Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (Subject to Deed of Company Arrangement) - [2021] WASCA 186

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   KIPOI HOLDINGS MAURITIUS LTD -v- TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2021] WASCA 186
CORAM:   BUSS P
MURPHY JA
MITCHELL JA

HEARD:   7-9 SEPTEMBER 2021
DELIVERED          :   20 OCTOBER 2021
FILE NO/S:   CACV 38 of 2021
BETWEEN:   KIPOI HOLDINGS MAURITIUS LTD
Appellant
AND
TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Respondent
ROBERT MICHAEL KIRMAN as joint and several administrator of TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
ROBERT CONRY BAUER as joint and several administrators of TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Respondents
YINGKOU YANGZHOU TRADE CO LTD
Third Respondent
KING & WOOD MALLESONS
Fourth Respondent

FILE NO/S: CACV 46 of 2021
BETWEEN: KIPOI HOLDINGS MAURITIUS LTD
Appellant
AND
TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Respondent
ROBERT MICHAEL KIRMAN as joint and several administrator of TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
ROBERT CONRY BAUER as joint and several administrator of TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Respondents
YINGKOU YANGZHOU TRADE CO LTD
Third Respondent
KING & WOOD MALLESONS
Fourth Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   MASTER SANDERSON
Citation: KIPOI HOLDINGS MAURITIUS LTD -v- TIGER RESOURCES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2021] WASC 165
File Number            :   COR 53 of 2021

Catchwords:

Corporations Law - Deed of company arrangement - Alleged false or misleading information provided to creditors - Application to terminate deed of company arrangement - Where company insolvent and voluntary administrators appointed - Where related company of purported majority secured lender and junior secured lender had submitted competing proposals for deed of company arrangement - Where administrators identified risks in adopting proposal by junior secured lender and recommended proposal by related company of purported majority secured lender at second meeting of creditors - Where creditors at second meeting of creditors voted in favour of proposal by related company of purported majority secured lender - Where deed of company arrangement entered into pursuant to creditors' resolution at second meeting of creditors - Where junior secured lender brought application to terminate deed of company arrangement alleging false or misleading information had been provided to creditors - Whether master erred in finding administrators and related company of purported majority secured lender had not provided false or misleading information to creditors

Corporations Law - Deed of company arrangement - Exercise of discretion to terminate deed of company arrangement - Whether discretion should be exercised even if false or misleading information provided to creditors

Practice and procedure - Application to vacate hearing date for trial and adjourn to allow opportunity to file further evidence - Where master found additional evidence would not alter the outcome of proceedings - Whether master erred in dismissing application

Legislation:

Corporations Act 2001 (Cth), s 435A(a), s 439C(c), s 444A, s 444B, s 444E, s 444D, s 445CA, s 445D, s 445H, s 447A

Result:

Consolidated appeals CACV 38 of 2021 & CACV 46 of 2021
Appeal dismissed

Category: B

Representation:

CACV 38 of 2021

Counsel:

Appellant	:	R C A Higgins QC & J Hutton & P A Walker
First Respondent	:	J K Taylor SC & P Edgar
Second Respondents	:	J K Taylor SC & P Edgar
Third Respondent	:	S J Maiden QC & N Wallwork & J Abberton
Fourth Respondent	:	No appearance

Solicitors:

Appellant	:	Clayton Utz
First Respondent	:	Norton Rose Fulbright Australia
Second Respondents	:	Norton Rose Fulbright Australia
Third Respondent	:	Lavan
Fourth Respondent	:	No appearance

CACV 46 of 2021

Counsel:

Appellant	:	R C A Higgins QC & J Hutton & P A Walker
First Respondent	:	J K Taylor SC & P Edgar
Second Respondents	:	J K Taylor SC & P Edgar
Third Respondent	:	S J Maiden QC & N Wallwork & J Abberton
Fourth Respondent	:	No appearance

Solicitors:

Appellant	:	Clayton Utz
First Respondent	:	Norton Rose Fulbright Australia
Second Respondents	:	Norton Rose Fulbright Australia
Third Respondent	:	Lavan
Fourth Respondent	:	No appearance

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

Bidald Consulting Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 1235; (2005) 226 ALR 510
Emanuele v Australian Securities Commission (1995) 63 FCR 54
Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (subject to deed of company arrangement) [2021] WASC 165
Litopoulos v Indiana Holdings Pty Ltd [2021] WASCA 88
Mighty River International Ltd v Hughes [2018] HCA 38; (2018) 265 CLR 480
Promoseven Pty Ltd v Prime Project Development (Cairns) Pty Ltd [2013] QCA 405; (2013) 97 ACSR 390

Table of contents

Introduction

Factual background

Late 2015/early 2016 - secured lending

September 2019

March 2020

June 2020

November 2020

2 December 2020 - report to creditors on insolvency

8 - 12 December 2020

Late 2020/early 2021 - care and maintenance funding

January 2021

5 - 9 February 2021

9 February 2021 - Administrators' supplementary report

11 - 14 February 2021

15 February 2021

15 February 2021 - Kipoi's Third Term Sheet

16 February 2021 - the Administrators' Adjournment Application

16 February 2021 - the second meeting of creditors

Classes of creditors

The Administrators' recommendations

Voting

19 February 2021 - 26 February 2021

4 March 2021

Late March/early April 2021

13/14 April 2021

22 April 2021

The Substantive Appeal

The master's reasoning

The parties' submissions as to whether information was false or misleading

Kipoi's submissions

Respondents' submissions

Alleged false or misleading information - disposition

Risk of enforcement by secured creditors

Insolvency risk post‑effectuation of a Kipoi DOCA

Documentation risk

Conclusion

Exercise of the discretion to terminate the Tiger DOCA

Parties' submissions

Exercise of discretion - disposition

Orders in the Substantive Appeal

Procedural Appeal

Provisions of the Common Terms Agreement

Parties

Debts and Security

Transfers of rights and obligations by Senior Lender

Provisions of the ISSA

Parties

Directions to the Security Trustee

Transfers of rights and obligations

Transfer to Jinji on 27 January 2021

Communications to and by the Administrators as to the transfer

Proceedings at creditors' meeting on 16 February 2021

The Primary Application

Kipoi's submissions to the master on the Primary Application

The master's decision on the Primary Application

Grounds of appeal in the Procedural Appeal

Disposition of the Procedural Appeal

Administrators' supplementary report to creditors of 9 February 2021

Statements in PowerPoint slideshow

Statements about admission of proof of debt in the Minutes

Statements in letter from Jinji's solicitors of 15 February 2021

Overall effect of the impugned statements

Conclusion and orders

Orders

JUDGMENT OF THE COURT:

Introduction

These appeals are against orders made by Master Sanderson pursuant to the learned master's decision in Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (subject to deed of company arrangement)[1] (primary decision). The primary proceedings concerned a deed of company arrangement in respect of the first respondent (Tiger) dated 19 February 2021 (Tiger DOCA).
[1] Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (subject to deed of company arrangement) [2021] WASC 165.
There are two appeals which have been consolidated in this matter. The first (CACV 38 of 2021) is a procedural appeal against the master's decision not to vacate the hearing date for the trial and adjourn the trial to allow Kipoi the opportunity to file further evidence. The second is the substantive appeal (CACV 46 of 2021) against the master's decision to dismiss Kipoi's application to terminate the Tiger DOCA. Whilst the two appeals have been consolidated, for ease of exposition it is convenient to refer to the first appeal as the 'Procedural Appeal' and the second as the 'Substantive Appeal'. The consolidated appeal was heard urgently on the basis that if the Tiger DOCA is not completed by 31 December 2021, it may be terminated.[2]
[2] See cl 9.5 of the Tiger DOCA; GB 1634; appeal ts 258, 262 - 263.
The Tiger DOCA was executed pursuant to a resolution of creditors at a second meeting of creditors held on 16 February 2021.
Tiger was registered in 1997 and listed on the Australian Securities Exchange in the same year. It is a holding company for nine controlled subsidiaries incorporated in jurisdictions other than Australia (Tiger Group). These jurisdictions include the Democratic Republic of Congo (the Congo).[3] One of Tiger's subsidiaries, Societe d'exploitation de Kipoi SA (SEK), was in the Congo and operated a copper mine, which was the only income‑producing asset of the Tiger Group (SEK copper mine).
[3] Primary decision [11].
In general terms, pursuant to the Tiger DOCA, the third respondent (YYT) agreed to contribute funds for the compromise and discharge of Tiger's unsecured debts via a creditors' trust arrangement. YYT was a related company of Jinji Resources Finance Pty Ltd (Jinji) which was (or claimed to be) the majority secured lender to the Tiger Group. The master said that the appellant (Kipoi) 'would seem to be', in effect, the junior secured lender to the Tiger Group.[4] Both YYT and Kipoi had submitted rival proposals to creditors before the second meeting of creditors on 16 February 2021 at which, as noted above, the creditors voted in favour of the YYT proposal.
[4] See primary decision [12], [76]; Kipoi's senior counsel in this appeal said that Kipoi's submission was that it was a secured creditor, but that position may be contested and it was not an 'agreed position': appeal ts 223. These reasons do not involve any determination of that matter.
In essence, in the primary proceedings, Kipoi, whose proposal was not accepted by creditors, applied to set aside the Tiger DOCA, pursuant to (most relevantly) s 445D(1) of the Corporations Act 2001 (Cth) (Act). The application was brought on the basis that, prior to the resolution of creditors at the second meeting of creditors, false or misleading information had been provided to unsecured creditors by the second respondents (Administrators) and YYT. The application was opposed by Tiger, the Administrators, YYT and an intervening unsecured creditor (KWM) to which Tiger was indebted in excess of $0.5 million.[5] No unsecured creditors supported Kipoi's application to terminate the Tiger DOCA on the basis that unsecured creditors were provided with false or misleading information. Nor did any unsecured creditors contend before the master in the primary proceedings that they were misled.
[5] GB 1468.
The master dismissed Kipoi's application. In general terms, the master found that the unsecured creditors had not been provided false or misleading information by the Administrators and/or YYT. The master also found that (1) Kipoi had no standing to bring the application, (2) insofar as the application sought relief in reliance on s 447A of the Act, the relief sought was not available on the proper construction of s 447A of the Act, and (3) in any event, he would not terminate the Tiger DOCA in the exercise of discretion under s 445D(1) of the Act.
By the Substantive Appeal, Kipoi appeals the primary decision contending error with respect to each of these findings by the master. YYT and the Administrators resisted the appeals. The intervening creditor below, KWM, filed a notice stating, in effect, that it would abide the outcome.
For the reasons which follow the Procedural Appeal and the Substantive Appeal should be dismissed. As to the former, the master was correct to find that the additional evidence in connection with which Kipoi made its application for adjournment, being evidence as to the alleged invalidity of the transfer of certain secured debt to Jinji, would have made no difference to the outcome of the primary proceedings. As to the latter, the statements by the Administrators and YYT which Kipoi seeks to impugn did not provide false or misleading information to unsecured creditors. In any event, even if the master had erred in so holding, we would not terminate the Tiger DOCA in any re‑exercise of the discretion conferred by s 445D(1) of the Act.

Factual background

Late 2015/early 2016 - secured lending

In or about late 2015/early 2016, each of Taurus Mining Financing Fund LP (Taurus), International Finance Corporation (IFC) and Resources Capital Fund LP (RCF) lent funds to SEK. Tiger guaranteed the obligations of SEK.[6] The lenders entered into a document titled 'Intercreditor and Security Sharing Agreement' as amended and restated, including as at 17 April 2019[7] (ISSA). Under the ISSA, Law Debenture Trustees Ltd, a London based company, was appointed as the security trustee (Security Trustee).[8]

September 2019

[6] Primary decision [12].

[7] GB 570.

[8] Primary decision [15].

In or around September 2019, Tiger commenced steps to undertake a scheme of arrangement.[9]

March 2020

[9] Primary decision [13].

On or about 2 March 2020, IFC transferred its rights and obligations under the finance agreements to Kipoi (which at that time was called Teichmann Construction Mauritius Ltd).[10]

June 2020

[10] Primary decision [12]. See fn 3.

The scheme of arrangement for Tiger (Scheme of Arrangement) was implemented on 11 June 2020. By this time, the secured lenders to SEK were Kipoi, Taurus and QMetco Ltd (QMetco), with Taurus/QMetco holding the majority of the secured debt.[11]
[11] Primary decision [13].
The effect of the Scheme of Arrangement was that:[12]
1.The secured debt owed by SEK (and guaranteed by Tiger) was compromised from approximately US$271 million to approximately US$100 million.
2.The secured lender group was to receive shares equal to approximately 99.3% of Tiger's issued share capital, of which:
(a)23.66% of Tiger's capital was to be issued to Kipoi; and
(b)75.64% was to be issued to Taurus and QMetco.
3.An intercompany receivable in the sum of US$171 million was recorded as owing by SEK to Tiger.[13]
[12] Primary decision [13].
[13] GB 782, 787.
However, the fees of the Scheme administrator (Mr Tucker) were not paid. Mr Tucker still holds, as trustee under a trust deed known as the Jericho Master Trust Deed, 99.3% of the total shares on issue, being those shares issued by Tiger under the Scheme of Arrangement, as a result of his fees not being paid.[14]

November 2020

[14] Primary decision [14].

On 5 November 2020, the Administrators were appointed to Tiger.[15]
[15] Primary decision [16].
The first meeting of creditors was to be held on 17 November 2020, but it lapsed because of an absence of a quorum.[16]

2 December 2020 - report to creditors on insolvency

[16] CACV 46 of 2021, WB 132, 135, 142.

On 2 December 2020, the Administrators prepared and issued a report to creditors, which was required to be issued prior to the second meeting of creditors.[17]
[17] GB 772 - 803.
In their report dated 2 December 2020, the Administrators stated the following matters.[18]
[18] See especially pars 3.1, 3.6.1, 4.1, 4.2, 5.2.2, 7.3, 7.3.6; GB 781, 784, 786 - 787, 791, 794, 797.
Tiger was primarily a holding company, with its principal focus on the discovery, development and exploration of high‑grade copper deposits. The main asset of Tiger and the Tiger Group was the SEK copper mine.[19]
[19] GB 781.
Tiger's primary source of revenue was management fees derived from SEK's copper mining operation and, accordingly, Tiger's solvency was dependent on SEK.[20]
[20] GB 786.
SEK obtained funding from Senior Lenders, guaranteed by Tiger. The debt, which was secured, was (as at the date of the report) US$109.1 million, of which Taurus/QMetco held US$92.4 million and Kipoi held US$16.7 million.[21]
[21] GB 791.
The Senior Lenders obtained security over the whole, or substantially the whole, of Tiger's assets, including its shares in, and receivables from, subsidiaries (including SEK), as well as security directly over the assets of SEK. The security was held by the Security Trustee.[22]
[22] GB 784.
In general terms, SEK had faced difficulties and financial uncertainty for some time, in that:[23]
1.The copper mine had been loss‑making for an extended period of time, with the rate of losses increasing materially in the financial years ending 30 June 2019 and 30 June 2020 due to production issues, costs overruns and adverse weather conditions, before operations were suspended entirely in April 2020.
2.SEK had significant direct secured borrowings (as high as US$271 million prior to the Scheme of Arrangement) which were subject to various periods of forbearance while restructuring initiatives were pursued.
3.SEK had significant unsecured debts to Congo‑based creditors which, prior to suspension of operations at the mine, were in the order of US$36 million. SEK had undertaken standstill negotiations with various creditors, but achieved only limited success, and required further funding from the Senior Lenders to meet ongoing unsecured costs.
[23] GB 797.
The Tiger Group recorded net losses before tax of $35.7 million in the financial year ended 30 June 2017, and net losses before tax of $51.7 million in the financial year ended 30 June 2018. This was due to operational issues and impairment of assets at the copper mine. The draft accounts of the Tiger Group for 30 June 2019 reported a net loss before tax of $83.7 million, which was attributed to disruptive wet seasons and issues in relation to processing performance at the copper mine.[24]
[24] GB 781.
In or around September 2019, Tiger commenced steps to undertake a Scheme of Arrangement with a view to compromising secured debt from US$271 million to US$100 million in exchange for shares in Tiger.[25]
[25] GB 781.
From September 2019 Tiger incurred liabilities which related to the Scheme of Arrangement. Tiger had limited direct capacity to meet those liabilities and, ultimately, they were not paid and formed debts of the Administration. As such, Tiger was likely insolvent from that date, if not earlier.[26]
[26] GB 794.
Tiger was delisted from the Australian Securities Exchange on 3 February 2020.[27]
[27] GB 782.
In early April 2020, operations at the SEK copper mine were suspended due to the adverse impact of the COVID‑19 pandemic, such that the production at the mine, and Tiger's primary source of revenue, ceased. Tiger placed the mine into care and maintenance, with an expectation of recommencing operations in August 2020. It estimated that the cost to restart operations would be US$25 million, which the Senior Lenders indicated they were unwilling to fund. From this point onwards, Tiger was reliant on funding from the Senior Lenders to meet ongoing corporate costs, and had insufficient cash to make any meaningful payments towards historical creditors.[28]
[28] GB 782.
Tiger subsequently commenced discussions with other potential financiers to obtain funding, which was not obtained.[29]
[29] GB 782.
During the period of care and maintenance, QMetco provided approximately US$1.25 million per month, on a reimbursable basis, to meet ongoing critical expenses and holdings costs while a sale process of the mine was progressed. Three offers were received, but none was sufficient to repay the Senior Lenders in full.[30]
[30] GB 782.
The Scheme of Arrangement was implemented in June 2020. In addition to the compromise of secured debt and the issue of shares in Tiger to Senior Lenders, Tiger created, pursuant to the Scheme of Arrangement, an intercompany loan receivable from SEK in the amount of US$171 million. At or around September 2020, this receivable from SEK was Tiger's only material asset, and it was carried at face value, having not been impaired or written down as at September 2020.[31]
[31] GB 787.

Also, as at September 2020, the Tiger Group had current liabilities of $189.5 million as against current assets of $23.7 million, and an overall deficiency of net assets of $68.4 million. The debt owed to the Senior Lenders was a current liability.[32]
[32] GB 787.
As at September 2020, Tiger had not entered into any payment arrangements or agreed settlement with any of its creditors; however, no creditors had instigated formal recovery proceedings or issued demands to Tiger in respect of amounts owed. Overall, there was evidence that creditors had informally commenced pursuing outstanding debts, and that Tiger was undertaking to negotiate commercial settlement amounts with its largest creditors.[33]
[33] GB 797.
Tiger and the Tiger Group had been loss‑making since at least the financial year ended 30 June 2017, and the Tiger Group has recorded total losses of US$485 million since incorporation.[34]
[34] GB 786.
In October 2020, QMetco advised that it was unwilling to continue funding the mine's holding costs or Tiger's corporate costs. Absent funding by the Senior Lenders to meet these costs while sale negotiations were progressed, the Tiger board formed the view that Tiger was insolvent, or was likely to become insolvent.[35]
[35] GB 782.
The Tiger board resolved to appoint the Administrators on 5 November 2020.[36]
[36] GB 781 - 782.
The Administrators concluded, on the topic of insolvency:[37]
The Act specifies that a company is solvent if, and only if, it is able to pay all of its debts as and when they fall due. A company that is not solvent is insolvent.
At the time of the Administrators' appointment, Tiger was insolvent in that it had insufficient cash resources available to meet its existing and ongoing debts.

8 - 12 December 2020

[37] GB 794.

The second meeting of creditors was scheduled to be held on 9 December 2020.[38]
[38] GB 1044 - 1078.
On 8 December 2020, Kipoi paid $33,000 (including GST) to the Administrators to meet their costs of adjourning the second meeting of creditors to provide additional time for a DOCA proposal to be formulated. Accordingly, on 9 December 2020, the chair of the second meeting of creditors adjourned the meeting until 16 February 2021.[39]
[39] See Minutes of second meeting of Tiger's creditors; GB 1441 - 1444.
On 19 December 2020, Kipoi sought an extension of time to submit a DOCA proposal, and an extension to 18 January 2021 was granted.[40]

Late 2020/early 2021 - care and maintenance funding

[40] Administrators' solicitors' letter to Kipoi's solicitors dated 7 February 2021 (7 February 2021 letter), par 1.2(3); GB 1319.

In late 2020/early 2021, the SEK copper mine had been put into care and maintenance and was being funded by YYT and/or Jinji and an associated company (CGM). The continuing cost of care and maintenance was in the order of $250,000 to $500,000 per week.[41]

January 2021

[41] Primary decision [5]. Affidavit of Mr Wei sworn 21 April 2021, par 16; GB 2133.

On 15 January 2021, Kipoi sought a further extension of time to submit a DOCA proposal.[42]
[42] 7 February 2021 letter, par 1.2(4); GB 1319.
On 20 January 2021, the Administrators contacted Kipoi requiring that they submit a proposal no later than 29 January 2021.[43]
[43] 7 February 2021 letter, par 1.2(5); GB 1319.
On 27 January 2021, Jinji purportedly acquired from Taurus and QMetco the secured debt of SEK.[44] (Kipoi subsequently disputed the acquisition, and it was evidence in relation to this issue (transfer of debt issue) for which Kipoi sought an adjournment of the trial - the subject of the Procedural Appeal.)
[44] Primary decision [17].
Also on 27 January 2021, YYT submitted its first binding proposal for a DOCA to the Administrators.[45]
[45] Primary decision [17].
On 29 January 2021, Kipoi submitted its first term sheet for a DOCA proposal.[46] It was unsigned, non‑binding and provided on a private and confidential basis.[47]

5 - 9 February 2021

[46] Primary decision [18].

[47] 7 February 2021 letter, par 1.2(6); GB 1319. See also GB 1116.

On 5 February 2021, Kipoi's solicitors confirmed that its term sheet could not be provided to creditors.[48]
[48] 7 February 2021 letter, par 1.2(8); GB 1320. See also GB 1116.
On 8 February 2021, YYT, by its solicitors, wrote to the Administrators, by their solicitors, advising, in effect, that if the YYT DOCA were approved, then (1) YYT intended to provide additional funding to SEK so as to recommence its operations, (2) YYT had sufficient available funds to allow Tiger to recommence its operations (confirmation of which had been provided separately), and (3) YYT intended to negotiate a restructure of the amount owed to the secured creditor group. YYT said that the effect of this would be that Tiger would be able to continue its operations after the effectuation of the DOCA on a solvent basis.[49]

9 February 2021 - Administrators' supplementary report

[49] GB 2032 - 2033.

On 9 February 2021, the Administrators issued a supplementary report to creditors, in which the Administrators noted that:[50]
1.No return to any class of creditor was expected in a liquidation of Tiger.
2.The return to each class of creditor under the YYT proposed DOCA exceeded the estimated liquidation return. Further, priority employee creditors would receive a greater return under the YYT proposed DOCA than in the event of a liquidation.
[50] GB 1117.
The Administrators recommended that Tiger's creditors vote in favour of the (then) DOCA proposal by YYT, in that:[51]
1.it provided a greater return compared to a liquidation;
2.it provided greater certainty of a return to creditors; and
3.it provided for a more timely distribution to creditors, as funds were to be made available to the Deed Administrators within three days of execution of the DOCA and provision of a relevant notice by the Deed Administrators.
[51] GB 1117.
The Administrators also noted that under YYT's proposed DOCA, the DOCA would not bind Tiger's Senior Lenders. They were to be excluded from the DOCA, and were not entitled to receive a distribution.[52]
[52] GB 1120.
The Administrators also stated:[53]
[53] GB 1126.

Relevant disclosure

Administrators' comments

Compliance opinion

·     The Administrators have made enquiries with the DOCA Proponent regarding their ability to comply with their obligations under the DOCA and [Creditors' Trust], which primarily involves the payment of the DOCA Contribution.

·     Based on the response, the Administrators are of the opinion that they will be capable of complying with the obligations of the DOCA.

Solvency statement

·     [YYT] has advised that if its DOCA is accepted[:]

-    it intends to provide additional funding to SEK so as to recommence its operations;

-    has sufficient available funds so as to allow the Tiger [sic] to recommence operations; and

-    intends to negotiate a restructure of the amount owed to the secured creditor group,

the effect of which will be that Tiger will be able to continue its operations post completion of the DOCA on a solvent basis.

11 - 14 February 2021

On 11 February 2021, Kipoi submitted to the Administrators a binding term sheet which materially improved the return to creditors compared to the YYT DOCA proposal.[54]
[54] Primary decision [18]; GB 833 - 836.
On 12 February 2021, Jinji (by its solicitors) purportedly instructed the Security Trustee to vote for the full value of the Senior Lender's debts under the finance agreements in favour of the YYT DOCA proposal.[55]
[55] Primary decision [19].
On 13 February 2021, after certain clarifications were sought by the Administrators' solicitors, Kipoi submitted a further updated DOCA proposal. The consideration in that proposal remained the same, but a creditors' trust was incorporated and certain definitions and timing issues were clarified.[56]
[56] Primary decision [20].
On 13 and 14 February 2021, the Security Trustee wrote to the Administrators' solicitors advising, in effect, that if the Kipoi proposal was successful, then the Security Trustee would take immediate action to enforce its rights to recover the amount owed by SEK and Tiger. These rights were said to include appointing a receiver and winding up Tiger.[57] The Security Trustee also advised that it supported YYT's proposal and did not support, and would vote against, the Kipoi proposal.[58]
[57] Primary decision [21].
[58] GB 1329, 1349.
In its letter of 14 February 2021, the Security Trustee also stated that even if the Kipoi proposal were completed (which it said was unlikely), Tiger would be left in a state of insolvency having regard to the extent of the secured debt, contrary to the objects of pt 5.3A of the Act.[59]
[59] GB 1350.
On 14 February 2021, the Administrators filed an urgent application in the Supreme Court to 'provide the opportunity (but not the obligation)' to adjourn the second meeting of creditors scheduled for 16 February 2021 (Administrators' Adjournment Application).[60]
[60] Primary decision [24]. See also GB 1361.
On 14 February 2021, Jinji (by its solicitors) wrote to the Administrators' solicitors saying that if the second creditors' meeting scheduled for 16 February 2021 were adjourned, Jinji would immediately take steps to have Tiger and SEK placed into liquidation.[61]
[61] Primary decision [24].
On 14 February 2021, YYT (by its solicitors) wrote to the Administrators' solicitors attaching a variation to YYT's DOCA proposal, under which the 'Available Trust Property' to be paid to unsecured creditors was increased to $1,150,000.[62]

15 February 2021

[62] GB 1346 - 1348.

On 15 February 2021, YYT (by its solicitors) sent letters directly to certain creditors of Tiger.[63] The letters were essentially in the same form and included the following statements:[64]
In order for the [Kipoi] Proposal to be voted on by creditors, it will be necessary to adjourn the Reconvened Meeting. Our clients' position as regards any adjournment of the Reconvened Meeting is as follows:
14.1The YYT proposal expires at close of business on 16 February 2021.
14.2If the meeting is adjourned or the YYT proposal is not approved on 16 February 2021, the YYT proposal will be immediately withdrawn.
14.3The funding to SEK for the care, preservation and maintenance of the mine that is currently arranged by our clients will immediately cease.
14.4Jinji will immediately take steps to have [Tiger] and SEK placed into liquidation.
15.It is for the above reasons that our clients do not consider that the [Kipoi] Proposal can be implemented. As such our clients consider there is risk as to whether the [Kipoi] Proposal will actually result in any return to you. (italics emphasis added) (bold emphasis in original)
[63] Primary decision [22].
[64] GB 2389.
On 15 February 2021, the Administrators issued a further circular to creditors which included the following statements:[65]
[65] Primary decision [24].
1.YYT had improved its DOCA proposal so that 'Available Trust Property' was now $1,150,000.
2.The Administrators had conferred with Kipoi and YYT and had filed the Administrators' Adjournment Application.
3.Whilst the Administrators had not had the opportunity to consider the Kipoi updated proposal in the required level of detail, they had undertaken a preliminary estimate of the return to creditors as against the YYT proposal and liquidation. They concluded both proposals provided for an amount of $1,100,000 to be available to creditors and that each proposal would utilise a creditors' trust to facilitate the return to creditors.
4.The outcome to individual creditors varied in each proposal, however, overall the return to all but one creditor was higher in the YYT proposal.
5.By way of conclusion:
the financial return under any DOCA must be balanced against the conditionality and risk of the proposal. The Administrators have considered the risk of the [YYT] DOCA in detail and outlined these considerations in the Supplementary Report. Due to time constraints outside the control of the Administrators, a similar analysis has not been completed in respect of the [Kipoi] updated proposal. The Administrators are in the process of considering certain risks associated with the [Kipoi] Updated Proposal and intend to discuss these risks with creditors at the Reconvened Second Meeting.

15 February 2021 - Kipoi's Third Term Sheet

At about 10.45 pm on 15 February 2021, Kipoi submitted a further binding term sheet to the Administrators (Kipoi's Third Term Sheet). This offer was materially better than the second YYT DOCA proposal in every category of creditors, save for two (which were already receiving 100% return). It provided for a return to unsecured creditors of $1,400,000 as against its last proposal and YYT's proposal, both of which had provided for a return of $1,100,000.[66]
[66] Primary decision [25].
Kipoi's Third Term Sheet contained 21 items and included, relevantly, the following.[67]
[67] GB 1388 - 1392.
The proponent was Kipoi (item 2). The purpose of Kipoi's Third Term Sheet was to articulate the key terms of the deed of company arrangement proposed by Kipoi (item 6).
The parties to the proposed deed of company arrangement would be (1) the Administrators, (2) Tiger, and (3) Kipoi (item 7).
Kipoi's Third Term Sheet constituted an offer by Kipoi capable of acceptance by the Administrators and binding on such acceptance (item 9).
Item 10 provided that Kipoi would pay a total consideration of AU$3.3 million, and a further US$23 million to the Administrators/Deed Administrators, as follows:
(1)On submission of Kipoi's Third Term Sheet, Kipoi would pay AU$150,000 to the Administrators in payment of their remuneration, costs and expenses associated with their work in considering and recommending the Third Term Sheet, in preparing and negotiating the documents required to implement the proposal, in applying to the court to obtain orders adjourning the second meeting of creditors for 30 days, and in holding the adjourned second meeting of creditors (Administrator Fee Fund).
(2)Within two business days after execution of the DOCA, Kipoi would pay AU$750,000 to the Deed Administrators in respect of their remuneration, costs and expenses of administering the DOCA and implementing the proposals and transactions contemplated by it (Deed Administrator Fee Fund).
(3)Within two business days after the execution of the DOCA, Kipoi would pay to the Deed Administrators, as moneys available for distribution to creditors under the DOCA, the sum of AU$1.4 million (DOCA Fund).
(4)Kipoi would pay US$23 million to the Deed Administrators to pay the Other Senior Lenders,[68] in consideration for the transfer and assignment of their secured debt and securities to Kipoi if such offer were accepted by the Other Senior Lenders by 5 March 2021 and within two business days of such acceptance (Senior Debt Payment).
(5)Within two business days after the grant of orders pursuant to s 444GA of the Act, as contemplated by item 11(5), Kipoi would pay AU$1 million to the Deed Administrators to pay the Shareholders (defined as the holders of the Shares in Tiger), in consideration for the transfer of their shares to Kipoi (Shareholder Payment).
[68] The phrase 'Other Senior Lenders' was defined to mean QMetco and Taurus, or the lawful holders of the balance of the Secured Debt not held by Kipoi.
By item 11, the 'key operative terms' of the proposed DOCA would provide that:
(1)The Deed Administrators would use the Deed Administrator Fee Fund to pay the remuneration, costs and expenses associated with implementing Kipoi's Third Term Sheet and the transactions contemplated by it under the proposed DOCA, including in relation to an application under s 444GA of the Act.
(2)The Deed Administrators would use the DOCA Fund (AU$1.4 million) to satisfy all admitted Creditor Claims, through the creation of a creditors' trust (Creditors' Trust).
(3)All creditors would accept their entitlements under the Creditors' Trust in full satisfaction and complete discharge of all Claims which they have, or claim to have, against Tiger, with all Claims against Tiger being extinguished.
(4)The Deed Administrators would, within two business days of acceptance by the Other Secured Lenders,[69] pay the Senior Debt Payment to the Deed Administrators to pay the Other Senior Lenders, in consideration for the transfer and assignment of their secured debt and securities to Kipoi. If this did not occur by 5 March 2021, Kipoi was not required to pay the Senior Debt Payment to the Deed Administrators, or at all.
(5)The Deed Administrators would, by seeking and obtaining an appropriate order under s 444GA of the Act, cause Tiger to transfer all of the shares held in Tiger to Kipoi or its nominees, in consideration for the 'Shareholders Contribution [sic - Shareholder Payment]' which would be distributed to the Shareholders.
(6)The Deed Administrators would remove the existing directors of Tiger, and replace them with such directors as nominated by Kipoi.
(7)Upon effectuation of the DOCA, the DOCA would terminate, and the control of Tiger would be handed to the Kipoi directors.
[69] The term 'Other Secured Lenders' was not defined, but the term 'Secured Lenders' was defined to mean the lawful holders of the Secured Debt. Secured Debt was defined as the Secured Debt held by Kipoi and the Other Senior Lenders in relation to the assets and undertaking of Tiger.
By item 13, the Conditions Precedent to Kipoi's Third Term Sheet were:
(1)the Administrators 'formally recommending this Proposal' to the creditors ahead of the second meeting of the creditors of Tiger; and
(2)the creditors passing a resolution to accept the Kipoi proposal and enter into the DOCA at the second meeting of the creditors of Tiger.
Item 15 referred to Completion, and provided that the DOCA would be 'fully completed and effectuated' upon the last of the following to occur:
(1)The conditions precedent having been satisfied (or waived by Kipoi).
(2)The Administrator Fee Fund, the Deed Administrator Fee Fund and the DOCA Fund having been received by the Deed Administrators.
(3)The DOCA Fund having been transferred to the Creditors' Trust.
(4)The Shares (defined as all of the shares held in Tiger) having been transferred to Kipoi.
Item 15 also provided '[f]or the avoidance of doubt'[70] that:
Completion of the DOCA is not conditional on the acceptance of [Kipoi's] offer of the Senior Debt Payment to the Other Secured Lenders as contemplated by item 11(4).
[70] cf item 15.4.
Item 16 referred to Termination, and provided that the DOCA would terminate upon Completion, and would otherwise terminate:
(a)if Completion does not occur by 30 April 2021 unless otherwise agreed by the Deed Administrators and [Kipoi];
(b)by order of the Court; or
(c)by resolution of the Creditors passed at a meeting convened pursuant to div 75‑10 of [Insolvency Practice Schedule].
Item 16 also added:
For the avoidance of doubt, the enforcement of the Secured Debt by the Other Senior Lenders will not give rise to a termination event, rather the DOCA will continue and [Kipoi] expressly notes that it will participate as a bidder in any enforcement process. (emphasis added)

16 February 2021 - the Administrators' Adjournment Application

The Administrators' Adjournment Application was heard on the morning of 16 February 2021. After hearing argument, the master made orders which allowed for the creditors to adjourn the meeting, but did not permit the Administrators to adjourn the meeting of their own motion.[71]

16 February 2021 - the second meeting of creditors

[71] Primary decision [26].

On 16 February 2021 at around 3.00 pm, the second meeting of creditors was held. The Administrators reported that the court had ordered that the creditors may adjourn the meeting. The Administrators recommended to the creditors of Tiger that they accept YYT's final DOCA proposal.[72] When doing so, they identified a number of risks associated with Kipoi's final proposal, referred to in [80] below.

Classes of creditors

[72] Primary decision [27].

The classes of creditors included a secured creditor and various classes of unsecured creditors. The secured creditor was the Security Trustee.
The following table sets out the classes of unsecured creditors, and their potential returns under the competing Kipoi and YYT proposals provided to and considered by creditors at the meeting on 16 February 2021.[73]
[73] The information in the table is from GB 1111, 1210, 1137 ‑ 1138, 1347, 1391 ‑ 1392, 1394, 1468, 1481.

Creditor Class (unsecured)	Description of creditor class	Return under YYT proposal (c/$)	Return under Kipoi proposal (c/$)
Class A	Ms Caroline Keats - the remaining director of Tiger following the resignation of two other directors upon the Administrators' appointment.	12.4	16.5
Class B	Mr Ian Goldberg - former secretary of Tiger (1 Dec 2019 - 4 Nov 2020).	29.5	39.4
Class C	Ms Tamara Lissovski - former secretary of Tiger (17 Sep 2019 - 25 Nov 2019).	100	100
Class D	KordaMentha.	79.4	90
Class E	Group of 20 unsecured creditors of Tiger.	100	100
Class F	Group of 3 unsecured creditors of Tiger - comprised of New Holland Capital Pty Limited, Herbert Smith Freehills and Norton Rose Fulbright.	25	36.3
Class G	Group of 15 other unsecured creditors of Tiger, including KWM.	25	31.8

The Administrators' recommendations

The minutes of the meeting of 16 February 2021, indicate that the Administrators, by the Chairperson, advised that:[74]
[74] GB 1449 - 1450. The following is a quotation of the Administrators' recommendation, save that, for ease of exposition, the paragraphs have been numbered for the purposes of these reasons.
1.the Administrators had considered both of the DOCA proposals received;
2.both proposals provide a better return to all classes of creditors then liquidation, in a more timely manner, and also exceed the likely return to employees from [Fair Entitlements Guarantee];
3.having regard to the relevant factors discussed, although the revised [Kipoi] proposal provides a better return to five classes of creditors, the Administrators recommend that creditors accept the [YYT] DOCA proposal as:
(a)further adjourning the meeting (although within creditors' powers given the Court orders obtained) will create a material risk that the [YYT] DOCA will be unavailable to creditors given its expiry and lack of an extension;
(b)the [S]ecurity [T]rustee has provided a special proxy voting in favour of the [YYT] DOCA and that proxy has not been withdrawn;
(c)eight unsecured creditors with debts of $2.6 million (circa 62% of unsecured debts) confirmed their support for the [YYT] DOCA Proposal over the Revised [Kipoi] DOCA Proposal, notwithstanding the lower return under the [YYT] DOCA Proposal;
(d)there are a number of risks regarding the [Kipoi] DOCA proposal which have not been mitigated or fully considered, including:
(i)potential enforcement by the secured creditors (which could impact the timely effectuation of the DOCA);
(ii)solvency of Tiger post completion of the DOCA;
(iii)a potential lack of funding at the SEK level (which could impact the mine operations);
(iv)the lack of final documentation; and
4.the [YYT] DOCA Proposal is in an advanced form and could be executed by the Administrators in short order.
The above recommendations were also summarised in a PowerPoint presentation headed 'Administrators' recommendation', in the following terms:[75]
[75] GB 1482.
On balance, the Administrators' recommend the [YYT] proposal as:
-it provides a higher and more timely return than liquidation
-it is supported by the [S]ecurity [T]rustee and a number of key creditors, notwithstanding the lower return
-it is in an advanced form and could be executed expediently
-an adjournment would risk the [YYT] Proposal
-the [Kipoi] proposal is subject to a number of risks which have not been fully considered and mitigated, including:
>Enforcement by secured creditor
>Solvency post completion of DOCA
>Final documentation
(emphasis added)
It is evident that the italicised words in the PowerPoint presentation reflect the advice referred to in points 3(d)(i), (ii) and (iv) referred to in [80] above, which is the principal focus of Kipoi's complaint in appeal ground 1.

Voting

The Security Trustee was admitted to vote in the sum of (approximately) $151.8 million.[76]
[76] GB 1468.
At the request of Kipoi, the Chairperson put a resolution to adjourn the meeting to 23 February 2021. The resolution failed with 22 votes against (with a value of approximately $155.76 million, including the Security Trustee vote in the sum of $151.8 million), and two votes in favour (with a value of approximately $281,000).[77] A majority of creditors in number and in value voted in favour of the YYT‑proposed DOCA. There were 23 votes in favour (with a value of approximately $156 million, including the Security Trustee's vote in the sum of $151.8 million), and no votes against. One voting creditor, with a vote value of approximately $56,000, abstained.[78]

19 February 2021 - 26 February 2021

[77] GB 1455.

[78] GB 1454.

The Tiger DOCA was executed on 19 February 2021.[79]
[79] Primary decision [9].
On 23 February 2021, YYT paid approximately US$1.44 million to the Administrators on account of the 'Available Trust Property' and the 'Fees Fund' in accordance with its obligations under cl 9.1.1 and cl 9.3 of the Tiger DOCA, and from that day:[80]
1.the Administrators were entitled under cl 22 of the Tiger DOCA to look to the Fees Fund to satisfy their remuneration and expenses incurred as voluntary administrators and deed administrators;
2.Tiger had the right under cl 22.5 of the Tiger DOCA to any surplus in the Fees Fund, after payment of remuneration and expenses; and
3.the Administrators incurred the right to remuneration and expenses in execution and effectuation of the Tiger DOCA, to which they could look to the Fees Fund to satisfy.
[80] Primary decision [74].
On 26 February 2021, Tiger and the Administrators executed the Creditors' Trust Deed, pursuant to the obligations under cl 9.1.2 of the Tiger DOCA.[81]

4 March 2021

[81] Primary decision [74]. See also GB 1679.

On 4 March 2021, the Administrators paid the 'Available Trust Property' into the Creditors' Trust Account, pursuant to the obligations under cl 9.1.3 of the Tiger DOCA.[82]
[82] Primary decision [74].
As a consequence of these steps and the operation of cl 13.1 of the Tiger DOCA, on 4 March 2021:[83]
1.the unsecured creditors' rights were discharged, satisfied, released and extinguished on and from 4 March 2021;
2.the unsecured creditors obtained rights to claim against the Creditors' Trust;
3.the Administrators obtained the right to execute and deliver to Tiger, written releases of their former claims under cl 13.3 of the DOCA; and
4.Tiger and the Administrators obtained a right to plead the deed against any person having a claim against Tiger.
[83] Primary decision [74].
By operation of the Creditors' Trust Deed, from 4 March 2021:[84]
1.the Administrators became entitled to the payment of up to $50,000 out of the Trust Fund in payment of their remuneration and expenses under cl 6.1.1 and cl 19;
2.the unsecured creditors became entitled to the payment of certain sums out of the Trust Fund under cl 6.1.2 - cl 6.1.8 and cl 7.2;
3.the unsecured creditors' claims to those payments operated in satisfaction and discharge of all 'claims' under cl 7.20;
4.the Administrators became entitled to call upon unsecured creditors to execute and deliver a written release of all those former claims under cl 7.20; and
5.Tiger obtained the right to payment of any surplus in the Trust Fund under cl 9.1.

Late March/early April 2021

[84] Primary decision [74].

Kipoi commenced the primary proceedings by originating summons on 26 March 2021 to terminate the Tiger DOCA and for orders for the liquidation of Tiger, alternatively for the further administration of Tiger. The application was supported by an affidavit of Mr Gupta, sworn 25 March 2021. In pars 66 - 75 of his affidavit, Mr Gupta explained, under the heading 'Reasons for bringing the application', the basis for Kipoi's allegations that the Administrators had provided materially misleading information to creditors at or before the meeting on 16 February 2021.[85]

13/14 April 2021

[85] GB 298 - 300.

On 13 April 2021, the Administrators issued a circular to creditors in relation to Kipoi's application to terminate the Tiger DOCA. The circular included information about Kipoi's allegations that misleading or false information had been provided to creditors. The information in that regard was taken from Mr Gupta's affidavit, and is summarised in the table below.[86]
[86] The information referred to in the table is at GB 298 ‑ 300, 2041 ‑ 2043.

Allegation of misleading statements of Administrators	Allegation made in Mr Gupta's affidavit of 25 March 2021	13 and 14 April 2021 circular to creditors
1.	[I]f the secured creditors (on Jinji's instructions through the Security Trustee) could validly appoint a receiver, it was [Kipoi's] position that … if a receivership arose, [Kipoi] would participate as a bidder to acquire the relevant assets and thus any resulting receivership would not pose a problem for the Final [Kipoi] DOCA proposal. It was material to creditors' ability properly to assess the significance of the asserted enforcement risk that they be informed about this matter as well. This was also not done.	[T]he Administrators should have informed creditors that if a receivership arose, [Kipoi] had evinced an intention to participate as a bidder to acquire the relevant assets of Tiger, and on that basis [Kipoi] asserts that any resulting receivership would not have posed a problem for the [Kipoi] DOCA Proposal. [Kipoi] further asserts that its stated intention to participate as a bidder in any receivership was material to creditors' ability properly to assess the significance of the enforcement risk associated with the [Kipoi] DOCA Proposal.
2.	[I]f the secured creditors (on Jinji's instructions) could validly apply to wind up Tiger, in the face of the effectuation of the Final [Kipoi] DOCA proposal, such application would have required the Court to grant leave to proceed (given s 444E of the [Act]) and also to exercise its discretion in favour of winding up. The secured creditors' interests could adequately have been protected by their right to appoint a receiver. There was therefore a significant possibility that leave would be refused, or a winding up order not made. Indeed … it might be doubted that [YYT's] assertions should be given much weight given its obvious commercial interest in stifling the Final [Kipoi] DOCA Proposal. It was material to creditors' ability properly to assess the significance of the asserted solvency risk that they be informed about these matters. This was not done either.	[I]f the secured creditors could validly apply to wind up Tiger, if the [Kipoi] DOCA Proposal was approved, such an application would have required the Court to (i) grant leave and (ii) exercise its discretion in favour of winding up Tiger. [Kipoi] asserts that there was a significant possibility that an order winding up Tiger would not be made because the secured creditors could appoint receivers instead (and the Court would consider that a sufficient remedy for them). They further contend that [YYT's] assertions regarding winding up Tiger should not have been given much weight because [YYT] had an obvious commercial interest in stifling the [Kipoi] DOCA Proposal. [Kipoi] contends that these factors were material to creditors' ability to properly assess the significance of the solvency risk of the [Kipoi] Proposal.
3.	[A]lthough [YYT] had formally stated that its DOCA proposal would lapse if not voted up [sic] at the second creditors' meeting, having regard to the concurrent threats of receivership and winding up by Jinji's representatives (who were the same as [YYT's] representatives), there was a significant possibility that [YYT's] position was not final. Again, [YYT] had an obvious commercial interest in stifling the Final [Kipoi] DOCA proposal and bolstering its own proposal. It was material to creditors' ability properly to assess the risks of adjournment to consider the Final [Kipoi] DOCA proposal, compared with voting for the Second [YYT] DOCA proposal, that they be informed of these matters. This was also not done.	[A]lthough [YYT] had formally stated that the [YYT] DOCA Proposal would lapse if not voted up at the Meeting, [Kipoi] contends that: (a) there was a significant possibility that [YYT's] position was not final; and (b) [YYT] had an obvious commercial interest in stifling the [Kipoi] DOCA Proposal and bolstering its own proposal, and creditors should have been informed that it was possible [YYT] may change its position in order to properly to assess the risks of adjournment (which would have allowed further consideration of the [Kipoi] DOCA Proposal).
4.	[A]lthough, by 16 February 2021, the Final [Kipoi] DOCA proposal had not been translated into a form capable of immediate execution, this was not a risk or a material risk for creditors. The Final [Kipoi] DOCA proposal was binding, straightforward, and could have been documented quickly and easily after any vote in favour of it. This was particularly so, given the then existence of a long-form draft DOCA from [YYT] (which contained various terms which were common, or similar, to the [Kipoi] proposal).	[T]he fact that the [Kipoi] DOCA Proposal had not been translated into a form capable of immediate execution, was not a risk or a material risk for creditors because the [Kipoi] DOCA Proposal was binding, straightforward, and could have been documented quickly and easily if it was approved. [Kipoi] contends that this was particularly so given that the [YYT] DOCA Proposal was in a long-form draft and that draft contained various term which were common, or similar, to the [Kipoi] proposal.

The Administrators also informed creditors of the matters in pars 74 ‑ 75 of Mr Gupta's affidavit of 25 March 2021 including (1) the position of creditors under Kipoi's proposed DOCA, and (2) that Kipoi continued to maintain its final DOCA proposal, and would put that proposal to creditors again if the orders set out in the originating process were made.
An updated circular was issued by the Administrators on 14 April 2021 correcting an immaterial (for present purposes) error in the voting slip in the 13 April 2021 circular.[87]
[87] GB 2051.
The Administrators posed to creditors the following question on the issue of Kipoi's allegations of misleading information:[88]
Had the matters now raised by [Kipoi] in the Proceedings and summarised in the circular to creditors … been communicated to you before the vote at the meeting of creditors of Tiger held on 16 February 2021, would you have voted differently at that meeting or instructed any proxy appointed by you to vote differently?
[88] GB 2044. This question is the same on amended voting slip distributed on 14 April 2021; GB 2057.
The Administrators received nine responses from creditors. The responses were received from the Class A creditor, the Class B creditor, two Class E creditors, one Class F creditor and four Class G creditors. The total value of the interest held by the unsecured creditors who responded to the 13/14 April 2021 circular was AU$2,194,241.[89]
[89] Affidavit of Mr Kirman sworn 21 April 2021, par 47; GB 2021.
All nine creditors voted 'No', indicating that they would not have voted differently at the 16 February 2021 meeting had the matters raised by Kipoi in the proceedings been communicated to them before voting at the meeting.[90]
[90] Affidavit of Mr Kirman sworn 21 April 2021, par 47; GB 2021.
The Administrators also asked creditors, in effect, whether the Administrators should defend the proceedings commenced by Kipoi and oppose the orders sought in Kipoi's application. Seven creditors were in favour of defending the proceedings. One creditor voted against: Cube Consulting Pty Ltd, a Class G creditor which had been admitted to vote at the meeting on 16 February 2021 in the sum of (approximately) $22,000. One creditor abstained on that issue: Plant and Infrastructure Engineering Pty Ltd, a Class G creditor which had been admitted to vote at the meeting on 16 February 2021 in the sum of (approximately) $36,500.[91]
[91] Affidavit of Mr Kirman sworn 21 April 2021, par 47; GB 2021.
The Administrators also asked creditors, in effect, whether the Administrators should consent to orders in the terms of pars 1 ‑ 3 of Kipoi's application, including the orders that the Tiger DOCA be terminated and that Tiger be wound up. Eight creditors in effect said no. One Class G creditor, Plant and Infrastructure Engineering Pty Ltd, again abstained.[92]
[92] Affidavit of Mr Kirman sworn 21 April 2021, par 47; GB 2021.
The Administrators also asked, in effect, whether the Administrators should consent to orders in the terms of pars 6 and 7 of Kipoi's application, including the orders that the Tiger DOCA be terminated and there be a further administration of Tiger. Seven creditors in effect said no. There were two abstentions on this issue. Again a Class G creditor, Plant and Infrastructure Engineering Pty Ltd, abstained. Also a Class E creditor, Russell Broadhead Site Services, which had been admitted to vote in the sum of approximately $5,500 at the meeting on 16 February 2021, abstained.[93] (As noted earlier, Class E creditors were paid in full under the Tiger DOCA.)

22 April 2021

[93] Affidavit of Mr Kirman sworn 21 April 2021, par 47; GB 2021.

On 22 April 2021, the primary proceedings were listed for final hearing on 11 May 2021.

The Substantive Appeal

It is convenient to address the Substantive Appeal first.
To succeed in the Substantive Appeal, Kipoi must make good its contention that false or misleading information, within the meaning of s 445D(1)(a)(i) of the Act, was provided to unsecured creditors. In that regard, Kipoi contends that false or misleading information was provided by the Administrators and YYT as to the 'risks' to unsecured creditors of Kipoi's proposed DOCA being, relevantly, risks in relation to (1) enforcement by the secured creditor, (2) insolvency post‑effectuation of any DOCA based on Kipoi's proposal, and (3) documentation risk.[94] We will address this issue first.
[94] Appeal ground 1, Administrators' notice of contention grounds 1 and 2.
Kipoi's case concerns the risks identified by the Administrators in their recommendation to creditors at the meeting of 16 February 2021, referred to in [80] ‑ [81] above. It also concerns the statements in YYT's letter to creditors dated 15 February 2021, referred to in [62] above.

The master's reasoning

The master, having dismissed Kipoi's application to adduce additional evidence in respect of the transfer of debt issue, proceeded to address Schedule C to Kipoi's reply submissions dated 10 May 2021, which summarised its (proposed) case as to the alleged misleading information with respect to the transfer of debt issue.[95] To that extent, the master, with respect, dealt with an issue which he had effectively precluded Kipoi from raising.
[95] Primary decision [84] - [101].
The master then went on to address what he described as three other aspects of Kipoi's submissions, which he characterised as:[96]
1.the risk that receivers would be appointed and Tiger would be placed into liquidation if the YYT proposed DOCA were not accepted, and the Kipoi proposed DOCA were accepted;
2.an allegation that it was misleading to inform creditors that if the YYT proposed DOCA were not accepted, the proposal might lapse; and
3.an allegation to the effect that it was misleading to inform creditors 'with respect to the need to detail' the Kipoi proposal.
[96] Primary decision [102].

As to the first of those matters identified by the master, the master referred to Kipoi's 30 April 2021 submissions (not its reply submissions) and said:
[102]… At par 42 of its written submissions [filed 30 April 2021], [Kipoi] puts the position as follows:
'Mr Gupta's evidence is that, at the second creditor's meeting, the Administrators did not inform Creditors that:
(a)[Kipoi]'s position was that if a receivership arose, [Kipoi] would participate as a bidder to acquire the relevant assets and thus any resulting receivership would not pose a problem for the proposed [Kipoi] DOCA effectuating as:
(i)the Creditors' Trust would proceed in any event such that all unsecured creditors were protected;
(ii)[Kipoi] would participate as a bidder to purchase the assets of [Kipoi] at market value;
(b)the secured creditors' interests would adequately be protected by their right to appoint a receiver, and there was considerable doubt about whether any winding up application would be made (or would proceed); and
(c)even if the secured creditors (on Jinji's instructions through the Security Trustee) could validly appoint a receiver, it was [Kipoi]'s position that, if a receivership arose, [Kipoi] would participate as a bidder to acquire the relevant assets and thus any resulting receivership would not pose a problem for the proposed [Kipoi] DOCA.
[103]With respect, much of what is contained in that submission is highly speculative. If receivers were appointed, there would inevitably be a delay before it could be ascertained what return, if any, the creditors would receive. As I have indicated above, the corporate holdings under the umbrella of Tiger were complex. By way of example, SEK is in liquidation and subject to the DRC's law. It is perfectly reasonable for the administrators to have approached the matter on the basis that the creditors had an appreciation of what might flow from Tiger being placed in receivership and/or liquidation and the delays in any potential return. Even if they trusted the good offices of Mr Gupta and [Kipoi], there was no warrant for the administrators bringing these matters to the attention of the creditors. Put another way, it was not false or misleading to say nothing about this issue.
In relation to the second allegation referred to in [106.2] above, the master said:
[104]Second, it was said it was misleading to inform the creditors if it was not accepted the YYT DOCA proposal might lapse. It is difficult to see what else the administrators could have done. They were told in as many words by YYT that if the meeting was adjourned, the DOCA proposal would lapse. It was possible YYT would backtrack on that threat but there was no reason to expect they would do so. They had been quite definite. There is nothing in the evidence to suggest theirs was an empty threat. The administrators could not be expected to make that suggestion to creditors. In not making any statement about the possibility the threat would not come to pass, they were not in any way acting in a manner which was false or misleading.
In relation to the third allegation referred to in [106.3] above, the master said:
[105]Finally, it was said the information provided was false and misleading with respect to the need to detail the [Kipoi] proposal. This complaint has about it two aspects. First, it was said that the meeting would need to be adjourned to allow the DOCA to be put in final form. (The meeting was also advised the administrators wanted more time to consider the [Kipoi] proposal. But that aspect of the proposal for an adjournment can, for the moment, be put to one side). That was clearly a correct statement of the position - as at the date of the reconvened meeting there was a binding [term sheet] but there was no DOCA as such. During the course of the hearing, I indicated to senior counsel for [Kipoi], that I was not satisfied the evidence indicated there would be any difficulty in actually drafting the DOCA. In other words, there was nothing to suggest there would have been a sticking point which meant the terms of the DOCA could not be agreed. The risk was that having voted for the adjournment, the creditors would not have been in a position to vote in favour of a subsequent [Kipoi] proposal because supervening events, such as the appointment of receivers, would so have altered the landscape as to make the DOCA unworkable.
The master also said:
[106]Taking in the overall and looking at the totality of the evidence, I am not satisfied what was put before the creditors by the administrators was false or misleading. Nor am I satisfied there was any omission which was of any significance at all. Accordingly, I am satisfied that [Kipoi] has not shown a breach of s 445D(1)(a)(i) or s 445D(1)(c). Having reached that conclusion, it is not necessary to consider whether any false or misleading information was 'material' under the provisions of s 445D(a)(ii).

The parties' submissions as to whether information was false or misleading

Kipoi's submissions[97]

[97] See Kipoi's written submissions, pars 1 ‑ 31; CACV 46 of 2021, WB 12 - 19; Kipoi's written submissions as to notice of contention, pars 1 ‑ 18; CACV 46 of 2021, WB 116 - 121.

Kipoi submitted, in effect, that the Administrators had provided false or misleading information to unsecured creditors insofar as they recommended that Tiger's creditors approve the YYT proposed DOCA but not the Kipoi proposed DOCA on the basis that, with respect to the latter DOCA, there were 'risks' for unsecured creditors, being (1) 'enforcement by secured creditor', (2) 'solvency post‑completion of DOCA', and (3) 'final documentation'.
In summary, Kipoi contended that, contrary to the Administrators' recommendations, the Kipoi proposed DOCA did not carry risks for unsecured creditors because:
1.It provided for a distribution to unsecured creditors under a creditors' trust, which distribution stood to occur even if the secured creditors of Tiger subsequently enforced their rights, including by the appointment of receivers, and even if Tiger might subsequently be insolvent.
2.Section 444E of the Act would have required the secured creditors to obtain leave of the court before they could apply successfully to wind up Tiger, and there was nothing to suggest that any such leave would be granted, given their ability to appoint receivers.
3The absence of final documentation posed no, or no material, risk to Tiger's unsecured creditors, because Kipoi's proposal was binding, straightforward and could readily have been formalised within the timeframes provided for under s 444B(2) of the Act.
Kipoi also submitted that, for similar reasons, the correspondence sent to creditors of Tiger by YYT constituted false or misleading information, insofar as YYT asserted that (1) if the YYT proposed DOCA were not approved by creditors, then Tiger's purported majority secured lender, Jinji, would take immediate steps to have Tiger and its subsidiaries placed into liquidation, and (2) there was a consequential risk as to whether the Kipoi proposed DOCA would actually result in any return to creditors.
Kipoi submitted that the statements made by YYT, via its solicitors, in its letter dated 15 February 2021 were false or misleading, on the basis that 'action [taken] by the majority secured lender did not pose a risk to creditors under the [Kipoi‑proposed] DOCA'.[98]

Respondents' submissions

[98] Kipoi's written submissions, par 29; CACV 46 of 2021, WB 19.

The Administrators submitted that their statement of the risks did not convey false or misleading information to unsecured creditors.[99]
[99] Administrators' written submissions, par 13; CACV 46 of 2021, WB 81; appeal ts 132.
YYT in effect supported the Administrators' submissions referred to above. YYT submitted that similarly, the statements in its letter of 15 February 2021 were not false or misleading.[100]

Alleged false or misleading information - disposition

[100] YYT's written submissions, pars 46 - 50; CACV 46 of 2021, WB 61 - 62.

The Administrators' recommendations to creditors on 16 February 2021 are set out in [80] above. Kipoi, by its grounds of appeal, did not contend that the statements in points 1, 2, 3(a), 3(b), 3(c), 3(d)(iii)[101] and 4 were not accurate. Also, Kipoi accepted that the Administrators correctly stated (and indeed it is an important aspect of its case) that the Kipoi proposal would provide a better return to five classes of creditors.
[101] Although the matter in 3(d)(iii) was mentioned in passing by Kipoi in oral reply submissions: appeal ts 228.
Kipoi's focus in the appeal with respect to the Administrators' recommendations, was on points 3(d)(i), (ii) and (iv) referred to in [80] above, and (correspondingly) the last three risks mentioned in the PowerPoint presentation referred to in [81] above.

Risk of enforcement by secured creditors

As to point 3(d)(i) of [80] above, it was accurate for the Administrators to state that there was a risk of enforcement by secured creditors in light of the unequivocal correspondence from the Security Trustee dated 13 and 14 February 2021. The risk was that if creditors voted for the Kipoi proposal and the resolution passed, the Security Trustee would move immediately, or at least expeditiously, to exercise rights over the only asset of the Tiger Group of any value. Kipoi in this appeal did not contend that the Security Trustee could not have enforced its security.[102]
[102] Appeal ts 101.
From a practical and commercial perspective (as opposed to a more theoretical perspective), it was also accurate to say that this was a risk of the Kipoi DOCA proposal because, unlike the YYT DOCA proposal, the Kipoi proposal did not have the support of, and moreover was opposed by, the Security Trustee. Objectively, the chances of the Security Trustee exercising its security rights pending the effectuation of the YYT‑proposed DOCA, which it supported, were of a very substantially different and lower order than the prospects of the security being enforced if Kipoi's proposal were accepted.
It was also accurate to say that enforcement by the Security Trustee could affect adversely the position of unsecured creditors by impacting upon the timely effectuation of the Kipoi‑proposed DOCA. That is so for the following reasons.
The evident commercial point of the Kipoi proposal was to obtain effective control of the SEK copper mine. Whilst the Kipoi proposal was not conditioned upon Kipoi acquiring the debt and security of the other Senior Lenders, the commercial reality was that if the prize of the DOCA had been jeopardised, or was in prospect of jeopardy, by the Security Trustee appointing receivers over the shares in SEK and (more importantly) over the assets of the SEK copper mine and/or Tiger's US$171 million receivable from SEK, the incentive for Kipoi to pay the DOCA Fund in performance of its obligations under a DOCA would be considerably diminished, to say the least.
Kipoi contended in this appeal that there was no or no real risk to unsecured creditors because if (1) the Administrators had accepted Kipoi's Third Term Sheet and/or (2) the creditors had voted in favour of a DOCA on those terms, any subsequent failure by Kipoi to pay the DOCA Fund could have been redressed by the Administrators commencing proceedings for specific performance, requiring Kipoi to pay the DOCA Fund. Kipoi further submitted that, albeit that it was a company registered in Mauritius with no presence in Australia, the Administrators could, upon obtaining an order for specific performance, arguably seek to enforce the judgment in Mauritius. These contentions are legally tenuous and, more importantly, removed from commercial reality.
Even though Kipoi's Third Term Sheet was expressed as a binding offer, its acceptance by the Administrators could not in and of itself, as a matter of law, create a DOCA binding on or in favour of creditors.[103] Also and in any event, Kipoi's Third Term Sheet was expressly conditioned upon (amongst other things) the creditors passing a resolution to accept the Kipoi proposal and to enter into the DOCA at the second meeting of the creditors.[104] Insofar as it might have been suggested that the mere acceptance of Kipoi's Third Term Sheet by the Administrators could create a binding contract amenable to specific performance of an obligation on the part of Kipoi to pay the DOCA Fund, the contention cannot be accepted. Also, it is unlikely that there would be any order for specific performance ahead of at least the execution of the creditors' trust instrument.
[103] See s 444A, s 444B, s 444D of the Act.
[104] Condition precedent no 2, item 13; GB 1390.
Moreover, even once a DOCA and trust instrument were executed, it may be doubted that the Administrators would commence, or even be funded to commence, proceedings for specific performance against Kipoi if it failed to pay the DOCA Fund. For their different reasons, neither Kipoi nor the Security Trustee would have had any incentive to fund proceedings. Also, unsecured creditors would prima facie be unlikely to have the appetite to fund potentially expensive legal proceedings, thereby increasing their commercial exposure arising from Tiger's insolvency. The more likely outcome, if Kipoi failed to meet its obligation to pay the DOCA Fund, would be that the Kipoi DOCA would be terminated by the creditors under s 445CA of the Act or upon application under s 445D(d) of the Act. In other words, the risk was that the Kipoi DOCA would not be effectuated.
Further, the means by which, and the timing within which, an order for specific performance might be enforced against Kipoi in Mauritius was not explained by Kipoi in oral or written submissions. But even assuming (in favour of Kipoi) that the Administrators could obtain an order for specific performance and enforce the judgment in Mauritius, those assumptions only serve to demonstrate the correctness of the Administrators' statement that the acceptance of Kipoi's proposal could impact adversely the timely effectuation of the DOCA. It might be argued that Kipoi might have successfully restrained the Security Trustee from appointing receivers by reason of some alleged breaches of the ISSA, or it may be that Kipoi would, in any event, as a matter of commercial morality or principle, comply with its contractual obligations for no tangible commercial reward. Nevertheless, those possibilities could not gainsay the risk identified by the Administrators. The fact that Kipoi had the cash offshore, and the fact that it had paid a sufficient amount to the Administrators to get to the point where its Third Term Sheet could be considered, do not alter that conclusion.
Kipoi's contention to the effect that the DOCA might have been executed and effectuated, at least to the point where unsecured creditors were paid, before the Security Trustee enforced the secured debt having regard to the consultation provisions of s 5(a) of the ISSA is purely speculative, particularly as there is no evidence as to whether consultation had been undertaken prior to the second meeting of creditors on 16 February 2021. Moreover, it does not gainsay the risk identified by the Administrators. Further, the submission takes no account of the considerable scope for enforcement, absent the consultation process, pursuant to the provisions of s 5(b) of the ISSA.
It is also true that Kipoi's Third Term Sheet stated that Kipoi 'notes' (not 'undertakes' as submitted by Kipoi in this appeal) that it would 'participate as a bidder in any enforcement process' by the Other Secured Lenders. However, it is doubtful that this, on the proper construction of Kipoi's Third Term Sheet as a whole, was more than a statement of intention. Also, even if it were a contractual promise, it is doubtful that it would be specifically enforceable. Moreover, even if enforceable, a promise to 'bid' without any guaranteed minimum bid, could hardly be treated as providing any real commercial comfort to creditors contemplating the Kipoi proposal, and the potential loss of the YYT proposal.
Kipoi also referred to the evidence of one of the Administrators, Mr Kirman, in cross‑examination,[105] which, Kipoi submitted, involved an acceptance by Mr Kirman that there was no risk to unsecured creditors under the Kipoi proposal because it was a term of the proposal that unsecured creditors would be paid irrespective of whether any enforcement action occurred by the Security Trustee, or otherwise.
[105] Trial ts 185; GB 185.
Mr Kirman's evidence in cross-examination referred to by Kipoi is of no material assistance to Kipoi on this point. The evidence of Mr Kirman (one of the administrators) was, relevantly, that (1) if Kipoi's proposal in the Third Term Sheet was approved by creditors and (2) if Kipoi paid the DOCA Fund to the Administrators for payment into a creditors' trust, then (3) at that point Kipoi's proposal would be 'unconditional'.[106] The second of the qualifications referred to by Mr Kirman reflected the risk that payments might never be made by Kipoi by reason of the Security Trustee taking enforcement measures as explained earlier. As to the third statement made by Mr Kirman, he had not seen Kipoi's proposed creditors' trust instrument. To that extent, his answer involved an assumption on his part. This aspect of his evidence may reflect an attitude of mind that no conditions would be attached to the payment to creditors once the DOCA Fund was paid into a creditors' trust. However, the correctness of that hypothesis would ultimately depend upon the terms of the creditors' trust.
[106] Trial ts 185; GB 185.
The Administrators correctly identified the risk to unsecured creditors associated with the Kipoi proposal if the Security Trustee moved to exercise rights which, in effect, stripped the proposal of any value to Kipoi - although the risk would have been obvious enough to unsecured creditors with any degree of commercial acuity in any event in the circumstances as they obtained as at 16 February 2021.

Insolvency risk post‑effectuation of a Kipoi DOCA

Although the greater risk to unsecured creditors was, as explained above, that a Kipoi DOCA would not be implemented if the Security Trustee took action to render it devoid of commercial value for Kipoi, it was also correct to say that even if implemented, there would be the risk that Tiger would be left insolvent at the end of its effectuation.[107] The Administrators' statement referred to in point 3(d)(ii) of [80] above was not false or misleading.
[107] Kipoi accepted this in oral submissions in the appeal: appeal ts 213.
This was essentially for two reasons. First, any sale of the SEK assets (or Tiger's interests in those assets) by receivers with a view to discharging the secured debt might not occur by the time the Kipoi DOCA had been effectuated, leaving over $150 million of current (secured) liabilities unpaid, corporate overheads unfunded,[108] and no capacity to pay or repay any unsecured debt associated with care and maintenance. Secondly, there was the risk that, even with a timely sale, any realisation of the assets would be insufficient to discharge the secured debt, let alone to provide any surplus to pay outstanding or ongoing liabilities.
[108] The inability to pay ongoing corporate costs was one of the reasons Tiger was placed by its directors into voluntary administration in the first place: Administrators' report to creditors dated 2 December 2020, par 3.1; GB 782.
Whilst it appears that the Administrators did not have an expert valuation of the SEK copper mine, on the evidence before the master, an indication of its value relative to the overall level of debt may be inferred from the facts that:
1.the mine had been the principal asset of the Tiger Group, and the primary source of revenue for Tiger;
2.the Tiger Group had recorded net losses before tax of $35.7 million and $51.7 million in the financial years ending 30 June 2017 and 30 June 2018 respectively;
3.the draft accounts of the Tiger Group for the year ended 30 June 2019 recorded a net loss before tax of $83.7 million;
4the Tiger Group had recorded total losses of US$485 million since incorporation;
5.as at September 2020, the Tiger Group had a deficiency of net assets of $68.4 million;
6even after debt had been substantially reduced under the Scheme of Arrangement (a reduction of about US$171 million), the mine was unable to service debt; and
7.three offers for the mine had been received around 2020, but none was sufficient to repay the debt owed to secured creditors.

The master continued:[203]
[203] Primary decision [58] - [60].
As I indicated earlier, the securities granted by Tiger were subject to the ISSA. [Kipoi] did not put on any evidence of a security document granted in its favour or in favour of any individual lender. [Tiger] and [the Administrators] submitted that was because, as set out in the definition of 'security documents' in the Common Terms Agreement (CTA), all security documents were granted to the Security Trustee. [The Security Trustee] holds the charge property for the secured parties on the terms of the ISSA. Under s 3(a)(ii) of the ISSA, each secured party authorised the Security Trustee to perform the duties, obligations and responsibilities and exercise the rights, powers and authorities and discretions specifically given to the Security Trustee under or in connection with the financing documents together with any other incidental rights, powers, authorities or discretion. As is usual in such arrangements, the Security Trustee is granted broad powers. S[ection] 3(a)(ii) does not in any way caveat or limit the authorisations granted to the Security Trustee. That section is not expressed to be subject to any other section of the ISSA.
[Tiger] and [the Administrators] submitted when considering the exercise of those broad powers:
(a)the Security Trustee was the appropriate entity for the administrators to listen to;
(b)the company's relevant contractual arrangements were with the security trustee;
(c) the [A]dministrators are not required to interrogate the ISSA or any other document relating to the arrangements between the lenders and security trustees to which the company was not a party;
(d)there was no reason for the [A]dministrators to consider the views of the individual senior lenders; and
(e)[Kipoi] had not established the Security Trustee acted in breach of their rights and obligations under the relevant documents.
These submissions are unanswerable. It is a question of how far the chain of enquiry could and should have been taken by the [A]dministrators. What is telling is [Kipoi] could provide no answer to [Tiger's] and [the Administrators'] claims. What they were effectively trying to do was question the Security Trustee's right to take the action they threatened if the YYT DOCA was not accepted. As a matter of contractual interpretation, they failed.

Grounds of appeal in the Procedural Appeal

Kipoi appeals against the master's dismissal of the Primary Application on five grounds.
Ground 1 in effect contends that the master erred in concluding that the additional evidence would not have been of 'sufficient probative value to alter the outcome of the proceedings' even if the debt transfer were found to be ineffective. It is asserted that the master failed to consider whether statements made to Tiger's creditors either assumed or asserted the effectiveness of the purported transfer of secured debt to Jinji or conveyed that there was a reasonable basis to consider the debt transfer was effective. Kipoi contends that the additional evidence would have established these statements to be false or misleading, and was of significant probative value on that basis.
Ground 2 contends that the master erred in concluding that the additional evidence was not of sufficient probative value because it was the position of the Security Trustee that was crucial, and because the Security Trustee was the appropriate entity for the Administrators to listen to.
Ground 3 contends that the master erred in finding, and proceeding on the basis, that the Administrators, alerted to the potential difficulties with the debt transfer by Kipoi, had brought the issue to the attention of creditors, in circumstances where the Administrators:
1.told creditors only that Kipoi had 'raised arguments' that the debt transfer was not valid or effective;
2.did not alert creditors to any issue regarding the effectiveness of the debt transfer, including the fact that it was signed by a director at a time when SEK was in liquidation; and
3.conveyed to creditors that Kipoi's assertions were unsubstantiated and they could proceed on the basis that the debt transfer was effective.
Ground 4 contends that the master erred by applying the wrong test. Kipoi contends that the master proceeded on the erroneous basis that the proper inquiry was whether the Administrators had acted appropriately in not investigating the alleged ineffectiveness of the debt transfer beyond ascertaining the position of the Security Trustee. Kipoi says that this is not an element of s 445D(1)(a) of the Act.
Ground 5 in effect contends that the master erred in the exercise of his discretion by failing to take the following matters into account:
1.what Kipoi contends is the true probative value of the additional evidence;
2.the absence of any delay by Kipoi in bringing the Primary Application;
3.the need to give Kipoi a sufficient opportunity to present its case;
4.the absence of prejudice to any other party if the Primary Application were granted; and
5.the prejudice to Kipoi of being 'shut out' from making arguments if the Primary Application were dismissed.
If the appeal succeeds, Kipoi seeks orders setting aside the master's final orders in the primary proceedings and remitting the matter to the master for further directions as to adducing additional evidence.
Because the order dismissing the Primary Application is interlocutory, Kipoi requires leave to appeal against the order. The application for leave to appeal was referred to the hearing of the appeal.

Disposition of the Procedural Appeal

Kipoi in effect sought an adjournment of the trial to enable it to obtain additional evidence which it hoped would establish that the debt transfer from Taurus and QMetco to Jinji was ineffective. This was on the basis that the Common Terms Agreement required SEK and Jinji to enter into a loan agreement for the transfer to be effective. Kipoi wished to contend that the Loan Agreement was invalid because it was not executed by an authorised officer of SEK. It hoped to establish that, under the law of the Congo, only the liquidator could validly execute the Loan Agreement on 27 January 2021. If that was correct, then Kipoi would contend that Jinji was not a secured creditor of Tiger and was not a 'Majority Senior Lender' entitled to give instructions to the Security Trustee under the terms of the ISSA.
The master properly identified as the most important issue whether the additional evidence would 'alter the outcome of the proceedings if it went the way that [Kipoi] suggested it would'.[204] The master in effect held that, even if the additional evidence established the debt transfer to Jinji to be ineffective, it would not establish any impugned statement to Tiger's creditors to be false or misleading.
[204] Primary decision [57].
We turn to consider that issue, by reference to each of the statements which Kipoi sought to establish to be false or misleading. That is, we consider whether the impugned statements would be false or misleading if the debt transfer to Jinji was ineffective because the Loan Agreement was invalid as it was not executed by an officer of SEK authorised to do so.

Administrators' supplementary report to creditors of 9 February 2021

The first statement said to be false or misleading is the statement in the Administrators' supplementary report to creditors of 9 February 2021, set out earlier and reproduced below for ease of reference:[205]
On 27 January 2021, the Administrators understand that Jinji acquired the secured debt of SEK (guaranteed by Tiger) that was previously held by [Taurus] and [QMetco]. Whilst certain arguments have been raised by [Kipoi] (another senior lender) disputing the validity of the transfer, the Administrators have received evidence confirming the secured debt has been assigned, including confirmation from the Security Agent and Trustee. Accordingly, at the time of writing this Supplementary Report, and for the purposes of the Reconvened Second Meeting, the Administrators are satisfied that [Taurus'] and [QMetco's] debt has been transferred to Jinji.
[205] GB 691.
Kipoi submits that this passage conveyed to Tiger's unsecured creditors that the transfer of the debt to Jinji was validly made.[206] Such information would be false and misleading if the transfer was actually, legally, ineffective. However, we do not accept that this is the information conveyed by the statement. The statement begins with a reference to what the Administrators understand. It concludes with a statement as to the Administrators' state of satisfaction. The satisfaction itself is not expressed to be absolute, but to be held at the time of writing the supplementary report and for the purposes of the creditors' meeting. The dispute as to the validity of the transfer is noted.
[206] Appeal ts 9.
In our view, the impugned statement conveys that the Administrators understood and were satisfied, for the purposes of the creditors' meeting, that the debt transfer to Jinji was effective. Kipoi does not assert that aspect of the statement to be false or misleading, as it does not contend that the Administrators did not actually have that understanding and state of satisfaction.[207]
[207] Appeal ts 8.
It may also be that the statement conveys that the evidence which the Administrators received provided a reasonable basis for believing that the debt had been transferred to Jinji. However, to the extent that the statement conveyed this information, it was not false or misleading. At the time of making the statement the Administrators had, as noted at [197] - [198] above, received the Loan Agreement, the Creditor Accession Undertaking and the Transfer Certificates. These were the documents which were required under the Common Terms Agreement and the ISSA to give effect to a transfer of debt to an acceding Senior Lender. The Administrators had also received advice from the Security Trustee that the transfer to Jinji had been made and accepted. There was nothing to suggest that the Administrators were aware of the possible existence of any fact that would make the purported transfer ineffective. The only basis on which Kipoi had, to that point, asserted invalidity was the unparticularised assertion that Jinji may be a Prohibited Party. There was no suggestion, before the master or in this court, that Jinji was actually a Prohibited Party, and no evidence was presented to the Administrators that this was the case. In our view, the material which the Administrators had received provided reasonable grounds for them to believe that the debt had been transferred to Jinji.
In oral submissions, senior counsel for Kipoi disavowed a case based on the proposition that the statement conveyed that the Administrators had reasonable grounds for believing the transfer to have been effected.[208] Nor did Kipoi seek to make a case that the Administrators should have informed creditors that the Security Trustee was not, under the terms of the financing agreements, itself required to make inquiries.[209] Senior counsel also disavowed a case based on an implied statement that the Administrators had carried out all reasonable inquiries.[210]
[208] Appeal ts 10.
[209] Appeal ts 11.
[210] Appeal ts 11.
Counsel indicated that the ultimate point was that the representation by the Administrators as to their satisfaction became a representation as to the actual fact.[211] For the reasons explained above, that is not the effect of the statement in the Administrators' supplementary report. Nor was information of the actual fact of a legally effective debt transfer to Jinji conveyed by the subsequent statements which Kipoi seeks to impugn, either individually or when all the statements are considered together.

Statements in PowerPoint slideshow

[211] Appeal ts 11 - 12.

The second statement that Kipoi seeks to impugn is contained in a PowerPoint slideshow which was presented to the reconvened creditors' meeting on 16 February 2021. One of the dot points in a list of 'subsequent events' after the adjournment of the creditors' meeting is:[212]
•Acquisition of Taurus/QMetco secured debt by [Jinji]. Validity of assignment disputed by a senior lender ([Kipoi])[.]
[212] GB 1479.
This statement cannot be taken to be a statement about the fact that the debt transfer to Jinji was legally effective. The PowerPoint slide expressly notes that the validity of the assignment is disputed. The information conveyed by the dot point is no more than that, since the adjournment of the creditors' meeting, there has been a purported transfer of secured debt to Jinji, the validity of which is disputed by Kipoi. There is nothing false or misleading in that statement.
The third impugned statement also appears in the PowerPoint slideshow, in a slide which relevantly reads:[213]
On balance, the Administrators recommend the [YYT] proposal as:
…
- the [Kipoi] proposal is subject to a number of risks which have not been fully considered and mitigated, including:
> Enforcement by secured creditor[.]
[213] GB 1482.
Kipoi submits that this statement takes, as its factual predicate, that Jinji is in fact a secured creditor, with powers and rights of enforcement associated with that status.[214] We do not accept that submission. In the context of the Minutes as a whole, understood in the context of the Security Trustee's correspondence of 13 and 14 February 2021, the reference is to the enforcement by the Security Trustee, which had threatened to enforce its securities if the Kipoi DOCA proposal was accepted.
[214] Appeal ts 13.
In the Substantive Appeal, we have concluded that the statement that enforcement by the Security Trustee was a risk to the Kipoi DOCA proposal was not false or misleading. Kipoi's argument in that respect would not be improved if the debt assignment to Jinji were established to have been ineffective.

Statements about admission of proof of debt in the Minutes

The next information which Kipoi seeks to impugn is that recorded in the Minutes of the creditors' meeting of 16 February 2021, set out at [207] above. The statements were made in the context of the operation of IPR 75‑100, which provides:
(1)The person presiding at a meeting may determine any question that arises as to the entitlement of a person to vote.
(2)In deciding whether a person is entitled to vote at a meeting of creditors, the person presiding must:
(a)have regard to the merits of the person's claim; and
(b)act impartially and independently.
(3)If the person presiding is in doubt whether a proof of debt or claim should be admitted or rejected, her [sic] or she must mark that proof as objected to and allow the creditor to vote, subject to the vote being declared invalid if the objection is sustained.
(4)A decision by the person presiding to admit or reject a proof of debt or claim for the purposes of voting may be appealed against to the Court within 10 business days after the decision.
In the statements referred to in [207] above, Mr Kirman, as chairman, is recorded as saying, in effect, that:
1.the Administrators had not received any information that would suggest that the value of the debt was less than the amount stated in the proof by the Security Trustee; and
2.the Administrators do not consider that there is any doubt as to whether the debt should be admitted for the purposes of IPR 75‑100(3).
The first statement was plainly correct. There was no information provided to the Administrators that the value of the secured debt was less than US$109,686,774 (AU$151,850,370) as at the relevant date, 5 November 2020.[215] Further, the value of the debt for voting purposes did not depend upon whether there were internecine disputes between Senior Lenders as to who, if anyone, was entitled to give instructions to the Security Trustee.
[215] See GB 1468.
As to the second statement, senior counsel for Kipoi stated that Kipoi did not dispute that the Security Trustee was 'entitled to prove its debt'.[216] If the Security Trustee were 'entitled to prove its debt' then there could be no doubt that it could be admitted to vote as a creditor at a meeting of creditors of Tiger. The only question then would be the value to be ascribed to the claim for voting purposes and, as indicated above, it was correct to say that the Administrators had not received information suggesting that the value of the debt was less than the amount stated in the proof by the Security Trustee. In any event, the statement concerned the chairperson's state of mind, and there is no evidence to show that the statement was false or misleading in that regard.
[216] Appeal ts 19.
The correctness of neither statement turned upon the effectiveness or otherwise of the transfer of Taurus' and QMetco's debt to Jinji. Contrary to Kipoi's submissions, the statements did not convey to unsecured creditors that the 'Administrators were satisfied that, and it was the case that, the debt transfer [to Jinji] was valid'.[217] That was not the point or effect of these statements. These statements concerned the chairperson's determination, in his capacity as the person presiding at the meeting, as to the Security Trustee's entitlement to vote and as to the value to be attached to the Security Trustee's proof of debt for voting purposes.
[217] Appeal ts 19.
Further, Kipoi's underlying complaint appears not to be that the Security Trustee was precluded from voting at a meeting of creditors in the amount of its proof for the secured debt, but rather that it was not actually authorised by the Senior Lenders to vote the way that it did. But the Administrators did not provide any statement or assurance to unsecured creditors that the Security Trustee had actual authority under the financing agreements to vote the way that it did, and indeed it would have been unrealistic to expect the Administrators to proffer a view as to the question of actual authority in that regard. If and insofar as Kipoi's complaints about the debt transfer prior to the second meeting of creditors were relevant to the question of the Security Trustee's authority, all the Administrators did (see [235] ‑ [236] above) was to inform creditors that they had considered Kipoi's complaint and had formed the view, on the evidence available, that the debt had been transferred to Jinji.
It may be added, although the point is not essential for the determination of the appeal, that the Common Terms Agreement provided, in effect, for the Security Trustee to be paid a 'Parallel Debt' by a 'Transaction Party' (including SEK and Tiger), which was equivalent to the 'Corresponding Debt' owed by a 'Transaction Party'. The Parallel Debt was independent of the Corresponding Debt and not held on trust, although any repayment of the Parallel Debt to the Security Trustee would decrease, to the extent of the payment, the Corresponding Debt owed to the 'Finance Parties', including the Senior Lenders.[218] The provisions in relation to the payment of the Parallel Debt to the Security Trustee were expressed, in the last part of the relevant clause, to apply for the purposes of determining the Secured Obligations in the Security Documents governed by the laws of the Republic of South Africa.[219]
[218] Section 8.13(c) ‑ (g) of the Common Terms Agreement; definitions of Corresponding Debt, Parallel Debt and Transaction Parties in s 1.01 of the Common Terms Agreement; GB 321, 347, 365, 475 ‑ 476.
[219] Including the Business Assets Pledge and the Kipoi Mining Mortgage: GB 316, 340, 477.
The Minutes also refer to the letter from Kipoi's solicitors referred to at [206] above, which was apparently received eight minutes before the scheduled meeting time. The Minutes record that the Administrators had taken advice from their solicitor. Their solicitor's view of the letter was expressly said to have been formed in a preliminary review undertaken in the extremely limited time available. Their solicitor's view of the letter from Kipoi's solicitors was that it 'restates previous unsubstantiated contentions and objections to the [Security Trustee's] proof of debt'. That statement was not false or misleading, even on the assumption that the transfer to Jinji was ineffective. The letter did not substantiate the allegations which Kipoi advanced other than by providing particulars of the basis on which it contended that Jinji was a Prohibited Party (which Kipoi has not contended to be the case in the primary proceedings or on appeal). Further, the views of the Administrators' solicitor were directed to Kipoi's objections to the Security Trustee's proof of debt. As noted above, it was not disputed by Kipoi that the Security Trustee was entitled to prove its debt for voting purposes at the 16 February 2021 meeting (and there is no evidence to suggest otherwise). The bases upon which Kipoi had sought to object to the Security Trustee voting in respect of its proof of debt were unsubstantiated and without foundation.

Statements in letter from Jinji's solicitors of 15 February 2021

Kipoi also relies on statements in letters by the solicitors for Jinji and YYT to unsecured creditors on 15 February 2021. As noted earlier, in those letters, the solicitors said:[220]
In order for the [Kipoi] Proposal to be voted on by creditors, it will be necessary to adjourn the Reconvened Meeting. Our clients' position as regards any adjournment of the Reconvened Meeting is as follows:
14.1 The YYT proposal expires at close of business on 16 February 2021.
14.2 If the meeting is adjourned or the YYT proposal is not approved on 16 February 2021, the YYT proposal will be immediately withdrawn.
14.3 The funding to SEK for the care, preservation and maintenance of the mine that is currently arranged by our clients will immediately cease.
14.4 Jinji will immediately take steps to have [Tiger] and SEK placed into liquidation. (italics emphasis added) (bold original emphasis)
[220] GB 2389.
Kipoi submits that par 14.4 of this statement cannot be true if the debt transfer is ineffective.[221] We do not accept this submission. The statement is expressed as a statement of Jinji's and YYT's position. That was their position. The statement anticipates that Jinji would take steps to have Tiger and SEK placed into liquidation. That is to be understood as including an intention to procure the Security Trustee to take steps to wind up Tiger and/or SEK. There is nothing false or misleading about that statement in circumstances where that was Jinji's intention. While a relevant step might have been to instruct the Security Trustee to make a winding up application, the threat was not empty in circumstances where the Security Trustee was, as a matter of fact, accepting Jinji's instructions. The statement does not assert that the steps proposed to be taken by Jinji will be successful, or that Jinji has any particular legal entitlement to take those steps. It merely indicates Jinji's position that steps would immediately be taken if the reconvened creditors' meeting was adjourned.
[221] Appeal ts 14.
In our view, proving that the debt transfer to Jinji was ineffective would not demonstrate this statement to be false or misleading.

Overall effect of the impugned statements

Kipoi submits that what was conveyed to the creditors by the above representations, taken as a whole, was that there was no doubt or question about the validity of the transfer of the underlying debt.[222] We do not accept that submission. None of the individual statements had that effect, and considering the combined effect of the statements does not improve Kipoi's position.
[222] Appeal ts 18 - 19.
The fact that Kipoi disputed the validity of the debt transfer to Jinji was expressly stated. Statements that the Administrators did not consider there to be any reason to doubt that the Security Trustee's proof of debt should be admitted were correct, and Kipoi accepts that the Security Trustee was entitled to prove the secured debt. Statements that Kipoi's claims were unsubstantiated were also correct, as Kipoi never provided the Administrators with any evidence to support its claim of invalidity. The only particularised statement of the reason why the debt transfer was said to be ineffective was provided about eight minutes before the reconvened creditors' meeting. Kipoi's statement of 16 February 2021 asserted a basis (Jinji's alleged status as a 'Prohibited Party' on the ground that one of its directors was entrusted with prominent public functions in China) which Kipoi did not seek to justify in the proceedings. Statements about the views of the Administrators were just that, and were not expressed in terms that conveyed that there was objectively no room for doubt as to the validity of the debt assignment to Jinji.
Nor do we accept the contention in Kipoi's written submissions that the above statements conveyed that the reason the YYT DOCA proposal was preferred by the Administrators was that it enjoyed 'majority creditor support'.[223] The Administrators were not referring to the underlying arrangements between the Senior Lenders. References to the secured creditor were properly understood as being to the support of the Security Trustee. Further, irrespective of the effectiveness of the debt transfer to Jinji, the Security Trustee was accepting instructions from Jinji as a matter of fact. From Tiger's perspective, it was the attitude of the Security Trustee as to the enforcement of securities that mattered as it held the securities. Demonstrating the debt transfer to Jinji to be ineffective or subject to legal doubt would not falsify statements that potential enforcement by secured creditors was a risk regarding the Kipoi DOCA proposal that had not been mitigated or fully considered.[224]

Conclusion and orders

[223] Appellant's written submissions, par 32; CACV 38 of 2021, WB 149 - 150.

[224] GB 1450.

For the above reasons there would have been no utility in adjourning the trial to give Kipoi an opportunity to obtain evidence to establish that the debt transfer to Jinji was ineffective, or that there was uncertainty as to its validity. Senior counsel for Kipoi accepted that this was the purpose of the Primary Application.[225] There would have been no utility in adjourning for that purpose as proving those matters would not have enabled Kipoi to establish that any of the statements it sought to impugn were false or misleading.
[225] Appeal ts 20.
Once that conclusion is reached, the inevitable conclusion is that the Primary Application should be dismissed. Allowing the Primary Application would have involved a significant delay in the trial while:
1.evidence (including expert evidence as to Congolese law) was obtained;
2.parties interested in the validity of the debt transfer (such as Taurus, QMetco and the Security Trustee) were joined to the primary proceedings; and
3.Kipoi commenced the anticipated proceedings directly challenging the validity of the debt transfer and those proceedings progressed to be ready for trial together with the primary proceedings.
Such a delay would, in the circumstances, have been contrary to case management principles, the general statutory objective that administrations under pt 5.3A of the Act be conducted expeditiously[226] and the imperative for urgency in this particular case resulting from the provision for termination of the DOCA if the Conditions Precedent are not satisfied by 31 December 2021.[227] There is no prejudice to Kipoi in refusing the Primary Application when the evidence Kipoi sought the opportunity to obtain could not have altered the outcome of the primary proceedings. Dismissing the Primary Application did not shut Kipoi out from advancing a viable claim.
[226] See Mighty River International Ltd v Hughes [2018] HCA 38; (2018) 265 CLR 480 [37], [62], [72].
[227] Clause 9.5 of the DOCA; GB 1512.
Therefore, grounds 1 and 3 are not established and the master's decision to dismiss the Primary Application was plainly correct in its result. It is unnecessary to consider the errors alleged by the other grounds of appeal. Those other alleged errors would not be material, since they could not have altered the outcome of the Primary Application. Even if this court were to find material error in the exercise of the master's discretion, on exercising the discretion afresh we would also dismiss the Primary Application.
Kipoi requires leave to appeal against the master's interlocutory decision. Ordinarily, leave will only be granted where the interlocutory decision is at least attended by sufficient doubt to justify the granting of leave and substantial injustice would result if the interlocutory decision was allowed to stand.[228] In the present case, neither of these requirements are satisfied. While the concern about interlocutory appeals fragmenting proceedings does not apply here, as final orders have been made in the primary proceedings, it would be futile to grant leave to appeal in the circumstances of this case.
[228] See, for example, Litopoulos v Indiana Holdings Pty Ltd [2021] WASCA 88 [11] - [13].
There is a further reason why leave to appeal against the dismissal of the Primary Application should be refused. Earlier we have concluded that, even if (contrary to our view) false or misleading information about Tiger's affairs was given to Tiger's creditors, this is not an appropriate case for the court to exercise its discretion under s 445D of the Act to terminate the DOCA. That analysis would apply equally to any finding that false or misleading information was provided to creditors about the effectiveness of the debt transfer to Jinji. Therefore, even if (contrary to our view) the additional evidence Kipoi sought to adduce could establish that the condition for the existence of the discretion in s 445D(1)(a) was satisfied, no substantial injustice would be occasioned by the dismissal of the Primary Application. That is because, even if Kipoi could use the proposed additional evidence to prove that the court's discretion was enlivened, it has not established that the discretion should be exercised.
That conclusion is confirmed by the evidence that, on 16 April 2021, the Administrators also circularised creditors in relation to whether they would have voted differently at the meeting on 16 February 2021 had the complaints made by Kipoi as to the validity of the transfer of debt to Jinji been communicated to them before voting. In addition to a response by the Security Trustee, 18 responses were received from unsecured creditors, being the Class A creditor, the Class B creditor, the Class D creditor, three Class E creditors, two Class F creditors and nine Class G creditors, as well as a response from a Class G creditor who had not voted at the 16 February 2021 meeting and whose claim was around $1,723. Seventeen of the 18 unsecured creditors, with debts to the value of around $3.5 million,[229] said, in effect, that they would not have voted differently at the 16 February 2021 meeting had the matters raised by Kipoi on this question been communicated to them before the meeting. Only one Class G creditor, PwC, with a debt to the value of around $0.138 million, said, in effect, that they would have voted differently.[230]
[229] The responding creditors' debts totalled $155,493,068. Deducting the Security Trustee's debt to the value of $151,850,371 gives a total unsecured creditor debt of $3,642,697. One Class G creditor, PwC, with a debt of $138,812, said that its vote would have been different. This leaves a total debt value of $3,503,885 in respect of unsecured creditors responding to the circular saying that they would not have changed their vote.
[230] Affidavit of Mr Kirman sworn 21 April 2021, par 51; GB 2021 - 2022.

Orders

For the above reasons, we would refuse leave to appeal in the Procedural Appeal and dismiss the Procedural Appeal. The consolidated appeal should be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Murphy
20 OCTOBER 2021