Chalmsbury Nominees Pty Ltd v Alita Resources Limited (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) - [2023] WASC 97

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CHALMSBURY NOMINEES PTY LTD -v- ALITA RESOURCES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2023] WASC 97
CORAM:   HILL J
HEARD:   13 MARCH 2023
DELIVERED          :   28 MARCH 2023
FILE NO/S:   COR 19 of 2023
BETWEEN:   CHALMSBURY NOMINEES PTY LTD
First Plaintiff
CANACCORD GENUITY (AUSTRALIA) LIMITED
Second Plaintiff
AND
ALITA RESOURCES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Defendant
ROBERT MICHAEL KIRMAN AND ROBERT CONRY BAUER in their capacity as DEED ADMINISTRATORS OF ALITA RESOURCES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Defendant
AUSTROID CORPORATION
Third Defendant

Catchwords:

Corporations – Originating process seeking orders terminating deed of company arrangement – Application by third defendant for summary judgment – Whether plaintiffs have arguable case – Turns on own facts

Corporations – Abuse of process – Whether current proceedings raise issues which have been determined finally in earlier proceedings – Inter-relationship between s 444GA application and application under s 445D and s 447A of the Act – Turns on own facts

Legislation:

Corporations Act 2001 (Cth) s 445D, s 445G, s 447A, s 606

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	J Garas SC & R A Collins
Second Plaintiff	:	J Garas SC & R A Collins
First Defendant	:	J K Taylor & W C J Zappia
Second Defendant	:	J K Taylor & W C J Zappia
Third Defendant	:	S Maiden KC & P R Edgar

Solicitors:

First Plaintiff	:	Arnold Bloch Leibler
Second Plaintiff	:	Arnold Bloch Leibler
First Defendant	:	Clayton Utz
Second Defendant	:	Clayton Utz
Third Defendant	:	Lavan

Cases referred to in decision:

Australian Securities and Investments Commission v Midland Hwy Pty Ltd (admin apptd) [2015] FCA 1360; (2015) 110 ACSR 203
Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256
Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 1235; (2005) 226 ALR 510
Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391
Commonwealth Bank of Australia v C2C Developments Pty Ltd [2013] NSWSC 724; (2013) 94 ACSR 555
Gerovich v Gerovich as executor of the estate of Gerovich [2018] WASC 153
Guo v Song [2018] NSWSC 12
Habrok (Dalgaranga) Proprietary Limited v Gascoyne Resources Limited [2020] FCA 1395; (2020) 149 ACSR 1
Irving v Smith [2008] FCA 1391; (2008) 68 ACSR 14
Jebb as trustee for the Trafalgar West Investments trust v Superior Lawns Australia Pty Ltd [2019] WASC 121
Khoury v Zambena (1997) 23 ACSR 344
Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (subject to deed of company arrangement) [2021] WASCA 186
Mighty River International v Hughes [2018] HCA 38; (2018) 265 CLR 480
Park, Re Collection House Ltd (Subject to a Deed of Company Arrangement) [2022] FCA 1244
Perpetual Trustee Company Ltd v Mustang Marine Australia Services Pty Ltd [2010] NSWSC 1429
Promnitz v Indochine Mining Ltd (subject to Deed of Company Arrangement) [2015] FCA 857; (2015) 108 ACSR 134
Public Trustee (Qld) v Octaviar Ltd (subject to deed of company arrangement) (recs and mgrs apptd) [2009] QSC 202; (2009) 73 ACSR 139
Re Citadel Financial Corporation Pty Ltd (subject to Deed of Company Arrangement) [2020] NSWSC 886; (2020) 146 ACSR 220
Re Diverse Barrel Solutions Pty Ltd [2014] FCA 53
Re OrotonGroup Ltd (Subject to Deed of Company Arrangement); Application of Strawbridge and Kanevsky [2018] NSWSC 1213
Re Sales Express Pty Ltd (admins apptd) [2014] NSWSC 460
Strawbridge, Re Virgin Australia Holdings Ltd (admins apptd) (No 9) [2020] FCA 1652; 148 ACSR 648
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77
University of Sydney v Australian Photonics Pty Ltd [2005] NSWSC 412; (2005) 53 ACSR 579
Westpac Banking Corp v Anderson [2017] WASC 106
Workers Compensation Nominal Insurer v Perfume Empire Proprietary Ltd [2011] NSWSC 379

HILL J:

These proceedings are the latest proceedings in the long and somewhat complicated history of the external administration of Alita Resources Ltd (Alita).
The second defendants are the joint and several deed administrators of the first defendant, Alita (Deed Administrators). On 23 December 2020, Alita and the Deed Administrators executed a deed of company arrangement (Parent DOCA). Under the terms of the Parent DOCA, it is proposed that all of the shares in Alita will be transferred to Austroid Corporation (Austroid). At the date of the hearing, not all of the conditions precedent to the Parent DOCA have been satisfied, and the Parent DOCA has not yet effectuated.
On 1 February 2023, Chalmsbury Nominees Pty Ltd and Canaccord Genuity (Australia) Ltd (Canaccord parties), who have a beneficial interest in shares in Alita, filed an originating process seeking orders under s 445D of the Corporations Act 2001 (Cth) (Act) for the termination of the Parent DOCA.
On 24 February 2023, Austroid filed an application for summary judgment. Orders were made to program the application through to hearing on 13 March 2023. In broad terms, the deed administrators support Austroid's application, which is opposed by the Canaccord parties.
On the morning of the hearing, the Canaccord parties were granted leave to amend their originating process to clarify the basis on which the orders in their originating process are sought. It is now clear that the Canaccord parties seek to terminate the Parent DOCA pursuant to s 445D(1)(e) or s 445D(1)(g) of the Act, or in the alternative s 447A of the Act.
For the reasons that follow, it is my view that Austroid's application for summary judgment should be dismissed.

Evidence on the application

In support of their application for summary judgment, Austroid relied on two affidavits of Zachary Sharp, a solicitor employed by Austroid's solicitors, filed 24 February 2023 and 10 March 2023.
The plaintiffs relied on three affidavits: an affidavit of David Samuel Barlow, a director of each of the plaintiffs, filed 1 February 2023; an affidavit of Reginald Lee Spencer, the head of mining research at Canaccord, filed 8 March 2023; and an affidavit of Stephen David Lloyd, a partner of the plaintiffs' solicitors, which was also filed on 8 March 2023.
The following factual background, which is not in dispute, has been taken from these affidavits.
Alita is a resources company whose shares are listed on the Singapore Stock Exchange. Through its wholly owned subsidiaries, Tawana Resources Pty Ltd (Tawana) and Lithco No 2 Pty Ltd (Lithco), Alita's primary asset is the Bald Hill lithium and tantalum mine in the Eastern Goldfields region of Western Australia (Mine).
In August 2019, administrators and receivers were appointed to Alita by its then secured creditor, Galaxy Resources Ltd (Galaxy). Two alternative proposals were put forward to the then administrators. The then administrators considered the proposal by China Hydrogen Energy Ltd (CHEL) and Liatam Mining Pty Ltd (Liatam) to be the superior proposal. On 27 November 2019, directions were sought from this court that the former administrators were justified in entering into a series of documents with these parties. On 28 November 2019, the former administrators entered into these documents with CHEL and Liatam, which included a loan facility agreement and a general security deed. Following a resolution of creditors in December 2019, the Liatam DOCA was executed by all parties.
On 18 December 2019, the former administrators filed an application under s 444GA (First 444GA Application) seeking orders for the transfer of the shares in Alita to Liatam or its nominee. On 6 March 2020, orders were made granting leave to the former administrators in the terms sought.
On 18 November 2020, Liatam filed an application seeking to vary the terms of the Liatam DOCA to enable the outstanding conditions precedent to be waived by agreement and for the Liatam DOCA to be effectuated immediately. Orders to this effect were made by this court on 24 November 2020.
On 2 December 2020, Austroid purchased CHEL's debt and became the only secured creditor of Alita and its subsidiaries. On 3 December 2020, the Liatam DOCA effectuated, which extinguished in full all claims of creditors against the company, excluding the secured debt.
On 4 December 2020:
(a)the second defendants were appointed administrators of the Companies;
(b)Richard Tucker and John Bumbak of KordaMentha were appointed by Austroid as receivers and managers;
(c)Austroid submitted a proposal to the administrators which involved two deeds of company arrangement: the first with respect to Alita (Parent DOCA) and the second with respect to Tawana and Lithco (Subsidiary DOCA).
On 8 December 2020, Austroid and the Deed Administrators entered into a loan facility agreement under which Austroid agreed to fund the cost of the administrations.
The first creditors meeting was held on 16 December 2020. On the same date, the plaintiffs issued a notice of meeting for the second creditors' meeting, which was held on 23 December 2020. At the second creditors' meeting, Austroid, as the only creditor of Alita, resolved to approve entry into the two interrelated DOCAs which it had proposed. Following the resolution, both DOCAs were executed by all relevant parties.
Both DOCAs were subject to a number of conditions precedent. Relevantly, for the purposes of this application, the conditions precedent of the Parent DOCA are set out in cl 6 and include:
(a)confirmation from the Australian Securities and Investments Commission (ASIC) that it has granted relief for the purposes of s 606 of the Act;
(b)waiver or relief from the Securities Industry Council of Singapore; and
(c)the approval of the Foreign Investment Review Board.
As at today's date, none of these conditions precedent have been satisfied.
Under cl 6.4 of the Parent DOCA, Austroid was required to notify the Deed Administrators on or before 31 January 2022 (which the parties referred to in argument as the Sunset Date), or such later date as agreed in writing, whether these conditions precedent had been satisfied. If the conditions precedent were not satisfied by this date, the Deed Administrators were entitled (but not required), by notice to creditors and Austroid, to terminate the DOCA or to call a meeting of creditors to consider varying or terminating the DOCA.
The conditions precedent of the Subsidiary DOCA were satisfied on 23 December 2020. Prior to the effectuation of the Subsidiary DOCA, Lithium Investments (WA) Pty Ltd filed an urgent application in this court seeking to restrain the effectuation of the Subsidiary DOCA and to set aside the Parent DOCA and the Subsidiary DOCA. On 3 January 2021, this application came before me for hearing on an interlocutory basis. Orders were made on that date restraining the effectuation of the Subsidiary DOCA until the final determination of the application.
On 19 March 2021, orders were made by consent setting aside the orders restraining the effectuation of the Subsidiary DOCA and dismissing those proceedings. On the same date, the Subsidiary DOCA effectuated.
On 1 July 2021, the second defendants, as Deed Administrators of the Parent DOCA, filed an application seeking orders pursuant to s 444GA of the Act for the transfer of all shares in Alita to Austroid or its nominee under the Parent DOCA (Second 444GA Application).
On 27 August 2021, the Canaccord parties sent a letter of objection to the Deed Administrators in respect of the Second 444GA Application. The letter of objection referred to current lithium market and investor sentiment and expressed the view that the asset value of Alita was materially higher than the amount due to Austroid.[1] Otherwise, the Canaccord parties did not seek to be heard on the application.
[1] Affidavit of Zachary Sharp filed 24 February 2023 'ZS 55'.
On 1 September 2021, Master Sanderson made orders allowing the transfer of 100% of the issued capital of Alita from its shareholders to Austroid. These orders were varied on 7 September 2021 and on 17 September 2021, Master Sanderson published his reasons for decision. In his reasons for decision, Master Sanderson concluded the shares in Alita had no value and that, as a consequence, the transfer of the shares could not adversely affect a shareholder. Relevantly, Master Sanderson's orders included:
(a)An order pursuant to section 444GA(1)(b) of the Corporations Act that the Plaintiffs jointly and severally have leave to transfer 100% of the fully paid ordinary shares in the capital of Alita Resources Limited (receivers and managers appointed) (subject to deed of company arrangement) (Alita) (Shares) from the members (as defined in the Corporations Act) of the Company (Members) to Austroid Corporation (or its nominee or as it directs) on the Effectuation Date as defined in the Parent DOCA and in accordance with its terms, subject to:
(i) the Australian Securities and Investments Commission granting Alita relief from complying with section 606 of the Act pursuant to section 655A of the Act;
(ii) the Conditions Precedent in paragraphs 6.1.4, 6.1.5 and 6.1.7 of the Parent DOCA being satisfied; and
(iii) the Plaintiffs effecting the arrangement under the Parent DOCA.
The parties have agreed to extend the Sunset Date in cl 6.4 of the Parent DOCA on a number of occasions. On 28 January 2022, it was extended from 31 January 2022 to 31 January 2023, and on 31 January 2023, it was extended until 28 February 2023. On 14 February 2023, the Deed Administrators and Austroid agreed to extend the Sunset Date to the earlier of:
(a)29 May 2023; or
(b)the date that is four weeks after the receipt of a further independent expert report on the residual value of the shares in Alita.
The evidence filed by the Canaccord parties includes an affidavit of Mr Spencer, the head of mining research at Canaccord. Mr Spencer is an equity analyst who, for the last 8 years, has been covering lithium stocks. In December 2022, Mr Spencer valued the Mine as having a current value of approximately $1.54 billion.[2] His affidavit annexes a series of charts he obtained from the Asian Metal database and the Bloomberg database. These charts show that there has been a significant increase in lithium prices since the time of the reports filed in support of the Second 444GA Application.
[2] Affidavit of Reginald Lee Spencer filed 8 March 2023 [12].

Parties' submissions

Austroid advanced three primary reasons for its submission that the plaintiffs' originating process ought be dismissed summarily:[3]
(a)at the hearing of the Second 444GA Application, the question as to whether there was some prospect of an increase in the value of shares of Alita was considered by the Court. In these circumstances, even if there is some residual value in the shares, this will not amount to 'injustice' under s 445D(1)(e) of the Act;
(b)under the terms of the Parent DOCA, the shares in Alita will not be transferred to Austroid if there is any residual value in the shares. This is because a condition precedent of the Parent DOCA is that ASIC grant a waiver of s 606 of the Act. In the relevant regulatory guide published by ASIC, it is made clear that ASIC will not grant a waiver under s 606 if there is residual value in the shares the subject of the application. On this basis, it was contended the issue raised by the Canaccord parties, namely the residual value of the shares, will be addressed by ASIC in deciding whether or not to grant the waiver that is required to be sought and the court should allow that to occur;
(c)the significant delay of the plaintiffs in commencing this application is 'unprecedented and inexplicable' and there is no evidence before the court which justifies this delay.
[3] Austroid's submissions filed 24 February 2023 [6].
Each of Austroid and the Deed Administrators also contended that the Canaccord parties' attempt to raise the issue of the residual value of the Alita shares was an abuse of the processes of the court. It was emphasised that the question as to the potential increase in the value of lithium was known to the Canaccord parties prior to the hearing of the Second 444GA Application. This was apparent from the letter from the Canaccord parties to the Deed Administrators prior to that hearing which referred to the current lithium market and investor sentiment and asserted the Alita shares had some residual value. Notwithstanding this view, the Canaccord parties did not seek leave to intervene in those proceedings or seek to be heard. As shareholders of Alita, the Canaccord parties are bound by the decision and orders of Master Sanderson, which have not been the subject of appeal by the Canaccord parties or anyone else.[4]
[4] An appeal was lodged but discontinued (Affidavit of Zachary Sharp filed 24 February 2023 'ZS68').
Austroid and the Deed Administrators submitted that the court had already finally determined whether there was any injustice to the shareholders of Alita, in terms of whether there was any future residual value in the Alita shares, and that it was an abuse of process for the Canaccord parties to seek to re-open or relitigate this issue. Unless the Canaccord parties can establish there is residual value in the Alita shares, there is no reason for the court to terminate the DOCA on any of the grounds advanced by the plaintiffs.
Senior counsel for Austroid also submitted that allowing the application to proceed was unnecessary and an abuse of the processes of the court, as any hearing as to the value of the Alita shares is unnecessary and a substantial waste of the court's resources.
The Canaccord parties oppose the application and say that the court should not grant summary judgment on an application under s 445D of the Act which requires an 'evaluative consideration of all relevant circumstances viewed as whole and the weighing of competing considerations'. The application will require the court to consider whether the DOCA should be terminated on one of two grounds: first, what they contend is a material change in circumstances since the Second 444GA Application and that the shares now have 'immense value', and second, the Parent DOCA has been on foot for 'well over' two years and has been extended on a number of occasions. In their submission, it cannot be said that there is no real question to be tried on either of these matters.

Legal Principles

Summary judgment

The principles that the court is required to apply on an application for summary judgment are well known and were summarised by the Court of Appeal in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd in the following terms:[5]
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted. (citations omitted)
[5] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24].
For a court to order summary judgment, it must be satisfied the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily. The Court also has inherent jurisdiction to protect its processes from abuse by summarily disposing of an action as frivolous and vexatious if it is so obviously untenable that it cannot possibly succeed.
This does not mean, however, that summary judgment will only be given where the case is so hopeless that extensive argument is not required. Extensive argument may be required to demonstrate a party's case is so clearly untenable that it cannot succeed.[6]
[6] Westpac Banking Corp v Anderson [2017] WASC 106 [50] - [54].

On this application, Austroid bears the legal onus of establishing there is no serious question to be tried.
Where the Canaccord parties have filed evidence in opposition to the application, they bear an evidentiary onus to demonstrate the existence of a triable issue. The evidence is also required to set out with some particularity the facts which establish the basis for its action.[7]
[7] Gerovich v Gerovich as executor of the estate of Gerovich [2018] WASC 153 [30].
Where there is a conflict on the evidence, the Court should approach the application on the basis that the facts set out in the affidavits of the party who is resisting the application for summary judgment will ultimately be accepted at trial.[8]

Statutory regime

[8] Gerovich v Gerovich as executor of the estate of Gerovich [32].

The statutory regime that governs the application by the Canaccord parties is pt 5.3A of the Corporations Act 2001 (Cth) (Act). Relevantly, s 445D of the Act gives the court power to make an order terminating a deed of company arrangement on a number of grounds. The Canaccord parties, in their amended originating process, rely on s 445D(1)(e) (effect cannot be given to the deed without injustice or undue delay) and s 445D(1)(g) (the deed should be terminated for some other reason). In the alternative, the plaintiffs rely on s 447A of the Act which gives the court broad powers to make orders under pt 5.3A.
These sections must be construed and applied taking account of the objects of pt 5.3A of the Act set out in s 435A of the Act. The objects include maximising the chances of the company, or as much of its business as possible, continuing in existence or, where this is not possible, for it to result in a better return for the company's 'creditors and members' than would result from an immediate winding up.
On an application under s 445D of the Act, the plaintiffs bear the onus of proof in establishing there is a basis on which the DOCA should be set aside and that the court should exercise its discretion to do so. In considering the application, the court is required to consider the operation of the DOCA as at the date of the hearing and not at some other time.[9] The power to terminate a DOCA under s 445D is a discretionary power which must be exercised having regard to the interests of creditors as a whole and in the public interest.[10]
[9] University of Sydney v Australian Photonics Pty Ltd [2005] NSWSC 412; (2005) 53 ACSR 579 [24].
[10] Kipoi Holdings Mauritius Ltd v Tiger Resources Ltd (subject to deed of company arrangement) [2021] WASCA 186 [166].
As was noted by Palmer J in University of Sydney v Australian Photonics Pty Ltd:[11]
Setting aside a deed of company arrangement which has been solemnly approved at a meeting of creditors is not a light matter. Generally speaking, the creditors are taken to be the best judges of what is in their commercial interests. If the deed is to be terminated there must be a sufficient reason shown for that termination: that reason exists if those seeking the termination prove one or other of the grounds under s 445D(1) to the Court's satisfaction.
[11] University of Sydney v Australian Photonics Pty Ltd [34].
Delay in making an application to terminate a DOCA is a relevant matter which is taken into account in considering whether the discretion to terminate the DOCA should be exercised.[12]
[12] Khoury v Zambena (1997) 23 ACSR 344, 352.
In relation to the specific sections relied on by the Canaccord parties, in considering an application under s 445D(1)(e) of the Act, the court considers the effect of the DOCA rather than its purpose.[13] In Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd, Campbell J stated that:[14]
What s 445D(1)(e) is concerned with is injustice or delay which arises in giving effect to the Deed. Such injustice might be inherent in the terms of the Deed itself, or might arise when the terms of the Deed are sought to be applied to circumstances which have arisen. (emphasis in original)
[13] Re Citadel Financial Corporation Pty Ltd (subject to Deed of Company Arrangement) [2020] NSWSC 886; (2020) 146 ACSR 220.
[14] Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 1235; (2005) 226 ALR 510 [222].
In considering whether to set aside a DOCA because of 'injustice', this term is of wide import and takes into account whether the effect of the deed is unfair or inequitable in the impact it has.[15]
[15] Guo v Song [2018] NSWSC 12 [146]. See also Irving v Smith [2008] FCA 1391; (2008) 68 ACSR 14 [53].
In respect of the ground to set aside a DOCA because of undue delay, there has been very little judicial consideration of the meaning of 'undue delay' or the circumstances in which the court will exercise its discretion. In Commonwealth Bank of Australia v C2C Developments Pty Ltd,[16] Young AJ expressed the view that he would have been prepared to make orders under s 445D(1)(e), although ultimately the application was decided on other grounds. In that case, the original DOCA was made four and a half years prior to the application and almost two years had passed since the original deadline to pay a promised sum. His Honour expressed the view that this ground was made out due to the delay in finalising the DOCA, including the problems associated with it being effectuated within a 'reasonable time in the future'.
[16] Commonwealth Bank of Australia v C2C Developments Pty Ltd [2013] NSWSC 724; (2013) 94 ACSR 555 [24] - [25].
Turning to s 445D(1)(g), this subsection was described by Kiefel CJ and Edelman J in Mighty River International v Hughes as a 'catch-all power', which could include 'an abuse of the provisions of Pt 5.3A'.[17]
[17] Mighty River International v Hughes [2018] HCA 38; (2018) 265 CLR 480 [13].
In Habrok (Dalgaranga) Proprietary Limited v Gascoyne Resources Limited,[18] Beach J summarised the court's discretion under s 445D(1)(g) of the Act. His Honour noted that this section gives the court the discretion to terminate the DOCA if it considers that 'for some other reason' this should occur. For example, the court may terminate a DOCA under this subsection if it is contrary to the public interest, which includes notions of commercial morality and the interests of the public at large. His Honour stated that:[19]
[G]enerally speaking, one should not terminate a DOCA and order a company to be wound up if the DOCA will restore the company to financial health and the DOCA does not have the purpose or effect of unjustifiably quarantining third parties from investigation. If the company is trading and it is likely that its business will continue, then unless there are real public interest concerns, termination of a DOCA and causing a company to be wound up are inappropriate outcomes. The interests of creditors should be the primary consideration, but they may be outweighed if the DOCA has a fraudulent or wrongful purpose.
[18] Habrok (Dalgaranga) Proprietary Limited v Gascoyne Resources Limited [2020] FCA 1395; (2020) 149 ACSR 1.
[19] Habrok (Dalgaranga) Proprietary Limited v Gascoyne Resources Limited [410].
The Canaccord parties also seek an order terminating the DOCA under s 447A of the Act. It was not in dispute that the court has jurisdiction to make such an order in an appropriate case. Courts have terminated deeds of company arrangement and voluntary administrations under this section where it would bar particular claims already being litigated against the company,[20] where the winding up may serve the public interest as investigations and recovery proceedings are likely to be funded and could realistically lead to persons who engaged in suspect transactions being brought to account,[21] if the provisions of the Act are being abused,[22] or where there is an ulterior element or purpose in using the provisions of pt 5.3A.[23]
[20] Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391.
[21] Public Trustee (Qld) v Octaviar Ltd (subject to deed of company arrangement) (recs and mgrs apptd) [2009] QSC 202; (2009) 73 ACSR 139 [182].
[22] Re Sales Express Pty Ltd (admins apptd) [2014] NSWSC 460 [19].
[23] Workers Compensation Nominal Insurer v Perfume Empire Proprietary Ltd [2011] NSWSC 379 [22].
In considering an application under s 447A, the court can apply by analogy the principles that apply under s 445D of the Act.[24]

Abuse of process

[24] Australian Securities and Investments Commission v Midland Hwy Pty Ltd (admin apptd) [2015] FCA 1360; (2015) 110 ACSR 203 [69].

The legal principles summarising the conduct that will amount to an abuse of the processes of the court were summarised by Vaughan J in Jebb as trustee for the Trafalgar West Investments trust v Superior Lawns Australia Pty Ltd in the following terms:[25]
What amounts to an abuse of the court's process is insusceptible of a formulation comprising closed categories. It extends to all categories of case in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Abuse of process occurs in any circumstance in which the use of the court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. However, the onus of satisfying the court that there is an abuse of process is a heavy one. The power to dismiss proceedings as an abuse of process should be exercised with caution and only in the most exceptional or extreme case.
…
A determination that proceedings constitute an abuse of process is not a discretionary decision. There can only be one correct answer to whether there is or is not an abuse of process. Accordingly, there is no discretion to dismiss or stay a proceeding as an abuse of process if they are not. Conversely, if there is an abuse of process, then there is no discretion whether or not to make an appropriate order to remedy the abuse.
The doctrine of abuse of process is informed in part by considerations of finality and fairness. The underlying public interest is twofold: there should be finality in litigation and a party should not be twice vexed in the same matter. Thus abuse of process may exist where a person seeks to re-litigate an issue already decided. There is a general public interest in the same issue not being litigated over again. It has been said that it would be a 'scandal to the administration of justice' if, a question having been disposed of by one case, the litigant were permitted to set up the case again by changing the form of proceedings.
For a step in a proceeding to amount to an abuse of process by reason of impermissible re-litigation of a dispute it is not necessary that one of res judicata, issue estoppel or Anshun estoppel be applicable. (citations omitted)
[25] Jebb as trustee for the Trafalgar West Investments trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [102], [105], [106], [107].

Disposition

None of the parties who appeared at the application, who were all represented by experienced and competent senior counsel, were able to refer me to any authority where summary judgment had been granted on an application to terminate a deed of company arrangement. Although this is not determinative, it is noteworthy. In my view, this reflects to a significant degree the position that on an application under pt 5.3A of the Act, once the court has power to make the orders sought, the determination of the application is a matter of discretion which takes into account all of the relevant facts and circumstances that exist at the date of the hearing. As such, it is difficult to envisage circumstances in which an application seeking such relief will be summarily determined, unless the applicant does not have standing to bring the application.
In this case, Austroid accepted for the purpose of this application that, on the material filed with the court, it was arguable that the plaintiffs had standing to bring the application. Austroid also accepted that in determining this application, the court should proceed on the basis that it was possible that at the hearing, the plaintiffs could adduce evidence to support a contention that the Mine was currently valued at $1.54 billion.
However, senior counsel for Austroid submitted the question of whether the shares in Alita might have some future value was considered and determined finally by the court on the Second 444GA Application. In Austroid's submission, a necessary consequence of this decision was that 'there is no unfair prejudice regardless of whatever prospect there might be of the shares increasing in value during the term of the deed'.
In considering this submission, it is necessary to consider what a court is required to decide on a s 444GA application, what the court in fact decided in making the orders under s 444GA, and in what circumstances, if at all, is a person entitled to attack these findings otherwise than by way of appeal.
Dealing with the first issue, the principles that apply to the consideration of an application under s 444GA are well established. These can be summarised as:[26]
(a)whether a transfer is unfairly prejudicial is to be determined having regard to all the circumstances of the case and the policy of the legislation;
(b)the fact that a transfer of shares is to occur without compensation to members is not sufficient, in itself, to establish unfair prejudice;
(c)where the equity in the company has no residual value, the members are unlikely to suffer prejudice, and certainly not unfair prejudice, by reason only of the absence of consideration; and
(d)orders may be made under s 447A of the Act to put into effect the proposed transfer of shares.
[26] Park, Re Collection House Ltd (Subject to a Deed of Company Arrangement) [2022] FCA 1244 [4] - [7].
If liquidation is the only realistic alternative to a proposed transfer of the shares and the shares would have no value in a liquidation, there is no prejudice, or no unfair prejudice, to the interests of members if the transfer of shares occurs without consideration.[27] The application requires the court necessarily to consider whether there is a prospect of the shares obtaining value within a reasonable time.[28]
[27] Strawbridge, Re Virgin Australia Holdings Ltd (admins apptd) (No 9) [2020] FCA 1652; 148 ACSR 648 [34], citing with approval Re OrotonGroup Ltd (Subject to Deed of Company Arrangement); Application of Strawbridge and Kanevsky [2018] NSWSC 1213 [37].
[28] Re Diverse Barrel Solutions Pty Ltd [2014] FCA 53 [19].
On the Second 444GA Application, Master Sanderson found that, based on his acceptance of the expert reports of Ms Lord and Mr Donnelly, the shares in Alita were of no value and their transfer could not adversely affect a shareholder. It is clear from the reasons for decision that Ms Lord was retained to provide an expert report as to the 'fair market value of the main assets of Alita, being, the Bald Hill Lithium Mine, exploration assets and plant and equipment'. It is not clear in the reasons for decision what the date of the fair market valuation was, although the extract from the report refers to a 'Valuation Date'. Ms Lord's fair market valuation on a going concern basis was a low value of $33.9 million to a high value of $65.7 million, with a preferred value of $49.8 million or on a salvage basis, a low value of $27.2 million to a high value of $51.8 million, with a preferred value of $39.5 million.
Mr Donnelly's fair market valuation was done as at 25 June 2021. He valued the assets with a low value of $34.4 million, a high value of $66.4 million with a preferred value of $50.4 million. In circumstances where he assessed the total indebtedness of Alita as between $68.8 million and $72.3 million, he concluded the total indebtedness of Alita exceeded the fair market value in each case and, as a result, considered the shares in Alita on a liquidation scenario to have a nil value.
I accept that the judgment of the court on the Second 444GA Application is a judgement in rem and binds the whole world, including the Canaccord parties. As a result, the question as to whether the shares in Alita had any residual value as at the date of the application and for a reasonable time afterwards cannot be challenged in any other action by a shareholder of Alita, except by way of appeal.
However, this does not mean that, on the particular facts in this case, the plaintiffs' application in the present case is unarguable. This is for two main reasons. First, the question as to whether the value of the Alita shares nearly two years after the date of the valuations in the Second 444GA Application is within the 'reasonable time' of the original valuations will depend on the facts and circumstances including the terms of the original valuations which are not in evidence before me. Second, at the time of the determination of the Second 444GA Application, the Sunset Date for the satisfaction of the conditions precedent was 31 January 2021, which was approximately four to five months in the future. It is at least arguable that any consideration as to what constitutes a 'reasonable time' must take into account the then provisions of the Parent DOCA.
At the hearing, senior counsel for Austroid accepted that the Second 444GA Application did not make a binding finding on the value of the shares in Alita that bound the parties forever. However, it was submitted that any 'immediate increase in value' of these shares could not be unjust because the prospect of changes in the valuation of the shares was within the contemplation of the court.[29] I do not accept this submission. Having accepted that the finding as to the value of the shares did not bind the parties forever, the issue for determination is how long this finding binds the parties. This will, in my view, require examination to what was contemplated at the time of the hearing. I do not consider that it is unarguable that a very significant change in value more than 18 months after the original valuation was not a matter in contemplation of the parties at the time of the Second 444GA Application.
[29] ts 56.
If the plaintiffs were able to satisfy the court on the balance of probabilities at the date of the hearing that the value of the Mine significantly exceeded the debt that was owed to Austroid, it is arguable there would be a practical benefit to members of Alita in terminating the Parent DOCA. In these circumstances, I consider it is arguable that a court could consider that an order should be made to terminate the DOCA as being inconsistent with the purposes of pt 5.3A as set out in s 435A of the Act.
In relation to the second ground of the application, which relies on s 445D(1)(e), as noted above, this section, in so far as it refers to 'undue delay', has not been the subject of any significant judicial consideration. My preliminary view is that the words 'undue delay' should be given their ordinary and natural meaning. That is, the section requires there not only to be delay but that the delay be unwarranted,[30] unjustified,[31] or unnecessary.
[30] Macquarie Dictionary.
[31] Oxford English Dictionary.
It is apparent on the chronology set out above that there has been a significant delay in effectuating the DOCA. In his affidavit filed in support of the originating process, Mr Barlow expresses the opinion that Austroid has had sufficient time to complete the transaction.
The precise reasons for the delay are not in evidence before me. In my view, it is unlikely that these matters are within the knowledge of the plaintiffs. The question as to whether the delay is warranted or justified are matters that are likely to be almost solely within the knowledge of Austroid.
In my view, it is sufficient, for the purposes of this application, that the plaintiffs have adduced evidence that there has been significant delay in effectuating the DOCA and that the delay is beyond that contemplated by the parties at the time of entry into the DOCA. This is evident from the fact that what the parties describe as the 'Sunset Date' has been extended on three occasions from 31 January 2022 until 28 May 2023. The questions as to whether this delay is warranted or justified and whether the deed can be effectuated without undue delay are, in my view, matters that should be determined at trial and not on a summary basis.

Senior counsel for Austroid, as well as senior counsel for the Deed Administrators, placed significant emphasis on the fact that a condition precedent of the Parent DOCA is confirmation from ASIC that it has granted relief for the purposes of s 606 of the Act. ASIC has released a regulatory guide (Regulatory Guide 6) in relation to the general prohibition contained in s 606 of the Act. Regulatory Guide 6 provides that ASIC may grant case-by-case relief from s 606 where an independent expert report concludes that shareholders have no residual equity in the company, company members are provided with an explanatory statement 'at least 14 days before the court hearing' and the court grants leave under s 444GA. It then states that:
Once we are satisfied with the explanatory materials and IER, we will generally provide 'in principle' relief subject to us continuing to monitor the court process and the court making the decision to grant leave to the administrator.
It is apparent from this section of Regulatory Guide 6 that this policy applies where the application for relief is made prior to the application to the court under s 444GA. In this case, the court has already heard and determined this application.
I accept that ASIC has informed the Deed Administrators that they are required to file a new application for relief and that this will need to be supported by an updated valuation report.[32] However, it is not clear on the evidence before the court how ASIC will otherwise deal with the application, particularly in circumstances where the other matters referred to in the Regulatory Guide cannot be addressed.
[32] Affidavit of Zachary Sharp filed 24 February 2023 'ZS68'.
In any event, I do not consider that the fact that ASIC, as a regulator, is presently considering an application by the Deed Administrators under s 655A of the Act prevents the court from considering an application under pt 5.3A of the Act or that this, of itself, means that there is no arguable case that the effect of the Parent DOCA would cause injustice. While the applications may raise similar factual matters, namely the current market value of Alita, they are different applications and different considerations apply.
The final matter raised by Austroid as a basis on which the application should be summarily dismissed was the delay of the Canaccord parties in bringing the application.
Austroid's submissions annexed as Annexure A is a table setting out a series of cases in which an application was made to terminate the DOCA, the length of the delay, what relevance was attributed to the delay and the outcome of the case. This table demonstrates the differing positions that have been taken by the court on the question of delay. By way of example in Promnitz v Indochine Mining Ltd (subject to Deed of Company Arrangement),[33] a delay of 13 days was considered to be an important factor to be weighed against the grant of relief. In other cases, a delay of 42 days was considered of no significance,[34] and a delay of 203 days by itself had little impact.[35] This table demonstrates that while delay is a factor that the court will take into account in exercising its discretion, it is not, by itself, a factor that will always result in the discretion being exercised against the applicant. In these circumstances, I do not consider that the question as to relevance of the delay in making the application can be determined in advance of the hearing of the application.
[33] Promnitz v Indochine Mining Ltd (subject to Deed of Company Arrangement) [2015] FCA 857; (2015) 108 ACSR 134.
[34] Perpetual Trustee Company Ltd v Mustang Marine Australia Services Pty Ltd [2010] NSWSC 1429.
[35] Re Citadel Financial Corporation Pty Ltd (subject to Deed of Company Arrangement) [2020] NSWSC 886; (2020) 146 ACSR 220.
I accept that the arguments put forward by Austroid and the Deed Administrators are matters which are relevant to the exercise of the discretion by the court. I also accept that the issues raised by the Canaccord parties will require all parties and the court to devote resources to an application that may, ultimately, be unsuccessful. However, as set out above, this is not the test on a summary judgment application. The questions for the court on this application are:
(a)Do the Canaccord parties have standing to bring the application?; and
(b)Does the court have power to make the orders sought by the plaintiffs and if so, should the court exercise its discretion to make the orders sought the plaintiffs.
In my view, these are questions that can only be determined on a consideration of all of the relevant facts. On the evidence currently before me, I do not consider the Canaccord parties' application is unarguable or that it should be determined summarily.
I turn then to the final matter raised by the Deed Administrators, namely whether the commencement and maintenance of these proceedings is an abuse of the processes of the court. I note that if the court were to accept this argument, the usual order is that the proceedings be permanently stayed.
The basis for the contention that these proceedings are an abuse of the processes of the court is that the court has already determined in the s 444GA proceedings that the shares had no residual value and, accordingly, their transfer could not adversely affect a shareholder.
In considering whether these proceedings are an abuse of the processes of the court, the court must take into account the procedural law of this court.[36] This includes the provisions of O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA). These provisions require the court to eliminate delays in the determination of proceedings in this court and to manage proceedings as quickly, inexpensively and efficiently as possible, in a manner which is consistent with maximising the efficient use of available judicial and administrative resources.
[36] UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77 [34].
In this case, the Canaccord parties contended they had a right to commence the proceedings and a right for the matters they raised to be determined by the court. While I accept the plaintiffs have a right to commence the proceedings, as was noted by the High Court in Batistatos v Roads and Traffic Authority (NSW), the defendant also has rights including the right:[37]
to seek the exercise of the power of the court to stay its processes in certain circumstances. On its part, the court has an obligation owed to both sides to quell their controversy according to law.
[37] Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 [63].
For the reasons set out above at [50] - [63], I have also concluded that these proceedings do not seek to re-argue matters that have already been determined. For this reason, I do not consider the proceedings to be an abuse of the processes of the court.
The Canaccord parties have not previously sought to terminate the Parent DOCA under s 445D and no court has previously considered whether there are grounds to terminate the Parent DOCA. While I accept that the court has previously considered whether there was any residual value in the Alita shares, this was based on valuations as at June 2021. Any consideration of whether the effect of the Parent DOCA is unjust will require the court to consider the value of the Mine as at the date of the hearing, or as close to it as possible. This issue has not been considered by the court previously.

Conclusion and orders

For these reasons, Austroid's application for summary judgment ought to be dismissed. I will hear from the parties as to the appropriate costs orders. My preliminary view is that the costs of the application should be costs in the cause.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
28 MARCH 2023