Kipoi Holdings Mauritius Limited v Robert Michael Kirman as joint and several administrators of Tiger Resources Limited (Subject to Deed of Company Arrangement) [No 2]
[2022] WASCA 14
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: KIPOI HOLDINGS MAURITIUS LIMITED -v- ROBERT MICHAEL KIRMAN as joint and several administrators of TIGER RESOURCES LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [No 2] [2022] WASCA 14
CORAM: BUSS P
BEECH JA
HEARD: 7 FEBRUARY 2022
DELIVERED : 7 FEBRUARY 2022
PUBLISHED : 11 FEBRUARY 2022
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 BAUER 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
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: ROBERT MICHAEL KIRMAN 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:
Appeals - Practice and procedure - Necessary and proper parties - Where in primary proceedings deed administrators sought leave under s 444GA of the Corporations Act 2001 (Cth) for the transfer of shares to effect a deed of company arrangement - Whether the claiming of restitutionary relief in the appeal seeking the retransfer of the shares made the previous legal owner of the shares a necessary party - Whether former deed administrators who were the moving parties in the primary proceedings should now be removed as parties to the appeal
Legislation:
Supreme Court (Court of Appeal) Rules 2005 (WA), r 42A
Result:
Appellant's application to join additional respondent granted
First respondents' application to be removed as a party dismissed
Category: B
Representation:
Counsel:
| Appellant | : | P A Walker |
| First Respondents | : | J K Taylor SC & P R Edgar |
| Second Respondent | : | S J Maiden QC & J G Abberton |
| Third Respondent | : | S J Maiden QC & J G Abberton |
Solicitors:
| Appellant | : | Clayton Utz |
| First Respondents | : | Norton Rose Fulbright Australia |
| Second Respondent | : | Lavan |
| Third Respondent | : | Lavan |
Case(s) referred to in decision(s):
Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
Kipoi Holdings Mauritius Ltd v Kirman and Bauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASCA 194
Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASCA 165
Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASCA 186
Lidden v Composite Buyers Ltd (1996) 67 FCR 560
Ramage v Waclaw (1988) 12 NSWLR 84
Robert Michael Kirman as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASC 411
Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291
REASONS OF THE COURT:
Two applications in this appeal were before the court on 7 February 2022.
First, the appellant, Kipoi Holdings Mauritius Ltd (Kipoi) applies for an order joining Richard Scott Tucker as the fourth respondent to the appeal.
Secondly, the first respondents, Messrs Kirman and Bauer, the erstwhile joint and several deed administrators of Tiger Resources Ltd (Tiger), apply for orders removing them as a party to the appeal.
At the conclusion of argument, the court made the following orders:
(a)On Kipoi's application:
(1)The appellant has leave, pursuant to r 42A of the Supreme Court (Court of Appeal) Rules2005 (WA), to add Richard Scott Tucker as a fourth respondent to the appeal.
(2)The costs of the application be the appellant's costs in the cause of the appeal.
(b) On the first respondents' application:
(1)The application is dismissed.
(2)The costs of the application be reserved.
We said that reasons for these orders would be published later. These are our reasons.
Background
The background appears from two earlier decisions of this court in proceedings between these parties: Kipoi Holdings Mauritius Ltd v Kirman[1] (stay reasons) and Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) (445D reasons).[2] For present purposes, a broad summary of the background is sufficient.
[1] Kipoi Holdings Mauritius Ltd v Kirman and Bauer as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASCA 194.
[2] Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASCA 186.
On 16 February 2021, Tiger's creditors resolved that the company enter into a deed of company arrangement (DOCA). The DOCA was executed on 19 February 2021. The first respondents were appointed as the deed administrators of the DOCA.
The second respondent (YYT) was the proponent of the DOCA. The third respondent (Jinji) is, or at least claims to be, the majority secured creditor of Tiger. It is associated with YYT.
Kipoi is a secured creditor of Tiger. It also had a beneficial interest in some of the shares of Tiger. The legal title to those shares was held by Mr Tucker, pursuant to a scheme of arrangement implemented on 11 June 2020.
Kipoi applied to set aside the DOCA pursuant to s 445D of the Corporations Act 2001 (Cth). The application was dismissed.[3] Kipoi's appeal from that decision was dismissed by this court.[4]
[3] Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASC 165.
[4] See the 445D reasons.
On 23 April 2021, pursuant to the DOCA, the first respondents, then the deed administrators, applied to the General Division of this court for leave under s 444GA of the Corporations Act to transfer all of the shares in Tiger to YYT.
On 20 October 2021, the master published written reasons as to why leave should be given. On 28 October 2021, the master made orders granting the deed administrators leave to transfer the Tiger shares.
On 3 November 2021, Kipoi filed a notice of appeal from the master's decision. On the same day, Kipoi applied for a stay of the master's orders.
This court granted a stay pending the determination of the appeal, conditional upon Kipoi paying the sum of $8,983,000 into court.[5]
[5] Stay reasons [65].
That amount was not paid and, consequently, the stay lapsed.
On 19 November 2021, following directions given by the master that the deed administrators were justified in transferring the shares,[6] the deed administrators transferred all of the shares in Tiger to YYT.[7]
[6] Robert Michael Kirman as joint and several administrators of Tiger Resources Ltd (Subject to Deed of Company Arrangement) [2021] WASC 411 [1].
[7] Affidavit of Amit Gupta [14].
On 24 November 2021, at a directions hearing in this appeal, counsel for the first respondents submitted that it was potentially a problem for the making of orders retransferring the shares previously beneficially owned by Kipoi, that Kipoi was a beneficiary and that the erstwhile legal owner of the shares, Mr Tucker, had not been joined as a party to the appeal.[8] In response, Kipoi's counsel foreshadowed the present application.
[8] Appeal ts 52 - 53.
On 6 December 2021, Kipoi filed an amended appellant's case.
The amended appellant's case
In its amended case, Kipoi amended its submissions to advance detailed further submissions focusing on the consequences, for the appeal and for the orders sought, of the fact that the Tiger shares had been transferred. The amended orders wanted include orders setting aside the master's orders and orders to the following effect:
2A.By no later than 4pm (AWST) on the date that is 3 business days after the pronouncement of these orders, [YYT] deliver to [Tiger] duly executed and proper instruments of transfer, in registrable form, providing for the transfer of the shares in Tiger acquired by [YYT] on 19 November 2021 back to the persons recorded in the [Tiger] register of members as the members of [Tiger] on 18 November 2021, in the proportions as so recorded in the register.
2B.[YYT] do all such other things as are necessary to effect registration of the transfer referred to in order 2A above.
2C.There be liberty to apply for such further or other relief as is necessary to bring about the re-transfer of shares in [Tiger] from [YYT] to those who held such shares on 18 November 2021.
The amended orders wanted also seek orders that the respondents pay the appellant's costs of the appeal and that the first respondents pay the appellant's costs of the primary proceeding.
Kipoi's application for Mr Tucker to be joined
On 16 December 2021, Kipoi applied for leave to add Mr Tucker as the fourth respondent.
Kipoi's submissions
In support of the application, Kipoi submits as follows.
While Kipoi does not concede the need to join Mr Tucker, given the first respondents' indication that joinder of Mr Tucker is necessary it is appropriate to do so. In circumstances where there is an arguable possibility that a person may be relevantly affected by the making of an order sought in the proceeding, it is open for that person to be joined.[9]
[9] Kipoi's submissions [18] citing Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291, 316.
Further, Kipoi points to the fact that it did not itself hold the legal title to the relevant shares prior to their transfer to YYT. Consequently, Kipoi is effectively a beneficiary asking for orders that would require the restoration of trust property to the trustee. In such cases, a trustee is ordinarily joined as a respondent.[10]
[10] Kipoi's submissions [21] citing Ramage v Waclaw (1988) 12 NSWLR 84, 91 ‑ 93; Lidden v Composite Buyers Ltd (1996) 67 FCR 560, 563 ‑ 564; Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 [55].
Kipoi submits that to the extent that exceptional circumstances need to be shown to justify why the trustee is not the applicant for relief, such circumstances exist by reason of the following. The need to seek restitutionary orders to restore the shares to Mr Tucker has only arisen during the pendency of this appeal. Mr Tucker was not a party to the first instance proceedings before the master. Kipoi submits that it is 'explicable and appropriate' for Kipoi to seek the relevant restorative orders and simply to join Mr Tucker as a respondent.[11]
The respondents' positions on the application
[11] Kipoi's submissions [23].
Mr Tucker has indicated, by his solicitors, that he neither consents to, nor opposes, joinder and if joined would abide by any order made by the court save as to costs.
The first respondents have indicated, by their solicitors, that they do not take a position in relation to the application.
The second and third respondents, YYT and Jinji, oppose the application.
YYT and Jinji's submissions
YYT and Jinji submit that:
(1)The court ought not make orders joining Mr Tucker unless it is persuaded that there is a realistic prospect of orders being made against him. That point has not been reached, as there is insufficient material to enable an assessment of the prospect. Further, if Mr Tucker were joined, YYT and Jinji would have inadequate notice of the case that they are to meet, as elaborated in (2) - (5) below.
(2)Kipoi's submissions do not deal with the question of whether the trust pursuant to which Mr Tucker held the shares ended upon the transfer of the shares on 19 November 2021 or otherwise what the effect of the trust ending was.
(3)Issues concerning Mr Tucker's remuneration and any lien that might secure it evidently may arise and yet have not been dealt with in Kipoi's amended appellant's case or in the submissions in support of the application.
(4)Regard must be had to Mr Tucker's obligation under a deed poll dated 23 December 2020 to take all steps reasonably necessary to support or facilitate the deed administrators in an application pursuant to s 444GA to transfer the shares to YYT. Mr Tucker contends that the deed poll was not executed in accordance with s 9 of the Property Law Act 1969 (WA), but has indicated by a letter from his solicitors that he is prepared to take all steps reasonably necessary to support or facilitate any subsequent s 444GA application to transfer the Tiger shares to YYT.[12]
(5)Kipoi has failed to establish or identify special circumstances justifying it being permitted to bring proceedings rather than Mr Tucker as trustee. In that regard, they point to the fact that Mr Tucker voted in favour of the DOCA, did not support the application to set aside the DOCA, and continues to support the transfer of the shares.[13]
Disposition
[12] Letter from Jones Day to Lavan dated 20 January 2022.
[13] YYT and Jinji's submissions [21].
If there is an arguable possibility that the rights or liabilities of a non‑party may be directly affected by orders sought in a proceeding, the non‑party is a necessary party and ought to be joined.[14] In our view, that applies in the present appeal. It is, at least, reasonably arguable that Mr Tucker's rights and liabilities may be affected in that, by the relief sought by Kipoi, legal title in the Tiger shares previously held by him would be revested in him, arguably thereby subjecting him to obligations enforceable in equity by those who had been beneficial owners of the shares before transfer. Alternatively, if the shares are revested directly in Kipoi to perfect its erstwhile equitable title, it is appropriate that the trustee is joined so as to be bound by the order made.[15]
[14] Victoria v Sutton [77] - [78]; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 [131].
[15] See, for example, Ramage v Waclaw (91).
A beneficiary can be permitted to sue directly, joining the trustee as a defendant, only where special circumstances are demonstrated.[16] YYT and Jinji submit that Kipoi has not demonstrated special circumstances. In our view, whether that is so is a matter appropriately determined after full argument in the context of resolution of the appeal, rather than being summarily determined in the present context.
[16] Alexander v Perpetual Trustees WA Ltd [55].
The other matters raised by YYT and Jinji in opposition to the application do not provide a proper basis to refuse to join Mr Tucker. In substance, those matters assert that there are deficiencies in the articulation of the appellant's case. Any such deficiency does not deny the conclusions stated in [29] and [30] above. If YYT and Jinji contend that deficiencies in the articulation of the appellant's case prevent them from sufficiently understanding it to enable preparation of their respondents' answers, that should be the subject of a separate application.
For these reasons, we made orders granting leave to Kipoi to add Mr Tucker as a fourth respondent in the appeal.
The first respondents' application to be removed as parties to the appeal
By application filed 23 December 2021, the first respondents apply for orders removing them as parties to the appeal and to require that Kipoi amend its orders wanted to make clear that no orders are sought against them.
The first respondents' submissions
The first respondents advance three reasons for the making of such orders:
(1)They submit that they should be removed because they are no longer deed administrators, in circumstances where they are joined as parties to the appeal 'as joint and several deed administrators'.[17]
(2)They submit that they are not directly affected by the relief sought in the appeal. In that regard, they point to [77] of the amended appellant's case, in which it is stated that no part of the relief is sought against the deed administrators, nor is the relief affected by the fact that there is now no DOCA in place nor any deed administrators acting. The first respondents emphasise that, in its amended appellant's case, Kipoi has not addressed questions of how the costs orders it seeks could or should be made against them as deed administrators in circumstances where they do not hold that position.[18]
(3)They submit that in circumstances where Kipoi was not a party to the primary proceedings, but appeared only by leave under r 2.13 of the Supreme Court (Corporations) (WA) Rules 2004 (WA), there is no basis for the making of an order for costs against the first respondents in favour of Kipoi.
[17] The first respondents' submissions in support of their application to be removed [15] ‑ [17].
[18] The first respondents' submissions in support of their application to be removed [19] ‑ [22].
Finally, the first respondents further submit, in the event such orders are not made, leave to appeal against them should be refused on the basis that the amended appellant's case discloses no arguable case for the making of the orders sought against them in the appellant's orders wanted.
Kipoi's submissions in opposition to the application
Kipoi opposes the first respondents' application. It submits that they remain proper parties to the appeal.
Kipoi submits that the first reason advanced by the erstwhile deed administrators for their removal - see [34(1)] above - overlooks the legal principle that an administrator or deed administrator has no juristic personality separate from the particular individual holding the office.
Kipoi submits that there remains an arguable possibility that orders made in the appeal will affect the rights or interests of the first respondents. It so submits on two bases:
(1)Orders on appeal setting aside the master's orders may affect the erstwhile deed administrators' rights and interests because such orders would remove or extinguish the rights, powers and permissions given to the deed administrators by force of the master's orders. That is so, notwithstanding that the deed administrators no longer hold that office, because whether a party is properly joined in an appeal focuses on the legal rather than the practical effect of the proposed orders. In any event, depending upon the course of events following success in the appeal, it can readily be contemplated that the deed administrators' rights and interests are affected. Consequently, the erstwhile deed administrators should remain a party to the appeal so as to be bound by the result.[19]
(2)The first respondents' rights or interests are affected by the costs orders sought by Kipoi on the appeal. There is a proper basis for costs orders to be sought if the appeal succeeds. At the least, the court ought not proceed to summarily determine the position adversely to it.
Disposition
[19] Kipoi's submissions [10] ‑ [15].
The first respondents were the moving party in the primary proceedings. When the appeal was commenced, they were plainly necessary parties to the appeal. The question is whether, as the first respondents contend, in light of the subsequent events outlined in [14] - [19] above, they should now be removed as parties. Having made this application, the first respondents have the onus of persuasion.
In our view, it cannot be said with the requisite degree of confidence that the rights or interests of the first respondents will not be affected by orders to be made on the appeal. The issues in the appeal, including as to the question of relief if a ground of appeal is established, can fairly be described as wide‑ranging and complex. It seems to us to be too difficult to foresee the manner in which the case will be resolved to enable a conclusion that there is no arguable possibility that orders made in the appeal will affect the rights or interests of the first respondents.
In our view, the first respondents should remain parties to the appeal, thereby ensuring that they are bound by this court's decision on the appeal.
Moreover, in our view, this application is not an appropriate occasion for summarily determining the range of costs orders that might be made in the appeal, including what orders might be made against the first respondents. Nor is the application an occasion to determine whether, as the first respondents contend, Kipoi's appellant's case is deficient in failing to articulate a basis for the making of any costs order relating to the primary proceedings or to the appeal adverse to the first respondents. That contention, if maintained and disputed, must be the subject of a separate application.
Contrary to their submission, maintaining the first respondents as parties to the appeal does not require them to expend their own funds on an appeal in which they consider themselves to have no interest. It is, of course, open to the first respondents, should they so elect, not to take any active part in the appeal.
For these reasons, we did not consider it appropriate to make any of the orders sought by the first respondents in their application and so we dismissed their application.
Conclusion
For the above reasons, we made the orders in [4].
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
BM
Associate to the Honourable Justice Beech
11 FEBRUARY 2022
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