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Kipoi Holdings Mauritius Ltd v Kirman

Kipoi Holdings Mauritius Ltd v Kirman

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   KIPOI HOLDINGS MAURITIUS LIMITED -v- KIRMAN and BAUER as joint and several administrators of TIGER RESOURCES LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2021] WASCA 194
CORAM:   BUSS P
MITCHELL JA

HEARD:   8 AND 10 NOVEMBER 2021
DELIVERED          :   10 NOVEMBER 2021
PUBLISHED           :   15 NOVEMBER 2021
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 ACN 077 110 304 (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
ROBERT CONRY BAUER as joint and several administrators of TIGER RESOURCES LIMITED ACN 077 110 304 (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:

Appeal - Practice and procedure - Application for stay of primary orders pending determination of appeal - Turns on own facts

Corporations - Deeds of company arrangement - Power of the court to vary a deed of company arrangement where to do so is necessary to preserve the effective exercise of its appellate jurisdiction

Legislation:

Corporations Act 2001 (Cth), s 444GA, s 445A, s 447A

Result:

Application for stay granted, subject to conditions
Application for variation of deed of company arrangement granted

Category: B

Representation:

Counsel:

Appellant	:	J J Hutton and P A Walker
First Respondents	:	J K Taylor SC and P Edgar
Second Respondent	:	S J Maiden QC, J G Abberton and N J Wallwork
Third Respondent	:	S J Maiden QC, J G Abberton and N J Wallwork

Solicitors:

Appellant	:	Clayton Utz
First Respondents	:	Norton Rose Fulbright Australia
Second Respondent	:	Lavan
Third Respondent	:	Lavan

Case(s) referred to in decision(s):

Adelaide Brighton Cement Ltd v Concrete Supply Pty Ltd [No 2] [2018] FCA 1003
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Ardrey v The State of Western Australia [No 2] [2017] WASCA 41; (2017) 55 WAR 1
Barboutis v The Kart Centre Pty Ltd [2019] WASCA 184
Complete Hire and Sales Pty Ltd v Terra Firma Constructions Pty Ltd [2018] WASCA 88
Easterday v The State of Western Australia [2005] WASCA 105; (2005) 30 WAR 122
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Jebb v Superior Lawns Pty Ltd [2018] WASCA 123
Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to a Deed of Company Arrangement) [2021] WASCA 186
Re CCS Equipment Pty Ltd [2019] WASC 431
Re Ceres Agricultural Co Pty Ltd [2020] FCA 4
Re Nexus Energy Ltd (subject to deed of company arrangement)

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] WASCA 194
Decision Date

CaseChat Overview and Summary

In the matter of Kipoi Holdings Mauritius Ltd v Kirman, the parties were engaged in a dispute regarding the quantum of security for an undertaking provided by Kipoi. This case was heard in the Federal Court of Australia. The primary legal issue before the court was the determination of the appropriate amount of security required to cover potential losses arising from the grant of a stay in proceedings, in accordance with the agreed principles.

The court considered the arguments presented by both parties regarding the reasonable estimate of losses that might be incurred due to the stay. The respondents sought to include in the security an allowance for holding costs associated with the delay in transferring shares to YYT, which included care and maintenance costs for the SEK copper mine and interest accruing on a secured debt. Kipoi, on the other hand, contested the inclusion of these holding costs, arguing that they might be incurred regardless and pointing to some discrepancies in the estimates provided by the respondents.

After reviewing the evidence and arguments, the court concluded that the holding costs were reasonable estimates of the losses that might be incurred due to the delay. The court noted that the determination of whether these costs would actually be recoverable and the quantum of recoverable damages would be addressed if the security were called upon in the event of an unsuccessful appeal. The court did not make a definitive ruling on the recoverability of these costs but acknowledged that such issues would arise in future proceedings if necessary.

The court ordered that the security for Kipoi's undertaking should include the amount of $92,500 for additional remuneration and costs of the Deed Administrators, as well as the estimated holding costs of $5,659,252 for care and maintenance at the SEK copper mine and $3,231,246.96 for interest accruing on the secured debt. The court emphasized that this determination was provisional and subject to further review if the security were to be called upon in future enforcement proceedings.

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

Legal Principle Established

The parties were agreed on the principles to be applied in determining the quantum of security for Kipoi's undertaking. The amount of security for the undertaking should be the amount which, at this stage, appears to be a reasonable estimate of the loss that would be sustained by persons or entities by reason of the grant of the stay. The damages payable under the undertaking must be confined to the loss which is the natural consequence of the stay under the circumstances of which the party obtaining the stay had notice.[41][41] See Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 311 - 312. All parties were agreed that the security to be provided by Kipoi should cover $92,500 in respect of additional remuneration and costs of the Deed Administrators. The respondents also sought an allowance for what were, in essence, the holding costs associated with the delay in effecting the transfer of shares to YYT. To the end of January 2022, these were estimated to be:(1)AUD$5,659,252 in respect of care and maintenance costs incurred at the SEK copper mine;[42] and (2)AUD$3,231,246.96 in respect of interest accruing by Tiger on the secured debt.[43][42] Comprising US$1,123,278.97 for 8 - 30 November 2021 (calculated at US$51,058.14 per day in accordance with annexure DD-3 to the Dou Affidavit), plus US$1,531,744 for 1 - 31 December 2021 (in accordance with annexure DD-3 to the Dou Affidavit); plus $1,531,744 for 1 - 31 January 2022 (being the average monthly calculation in accordance with annexure DD-3 to the Dou Affidavit) converted to AUD (x 1.3517) in accordance with the current RBA exchange rate.[43] Being interest at the daily rate of US$28,123.60 (being the rate indicated in par 44 of the Kirman Affidavit) for 85 days (being 8 - 30 November 2021, 1 - 31 December 2021, and 1 - 31 January 2022) converted to AUD (x 1.3517) in accordance with the current RBA exchange rate. In our view, these are reasonable estimates of the holding costs associated with what is at least reasonably claimed by the respondents to be a hiatus to be caused by the delay in the transaction provided for in the Tiger DOCA. In opposition to an allowance being made for these amounts, Kipoi contended that the costs may be incurred in any event and pointed to what it contended were some discrepancies in the estimates. In our view, these matters will properly arise for consideration if the security is called upon in the event that the appeal is ultimately unsuccessful. Those questions do not arise for determination at this stage. In making allowances for the provision of security for these amounts, the court is not, and is not to be taken to be, determining whether costs of the kind described above will be recoverable, or the quantum of damages recoverable, in any proceedings for enforcement of the undertaking which may be commenced at some later time. That later time will be the occasion for determining whether any claimed damages were actually caused by the stay and the quantum of any damages so caused.