BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 4]
[2018] WASC 338
•8 NOVEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BCBC SINGAPORE PTE LTD -v- PT BAYAN RESOURCES TBK [No 4] [2018] WASC 338
CORAM: LE MIERE J
HEARD: 12 OCTOBER 2018
DELIVERED : 8 NOVEMBER 2018
FILE NO/S: CIV 1562 of 2012
BETWEEN: BCBC SINGAPORE PTE LTD
Plaintiff
AND
PT BAYAN RESOURCES TBK
First Defendant
KANGAROO RESOURCES LTD
Second Defendant
Catchwords:
Procedure - Freezing orders - Varying of freezing orders - Whether progress of overseas proceedings is a relevant change of circumstances to justify variation to existing freezing orders - Whether announcement of scheme of arrangement is a material change of circumstances to justify variation to existing freezing orders
Legislation:
Corporations Act 2001 (Cth), s 208, s 229
Result:
Application allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | Dr R C A Higgins SC & Dr D Roche |
| First Defendant | : | Mr S K Dharmananda SC & Dr R A Collins |
| Second Defendant | : | Mr S K Dharmananda SC & Dr R A Collins |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| First Defendant | : | Clayton Utz |
| Second Defendant | : | Clayton Utz |
Case(s) referred to in decision(s):
BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2012] WASC 170
BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 3] (2013) 276 FLR 273
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Deputy Commissioner of Taxation v Karas [2012] VSC 68
Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mBH & Co KG; The Nidersachsen [1984] 1 All ER 398
LE MIERE J:
Summary
The plaintiff, BCBC Singapore Pte Ltd (BCBCS) has applied to vary the existing freezing order against the first defendant PT Bayan Resources TBK (Bayan). For the reasons which follow the existing freezing orders should be varied to ensure that Bayan gives BCBCS notice of any transaction between the second defendant, Kangaroo Resources Ltd (KRL), or any of its subsidiaries and Bayan or any subsidiary, associate or associate entity of Bayan, which gives to any of them a financial benefit within the meaning of s 229 of the Corporations Act 2001 (Cth) or disposes of a substantial asset within the meaning of ASX Listing Rule 10.1.
The existing freezing order
Bayan is a company incorporated in Indonesia. BCBCS is a company incorporated in Singapore. Bayan and BCBCS owned shares in another company incorporated in Indonesia ‑ PT Kaltim Supacoal (KSC). The rights of Bayan and BCBCS as shareholders in KSC were the subject of a joint venture agreement governed by the laws of Singapore. BCBCS commenced proceedings against Bayan in the High Court of Singapore which was subsequently transferred to the Singapore International Commercial Court (SICC). BCBCS claims against Bayan, among other things, damages for breach of the joint venture agreement.
After commencing proceedings in Singapore, BCBCS made an ex parte application to this court for freezing orders against Bayan and KRL in respect of shares held by Bayan in KRL. Pritchard J made interim freezing orders against Bayan and KRL (see BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2012] WASC 170). Subsequently Bayan and KRL commenced a separate proceeding against BCBCS in the original jurisdiction of the High Court seeking declaratory relief, contending that the interim freezing orders were beyond power. The High Court remitted the separate proceeding to this court where it was heard concurrently with BCBCS' application for a continuation of the freezing orders. That matter came before me. I dismissed the remitted proceeding, discharged the interim freezing order against KRL and continued the freezing order against Bayan: BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 3] (2013) 276 FLR 273 (BCBCS No 3). An appeal to the Court of Appeal and an appeal by special leave to the High Court were dismissed. The freezing order includes:
6.You must not transfer any of your shares in Kangaroo Resources Ltd (KRL) to a related entity, as defined in the Corporations Act (2001) (Cth).
7.To the extent any of your shares in KRL are not presently encumbered, you must not further encumber (by way of pledge, mortgage, charge, lien or any other form of encumbrance) your shares in KRL.
NOTIFICATION REQUIREMENT
8.You must not in any way dispose of your shares in KRL to any other entity or deal with or otherwise diminish the value of your shares in KRL, without first giving [7] clear business days notification in writing to BCBC Singapore Pte Ltd and BCBC Singapore Pte Ltd's Australian solicitors, Freehills, such notification to be by email:
(a)to BCBC Singapore Pte Ltd, to Mr Ivan Maras at [email protected]; and
(b)to Freehills, to Mr Grant Marjoribanks at [email protected].
The scheme of arrangement
KRL is a resources company incorporated in Australia and listed on the ASX. KRL and its subsidiaries hold mineral resources, including coal projects, in Indonesia. Bayan holds approximately 56.05% of KRL shares. On 17 August 2018 KRL announced that it had entered into a binding scheme implementation deed (SID) with Bayan. The SID provides that Bayan will acquire all of the issued shares in KRL that it does not already own by way of an Australian court approved scheme of arrangement (the Scheme).
The proposal for Bayan to acquire all of the shares in KRL it does not already own (the Proposal) has been considered by the directors of KRL who are independent from Bayan (Independent Directors). In the absence of a superior proposal and subject to an independent expert concluding that the Proposal is in the best interests of the minority shareholders, the Independent Directors support the Proposal and intend to recommend that KRL shareholders vote in favour of the Proposal. The Scheme will not become effective unless certain conditions precedent are satisfied or waived, including Foreign Investment Review Board (FIRB) approval, KRL shareholder approval and court approval. FIRB approval has been given. The shareholders meeting is scheduled for 26 November 2018. The first court hearing was on 16 October 2018 and the second court hearing is scheduled for 3 December 2018.
If court approval is given the Scheme will become effective on 4 December 2018. It is expected that suspension of trading on ASX in KRL shares will occur on 4 December 2018 and KRL will be removed from the official ASX list on 12 December 2018.
Proceedings in Singapore
At the time this court granted the freezing orders BCBCS had commenced proceedings in the High Court of Singapore, but no substantive hearing had been held and Bayan had filed a counterclaim. On 4 March 2015 the proceedings were transferred to the SICC, a division of the Singapore High Court. Since then two hearings have taken place in the SICC. The first, the Tranche 1 Hearing, was in relation to the determination of the scope and content of the parties' obligations in relation to the joint venture. In the second hearing, the Tranche 2 Hearing, the SICC considered whether the parties had breached their obligations, and if so, the consequences flowing from those breaches. Bayan subsequently appealed against the whole of the SICC's decision in the Tranche 2 judgment, except for the one issue which the SICC had determined in Bayan's favour. The Court of Appeal of the Republic of Singapore on 29 August 2018 dismissed most of Bayan's appeal. The Singapore Court of Appeal upheld the following findings of the SICC:
(a)Bayan was obliged to procure and/or ensure the supply of coal to KSC during the relevant period;
(b)Bayan breached that obligation, and this breach constituted a repudiation of the joint venture deed; and
(c)Bayan repudiated the joint venture deed by issuing the termination notice.
In relation to the issue of whether Bayan's repudiation caused loss to BCBCS, the Singapore Court of Appeal determined that causation turned on whether BCBCS was willing and able to fund KSC on its own. The Court of Appeal remitted that question to the SICC. The remaining steps in the Singapore proceedings include the Court of Appeal's remitter to the SICC of the question of BCBCS' ability to fund KSC by itself and a further hearing, the Tranche 3 Hearing, on causation more generally and damages. BCBCS' Singapore lawyers estimate that the remaining Singapore hearings may be completed and a decision handed down in the fourth quarter of 2019 or in early 2020.
The present application
BCBCS brings this application pursuant to the parties' liberty to apply and relies on the court's inherent jurisdiction. BCBCS seeks an order varying the existing freezing order by substituting for [8] of the existing order the following orders:
(a)You must not in any way, directly or indirectly, dispose of your shares in KRL to any other entity or deal with or otherwise diminish the value of your shares in KRL.
(b)You must not in any way, directly or indirectly, cause any of KRL's assets, its subsidiaries (direct or indirect), or its subsidiaries' assets to be transferred to you or a related entity, as defined in the Corporations Act 2001 (Cth).
BCBCS says that the orders should be varied because of the following change of circumstances. First, the prospect of BCBCS registering and enforcing a judgment in this court has increased. Since the orders were granted, BCBCS has obtained judgment from the SICC that Bayan had repudiated the joint venture deed. The SICC will now proceed to determine whether Bayan's repudiation caused BCBCS loss, and if so, the extent of that loss. Secondly, Bayan has announced its intention to acquire the balance of the shares in KRL by a scheme of arrangement. Further, Bayan has announced that if the scheme of arrangement is approved, Bayan intends to delist KRL, appoint its own directors and integrate KRL with the Bayan Group which is based in Indonesia. This increases the risk that the shares in KRL will diminish in value, leaving any judgment registered in this court unsatisfied.
Power to vary orders
The court may vary orders made on a prior interlocutory application where any changed circumstances make it just and proper to do so, or where the interests of justice require it.
The first change of circumstances relied upon by BCBCS is that its prospects of registering and enforcing a judgment in this court has increased.
Progress of Singapore proceedings not a material change of circumstances
In BCBCS No 3 I determined the application by BCBCS for a continuation of the freezing orders made by Pritchard J, together with the action brought by Bayan and KRL remitted by the High Court. Bayan and KRL challenged the continuation of the interim freezing orders on the ground that the court did not have jurisdiction or power to make the freezing orders.
I held that the court has jurisdiction or power to make a freezing order and to continue the freezing orders against Bayan if the following conditions are satisfied:
1.BCBCS has a good arguable case on an accrued cause of action that is justiciable in the High Court of Singapore;
2.there is a sufficient prospect that the High Court of Singapore will give judgment in favour of BCBCS;
3.there is a sufficient prospect that the judgment will be registered in or enforced by this court; and
4.this court is satisfied that there is a danger that a prospective judgment in the High Court of Singapore will be wholly or partly unsatisfied because the assets of Bayan are removed from Australia or disposed of, dealt with or diminished in value.
I found that each of those matters was established by the evidence. When those matters are established, the court has a discretion whether to make a freezing order and as to the terms of the order.
The evidence of the progress of the Singapore proceedings confirms that BCBCS has a good arguable case on the accrued cause of action that is justiciable in the High Court of Singapore, there is a sufficient prospect that the High Court of Singapore will give judgment in favour of BCBCS and there is a sufficient prospect that the judgment will be registered in or enforced by this court. However, the progress of the proceedings in Singapore are not a relevant change of circumstances to justify a variation of the restraints imposed on Bayan by the freezing order.
Even when the plaintiff shows that he has a case which reaches the threshold, the strength of his case is to be weighed in the balance with other factors relevant to the exercise of the discretion: Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mBH & Co KG; The Nidersachsen [1984] 1 All ER 398, Mustill J at 402 ‑ 403. However, the court should not be drawn into a premature trial of the action rather than a preliminary appraisal of the plaintiff's case. The decisions of the SICC have been relevantly favourable to BCBCS but the court has not yet determined whether BCBCS had the ability to fund KSC by itself and hence whether Bayan's repudiation caused loss to BCBCS. I do not consider that the progress of the Singapore proceedings is a sufficient reason for varying the orders in the manner sought by BCBCS.
Scheme of arrangement is a material change of circumstance
Bayan says that the announced scheme of arrangement is not a material change of circumstances. Bayan submits that at the time the existing freezing orders were made it had a controlling interest in KRL, which was adverted to by BCBCS' counsel before Pritchard J and before me. Further, in the course of my reasons for discharging the interim freezing order against KRL in BCBCS No 3 I said:
Bayan's controlling interest in [KRL] enables it to control or exercise influence over the disposition by [KRL] of its assets … [119].
Nevertheless, the scheme of arrangement, if it is effected, will increase the risk of Bayan diminishing the value of its KRL shares by causing KRL to give a financial benefit to Bayan or a related party of Bayan which diminishes the realisable value of KRL's assets and thereby the value of its shares. This increased risk arises in a number of ways. First, KRL will cease to be a public company and will cease to be subject to the prohibition in s 208 of the Corporations Act on giving a financial benefit to a related party without obtaining the approval of its members by a resolution, at which a vote may not be cast by a related party or an associate of a related party. Secondly, KRL will cease to be listed on the ASX and cease to be subject to listing rule 10.1 which prohibits a listed company from disposing of a substantial asset to a related party, or a substantial holder in the company, without the approval of holders of the company's ordinary securities. To obtain the requisite approval the company must obtain a report from an independent expert and the votes cast by a party to the transaction, in this case Bayan, must be disregarded. Thirdly, the presence of four independent directors presently provide some safeguard against Bayan taking steps to erode the value of KRL shares. Bayan has given an undertaking that it will retain two independent directors. Nevertheless, Bayan will have the ability to appoint to the KRL board a majority of directors associated with Bayan. Senior counsel for Bayan, Mr S K Dharmananda SC, submits that the directors of KRL will have fiduciary duties and statutory duties under the Corporations Act notwithstanding that KRL will be a wholly owned subsidiary of Bayan. That is true but nevertheless KRL will cease to be under the control of a majority of independent directors.
Bayan submits that there are various requirements under Indonesian law which provide safeguards against Bayan causing KRL to diminish the value of KRL's shares by giving financial benefits to Bayan to the detriment of KRL. However, there is some uncertainty as to the content, application and enforceability of those laws. In any event, the matters referred to in the previous part of these reasons constitute a material change of circumstances.
I am satisfied that there is a material change of circumstances. The question then arises as to whether, in the exercise of its discretion, the court should vary the existing freezing orders as sought by BCBCS.
Discretion to vary orders
In my opinion it is not appropriate to make the orders sought by BCBCS.
A freezing order has a significant impact on the property of a person against whom it is made and against whom a judgment has not been made or registered. It requires a high degree of caution: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 [50]. A court in granting interlocutory relief should generally grant the minimum relief necessary to do justice between the parties: Cardile [70]. Caution should be exercised not only when freezing orders are made, but at each stage of supervision of the order. In Deputy Commissioner of Taxation v Karas [2012] VSC 68 Kaye J said:
[I]t is recognised that such an order constitutes a significant interference with the rights of the persons against whom the order is made. Thus, at each stage of the supervision of such an order, the court must ensure that the reach of the order is no greater than that which is necessary to protect the processes of the court. In particular, it is necessary that the court, in determining an application such as this, ensure that the freezing order does not constitute an instrument of unfair oppression to the party in respect of whose assets the freezing order has been made [18].
Those observations are particularly relevant in this case. Bayan intends to integrate KRL into the Bayan Group. Under Indonesian mining laws foreign shareholders of Indonesian coal mining entities are required to divest their interests commencing from the fifth year of production, so that foreign shareholders have a maximum shareholding of 49% by the tenth year of production. If Bayan is precluded from acquiring any assets of KRL or its subsidiaries in a timely manner then those shares may be forfeited to the Indonesian government and the value of KRL may diminish. It is likely that it will be some years before KRL is required to divest its interest in its coal mines. However, commercial prudence may require that it commence divesting itself of those assets before the statutory deadline.
In my opinion, the minimum relief necessary to do justice between the parties is to vary the existing freezing orders to ensure that Bayan gives notice of any transaction between KRL or any of its subsidiaries and Bayan or any subsidiary, associate or associated entity of Bayan, which gives to any of them a financial benefit within the meaning of s 229 of the Corporations Act or disposes of a substantial asset within the meaning of ASX listing rule 10.1. The period of notice should be sufficient to enable BCBCS, if necessary, to apply to the court and for the matter to be properly resolved before the proposed transaction is implemented. I will hear from the parties as to the appropriate form of order and period of notice. I will not make an order absolutely prohibiting Bayan and KRL entering into relevant transactions as sought by BCBCS in its application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO THE HONOURABLE JUSTICE LE MIERE
8 NOVEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BCBC SINGAPORE PTE LTD -v- PT BAYAN RESOURCES TBK [No 4] [2018] WASC 338 (S)
CORAM: LE MIERE J
HEARD: 8 NOVEMBER 2018
DELIVERED : 3 DECEMBER 2018
FILE NO/S: CIV 1562 of 2012
BETWEEN: BCBC SINGAPORE PTE LTD
Plaintiff
AND
PT BAYAN RESOURCES TBK
First Defendant
KANGAROO RESOURCES LTD
Second Defendant
Catchwords:
Procedure varying freezing orders - Form of orders after judgment - Timing of variation to freezing orders - Whether notice requirement should be subject to exceptions - Whether scope of transactions should include reference to associates and associated entities - What the appropriate notice period should be - What the scope of confidentiality order should be
Legislation:
Corporations Act 2001 (Cth), s 50AA, s 50AAA, s 213, s 214, s 229
Result:
Orders varied
Category: B
Representation:
Counsel:
| Plaintiff | : | Dr R C A Higgins SC & Dr D Roche |
| First Defendant | : | Mr S K Dharmananda SC & Dr R A Collins |
| Second Defendant | : | Mr S K Dharmananda SC & Dr R A Collins |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| First Defendant | : | Clayton Utz |
| Second Defendant | : | Clayton Utz |
Case(s) referred to in decision(s):
BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 4] 2018 WASC 338
LE MIERE J:
Summary
The plaintiff BCBC Singapore Pte Ltd (BCBCS) applied to vary the existing freezing order against the first defendant PT Bayan Resources TBK (Bayan). I determined that the freezing orders should be varied to ensure that Bayan gives BCBCS notice of any transaction between the second defendant, Kangaroo Resources Ltd (KRL), or any of its subsidiaries and Bayan or any subsidiary, or associate entity of Bayan, which gives to any of them a financial benefit within the meaning of s 229 of the Corporations Act 2001 (Cth) or disposes of a substantial asset within the meaning of ASX Listing Rule 10.1: BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 4] 2018 WASC 338. I directed the parties to confer about the form of orders to give effect to my decision. After conferring the parties have been unable to reach agreement on the form of orders. For the reasons which follow I will make orders as set out at the end of these supplementary reasons.
Issues in dispute
The following issues remain in dispute:
1.When should the varied order commence?
2.Should the notice requirement be subject to exceptions?
3.Should the scope of the transactions include reference to associates and associated entities?
4.The appropriate notice period in the new order 8A.
5.The appropriate notice period in existing order 8.
6.Confidentiality.
Commencement of the order
BCBCS submits that the additional protections in the orders should take effect from the date of the court's orders, whereas Bayan submits that it should not come into effect until the scheme of arrangement (the Scheme) is implemented.
I held that the Scheme constituted a material change of circumstances because it would increase the risk of Bayan diminishing the value of its KRL shares. It was on that basis that I determined that the freezing order should be varied. It follows that the varied orders should be premised on the change of circumstances first occurring, that is upon the Scheme being effected.
Related party transactions ‑ exceptions in ch 2E
The issue is whether the requirement to give notice should be subject to the exceptions in ch 2E of the Corporations Act. Bayan says that the judgment proceeds on the basis that the effect of the Scheme will be to remove the regulatory protections given by ch 2E of the Corporations Act and Listing Rule 10.1 of the ASX Listing Rules. Bayan says that in seeking to continue these protections despite the Scheme the court has effectively sought to impose a 'synthetic version of ch 2E of the Act and Listing Rule 10 of the ASX Listing Rules'. Bayan proceeds to submit that the 'synthetic protection' should largely replicate those regulatory protections including their exceptions. Bayan says that if the exceptions within ch 2E are not included in the orders then it may lead to anomalous and unintended consequences. For example, if Bayan sought to supply a mining related service to KRL or its subsidiaries, even if it was for a nominal amount and even if adequate consideration was given, this would constitute the giving of a financial benefit which would need to be disclosed and a specified time to pass before it could be proceeded with. Bayan submits that rather than the exceptions undermining the protection to be afforded by the proposed orders, inclusion of the exceptions in ch 2E would replicate the protection that BCBCS would have prior to the Scheme being effected thereby removing one of the very risks identified as arising from the delisting of KRL.
BCBCS says that its version of the orders, which do not include the exceptions, gives effect to the court's judgment at [25] that Bayan be required to give notice of any transaction between KRL (and of its subsidiaries) and Bayan (and of its subsidiaries, associates or associated entities) that involves KRL providing a financial benefit within the meaning of the Corporations Act or disposing of a substantial asset within the meaning of ASX Listing Rule 10.1. BCBCS says that Bayan's proposal would substantially weaken the utility of the notification requirement, if not render it wholly redundant. For example s 214(1)(b) of the Corporations Act provides that member approval is not required to give a financial benefit, if the benefit is 'given by a closely‑held subsidiary of a body corporate to the body or an entity it controls'. Applied to the present set of orders, this would mean that Bayan would never be required to notify BCBCS of a transaction between it and KRL ‑ its closely held subsidiary. This exception, says BCBCS, would defeat the court's judgment.
The effect of the Scheme is not only to remove the regulatory protections given by ch 2E of the Corporations Act and ASX Listing Rule 10.1. Another major factor is that the protection of a board with a majority of independent directors is no longer ensured. The order proposed by BCBCS reflects the reasons for judgment. I am not persuaded by the arguments of Bayan that the order should include the exceptions set out in its draft with one qualification. I accept Bayan's argument in relation to small amounts. The words 'save for where such transaction falls within any of the exceptions in s 213 of the Corporations Act' should be added.
Scope of transactions ‑ reference to associates and associated entities
BCBCS says that its proposed orders reflect the court's reasoning that the orders should ensure that Bayan gives notice of any transaction between KRL or any of its subsidiaries and Bayan or any subsidiary, associate or associated entity of Bayan. By contrast, Bayan proposes that the notification should only apply to Bayan or any entity Bayan controls within the meaning of s 50AA of the Corporations Act.
BCBCS says that its formulation reflects the terms of the reasons for judgment. Further, BCBCS says that the formulation adopted by the court is the only form appropriate to guard against the increased risk that the value of the shares in KRL will be eroded. Under Bayan's proposed orders, BCBCS says, the requirement to notify BCBCS could be circumvented by KRL entering a transaction with, for example, the President Director of Bayan, Data Low Tuck Kwong. Similarly, there would be no requirement to notify BCBCS of a transaction between KRL and a corporate entity which is not under the control of Bayan, but is an associated entity within the meaning of s 50AAA.
Bayan says that the form of order proposed by BCBCS prohibits a range of individuals and entities from entering into certain transactions without disclosure. As the existing orders are only addressed to Bayan it is not clear how the amended orders could operate to effect other parties (eg a secretary of a related body corporate which is one of the definitions of 'associates' in s 11(c) of the Corporations Act).
The form of orders proposed by BCBCS better reflects the terms of the reasons for judgment than the orders proposed by Bayan. The arguments of Bayan do not persuade me that the form of the order should be modified in the form Bayan suggests. However, as the orders are only addressed to Bayan, the new order should only be addressed to Bayan. The opening words of the new order 8A should be: 'You must not enter, and must not cause or permit any of your subsidiaries, associates or associated entities to enter, into a transaction with KRL or any of its subsidiaries after the date of this order …'.
The appropriate notice period
BCBCS submits that a 40 day business day notice period is appropriate whereas Bayan submits the notice period should be confined to 14 business days. BCBCS says the longer period is appropriate when one has regard to:
(i)the protections currently in force under Corporations Act; and
(ii)the time BCBCS is likely to require to obtain an injunction preventing a transaction.
Bayan says that a notice period of 40 days would likely seriously impede Bayan's ordinary business operations. This is particularly the case, Bayan says, if the orders do not include the exceptions in ch 2E. The orders would mean that any day to day operations between the parties involving, for example, the supply of services, leasing, taking up of obligations, regardless of the amount involved, would need to be suspended for 40 business days. Such an order would not be workable in practice and would seriously affect Bayan's ability to move quickly if necessary.
I find that the appropriate period is 20 business days, which will correspond to about four weeks for most of the year.
Notice period in existing order 8
It is convenient to specify the same notice period in order 8 and order 8A. The notice period in the existing order 8 should be changed from seven days to 20 business days.
Confidentiality
Bayan has expressed concerns about the confidentiality of the material to be provided to BCBCS as part of the notification process. BCBCS has sought to accommodate those concerns by proposing an order that 'the notification shall only be disclosed to, and must be kept confidential by, officers and employees of White Energy Company Ltd (the parent of BCBCS) and its advisors who have been engaged for the purposes of providing advice in relation to the proposed transaction'. Bayan seeks to confine disclosure to named individuals within BCBCS/White Energy Company. BCBCS says that that is unworkable and is likely to hamper BCBCS in accessing a proposed transaction and in meeting any time period the court imposes in resolving the present dispute. I find that the confidentiality clause proposed by BCBCS is sufficient.
Other variations
BCBCS seeks some other minor amendments to the orders which are not controversial. They will be made.
Conclusion
The orders should be to the following effect:
1.Upon the plaintiff continuing the undertakings given in paragraphs 1 to 8 of Schedule A to the freezing orders against the First Defendant, being the orders marked 'A' made on 5 April 2012 and amended by the orders marked 'B' made on 26 June 2013 (freezing orders against Bayan), the freezing orders against Bayan (as amended by Orders 2 and 3 below) will continue until further order of the court.
2.Order 8 of the freezing orders against Bayan be amended by replacing '[7]' with '[20]', 'Freehills' with 'Herbert Smith Freehills', and by deleting the contacts for notification and replacing them with:
(a)to BCBC Singapore Pte Ltd, to Ms Andromeda Neale at [email protected]; and
(b)to Herbert Smith Freehills, to Mr Grant Marjoribanks at [email protected].
3.A new order 8A being inserted as follows:
With effect from the implementation of the scheme of arrangement between KRL and its shareholders pursuant to the Scheme Implementation Deed between you and KRL dated 16 August 2018 you must not enter, and must not cause or permit any of your subsidiaries, associates or associated entities to enter, into a transaction with KRL or any of its subsidiaries after the date of this order:
(a)which provides you or your associates or associated entities a 'financial benefit' within the meaning of s 229 of the Corporations Act 2001 (Cth) save where such transaction falls within any of the exceptions in s 213 of the Corporations Act; or
(b)by which KRL or any of its subsidiaries disposes of an asset that would constitute a 'substantial asset' of KRL or any of its subsidiaries within the meaning of ASX Listing Rule 10.2 to any of the persons identified in ASX Listing Rules 10.1.1 to 10.1.5.
without first giving 20 clear business days notification (Notification Period) in writing to BCBC Singapore Pte Ltd and BCBC Singapore Pte Ltd's Australian Solicitors, Herbert Smith Freehills, such notification to be by email:
(a)to BCBC Singapore Pte Ltd, to Ms Andromeda Neale at [email protected]; and
(b)to Herbert Smith Freehills, to Mr Grant Marjoribanks at [email protected].
Such notification (Notification) must include sufficient information to allow BCBC Singapore Pte Ltd to identify the structure of the transaction, the assets subject to the transaction, the parties to the transaction, and the consideration payable under the transaction. The Notification shall only be disclosed to, and must be kept confidential by, officers and employees of White Energy Company Ltd and its advisors who have been engaged for the purposes of providing advice in relation to the proposed transaction (Authorised Individuals). Upon expiry of the Notification Period, BCBCS and each of the Authorised individuals must keep the Notification confidential (except for any legal requirements or for the purpose of any court proceedings) or exercise best endeavours to destroy all copies of the Notification.
4.There by liberty to apply on four days' notice.
5.Submissions as to costs must be filed and served within 14 days of the date of this order.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO THE HONOURABLE JUSTICE LE MIERE
3 DECEMBER 2018
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