injunction should preserve, rather than fragment or potentially extinguish, contractual rights forming the subject matter of the appeal.
- A limited undertaking as to damages may be inadequate when the restraint could cause losses extending beyond the applicant’s own assets.
Why It Matters
The decision illustrates the difficulty of obtaining appellate injunctive relief in a multi-party commercial dispute where contractual rights operate across an entire shareholder bloc. A party cannot necessarily isolate its own interest if doing so exposes other parties to procedural or economic risks under an integrated sale mechanism.
It also underscores the practical importance of coordinated undertakings. Even where an applicant accepts conditions designed to preserve the parties’ positions, relief may be refused if related parties will not provide the protections needed to prevent contractual rights from lapsing while the appeal is pending.