Perry Corporation v Ithaca (Custodians) Limited

[2003] NZCA 284

IN THE COURT OF APPEAL OF NEW ZEALAND

CA43/03

BETWEENPERRY CORPORATION

First Appellant

ANDRICHARD C PERRY

Second Appellant

ANDITHACA (CUSTODIANS) LIMITED

First Respondent

ANDGUINNESS PEAT GROUP PLC

Second Respondent

ANDRUBICON LIMITED

Third Respondent

Hearing:8 December 2003

Coram:Gault P
Blanchard J
Glazebrook J

Appearances:  A R Galbraith QC and C M Stevens for Appellants

R J Asher QC and M R Dean for Respondents

Judgment:8 December 2003

Reasons:16 December 2003

REASONS FOR THE JUDGMENT OF THE COURT
DELIVERED BY GAULT P

[1]       The second respondent (GPG) applied for conditional leave to appeal to the Privy Council from the judgment of this Court delivered on 4 November 2003.

[2]       In its judgment this Court held that a full analysis of the evidence did not disclose an arrangement by which Perry Corporation had the power to acquire a substantial shareholding in Rubicon Ltd so as to require disclosure under s5 of the Securities Markets Act 1988.

[3]       This was a different conclusion from that reached in the High Court where it had been held that there had been a failure to disclose and that, in consequence, Perry Corporation should forfeit 12 million shares in Rubicon and dispose of a further 24 million shares within 180 days.

[4]       The interest of GPG is as a substantial shareholder in Rubicon Ltd having built its shareholding in the belief that there was no other substantial security holder, only to learn that Perry Corporation had terminated equity swap arrangements and acquired its shares.  It was held in the High Court, and not challenged, that GPG suffered no quantifiable loss as a result of the claimed failure by Perry Corporation to disclose its interest.

[5]       The application for conditional leave was advanced on the alternative grounds provided in r2(a) and (b) of the 1910 Order in Council.  It was submitted that GPG was entitled to leave as of right under r2(a), but if that was not accepted, there should be discretionary leave under r2(b).

[6]       At the end of the hearing we ruled that this is not a case attracting leave as of right and that we were not persuaded that this is a case in which the question involved in the proposed appeal is one which by reason of its great general or public importance or otherwise, ought to be submitted to the Privy Council.  We now give our brief reasons, which are essentially those advanced by Mr Galbraith QC in his well researched and comprehensive submissions on behalf of Perry Corporation.

[7]       The question formulated by Mr Asher QC as that involved in the appeal and of general and public importance was whether in the circumstances in which Perry Corporation, on entering into the share swaps, sold to the counterparties shares in Rubicon Ltd to be held as a hedge, and it was inevitable that those shares would be available for purchase from the counterparties when the share swaps were terminated, there existed arrangements by which Perry Corporation had the power to acquire the shares.  That was not the issue at the forefront of the arguments in the High Court or in this Court, although we accept it was adverted to.  The primary issue, and it is undoubtedly that which GPG wishes to ventilate before their Lordships, is the factual analysis on which this Court’s decision turned.  That, however, is not easily presented as a question of great general or public importance.

[8]       The question as posed by Mr Asher comes close to revisiting the point which has been common ground in the case until now.  It was not at any point contended that equity swaps per se create disclosable interests.  In effect, it is now said there is an exception to that.

[9]       Rule 2(a) provides for appeal:

As of right, from any final judgment of the Court of Appeal where the matter in dispute on appeal amounts to or is of the value of NZ$5,000 or upwards, or where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of NZ$5,000 or upwards.

[10]     It was submitted that there are two property interests at issue, each plainly of value in excess of $5,000.  The first is the shareholding of Perry Corporation that was the subject of the forfeiture order in the High Court and which GPG wishes to argue should be reinstated.  The second is the shareholding of GPG which is said to enjoy a consequential increase in value of $1.9 million should the forfeiture order be reinstated.

[11]     It has long been established by the Privy Council itself that in considering the application of the rule, the judgment appealed from is to be considered as it affects the interests of the party who is prejudiced by it, and who seeks to relieve himself from it by appeal:  Macfarlane v Leclaire [1862] 15 MOO PCC 181, 15 ER 462, Allan v Pratt (1888) 13 App Cas 80. This may mean that one party may be entitled to appeal as of right but another party in the same proceeding may not – although in that situation the disparity undoubtedly would weigh in the consideration of discretionary leave.

[12]     The consequential interest of GPG is no different from that of any other shareholder.  It depends on retention or otherwise of its shares rather than upon the determination of the issue in the proceeding.  We do not consider that the appeal involves, directly or indirectly, any claim or question to or respecting the property or civil rights of GPG.  The claim or question relates to regulatory compliance by Perry Corporation and any order that might be made in respect of its property.  But GPG has no interest in that.

[13]     Turning to the application for leave in the Court’s discretion under r2(b), the challenge GPG wishes to bring is to the case-specific findings of this Court on the evidence.  That cannot be said to be of general or public importance.  Of the issue outlined by Mr Asher (that “hybrid” equity swaps fall within the disclosure requirement), it may be said that its importance and merit were reflected in the attention it received in argument in this Court.  To argue that equity swaps established in certain circumstances fall within the disclosure requirement while maintaining the concession that equity swaps per se do not, would be to contend before their Lordship for a commercially impractical regime so fact-specific that it clearly cannot constitute a matter of great general or public importance.  It would also involve an approach not followed in the United Kingdom, Australia or other comparable jurisdictions. 

[14]     Accordingly, conditional leave was refused with an award of $3,000 costs and disbursements in favour of Perry Corporation.

Solicitors:

Phillips Fox, Wellington for Appellants
Chapman Tripp, Christchurch, for Respondents