Wollongong Coal Ltd v Gujarat NRE India Pty Limited

Judgment

1. LEEMING JA: Paragraph 2 of the plaintiffs' interlocutory process dated 24 November 2020 seeks an order that the fourth and fifth defendants be restrained from applying any funds of the first to third defendants for the defence or conduct of these proceedings. By way of abbreviated background, the fourth and fifth defendants, Ms Suelen McCallum and Mr Riad Tayeh, were appointed as directors of the first, second and third defendants, following the falling out of the natural persons who originated the joint venture in around 2013, namely, the plaintiff Mr John Parilo and the sixth defendant, Mr Alan Taylor.
2. At around the time of their appointment, a Deed of Mandate dated 11 May 2018 was executed. The deed has certain curious features. It is executed only by six persons, whom I am told represent 100% of the members of the corporate joint venture vehicles. However, on its second page, although not on the cover sheet, it is expressed to extend to eight parties, including the fourth and fifth defendants, Ms McCallum and Mr Tayeh. The deed confers upon Ms McCallum and Mr Tayeh the "unfettered authority to act in the best interest of the Shareholders" in "managing the day to day affairs of the Companies" and "undertaking the orderly and arms-length sale of all of the assets of the Companies". The deed deals with the remuneration of Ms McCallum and Mr Tayeh who are the "Incoming Directors" in at least two places. First, there is cl 3(a)(iii)(B): "The Shareholders hereby grant a mandate to the Incoming Directors as follows: (a) The Incoming Directors have the unfettered authority to act in the best interest of the Shareholders of each of the Companies in: (iii) placing the proceeds of sale of all the assets of the Companies into a trust account under the control of the Incoming Directors to be used to: … (B) satisfy all liabilities of the Companies (including but not limited to the fees of the Incoming Directors and any other fees and expenses they may incur in fulfilment of the Mandate) …" Secondly, there is an indemnity in cl 4: "Except to the extent that the Incoming Directors or either of them act in a manner that is in breach of their Mandate or is fraudulent or grossly negligent, the Shareholders agree to indemnify and keep indemnified each Incoming Director and dVT Group, its employees, agents and assigns from any loss they or any of them may suffer arising out of a claim against them in their capacity as directors of the Companies or any of them."