JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: KIPOI HOLDINGS MAURITIUS LIMITED -v- ROBERT MICHAEL KIRMAN and ROBERT CONRY BRAUER as joint and several administrators of TIGER RESOURCES LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [No 4] [2024] WASCA 145
CORAM: BUSS P
MITCHELL JA
VAUGHAN JA
HEARD: 14 - 17 AUGUST 2023
DELIVERED : 22 NOVEMBER 2024
FILE NO/S: CACV 106 of 2021
BETWEEN: KIPOI HOLDINGS MAURITIUS LIMITED
Appellant
AND
ROBERT MICHAEL KIRMAN as joint and several administrators of TIGER RESOURCES LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
ROBERT CONRY BRAUER as joint and several administrators of TIGER RESOURCES LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Respondents
YINGKOU YANGZHOU TRADE CO LTD
Second Respondent
JINJI RESOURCES FINANCE PTY LTD
Third Respondent
RICHARD SCOTT TUCKER
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: ROBERT MICHAEL KIRMAN and ROBERT CONRY BRAUER as joint and several administrators of TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) -v- YINGKOU YANGZHOU TRADE CO LTD [No 2] [2021] WASC 354
File Number : COR 69 of 2021
Catchwords:
Corporations - Deed of company arrangement - Appeal against leave to transfer shares under s 444GA of the Corporations Act 2001 (Cth) - Valuation of shares - Whether shares had nil residual value such that transfer did not prejudice interests of members - Expert evidence as to value - Turns on own facts
Practice and procedure - Whether leave to appeal required - Leave to appeal not required where non-party prejudicially affected by order of primary court
Practice and procedure - Application to adduce further evidence on appeal - Leave to adduce further evidence on appeal refused - Evidence sought to be adduced on appeal available at the time of primary proceedings - Evidence sought to be adduced in aid of new point raised on appeal
Duty to provide reasons for decision - Failure to provide legally adequate reasons - Failure to make findings in respect of central issues at trial - Resolution of central issues turned on competing expert evidence as to valuation - Failure to properly engage with competing expert valuations - Failure to explain preference for evidence of one expert witness over that of others
Expert opinion evidence - Sufficient connection between expertise and opinion - Question of weight - Expert insolvency practitioner gave opinion on value of shares - Where trial judge accepted opinion evidence that exceeded scope of expert witness's specialised knowledge or experience - Failure to consider if expert had necessary knowledge or experience to give opinion as to value - Where expert insolvency practitioner acknowledged lack of valuation expertise
Expert evidence - Contact between expert witness and instructing solicitors during preparation of joint expert report - Whether contact grounds for adverse credibility finding - Appellate restraint on review of factual findings - Trial judge advantage in seeing and hearing witnesses
Primary court error - Limitations of appellate review - Ability for appellate court to properly and justly determine question before primary court - Subjective nature of valuation evidence - Limitations of trial record and further available evidence on appeal - Comparative appellate disadvantage in not seeing and hearing witnesses - Comparative disadvantage where experts gave concurrent evidence - Trial record insufficient basis for court to determine properly and justly all central issues as to share value - Substantial differences between expert opinions on central valuation issues
Restitutionary relief - Reversal of judgment restitution - Reversal of judgment restitution not discretionary but arises as a right upon successful appeal - No barrier to restitutionary relief that the person seeking relief and the person against whom relief is sought were not joined as parties to the primary proceedings but were merely given leave to be heard as 'interested parties' and the persons were joined as parties to the appeal - No barrier to restitutionary relief that the trial judge's order giving leave under s 444GA(1) of the Corporations Act merely authorised the transfer of the issued shares and did not require the shares to be transferred - No barrier to restitutionary relief that the appellate court stayed the trial judge's order giving leave under s 444GA(1) and the party seeking relief allowed the stay to lapse by failing to satisfy the conditions of the stay - Whether the leave of the Court under s 444GA(1) may be given on conditions
Appropriate relief - Appeal allowed but court unable to decide issues for itself or to award restitution - Section 59(4) of the Supreme Court Act 1935 (WA) - Trial and determination of issue and question of residual value of shares pursuant to s 59(4) - Application for new trial stood over for further consideration pending determination of issue and question
Legislation:
Corporations Act 2001 (Cth), s 444GA
Supreme Court Act 1935 (WA), s 58, s 59(4)
Result:
Leave to appeal allowed if and to extent leave is required
Applications to adduce further evidence dismissed
Grounds 1 and 2 of appeal upheld
Application for new trial and further disposition of appeal stood over pending trial and determination of issue pursuant to s 59(4) of Supreme Court Act 1935 (WA)
Category: A
Representation:
Counsel:
| Appellant | : | N C Hutley SC (14 & 15 August 2023), R C A Higgins SC, J M Hutton SC & P A Walker (14 - 17 August 2023) |
| First Respondents | : | No appearance |
| Second Respondent | : | S J Maiden KC, J Abberton & J A G McComish |
| Third Respondent | : | S J Maiden KC, J Abberton & J A G McComish |
| Fourth Respondent | : | F J Maher |
Solicitors:
| Appellant | : | Clayton Utz |
| First Respondents | : | Norton Rose Fulbright Australia |
| Second Respondent | : | Lavan |
| Third Respondent | : | Lavan |
| Fourth Respondent | : | Jones Day |
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Table of Contents
Buss P
Overview of the facts and circumstances culminating in the Master making the order granting leave
Kipoi's grounds of appeal
YYT and Jinji's notice of contention
Additional issues arising in the appeal
Restitution: additional issue 6: Kipoi's claimed beneficial interest in approximately 24% of Tiger's issued shares
Restitution: additional issue 6: the restitutionary relief sought by Kipoi
Restitution: additional issue 6: the basis on which I will consider the question of the restitutionary relief sought by Kipoi
Restitution: additional issue 6: the questions to be resolved
Restitution: additional issue 6: the general principles relating to reversal of judgment restitution
Restitution: additional issue 6: what powers are conferred on this court to make orders that are required to give effect to reversal of judgment restitution?
Restitution: additional issue 6: is Kipoi precluded from seeking or obtaining reversal of judgment restitution against YYT because Kipoi and YYT were not joined as parties to the primary proceedings, but were merely given leave to be heard as 'interested parties'?
Restitution: additional issue 6: is Kipoi precluded from seeking or obtaining reversal of judgment restitution because the orders sought by Kipoi do not effect restitutio in integrum and do not take account of YYT's alleged change of position?
Restitution: additional issue 6: is Kipoi precluded from seeking or obtaining reversal of judgment restitution because the Master's order giving leave under s 444GA(1) merely authorised the transfer of the issued shares in Tiger to YYT and did not require the shares to be transferred?
Restitution: additional issue 6: is Kipoi precluded from seeking or obtaining reversal of judgment restitution because this court stayed the Master's order giving leave under s 444GA(1) and Kipoi allowed the stay to lapse by failing to satisfy the conditions of the stay?
Leave to appeal: additional issue 1: does Kipoi require leave to appeal and, if so, should leave be granted?
May the leave of the Court under s 444GA(1) be given on conditions if the Court is satisfied that compliance with the conditions would result in the transfer not unfairly prejudicing the interests of members of the company, within s 444GA(3)?
Relief
Conclusion
Mitchell JA.............................................................................................................................. 64
Vaughan JA
Overview
Background
The applicable legal principles on an application under s 444GA
The expert evidence before the primary court
A high-level summary of the expert evidence and the issues in dispute
A more detailed look at the expert evidence
The expert report of Mr Naidoo
The expert report of Mr Hughes
The affidavit of Mr White
The expert report of Mr Jaski
The expert report of Mr McVeigh
The expert report of Mr Donnelly
The joint expert report
The experts' oral evidence
Other evidentiary matters
Scheme of arrangement / recapitalisation and sale process
The offers received from the sale process
The voluntary administration process
Availability of funding in a liquidation scenario
The master's reasons on the s 444GA application
The grounds of appeal and notice of contention
Leave to appeal
The applications to adduce further additional evidence on the appeal
Approach to the remainder of these reasons
Disposition ground 1 - whether the master's reasons are legally inadequate
Ground 1: the parties' submissions
Ground 1: the applicable legal principles
Ground 1: consideration and determination
Disposition ground 2 - whether not open to accept Mr Donnelly's opinion on value
Disposition ground 3 - whether Mr Donnelly's credit necessarily affected by contact with YYT and Jinji's solicitors
Disposition NoC ground 1 - whether Kipoi lacked sufficient interest to oppose the application for leave under s 444GA
Disposition NoC ground 2 - whether, if the shares were of some value, a transfer would cause unfair prejudice to the members within s 444GA
Disposition NoC ground 3 - whether the master should have accepted the expert evidence of Mr Hughes
Is it possible for this court properly and justly to decide whether an order for leave to transfer under s 444GA ought to have been made?
Why this issue arises for consideration
The context in which the issue arises for consideration
The parties' submissions on the issue
Kipoi's submission as to a gap in the expert evidence
The limitations of appellate review
Determination of the issue
The question of restitutionary relief
Restitutionary relief: the parties' submissions
Restitutionary relief: the authorities
The general rule
The juridical basis for reversal of judgment restitution
YYT/Jinji's insistence on a 'just restoration'
Restitutionary relief: consideration of the matters relied on by YYT and Jinji in opposition to restitutionary relief
YYT/Jinji's opposition to restitution based on Kipoi being a non-party
YYT/Jinji's opposition to restitution on the basis that the proposed orders do not effect restitutio in integrum and do not take account of YYT's change of position
YYT/Jinji's opposition to restitution based on the s 444GA order merely authorising the transfer of the Tiger shares
YYT/Jinji's opposition to restitution based on Kipoi allowing the lapse of the stay order
Restitutionary relief: conclusion
What is the appropriate relief (if any)?
Conclusion and orders
BUSS P:
This appeal raises numerous issues in connection with an order made by Master Sanderson, pursuant to s 444GA(1) of the Corporations Act (Cth), giving leave for the administrators of a deed of company arrangement to transfer shares in the company.
Overview of the facts and circumstances culminating in the Master making the order granting leave
The first respondents (the Deed Administrators) were the deed administrators of a deed of company arrangement dated 19 February 2021 (the Tiger DOCA) for Tiger Resources Ltd (Tiger).
Tiger is an Australian registered company. It is the holding company for nine controlled subsidiaries incorporated in other jurisdictions (the Tiger Group). Those jurisdictions include the Democratic Republic of the Congo (the Congo). One of Tiger's subsidiaries that is domiciled in the Congo, namely Société d'Exploitation de Kipoi SA (SEK), operated a copper mine in the Congo. The copper mine was the sole income producing asset of the Tiger Group. Tiger's principal realisable assets comprised intercompany loans owing to Tiger and, possibly, Tiger's interest in its subsidiary, SASE Mining SARL, a company domiciled in the Congo.
The parties to the Tiger DOCA comprised the first respondents as the Deed Administrators, the second respondent (YYT) and Tiger.
YYT was the proponent of the Tiger DOCA.
The appellant (Kipoi) was a secured creditor of Tiger. Kipoi also claimed to have a beneficial interest in approximately 24% of Tiger's issued shares. Kipoi opposed the implementation of the Tiger DOCA.
The third respondent (Jinji) was a secured creditor of Tiger. Jinji also claimed to have a beneficial interest in Tiger's issued shares.
YYT and Jinji are related entities.
The fourth respondent (Mr Tucker) was the scheme administrator pursuant to a scheme of arrangement undertaken by Tiger on or about 11 June 2020 to reduce its secured debt from about US$271 million to US$100 million in consideration of the issue to the secured creditors of shares in Tiger. Mr Tucker, as scheme administrator and as trustee, held about 99.11% of Tiger's issued shares.
The balance of Tiger's issued shares, that is about 0.89%, were held by 4,280 other shareholders.
Clause 9.1 of the Tiger DOCA specified numerous steps that had to be completed as soon as practicable after the date of execution of the Tiger DOCA. Clause 9.1 stated that the completion of each of the specified steps was a condition precedent to completion under the Tiger DOCA. By cl 9.1.4, the specified steps included, relevantly, 'procurement of … Section 444GA Approval (either following granting of ASIC Relief or with the Court orders being conditional on that relief being granted)'. The term 'Section 444GA Approval' was defined in cl 1.1 to mean 'approval of the Court for the Deed Administrators to transfer [all of the issued shares in Tiger] to [YYT] for nil consideration pursuant to section 444GA(1)(b) of the Corporations Act'.
Clause 9.5 of the Tiger DOCA provided that if any or all of the conditions precedent in cl 9.1 were not satisfied by 31 December 2021, the Deed Administrators may:
(a)by notice to creditors and the proponent (that is, YYT) immediately terminate the Tiger DOCA (cl 9.5.1); or
(b)call a meeting of creditors to consider varying or terminating the Tiger DOCA (cl 9.5.2).
Clause 9.2 of the Tiger DOCA provided that the completion date under the Tiger DOCA was the date on which each of the steps in cl 9.1 had been completed.
Clause 10.1 of the Tiger DOCA provided, relevantly, that on the 'Effectuation Date', being three business days after the completion date (or such other date as the Deed Administrators and the proponent (that is, YYT) may agree in writing), the following shall occur:
10.1.1the Deed Administrators must effect a transfer of the Tiger Shares to the Proponent (or any one or more of its nominee, to the extent permitted by the Section 444GA Approval), including by lodging any necessary documentation with ASIC;
10.1.2control of Tiger will revert to its Directors and the Deed Administrators will not have any obligation or responsibility for the affairs of Tiger, including the ongoing trading of Tiger's Business; and
10.1.3this Deed will terminate; …
Clause 10.2 of the Tiger DOCA provided that the Deed Administrators were not required to transfer the issued shares in Tiger to YYT for nil consideration, in the manner required by cl 10.1.1, if the proponent (that is, YYT) directed the Deed Administrators in writing not to transfer the shares or if to do so would be inconsistent with 'the terms of any Section 444GA Approval obtained'.
Section 444GA of the Corporations Act provides:
(1)The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained:
(a)the written consent of the owner of the shares; or
(b)the leave of the Court.
(2)A person is not entitled to oppose an application for leave under subsection (1) unless the person is:
(a)a member of the company; or
(b)a creditor of the company; or
(c)any other interested person; or
(d)ASIC.
(3)The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.
By originating process filed on 23 April 2021 in the General Division of the Supreme Court, the Deed Administrators applied for leave under s 444GA(1) to transfer all of the issued shares in Tiger to YYT for nil consideration. YYT and Jinji supported the application. Kipoi opposed it. On 12 July 2021, YYT, Jinji and Kipoi were given leave to be heard on the application as 'interested parties' without being formally joined as parties to the application.
The Master heard the application on 17, 18, 19 and 23 August 2021. At the hearing, the Deed Administrators, YYT and Jinji contended that the issued shares in Tiger had no value and consequently the transfer of the shares to YYT for nil consideration would not unfairly prejudice the interests of members of Tiger, within s 444GA(3). Kipoi contended that the shares had a residual value and that the transfer of the shares to YYT for nil consideration would unfairly prejudice the interests of members. Five expert witnesses gave evidence at the hearing. The expert evidence was concerned with whether the shares in Tiger had a residual value and, if so, the amount of the residual value.
On 20 October 2021, the Master gave judgment and published written reasons. See Robert Michael Kirman and Robert Conry Brauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [No 2].[1] The Master held that the issued shares in Tiger had 'nil value' [40].
[1] Robert Michael Kirman and Robert Conry Brauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [No 2] [2021] WASC 354.
On 28 October 2021, the Master made, relevantly, this order:
Pursuant to section 444GA(1)(b) of the Corporations Act … [the Deed Administrators] jointly and severally have leave to transfer all of the existing shares … in the capital of [Tiger] from the members [as defined in the Corporations Act] of [Tiger] to [YYT] or its nominee on the Effectuation Date as defined in [the Tiger DOCA] and in accordance with its terms.
On 3 November 2021, Kipoi filed an appeal notice in this court appealing against the Master's orders. Also, on 3 November 2021, Kipoi filed an application in the appeal seeking a stay of the Master's orders pending the determination of the appeal.
On 10 November 2021, Mitchell JA and I made orders:
(a)staying the orders of the Master;
(b)requiring Kipoi to pay into court by way of security for Kipoi's undertaking as to damages the sum of A$8,983,000; and
(c)setting aside the stay if the security was not paid into court by 4.00 pm on 17 November 2021.
Kipoi did not pay the security into court by 4.00 pm on 17 November 2021 or at all.
On 18 November 2021, the Deed Administrators filed an application in the General Division of the Supreme Court for directions that the Deed Administrators were justified in transferring all of the issued shares in Tiger to YYT.
On 19 November 2021, the Master made, relevantly, this order:
Pursuant to section 90‑15 of the Insolvency Practice Schedule (Corporations) (IPS) at Schedule 2 of the Corporations Act 2001 (Cth) … [the Deed Administrators] are justified in transferring all of the shares in [Tiger] to [YYT] or its nominee.
On 24 November 2021, the Master published written reasons for making that order. See Robert Michael Kirman and Robert Conry Brauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement).[2]
[2] Robert Michael Kirman and Robert Conry Brauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASC 411.
On 19 November 2021, after the Master made the order, one of the Deed Administrators, Mr Kirman, signed a share transfer form transferring all of the issued shares in Tiger to YYT, and delivered the signed share transfer form and the share certificate for the shares to YYT's solicitors.
On 22 November 2021, YYT became the holder of the shares.
Kipoi's grounds of appeal
Kipoi's grounds of appeal raise, in essence, the following issues:
(a)Did the Master err in law by failing to provide legally adequate reasons in respect of the central issues in dispute at trial? (appeal ground 1).
(b)Did the Master err in law in treating Matthew Donnelly (one of the expert witnesses) as giving an opinion as to the value of Tiger's shares, and finding that Mr Donnelly's opinion should be accepted, when that was not open on the evidence? (appeal ground 2).
(c)Did the Master err in fact by finding that Mr Donnelly's credit was not affected by his contact with YYT and Jinji's solicitors during the preparation of the joint expert report? (appeal ground 3).
I agree with Vaughan JA, for the reasons he gives, that appeal grounds 1 and 2 have been made out.
I agree with his Honour, for the reasons he gives, that appeal ground 3 has not been made out.
YYT and Jinji's notice of contention
YYT and Jinji filed a notice of contention in the appeal in which they seek to uphold the Master's orders on grounds not relied upon by the Master. The grounds raise, in essence, the following issues:
(a)Did Kipoi lack sufficient interest to oppose the application for leave under s 444GA(1)? (notice of contention ground 1).
(b)Even if the evidence established that there was some value in Tiger's shares, would a transfer of all the issued shares in Tiger to YYT for nil consideration unfairly prejudice the interests of members of Tiger, within s 444GA(3)? (notice of contention ground 2).
(c)If the Master erred in preferring the evidence of Mr Donnelly, should the Master instead have preferred the evidence of Jason Hughes (another of the expert witnesses)? (notice of contention ground 3).
I agree with Vaughan JA, for the reasons he gives, that notice of contention grounds 1, 2 and 3 have not been made out.
Additional issues arising in the appeal
Additional issues arising in the appeal include:
(a)Does Kipoi require leave to appeal and, if so, should leave be granted? (additional issue 1).
(b)Should YYT and Jinji be granted leave to adduce additional evidence in the appeal; namely, parts of the affidavit of Anil Gupta sworn 16 December 2021? (additional issue 2).
(c)If the Master made a material error as alleged in the appeal grounds and the notice of contention fails, is this court able to decide, on the trial record and the additional evidence that is admitted in the appeal, whether the Master should have made an order giving leave under s 444GA(1)? (additional issue 3).
(d)If the Master made a material error as alleged in the appeal grounds and the notice of contention fails, and if this court is unable to decide, on the trial record and the additional evidence that is admitted in the appeal, whether the Master should have made an order giving leave under s 444GA(1), what relief (if any) should this court grant? (additional issue 4).
(e)If the Master made a material error as alleged in the appeal grounds and the notice of contention fails, and if this court is able to decide, on the trial record and the additional evidence that is admitted in the appeal, whether the Master should have made an order giving leave under s 444GA(1), what relief (if any) should this court grant? (additional issue 5).
(f)As to additional issue 4 and additional issue 5, should this court make orders providing for the restitution of the issued shares in Tiger that were transferred by Mr Kirman (one of the Deed Administrators) to YYT, if this court ultimately sets aside the Master's order giving leave under s 444GA(1) and, if so, on what terms (if any)? (additional issue 6).
I agree with Vaughan JA, for the reasons he gives, that:
(a)As to additional issue 2, YYT and Jinji should not be granted leave to adduce parts of the affidavit of Mr Gupta sworn 16 December 2021 as additional evidence in the appeal.
(b)As to additional issue 3, this court is unable to decide, on the trial record and the additional evidence that is admitted in the appeal, whether the Master should have made an order giving leave under s 444GA(1).
(c)As to additional issue 4:
(i)this court should direct, pursuant to s 59(4) of the Supreme Court Act 1935 (WA), that the following issue and question be tried and determined by a Judge of the General Division of the Supreme Court, namely:
What was the residual value of the ordinary issued shares in Tiger Resources Ltd (Subject to Deed of Company Arrangement), if any, as at 28 October 2021 (or such earlier date as close as possible thereto) based on a valuation of the assets and liabilities of the company by reference to a liquidation scenario rather than as a going concern?
(ii)the trial and determination of that issue and question, pursuant to s 59(4), should proceed on the basis proposed by Vaughan JA in his reasons;
(iii)Kipoi's application for a new trial, and the making of further orders by this court in relation to the final disposition of the appeal, should be stood over until after the trial and determination of that issue and question; and
(iv)the ancillary orders proposed by Vaughan JA should be made.
Additional issue 5 does not require determination having regard to the disposition of additional issue 3; that is, this court is unable to decide, on the trial record and the additional evidence that is admitted in the appeal, whether the Master should have made an order giving leave under s 444GA(1).
I will write separately on:
(a)whether this court should make orders providing for the restitution of the issued shares in Tiger that were transferred by Mr Kirman (one of the Deed Administrators) to YYT, if this court ultimately sets aside the Master's order giving leave under s 444GA(1) and, if so, on what terms (if any); that is, additional issue 6;
(b)whether Kipoi requires leave to appeal and, if so, whether leave should be granted; that is, additional issue 1; and
(c)whether the leave of the Court under s 444GA(1) may be given on conditions if the Court is satisfied that compliance with the conditions would result in the transfer not unfairly prejudicing the interests of members of the company, within s 444GA(3).
Restitution: additional issue 6: Kipoi's claimed beneficial interest in approximately 24% of Tiger's issued shares
As I have mentioned, Kipoi claimed to have a beneficial interest in approximately 24% of Tiger's issued shares.
As Vaughan JA has noted in his reasons:
(a)Kipoi contended in the primary proceedings that it had a beneficial interest in approximately 24% of Tiger's issued shares.
(b)In the primary proceedings YYT and Jinji did not dispute that Kipoi had a beneficial interest in approximately 24% of Tiger's issued shares.
(c)In those circumstances, the Master did not make any finding as to whether Kipoi's contention was correct.
(d)On appeal, YYT and Jinji seek to deny the existence of Kipoi's claimed beneficial interest. YYT and Jinji's denial on appeal is inconsistent with their position before the Master in relation to Kipoi's contention that it had a beneficial interest in approximately 24% of Tiger's issued shares. In the circumstances, it would be contrary to the interests of justice for this court to permit YYT and Jinji to advance this new denial on appeal.
(e)This court cannot make a finding, based on the trial record, as to whether in fact and in law Kipoi had a beneficial interest in approximately 24% of Tiger's issued shares, as distinct from having had an expected or contingent beneficial interest in Tiger's issued shares, when all of the issued shares were transferred by the Deed Administrators to YYT.
(f)However, it may be accepted in the appeal that Kipoi had a sufficient interest in approximately 24% of Tiger's issued shares to constitute Kipoi an 'interested person' within s 444GA(2)(c).
At all material times before the Deed Administrators transferred all of the issued shares in Tiger to YYT, Mr Tucker was the holder of about 99.11% of Tiger's issued shares, including the shares in which Kipoi claimed a beneficial interest.
Restitution: additional issue 6: the restitutionary relief sought by Kipoi
Initially, the relief sought by Kipoi if the appeal is allowed includes a retransfer of the issued shares in Tiger that were transferred to YYT after the Master gave leave under s 444GA(1) of the Corporations Act. However, in Kipoi's amended written reply, counsel for Kipoi indicated that Kipoi would be content if restitutionary relief was confined to the approximately 24% of the issued shares in Tiger in which Kipoi claimed a beneficial interest.
Kipoi submitted that if one or more of its grounds of appeal are made out, then the shares in Tiger should be retransferred even if this court decides to remit to a single judge for redetermination of whether the Master should have given leave under s 444GA(1). Alternatively, Kipoi submitted that the shares in Tiger should be retransferred upon this court, alternatively upon a single judge on remitter, deciding that the Master should have refused to give leave.
YYT and Jinji submitted that no order for the retransfer of the shares in Tiger should be made if one or more of the grounds of appeal are made out or if this court or a single judge on remitter decides that the Master should have refused to give leave under s 444GA(1).
The relief sought by Kipoi and opposed by YYT and Jinji in relation to a retransfer of the shares in Tiger was the subject of detailed oral and written submissions before this court.
It is in the interests of justice that this court determine now whether, in principle, the reversal of judgment restitution sought by Kipoi is available, in the circumstances of this appeal, even though (like Vaughan JA) I am satisfied that this court is unable, on the material before it, to determine whether the Master should have made an order giving leave under s 444GA(1) and, consequently, the redetermination of that issue must be remitted to a single judge.
Restitution: additional issue 6: the basis on which I will consider the question of the restitutionary relief sought by Kipoi
I will consider the question of the restitutionary relief sought by Kipoi on the basis that the Master should have refused to give leave under s 444GA(1) even though, like Vaughan JA, I am unable to reach a view on the merits of the issue of leave under s 444GA(1) on the material before the court.
Further, I will consider the question of the restitutionary relief sought by Kipoi on the basis that Kipoi's claim for restitution is confined to the approximately 24% of the shares in Tiger in which Kipoi claimed a beneficial interest.
Restitution: additional issue 6: the questions to be resolved
The determination of whether, in principle, the reversal of judgment restitution sought by Kipoi and opposed by YYT and Jinji is available, in the circumstances of this appeal, raises a number of questions, having regard to the submissions made by counsel for Kipoi and counsel for YYT and Jinji.
Those questions, which must be resolved by this court on the assumption that the Master should have refused to make an order giving leave under s 444GA(1), are as follows.
First, what powers are conferred on this court to make orders that are required to give effect to reversal of judgment restitution? Secondly, is Kipoi precluded from seeking or obtaining reversal of judgment restitution against YYT because Kipoi and YYT were not joined as parties to the primary proceedings, but were merely given leave to be heard as 'interested parties'? Thirdly, is Kipoi precluded from seeking or obtaining reversal of judgment restitution because the orders sought by Kipoi do not effect restitutio in integrum and do not take account of YYT's alleged change of position? Fourthly, is Kipoi precluded from seeking or obtaining reversal of judgment restitution because the Master's order giving leave under s 444GA(1) merely authorised the transfer of the issued shares in Tiger to YYT and did not require the shares to be transferred? Fifthly, is Kipoi precluded from seeking or obtaining reversal of judgment restitution because this court stayed the Master's order giving leave under s 444GA(1) and Kipoi allowed the stay to lapse by failing to satisfy the conditions of the stay?
The submissions of the parties in relation to the questions I have formulated are summarised in Vaughan JA's reasons. It is unnecessary to repeat his Honour's summary.
I will initially consider the general principles relating to reversal of judgment restitution and then address each of the questions I have formulated.
Restitution: additional issue 6: the general principles relating to reversal of judgment restitution
I will examine a number of the leading authorities which have considered reversal of judgment restitution and then set out some general principles that are discernible from the preponderance of those authorities.
In Rodger v The Comptoir D'Escompte de Paris,[3] by an Order in Council made on an appeal, the judgment of the Supreme Court of Hong Kong in an action of trover was reversed, and a nonsuit directed to be entered. After the Order in Council was made, the Supreme Court had no doubt that it had the power and the duty to order restitution of the principal sum that had been paid pursuant to the judgment before it was reversed. However, the Supreme Court was of the opinion that it did not have the power to order the payment of interest upon any part of the principal sum that had been paid. The question before the Privy Council was whether the Supreme Court had power to order payment of interest and, if so, whether in the present case it was proper to exercise that power.
[3] Rodger v The Comptoir D'Escompte de Paris (1871) LR 3 PC 465.
Lord Cairns, in delivering the advice of the Privy Council, stated (475):
[O]ne of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the Suitors, and when the expression 'the act of the Court' is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of appeal, but the act of the Court as a whole, from the lowest Court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case. It is the duty of the aggregate of those Tribunals, if I may use the expression, to take care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court.
Lord Cairns said that, as a matter of principle, there was no doubt that injustice would be done to the Petitioners, and that 'the perfect judicial determination which it must be the object of all Courts to arrive at, will not have been arrived at unless the persons who have had their money improperly taken from them have the money restored to them, with interest, during the time that the money has been withheld' (475 ‑ 476).
Lord Cairns also said that 'the precedents will be found to be in favour of a restitution of the money with interest' and that this practice reflected the 'true principle to be applied to this case, and with what the justice of such a case demands' (476).
In Merchant Banking Co v Maud,[4] Sir James Bacon VC observed that the decision of the Privy Council in Rodger laid down 'a just and reasonable rule which ought to prevail in all cases' (660).
[4] Merchant Banking Co v Maud (1874) LR 18 Eq 659.
In Cox v Hakes,[5] Lord Field, who dissented in the result, cited Rodger in support of the proposition that 'restitutio in integrum is the right of every successful appellant'.
[5] Cox v Hakes (1890) 15 App Cas 506, 547.
In Jai Berham v Kedar Nath Marwari,[6] Lord Carson, in delivering the advice of the Privy Council, referred to the duty of an appellate court, when varying or reversing a decree, to place the parties in the position they would have been but for the variation or reversal, and said:
It is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved.
His Lordship then referred to Lord Cairns' statement in Rodger which I have set out at [55] above.
[6] Jai Berham v Kedar Nath Marwari (1922) LR 49 Ind App 351, 355 ‑ 356.
In Heavener v Loomes,[7] Isaacs and Rich JJ adopted, in essence, the principle enunciated by Lord Cairns in Rodger and observation of Lord Carson in Jai Berham.
[7] Heavener v Loomes [1924] HCA 10; (1924) 34 CLR 306, 323 ‑ 324.
In Commissioner for Railways (NSW) v Cavanough,[8] the respondent was an officer in the employ of the appellant. He was convicted of a criminal offence. The conviction was set aside on appeal. The respondent then sued the appellant for salary for the period between the date of his conviction, when he was suspended, and the date of setting aside the conviction, when he was reinstated. The appellant relied upon a statutory provision to the effect that an officer convicted of an offence shall be deemed to have vacated his office. The High Court held that upon the setting aside of the respondent's conviction, the conviction was avoided ab initio. Therefore the respondent could not be deemed by the statutory provision to have vacated his office. He was entitled to the salary for the period in question.
[8] Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220.
Rich, Dixon, Evatt and McTiernan JJ cited with approval (at 225) the following passage from Archbold's Criminal Pleading, Evidence and Practice (21st ed, 1893) 226 ‑ 227:
[U]pon the reversal of a judgment against any person convicted of any offence, the judgment, execution and all former proceedings become thereby absolutely null and void. If living, he (or if dead, his heir or personal representative, as the case may be) will be entitled to be restored to all things which he may have lost by such erroneous judgment and proceedings, and shall stand in every respect as if he had never been charged with the offence in respect of which judgment was pronounced against him.
In Commonwealth v McCormack,[9] the salient facts were these. In an earlier appeal the High Court declared that the Commonwealth had been entitled to set off an amount of $75,000 against an amount owing by the Commonwealth to the plaintiff in respect of the acquisition of land. When making its order in the earlier appeal, the High Court was not aware that the Commonwealth had in fact paid the plaintiff $75,000 and interest (totalling $91,990.06) pursuant to the judgment of the primary court. In the current appeal the High Court held that the Commonwealth was entitled to have the earlier High Court order varied, pursuant to O 29 r 11 of the High Court Rules, to require the plaintiff to repay the amount paid in satisfaction of the primary court's judgment.
[9] Commonwealth v McCormack [1984] HCA 57; (1984) 155 CLR 273.
Murphy, Wilson, Brennan, Deane and Dawson JJ referred with approval (at 276 ‑ 277) to:
(a)Lord Field's statement in Cox that 'restitutio in integrum is the right of every successful appellant';
(b)Lord Cairns' statement in Rodger which I have set out at [55] above; and
(c)the principle espoused by Isaacs and Rich JJ in Heavener based on Rodger and Jai Berham.
Their Honours then said (277):
The omission of a repayment order from the order dismissing the appeal is due entirely to the failure of the Commonwealth to instruct counsel to inform the court of the circumstances which made such an order necessary. If the matter had been raised on the hearing of the appeals, such an order would have been made as of course for the reason that, without a repayment order made by one of the courts having jurisdiction to make it, the appeals to the Federal Court and to this Court would be nugatory. The Commonwealth would remain deprived of the money which it had paid in obedience to the judgment of the Supreme Court which the Federal Court and this Court have held to be erroneous.
Murphy, Wilson, Brennan, Deane and Dawson JJ added that the order sought by the Commonwealth should be made 'to give effect to the judgment which the Court has delivered and to accord the right of restitutio in integrum to the Commonwealth' (277).
In National Australia Bank Ltd v Bond Brewing Holdings Ltd,[10] the primary judge appointed receivers and managers to a holding company and a number of its operating subsidiaries that carried on business as brewers. On appeal, the Full Court of the Supreme Court of Victoria held that the primary judge erred in making the order appointing the receivers and managers. The Full Court set aside the order. A question arose in the appeal as to whether, in the absence of an undertaking as to damages by the parties who had applied for the order appointing the receivers and managers, the Full Court had power to award damages to the companies for any harm suffered by reason of the erroneous order appointing the receivers and managers.
[10] National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386.
In the Full Court, Brooking J referred to a number of decisions on reversal of judgment restitution, including Rodger, Merchant Banking, Cox, Heavener and McCormack (591 ‑ 594). His Honour said that the principle expressed by Lord Cairns in the passage from Rodger that I have set out at [55] above 'cannot be read as asserting that the court will always ensure, so far as possible, that no suitor suffers as a result of the act of the court a loss for which there is no redress' (591). His Honour continued (591):
The law being what it is, and judges being what they are, many wrong judgments and orders are given and made. These can be corrected on appeal. But there are and must be limits to how far the courts will go in putting matters right on appeal.
After an extensive survey of the case law in Australia, the United Kingdom and the United States, Brooking J expressed these conclusions (597 ‑ 598):
This survey shows that the principle on which the courts have for centuries acted is that when an erroneous judgment or order is overturned, whether by means of appeal or by any other procedure, the court will achieve a just result by requiring anything that has been taken from him by the other party by virtue of the wrong decision to be restored. … The principle is, as it was in the reign of the first Elizabeth (Eyre v Woodfine Cro Eliz 278; 78 ER 533), one of restitution or restoration. The court is seeking to restore to one party what it has wrongly taken from him and given to the other. It does not seek to restore the successful party to his former position by awarding damages to compensate him for loss flowing from the erroneous judgment or order. (emphasis added)
In Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2),[11] Handley JA (Mahoney and Priestley JJA agreeing) said that it is well‑established that the reversal of a judgment on appeal entitles the successful appellant to recover any moneys paid under the reversed judgment (661). His Honour cited Cavanough in support of that proposition. His Honour also observed that the passage from Archbold's Criminal Pleading, Evidence and Practice, which Rich, Dixon, Evatt and McTiernan JJ quoted with approval in Cavanough, 'is of general application and applies to civil appeals' (661). His Honour then said (661 ‑ 662):
The same principles apply when a superior court, in the exercise of its supervisory jurisdiction, quashes orders of an inferior court. In that event the defendant in the inferior court who has succeeded in having the orders against him quashed, is entitled to restitution in respect of any moneys paid by him in respect of a fine, costs or otherwise under those orders and in respect of any other benefits such as the possession of land which the other party obtained thereunder: see R v Jones (1722) 1 Str 474; 93 ER 643; R v Wilson (1835) 3 Ad & E 817 at 837 ‑ 838; 111 ER 624 at 631 ‑ 632 and R v Hellier (1851) 17 QB 229 at 235 ‑ 238; 117 ER 1267 at 1270 ‑ 1271.
[11] Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659.
In Nykredit Mortgage Bank Plc v Edward Erdman Ltd (No 2),[12] the House of Lords held that the House had jurisdiction, when ordering the repayment of money paid pursuant to a judgment that had been set aside by the House on appeal, to award interest on the money ordered to be repaid. Lord Nicholls of Birkenhead (Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Slynn of Hadley and Lord Hoffmann agreeing) said (1637):
[W]hen ordering repayment the House is unravelling the practical consequences of orders made by the courts below and duly carried out by the unsuccessful party. The result of the appeal to this House was that, to the extent indicated, orders made in the courts below should not have been made. This result could, in some cases, be an idle exercise unless the House were able to make consequential orders which achieve, as nearly as is reasonably practicable, the restitution which this result requires. This requires that the House should have power to order repayment of money paid over pursuant to an order which is subsequently set aside. It also requires that in suitable cases the House should have power to award interest on amounts ordered to be repaid. Otherwise the unravelling would be partial only.
[12] Nykredit Mortgage Bank Plc v Edward Erdman Ltd (No 2) [1997] 1 WLR 1627.
In Meerkin & Apel v Rossett Pty Ltd (No 2),[13] the Court of Appeal of Victoria set aside a judgment for damages, which included an amount of damages by way of interest, obtained by the respondent. The Court of Appeal ordered that any amount that had been paid pursuant to the judgment be repaid with interest and reserved liberty to apply as to the rate or amount of interest. The respondent repaid the full amount of the judgment and paid interest on that amount calculated on a simple interest basis at 7% per annum. The appellants sought a higher rate of simple interest; alternatively, compound interest at a mercantile or commercial rate with half‑yearly rests. The Court of Appeal held that the appellants were not entitled to further interest.
[13] Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] VSCA 10; [1999] 2 VR 31.
Callaway JA (Charles and Batt JJA agreeing) referred at [7] to the 'wider view' identified by Fitzgerald P in Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd,[14] and the 'narrower view' adopted by Brooking J in Bond Brewing Holdings. The wider view is that the appellate court should focus on the loss that the appellant has suffered by satisfying the primary judgment. The narrower view is that the appellate court should focus on the fruits of the primary judgment that the respondent has (or is presumed to have) enjoyed. His Honour was not persuaded that Brooking J's analysis was wrong [7].
[14] Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26.
Callaway JA said [7]:
An appellate court is concerned to do justice to the parties, not solely to the appellant. The error was made by the court below, not by the respondent. There is no right to compensation as against the respondent but only to restitution. If interest measured by the appellant's loss is awarded, all that the court will do is to shift the injustice occasioned by the erroneous judgment from the appellant to the respondent.
His Honour referred on several occasions to the need to be fair to both parties and said at [15] that that was the fundamental reason for his agreement with the judgment of Brooking J in Bond Brewing Holdings. His Honour added at [15] that the judgment of Brooking J accorded with the statements of principle by the Privy Council in Jai Berham (355) and referred to by Isaacs and Rich JJ in Heavener (323 ‑ 324).
In TCN Channel 9 Pty Ltd v Antoniadis [No 2],[15] the claimant applied for orders for the repayment of judgment debts and costs paid by the claimant pursuant to judgments that were subsequently set aside by the Court of Appeal of New South Wales. The Court of Appeal ordered that there be a new trial.
[15] TCN Channel 9 Pty Ltd v Antoniadis [No 2] [1999] NSWCA 104; (1999) 48 NSWLR 381.
The opponent resisted the making of orders for restitution on discretionary grounds. The Court of Appeal (Handley, Beazley and Stein JJA) held that pt 51AA r 18 of the Supreme Court Rules 1970 (NSW), which at the material time provided that where a judgment is reversed on appeal, the 'Court of Appeal may make such orders for restitution … as the Court of Appeal thinks fit', confers a power to order restitution and not a discretion to refuse it [8]. Their Honours accepted, however, that orders for restitution may be moulded in relation to some aspects of the granting of restitution following the reversal of a judgment on appeal; for example, the date for repayment or delivery of possession [8]. See also Woolworths Ltd v Strong (No 2).[16]
[16] Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; (2011) 80 NSWLR 445 [28] (Campbell JA; Handley AJA & Harrison J agreeing).
The opponent also submitted that the principle enunciated by Lord Cairns in Rodger (475) had no application where the appellate court had only ordered a new trial and had not finally disposed of the proceedings. The Court of Appeal rejected that submission. Their Honours said [11]:
The present question was not raised by the facts in Rodger's case and in our judgment Lord Cairns' language, properly understood, does not support any qualification to the general principle. This claimant has been injured by acts of the Court, both the trial court, and the single judge of this Court who refused to order a stay of execution on the judgments under appeal in that it has been compelled to pay money at a time when it is now known that the money was not legally payable. The opponent, to use other language of Lord Cairns (at 475; 125), has 'by mistake and by wrong obtained possession of the money under a judgment which has been reversed', and remains in possession of that money without any existing right to do so. In our judgment the Court is bound to make orders for restitution to redress this continuing wrong.
See also Ageas Insurance Co (Asia) Ltd v Lam Hau Wah Inneo.[17]
[17] Ageas Insurance Co (Asia) Ltd v Lam Hau Wah Inneo [2011] 1 HKLRD 422 [10] ‑ [14] (Kwan JA; Sakhrani J agreeing).
In Heydon v NRMA Ltd (No 2),[18] the Court of Appeal of New South Wales, in an earlier decision, set aside a judgment that had been obtained by the respondent against the appellants. The appellants had paid the judgment sum ordered by the primary judge before the judgment was set aside on appeal. The appellants and the respondent were unable to agree upon the appropriate interest rate payable by the respondent on the judgment sum that had to be repaid.
[18] Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; (2001) 53 NSWLR 600.
Mason P (Beazley JA and Ipp AJA agreeing) held that an appellate court's power to award restitution with interest exists at common law and is not based upon 'some discretionary invocation of statutes or rules relating to appeals' [14]. His Honour elaborated [14]:
It is based on the 'unifying legal concept' of unjust enrichment identified by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256 ‑ 257. My views are developed in detail in Restitution Law in Australia, especially ch 7 (Judgments Reversed or Set Aside) and ch 28 (Interest). In brief, restitution is available regardless of the means whereby the judgment is discharged; and restitution with interest is the right of the ultimately successful party (see esp Rodger v Comptoir d'Escompte de Paris(1871) LR 3 PC 465; Commonwealth v McCormack (1984) 155 CLR 273; TCN Channel 9 Pty Ltd v Antoniadis (No 2)(1999) 48 NSWLR 381).
His Honour said that the purpose of an award of interest on the judgment sum that must be repaid is 'restitutio in integrum (Commonwealth v McCormack (at 276)), that is, to put the parties in the position they should have been when the litigation was completed at first instance' [19]. His Honour then said [19]:
A just restoration is the means whereby an attempt is made 'to take care that the act of the Court does no injury to any of the Suitors' (Rodger (at 475), cited in Commonwealth v McCormack (at 276). See also Heavener v Loomes (1924) 34 CLR 306 at 323 ‑ 324). There is no aim of punishing or even coercing the ultimately unsuccessful litigant who, after all, cannot be at fault in having sought to obtain and retain the fruits of victory awarded by the court at first instance. In this circumstance, the moral claims of the parties are somewhat different to those that prevail prior to the initial judgment when, ex hypothesi according to the law declared at first instance, the judgment debtor was wrongfully withholding payment of the damages or debt due to the plaintiff.
Mason P made these comments at [21] about a passage from the reasons of Callaway JA in Meerkin & Apel [7] that I have set out at [75] above:
This passage suggests a dichotomy between restitution and compensation that may be capable of being misunderstood. I agree that the court is not seeking to compensate the ultimately successful party for all indirect losses stemming from submission to the judgment later set aside on appeal (see National Australia Bank Ltd v Bond Brewing Holdings Ltd and Burger King Corporation v Hungry Jack's Pty Ltd[2001] NSWCA 187 at [487] ‑ [500] for instances where compensatory restitution was withheld). However, the present context (interest) is one where the court is seeking to achieve restitutio in integrum by seeking to restore the parties to the position they would have been when the litigation finished at first instance. In these circumstances, while the award of interest is restitutionary in intent as regards both parties, its effect is also broadly compensatory as regards the appellant.
Mason P observed that 'the appellant's notional loss of the fruits of the money and the respondent's notional gain of those fruits are two sides of the one coin' [23]. His Honour added that the 'coin seeks to measure in a broadly just manner the value of the respondent's enrichment at the appellant's expense in consequence of having enjoyed the shortlived fruits of the erroneous judgment' [23].
In White v Tomasel,[19] McMurdo J explained that the rationale for reversal of judgment restitution is the appellate court's concern to restore to the successful appellant the money or property of which the appellant was involuntarily divested by the primary court's erroneous exercise of judicial power [68]. His Honour then said [68]:
It is unnecessary for the appellant to establish an unjust enrichment, at least in the sense that the property transferred is worth more than the consideration paid by the respondents. And to the extent that enrichment is relevant, the respondents have what should be still the appellant's property.
See also Roxborough v Rothmans of Pall Mall Australia Ltd.[20]
[19] White v Tomasel [2004] QCA 89; [2004] 2 Qd R 438.
[20] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [70] ‑ [75] (Gummow J).
In Goff & Jones on Unjust Enrichment (10th ed, 2022) at [26‑06] it is suggested that the better explanation of a successful appellant's right to reversal of judgment restitution lies in the policy consideration that the power of primary courts 'to force litigants to transfer benefits to other litigants is partly justified by procedural mechanisms whose function is to reduce the risk of judicial error'.
In Easterday v The State of Western Australia[21] and Secure Parking (WA) Pty Ltd v Wilson,[22] the reasoning of Brooking J in Bond Brewing Holdings in relation to reversal of judgment restitution was approved.
[21] Easterday v The State of Western Australia [2005] WASCA 105; (2005) 30 WAR 122 [31] ‑ [33] (Steytler J; Wheeler & Roberts‑Smith JJ agreeing).
[22] Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268; (2008) 38 WAR 350 [109] ‑ [111] (Buss JA; Martin CJ agreeing).
In Easterday, Steytler J referred to numerous authorities and concluded that, in the civil jurisdiction, where a judgment is reversed on appeal, restitution follows 'as of course' [39].
The remedy of restitution differs from the remedy of damages. Reversal of judgment restitution requires that the gain to the respondent be measured, not the loss to the appellant. See P Birks, Unjust Enrichment (2nd ed, 2005) 3 ‑ 4; Sempra Metals Ltd v Inland Revenue Commissioners.[23]
[23] Sempra Metals Ltd v Inland Revenue Commissioners [2007] UKHL 34; [2008] 1 AC 561 [28] (Lord Hope of Craighead).
In Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn,[24] the Privy Council examined the decision in Rodger and explained that the essence of the Board's reasoning in Rodger was simply that 'to give full effect to its decision that the defendant had wrongly (in the sense of erroneously) been ordered to pay a sum of money, repayment was required not only of the principal sum but of a further sum in the form of interest to reflect the fact that the defendant, instead of the claimant, had had the use of the money in the period between payment and repayment' [49].
[24] Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn [2020] UKPC 23; [2021] 1 WLR 5741.
Lord Leggatt JSC, in delivering the advice of the Privy Council, then said [50]:
Although such an order for repayment is restitutionary, there is no need to look for any reason to justify restitution beyond the fact that the appellate court has decided that, on a true view of the law and the facts, the order appealed from should not have been made. To give practical effect to that decision, it is necessary to reverse transfers of money or other property which have been made pursuant to the order set aside on appeal. The position is analogous to that which obtains where, for example, a contract is rescinded and there is required to be a giving back and a taking back on both sides.
His Lordship continued [51]:
Such restitution may not compensate the successful appellant for all the loss which it has suffered as a result of complying with the order of the lower court. There is in the Board's view no injustice in that. On the one hand, the process of appeal would be nugatory if the losing party was not required to return money or property transferred under the judgment set aside on appeal. At the same time, as commentators have argued, so long as a claimant has a judgment in its favour, the claimant should generally be entitled to act on the judgment without being exposed to a liability in damages by doing so: see DM Gordon, 'Effect of Reversal of Judgment on Acts Done Between Pronouncement and Reversal' (1958) 74 LQR 517; B McFarlane, 'The Recovery of Money Paid Under Judgments Later Reversed' (2001) 9 RLR 1. Requiring the respondent to restore what it received but not to have to compensate the successful appellant for anything else it has lost strikes an appropriate balance between the need to respect judgments for as long as they are binding and the need to enable error to be corrected through an effective system of appeals. It is a balance which may, if justified in particular circumstances, be adjusted in favour of an appellant by ordering a stay of execution or requiring an undertaking in damages as a condition of granting leave to appeal.
Lord Leggatt JSC referred with approval to the passage from the judgment of Brooking J in Bond Brewing Holdings that I have set out at [70] above and then said [54]:
In some cases where the order reversed on appeal required the transfer of property, it may be necessary and appropriate to require the property itself to be restored to the successful appellant. For example, such a remedy will normally be appropriate where, by the order reversed on appeal, the appellant was dispossessed of land. In a case such as the present, however, where the property transferred to the respondent was a fungible commodity (and in any case no longer exists), such an order for the specific restoration of property would plainly be inapt. In principle what is required is restoration of the monetary value of the property transferred in so far as this exceeded the price paid for it. In accordance with the Rodger and Nykredit cases, the reversal of the order for specific performance would not be complete unless interest is also awarded on the principal sum payable.
A successful appellant's right to restitution is personal, not proprietary, in character. See Heydon [26]; White [67]; Secure Parking [113].
It is a general principle that an appellate court can only order restitution against a party to the judgment and in favour of a party to the judgment. See R v Lever;[25] Burger King Corporation v Hungry Jack's Pty Ltd;[26] White [67]; SmithKline Beecham plc v Apotex Europe Ltd;[27] DM Gordon, Effect of Reversal of Judgment on Acts Done Between Pronouncement and Reversal (1958) 74 LQR 517, 523; Goff & Jones on Unjust Enrichment (10th ed, 2022) at [26‑13], [26‑17] ‑ [26‑19].
[25] R v Lever (1690) 1 Show KB 261; 89 ER 560; (1690) 2 Salk 587; 91 ER 492.
[26] Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 [493] (Sheller, Beazley & Stein JJA).
[27] SmithKline Beecham plc v Apotex Europe Ltd [2006] EWCA Civ 658; [2007] Ch 71 [40] ‑ [82] (Jacob LJ; Moore‑BickLJ & Sir Andrew Morritt C agreeing).
Mr Gordon made, relevantly, two points in his article (522 ‑ 523). First, restitution will not necessarily restore to a successful appellant all that he or she has lost as a result of the judgment which has been reversed, but merely what has reached the respondent's hands. For example, if the appellant's property has been sold pursuant to a judicial order for sale, neither the property nor its true value can be recovered, but only the proceeds of sale (Robertson v Miller[28]). Secondly, restitution can only be ordered against a party to the judgment (Bank of US v Bank of Washington[29]). If the appellant's property has been sold to a third party, the appellant does not have a remedy by restitution proceedings in the appeal. Even if the third party cannot establish a good title to the property, the appellant must bring new proceedings against the third party.
[28] Robertson v Miller (1904) 3 NB Eq 78.
[29] Bank of US v Bank of Washington (1832) 31 US 8.
In SmithKline Beecham, the claimants brought an action for patent infringement against the defendants. In the action the claimants obtained two interim injunctions, both of which contained a cross‑undertaking as to damages in favour of the defendants. Pumfrey J dismissed the claimants' action. After the dismissal of the action, Pumfrey J held that the defendants could enforce the cross‑undertakings as to damages.
By their draft points of claim, the defendants alleged that the cross‑undertakings could be enforced by or for the benefit of the parent companies of the defendants. The defendants applied for an order amending the cross‑undertakings under the slip rule so that in effect the cross‑undertakings as to damages were also in favour of the parent companies. The defendants and the parent companies applied for an order specifying that the parent companies were entitled to recover, pursuant to a restitutionary cause of action, losses suffered by the parent companies by virtue of the granting of the interim injunctions. The defendants and the parent companies also applied for an order that the parent companies be joined as defendants to the infringement action.
Lewison J dismissed those applications.
On appeal to the Court of Appeal of England and Wales, counsel for the defendants and the parent companies submitted, relevantly, that [40]:
(a)an appellate court has power to ensure that 'a litigant who has used [the primary court's process] to gain an advantage and then lost on appeal will be obliged by [the appellate court] to disgorge that benefit to a party adversely affected'; and
(b)that power extends to requiring the litigant to disgorge that benefit 'to a third party who was adversely affected by the "wrongful" order'.
The Court of Appeal rejected those submissions.
Jacob LJ (Moore‑Bick LJ and Sir Andrew Morritt C agreeing) held, relevantly and in effect, that [40] ‑ [82]:
(a)a court has jurisdiction to require a party who applies for an interim injunction to give a cross‑undertaking as to damages for the benefit of third parties affected by the injunction;
(b)however, the court's power in restitution to order an equitable return to a party who has lost the fruits of his property does not extend to restoring any person who has suffered a loss, as a result of the granting of the interim injunction, to the position he or she was in before the injunction was granted; and
(c)there is no analogy between the parent companies' claim in restitution, on the one hand, and an appellate court's power, on reversing the judgment of a primary court, to order the repayment of money paid by the appellant under the judgment that has been set aside, on the other.
A number of general principles are discernible from the preponderance of the authorities I have examined. First, when an appellate court overturns an erroneous judgment or order, the successful appellant is entitled to recover from the unsuccessful respondent any money or property of the appellant that has been paid or transferred to or received by the respondent pursuant to or in compliance with the judgment or order that has been set aside. Secondly, it is unnecessary for the successful appellant to establish an unjust enrichment, at least in the sense that the property transferred is worth more than the consideration paid by the respondent, and to the extent that enrichment is relevant the unsuccessful respondent has what should have been the appellant's money or property. Thirdly, the guiding principle is restitution or restoration of the appellant's money or property as distinct from awarding damages to compensate the appellant for loss suffered as a result of the erroneous judgment or order. The appellate court seeks to achieve restitutio in integrum by endeavouring to restore the appellant and the respondent to the position they would have been in had the correct judgment or order been entered by the primary court. Fourthly, the appellate court is concerned to make orders that will achieve a just outcome, within the limits of the guiding principle of restitution or restoration, to both the appellant and the respondent. However, a just outcome, within the limits of the guiding principle of restitution or restoration, to both the appellant and the respondent necessarily includes restoring to the successful appellant any money or property of the appellant that has been paid or transferred to or received by the unsuccessful respondent pursuant to or in compliance with the judgment or order that has been set aside. Fifthly, although orders for reversal of judgment restitution are not made and cannot be resisted on discretionary grounds, the appellate court may mould the orders to achieve a just outcome, within the limits of the guiding principle of restitution or restoration; for example, by fixing the date for repayment of money paid or the date for retransfer of property transferred pursuant to the erroneous judgment or order. Sixthly, in an appropriate case, the appellate court may require the respondent to pay interest or account for profits received by the respondent in respect of the money or property of the appellant that was paid or transferred to or received by the respondent, pursuant to or in compliance with the erroneous judgment or order, to redress the appellant's loss and the respondent's gain for the purpose of achieving restitutio in integrum. Seventhly, where a judgment is reversed on appeal the appellant's right to restitution or restoration is personal, not proprietary. Eighthly, an appellate court can only order restitution against a person who is in substance a party (as distinct from a third party) to the judgment and in favour of a person who is in substance a party (as distinct from a third party) to the judgment. I explain this distinction later in these reasons when I consider whether Kipoi is precluded from seeking or obtaining reversal of judgment restitution against YYT because Kipoi and YYT were not joined as parties to the primary proceedings, but were merely given leave to be heard as 'interested parties'.
In the latter respect it is well established that a decision of a judge[565] of a superior court is valid unless and until it is set aside (even if made outside of jurisdiction).[566] If such a decision has not been set aside, and a stay has not been granted, it is a lawful judgment and action taken in reliance on it is lawful.[567] Once set aside 'the order can no longer provide the lawful justification for further action, but whether what has been done can be undone will depend upon the availability of appropriate remedies, to bring about the appropriate relief'.[568]
[565] A master of the Supreme Court of Western Australia is a member of the court: Supreme Court Act s 6(3)(e). Accordingly, the s 444GA order takes effect as an order of a superior court of record.
[566] Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, 585, 590, 598, 605. See also The State of New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118 [32] - [33], [38], [41], [56].
[567] Wilde v Australian Trade Equipment Co Pty Ltd [1981] HCA 13; (1981) 145 CLR 590, 603.
[568] Wilde v Australian Trade Equipment Co Pty Ltd (603).
There was no discussion at the appeal hearing of what this principle might mean were Kipoi (or Mr Tucker) to seek recovery of the Tiger shares against YYT in separate proceedings having secured an order that this court set aside the s 444GA order. Outside of the making of a restitutionary order in this court such submissions as were received were limited to the rights of a member where a deed administrator purported to transfer the member's shares without written consent or leave of the court under s 444GA.[569] In the circumstances it would be inappropriate to consider what, if any, scope there is for recovery in separate proceedings if a s 444GA order is set aside on appeal.
[569] Appeal ts 251 - 253.
Reversal of judgment restitution in the present case might be thought to further the evident safeguard inherent in conditioning the power to transfer under s 444GA on leave of the court. Any such consideration is secondary. The availability of reversal of judgment restitution is concerned with the effective exercise of the court's appellate jurisdiction rather than the court's protective function under s 444GA.
In my opinion, having regard to the matters previously discussed and for the reasons that follow, the effective exercise of the court's appellate jurisdiction does not justify the availability of reversal of judgment restitution in the case of a deed administrator's transfer of shares following an erroneous order for leave to transfer under s 444GA. I rely in particular on the following.
First, the concern underpinning reversal of judgment restitution is to ensure that the 'act of the court' does no injury to any of the litigants. But, for reasons that are apparent from my consideration of the parties' competing submissions on this topic, the Tiger shares were not transferred by or pursuant to the court's s 444GA order. The court's order did no more than empower the deed administrators to effect a transfer. The order for leave under s 444GA was permissive rather than coercive. The transfer was an act of the deed administrators and was compelled by the terms of the DOCA rather than the order of the court. The order did not effect a transfer of the Tiger shares. Nor did the order of itself necessitate a transfer of the Tiger shares.
Second, and relatedly, Kipoi reads too much into the various formulations used to describe the necessary nexus between the erroneous judgment and that which may be the subject of reversal of judgment restitution. The passages relied on must be read in context - they concern the particular factual context that was then before the court and, in any case, are often simply reflective of language employed in historic common forms rather than principle. It is wrong to read the passages relied on as considered statements of principle capable of universal application in novel situations such as the present case.
Third, accepting that there is a nexus requirement, it is one properly understood in terms of what has been paid or transferred 'by or pursuant to' the erroneous judgment. 'By' was the degree of connection preferred by the plurality in Cavanough. I would add the words 'pursuant to' to signify that the required nexus is not to be unnecessarily circumscribed where money is paid or property is transferred in obedience to a judgment without the necessity for any formal process of execution to give effect to the court's judgment (as was the case in Commonwealth v McCormack). That explication of the concept is, in any case, inherent in the 'by reason of' preferred by Starke J in Cavanough.
The master's s 444GA order might be seen as something which provided the occasion for or the opportunity for the transfer of the Tiger shares. It was a condition to be satisfied if there was to be a lawful and effectual transfer of the Tiger shares by the deed administrators. This no doubt informs Kipoi's submission that it was enough that the transfer would not have occurred 'but for' the order. But here, as when considering questions of causation, one should differentiate between an act of the court which does injury to a litigant and an act which merely provides the occasion for or the opportunity for the subsequent suffering of an injury. The nature and effect of the s 444GA order is such that it is of the latter character. It follows, as I have said, that the Tiger shares were not transferred by or pursuant to the court's s 444GA order.
I would, for these reasons, uphold YYT and Jinji's contention that the restitutionary relief Kipoi seeks by way of reversal of judgment restitution is unavailable so far as the s 444GA order merely authorised but did not require the transfer of the Tiger shares. As reversal of judgment restitution relief is unavailable so too is the substitutive restitution that Kipoi sought in the alternative (see [765] - [766]).
It should not be thought that this conclusion exposes an inadequacy in the court's effective exercise of its appellate jurisdiction. In his article on the effect of reversal of judgment D M Gordon QC observed that 'it cannot be said that a right to appeal necessarily guarantees that an appellant will obtain the full fruits of success'.[570] It is for this reason that the court may stay the operation of a judgment pending appeal. The availability of a stay pending determination of an appeal provides an effective means of protection for a litigant in the position of Kipoi and satisfactorily ensures the effective exercise of the court's appellate jurisdiction.
[570] Gordon D M, Effect of Reversal of Judgment on Acts done between Pronouncement and Reversal (1958) 74 LQR 517, 520.
YYT and Jinji relied on Kipoi's failure to meet the condition for the stay order as a reason why reversal of judgment restitution is unavailable. It is not necessary to consider that argument given the conclusion I have come to on the present objection to restitutionary relief. However, for completeness, I will now turn to YYT and Jinji's fourth and final contention in opposition to restitutionary relief.
YYT/Jinji's opposition to restitution based on Kipoi allowing the lapse of the stay order
Finally, YYT and Jinji oppose restitution on the basis that Kipoi could have protected itself from any injustice. However, being either unwilling or unable to comply with the conditional terms of this court's stay of the s 444GA order, Kipoi did not protect itself. Instead Kipoi allowed the stay to lapse. YYT and Jinji relied on a passage from Burger King Corp v Hungry Jack's Pty Ltd where, by reference to D M Gordon QC's article,[571] the Court of Appeal in New South Wales stated that 'the law will not be stretched so far as to ensure a party obtains the fruits of a successful appeal, where it has neglected to protect itself'.[572]
[571] Gordon D M, Effect of Reversal of Judgment on Acts done between Pronouncement and Reversal (1958) 74 LQR 517, 520.
[572] Burger King Corp v Hungry Jack's Pty Ltd [495].
Burger King Corp v Hungry Jack's Pty Ltd is a very different case from the present. It is a case where a party entered into agreements pursuant to a court order that was claimed to be legally erroneous. Accordingly, it is not a case where money or property was paid or transferred as a result of the erroneous order - it is a case where new rights and obligations were created. While there is reference to 'restitution' what was sought is better characterised as a reversion to the status quo ante rather than reversal of judgment restitution. In the unusual circumstances that had transpired in Burger King Corp v Hungry Jack's Pty Ltd the appellant accepted that problems would accompany immediate 'restitution'. Third party interests had intruded in relation to some of the agreements. The Court of Appeal said that the orders proposed were likely to be difficult to implement such that '[u]nscrambling the egg may be nigh impossible'; and that the point had 'become moot'.[573] In those circumstances it was not appropriate to order restitution in the event of a finding that the order was in error.
[573] Burger King Corp v Hungry Jack's Pty Ltd [500].
Relevantly, however, the Court of Appeal in New South Wales adopted an entirely orthodox view as to a successful appellant's entitlement to restoration of what was wrongly taken from him or her and given to the respondent.[574] In any case, once regard is had to the relevant passage of the article the Court of Appeal relied on, the point being made in the passage YYT and Jinji refers to is that only a stay can confer full protection against all of the possible adverse consequences of an erroneous judgment.[575] It is not being suggested that reversal of judgment restitution may be withheld because an appellant did not seek (or did not satisfy the condition imposed for) a stay of the primary court's order.
[574] Burger King Corp v Hungry Jack's Pty Ltd [489], [492].
[575] See also Burger King Corp v Hungry Jack's Pty Ltd [499].
Accordingly, YYT and Jinji's reliance on Burger King Corp v Hungry Jack's Pty Ltd is misplaced.
Kipoi's failure to meet the condition imposed for the continuation of the stay of the s 444GA order could only be relevant if reversal of judgment restitution is discretionary. It is not. The lapse of the stay due to Kipoi's unwillingness or inability to provide security does not provide a proper reason to decline Kipoi's claim for restitutionary relief.
Restitutionary relief: conclusion
Most of YYT and Jinji's objections to restitutionary relief fail. I accept, however, that the restitutionary relief Kipoi seeks by way of reversal of judgment restitution is unavailable so far as the s 444GA order merely authorised but did not require the transfer of the Tiger shares. It does not follow, however, that the appeal itself inevitably fails. YYT and Jinji's submission to that effect should be examined in the context of considering the appropriate relief more generally. I turn now to that issue.
What is the appropriate relief (if any)?
At the appeal hearing, the court raised with the parties what might occur if the court was satisfied that there was appellable error but considered that it was not able to decide for itself whether an order for leave under s 444GA ought to have been made in the primary proceedings.
The court mentioned that one possibility was remitter. Another possibility was to direct that an issue or question be tried or determined pursuant to s 59(4) of the Supreme Court Act. A s 59(4) direction could be either to a judge of the General Division or to a member of the present coram. Following a finding or determination of the issue or question directed to be tried or determined the court might direct that judgment be entered in accordance with the finding or determination. Such an approach might conceivably result in a wider range of possible outcomes were it found that the appeal ought to be allowed. One possibility might be, for example, that leave ought to be granted under s 444GA on condition that YYT pay an amount that reflected the assessed value of the Tiger shares. Much would depend on the result of the finding or determination on the s 59(4) direction.[576]
[576] Appeal ts 140 - 141, 180 - 181, 238 - 247, 361 - 362, 372 - 373, 424.
Section 59 of the Supreme Court Act is concerned with the Court of Appeal's power to order a new trial. A new trial may be ordered as to part only of a matter in controversy or as to a particular question or issue without disturbing any finding or decision as to any other part of the controversy.[577] Also, by s 59(4), where there is an application for a new trial:[578]
the Court of Appeal shall have and may exercise all such powers as are exercisable by it upon the hearing of an appeal and may, if it is satisfied that it has before it all the materials necessary for finally determining the question in dispute or any of them, or for awarding any remedy or relief sought, give judgment accordingly, and for that purpose shall have and may exercise all the jurisdiction, powers, and duties of the Court, whether as to amendment or otherwise, and may draw any inference of fact not inconsistent with the findings of the jury, if any, or may, if it is of the opinion that it has not sufficient materials before it to enable it to give judgment, direct the application to stand over for further consideration, and may direct such issues or questions to be tried or determined, and such accounts and inquiries to be taken and made, as it thinks fit, or may direct judgment to be entered in accordance with the finding or determination of any issue or question directed to be tried or determined, or may give judgment, in any of the modes authorised by this Act or the rules of court. (emphasis added)
[577] Supreme Court Act s 59(3).
[578] Supreme Court Act s 59(4).
Accordingly, if there is an application for a new trial, the Court of Appeal may - if the court is of the opinion that it has not sufficient materials before it to enable the court to give judgment: (1) stand the application over for further consideration; and (2) may direct such issues or questions to be tried or determined, or account and inquiries to be made, as the court considers fit. Thereafter, following a finding or determination of the issue or question directed to be tried or determined, the court may enter judgment in accordance with the finding or determination.
There is relatively little judicial consideration of s 59(4).
A note to s 59(4) as originally enacted explains that it is derived from s 39 of the Supreme Court Civil Procedure Act 1932 (Tas). The terms of s 59(4) reflect the text of s 39(5)(a) of the Tasmanian Act. The Tasmanian provision, in turn, can be traced to O 40 r 10 of the Rules of the Court 1873 (UK) and was similar to a number of statutory provisions governing aspects of appeals and new trials in other Australian courts.[579]
[579] See eg Rules of the Supreme Court 1900 (Qld) O 70 r 26; High Court Procedure Act1903 (Cth) sch pt II s I r 23.
The potential application of the provision is illustrated by a decision of the Tasmanian Court of Criminal Appeal in Director of Public Prosecutions v Harwood.[580] There the Director appealed against a sentence on the ground that it was manifestly inadequate. The sentencing judge made limited factual findings. For example, the sentencing judge did not make findings on material matters relevant to the factual basis of sentencing. Nor were there findings as to the personal circumstances of the offender. The Court of Criminal Appeal concluded that, without those findings, it was impossible for the court to adequately assess whether the sentence was manifestly inadequate. Also, if the appeal was allowed, there would be difficulties in resentencing the offender. In the circumstances, invoking the Tasmanian analogue to s 59(4), the Court of Criminal Appeal stood over the hearing of the appeal and directed that the sentencing judge determine and report to the court as to the factual basis on which the sentence was imposed.[581]
[580] Director of Public Prosecutions v Harwood [2019] TASCCA 2. To similar effect see P v Tasmania [2005] TASSC 107 [7].
[581] Director of Public Prosecutions v Harwood [13] - [17].
In this respect, at least in an appeal marked by inadequacy of reasons on the part of the primary court, s 59(4) (and its analogues in other jurisdictions) provide a means to overcome a failure in the fact finding process in a way that is functionally equivalent to the practice employed by the Full Court of the Federal Court of Australia when it remits a matter back to the primary court for the purpose of requiring legally adequate reasons (see [502] above).
The power conferred by s 59(4) is only available where there is an application for a new trial. YYT and Jinji sought a new trial in the alternative, ie in the alternative to the relief they propounded in the event that the appeal was allowed (as to which see [864] below).
Initially senior counsel for Kipoi disavowed any intention by Kipoi to apply for a new trial. That was on the basis that this court could and should determine whether an order for leave to transfer under s 444GA ought to have been made in the primary proceedings.[582] However, Kipoi accepted that there was an inherent power to remit the matter for redetermination if the appeal was allowed.[583] This, as has been seen, was advanced by Kipoi as a fall-back in the event that the court was not able to decide for itself whether leave under s 444GA ought to have been granted in the primary proceedings. Conformably with this alternative senior counsel for Kipoi also accepted, correctly in my view, that there was an application for a new trial inherent in the appeal. This was on the basis that, if the primary reasons were legally inadequate and the court then reached the view that it did not have sufficient materials to enable it to determine the valuation question implicit in s 444GA(3), then what Kipoi sought in the alternative was a new trial.[584]
[582] Appeal ts 240, 243, 377.
[583] Appeal ts 239.
[584] Appeal ts 240 - 241.
In the circumstances the power under s 59(4) of the Supreme Court Act to direct that an issue or question be tried and determined is enlivened.
At all times Kipoi accepted the possibility of a 'conventional' or 'classic'[585] remittal.[586] This was where the court found error, allowed the appeal and set aside the master's order, but - having declined to determine the question under s 444GA for itself - remitted the undetermined s 444GA application to the General Division for redetermination.
[585] As so described by Mr Hutton SC for Kipoi in oral reply submissions: appeal ts 488.
[586] Appeal ts 142, 148, 177 - 178, 238 - 239.
Initially Kipoi accepted that restitution in the form of a court ordered re-transfer of the Tiger shares would have to await reperformance of the task prescribed by s 444GA (whether by this court or on this court's remitter or following a s 59(4) direction).[587] Kipoi also initially accepted that the master's order under s 444GA granting leave to transfer would not be set aside pending the outcome on the remitter or s 59(4) direction. In other words, the order under appeal would only be set aside if it was conclusively determined that leave under s 444GA ought to have been refused in the primary proceedings.[588]
[587] Appeal ts 180.
[588] Appeal ts 189 - 190. See also appeal ts 176.
Kipoi's position was modified in subsequent oral submissions. Relevantly:[589]
1.Kipoi said that, if appellable error was established, this court was able to decide for itself on the trial record and the additional evidence adduced on appeal whether leave under s 444GA ought to have been given in the primary proceedings. (This contention has now been considered and rejected. For the reasons I have given at [663] - [746] I am not satisfied that the court can properly and justly determine whether an order for leave to transfer under s 444GA should have been made in the primary proceedings.)
2.If, however, the court considered it was not able to decide for itself whether leave under s 444GA ought to have been given, Kipoi said that the appeal should still be allowed. Kipoi said that in this scenario - which is the situation that has transpired on my findings - the master's s 444GA order for leave to transfer ought to be set aside forthwith. That, Kipoi said, is the conventional approach where a judgment or order is infected by error of law constituting appellable error. This court might then remit the question of leave under s 444GA.
3.In this respect, and seemingly inconsistently with its written submission as referred to at [665] above, Kipoi suggested that leave under s 444GA could be granted nunc pro tunc notwithstanding that the Tiger shares had been transferred and the DOCA effectuated.
4.Any such application, and any remitter, would be determined on fresh evidence in accordance with the facts as they existed at the time of the further hearing.
5.The Tiger shares should be restored to Kipoi pending any such further hearing.
[589] Appeal ts 233 - 238, 241 - 244, 248 - 251, 275 - 276, 282.
I understand Kipoi's modified position to be one advanced primarily in relation to its 'conventional' or 'classic' remittal rather than a s 59(4) direction. Kipoi's position on what ought to occur in the event of a s 59(4) direction evolved during the appeal hearing. Initially, in the event that the court was minded to make a s 59(4) direction, Mr Hutley SC as senior counsel for Kipoi said it should be on the condition that YYT and Jinji undertook not to deal with the Tiger shares pending the determination.[590] However, in reply Mr Hutton SC as senior counsel for Kipoi said that restitution should be ordered as otherwise the master's erroneous decision would be having a continuing legal effect.[591]
[590] Appeal ts 282.
[591] Appeal ts 493.
I do not accept that there should be restitutionary relief of the kind sought by Kipoi in the event of remittal. That is all the more so in the event that the court considers it should make a s 59(4) direction rather than provide for a 'conventional' or 'classic' remitter - there being, in the event of a s 59(4) direction, no occasion for the immediate setting aside of the master's s 444GA order. In both scenarios the unavailability of substantive reversal of judgment restitution, for the reasons I have given in the earlier section of these reasons, means that there ought not be restitutionary relief in the lesser situation that prevails where Kipoi has only succeeded to the extent of bringing about a redetermination (either in the form of a remitter or through the process under s 59(4)).
YYT and Jinji suggested a different approach by way of remitter. If the appeal was allowed YYT and Jinji contended for orders that: (1) the master's order be set aside; (2) in lieu thereof this court grant leave to transfer the Tiger shares under s 444GA on condition of just payment by YYT; and (3) the court remit to a judge of the General Division the determination of the amount of the just payment (see [677] - [679] above).
YYT and Jinji did not pre-condition such relief on Kipoi first satisfying the court that an order for leave to transfer under s 444GA should not have been made in the primary proceedings. Rather, YYT and Jinji contemplated the appeal being allowed on terms that saw a variation of the s 444GA order with the potential for a 'just payment' as determined on remitter in favour of Kipoi (thereby preserving YYT's position as owner of the Tiger issued shares). Accordingly, implicit in this suggestion is acceptance on behalf of YYT and Jinji that even if, as I have found, Kipoi cannot sustain its claim for reversal of judgment restitution, Kipoi may nonetheless be entitled to some form of relief if appellable error is established.
There is, in the circumstances, implicit acceptance by YYT and Jinji that they overreach in their earlier submission to the effect that the unavailability of reversal of judgment restitution is fatal to Kipoi's appeal (see [750] above). In any case I do not accept the submission. It is well established that this court does not confine itself to granting the relief which is specified and, subject to affording the parties procedural fairness, will give such relief as is appropriate to the facts as found and the conclusions reached (provided that the relief is not in respect of a different cause of action to that relied on).[592] Accordingly, the unavailability of reversal of judgment restitution does not preclude a possibility of a successful appeal where some other form of relief is capable of being fashioned.
[592] Wicks v Bennett [1921] HCA 57; (1921) 30 CLR 80, 100; Rawson v Hobbs [1961] HCA 72; (1961) 107 CLR 466, 485; Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300, 318. See also Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2018] WASCA 185 [76].
The relief proposed by YYT and Jinji has the merit of bringing the appeal to an immediate finalisation.
Kipoi criticised YYT and Jinji's proposal on the basis that payment of a 'just amount' involved compensation rather than restitution or substitutive restitution.[593] That much may be accepted. But compensation is appropriate in circumstances where Kipoi has not made good its claim for restitutionary relief based on reversal of judgment restitution. Otherwise, Kipoi said that YYT and Jinji's proposal suffered from the vice that it permitted resolution of the controversy on a different basis to that underlying the deed administrators' application before the master - something said to be apparent from the basis on which a condition precedent to completion under cl 9.1.4(a) of the DOCA concerning ASIC relief from the operation of s 606 of the Corporations Act was sought and obtained.[594]
[593] Appeal ts 474. See also appeal ts 493 - 494.
[594] Appeal ts 484 - 486, 494 - 495.
Accordingly, once the relief based on reversal of judgment restitution is put aside, the alternate forms of relief addressed at the appeal hearing are:
1.An order that the s 444GA order is set aside together with a consequential order that the deed administrators' application for such relief is remitted to the General Division for redetermination according to law.
2.An order that the s 444GA order is varied such that leave to transfer is granted subject to 'just payment'; and the matter is otherwise remitted to the General Division for determination of the amount of the just payment.
3.The question of a new trial be stood over for further consideration pending the trial and determination of identified specific issues and questions pursuant to s 59(4) so that this court has sufficient materials before it to enable it to give judgment.
None of these options are ideal. All will require a judicial determination of the residual value, if any, of Tiger's issued shares. I am persuaded, however, that implementation of the s 59(4) procedure is the best of the available options as put forward at the appeal hearing. In this respect I note that senior counsel for Kipoi accepted that there may be some real advantage in proceeding under s 59(4) before the court made final orders.[595]
[595] Appeal ts 280. But see also appeal ts 493.
In terms of the comparative advantages of using the s 59(4) procedure, it should be acknowledged that the court is confronted with very unusual circumstances. Difficulties may arise with 'conventional' or 'classic' remitter given the effectuation of the DOCA and the cessation of the deed administrators' office as administrators of the DOCA. Kipoi has already taken conflicting positions on this point. Putting aside the legal questions that arise there is also the practical difficulty brought about by the circumstance that the deed administrators, as the relevant moving party, are now disinterested in the outcome of the litigation - a matter evident from their non-participation in the appeal. YYT and Jinji's proposal suffers from the disadvantage that this court makes final orders without sufficient materials. Also, the concept of a 'just payment' is vague and is likely to result in further disputation.
Further, there is, as Buss P's reasons note, an unresolved issue of whether a s 444GA order for leave to transfer may be subject to conditions. The parties took different positions on whether this was permissible, either as a matter of law or in the circumstances of the particular case. The court did not receive considered submissions on the issue and I would not, at this juncture, offer any view on whether such a conditional order is permissible as a matter of law or ought to be made in the circumstances of this case.
By contrast, adoption of the s 59(4) procedure, while unusual, best approximates the position were this court in a position properly and justly to determine whether an order for leave to transfer under s 444GA should have been made in the primary proceedings. In that event, based on its view as to the residual value of Tiger's issued shares, if any, this court would make appropriate final dispositive orders. The s 59(4) procedure can be used to bring about the same outcome.
I would, in the circumstances, make a direction under s 59(4) of the Supreme Court Act.
The purpose of the s 59(4) direction is to obtain sufficient materials to enable this court to give judgment. This object informs the issues or questions that the court ought to direct be tried or determined. I would, in the circumstances, not frame the issue or question expressly in terms of s 444GA(3). That, in any case, will be the ultimate issue for this court after a finding and determination on the issue or question the subject of the s 59(4) direction. The issue or question should instead be framed widely enough so that this court is placed in a position also to consider what, if any, conditions ought to have been imposed for satisfaction that the transfer of the Tiger shares would not unfairly prejudice the interests of the members of the company (assuming that such conditions are permissible as a matter of law and in the circumstances of the case). The parties should, of course, be heard on any such conditions when the matter returns to this court after the finding and determination pursuant to s 59(4).
Given the nature of the inquiry under s 444GA(3) I would frame the issue or question for trial or determination in terms of the residual value of Tiger's issued shares based on a valuation of the assets and liabilities of the company by reference to a liquidation scenario. This should be directed to the date of the master's s 444GA order (or such earlier date as close as possible thereto) as that is the date to which the inquiry under s 444GA(3) must be directed. I have prepared a form of the direction for the parties' consideration and further submissions on delivery of judgment (see [882.4] below).
The trial and determination the subject of the s 59(4) direction will require a further oral examination of the experts in relation to their evidence.
There will need to be consideration of whether the parties ought to be permitted to adduce additional expert or other evidence on the trial and determination the subject of the s 59(4) direction. Kipoi opposed the reception of new evidence.[596] Prima facie there is merit in Kipoi's resistance to the potential introduction of a series of new experts. The interests of justice will not be served by allowing the parties free rein to recast or improve their respective cases at the trial and determination the subject of the s 59(4) direction by adducing evidence that could and should have been presented at the hearing before the master. It might, however, be appropriate to allow the parties to file short supplementary expert reports that update the experts' respective calculations to take account of movements in the copper price between the date of the original hearing and 28 October 2021 (the date of the master's order granting leave to transfer under s 444GA). I am also conscious that the court knows nothing about the continued availability of the expert witnesses and, in particular, whether the deed administrators' expert witnesses will make themselves available for engagement on behalf of YYT and Jinji. Such practical matters may influence whether the parties ought to be permitted to adduce additional evidence and, if so, the extent of that evidence.
[596] Appeal ts 281.
Accordingly, I would hear from the parties on the issue of additional evidence on the delivery of judgment. It should not be expected, however, that the court will leave the matter to the discretion of the judge who is to deal with the s 59(4) direction. As the trial and determination pursuant to s 59(4) is to be conducted under the auspices of this court's appellate jurisdiction it is preferable that this court determine the bounds of the trial and determination. To ensure that matters unforeseen do not derail the trial and determination I would allow the parties liberty to apply.
A question arose at the appeal hearing as to whether the s 59(4) trial and determination should be conducted by a member of the present coram.
The main benefit in the s 59(4) trial and determination being conducted by a member of the present coram is one of judicial economy. The members of this court are familiar with the valuation evidence and the disputed issues in the valuation evidence. I am conscious, however, that the outcome of the s 59(4) trial and determination may itself be appealed. If so it would be convenient if any such appeal could be heard concurrently with the further consideration contemplated by the s 59(4) procedure. That will not be possible if a member of the present coram conducts the s 59(4) trial and determination. In the circumstances it is preferable for the s 59(4) trial and determination to be conducted by a judge of the General Division. It is not necessary to order that the s 59(4) trial and determination be conducted by a judicial officer other than the master given that the master has retired.
Conclusion and orders
For these reasons I would make orders to the following effect:
1.The appellant has leave to appeal if and to the extent that leave to appeal is required.
2.The second and third respondents' application in an appeal dated 4 May 2022 is dismissed so far as it concerns the affidavit of Amit Gupta sworn 16 December 2021 and attachments thereto.
3.The fourth respondent's application in an appeal dated 27 April 2022 is dismissed so far as it concerns the affidavit of Amit Gupta sworn 16 December 2021 and attachments thereto.
4.Pursuant to s 59(4) of the Supreme Court Act 1935 (WA) the court directs that the following issue and question be tried and determined, namely:
'What was the residual value of the ordinary issued shares in Tiger Resources Ltd (Subject to Deed of Company Arrangement), if any, as at 28 October 2021 (or such earlier date as close as possible thereto) based on a valuation of the assets and liabilities of the company by reference to a liquidation scenario rather than as a going concern?'
5.The trial and determination of the issue and question to be tried and determined pursuant to s 59(4) is to proceed as follows:
(a)The trial and determination is to be conducted before a judge of the General Division.
(b)The trial and determination proceed on the affidavits and expert reports specified in the schedule, as well as the other documentary exhibits before the primary court at the original hearing in action COR/69/2021, together with:
(i)[identify here any additional expert or other evidence the parties are to be permitted to adduce];
(ii)oral evidence adduced from one or more of the expert witnesses at the trial and determination;
provided that no party may cross-examine the deponent of an affidavit or the maker of an expert report if that witness was not required for the purpose of cross-examination at the original hearing in action COR/69/2021.
(c)The judge is to set out his or her conclusion on the issue and question to be tried and determined in the form of an order that answers the question specified at par 4 above.
6.The application for a new trial, and the further disposition of the appeal, stand over for further consideration upon the finding and determination of the issue and question directed to be tried and determined under s 59(4).
7.The appellant inform the Court of Appeal registrar of the fact of the finding and determination of the issue and question directed to be tried and determined under s 59(4) within 3 business days after such finding and determination.
8.The parties have liberty to apply in relation to the trial and determination of the issue and question to be tried and determined pursuant to s 59(4) on 5 business days' notice.
The schedule should identify all of the affidavits and expert reports that were received by the master at the original hearing. These will include the JER.
The parties should, however, be heard on the precise terms of the orders to give effect to these reasons. In doing so it will be necessary for the parties to address the extent to which, if at all, the parties ought to be permitted to adduce additional evidence.
The parties should also be heard on the costs of the appeal. On a provisional basis, however, it may well be simpler to reserve costs pending the outcome of the trial and determination pursuant to s 59(4). That course will ensure that the court evaluates the question of costs having regard to the parties' ultimate success on the appeal.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AR
Associate to the Honourable Justice Vaughan
22 NOVEMBER 2024
- AGLC
- Kipoi Holdings Mauritius Limited v Robert Michael Kirman and Robert Conry Brauer as joint and several administrators of Tiger Resources Limited (Subject to Deed of Company Arrangement) [No 4] [2024] WASCA 145
- Case
- [2024] WASCA 145
- Decision Date
CaseChat Overview and Summary
The appeal raised several legal issues, including the conditions under which leave to appeal was required, the admissibility of further evidence on appeal, and the sufficiency of reasons provided by the trial judge. The central issue was whether the trial judge erred in accepting the valuation evidence of one expert over others, particularly given the expert's acknowledgment of lacking specific valuation expertise. The court also examined the trial judge's failure to properly engage with and explain the preference for one expert's valuation over others.
The court found that the trial judge had indeed failed to provide legally adequate reasons for preferring one expert's valuation evidence over others. The trial judge had not properly engaged with the competing expert opinions and had not sufficiently explained the basis for preferring one expert's evidence. The court further found that the trial judge's error was significant given the subjective nature of the valuation evidence and the substantial differences between the experts' opinions. The court held that the appeal could not be determined on the basis of the existing record and that a new trial was necessary to properly and justly resolve the central issues of share valuation. The appeal was allowed, and the matter was remitted to the trial court for a new determination of the residual value of the shares.
In light of the findings, the court stayed the order allowing the share transfer and stood over the application for a new trial pending the resolution of the valuation issue. The court clarified that the reversal of the judgment restitution was a matter of right upon a successful appeal and was not discretionary, even though the parties involved were not formally joined in the primary proceedings. The court also noted that the trial judge's order merely authorised the transfer of shares and did not require the transfer to be completed.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
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