HNA Irish Nominee Ltd v Kinghorn (No 2) [2012] FCA 228

FEDERAL COURT OF AUSTRALIA

HNA Irish Nominee Ltd v Kinghorn (No 2) [2012] FCA 228 Citation: HNA Irish Nominee Ltd v Kinghorn (No 2) [2012] FCA 228

Parties: HNA IRISH NOMINEE LIMITED and HNA GROUP (HONG KONG) CO LIMITED v GEOFFREY ANDREW KINGHORN, DAVID LLOYD VEAL, KV AVIATION HOLDINGS PTY LIMITED ACN 054 680 376 (FORMERLY CALLED AAHL PTY LIMITED) and OTHERS NAMED IN THE SCHEDULE

File number: NSD 94 of 2010

Judge: EMMETT J

Date of judgment: 15 March 2012

Catchwords: CORPORATIONS – redeemable preference shares – principles governing construction of corporate constitution – whether and in what circumstances preference shares held by first plaintiff in defendant companies could be redeemed – where defendant companies were special purpose vehicle companies forming part of certain structured financing transactions involving leases of commercial aircraft – where holders of preference shares were investors in those transactions – where controllers of the holder of ordinary shares in the special purpose vehicle companies also controlled the boards of those companies and caused those boards to assert a right of redemption over the preference shares – where constitutions ambiguous as to redemption trigger under s 254A of the Corporations Act 2001 (Cth) – whether preferred dividend could be paid and the preference shares redeemed on the basis of a revaluation of an aircraft, being a company asset the subject of a lease, prior to the expiration of the lease term CORPORATIONS – misrepresentation and estoppel – whether any defendants, including individuals controlling holder of ordinary shares in special purpose vehicle companies, engaged in misleading and deceptive conduct in contravention of s 1041H of the Corporations Act 2001 (Cth) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) – where impugned acts comprised representations made to various investors who acquired interests in preference shares – whether impugned acts induced investors to acquire those interests based on misapprehension as to rights attaching to preference shares – to whom relevant acts could be imputed – whether defendants should be estopped from asserting that material economic value attaches to ordinary shares by reason of redeemability of preference shares CORPORATIONS – oppression – whether affairs of special purpose vehicle companies were conducted contrary to interests of their members as a whole or prejudicially to interests of preference shareholders – where impugned conduct included various alleged breaches of directors' duties – whether directors of special purpose companies under a conflict between duty and interest – whether steps taken to relieve any conflict – whether directors showed preference for interests associated with themselves CORPORATIONS – relief for oppression – disputed value of ordinary shares in special purpose vehicle companies – whether such value could depend upon a confluence of interests in other associated companies such that the overall activities of the companies could be controlled and co-ordinated to take advantage of market opportunities – whether expropriation or transfer of ordinary shares to charitable trust an appropriate remedy – whether appointment of additional directors an appropriate remedy PRACTICE AND PROCEDURE – joinder of parties – deficiency in joinder – whether claims of misrepresentation and oppression by plaintiffs were in effect made on behalf of other investors not party to proceeding – where no evidence adduced on behalf of those investors – where certain orders relieving oppression could affect rights of non-party shareholders in the special purpose companies – whether such other shareholders should be joined if orders relieving oppression were contemplated