Tydeman v Tibra Capital Pty Limited

Background to claims

1. Tanamerah was incorporated in 2000. It has only ever had one share on issue. Up until May 2002, Mr Tydeman was the sole shareholder and director, and the company was called Macrologix Pty Ltd. In May 2002 Ms Tydeman replaced Mr Tydeman as the sole shareholder and director, and the company adopted its current name. Mr Tydeman was reappointed as a director, alongside Ms Tydeman, in 2009.
2. The shares in Tibra which are the subject of the proceedings appear to have been issued to Tanamerah in two tranches, in January and July 2008. In July 2008, a letter was sent to Tanamerah on behalf of Tibra which stated: Now that you have become a shareholder in Tibra Capital Pty Ltd you are required to become a party to the Shareholders' Agreement between Tibra Capital Pty Ltd and A Class Ordinary shareholders in Tibra Capital Pty Ltd ("the Shareholders' Agreement"). Becoming a party to the Shareholders' Agreement requires that you sign a Deed of Accession which confirms that you agree to abide by the terms of the Shareholders' Agreement. Please find enclosed a copy of the signed Shareholders' Agreement in full. Also enclosed is a Deed of Accession agreement (in duplicate) for your signature. Please return one original signed copy to Tibra Capital Pty Ltd, the other should be retained for your records.
3. Enclosed with the letter was a copy of a written agreement styled "Shareholders' Agreement in relation to Tibra Capital Pty Limited". The parties to the agreement were Tibra and eleven specified shareholders. The Agreement contained a counterparts clause in the usual form. The execution section provided for execution by each of the eleven shareholders, but not Tibra itself. The copy enclosed with the letter was undated and had been executed by ten of the eleven shareholders. The Agreement provided that shares could not be issued or transferred to a new shareholder unless the incoming shareholder entered into a Deed of Accession in the form specified in a schedule to the Agreement.
4. The Deed of Accession enclosed with the letter followed the form specified in the Shareholders' Agreement. The Deed was in the form of a deed poll. It recited that it was supplemental to a "Shareholders' Agreement dated 3 March 2008 between [Tibra] and others." It provided for Tanamerah to be bound by, and have the benefit of, the provisions of the Shareholders' Agreement, so defined. Ms Tydeman duly executed the Deed on behalf of Tanamerah in accordance with Tibra's request.
5. In August 2008 a further letter (wrongly dated August 2007) was sent on behalf of Tibra to Tanamerah. The letter enclosed what purported to be a minute of an Extraordinary General Meeting of the members of Tibra held on 30 April 2008 and resolving that the company "accept the Deed of Variation (annexure A) to the Shareholders' Agreement (annexure B)". The minute purported to record that fifteen shareholders had attended the meeting, including Tanamerah. At the end of the minute there was space for signature on behalf of each of the shareholders.
6. A copy of the Deed of Variation to which the minute referred was also enclosed with the letter. The Deed of Variation took the form of a deed between Tibra and fifteen specified shareholders, which provided for some of the terms of the Shareholders' Agreement to be varied. The copy provided was executed by Tibra and nine of the shareholders.
7. In the covering letter, Tanamerah was asked to sign and return the two documents. This was done, Ms Tydeman signing the minute and Mr Tydeman and Ms Tydeman executing the Deed of Variation.
8. Clause 11 of the Shareholders' Agreement dealt with the sale of shares. A shareholder was not entitled to transfer or encumber its shares without board approval (cl 11.1). A shareholder wishing to sell any of its shares (defined as a "Seller") could do so by serving a transfer notice on all other shareholders, with a copy to Tibra (cl 11.3). The Seller and the offeree shareholders were then required to consult with a view to agreeing on a purchase price; if a purchase price could be agreed, the Seller was deemed to have offered to sell at that price (cl 11.4(a)). If agreement could not be reached, Tibra had to request its "Group Accountant" to determine the "Market Value" of the shares and notify the Seller of that determination (cl 11.4(b)). The Seller was entitled to dispute the determination of Market Value by the Group Accountant; this would result in an independent determination of Market Value by an external valuer, referred to as the "Independent Valuer" (cl 11.6).
9. Market Value was to be determined on certain assumptions set out in cl 11.5. The term "Market Value" was also defined as being "calculated in accordance with Schedule 7". Clause 11.5 provided that the determination of Market Value should be undertaken "having regard to" Schedule 7. Curiously, a schedule with this number does not appear in the copy of the Shareholders' Agreement in evidence before me.
10. The Shareholders' Agreement provided that once the Market Value had been determined, each offeree shareholder was required to notify the Seller whether the offeree wished to purchase its allocation of the shares (clause 11.10). If all offerees agreed to buy their allocations, the shares would then be sold at the price which had been agreed (or Market Value if no price had been agreed). Otherwise, the Seller was required to give Tibra notice of how it wished to proceed. The Seller's choice was either to withdraw all of the offers in the transfer notice, in which case it was required to pay the costs and expenses of the Group Accountant and the Independent Valuer (clause 11.12(b)(i)); or alternatively to proceed with the sale (clause 11.12(b)(ii)). In that event, any offerees who had agreed to purchase their allocations would proceed to purchase their allocations at the agreed price (or Market Value if no price had been agreed) and Tibra would be required to buy back the remaining shares under cl 13.
11. Clause 13 of the Shareholders' Agreement dealt with share buy-backs. The parties were contractually obliged to comply with all the requirements of the Corporations Act 2001 (Cth) (clause 13.1(a)) and to complete the buy-back of the shares on a Net Asset Value basis (clause 13.1(d)). Net Asset Value basis was defined as the net asset value of Tibra and its subsidiaries, determined by the Group Accountant in accordance with applicable accounting standards. Any two directors of Tibra were authorised to act as agent and attorney of the Seller and of Tibra with power to complete the buy-back (clause 13.2 (b)).
12. It appears that in January 2011, Tanamerah served on Tibra and its shareholders a transfer notice for the whole of the parcel of 231,830 shares Tanamerah held as trustee for ASF. None of the other shareholders of Tibra accepted Tanamerah's offer. In March 2011 Tanamerah issued a further notice requiring Tibra to purchase the shares pursuant to clause 11.12(b)(ii), purportedly at Market Value.
13. Tibra proceeded towards the buy-back of the shares on the Net Asset Value basis despite Tanamerah's notice having referred to Market Value. In May a meeting of shareholders was held at which resolution was purportedly passed to amend the Shareholders' Agreement so as to provide that Tibra's company secretary could act as agent and attorney of each shareholder for the purpose of the steps required for the buy-back under cl 13. Purportedly by way of compliance with the Corporations Act, s 257D, Tibra convened a meeting of shareholders on 6 June. No representative of Tanamerah (or, it seems, the other shareholders of Tibra) attended the meeting; Tibra's company secretary purported to represent the shareholders pursuant to the May amendment of the Shareholders' Agreement. The acquisition by Tibra of the shares was purportedly approved; the sum of $1.88 per share was paid to Tanamerah on 9 June and the shares were cancelled.
14. As is described in more detail below, the 2012 proceedings were then brought in Tanamerah's name against Tibra, and this resulted in the proceedings being stayed and various costs orders against Tanamerah. Eventually winding up proceedings were brought by Tibra against Tanamerah.
15. On 1 September 2016, a meeting was convened by the Tydemans as members of ASF at which they purported to resolve that Tanamerah "was removed as the corporate trustee" of ASF and that they themselves were "appointed to stand and act as trustees" of the ASF. A document described as "Minutes of Meeting" of Tanamerah was also signed by Mr Tydeman as "Chairperson". The minutes do not indicate whether this was supposed to be a meeting of Tanamerah's directors or shareholders. It showed Tanamerah, Ms Tydeman and Mr Tydeman as all being "in attendance". It recorded purported resolutions that Tanamerah be removed as trustee of ASF and the members of ASF (the Tydemans) be "hereby appointed" as trustees in Tanamerah's place. A deed styled "Deed of Change of Trustee" was also executed between Tanamerah and the Tydemans under which Tanamerah appointed the Tydemans as agent "to give effect to the trustee replacement in relation to ASF" and both Tanamerah and the Tydemans acknowledged the removal of Tanamerah as trustee and its replacement by the Tydemans.
16. On 17 October 2016 Tanamerah executed a document entitled "Litigation Recovery Rights of Alexander Superannuation Fund". I will refer to this as the "assignment document". The document recited the execution of the Deed of Accession "in connection to" [sic] the Shareholders' Agreement, "being an Agreement which is said to have been entered into on or about 3 March 2008" (defined as the "SHA"). After reciting the compulsory purchase of Tanamerah's 231,830 shares in Tibra, the document continued: When that transfer event took place it automatically and immediately caused the creation of 231,830 litigation recovery rights ("Litigation Recovery Rights") to come into existence in relation to the 231,830 ordinary shares and all those rights were held by the aforementioned office holder of ASF on behalf of ASF. ... Tanamerah hereby irrevocably, absolutely and unconditionally transfers and/or assigns to the joint individual trustees of ASF, with immediate effect, all and any rights, title and interests held by it in relation to, or in connection with or which arises out of, the 231,830 ordinary shares which includes the Litigation Recovery Rights. The joint individual trustees may, as they think fit, sue and enforce those rights for all and any equitable or legal cause of action and as against any person (including Tibra). Tanamerah hereby irrevocably, absolutely and unconditionally transfers and/or assigns to the joint individual trustees of ASF, with immediate effect, all and any rights (including all accrued rights), title and interests in relation to, or in connection with or which arises out of, the Deed of Accession and the SHA, as necessary for the enforcement of the aforementioned rights.

Tydemans' claim

1. The Statement of Claim in the present proceedings names "Catherine Tydeman and James Tydeman as Trustees of Alexander Superannuation Fund ABN 17 226 933 152" as the plaintiff (singular). It pleads that "all rights (including all accrued rights)" of Tanamerah vested in the Tydemans as successor trustees of ASF from 1 September 2016. The Statement of Claim is based on the "Tibra Capital Pty Limited Shareholders' Agreement", which is also referred to as the "SHA". The Statement of Claim pleads that that Agreement "was brought into existence" on or about 3 March 2008. It goes on to plead that Tanamerah as trustee of ASF "executed a deed of accession in relation to the SHA whereby it became jointly bound with" Tibra and the other parties to the SHA. The Statement of Claim also pleads that Tanamerah executed the August 2008 Deed of Variation with the result that cl 17 of the SHA was amended, although it goes on to plead that the deed of variation was not executed by all the parties to the Shareholders' Agreement.
2. The relief sought in the Statement of Claim is relevantly: … 3 An order consistent with clause 11.5 and Schedule 7 of the Tibra Capital Pty Limited Shareholders' Agreement that a the Plaintiff may request any Independent Valuer to determine and fix the purchase price of the 231,830 ordinary shares: or b only if order 3a above is not made, the Plaintiff and Defendant may each request Independent Valuers of their choosing to determine the purchase price of the 231,830 ordinary shares and then the court must fix the purchase price in relation to those valuations, or c only if order 3b above is not made, the Defendant must satisfy the requirement to perform specifically clauses 11.4(b) to 11.7 of the Tibra Capital Pty Limited Shareholders' Agreement to determine and fix the purchase price of the 231,830 Sale Shares. 4 Only if order 3c above is made, then a further order the Plaintiff has a right of full access to the Group Accountant and Independent Valuer, as relevant 5 An order the Defendant must pay to the Plaintiff damages for the loss of 231,830 ordinary shares at an amount as determined and fixed in relation to order 3 above (less the amount paid by the Defendant on or about 9 June 2011). 6 Only if order 5 above is not made, an order the Defendant must perform specifically the completion of the sale of 231,830 Sale Shares under clause 11.13(a) of the Tibra Capital Pty Limited Shareholders' Agreement and pay to the Plaintiff the purchase price of those Sale Shares as determined and fixed in relation to order 3 above (less the amount paid by the Defendant on or about 9 June 2011). 7 In relation to order 5 or 6 above, as relevant: a. a declaration the Defendant stands as trustee of a constructive trust for all unpaid sale funds held by it on behalf of Alexander Superannuation Fund in relation to the 231,830 ordinary shares as and from 9 June 2011; and b. an order the Defendant must pay to the Plaintiff all the trust profits accrued in relation to that constructive trust, in relation to order 7a above.
3. In effect, what the Tydemans on behalf of ASF are seeking by the relief claimed in the Statement of Claim is to be paid the Market Value for Tanamerah's shares in Tibra, as determined by the Independent Valuer (less the Net Asset Value already paid). In substance, it is a claim for relief in the nature of specific performance. The difficulty which faces this claim is that, on the face of it, Tanamerah was only entitled under the Shareholders' Agreement to be paid Market Value if the offeree shareholders agreed to buy Tanamerah's shares; if the shareholders did not accept Tanamerah's offer, Tibra's only obligation was to buy back the shares at Net Asset Value.
4. The Statement of Claim seeks to get around this problem in a number of ways. First, the Statement of Claim pleads misleading and deceptive conduct and breach of fiduciary duty by Tibra in prior communications with its shareholders about how the share sale and buy-back procedures worked. The Statement of Claim alleges also that the way in which the relevant clauses of the Shareholders' Agreement was drafted was itself misleading or deceptive conduct for which Tibra is responsible. The allegation is apparently that as a result of this conduct on the part of Tibra, other shareholders did not make offers to buy Tanamerah's shares at Market Value.
5. The Statement of Claim also alleges that clauses 13.1(d) (providing for a buy-back at Net Asset Value) and 13.2(b) (providing for the directors of Tibra to have authority to complete buy-backs on behalf of shareholders) were penalties and therefore void. Next, the Statement of Claim alleges various breaches of the provisions of the Shareholders' Agreement, irregularities and other defects in the process of responding to Tanamerah's notices, conducting the meeting which resulted in the purported amendment of the Shareholders' Agreement, and in conducting the meeting which approved the buy-back of Tanamerah's shares.
6. In the course of the hearing before me, Mr Tydeman indicated that he wishes to reformulate the way in which the Statement of Claim is pleaded. As has been seen, it is currently pleaded on the basis that the Shareholders' Agreement sent by Tibra to Tanamerah in July 2008 was binding and effective between Tibra, Tanamerah, and Tibra's other shareholders, as a result of the execution of the Deed of Accession and the Deed of Variation. Mr Tydeman now wishes to repudiate that premise. He pointed out that the Shareholders' Agreement provided in July 2008 was in fact undated. Both the Deed of Accession and the Deed of Variation referred to the Shareholders' Agreement as being dated 3 March 2008. There is apparently no document which bears that date. A Notice to Produce was issued by the Tydemans in these proceedings for any shareholders' agreement bearing that date, and none was produced. Mr Tydeman also pointed out that, although named as party to the Shareholders' Agreement provided in July 2008, Tibra did not execute it. Mr Tydeman argued that, as a result, the whole process which began with the transfer notice in January 2011 and ended with the cancellation of Tanamerah's shares was invalid.
7. Reformulating the Statement of Claim in accordance with this new argument would obviously be a substantial task, if it is possible at all. Counsel for Tibra submitted that I should proceed to deal with the applications on the existing pleading and consider in due course whether I should grant liberty to re-plead if necessary. Mr Tydeman did not oppose this course and I propose to follow it.

Tibra's motion: summary judgment

1. Strictly speaking, the purported resolutions of 1 September 2016 (described at [22] above) may be open to the objection that it is unclear what authority the Tydemans had as individuals to remove Tanamerah as trustee of ASF or to exercise corporate functions of Tanamerah. But since the Tydemans, between them, represented the whole of Tanamerah's board of directors and all of its shareholders I think that those resolutions, together with the deed, executed on the same date were indeed effective to substitute the Tydemans for Tanamerah as trustees of ASF. Counsel for Tibra did not submit to the contrary.
2. Tibra's principal contention on its motion is that the Tydemans are not the proper plaintiffs for the purpose of making a claim arising out of the buy-back, or purported buy-back, of the shares the subject of these proceedings. Tibra submits that, despite the fact that Tanamerah held on trust for ASF and the Tydemans have now replaced Tanamerah as the trustee of ASF, Tanamerah is still the proper plaintiff for claims arising out of the acquisition and cancellation of the shares.
3. The Tydemans' first response is that ASF is a "corporation" in its own right. Accordingly, Mr Tydeman argues, ASF can bring these proceedings for loss of "its" shares, and can do so through the Tydemans as the new trustees.
4. This argument is quite inconsistent with the nature of a trust, as traditionally understood. "The common law does not recognise a trustee as having assumed an additional or qualified legal personality": J D Heydon and M J Leeming, Jacobs' Law of Trusts (LexisNexis Butterworths Australia, 8th ed, 2016) at [21.02]. A trustee holds the legal title to trust property and exercises legal rights with respect to such property as against third parties; all equity does is to control the exercise of those rights so as to ensure that the trustee complies with his or her equitable obligations to the beneficiaries of the trust. This duality is the foundation of all equitable jurisprudence.
5. In the present case, Tanamerah as trustee was the legal owner of the shares in Tibra. Legal ownership conferred the right to claim damages or compensation arising from the (allegedly wrongful) acquisition and cancellation of the shares. Equity requires that legal right to be exercised by Tanamerah (or any successor trustees, if those legal rights are transferred to them), in the interests of the ASF beneficiaries. But that does not make the trust some sort of legal entity separate from the trustee and the beneficiaries.
6. In some cases, and for some purposes, statute has recognised a trust as a separate entity. An example is the Income Tax Assessment Act which treats a trust as an independent entity for the purpose of lodging tax returns and (to some extent) for the purpose of paying tax. But this is exceptional, and only underlines the departure from the general rule.
7. The question is whether a trust is a "corporation" under the definition in the Corporations Act, s 57A, thus giving rise to another exception. That definition provides: 57A Meaning of corporation (1) Subject to this section, in this Act, corporation includes: (a) a company; and (b) any body corporate (whether incorporated in this jurisdiction or elsewhere); and (c) an unincorporated body that under the law of its place of origin, may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose.
8. Mr Tydeman relied upon sub-paragraph (c), contending that ASF is an "unincorporated body" and that the trustee of ASF is an "office holder of that body". I cannot agree. In my opinion, the term "body" denotes some form of organisation made up of a group of persons, with officeholders who are appointed to exercise functions on behalf of the organisation. A trust is not such a "body" and the trustee does not hold property "in the name of" the trust in this sense. Furthermore, the Corporations Act contains numerous provisions which recognise the existence of trusts as traditionally understood, not as separate corporations. To take only one example, there are the provisions concerning the registration of beneficial and non-beneficial ownership of shares in s 1072H.
9. It is, in my opinion clear beyond argument that the Tydemans are not entitled, by virtue of their status as trustees of ASF, to maintain an action at law against Tibra on behalf of the trust. The Tydemans' first argument in response to Tibra's application fails.
10. It follows that, strictly speaking, it was wrong to designate Ms Tydeman and Mr Tydeman as a single plaintiff in these proceedings and it was wrong to include in that designation the ABN of ASF as if that denoted the trust as some sort of legal entity. In fact, it is not necessary that the fact that the Tydemans are the trustees of ASF should appear in the title of the proceedings at all: Commonwealth v Davis Samuel Pty Ltd (No 11) (2017) 316 FLR 159 at 199-201 [238]-[250]. I will therefore direct that the description of the plaintiff parties in the proceedings be amended so as to show Ms Tydeman as the first plaintiff and Mr Tydeman as the second plaintiff.
11. The Tydemans' second argument is that they are entitled to bring these proceedings because the right to do so has been assigned to them by Tanamerah, the former trustee of ASF. The Tydemans rely in particular on the assignment document executed by Tanamerah in favour of the Tydemans in October 2016 (see [23] above).
12. I have accepted that the Tydemans have replaced Tanamerah as the trustee of ASF. That is, equity would recognise the Tydemans as having succeeded to the rights and liabilities of the trustee with respect to the trust property. In that sense, Tanamerah's rights against Tibra have been assigned in equity to the Tydemans. But that does not mean that the law recognises the Tydemans as being entitled to maintain a legal action against Tibra in their own names. For that purpose an effective assignment of Tanamerah's legal rights is required.
13. The assignment document certainly purported to assign from Tanamerah to the Tydemans the legal right to bring the claims the subject of these proceedings. But Tibra contends that those rights have not effectively been assigned because they were not legally capable of being assigned. Tibra relies on cl 20.6 of the Shareholders' Agreement which provided: 20.6 Assignment (a) Subject to clause 20.6(b), a party may only assign this agreement or a right under this agreement with the prior written consent of each other party. (b) A Shareholder may assign its rights under this agreement to a person to which it sells all of its Shares in accordance with this agreement.
14. In my opinion, Tibra's contention is correct in so far as it applies to the claims made in these proceedings which are based on the Shareholders' Agreement. It is clearly established that a provision such as cl 20.6 is effective to render rights under the relevant contract unassignable, even if those rights would ordinarily be assignable: Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 at 106-109.
15. As explained at [26] above, the claim for specific performance of the Shareholders' Agreement (or for damages for breach of the Shareholders' Agreement or in lieu of specific performance) are clearly rights which derive from the Shareholders' Agreement. It is not clear whether the Statement of Claim validly asserts a claim for statutory compensation for misleading and deceptive conduct, but in any event such a claim is not assignable at law either: Chapman v Luminis Pty Ltd (No 4) (2001) 123 FCR 62 at 116-117.
16. This is sufficient to conclude that the claims articulated in the Statement of Claim are not assignable and therefore the claim as pleaded in the Statement of Claim must be struck out. As I have mentioned, Mr Tydeman foreshadowed the amendment of the Statement of Claim. It would be possible for the Court to strike out the existing Statement of Claim but allow Mr Tydeman a further opportunity to see if he can replead the case in a way which would disclose an arguable basis for claim by the Tydemans against Tibra. The question is whether there is sufficient prospect of an arguable claim emerging to make this worthwhile.
17. There are formidable obstacles to reformulating the Tydemans' case so as to pursue the claim against Tibra without relying on the provisions of the Shareholders' Agreement. Tanamerah purported to enter into legal relations with Tibra and with the other shareholders of Tibra by executing the Deed of Accession and the Deed of Variation. On the face of it, the objective intention of the parties was to establish contractual relations between themselves in the form of the undated version of the Shareholders' Agreement which was sent to Tanamerah in July 2008. Mr Tydeman's new argument would lead to the conclusion that they actually failed to establish any contractual relationship between themselves at all.
18. Where a document contains an obvious clerical error, it is open to the Court to supply words or read words out of the agreement to the Court with the parties' intention: see National Australia Bank Ltd v Clowes [2013] NSWCA 179 at [35]-[38] and the authorities cited. This would seem to be a prime case for the application of that principle. On the face of it, also, all of the dealings between Tanamerah, the other shareholders and Tibra leading up to the acquisition of Tanamerah's shares, including Tanamerah's own notices, appear to have been based on the common assumption that the parties' relationship was governed by the undated Shareholders' Agreement. In these circumstances, Tanamerah would probably be estopped from asserting the contrary.
19. Assuming, however, that the error invalidated the whole process by which Tibra acquired Tanamerah's shares, there is a further question as to what claims would result and whether the Tydemans are the proper plaintiffs to litigate such claims. In argument, Mr Tydeman characterised Tibra's conduct as a misappropriation, or "theft", of the shares. But shares are not tangible property and it is a misnomer to speak of them as being stolen as one would steal a motor car. A share is, as a matter of legal analysis, a bundle of contractual rights and obligations as between the individual shareholder, the other shareholders and the company. Those contractual rights and obligations are defined by the terms of the company's constitution (together with any ad hoc contractual agreement which may be made between the company and the particular shareholder).
20. If Mr Tydeman's new argument is correct and the whole process purportedly undertaken by the parties under the Shareholders' Agreement which culminated in the purported buy-back and cancellation of Tanamerah's shares was invalid, then the complaint becomes that Tibra treated Tanamerah's shares as having been cancelled when it had no contractual right to do so. That is, Tibra failed to accord to Tanamerah the ongoing entitlements which it had as shareholder and which, on Mr Tydeman's argument, were not validly extinguished by the purported buy-back and cancellation. As a matter of legal analysis, this is a complaint about the failure on Tibra's part to comply with the terms of its constitution. Because a shareholder's rights under the constitution of a company are essentially contractual, it is still a contractual claim. It is just that the contract which is the basis of the claim is not the Shareholders' Agreement but the constitution of Tibra itself.
21. In my view, any contractual right to damages or specific performance which might arise under Tibra's constitution are unassignable. The Corporations Act 2001 (Cth), s 1070A(1) provides that a share is personal property and is transferrable or transmissible, "as provided by" the company's constitution. At the time the relevant transactions took place, Tibra's constitution provided that the directors were entitled to refuse any transfer for any reason (clause 4). It follows, in my view, that Tanamerah's shares in Tibra were only capable of assignment with the consent of Tibra (through its directors). Rights which derive from ownership of the shares cannot, in my opinion, be in any better position.
22. The critical fact is that the events about which the Tydemans complain took place while Tanamerah was a shareholder. Any entitlement which may have arisen to compensation as a result of the way in which the shares were dealt with arose at that time. Tanamerah had no power to make a unilateral transfer of those entitlements to a third party without Tibra's consent. Thus even if Mr Tydeman did reformulate the Statement of Claim and he were able (contrary to the preliminary observations I have made above) to propound an arguable case independently of the Shareholders' Agreement, that case would still founder on the issue of assignability. There is no point in affording Mr Tydeman an opportunity to reformulate the Statement of Claim in the way he has foreshadowed. I therefore conclude that Tibra's primary application succeeds and the proceedings should be summarily dismissed.
23. Of course, this conclusion does not mean that the claims which arise out of the acquisition of Tanamerah's shares in Tibra cannot be litigated. If, as I have found, the claims arising out of the purported buy-back of the shares are not assignable, equity would usually require the former trustee, Tanamerah, to exercise those legal rights as directed by the new trustees, the Tydemans. But the Tydemans' entitlement to direct Tanamerah in this regard is not absolute. For instance, an equitable assignor is usually entitled to insist on an indemnity being given before pursuing any proceeding at the request of the equitable assignee: see J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (LexisNexis Butterworths Australia, 5th ed, 2015) [6-160], [6-520]. It is not, however, necessary to explore any further for the purposes of this judgment what the Tydemans might need to do in order to require Tanamerah to pursue the claims. It is enough to say that if they are to be litigated they must be litigated in the name of Tanamerah.

Tibra's motion: stay

1. In case I am wrong in my view that the proceedings should be summarily dismissed, I will now consider Tibra's alternative application for a stay.
2. The Statement of Claim in the 2012 proceedings pleaded claims of misleading and deceptive conduct and invalidity of the buy-back process along similar lines to the claims in these proceedings summarised at [27]-[28] above. The relief sought included: (1) An order made that an Independent Valuer is appointed, under instruction by the Plaintiff, to determine the Market Value for the Plaintiff's 231,830 Sale Shares as at 31 December 2010 on the basis in accordance with Clause 11.5 of the Shareholders' Agreement. (2) An order made that the Defendant pay to the Plaintiff the Market Value for the Plaintiff's 231,830 Sale Shares as determined in paragraph (1) above (less the amount paid by the Defendant on or about 9 June 2011). (3) An order made that the Defendant pay all the costs and expenses incurred for the Independent Valuer in connection with paragraph (1) above. (4) An order made that the Defendant pay to the Plaintiff an accounting of net earnings which the Tibra Group accrued in respect to the Plaintiff's 231,830 issued Shares between 1 January 2011 and 8 June 2011 (inclusive). (5) An order made that the Defendant pay to the Plaintiff disgorgement damages using the unaccounted sale funds as part of its business, as calculated in paragraph (2) above, from 9 June 2011 (inclusive) to the date the order is made.
3. Mr Tydeman did not retain solicitors to act for Tanamerah in the 2012 proceedings. Instead he sought to take advantage of the provisions of Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 7.1(2)(a), to act for Tanamerah himself. UCPR r 7.1 relevantly provides: 7.1 By whom proceedings may be commenced and carried on (cf SCR Part 4, rules 4 and 4A, Part 66, rule 1; Act No 9 1973, section 43; Act No 11 1970, section 11) … (2) A company within the meaning of the Corporations Act 2001 of the Commonwealth: (a) may commence and carry on proceedings in any court by a solicitor or by a director of the company, and … (3) In the case of proceedings in the Supreme Court, subrule (2)(a) authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings. (4) A corporation (other than a company within the meaning of the Corporations Act 2001 of the Commonwealth): (a) may commence and carry on proceedings in any court by a solicitor, and (b) may commence and carry on proceedings in any court (other than the Local Court) by a duly authorised officer of the corporation, and (c) may commence and, unless the court orders otherwise, carry on proceedings in the Local Court by a duly authorised officer or employee of the corporation. …
4. The 2012 Statement of Claim named Tanamerah as first plaintiff and Mr Tydeman as second plaintiff. It did not plead any independent cause of action on behalf of Mr Tydeman; he was joined only so that he could contend that the proceedings complied with UCPR 7.1(2)(a) notwithstanding that no solicitor had been retained by Tanamerah.
5. The principal issue before Hallen J was whether the proceedings so constituted complied with UCPR r 7.1(2)(a). His Honour concluded, consistently with earlier authority in this Court, that they did not. UCPR r 7.1(2)(a) only applies where the director has a cause of action in the proceedings in his or her own right. Hallen J ordered that the proceedings be stayed until a solicitor was appointed to represent Tanamerah: Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2013] NSWSC 36. An application for review of this decision was made to the then Chief Judge in Equity, which was unsuccessful except for a consent grant of leave which resulted in Hallen J reconsidering one aspect of his February 2013 orders: Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd (No 2) [2013] NSWSC 616. A subsequent application for leave to appeal was refused in August 2013: Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2013] NSWCA 266. Although these proceedings collectively resulted in some variation in the expression of the orders, the stay order made by Hallen J remained undisturbed. Tanamerah and Mr Tydeman were ordered to pay Tibra's costs of the interlocutory applications which culminated in the stay, to be assessable forthwith. Leave was granted for Tanamerah, should it appoint a solicitor to represent it, to apply for variation of this order. The review and appeal proceedings also resulted in a number of further costs orders against Tanamerah and Mr Tydeman.
6. Tanamerah never did appoint a solicitor to act for it in the 2012 proceedings. Tibra eventually turned to enforcement of the costs orders. In May 2015 Tibra issued a statutory demand to Tanamerah, based on four costs certificates which had been obtained and registered as judgments, and totalling $112,618.60.
7. Proceedings were brought by Mr Tydeman in the name of Tanamerah to challenge the statutory demand. The application was dismissed in October 2015. An appeal was unsuccessful: Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2016] NSWCA 23. Meanwhile an application for review of the Court of Appeal's decision in August 2013 was dismissed in March 2016: Tanamerah Estate Pty Ltd v Tibra Capital Pty Ltd [2016] NSWCA 42. Winding up proceedings based on failure to comply with the statutory demand were commenced in the same month and a winding up order was eventually made against Tanamerah in November 2016: Re Tanamerah Estates [2016] NSWSC 1644.
8. Tibra relies on UCPR r 12.10. That rule provides that, where costs are outstanding as a result of the dismissal of earlier proceedings and the party liable to pay those costs brings fresh proceedings on the same or substantially the same course of action, the Court may stay the fresh proceedings until those costs have been paid. This rule is not applicable in this case because the 2012 proceedings have not been dismissed; they have only been stayed. But Tibra also contended that the proceedings are an abuse of process, which enlivens the Court's general power to grant a stay under the Civil Procedure Act 1995 (NSW), s 67.
9. In Reynolds v Reynolds [1977] 2 NSWLR 295 Waddell J said (at 306): It is well established that the maintenance of proceedings in two courts, in each of which the relief sought may be granted, may be an abuse of process… In such cases the existence of two proceedings is considered prima facie vexatious, and the court will generally, as of course, put the plaintiff to his election, and stay one of the proceedings; or it may, as in the latter case, stay the proceedings which is considers to be inappropriate.
10. In my opinion, this principle is applicable in the present case. The subject matter of the 2012 proceedings is the same as the subject matter of these proceedings. In both the claim is to have Tibra pay for the shares at Market Value. The fact that the claims have been pleaded in somewhat different ways (and that further amendments are foreshadowed) does not alter that fact.
11. I did not understand that Mr Tydeman really disputed that the general principle stated by Waddell J is engaged. Mr Tydeman's argument was that it would be unjust to apply the principle by staying the present proceedings. Mr Tydeman asserted that the 2012 proceedings were over. He pointed to entries in Tibra's bill of costs for the costs assessment applications, which, he asserted, showed that Tibra had recovered the whole of its costs of the 2012 proceedings pursuant to the orders made by Hallen J in February 2013. He pointed out that no attempt had been made to pursue the bankruptcy notice which Tibra had issued. Mr Tydeman characterised Tibra's application as a tactical manoeuvre designed to erect the unsatisfied costs orders as an obstacle to a legitimate claim being brought to trial.
12. It is true that the 2012 proceedings have been stayed. But in my view, that makes no difference to the application of the principle. Those proceedings are still pending in the sense that no final orders have been made disposing of the substantive claims for relief. The file can be reactivated at any point, provided that the conditions required to lift the stay are complied with. I do not see how all of the costs which Tibra incurred in defending the proceedings can have been caught up in the costs orders which were made, as they were limited to the stay application. But if more extensive costs have been recovered under the order than should have been, this cannot alter the fact that the proceedings have not been substantively disposed of.
13. In his February 2013 decision, Hallen J rejected an argument by Mr Tydeman that the 2012 proceedings were proceedings "relating to a trust": [2013] NSWSC 36 at [131]. In argument before me, Mr Tydeman sought to turn this conclusion (which was upheld by the Court of Appeal) to his advantage. He argued that it meant that the 2012 proceedings had "nothing to do with" ASF. The suggestion apparently was that this distinguished the 2012 proceedings from the present proceedings which, so Mr Tydeman submitted, had been brought by ASF itself. I already rejected Mr Tydeman's characterisation of these proceedings as being brought in the name of ASF. In any event, as Hallen J made clear at [124]-[130], proceedings may be brought by a party as trustee without those proceedings being proceedings "relating to a trust" in the relevant sense.
14. I think Mr Tydeman was correct to recognise the significance of the unsatisfied costs orders in the 2012 proceedings. The Court might well require payment of those costs as a condition of lifting the stay. But I do not however accept that this would involve injustice in any relevant sense. Mr Tydeman may or may not be correct in characterising Tibra's approach to the litigation as a tactic. But if it is a tactic, it is a legitimate one. A basic rule of our legal system is that, generally, the unsuccessful party pays the successful party's costs. Those who choose to conduct their business dealings through a company obtain privileges, in particular the benefits of limited liability and perpetual succession. In my view, it would be an abuse of the system if, having had the benefit of using Tanamerah as a corporate trustee, the Tydemans could evade the costs liabilities accumulated while it was trustee by the simple expedient of abandoning it to be wound up and substituting themselves as trustees to continue the litigation as if nothing had happened.
15. In fact, it appears actually to be in the Tydemans' interests, if they are to pursue the claims, to pursue them in the 2012 proceedings. Given Tibra's challenge to the maintainability of the claim in the name of Tanamerah (which I have upheld), Tanamerah needs to be a party to the proceedings so that the claim can be pursued in its name for the ultimate benefit, if successful, of the beneficiaries of ASF. Pursuing the 2012 proceedings would also avoid any argument about the claims being statute barred.
16. In my opinion, the duplication involved in these proceedings is enough to make them an abuse of process. If summary judgment had not been appropriate, the proper course would have been for the Court to stay these proceedings and leave it to the Tydemans to apply to be substituted as plaintiffs in, or otherwise joined to, the 2012 proceedings.

Tydemans' motion

1. As mentioned, Mr Tydeman indicated that he wished to recast the Statement of Claim. For that reason alone, the Tydemans' summary judgment application could not have succeeded. In any event, I have concluded that the Tydemans' claims in these proceedings are not sustainable. The Tydemans' summary judgment application must be dismissed.

Orders

1. The orders of the Court are:
2. Order that the title of the proceedings be varied so as to name Catherine Alexis Tydeman as first plaintiff and James Scott Tydeman as second plaintiff.
3. Order that the plaintiffs' Notice of Motion of 19 January 2018 be dismissed.
4. Order that the proceedings be dismissed.
5. Order that the plaintiffs pay the defendant's costs of the proceedings.

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