JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: YARA AUSTRALIA PTY LTD -v- OSWAL [No 2] [2013] WASCA 187
CORAM: McLURE P
PULLIN JA
MURPHY JA
HEARD: 18-20 FEBRUARY 2013
DELIVERED : 16 AUGUST 2013
FILE NO/S: CACV 121 of 2011
BETWEEN: YARA AUSTRALIA PTY LTD
Appellant
AND
RADHIKA OSWAL
First RespondentPANKAJ OSWAL
Second RespondentYARA PILBARA HOLDINGS PTY LTD (FORMERLY BURRUP HOLDINGS LTD)
Third RespondentTOR HOLBA
First-named Fourth RespondentVINOJIT AMBALAVANER
Second-named Fourth RespondentYARA PILBARA FERTILISERS PTY LTD (FORMERLY BURRUP FERTILISERS PTY LTD) (Receivers and Managers Appointed)
Fifth Respondent
RAMESH SODUM
Sixth RespondentIAN CARSON
First-named Seventh RespondentDAVID McEVOY
Second-named Seventh RespondentSIMON THEOBALD
Third-named Seventh Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :KENNETH MARTIN J
Citation :OSWAL -v- YARA AUSTRALIA PTY LTD [No 3] [2011] WASC 255
File No :CIV 3078 of 2010
Catchwords:
Appeal - Interlocutory appeal from trial of preliminary questions - Proper construction of company shareholders deeds and other contractual instruments - Proper construction of phrase 'holder of shares' within contractual instruments - Proper construction of contractual clauses granting special voting rights to company directors - Proper construction of pre-emptive rights provisions within contractual instruments
Corporations law - Proper construction of phrase 'holder of shares' at law - Effect at law of notation of non-beneficial shareholding on company register of members - Reference in company register of members to shareholding as trustee
Trusts law - Effect of resolution to appoint trust property for benefit of beneficiaries of a discretionary trust - Whether appointment of trust property for benefit of beneficiaries of a discretionary trust creates a separate trust
Legislation:
Corporations Act 2001 (Cth), s 140(1), s 168, s 169(5A), s 1070A(1)(b), s 1071B(2), s 1072E(9), s 1072F(1), s 1072H(6)
Result:
Appeal dismissed
First respondent's cross-appeal upheld in part
Seventh respondents' cross-appeal upheld
Category: A
Representation:
Counsel:
Appellant:Mr R W Douglas & Mr D M
Benson
First Respondent: Mr P Durack SC & Mr A Shearer
Second Respondent: No appearance
Third Respondent: No appearance
First-named Fourth Respondent: No appearance
Second-named Fourth Respondent: No appearance
Fifth Respondent: No appearance
Sixth Respondent: No appearance
First-named Seventh Respondent: Mr J H Karkar QC & Mr K J Mony
De Kerloy
Second-named Seventh Respondent : Mr J H Karkar QC & Mr K J Mony
De Kerloy
Third-named Seventh Respondent: Mr J H Karkar QC & Mr K J Mony
De Kerloy
Solicitors:
Appellant:Clayton Utz
First Respondent: Norton Rose Fulbright Australia
Second Respondent: No appearance
Third Respondent: No appearance
First-named Fourth Respondent: No appearance
Second-named Fourth Respondent: No appearance
Fifth Respondent: No appearance
Sixth Respondent: No appearance
First-named Seventh Respondent: Herbert Smith Freehills
Second-named Seventh Respondent : Herbert Smith Freehills
Third-named Seventh Respondent: Herbert Smith Freehills
Case(s) referred to in judgment(s):
Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; (2009) 77 NSWLR 299
ALH Group Property Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW)
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- Case
- [2013] WASCA 187
- Decision Date
CaseChat Overview and Summary
The primary judge found that all of the shares held by Pankaj Oswal (and Vikas Rambal) were trust property. Yara was aware of this fact. The court held that it was necessary to distinguish between the rights which belong to the holder of shares, qua shareholder, and broader contractual and commercial considerations. The court found that it was sensible for Mr Oswal to enter into the Deeds in his capacity as trustee of the Burrup Trust and warrant that he had both the power and authority to enter into the Deeds. The court also found that this did not have the effect of excluding Mr Oswal's liability under the Deed in his personal capacity. The court found that the phrase 'holder of shares' included the capacity in which the legal entity entered into the Deeds. The court found that the parties to the Deeds intended that the terms 'holder' and'shareholder' include the capacity in which the legal entity entered into the Deeds.
The court held that the proper construction of the phrase 'holder of shares' within the contractual instruments was that it included the capacity in which the legal entity entered into the Deeds. The court found that the unmistakeable intention of clauses 9, 10 and 11 was that only a party to the Deed can be a holder/shareholder. The court found that the shareholder's capacity as trustee figures prominently in those clauses (9, 10 and 11) that are central to maintaining the managerial power-sharing arrangement at the heart of the Deeds. The court found that the parties' intentions must prevail. The court found that the appointment of trust property for the benefit of beneficiaries of a discretionary trust does not create a separate trust.
The court dismissed the appeal, affirmed the decision of the primary judge, and made no orders as to costs.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
It is also necessary to distinguish between the rights which belong to the holder (legal owner) of shares, qua shareholder, and broader contractual and commercial considerations. All of the BHL shares held by Pankaj Oswal (and Vikas Rambal) were trust property. Yara was aware of that fact. There was no sensible alternative but for Mr Oswal to enter into the Deeds in his capacity as trustee of the Burrup Trust and warrant that he had both the power and authority to enter into the Deeds and a right to be indemnified out of the trust fund (see cl 12.2 of both Deeds). However, that did not have the effect of excluding Mr Oswal's liability under the Deed in his personal capacity: Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773. That is, the fact that a party enters into a contract or deed in the capacity of trustee does not exclude or confine his personal liability to comply with the terms of the instrument. Unless the agreement otherwise provides, his personal liability continues even after his appointment as trustee ends. Yara contends that on a proper construction of the Deeds, holder except for the parent company exception is the legal person and the capacity in which he acts as recorded in the register of members. Both the OSD and SD identify and define the relevant parties by reference to their capacity as trustee. Both Deeds describe the relevant party in the following terms:Pankaj Oswal as trustee of the Burrup Trust … ('Pankaj Oswal') Further, Recital A of the OSD and SD provides that:Pankaj Oswal is the trustee of the Burrup Trust and in his capacity as trustee of the Burrup Trust is the holder of [specified number] ordinary fully paid shares in [BHL] representing [nominated percentage] of the issued shares in [BHL]. Yara also relies on cl 16.2(c) of the Deeds to refute what it describes as the narrow meaning of the word 'holder'. Clause 16.2 provides for the automatic termination of the relevant Deed. Clause 16.2(c) provides that the Deed will also be terminated for any one shareholder when it ceases 'to hold, directly or indirectly', any shares. When read in the context of the Deeds as a whole, the reference to 'directly or indirectly' is intended to refer to the exclusion in cl 9(2) which permits a transfer from a shareholder to its wholly owned subsidiary if cl 9.7 is complied with (the execution of an assumption deed) and other conditions are met. The shareholder (the holding company) remains liable for the performance of the duties, responsibilities and obligations assumed by the subsidiary under the Deed. The holding company indirectly holds the shares because of its control over the actual holder, its subsidiary. In isolation, cl 16.2(c) has no wider significance. However, there are other provisions of the Deeds supporting the conclusion that the parties thereto intended that the terms 'holder' and 'shareholder' include the capacity in which the legal entity entered into the Deeds. The unmistakeable intention of clauses 9, 10 and 11 is that only a party to the Deed can be a holder/shareholder. The party is intended to be the holder/shareholder under the Deeds. Further, the shareholder's capacity as trustee figures prominently in those clauses (9, 10 and 11) that are central to maintaining the managerial power‑sharing arrangement at the heart of the Deeds. Recital A also reflects the parties' intentions, which must prevail.