Bolton v WAM Active Ltd

[2025] NSWCA 81

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Bolton v WAM Active Ltd [2025] NSWCA 81

Hearing dates:

17 April 2025

Date of orders:

17 April 2025

Decision date:

17 April 2025

Before:

Leeming JA

Decision:

1. Continue the existing stay of order 1 made by Nixon J on 14 April 2025, subsequently extended by the Registrar and by me, until 4pm on 8 May 2025.

2. I accept the undertaking on behalf of Mr Bolton, given by his counsel, personally to pay for the costs of the administration over the period from now until 4pm on 8 May 2025 if his appeal is unsuccessful.

3. I note that Keybridge Capital Ltd will continue to incur obligations to make certain payments during the period of the stay.

4. I order that by way of security for the undertaking in order 2 above, and the obligations in order 3 above, for Mr Bolton to pay into Court or otherwise as agreed between the appellant and the first to fourth respondents the amount of AU$25,000 within seven days of today.

5. I grant liberty to apply by email to my Associate on one business day’s notice.

6. The costs of each of the appellant and first to fourth respondents be those parties’ costs in the appeal.

Catchwords:

PROCEDURE — stay pending appeal — dispute as to composition of board of listed company — whether applicant had established proper basis for stay — appeal to be heard in 12 business days — applicant profferred undertaking to be personally liable for quantifiable costs — applicant provided security for liability on undertaking — stay ordered

Legislation Cited:

Corporations Act 2001 (Cth), s 198G

Supreme Court Act 1970 (NSW), s 101

Cases Cited:

Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685

In the matter of Keybridge Capital Limited [2025] NSWSC 240

In the matter of Keybridge Capital Limited (No 2) [2025] NSWSC 354

Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383

Qasim v PF 473 Pty Ltd [2024] NSWCA 248

Vaughan v Dawson [2008] NSWCA 169

Category:

Procedural rulings

Parties:

Nicholas Francis John Bolton (Appellant)
WAM Active Ltd (1st respondent)
Geoffrey James Wilson (2nd respondent)
Jesse Michael Hamilton (3rd respondent)
Martyn McCathie (4th respondent)
Frank Antony Catalano (5th respondent)
Sulieman Ahmad Sulieman Ravell (6th respondent)
Keybridge Capital Ltd (administrator appointed) (7th respondent)
Gideon Isaac Rathner (8th respondent)
John Dean Patton (9th respondent)
Richard Michael Dukes (10th respondent)

Representation:

Counsel:
G Sirtes SC and A Osborn Brodie (Appellant)
JS Emmett SC and D Krochmalik (1st to 4th respondents)
S Abraham (solicitor) (7th and 8th respondents)

Solicitors:
Hamilton Locke (Appellant)
Mills Oakley (1st to 4th respondents)
Arnold Bloch Leibler (5th respondent)
Sulieman Ahmad Sulieman Ravell (in person)
Tisher Liner FC Law (7th and 8th respondents)

File Number(s):

2025/00116543

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

New South Wales Supreme Court

Jurisdiction:

Equity – Corporations List

Citation:

[2025] NSWSC 240; [2025] NSWSC 354

Date of Decision:

21 March 2025; 14 April 2025

Before:

Nixon J

File Number(s):

2025/54507

EX TEMPORE JUDGMENT

1. LEEMING JA: Yesterday, 16 April 2025, Mr Nicholas Francis John Bolton filed a notice of appeal in this Court from two judgments of Nixon J, sitting in the Corporations List in the Equity Division. The first is a judgment of some 376 paragraphs promptly delivered after a three-day hearing in the first week of March on 21 March: In the matter of Keybridge Capital Limited [2025] NSWSC 240. The second, after a further hearing on 8 April 2025, once again promptly delivered on 14 April 2025, is In the matter of Keybridge Capital Limited (No 2) [2025] NSWSC 354. That is a judgment of some 223 paragraphs.

2. Before me today is Mr Bolton’s notice of motion, which was also filed yesterday, seeking relevantly a stay of orders made by Nixon J, in particular of order 1 made on 14 April 2025 which is in the following terms:

Order, pursuant to s 447A of the Corporations Act 2001 (Cth), that the administration of the First Defendant is to end with immediate effect.

3. That order was itself stayed until 4pm yesterday afternoon by the primary judge and subsequently again stayed until 11 o’clock this morning by the Registrar and, because argument had not by then finished, again by me until 2pm this afternoon.

4. There is no occasion in these reasons to give anything like a complete account of the litigation that has occupied two substantial judgments of Nixon J in the last three or four weeks. It is sufficient for present purposes to say that Mr Bolton claims that he was wrongly removed as a director of Keybridge Capital Ltd, a company listed on the Australian Stock Exchange, following a meeting on 10 February 2025 immediately before the board appointed a voluntary administrator to the company.

5. The steps leading up to that meeting and the steps taken immediately after are the subject primarily of the first judgment. The second judgment resulted in, as noted above, an order that the administration of the first defendant is to end with immediate effect. Simplifying the matters considerably, the point of the appeal is to reverse the findings about the effectiveness of the meetings earlier this year, and the point of the stay is to continue the administration of the company until the hearing and determination of the appeal.

6. In some respects, the issues bearing upon the grant or refusal of interlocutory relief have been simplified by the constructive attitude of all parties who, in advance of the formal commencement of the hearing of the contested application for the stay, participated in agreeing to an ultimately uncontroversial timetable which will have the appeal being heard on a final basis in exactly three weeks’ time, on Thursday 8 May. Bearing in mind that today is Maundy Thursday, that is only 12 working days from today.

7. On the other hand, the fact that the period of time during which the stay sought by Mr Bolton is relatively short in some ways makes the discretionary considerations more finely balanced than they would otherwise be.

8. The appeal is brought from aspects of both judgments in the Corporations List. At one stage the motion sought also that the declaratory relief granted by the primary judge on 21 March 2025, to the effect that the meeting of 10 February 2025 was validly held and that various directors including Mr Bolton were removed and replaced by persons associated with the respondents, was also the subject of a stay. However, it having been pointed out, correctly, that a stay of a declaration is nonsensical, the appellant’s motion is confined to the substantive order made on 14 April 2025 that the administration end.

9. The respondents have also flagged the possibility that the appeal is only by way of leave, there not being any monetary judgment involved and (as yet – noting that the appeal is in the first 24 hours of its existence) no affidavit as to the amount at stake. However, in the perhaps unlikely event that it turns out that leave is required, all parties accept that there should be a concurrent hearing on 8 May.

10. Mr Emmett SC who, with Mr Krochmalik, appeared for the respondents opposing the stay emphasised the relative weakness of ground 1 of the appeal noting in particular that no challenge is made to these three matters:

1. that Mr Patton was actuated by wrongful purpose in purporting to adjourn the meeting and avoiding the consequence of the removal of among other people Mr Bolton,

2. the administrator, Mr Rathner, who is the eighth respondent to the appeal, was and remains in a position of actual conflict with respect to accepting and carrying on that role,

3. there is no basis to conclude that the deed of company arrangement proposal advanced by Mr Bolton at first instance would provide or was capable of providing a better outcome for creditors of Keybridge.

11. That said, there is no dispute that in an application of this kind the Court does not, generally speaking, speculate as to the strength or otherwise of the prospects of success, although it may make some preliminary assessment so as to exclude an appeal which has been lodged without any real prospect of success so as to gain time: see Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 at [18]-[19]; Qasim v PF 473 Pty Ltd [2024] NSWCA 248 at [10]. It was not suggested that the grounds of appeal other than ground 1 were without any real prospect of success. Bearing in mind the entirety of the appeal, both sides’ submissions primarily addressed the balance of convenience, bearing in mind the successful respondents’ prima facie entitlement to enjoy the fruits of their victory at first instance. The fruits of that victory in this case amount in substance to board control of the company.

12. The onus lies upon the appellant to demonstrate that a proper basis for a stay that is fair to all parties has been made out: Alexander v Cambridge Credit CorporationLtd (1985) 2 NSWLR 685 at 694, subject to which is the broad equivalence of the discretionary considerations to the balance of convenience in applications for interlocutory applications: Vaughan v Dawson [2008] NSWCA 169 at [17].

13. Although there is a great deal of evidence that both sides have supplied in support of the application, and I have been assisted also by the concise written and oral submissions from both sides, the essential matters bearing upon the balance of convenience fall, as I see them, into two categories. Both reflect the consequences of the stay and the inevitable delay that would ensue if a stay is granted. One is more or less quantifiable and the other is unquantifiable, at least on the evidence as it has been supplied at this stage in the litigation.

14. The quantifiable prejudice is the ongoing costs that the company will incur as the inevitable consequence of the grant of interlocutory relief. Before me they have primarily been identified as the ongoing costs of the administrator, and the salaries and fees paid to Mr Bolton, who is the Chief Executive Officer, and Mr Patton, who is the company’s secretary. It is slightly difficult to determine what those costs are going to be over the next 12 working days or three weeks between now and the hearing of the appeal, mostly because doing the best I can on what has been placed before the Court, the role taken by the administrator is likely to be substantially different than what had occurred when the proceedings were heard by the primary judge.

15. The present instructions of the administrator, as I understand them, is that he is likely not to actively participate in the hearing of the appeal. It is unclear what costs will be incurred over the next three weeks that would not have been incurred if, as Nixon J has ordered, the administration were to end with immediate effect. It is likely to be some small number of thousands of dollars, but nothing like the very substantial costs, in the hundreds of thousands of dollars, which were incurred earlier this year.

16. The salary to be paid to Mr Bolton and Mr Patton as officers of Keybridge is quantifiable. Their salaries are quite large, but the time period is quite small.

17. In addition, submissions have been made in relation to salaries derived by Mr Bolton as an officeholder of a subsidiary of Keybridge, Yowie Group Ltd, and once again speaking very generally, the intention of the new board majority is to secure control of that company too, with the consequence that delay in doing so is said to give rise to quantifiable cost by reference to the amounts being paid by Yowie to its directors and officers.

18. Mr Bolton addresses the costs of the administrator by proffering an undertaking to be personally liable to pay for the costs of the administration over the period of the stay if the appeal is unsuccessful. Further, perhaps in response to submissions from the respondents about the worth of such an undertaking, he has proffered to supply by way of security for that obligation a sum of money into Court.

19. I will return to the question of those quantifiable costs momentarily.

20. The second aspect of prejudice, which I earlier described as unquantifiable, is the cost of delay in securing the benefits of board control of Keybridge that is the inevitable consequence of the granting of a stay. The evidence before me, primarily in the form of an affidavit of Mr Simmons, a partner of the law firm acting for the respondents, is to the effect that there are many steps, including steps relating to capital raising, that will be delayed by reason of any stay. While the administration is in place, the board which has been confirmed by the primary judge cannot exercise any powers on behalf of the company.

21. To that there is an exception, in that the primary judge made orders on 14 April 2025 in the following terms including order 3:

Order, pursuant to s 198G(3)(b) of the Corporations Act 2001 (Cth), that the directors of the First Defendant be granted approval to exercise their powers and functions to cause the First Defendant to negotiate the terms of:

(a) the Revised Term Sheet dated 28 March 2025;

(b) the Addendum to the Revised Term Sheet dated 1 April 2025; and

(c) the “Finance Documents” (as defined in the Revised Term Sheet).

22. Mr Simmons says and I accept that “the capital raising process” and the various steps that that will involve, will necessarily be delayed as a consequence of the grant of a stay. I accept that evidence, which is not only unchallenged but also inherently plausible. It goes to the nub of this aspect of the issue of prejudice, at least as I presently see the matter.

23. The fact of the matter is that Mr Bolton has exercised his entitlement conferred by s 101 of the Supreme Court Act 1970 (NSW) to an appeal. The fact of the matter is that irrespective of anything that this Court does today, there will inevitably be uncertainty as to what is according to law the board composition of the listed company, Keybridge. That is to say, irrespective of whether or not there is a stay of the order that the administration cease, there will continue to be uncertainty about the composition of the board and who can control the company for the next three weeks, until the Court of Appeal hears the appeal. If there is a stay, the administrator will continue in office. If there is no stay, the board members as determined by Nixon J will assume the powers of the board, but subject to the possibility that the Court of Appeal will determine that the declarations issued from the primary judge as to the board composition of the company should be set aside.

24. There is nothing that can be done to remove that uncertainty. That seems to me to speak directly to the prejudice because although I completely recognise that there are difficulties in taking steps towards, to take the example which is most prominent in the respondents’ submissions, the contemplated capital raising, as well as the further steps to secure control of Yowie Group Ltd if a stay is in place, I would also infer that, even in the absence of any stay, there will be commercial difficulties, because of the pendency of the appeal and the concomitant uncertainty. It is primarily for that reason that this Court has set down the appeal as promptly as it has, with, as I said, the constructive cooperation of the parties, so as to minimise the inevitable commercial uncertainty which is the consequence of a party disappointed with litigation at first instance exercising his right of appeal.

25. Another way of putting that is that there can be no completely satisfactory outcome in terms of outsiders – bankers, lawyers and indeed shareholders – who are wishing to deal with the company in the next three weeks. Whether or not a stay is granted, there is inevitable uncertainty.

26. All of those considerations have led me to conclude that the two categories of prejudice that I have referred to should be addressed in different ways. It is appropriate, as the price of any stay that Mr Bolton be obliged to assume personal responsibility for some of the directly quantifiable costs in the form of fees and salaries that will flow, but in relation to the unquantifiable costs which are a consequence merely of delay, different considerations intrude.

27. One further concern I have is this. It is neither possible nor appropriate for me to express any view on the prospects of success of the appeal. I am in no position to do so; further, it would be contrary to the authority mentioned above. That means that there must at least be a possibility that the appeal will be allowed and there is therefore real scope for confusion in the market in the event that the stay is refused, and the board, as constituted in accordance with the decision at first instance, is in place for some limited period of time, perhaps three weeks or perhaps slightly more, and then the board as formerly constituted resumes its authority and ability to bind the company. Those are the sorts of uncertainties and potential for confusion that favour, so long as other aspects of prejudice can be addressed, the maintenance of the status quo.

28. In what I have said above, I have focused upon what ultimately seemed to be the decisive considerations in the exercise of the discretion that falls to me today. I have however not been exhaustive in addressing the respondents’ submissions opposing the grant of interlocutory relief. There is no challenge, as noted above, to the primary judge’s finding that the administrator, Mr Rathner, is and was when appointed in a position of conflict: see [2025] NSWSC 240 at [332]. That appears to have, entirely properly, informed the second judgment: see for example at [157]. The consequence of the stay now sought by Mr Bolton will be to leave in place for a period of at least three weeks a person found to have been in a position of conflict. That said, the time period is limited and there is nothing to suggest Mr Rathner will take any active let alone irreversible steps in that period.

29. Secondly, I have not fully so far done justice to the quantification proposed by the respondents of the quantifiable costs which will follow from the granting of a stay. Without being critical of anyone and bearing in mind this application has been brought on within 24 hours of the appeal being commenced, there is a degree, necessarily, of uncertainty in what those costs are likely to be. In part, it turns upon what steps, if any, the administrator takes in the next three weeks. In part, it turns upon extrapolations as to what might happen concerning the so-called securing of Yowie Group Ltd.

30. I raised during argument a concern that it would be wrong in principle as the price of a stay merely to pluck a figure out of the air, and I was reassured by both senior counsel, Mr Sirtes SC who appears for Mr Bolton, Mr Emmett, who appears for the first to fourth respondents, that that was not so. There are difficulties in determining what the amount of additional salaries and remuneration is going to be but those difficulties primarily come about from the fact that the time that we are speaking of, although it cannot be certain because we do not know how much longer than three weeks it will be, is nonetheless very brief. The evidence before me is that Mr Bolton, as I understand it, although on a base salary of $440,000 per annum, is required to work only on a part-time basis on a pro rata part-time base salary of $330,000 per annum.

31. Mr Patton’s fees as company secretary, and the way in which they would be calculated over the next three weeks, is not entirely clear to me. But if one takes an approximate amount of $400,000 per annum, the amounts we are looking at for a stay of three weeks are in the order of $20,000 to $30,000, and that is consistent with some of the amounts mentioned during submissions before me today.

22. Thirdly, I have not so far done full justice to the submissions made concerning Mr Bolton’s personal finances. There is evidence before me of a bankruptcy notice having been issued to him by a law firm. The most recent information concerning the status of the bankruptcy notice is that it has been adjourned, and there was no cavilling with my drawing the inference I raised during the argument that that would continue to be adjourned pending the determination of the appeal. There is also evidence that, I think, without being critical of anyone, no one says is unambiguous, in the form of an email from Mr Bolton of 14 November 2024 which is in the following terms:

Atanaskovic Hartnell: $256,138.31 (Nick Salary directed to AH per disputed garnish [sic] order).

33. One possibility is that that reflects a partial, without prejudice, compromise of the amount claimed by Mr Bolton’s creditor. However, it is far from clear beyond argument what the actual position is.

34. Ultimately, although I mention those things in deference to the submissions that are made, they do not greatly affect the orders I propose to make, although they may perhaps have been in the background of what I mentioned before, namely Mr Bolton undertaking to provide security for the undertaking that is proffered.

35. I do not pretend that this application has been easy. In fact, I think it is one of the more finely balanced applications for a stay that I have encountered. Ultimately I am persuaded that a stay on terms should be granted for a limited period of time, namely until 4pm on 8 May 2025, which is to say precisely three weeks, two hours and six minutes from now, because as to the quantifiable aspects of prejudice, I think that the matters proffered by Mr Sirtes go some reasonable way towards addressing the prejudice, and in relation to the non-quantifiable aspects, there are the difficulties which I have tried to indicate above in that there will always be uncertainty in the markets and difficulties in dealing with a company whose board composition is disputed while there is a pending appeal, and for that reason it is better in the very short timeframe that we have in mind, namely 12 working days, to preserve the status quo.

36. When I said 4pm 8 May 2025, I meant precisely that. I am disinclined to make a broader order as is sought on the notice of motion for the stay to last until the determination of the appeal. As I sought to indicate above, it is inappropriate for a judge hearing an application of this kind to express a view about the strength or otherwise of the appeal; a judge is normally in no position to do so and I am certainly unable to do so, there not having been the exchange of submissions or the underlying material. I am very conscious that reasons for judgments which seem on their face to be cogent and highly persuasive may be, when exposed to the challenge which is the inevitable part of an appeal, less persuasive than they seemed at first blush. However, by the afternoon of 8 May 2025, the Judges of Appeal constituting the Court of Appeal will have read the parties’ written submissions and heard the parties’ oral submissions. There is absolutely no guarantee that orders will be made then and there. However, it is absolutely certain that three members of the Court will be in a much better position than I presently am to assess the strength or weakness of the appeal which has been brought. That is materially different from the position I am presently in, and is why I think it appropriate that the onus be placed squarely on the appellant to maintain any further stay pending the determination of the appeal, if indeed judgment is reserved, rather than my determining that at this stage.

37. Further, it is appropriate for, as the price of the stay, the applicant to be personally responsible for the costs of the administration over the period of the stay if the appeal is unsuccessful. It is also appropriate for an amount of money to be paid into Court to support both that undertaking and also the fact that the company will continue to pay salaries and fees in the meantime.

38. The amount I have settled upon to be paid into Court, doing the best I can in relation to matters which have many dimensions of uncertainty, is A$25,000, and the orders that I propose will require that amount to be paid into Court by Mr Bolton within seven days of today.

39. There is one further thing to say in relation to the matters underlying what I have described as unquantifiable prejudice to the respondents, and that is informed by the orders made by Nixon J pursuant to s 198G of the Corporations Act giving limited authority to the respondents to act on behalf of the company. At the moment, the evidence before me in terms of this unquantifiable prejudice is, and I mean no criticism to anyone, expressed at some level of generality in respect of any particular steps sought to be undertaken. It is possible in the next week or fortnight that some particular proposal emerges that would warrant a further grant of authority to the directors of the company as determined by the primary judge, and nothing in these reasons is intended to undercut the ability of the respondents to make further application on those lines. That said, I am moderately sceptical that, given that the time the stay will be in place is a mere 12 working days, that any such application will be necessary.

40. Finally, all parties should proceed on the assumption that the Court of Appeal on 8 May will proceed as expeditiously as it can to determine the matter, in that respect following the footsteps of the primary judge.

41. The orders I therefore will make will be as follows:

1. Continue the existing stay of order 1 made by Nixon J on 14 April 2025, subsequently extended by the Registrar and by me, until 4pm on 8 May 2025.

42. HIS HONOUR: Mr Sirtes, I’ve tried to be quoting directly from para 18(b) when speaking of the undertaking. You’re instructed to give that undertaking on behalf of your client?

43. SIRTES: I am, your Honour.

44. HIS HONOUR:

2. I accept the undertaking on behalf of Mr Bolton, given by his counsel, personally to pay for the costs of the administration over the period from now until 4pm on 8 May 2025 if his appeal is unsuccessful.

3. I note that Keybridge Capital Ltd will continue to incur obligations to make certain payments during the period of the stay.

4. I order that by way of security for the undertaking in order 2 above, and the obligations in order 3 above, for Mr Bolton to pay into Court or otherwise as agreed between the appellant and the first to fourth respondents the amount of AU$25,000 within seven days of today.

5. I grant liberty to apply by email to my Associate on one business day’s notice.

45. HIS HONOUR: I had in mind for each parties’ costs being costs of the appeal. Does anyone want to say anything against that?

46. EMMETT: No, your Honour.

47. SIRTES: No, your Honour.

6. The costs of each of the appellant and first to fourth respondents be those parties’ costs in the appeal.

**********

Decision last updated: 24 April 2025