OSWAL -v- YARA AUSTRALIA PTY LTD [No 3] [2011] WASC 255 (14 September 2011)

OSWAL -v- YARA AUSTRALIA PTY LTD [No 3] [2011] WASC 255 (14 September 2011) - WASC 2012 case summary — Zoe

[496]

Etymology: Appears first about 1600. In sense 1, it answers to Latin complēre to fill up, fulfil, accomplish, COMPLETE adj. This verb became in Romantic complīre, whence Italian compire, compiere, Provençal complir, Old French complir (see COMPLISH v.), all in the original sense. But in Old Catalan compliror Spanish cumplir, the sense underwent the development 'to fill up, make up what is wanting, satisfy, satisfy the requirements or forms of courtesy' = comply with, in sense 2 below. In this latter sense, complire appears to have been adopted in 16th cent. Italian, by the side of the native compire in the original sense; and the Italian was evidently the immediate source of sense 2 (In the same way the Old Catalan or Spanish form and sense of the derivative n. complimento, complimiento, was the source of Italian complimento, and so of the 16th cent. French compliment, and 17th cent. English COMPLIMENT n.) As to the form of comply compare SUPPLY n. (Latin supplēre, Italian supplīre, Old French soupleyer (15th cent. Suppleyer, suppléer), late Middle English sowplé, 15th cent. Supple, supplie, supply. On the model of this, and with the same relation of form to Latin complēre, Italian complire, that supply bore to supplēre, supplier, but without the same antecedent history, comply appears to have come into use in the end of the 16th cent. (Old French complir was by that time obsolete.) In the sense-development in English there has been a tendency to association with PLY n., French plier, Latin plicāreto bend, so as to make 'bending to the will of another' a more prominent part of the notion: compare especially COMPLIANT adj. and n.

...

5. To act in accordance with, and fulfilment of, wishes, desires, requests, demands, conditions, or regulations; to fulfil the wishes or requirements of; to yield, accede, or consent to.

a. Formerly: To comply with a person.

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b. Now: To comply with a person's desires, requests, requirements, conditions, etc. Also predicated of actions, arrangements, and the like. (This and c are the only surviving uses.) ...

[702]

(a) (Board): Subject only to the particular responsibilities set out in clauses 4.2(c) and 4.3, which are delegated by the Board to the Chairman and Managing Director respectively, the Board of Holdings will be responsible for the overall direction and control of the management of Holdings including the formulation of policies to be applied in the conduct of the Business.

(b) (Maximum number): On and from the Commencement Date, the Board of each company in the Company Group must consist of no more than 5 Directors (excluding alternate directors).

(c) (Appointment): For as long as it holds 5% or more of the issued share capital of Holdings, Yara may appoint one non-executive director to the Board of each company in the Company Group. For as long as he holds 5% or more of the issued share capital of Holdings, Pankaj Oswal may appoint the remaining 3 directors to the Board of each company in the Company Group. Holdings will appoint to the Board of each other company in the Company Group the persons nominated by the Shareholders in accordance with this clause.

(d) (Removal): Provided that the Shareholder has complied with clauses 4.1(c) and 4.1(t), a Director may only be removed by the Shareholder who appointed him. To remove a Director, the Shareholder who appointed him must give notice to the relevant company in the Company Group. The removal notice takes effect on the date that the removal notice is deemed given under clause 21(e).

(e) (Manner of appointment and removal): Every appointment and removal of a Director takes effect when the written notice of appointment or removal is received at the Registered Office. However, in the case of an appointment, the appointment takes effect when the written consent to act as a director is received at the Registered Office if that is later than the receipt of the notice of appointment.

(f) (Resignation): If at any time a Shareholder holds less than the percentage of Shares in Holdings referred to in clause 4.1(c), the Shareholder must ensure that its appointee Director(s) resign from the Board with effect from the date on which the Shareholder first held less than that percentage.

(g) (Directors and officers insurance): Holdings, must and must cause each other company in the Company Group, to obtain directors and officers insurance, insuring each Director in respect of acts and omissions of that Director in his or her capacity as a Director of that company, other than in respect of fraud or breaches of trust or fiduciary duties, and otherwise for amounts and on terms approved by the Board.

(h) (Director's deeds): Holdings must, and must cause each other company in the Company Group to, enter into a deed with each Director whereby:

[712]

(a) (Frequency): At least 4 Board meetings for Holdings must be held each Financial Year unless otherwise determined by approval of the Directors.

(b) (Convening): A Director may at any time, and the company secretary will on the request of a Director, convene a meeting of the Directors and include on the agenda for that meeting such items of business or resolutions as proposed by such Director.

(c) (Notice of meetings): Directors must be given at least 7 Business Days' notice of a Directors' meeting, unless otherwise agreed by all Directors.

(d) (Agenda): The notice of a Directors' meeting must include an agenda and, unless all Directors otherwise agree, a Board meeting may only resolve matters specifically referred to in the agenda. Subject to clause 4.4(b) the Chairman and company secretary after consultation with the Directors, must determine the contents of the agenda.

(e) (Quorum): A quorum for Board meetings is constituted by the attendance (in person, by telephone or by live audio-visual transmission) of a Director appointed by each Shareholder that is entitled to appoint a Director under clause 4.1(c).

(f) (Adjournment): If at least one Director appointed by each Shareholder entitled to appoint a Director in accordance with this deed is not present (either in person, by telephone or by live audio-visual transmission) at a Board meeting, the meeting must be adjourned and reconvened at such time and place as reasonably determined by the Directors present (provided that notice of the time, date and place of the reconvened meeting must be given to each Director not less than 72 hours before the meeting and the reconvened meeting must not be held sooner than 7 days after the date of the adjourned meeting).

(g) (Quorum at reconvened meeting): Unless the matters to be considered at the reconvened meeting require the approval of a Special Majority of Directors pursuant to clause 4.5(b)(ii) (in which case the quorum shall be as stipulated under clause 4.4(e)), the quorum for a meeting reconvened in accordance with clause 4.4(f) is a majority of the Directors entitled to attend and vote at a Board meeting.

(h) (Personal interest): If a Director has a material personal interest in a matter to be discussed or determined at a Board Meeting, he or she must disclose that to the Board prior to or at that particular meeting. Subject to the Corporations Act and the Constitution, a Director who is ordinarily entitled to attend and vote at a Board Meeting but who is specifically excluded by any requirement of the Corporations Act or the Constitution from a particular meeting due to him or her having a material personal interest in a matter to be discussed or determined at that particular meeting, will be counted as a Director entitled to attend and vote at a meeting for the purposes of determination of the quorum in accordance with this clause 4.4.

(i) (Attendance by telephone): The contemporaneous linking together by telephone or other electronic means of a number of the Directors sufficient to constitute a quorum constitutes a meeting of the Board. A Director participating in a meeting by telephone or electronic means is taken to be present at the meeting. There must always be an ability for Directors to participate in any meeting of Directors by telephone or other electronic means.

(j) (Circulating resolutions): The provisions of clause 4.5 apply to resolutions of the Board passed by circulating resolution such that the Directors may pass a resolution without a Directors' meeting being held if a simple majority (or if required under clause 4.5, a Special Majority) of the Directors entitled to vote on the resolution sign a document that they are in favour of the resolution set out in the document provided that notice of the proposal to pass the written resolution is provided to all Directors prior to it being passed. This clause 4.4(j) applies despite any provision of the Constitution.

[787]

(Business Plan and Budget): The approval of the annual Business Plan and Budget and any material departure from or variation to the annual Business Plan and Budget, provided that such approval in each case will not be unreasonably withheld by any Director and to the extent that the rationale, substance and approach adopted for the proposed Business Plan and Budget does not vary in any material respect to the rationale, substance and approach adopted for the most recently approved Business Plan and Budget then the proposed Business Plan and Budget will be approved.
(Activities outside Business Plan and Budget): The undertaking of any material activities or transactions by any company in the Company Group, including without limitation capital expenditure, operating expenditure, disposals of assets or incurring liabilities, which are not provided for in the then approved Business Plan and Budget provided that if the value of such expenditure, asset or liability when aggregated with all other such expenditure, assets or liabilities in the 12 month period preceding the proposed date of such expenditure, disposal or incurring such liability is less than US$7,000,000 then it is not material for the purposes of this clause.
(Share capital and securities): The issue of, or agreement to issue, Shares, convertible notes, options to take up unissued Shares, or other securities in the capital of any company in the Company Group or the offer of or invitation to subscribe for Shares or other securities of any company in the Company Group.
(Listing): Any proposal for the public listing of Holdings' Shares or the shares or securities of any company in the Company Group.
(Finance): Obtaining new or materially increasing existing external borrowings, where the total of all external borrowings exceeds the limits determined by the Directors and where no limits have been set then any new or increased external borrowings or provision of guarantees or indemnities by any company in the Company Group to any third party that exceeds the limits previously determined by a Special Majority of the Directors and where no limits have been set then any guarantee or indemnity or the grant of any Encumbrance over any assets of any company in the Company Group PROVIDED THAT a Special Majority of the Directors will only be required pursuant to this paragraph 5 to approve a terms sheet in respect of any new or materially increased external borrowing and otherwise the negotiation, settling and approval of documentation in connection with such external borrowing is within the discretion and authority of the Managing Director.
(Dividends): The determination of a reasonable policy for the declaration of dividends by the companies in the Company Group which policy is to take into account the circumstances of the Company Group and recognise the Shareholders desire to maximise returns to the Shareholders while making adequate provision for the future growth and development of the Company Group.
(Related party transactions): Any determinations or decisions with respect to any matters between a company in the Company Group and one or more Shareholders or any Related Bodies Corporate of any Shareholders including without limitation:

[876]

The position, then, is that final orders cannot be made at this time on either Mrs Oswal's claim or on Yara's counterclaim.
The question is whether the outcome of the preliminary issues was such that a successful or substantially successful party or parties can be identified in whose favour costs orders should be made. My view as to that proposition is in the negative.
The outcome of the hearing of the preliminary issues, in my view, saw no party as entirely successful in having all propositions they had sought to establish before me accepted. There remain robust arguments from each side about who was substantially successful or tactically successful upon their construction arguments. The reality is that the determination of the preliminary issues involved a complex exercise in contractual construction. Each side ran numerous arguments. The primary reasons attempted to resolve the significant construction arguments raised. But it still remains to be seen how the answers provided to the questions posed will affect the ultimate outcome of this litigation.
Absent a clear winner, in my view it would be more prudent, not to mention just, to wait to resolve costs issues associated with the determination of preliminary issues until the end outcomes concerning Mrs Oswal's claim and Yara's counterclaims are known.
I am led to that position first because, as the primary reasons reflect, on the assessment of extremely complex arguments, no party fully succeeded in establishing everything it was seeking to show in terms of the construction positions advocated at the hearing.
Next, I am advised that Yara has commenced an appeal against the primary reasons and other parties have filed crossappeals. These appeals presently remain unresolved. So it is possible that my answers to the preliminary issues may be varied, and that the final outcome of this action and counterclaim then be guided by alternative construction outcomes framed elsewhere. Potential for the situation to change by reason of further inputs is a reason to wait before finalising costs orders associated with the preliminary issues.
As already mentioned, I am informed YPH shareholding control has altered and that Yara is now the 51% majority shareholder, with Apache holding a 49% share. But Mrs Oswal is pursuing proceedings in the Supreme Court of Victoria, challenging the validity of the ANZ Bank's realisation through sale of her 35% YPH shareholding. I am told that that challenge is framed in a context of issues which have been raised by Mrs Oswal over the validity of ANZ's securities and thereby its rights to realise Mrs Oswal's 35% shareholding in YPH. Outcomes in the unresolved Victorian litigation also have some potential to impact against this action. So does another action pursued by Mr Oswal in the Supreme Court of Victoria, where he challenges the reasonableness of the marketing and sale process concerning Mr Oswal's 30% shareholding in YPH.
Although my answers to some of the preliminary issues might be read as providing a basis for concluding that Mrs Oswal's attempted appointment of the sixth defendant by counterclaim (Mr Sodum) as director of YPH was inherently flawed, I have, as indicated, only considered to date issues of construction concerning the SD and the SSA. It remains to be seen whether further noncontractual causes of action could possibly bear upon my final assessment of the validity of Mr Sodum's appointment as Mrs Oswal's exclusively appointed nominee director to YPH.

At a glance

Court

Decision date

Before

Source

Judgment (880 paragraphs)

Cases Cited (17)