Cayenne Coal Pty Ltd as Trustee for Boardwalk Resources Trust v Whitehaven Coal Limited

Solicitors: Carroll & O'Dea Lawyers (Plaintiff) Allens (First Defendant) Hamilton Locke (Proposed Fourth Defendant) File Number(s): 2022/146064 Publication restriction: None

Introduction

1. By a summons filed on 20 May 2022, the plaintiff, Cayenne Coal Pty Ltd (Cayenne), seeks (1) an order pursuant to s 71 of the Trustee Act 1925 (NSW) that 26,678,979 "Restricted" or "Milestone" shares (the Restricted Shares) in the first defendant, Whitehaven Coal Ltd (Whitehaven), be vested in it as trustee for the Boardwalk Resources Trust (the BR Trust); (2) a declaration that Cayenne as trustee of the BR Trust is entitled to be registered as the holder of the Restricted Shares; and (3) an order pursuant to s 175(1) of the Corporations Act 2001 (Cth) and the Court's equitable jurisdiction that the share register of Whitehaven be rectified accordingly.

Background

1. The Restricted Shares were issued by Whitehaven in May 2012 in connection with a transaction by which Whitehaven acquired all of the shares in Boardwalk Resources Limited (BRL), an unlisted coal exploration company whose shareholders were predominantly entities or persons associated with Mr Nathan Tinkler. The shareholders included the third defendant, Boardwalk Resources Investments Pty Ltd (BRI) as trustee for the BR Trust, which owned approximately 83.4 percent of the shares in BRL. Mr Tinkler was a director of BRI and is a beneficiary of the BR Trust. BRL's assets included four exploration projects known as the Ferndale Project, the Dingo Project, the Sienna Project and the Monto Project (together, the Boardwalk Projects).
2. In all, in connection with the transaction, Whitehaven issued 85.89 million ordinary shares and 34.02 million Milestone shares. The Milestone shares were issued to BRL's shareholders including BRI on terms set out in a deed dated 1 May 2012 titled "Restriction Deed" (the Restriction Deed), which, as its name suggests, imposes certain restrictions on the rights attaching to the Milestone shares. Those restrictions fall away when certain trigger events relating to the development of the Boardwalk Projects occur. In that way, the Milestone shares operate as a form of deferred consideration. It is common ground that the trigger events have not yet occurred. Cayenne has undertaken that, in the event that the orders it seeks are made, it will execute and procure that Mr Tinkler executes a deed by which they become bound by the Restriction Deed in respect of the Restricted Shares.
3. On 26 April 2012, the Restricted Shares were registered in the name of the second defendant, AET Structured Finance Services Pty Ltd (now known as Certane CT Pty Ltd) (Certane). It is not clear how that happened.
4. In connection with the acquisition by BRI of shares in Whitehaven, a syndicate of approximately 17 lenders, including Pok Hong Limited (Pok Hong), entered into a Senior Facility Agreement dated 27 April 2012 (the SFA), with BRI as trustee for the BR Trust, and Aston Resources Investments Pty Ltd (ARI) as trustee of the Aston Resources Trust, another entity associated with Mr Tinkler, by which they agreed to lend BRI and ARI the sum of USD634,000,000.
5. As might be expected, the borrowers granted security over assets they held to secure their obligations under the SFA. By a security trust deed dated 27 April 2012 titled "Security Trust Deed (Aston Boardwalk Whitehaven Security Trust Deed (Debt))" (the Security Trust Deed) a trust was established to hold the securities granted to the lenders and Credit Suisse AG, Singapore Branch (Credit Suisse) was appointed as trustee of that trust. The security included security granted by BRI over assets it held as trustee of the BR Trust. That security was granted pursuant to a deed titled "Specific Security Deed (BRI - Debt)" (the Specific Security Deed), which was executed at about the same time as the SFA. Also at the same time, BRI, Credit Suisse and Certane executed an agreement titled "Sponsorship Agreement (BRI - Debt)" (the Sponsorship Agreement). A related company of Certane, AET SPV Management Pty Limited (the Agent), was appointed agent of the lenders under the SFA. It will be convenient to refer to the SFA, the Security Trust Deed, the Specific Security Deed and the Sponsorship Agreement as the Finance Documents.
6. Clause 2.1 of the Sponsorship Agreement provided: Appointment as Controlling Participant The Participant Sponsored Holder [BRI] appoints the Participant [Certane] (and the Participant accepts such appointment) as its Controlling Participant upon the terms of this agreement and the ASTC Rules [that is, the ASX Settlement Operating Rules] in relation to those Approved Financial Products which are subject to the [Specific Security Deed] at any time including the Secured Property (as defined in the [Specific Security Deed]).
7. Clause 11.1 relevantly provided: Instructions from Security Trustee (Debt) Despite anything to the contrary contained in this agreement, the Participant Sponsored Holder irrevocably authorises and instructs the Participant and, until the Participant receives a notification from the Security Trustee (Debt) under clause 11.2, the Participant agrees with the Participant Sponsored Holder and the Security Trustee (Debt) that the Participant must: (a) deal with the Financial Products covered by this agreement only on the instructions, and with the consent, of the Security Trustee (Debt); (b) Transfer the legal title to any of the Financial Products covered by this agreement upon receiving an instruction of the Security Trustee (Debt) to do so;
8. Schedule 1 stated that the Financial Products initially covered by the agreement were the 67,352,407 ordinary shares in Whitehaven issued to BRI.
9. Schedule 1 of the Sponsorship Agreement is consistent with an internal email sent on 24 April 2012 by Mr Anthony Tesvic of Ashurst, who were acting for BRI, stating that "AET" had agreed to establish Holder Identification Numbers (HINs) within the CHESS settlement system and that Ashurst would instruct "AET" to establish three HINs including "a HIN to hold 67,352,407 of BRI's shares (being BRI's entire shareholding post-scheme)". On 30 April 2012, Mr Fergus Smith, a senior associate with Freehills, who acted for the Tinkler Group, sent an email to Computershare, which managed Whitehaven's share registry, stating that the HIN "for the purposes of the BRI/Whitehaven transaction to be settled tomorrow is HIN ######3737". Following settlement, on 1 May 2012, Whitehaven issued a Completion Notice to Computershare stating that completion had occurred and that "Computershare is instructed to issue shares in Whitehaven to the Boardwalk SPA vendors in accordance with the schedule". In respect of BRI, that schedule indicates that the shares to be issued included both the initial shares of 67,352,407 and the Restricted Shares and that they were to be assigned to the HIN identified by Mr Smith, which was in the name of Certane. How that instruction came about is not explained in the evidence.
10. On 1 June 2012, in circumstances not explained in the evidence, the Sponsorship Agreement was terminated, although Certane continued to hold the Restricted Shares.
11. In or around April 2014, the borrowers under the SFA defaulted. On 1 March 2016, BRI was placed into liquidation.
12. In or around late 2017 and early 2018, Pok Hong acquired the debt of all other lenders under the SFA. In or around November 2020, Pok Hong exercised its rights under the SFA to appoint Global Loan Agency Services Australia Pty Ltd as agent under the SFA in place of the then agent and to appoint Global Loan Services Australia Nominees Pty Ltd as the security trustee under the Security Trust Deed in place of Credit Suisse. However, the Restricted Shares continue to be held by Certane.
13. On 20 December 2018, Mr Tinkler commenced representative proceedings in the Supreme Court of Queensland against Whitehaven (the Representative Proceedings). The statement of claim stated that the proceedings were commenced by Mr Tinkler as trustee of the BR Trust. On 7 May 2019, Flanagan J made an order transferring the proceedings to this Court and on 12 July 2019 this Court made an order substituting Les & Zelda Investments Pty Ltd (LZI) as trustee for the Les & Zelda Family Trust as the plaintiff in the proceedings and granting leave to LZI to file an amended statement of claim.
14. By the amended statement of claim, LZI, a company associated with Mr Tinkler, on its own behalf and on behalf of other holders of Milestone shares including BRI, sues Whitehaven for breach of its contractual obligations and for oppressive conduct for not developing the Boardwalk Projects in a way that would have met the milestones and triggered the release of the restrictions on the Milestone shares. The relief sought in those proceedings include orders the effect of which would be to release LZI and those who it represents from the restrictions contained in the Restriction Deed.
15. Clause 8.8 of the Trust Deed dated 20 October 2010 which governs the BR Trust (the BR Trust Deed) relevantly provides: Vacation of office The office of trustee will be determined and vacated: a. … b. If the Trustee, being a company, enters into liquidation, whether compulsory or voluntarily (not being a voluntary liquidation for the purposes of amalgamation or reconstruction) or has a receiver, receiver and manager or administrator appointed or makes or enters into any composition or scheme of arra ngement with its creditors.
16. Clause 7 of the BR Trust Deed vests the power to appoint a new or additional trustee in Mr Tinkler and Mr Troy Palmer jointly. Under cl 7.2, an appointor may at any time relinquish the power of appointment "by notice in writing given to the Trustee", in which case the remaining appointor retains the power of appointment. Clause 7.5 relevantly states: Restrictions of power of appointment The power to appoint a new trustee contained in this clause must not be exercised in favour of: a. … b. a person who is solely entitled to exercise the power of appointment for the time being; …
17. The day before the Representative Proceedings were commenced, Mr Tinkler and Mr Palmer, by deed dated 19 December 2018, which was expressed to take effect on 3 March 2016, purported to appoint Mr Tinkler as the trustee of the BR Trust in place of BRI. Recital C of the deed records: On the Appointment Date [3 March 2016], the Appointors resolved to appoint the Current Trustee [Mr Tinkler] as trustee of the Trust. That appointment was not recorded in writing.
18. The day the Representative Proceedings were commenced Mr Tinkler also signed a deed purporting to appoint Cayenne as the trustee of the BR Trust in place of BRI.
19. How Mr Tinkler came to sign separate deeds nominating different trustees on consecutive days is not explained in the evidence. However, according to the evidence, on 21 January 2019, Mr Peter White, a partner of Ernst & Young, who had been acting for Mr Tinkler since 2008, sent an email to the solicitors acting for Mr Tinkler in the Representative Proceedings stating that he (Mr White) had recently met with Mr Tinkler. Mr White said in his email that he had seen a copy of the statement of claim in the Representative Proceedings, which referred to the appointment of Mr Tinkler as trustee. Mr White said that he had not seen the deed of appointment and that it appeared that the appointment was not possible because Mr Tinkler "was the person who was solely entitled to exercise the power of appointment" and therefore was excluded from appointment by cl 7.5(b) of the BR Trust Deed.
20. Mr White's comments are consistent with a document dated 12 October 2011 signed by Mr Palmer which states that "Pursuant to clause 7.2 of the Deed of Settlement, I Troy Allan Palmer relinquish all power and authority afforded to me as an Appointor of the Boardwalk Resources Trust as of the date of this letter". That document was created on 4 October 2011 and printed on 5 October 2011 by Ms Aimee Hyde, who was then the legal counsel of the Tinkler Group and the secretary of BRI.
21. Whitehaven submits that there is no evidence that that document was "given to the Trustee" as required by cl 7.2 of the BR Trust Deed and contends that an inference can be drawn against Cayenne in accordance with the principles stated in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 arising from the fact that neither Mr Tinkler nor anyone else was called to prove receipt of the document by BRI. However, it is hardly surprising that no one was called to prove receipt by BRI of a document that was signed over 10 years ago. In my opinion, it is more likely than not that the document was signed by Mr Palmer and returned to Ms Hyde. The likelihood is that Ms Hyde prepared the document and asked Mr Palmer to sign it and return it to her. There would be no point in Ms Hyde preparing the document unless she expected it to be signed and returned to her. And there would be no point in Mr Palmer signing the document unless he did so for that purpose. In the normal course of events, that is likely to be what happened. Ms Hyde undoubtedly would have received the document as secretary of BRI. Accordingly, the document was given to the trustee, with the result that Mr Tinkler could not validly have been appointed as trustee. That conclusion is supported by the contemporaneous correspondence from Mr White, who is likely to have had knowledge of the matter.
22. The deed of appointment dated 20 December 2018 was not registered. Since about mid-2019, SMB Law has acted for Cayenne. Mr Stephan Briggs, the principal of SMB Law, gives evidence that he was sent an unregistered copy of the deed of appointment on 14 June 2019 by Mr White. He concluded that it should be registered. However, the original could not be located. Mr Briggs therefore arranged for Mr Tinkler to execute a further deed of appointment and removal of trustee on 17 June 2019 which again appointed Cayenne as trustee of the BR Trust. That deed was registered on the same day. In my opinion, that deed was effective to appoint Cayenne as trustee of the BR Trust.
23. In connection with the representative proceedings, LZI and Mr Tinkler have sought litigation funding from LCM Funding Pty Ltd (LCM). By a Due Diligence & Work Program Agreement dated 1 March 2022 entered into between LCM, LZI, Mr Tinkler, Cayenne and Watson Mangioni Lawyers Pty Ltd (the DDWPA), LCM has agreed to provide funding in relation to the Representative Proceedings subject to the satisfaction of certain conditions. The version of the DDWPA in evidence has been redacted. Relevantly, cl 45 provides: Conditions to LCM funding With the exception of funding the Due Diligence Costs, LCM's funding of the Claim is conditional upon the following: 45.1 the Due Diligence being completed to the satisfaction of LCM; 45.2 each member of the Class Sub-Group [redacted] (excluding any member of the Class Sub-Group who opts out of the Proceedings); 45.3 leave being granted in the Proceedings to file the statement of claim substantially in the form provided to the solicitors for the Defendant on 26 January 2022 and all necessary steps be taken in the Proceedings on behalf of the Class until such time as all the Conditions have been satisfied; 45.4 the registered holder of the Restricted Shares initially issued to the nominee of Boardwalk Resources Investments Pty Ltd as trustee for Boardwalk Resources Trust (BRI Restricted Shares) being amended to Cayenne Coal Pty Limited; and 45.5 LCM lodging a PPSR interest over the BRI Restricted Shares (which will only take effect in the event the restrictions on the shares are removed), which LCM must promptly do following satisfaction of clause 45.4, (together the Conditions).
24. Following the due diligence contemplated by the DDWPA and satisfaction of the conditions, LCM in its absolute discretion may fund the Representative Proceedings, in which case it will notify the other parties to the agreement of that decision and provide them with "Funding Documentation". Clause 55 provides that "Unless the Parties agree, the terms of the Funding Documentation shall not be inconsistent with the terms of this Agreement or the Key Commercial Terms". The Key Commercial Terms include the following: 4. In the event that a Recovery is in the form of the restricted shares of the Group Members (Restricted Shares) becoming unrestricted, then the Group Members agree to: 4.1 LCM being granted security over the Restricted Shares effective at the point in time these shares become unrestricted;
25. Leave to proceed against BRI was granted on 22 July 2022. Both Certane and BRI have filed submitting appearances.
26. By notice of motion dated 24 August 2022, Pok Hong seeks to be joined as a fourth defendant in the proceedings for the purpose of opposing the orders sought by Cayenne. The question whether that order should be made was reserved to this judgment. It appears to be common ground that if Pok Hong is directly affected by the orders then it is a necessary party and should have been joined as a defendant by Cayenne. It is Cayenne's position that Pok Hong is not affected by the orders because it has no rights in respect of the Restricted Shares.
27. Before addressing the issues raised by these proceedings directly, it is necessary to say something more about the critical agreements and to say something about the relevant provisions of the Trustee Act and s 175(1) of the Corporations Act 2001 (Cth).

The Restriction Deed

1. The parties to the Restriction Deed include Whitehaven, BRI as trustee of the BR Trust and Mr Tinkler as the controller of BRI.
2. Clause 2.2 of the Restriction Deed relevantly provides: Restrictions Each Vendor must not do any of the following during the Restriction Period for a Restricted Share: (a) Dispose of, or agree or offer to Dispose of, the Restricted Share; or (b) do, or omit to do, any act if the act or omission would have the effect of transferring effective ownership or control of the Restricted Share or any legal, beneficial or economic interest in the Restricted Share; …
3. "Dispose" is defined to include: (b) in relation to the Restricted Shares, to: (i) sell, assign, transfer or otherwise dispose of any interest in the Restricted Shares; (ii) encumber or grant a security interest over the Restricted Shares; (iii) grant or exercise an option in respect of any Restricted Shares; (iv) do, or omit to do, any act if the act or omission would have the effect of transferring effective ownership or control of any of the Restricted Shares or any legal, beneficial or economic interest in the Restricted Shares; or (v) agree to do any of those things.
4. Clause 2.3 provides: Controllers Each Controller must procure that their respective Vendor complies with its obligations under clause 2.
5. Clause 3.2 sets out a number of trigger events. Clause 3.3 provides: Vesting (a) Immediately upon all applicable Trigger Events having occurred in respect of any one of the Projects (First Successful Project) the Restrictions will cease to apply to half of each Vendor's Restricted Shares. The release of the Restrictions from a Restricted Share is referred to in this deed as Vesting. (b) Immediately upon all applicable Trigger Events having occurred in respect of any other Project (that is, any Project other than the First Successful Project) the Restrictions will cease to apply to all remaining Restricted Shares held by the Vendors. (c) There is no time limit within which Vesting may occur.
6. Clause 6.3 sets out a number of warranties given by vendor trustees. It includes the following warranty: If the Vendor is a trustee of a Trust, it:(a) is the only trustee of the Trust and no action has been taken or is proposed to remove it as trustee of the Trust unless otherwise consented to by the Purchaser which consent must not be unreasonably withheld; Clause 6.1 states that each warranty is given at the date of the deed and "at all times until expiry of the Restriction Period of the relevant Restricted Share in respect of which the warranty is provided".
7. Clause 7 of the Restriction Deed is in the following terms: Consequences of breaching this deed (a) If it appears to the Purchaser that a Vendor may breach this deed, the Purchaser may take the steps necessary to prevent the breach, or to enforce the deed as soon as it becomes aware of the potential breach. (b) If a Vendor breaches this deed, each of the following applies: (i) the Purchaser may take the steps necessary to enforce the deed, or to rectify the breach, as soon as practicable after becoming aware of the breach; and (ii) the Purchaser may refuse to acknowledge, deal with, accept or register any sale, assignment, transfer or conversion of any of the Restricted Shares. This is in addition to other rights and remedies of the Purchaser. (c) The parties agree that damages would be an insufficient remedy for breach of clause 2 and the Vendors agree that the Purchaser is entitled to seek and obtain an injunction or order for specific performance to enforce the obligations of any Vendor under clause 2 without proof of actual damage and without prejudice to any of its other rights or remedies.

The SFA

1. The parties to the SFA are ARI and BRI as borrowers, the Agent (as agent), Credit Suisse as security trustee and the lenders. The SFA has been amended and restated on a number of occasions. The most recent version is the Fourth Amendment and Restatement Deed dated 18 June 2013. Unless otherwise stated, all references are to that document. That document records Mr Tinkler as a guarantor under the agreement. The guarantees signed by him are not in evidence.
2. Clause 2.1 of the SFA provides: Term Loan Facility (a) Subject to the terms of this Agreement, the Lenders make available to the Borrowers a term loan facility in an aggregate amount equal to the Total Commitments. (b) The Facility will be available to the Borrowers for the purposes specified under Clause 3.1 (Purpose). As I have said, the total commitments under the facility were USD634,000,000.
3. The SFA provided for the payment of interest and default interest under cl 10. According to evidence given by Ms Brit Ibanez, the solicitor for Pok Hong, the total amount owing under the SFA at the time the borrowers defaulted was $257,154,127.68 and that the amount currently owed by the borrowers exceed $850,000,000 due to default interest which has accrued since April 2014.
4. Clause 18 of the SFA sets out a number of representations and warranties made by each borrower to each "Finance Party". Clause 18.20 contains the following warranties in relation to Whitehaven shares: Whitehaven Shares (a) ARI and BRI are or will be, on the Scheme Implementation Date, the legal owners of 122,190,010 and 67,352,407 Whitehaven Shares (excluding Restricted Shares), respectively, subject to the Transaction Security and the arrangements contemplated by the relevant Sponsorship Agreements, which assets are held on trust for the beneficiaries of the Aston Resources Trust and the Boardwalk Resources Trust respectively, and the beneficiaries of the Aston Resources Trust and the Boardwalk Resources Trust respectively, are the absolute beneficial owners of such Whitehaven Shares, respectively. (b) The Whitehaven Shares (excluding Restricted Shares) that are or will be subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights other than under or pursuant to the Option Deed. (c) The constitutional documents of Whitehaven do not and could not restrict or inhibit any transfer of any of the Whitehaven Shares subject to the Transaction Security on enforcement of any Transaction Security. (d) The Borrowers together will own not less than 189,910,967 Whitehaven Shares (excluding Restricted Shares) (representing approximately 19.7% of the issued share capital of Whitehaven) as at the Scheme Implementation Date.
5. Clause 20 of the SFA contains what are described as "undertakings", which remain in force "from the Signing Date for so long as any amount is outstanding under the Finance Documents …". Relevantly, cl 20.8 provides: Disposals The Borrowers shall not, and shall procure that each Security Provider and Aston Metals shall not, enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any Secured Property or any other assets, … "Secured Property" means "all of the assets of any Borrower or any Security Provider which from time to time are, or are expressed to be, the subject of the Transaction Security". "Transaction Security" relevantly includes any Security created by the Security Trust Deed, the Specific Security Deed and the Sponsorship Agreement.
6. Clause 20.24 relevantly provides: Negative Pledge In this Clause, "Quasi-Security" means an arrangement or transaction described in paragraph (b) below. Except as permitted under paragraph (c) below: (a) The Borrowers shall not (and shall procure that Aston Metals and each Security Provider shall not) create or permit to subsist any Security over any of its assets (other than Permitted Security). (b) The Borrowers shall not (and shall procure that each Security Provider and Aston Metals shall not): (i) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by any Borrower or Aston Metals or any Security Provider; (ii) sell, transfer or otherwise dispose of any of its receivables on recourse terms; (iii) … (iv) … in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. (c) Paragraphs (a) to (b) above do not apply to any Security or (as the case may be) Quasi-Security, which is Permitted Security. "Security" is defined to mean "a mortgage, charge, pledge, lien or other security interest securing any obligation or payment or performance of any obligation of any person or any other agreement or arrangement having a similar effect". "Permitted Security" is defined to include "any Security created under a Finance Document or an Equity Document".
7. Clause 21 of the SFA sets out the events of default, which include (in cl 21.9) the following: Restricted Shares Any of ARI or BRI shall sell, lease, transfer or otherwise dispose of any Restricted Shares or enter into a single transaction or a series of transactions (whether related or not and whether voluntary or involuntary) in connection with any of the foregoing or shall breach the Restriction Deed.
8. The events of default also include (in cl 21.19) the following: Trustee Events of Default (a) (change of trustee) without the Security Trustee's consent any party which enters into a Finance Document or an Equity Document in its capacity as trustee of a trust (Trust) ceases to be sole trustee of the Trust, or any step is taken to: (i) remove it as trustee, or to appoint a substitute or additional trustee; or (ii) bring any part of the assets of the Trust (Trust Fund) under the control of any court;
9. Clause 20.23 of the original SFA contained a provision for the topping up of security so that the amount of security provided satisfied the "Security Coverage Ratio". "Security Coverage Ratio" was defined in the following terms: "Security Coverage Ratio" means, on any Trading Day, the ratio (expressed as a percentage) of: (i) the Market Value of all Whitehaven Shares subject to Transaction Security (excluding, for the avoidance of doubt, Restricted Shares for so long as Restricted Shares are not subject to Transaction Security); to (ii) the sum of (a) the aggregate amounts outstanding under the Finance Documents (including the amount of the Loans (including as increased from time to time by the interest thereon being capitalised pursuant to Clause 10.3 (Payment of Interest)), any accrued but unpaid and uncapitalised interest thereon and any amounts outstanding under any Fee Letter) and (b) the aggregate amounts outstanding under the Equity Documents, in each case on that Trading Day. That provision was deleted by one of the amendments to the SFA.

The Security Trust Deed

1. Clause 15 of the Security Trust Deed relevantly provides: SECURITY PROVIDER TRUSTEE REPRESENTATIONS Each Trustee represents and warrants to the Secured Creditors that: (a) … (b) (status as trustee) it is the sole trustee of the corresponding Trust, it has not given any notice of resignation and no action has been taken to remove it or to appoint an additional trustee of the corresponding Trust; "Trustee" is defined to include BRI. "Secured Creditors" is defined to include each lender.
2. Clause 16 of the Security Trust Deed relevantly provides: SECURITY PROVIDER TRUSTEE UNDERTAKINGS Each Trustee must, until such time as the Secured Money has been paid and discharged in full and the Secured Obligations have been performed and satisfied in full: (a) … (b) (remain sole trustee) not retire as trustee of the corresponding Trust, do anything which would cause or permit its removal or permit any additional or substitute trustee to be appointed; … (g) (no resettlement) ensure that no part of the corresponding Relevant Trust Fund is resettled, set aside or transferred to any other person, whether as trustee or otherwise, or mixed with any other property without the Secured Creditors' consent; "Relevant Trust Fund" is defined to mean "the assets of the corresponding Trust". In the case of BRI, that presumably includes the Restricted Shares, although they were issued to Certane.

The Specific Security Deed

1. The parties to the Specific Security Deed are BRI and Credit Suisse.
2. Clause 2.1 of the Specific Security Deed provides: Security clause To secure the punctual payment of the Secured Money and the punctual performance of the Secured Obligations, the Grantor grants to the Security Trustee a security interest (as defined in the PPSA) over all Present Securities, all Acquired Securities, all Deposited Securities, all New Right and the proceeds of all of the foregoing. "Present Securities" is defined to mean "the Marketable Securities of the Issuer specified in Schedule 1, excluding, for the avoidance of doubt, any Restricted Security". Schedule 1 lists 67,352,407 ordinary shares in Whitehaven with a HIN of ######3737. That schedule was amended in May 2012 to delete the reference to the HIN. "Acquired Securities" is defined to mean "any Marketable Securities of the Issuer (other than Present Securities) to which the Grantor becomes legally or beneficially entitled at any time (whether or not those Marketable Securities are held for the Grantor by any other person), excluding any Restricted Security". "Restricted Securities" is defined to mean "each Marketable Security of the Issuer that is, or is to be, owned or held by or for the Grantor and that is, or is to be, subject to the Restriction Deed …". "Deposited Securities" is defined to include certain securities transferred to Certane or Credit Suisse, again excluding any Restricted Security. "New Right" is defined to mean: … a present or future right of the Grantor: (a) to or in any money, dividend (including any return of capital), interest, offer, bonus, note or other Marketable Security, or any entitlement to subscribe for or acquire by any means any of them; (b) resulting from any substitution, conversion, redemption, forfeiture, cancellation, reclassification, consolidation or subdivision; or (c) resulting from a reduction of capital, liquidation or scheme of arrangement, in connection with the Secured Property, but "New Right" excludes any Restricted Security. "Marketable Security" is defined to mean "an intermediated security or an investment instrument".
3. Clause 2.4 of the Specific Security Deed provides: Acquired Securities If the Grantor acquires any Acquired Securities it must immediately: (a) in the case of Acquired Securities that are CHESS Securities: (i) give the Security Trustee and the Controlling Participant the applicable holder or other identification numbers and information sufficient to identify those Acquired Securities (including a copy of the relevant holding statement); and (ii) do everything necessary to: (A) ensure that those Acquired Securities are recorded on the Issuer's CHESS Subregister; and (B) transfer sponsorship of those Acquired Securities to the Controlling Participant; and (b) in the case of Acquired Securities that are Certificated Securities, deposit with the Security Trustee or the Security Trustee's nominee: (i) all Certificates for those Acquired Securities; and [(ii)] Transfers (in form and number satisfactory to the Security Trustee) for those Acquired Securities, with the name of the transferee, the consideration and the date left blank.
4. Clause 4.1 provides: General undertakings The Grantor must: (a) (obligation to pay) punctually pay the Secured Money when it becomes payable in accordance with the terms of any written agreement between the Grantor and/or any other Security Provider and the Security Trustee and/or any other Secured Creditor or, in the absence of any agreement or after default under any agreement, on demand by the Security Trustee; …
5. Clause 4.2 provides: Negative Pledge (a) Subject to clause 4.2(b), the Grantor must not, without the Security Trustee's consent, create, attempt to create or permit to exist any Security in relation to the Secured Property (whether ranking ahead of, equally with or after the Securities granted in clause 2.1) other than a Permitted Security. …

The Trustee Act

1. Section 9 of the Trustee Act relevantly provides: (1) Where a new trustee is appointed, the execution and registration of the deed of appointment shall without any conveyance, except as otherwise provided in this section, vest in the persons who become and are the trustees for performing the trust, as joint tenants and for the purposes of the trust, the trust property for which the new trustee is appointed. … (5) In the case of any property that is only transferable in books kept by a corporation company or other body, or in manner directed by or under any Act, whether of this State or otherwise, the property shall not vest until it is duly transferred. … (7) If any property does not vest under this section until transfer or registration, the execution and registration of the deed of appointment, or of the deed or deeds of consent and retirement, as the case may be, shall nevertheless vest the right to call for a transfer of the property, and to sue for or recover the property. (8) This section extends to an appointment by deed, or a retirement by deed, under the provisions of the instrument, if any, creating the trust.
2. Section 71(1) of the Trustee Act provides that the "Court may make an order in this Act called a vesting order, which shall have effect as provided in section 78". Section 71(2)(b) states that a vesting order may be made "where a new trustee has been appointed out of court under any statutory or express power".
3. Section 78(5) relevantly provides: (5) In the following cases the vesting order shall vest in the person named in the order the right to transfer or call for a transfer of the property or security, that is to say, in the case of - (a) …, (b) any security that is only transferable in books kept by a corporation company or other body, or in manner directed by or under any Act, whether of this State or otherwise.
4. The Court's power to make a vesting order is discretionary. Section 71(1) provides that the court "may" make such an order. See also Andco Nominees Pty Ltd v Lestato Pty Ltd (1995) 126 FLR 404 at 420-1 per Santow J. In deciding whether to make an order, the Court "requires clear evidence of the factual basis upon which it is asked to make [it]": Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd (2010) 6 ASTLR 271; [2010] VSC 268 at [27] per Warren CJ (Bloomingdale), citing Re Hayward's Settlement (1884) 10 VLR (E) 38; [1884] VicLawRp 11. In the context of an interlocutory application, Black J stated that "an order under s 71(2)(b) of the Trustee Act is not appropriately made where there are multiple contested claims over the relevant property which have not yet been determined": In the matter of Beechworth Land Estates Pty Ltd (in liq) and Griffith Estates Pty Ltd (in liq) [2018] NSWSC 1703 at [24]. Similarly, in Re Purkiss [1999] 3 VR 223; VSC 386, Warren J observed that "[t]he courts have demonstrated a reluctance to make vesting orders where the procedure is used 'to facilitate or be a substitute for ordinary conveyancing practice'": at [18] citing Dotter v Evans [1969] VR 41; VicRp 7. In Bloomingdale, Warren CJ observed (at [28] citing Casella v Casella [1969] VR 49; VicRp 8; Re Bennett [1954] QWN 52): The court's attitude to a petition for a vesting order will depend to some extent on the propriety of the case before it, the assiduity with which the evidence, including any documentary evidence, has been assembled, and the need for the relief sought.

Section 175 of the Corporations Act

1. Section 175(1) of the Corporations Act provides that "[a] company or registered scheme or a person aggrieved may apply to the Court to have a register kept by the company or scheme under [Part 2C.1] corrected". Section 169 of the Corporations Act provides that one of the registers to be kept under Part 2C.1 is a register of members.
2. It is generally accepted that the power conferred by s 175(1) does not broaden the scope of the Court's equitable jurisdiction to rectify a mistake in the register: see Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1996) 20 ACSR 553; [1996] NSWSC 204 at 558-9 per Bryson J; Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374; [1996] NSWSC 376 at 386-7 per Young J (both dealing with s 216H of the Corporations Law, the predecessor to s 175(1)); In the matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [3] per Black J; Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2020] NSWSC 1778 at [4364] per Ward CJ in Eq.
3. As Fullagar J explained in Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1; [1950] HCA 54 at 51, in order to obtain rectification in the Court's equitable jurisdiction, "[t]he person claiming rectification must show that he has some equity which the court will protect … But there may be circumstances which justify, or even compel, refusal". Such an equity would be prima facie established if a person's name was wrongly included or omitted from the register, or if the number of shares attributed to that person was incorrectly recorded imposing a disadvantage on that person or other shareholders: see In the matter of Mogul Stud Pty Ltd [2012] NSWSC 1639 at [7] per Black J.

Cayenne's claim against Whitehaven

1. There is a tension in the way in which Cayenne puts its case against Whitehaven.
2. In some of its submissions, Cayenne embraces the fact that the Restricted Shares are held in the name of Certane. It points out that Certane is willing to transfer the Restricted Shares to it. There is nothing in Whitehaven's constitution which would permit it to refuse to register that transfer. Indeed, cl 8.5 relevantly provides that "the Company may only refuse to register or prevent or interfere with the registration of a transfer of securities in the Company where permitted or required by any of the Listing Rules or ASX Settlement Operating Rules". The Restriction Deed does, of course, impose restrictions on the transfer of the shares. However, since neither Cayenne nor Certane is a party to that Deed, it cannot bind them. Therefore, there is nothing to prevent the transfer.
3. The logical consequence of this submission appears to be that Cayenne is entitled to be the registered holder of the Restricted Shares free of the restrictions contained in the Restriction Deed. However, even Cayenne does not contend for that outcome. It accepts that, upon transfer, it should be bound by the Restriction Deed and therefore in para 5 of its summons it has offered an undertaking to that effect, although if the submission is correct, precisely why that should be the case is not clear.
4. Moreover, perhaps conscious of the limitations on the power granted by s 175(1) of the Corporations Act, by its amended commercial list statement, Cayenne pleads that the registration of the Restricted Shares in the name of Certane was an error, principally because the lenders (and Credit Suisse) obtained no rights in respect of them under the Specific Security Deed. It seems to be Cayenne's position that that error is best corrected by registering the Restricted Shares in the name of the new trustee on condition that it agrees to be bound by the Restriction Deed. On the other hand, both Whitehaven and Pok Hong deny that there was an error. Whitehaven principally points to the specific instructions that were given at the time of settlement and to the fact that no evidence was called by Cayenne from Mr Tinkler or anyone else to explain the mistake. Pok Hong seeks to demonstrate that it does have rights under the Finance Documents in respect of the Restricted Shares, which is said to explain why those shares were registered in the name of Certane.
5. These considerations alone establish that this is not a suitable case to make the orders sought by Cayenne. The underlying rights of the parties are not sufficiently clear to justify a vesting order under s 71(1) of the Trustee Act or an order under s 175(1) of the Corporations Act.
6. There are other difficulties with the orders sought by Cayenne. The precise nature of the interest acquired by Cayenne in the Restricted Shares on its appointment as the new trustee of the BR Trust is not entirely clear. It is not entitled to be the registered holder of the Restricted Shares by virtue of its appointment as the new trustee. Rather, on appointment, it obtained the interest previously held by BRI. As Mr Braham SC, who appeared for Cayenne, accepted that interest is a chose in action. It is a right under some circumstances, which are not clearly identified, to require Certane to transfer the Restricted Shares to it. No vesting order is required to give effect to that right. As s 9(1) of the Trustee Act makes clear, on execution and registration of the deed of appointment (which has occurred) that right vests in Cayenne without the need for any conveyance. Consequently, a vesting order is unnecessary. It does not need to be made in respect of the chose in action, since that right was transferred without any vesting order. It does not need to be made in respect of the shares since Certane is already willing and able to transfer them. For those reasons, a vesting order is inappropriate.
7. Accepting that Cayenne has exercised its right to call for the Restricted Shares and Certane recognises its right to do so, it was and perhaps still is open to Pok Hong and possibly Whitehaven to challenge the exercise of that right having regard to the terms of the Restriction Deed, the Finance Documents and the circumstances in which the Restricted Shares came to be registered in the name of Certane, but to date neither has sought to do so. Instead, Whitehaven has refused to register the shares. However, that does not alter the fact that, on this analysis, there is no mistake in the register to be corrected. Rather, the question is whether Whitehaven is entitled in the circumstances to refuse to register the transfer agreed between Cayenne and Certane; and Cayenne's remedy, if it has one, is to seek an order compelling Whitehaven to recognise that transfer. In part, at least, whether Cayenne is entitled to such an order depends on its rights as transferee of the shares under cl 8.5 of Whitehaven's constitution. However, no claim is made by Cayenne under that provision. Mr Braham did suggest during the hearing that, if necessary, he would apply to amend the commercial list statement to plead cl 8.5. However, the amendment is more profound than that. The amendment would require an amendment to the relief sought in the summons and would raise the question, among others, whether there was anything in the Listing Rules or ASX Settlement Operating Rules which permitted Whitehaven to refuse registration, which was not a matter touched on in the hearing. Consequently, such an amendment if pressed would not have been permitted.
8. Cayenne accepts that, in order to obtain relief under s 175(1) of the Corporations Act, it must establish that the Restricted Shares were registered in the name of Certane by mistake. There may be reason to think that it was a mistake for the Restricted Shares to be issued to Certane. It was clear that the parties intended that the Restricted Shares would be governed by the Restriction Deed and that assumes that the Restricted Shares would be held by BRI. However, even accepting that there was a mistake, the mistake must have been that the shares were registered in the name of Certane rather than BRI. Normally, in those circumstances the appropriate applicant for an order under s 175(1) would be BRI.
9. It might be suggested that, in circumstances where BRI is in liquidation and Cayenne has been appointed the new trustee, it is now Cayenne that is the appropriate applicant for an order under s 175(1). There are, however, difficulties with that proposition.
10. If the mistake had not occurred, the Restricted Shares would have been held by BRI. Despite the terms of the BR Trust Deed, BRI remained a bare trustee of the BR Trust at the time that it went into liquidation: see, eg, Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 at [26] per Gordon J. In that capacity, it would have continued to hold the Restricted Shares. It also remained bound by the terms of the Restriction Deed.
11. Under cl 6.3 of the Restriction Deed, BRI warrants that it "is the only trustee of the Trust and no action has been taken or is proposed to remove it as trustee of the Trust unless otherwise consented to by [Whitehaven] which consent must not be unreasonably withheld". Under cl 6.1, that warranty is a continuing one. Consequently, that warranty will be breached by BRI if at any time some action is taken (by anyone) or is proposed to be taken to remove it as trustee. That would clearly include action taken by Mr Tinkler to appoint Cayenne in its place.
12. Under cl 7(b)(ii) of the Restriction Deed, if the warranty is breached, Whitehaven "may refuse to acknowledge, deal with, accept or register any sale, assignment, transfer or conversion of any of the Restricted Shares". Consequently, BRI could not have been replaced as trustee without the consent of Whitehaven except by BRI breaching the Restriction Deed. If it was in breach, Whitehaven had a right under the Restriction Deed to refuse to register the transfer from it.
13. BRI, or presumably Mr Tinkler and Cayenne, could have sought Whitehaven's consent to a transfer of the Restricted Shares to Cayenne. Under cl 6.3(a) of the Restriction Deed, Whitehaven would not have been entitled to withhold its consent unreasonably. Very relevant to the question of reasonableness is whether the transferee was prepared to agree to be bound by the Restriction Deed in the same way and to the same extent as BRI (as Cayenne has been prepared to do). But that is not the only consideration relevant to reasonableness. In the present case, under the DDWPA Cayenne has purported to grant LCM contingent rights in respect of the Restricted Shares; and it has done so in order to obtain funding for a claim against Whitehaven. It is difficult to see why, acting reasonably, Whitehaven would not be entitled to take those matters into account in granting its consent. The rights granted to LCM appear to amount to an agreement to transfer at least an economic interest in the Restricted Shares to LCM, since the effect of the DDWPA is to transfer part of the economic benefit of those shares to LCM. That is a breach of cl 2.2(a) of the Restriction Deed. Consequently, Cayenne has already indicated a willingness to breach the terms of the Restriction Deed. Although the Restriction Deed does not expressly prohibit the Restricted Shares from being used to fund a claim against Whitehaven, the fact that a proposed transfer has that purpose or effect appears to be a matter that Whitehaven might reasonably take into account in giving its consent to the transfer.
14. The result is that if the mistake (assuming there was one) had not occurred, the Restricted Shares would have been issued to BRI, BRI would not have been able to transfer the shares without Whitehaven's consent and Whitehaven would have been entitled to withhold its consent for the reasons given. Consequently, if the mistake had not occurred, Cayenne would not have been entitled to become the registered holder of the Restricted Shares.
15. The fact that Cayenne would not have been able to achieve what it is seeking to achieve by the order under s 175(1) of the Corporations Act that it seeks if the mistake on which it relies had not occurred provides a strong discretionary ground for refusing the relief it seeks under that section. To grant that relief would be to give Cayenne the benefit of the mistake on which it relies when the very purpose of the relief is to rectify that mistake.

The position of Pok Hong

1. It is still necessary to address the position of Pok Hong, if only because it is necessary to deal with its notice of motion.
2. It is the obligation of the plaintiff to join as defendants all parties who will be directly affected by the orders sought in the proceedings. The relevant principles were set out by the Full Court of the Federal Court of Australia in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; [1996] FCA 870 at 524-5 (the Super League case) in these terms: There are some classes of case where the ascertainment of the necessary parties who "ought to have been joined" is not difficult. Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest. … Where the subject matter of the proceedings is not of this kind, the ascertainment of necessary parties who ought to have been joined may be more difficult. In our opinion, the question should be decided according to the test proposed by Lord Diplock [in Pegang Mining Co Ltd Choong Sam [1969] 2 MLJ 52 at 55-6]. The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317 at 322 per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.
3. In that case, the Full Court held that the players and coaches who had entered into contracts to play and coach in the appellants' Super League competition were necessary parties to proceedings in which the respondents sought and obtained orders (1) that those contracts were held on trust for the respondents; (2) requiring the appellants to give notice under those contracts instructing the players and coaches to play and coach in the respondents' rival competition; and (3) restraining the appellants from paying players and coaches who failed to comply with those notices. The players and coaches were directly affected because the orders affected the employer for whom they were required to work.
4. John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 provides another example of the principle. In that case, the third party, Walker Corporation, held an equitable interest in the nature of an unregistered mortgage over land which was enforceable by equitable remedies against the registered proprietor. Without joining the third party, the plaintiff tennis club commenced proceedings against the owner of the land seeking a declaration that the land was held on constructive trust for it and an order that the land be transferred to it. It was successful before the Court of Appeal. An appeal to the High Court was allowed on the basis that Walker Corporation was a necessary party to the proceedings. As the High Court explained (at [133]): The relief claimed and granted - a constructive trust and a transfer of the land subject to the trust to the Club so as to make the interest transferred indefeasible on registration - directly affects the interest of any other person, like Walker Corporation, claiming an interest in the land, because orders in the Club's favour would, to a corresponding extent, be detrimental to those other persons.
5. It is Pok Hong's case that the orders sought by Cayenne will affect the rights conferred on it by the Finance Documents. Pok Hong identifies a substantial number of rights on which it relies. They fall into three categories. First, it relies on provisions of the Finance Documents that prohibit a change in the trustee of the BR Trust. Second, it relies on rights it says it has in respect of the Restricted Shares which will be affected by the orders sought by Cayenne. Third, it relies on the provisions of the Finance Documents that prevent the creation of any further security over the assets of the BR Trust and prevent any part of the trust fund from being resettled or transferred to any person.
6. As to the first category of rights, Pok Hong relies principally on cl 21.19 of the SFA, which states in effect that it is an event of default if BRI ceases to be sole trustee of the BR Trust, and cl 16(b) of the Security Trust Deed, which provides that BRI must not cause or permit its removal or permit any substitute trustee to be appointed.
7. Accepting that there has been an event of default under the SFA and a breach of the Security Trust Deed, it is not clear why that means Pok Hong is a necessary party to the current proceedings. The event of default under cl 21.19 of the SFA and the breach of cl 16(b) of the Security Trust Deed arise from the appointment by Mr Tinkler of Cayenne as trustee of the BR Trust in place of BRI, not from or as a consequence of any orders sought in these proceedings. The SFA and Security Trust Deed give Pok Hong rights in respect of those breaches. But the fact that from a practical point of view Pok Hong can achieve the same result by successfully resisting the orders sought in these proceedings does not make it a necessary party to the proceedings.
8. Pok Hong's second category of rights falls into a different class. Pok Hong contends that it was a necessary party to these proceedings because the Finance Documents, and in particular the Specific Security Deed, granted it (and the other lenders) rights in respect of the Restricted Shares and the purpose of these proceedings is to obtain control of those shares so that Cayenne can grant an interest, albeit a contingent one, in those shares to LCM. The rights granted to LCM directly affect the rights granted to Pok Hong. Cayenne's principal response to this contention is that Pok Hong has no rights in respect of the Restricted Shares.
9. There are a number of difficulties with that response.
10. First, Cayenne's response is not an answer to the question whether Pok Hong is a necessary party to the proceedings. The question is not whether Pok Hong is entitled to the rights it claims. As the Full Court pointed out in the Super League case in the passage quoted earlier, the "test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected". The question is whether the rights and liabilities "might" be directly affected, not whether they in fact are. If it were otherwise, the right to be joined would depend on the success (or, more accurately, lack of success) of the plaintiff's claim.
11. The relevant order sought by Cayenne is a vesting order in respect of the Restricted Shares. Assuming that in the circumstances that is an appropriate order for Cayenne to seek, it was necessary for Cayenne to join all those persons who might have an interest in those shares, since each might be directly affected by the order sought. The Restricted Shares were issued to Certane and, at least initially, were held by it under the Sponsorship Agreement. That could only have happened if the lenders (including Pok Hong) asserted some right in respect of those shares. For that reason alone, Pok Hong or the Security Trustee was a necessary party to the proceedings.
12. Cayenne asserts that the shares were issued to Certane by mistake. However, that does not alter the position. Pok Hong or the Security Trustee would remain a necessary party to the resolution of that issue because the resolution of that issue is relevant to the question whether the lenders had rights in respect of the shares.
13. Second, as is apparent from what has already been said, the assets of the BR Trust, including the Restricted Shares, are the subject of complicated security arrangements. It is not appropriate for the Court to seek to resolve issues arising from those arrangements on the application of a vesting order. Moreover, the Court should not in the exercise of its discretion make a vesting order the effect of which would be to vest the shares which formed part of those assets in a new trustee that is not bound by any of those arrangements.
14. Third, in my opinion, Pok Hong did obtain rights in respect of the Restricted Shares. Under cl 2.1 of the Specific Security Deed, BRI relevantly granted Credit Suisse (as Security Trustee) a security interest over all Acquired Securities. "Acquired Securities" is defined in effect to include any shares in Whitehaven to which BRI is or becomes legally or beneficially entitled other than Restricted Securities. "Restricted Securities" is defined to mean "each Marketable Security of [Whitehaven] that is, or is to be, owned or held by or for [BRI] and that is, or is to be, subject to the Restriction Deed …". On 2 May 2012, the Security Trustee's interest in the property secured under the Finance Documents was registered under the Personal Property Securities Act 2009 (Cth). That interest was described as "All the Grantor's present and after-acquired property, and all of the present and after-acquired property comprising the trust fund of the Boardwalk Resources Trust, except property not covered by or subject to the 'General Security Deed (BRI)' of that title dated 27 April 2012 (as amended from time to time)". A similar entry was also registered in respect of the Specific Security Deed.
15. The provisions of the Specific Security Deed referred to in the previous paragraph raise the question whether the definition of "Restricted Shares" catches all those shares that were the subject of the Restriction Deed at the time the Specific Security Deed was executed (whether or not they are subsequently released from that restriction) or whether it only catches those shares for so long as they remain the subject of that restriction.
16. In my opinion, the correct interpretation is the latter one. It is plain from the terms of the Finance Documents that the parties intended that the lenders would be granted security over all the assets, including any new assets, of BRI other than the Restricted Shares. That is hardly surprising given the amount that was borrowed. It is equally plain that the Restricted Shares were excluded because of the terms of the Restriction Deed. However, there was no commercial reason for that exclusion to continue to operate once the restrictions fall away.
17. The definition of "Restricted Securities" does not identify the relevant securities by reference to whether the securities were subject to the Restriction Deed at a particular date. Rather, it covers each share in Whitehaven that "is, or is to be" the subject of the Restriction Deed. The reference to "each Marketable Security" and the use of the present tense suggest that the question whether a share is a Restricted Security is to be judged from time to time depending on whether the Restriction Deed applies to that share at that time. The drafting recognises that under the Restriction Deed some but not all of the Restricted Shares may be released from the restrictions contained in the Restriction Deed.
18. The conclusion of the previous paragraph is supported by the definition of "Acquired Securities". That term is defined very broadly. It includes any shares in Whitehaven other than the 67,352,407 ordinary shares issued at the time the transaction with Whitehaven settled, irrespective of when those shares were acquired and irrespective of whether they are held in the name of BRI or some other person. The definition caters for the possibility that "Acquired Shares" includes shares in Whitehaven held by BRI, or on its behalf, at the time the transaction with Whitehaven settled (other than the Present Securities). Necessarily, whether BRI has acquired shares in Whitehaven that fall within the definition of "Acquired Securities" must be judged from time to time. Consequently, in applying the definition, it is logical, when applying the exception in respect of Restricted Securities, to ask whether the requirements of the definition of that expression are satisfied at that time. That conclusion is supported by the fact that a Restricted Security is defined as one that is subject to the Restriction Deed. A share ceases to be a Restricted Security once it is no longer subject to the Restriction Deed. The result is that, when the restrictions fall away, the Restricted Shares cease to be Restricted Securities and become Acquired Securities.
19. Some support for this conclusion is also to be found in the top up provisions contained in cl 20.23 of the original SFA. Those provisions required BRI to top up the security if the Security Ratio fell below a certain percentage. The numerator used in calculating that percentage included the Whitehaven shares other than "Restricted Shares for so long as Restricted Shares are not subject to Transaction Security". That provision contemplated that at some stage the Restricted Shares would be or might become "subject to Transaction Security". But that would only happen if, upon the lifting of the restrictions, the Restricted Shares became part of the secured property. The terms of the original SFA are part of the surrounding circumstances against which the terms of the Specific Security Deed is to be interpreted. They support the construction of "Acquired Security" for which Pok Hong contends.
20. On this analysis, as soon as the restrictions in the Restriction Deed are lifted in respect of the Restricted Shares, Pok Hong obtains a security interest in them. However, that is the very interest that Cayenne proposes to grant LCM in order to satisfy the condition in cl 45.5 of the DDWPA and is part of the Key Commercial Terms on which LCM would provide litigation funding in relation to the Representative Proceedings. That conclusion demonstrates that Pok Hong was a necessary party to the proceedings and ought to be joined as a defendant. It also provides an additional discretionary reason why the Court would not make the vesting order sought by Cayenne.
21. Pok Hong relies on a number of rights falling into the third category. They include cl 20.24 of the SFA, which provides that the Borrowers (that is, BRI and ARI) shall not "create or permit to subsist any Security over any of its assets …". They also include cl 16(g) of the Security Trust Deed. That clause places an obligation on BRI to ensure that the Restricted Shares, or perhaps the choses in action that BRI holds in respect of the Restricted Shares, are not resettled or transferred to any other person, whether as trustee or otherwise. Presumably, that obligation must be read as subject to the arrangements by which the Restricted Shares were issued to Certane. Having regard to the conclusions I have reached, it is unnecessary to consider this category of rights.

Orders and costs

1. It is apparent from what I have said that Pok Hong should be joined as a fourth defendant and that the proceedings should be dismissed.
2. Pok Hong was successful in its application to be joined as a defendant. In substance that order was not resisted by Cayenne and the order sought in Pok Hong's notice of motion in relation to costs is that "There be no order as to costs in relation to this Notice of Motion". On the other hand, the defendants, including Pok Hong, have been successful in the proceedings. There is no apparent reason why costs should not follow the event. However, the parties did not make submissions on costs, and they should be given an opportunity to do so if they wish.
3. Accordingly, the orders of the Court are: 1. Order that Pok Hong Limited be joined as the fourth defendant in the proceedings; 2. Order that there be no order as to costs in relation to the fourth defendant's notice of motion dated 24 August 2022; 3. Order that the proceedings be dismissed; 4. Subject to order (5), order that the plaintiff pay the defendants' costs of the proceedings; 5. Grant liberty to any party to apply within 14 days of the date of this judgment for an order varying order (4).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 September 2022