Yara Australia Pty Ltd v Oswal [No 2]

Yara Australia Pty Ltd brought an interlocutory appeal against the decision of the primary judge in Oswal v Yara Australia Pty Ltd [2018] WASC 160, which considered the proper construction of certain contractual instruments, including company shareholders' deeds. The appeal concerned the proper construction of the phrase 'holder of shares' within the contractual instruments, as well as the proper construction of clauses granting special voting rights to company directors and pre-emptive rights provisions. The appeal also concerned the proper construction of the phrase 'holder of shares' at law, and the effect at law of notation of non-beneficial shareholding on the company register of members. The court was asked to determine whether the appointment of trust property for the benefit of beneficiaries of a discretionary trust creates a separate trust.

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.