Supreme Court New South Wales Medium Neutral Citation: Angelis as trustee for the Angelis Family Trust v Pemba Capital Partners Fund I Partnership, LP (No 5) [2019] NSWSC 1877 Hearing dates: 19 December 2019 Decision date: 20 December 2019 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Parties to make further submissions concerning the Loan Agreement Catchwords: JUDGMENTS AND ORDERS – reasons – issue not dealt with in principal judgment – further submissions to be received Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Angelis Family Trust v Pemba Capital Partners Fund I Partnership, LP (No 3) [2019] NSWSC 1759 Category: Consequential orders (other than Costs) Parties: James Angelis as trustee for the Angelis Family Trust (First Plaintiff/Second Cross-Defendant on First Cross-Claim/Sixth Cross-Defendant on Second Cross-Claim) Jitendra Dutt (Second Plaintiff/Third Cross-Defendant on First Cross-Claim) Nathan Brown (Third Plaintiff/Fourth Cross-Defendant on First Cross-Claim) Antony Goldsmith (Fourth Plaintiff/Fifth Cross-Defendant on First Cross-Claim) Copiapo Pty Ltd as trustee for FCK Consulting Trust (Fifth Plaintiff/Sixth Cross-Defendant on First Cross-Claim) Pemba Capital Partners Fund I Partnership, LP (First Defendant/First Cross-Claimant on First Cross-Claim/First Cross-Defendant on Second Cross-Claim) Pemba Capital Partners Pty Ltd as trustee for the Castlereagh St (Swan) Co-Investment Trust (Second Defendant/Second Cross-Claimant on First Cross-Claim/Second Cross-Defendant on Second Cross-Claim) Adrian Christopher Kitchin (Third Defendant/Seventh Cross-Defendant on First Cross-Claim/First Cross-Claimant on Second Cross-Claim) Benjamin James Hastie (Fourth Defendant/Eighth Cross-Defendant on First Cross-Claim/Second Cross-Claimant on Second Cross-Claim) Drue Jonathon Giles Castanelli (Fifth Defendant/Ninth Cross-Defendant on First Cross-Claim/Third Cross-Claimant on Second Cross-Claim) Coverforce Holdings Pty Ltd (Sixth Defendant/First Cross-Defendant on First Cross-Claim/Fourth Cross-Defendant on Second Cross-Claim) Resilium BidCo Pty Ltd (Fourth Cross-Claimant on Second Cross-Claim) Resilium OpCo Pty Ltd (Fifth Cross-Defendant on Second Cross-Claim) Representation: Counsel: P Knowles (Plaintiffs) P Flynn SC (First and Second Defendants) M Condon SC with D Ratnam (Third to Fifth Defendants) Solicitors: Norton Rose Fulbright (Plaintiffs) Herbert Smith Freehills (First and Second Defendants) Roberts & Partners Lawyers (Third to Fifth Defendants) File Number(s): SC 2019/201647 Judgment 1. I gave judgment in this matter on 10 December 2019: Angelis as trustee for the Angelis Family Trust v Pemba Capital Partners Fund I Partnership, LP (No 3) [2019] NSWSC 1759. 2. These reasons assume familiarity with that judgment. I will use the same abbreviations here. 3. I held that, amongst other things, the Kitchin Parties were entitled to exercise their right under cl 5.6 of the 25 March 2019 Share Purchase Deed to "reverse" the "actions" involved in the Resilium Transaction. The parties referred to this as "unwinding" the Resilium Transaction. 4. One of the "actions" involved in the Resilium Transaction was the entry by Coverforce and the Kitchin Parties into a loan agreement dated 25 March 2019 (the "Loan Agreement") pursuant to which Coverforce loaned $20 million interest free to the Kitchin Parties to enable them to purchase from Suncorp the shares in Resilium. 5. The Loan Agreement provided that the loan was repayable on the "Termination Date": 10 years after the first "Drawdown Date", that is in 2029. 6. In closing submissions the Kitchin Parties submitted that, were the Resilium Transaction to be unwound: "17. Loan Contracts: The loan contracts between Coverforce and the Kitchin Parties, under which the sum of $20 million was advanced by Coverforce to them, those contracts remain binding on the Kitchin Parties such that they are required to repay the funds advanced to them." (Emphasis added.) 1. In that regard, in final oral submissions, senior counsel for the Kitchin Parties submitted: "Your Honour will see in para 17 that the loan contract would remain; we would have to repay the loan under the terms of the contract." (Emphasis added.) 1. Later in closing written submissions, the Kitchin Parties submitted: "On that scenario [assuming the relevant Resilium Transaction documents were void and of no effect] the Kitchin Parties have already conceded that they would be subject to an order to make restitution in relation to the loan funds, less any benefits derived by Coverforce from the OpCo revenues since 1 June 2019, within a reasonable time." (Emphasis added.) 1. Thus, arguably, the Kitchin Parties made inconsistent submissions concerning the nature of their obligations concerning the $20 million, assuming the Resilium Transaction were to be "unwound". 2. In my judgment, I did not turn my attention to and did not intend to decide the question of whether, assuming (as has happened) that the Kitchin Parties elected to "unwind" the Resilium Transaction, the Loan Agreement would remain binding on Coverforce such that the Kitchin Parties would not be liable to repay until the Termination Date. 3. As can be seen from what I have set out earlier, some of the Kitchin Parties' submissions appeared to recognise that, were the Resilium Transaction to be "unwound", the $20 million would have to be repaid "within a reasonable time". 4. At [504]-[506] of my 10 December 2019 judgment, I found that the entry by Coverforce into the Loan Agreement required Special Majority Board Approval, that no such approval was given and that it followed that "Coverforce did not agree to loan the $20 million to the Kitchin Parties". 5. On the other hand, at [587]-[588] I said that, were the Kitchin Parties to elect to unwind the Resilium Transaction, a number of transaction documents would remain and that the Kitchin Parties accepted that the Loan Agreement in those circumstances would "remain binding". I was there referring to submission that I have set out at [6] above. 6. However I accept that a tension may appear to exist between my finding at [506] and [588]. 7. I dealt with the Kitchin Parties' submissions concerning their entitlement to rely upon the assumptions referred to in s 129(1) of the Corporations Act 2001 (Cth) at [548]-[556] of my 10 December 2019 judgment. Notwithstanding my use of the plural "documents" at [556], I did not intend there to make a finding about any document other than the Share Purchase Deed. 8. The question of whether, in the events that have happened and now that the Kitchin Parties have elected to "unwind" the Resilium Transaction, they can retain the $20 million "interest free" until the Termination Date referred to in the Loan Agreement (that is, until 2029) or whether they must make restitution of those loan funds less any proper deduction "within a reasonable time" (for example, as soon as the "unwinding" of the Resilium Transaction is completed) is obviously one of great importance. 9. I propose to invite the parties to now make submissions on that question. 10. That will involve, amongst other things, addressing the question of any role played by statutory assumptions pleaded by the Kitchin Parties. 11. Other questions may also arise. 12. I do not see this as permitting any party to "reopen" their case. It is addressing a question that, in the urgent circumstances in which I was asked to deliver my judgment (see [34]-[35] of the 10 December 2019 judgment), I have not yet decided. 13. The parties should now confer and agree on an orderly timetable for submissions to enable the matter to be determined. 14. If any party wishes to make oral submissions on the question, the parties should contact my Associate. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2019