Sigiriya Capital Pty Ltd v Scanlon [2013] NSWCA 401

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Sigiriya Capital Pty Ltd v Scanlon [2013] NSWCA 401 Hearing dates: 23 October 2013 Decision date: 29 November 2013 Before: Meagher JA at [1]; Leeming JA at [7]; Sackville AJA at [54] Decision: (1) Appeal allowed. (2) Orders 3, 4 and 5 made on 30 April 2013 be set aside, and in lieu thereof make the following orders: (a) Declare that the notice from Sigiriya to Mr Scanlon dated 5 February 2013 constituted a valid and effective exercise by Sigiriya of its powers under cl 11.2 of the Loan Agreement and thereby required Mr Scanlon to deliver the entirety of the 7,499,850 ordinary shares in Sirius Minerals Plc to Sigiriya. (b) Order that Mr Scanlon immediately take such steps as are necessary so as to cause the entirety of the 7,499,850 ordinary shares in Sirius Minerals Plc, which had been acquired by Mr Scanlon pursuant to the terms of the Loan Agreement, to be transferred and/or delivered to Sigiriya (or to such other person or entity as nominated in writing by Sigiriya) and that such delivery and/or transfer be completed within seven days. (3) Order that Mr Scanlon pay Sigiriya's costs both in the Court below and of this appeal. (4) The notice of cross-appeal is dismissed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CONTRACT - construction and interpretation - loan to employee to take up parcel of shares - loan not repayable for three years and interest capitalised so long as no "early termination" of employment - shares not to be assigned or transferred - whether transfer of legal title of shares to obtain uncertificated holding an event of default - construction of terms - role of internal coherence in construction - meaning of "assign, transfer or take any economically similar action" - whether borrower ought reasonably to have become aware that transfer of legal title was event of default - whether implied term to act reasonably or in good faith - whether consensual termination of employment contract amounted to "early termination" for the purposes of loan agreement Cases Cited: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Chapmans Ltd v Australian Stock Exchange Ltd [1996] FCA 474; (1996) 67 FCR 402 Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 Fitzgerald v Masters (1956) 95 CLR 420 Harding v Anton's Wire Products Pty Ltd [2013] NSWCA 258 Perpetual Custodians Ltd as custodian for Tamoran Pty Ltd as trustee for Michael Crivelli v IOOF Investment Management Ltd [2013] NSWCA 231 Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15 Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 Texts Cited: JW Carter, The Construction of Commercial Contracts (2013) Hart Publishing Gore-Browne on Companies, 45th ed, vol 2 (at Update 88, November 2010) E Peden, Good Faith in the Performance of Contracts (2003) LexisNexis Butterworths M Stamp (ed), Practical Company Law and Corporate Transactions, 3rd ed (2011) Sweet & Maxwell P Wood, Set-off and Netting, Derivatives, Clearing Systems, 2nd ed (2007) Sweet & Maxwell Category: Principal judgment Parties: Sigiriya Capital Pty Ltd (appellant) Alexander Witrak Scanlon (respondent) Representation: Counsel: D Fagan SC; V Bedrossian (appellant) P Kite SC; G Boyce (respondent) Solicitors: Hunt & Hunt Lawyers (appellant) Kardos Scanlan Lawyers (respondent) File Number(s): 2013/121735 Decision under appeal Jurisdiction: 9111 Citation: [2013] NSWSC 227 Date of Decision: 2013-03-26 00:00:00 Before: Young AJ File Number(s): 2012/47100