Chief Executive Dept of Environment and Resource Management v Australis Mining Operations Qld Pty Ltd

[2010] QPEC 53

PLANNING & ENVIRONMENT COURT
OF QUEENSLAND

CITATION:	Chief Executive Dept of Environment and Resource Management v Australis Mining Operations Qld Pty Ltd & Ors [2010] QPEC 53
PARTIES:	THE CHIEF EXECUTIVE OF THE DEPARTMENT OF ENVIRONMENT AND RESOURCE MANAGEMENT (FORMERLY KNOWN AS THE ENVIRONMENTAL PROTECTION AGENCY) (Applicant) And AUSTRALIS MINING OPERATIONS QLD PTY LTD ACN 081 347 891 (First respondent) And TED DOROTHEOS TZOVARAS (Second respondent) And ANTHONY DAMIANOS (Third respondent) And JOHN WILLIAM GODDARD (Fourth respondent) And ROBERT RAYMOND COENRAADS (Fifth respondent) And BLAIR ALEXANDER PLEASH AND ROBERT WILLIAM JOSEPH ELLIOTT AS ADMINISTRATORS (Tenth respondent) And GEORGE CHRISTIANOS (Eleventh respondent) And MICHAEL DOLF SCHMIDT AND SUSAN JOAN SCHMIDT (Twelfth respondents)
FILE NO/S:	3765 of 2009
DIVISION:	Planning and Environment
PROCEEDING:	Application for determination
ORIGINATING COURT:	Planning and Environment Court at Brisbane
DELIVERED ON:	24 June 2010
DELIVERED AT:	Brisbane
HEARING DATE:	3 June 2010
JUDGE:	Griffin SC DCJ
ORDER:	Paragraph 14 of the Deed of Company Arrangement executed 27 February 2006 is not a bar to the present proceedings.
CATCHWORDS:	PLANNING AND ENVIRONMENT – DEED OF COMPANY ARRANGEMENT – ENVIRONMENTAL PROTECTION ACT – FAILURE TO PROVIDE FINANCIAL ASSURANCE – whether deed of company arrangement is a bar to proceedings against the first respondent for failing to provide “financial assurance” – whether applicant a “creditor” of the first respondent.
COUNSEL:	M Hinson SC, with N Kefford, for the applicant A C Barlow for the first respondent
SOLICITORS:	Crown Law for the applicant Paul Watts & Co Solicitors for the first respondent

1. A preliminary issue for determination has arisen between the applicant, the Chief Executive of the Department of Environment and Resource Management and Australia Mining Operations Qld Pty Ltd (the first respondent) as to whether paragraph 14 of a Deed of Company Arrangement executed on 27 February 2006 is a complete bar to proceedings against the first respondent whose failure is alleged to have occurred by reason of failure to provide a Financial Assurance as set out in paragraphs 9 and 10 of the originating application in circumstances where an issue is to whether section 444D of the Corporations Act 2001 (Cth) is said to apply.

1. Section 444D(1) provides that a Deed of Company Arrangement binds all creditors of the company so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i).

1. It is agreed that the relevant date is 31 October 2005. 

1. Clause 14 of the deed is in the following terms:

Bar to Creditors Claims

This Deed may be pleaded by the Company against any Creditor in bar of any debt or claim that is admissible under this Deed and a Creditor (whether the creditor’s debt or claim is not admitted or established under this Deed) must not, before the termination of this Deed:

(a)         take or concur in the taking of any step to wind up the    Company; or

(b)        except for the purpose and to the extent provided in this                    Deed, institute or prosecute any legal proceedings pending   against or in relation to the company as at the date referred   to in Item 3 of the Schedule hereto; or

(c)         take any further steps (including any step by way of legal or             equitable execution) in any proceedings pending against or   in relation to the Company as at the date referred to in Item   3 of the Schedule hereto; or

(d)        exercise any right of set off or cross action to which the                    creditor would not have been entitled had the Company   been wound up as at the date referred to in Item 3 of the   Schedule hereto; or

(e)         commence or take any further step in any arbitration    against the Company or to which the Company is a party;
              Or

(f)         requisition or seek to requisition a meeting of the creditors               unless the company is in default or breach of a term of this   Deed.

1. Clause 1.2 defines “Creditor” as follows:

“Creditor” means any person (his executors, administrator, heirs, transferees, subrogators, guarantors, indemnifiers and assigns) whose claims against the Company would have been a provable debt if the Company had been wound up and any person (his executors, administrator, heirs, transferees, subrogators, guarantors, indemnifiers and assigns) having any debt or claim present or future, actual or contingent, liquidated or unliquidated, secured or unsecured in part or in whole, arising at law or in equity, arising out of contract, statute or tort, due or which may become due by the Company as a result of anything done or omitted to be done by or on behalf of the Company on or before the date referred to in Item 3 of the Schedule hereto;”.

1. For clause 14 to have the effect contended for by the first respondent it must satisfy the court that:

(a)        the applicant is a “creditor” as defined; and

(b)        the applicant as a creditor of the first respondent has a debt or claim against the first respondent that is admissible under the deed.

1. Fundamental to the primary action by the applicant against the first respondent and others in action 3765/09 in the Planning and Environment Court, relief is sought by the applicant against the first respondent for orders under the Environmental Protection Act 1994 to remedy offences alleged to have been committed by the first respondent.  Those orders are sought in these terms: that the first respondent submit a rehabilitation report and carry out and complete rehabilitation works the subject of the report[1]; provide security for the performance of those works[2] and pay the costs of monitoring the rehabilitation works[3].

   [1]See s 505(9)(c)

   [2]See s 505(6)(b)

   [3]See s 505(6)(d)

Background  

1. The first respondent was in administration from 30 October 2005 to the date of a Deed of Company Arrangement on 27 February 2006.  That was the date on which the first respondent entered into that arrangement.  That arrangement continues in respect of the first respondent. 

Orders sought

1. Orders sought by the applicant are based in part upon allegations that the first respondent failed to give to the applicant a Financial Assurance as required by the first respondent’s environmental authority.  Financial Assurance is not in contention.  It is in the sum of $76,764.87 and was required to be paid “prior to the commencement of mining activities under the 2005 Plan of Operations”. [4]

   [4]Application paragraphs 9 and 10

1. The obligation to provide the Financial Assurance as a condition of the first respondent’s environmental authority arises by virtue of the combined operation of ss 263 and 364 of the Environmental Protection Act 1994 (EPA). 

1. There is no doubt that the Crown and therefore Chief Executive of the Department of Environment and Resource Management is bound under the Corporations Act. [5]

   [5]See s 5A

Fundamental question

1. Is the applicant a creditor of the first respondent?

1. The first respondent for its part relies upon s 553 of the Corporations Act which provides as follows:

“553     Debts or claims that are provable in winding up

(1)       subject to this division and division 8 in every    winding up all debts payable by, and all claims   against, the company  (present or future certain or   contingent ascertain or sounding only in damages),   being debts or claims the circumstances giving rise   to which occurred before the relevant date, are   admissible to proof against the company.”

The first respondent concedes that an obligation to pay the Financial Assurance is not a debt and therefore there is plainly no debtor/creditor relationship between the two relevant parties.  The first respondent argued however that when the purpose of the Financial Assurance is considered the Financial Assurance should be characterized as a bond securing the first respondent’s obligations under the environmental authority.  Reliance is placed on the provisions of s 364 of the EPA which provides as follows:

“When financial assurance may be required

(1)         the administering authority may, by condition of an    environmental authority (mining activities) or approval of a   transitional environmental program or site management   plan, require the holder of the environmental authority or   approval to give the administering authority financial   assurance as security for -

(a)        compliance with the environmental authority, transitional                 environmental program or site management plan and any   conditions of the program or plan; and

(b)        costs or expenses, or likely costs or expenses, mentioned in    s 367.”

1. The respondent argues that it is fundamental that the circumstances giving rise to the applicant’s ability to claim the Financial Assurance arose in early September 2005 at a time well before the Deed of Company Arrangement dated 27 October 2005.  Thus the first respondent submits that the following conclusions may be drawn from the operation of the Corporations Law and the factual circumstances as set out above. 

(a)        the obligation to pay the Financial Assurance to the applicant arose in early September 2005;

(b) that date is prior to 31 October 2005 the date referred to in s 444A(4)(i) of the Corporations Act;

(c)        the applicant’s financial claim is a claim “arising on or before the date specified in the deed”;

(d) accordingly the applicant is an entity who could have proven in a winding up under s 553 of the Corporations Act.

Upon this analysis, so the first respondent argues, the applicant is a creditor within the meaning of s 444D of the Corporations Act and the applicant is bound by the Deed of Arrangement. 

1. The operative paragraph of the Deed of Arrangement includes the following:

“This deed may be pleaded by the company against any creditor in bar of any debt or claim that is admissible under this Deed and a creditor (whether the creditor’s debt or claim is not admitted or established under this Deed) must not, before the termination of this deed;
…

(b)Institute or prosecute any legal proceedings pending against or in relation to the company as at the date referred to in Item 3 of the Schedule hereto …

1. The practical consequences of this argument successfully being accepted is that the first respondent claims the Deed to be a complete bar to all proceedings by the applicant against the first respondent including the orders sought, that is, for rehabilitation and the provision of guarantees. 

1. The ultimate order sought by the first respondent is that the applicant’s prosecution of the proceedings presently on foot should be restrained. 

The applicant’s case. 

1. The applicant argues that there is a fundamental difficulty with the point raised by the first defendant.  It is said that it is in fact hypothetical on this basis: the applicant makes no claim for payment of a Financial Assurance which remains unpaid.  Because no claim is made for payment of that sum it is unnecessary to consider whether any such claim is admissible under the Deed or whether the applicant is a creditor of the first respondent in respect thereof.

1. Furthermore, so the applicant submits, the relief which is sought by the applicant against the first respondent are merely orders under s 505 of the Environmental Protection Act 1994 which are orders to remedy offences committed by the first respondent.

1. Pursuant to s 505(5) of the Environmental Protection Act the failure by the first respondent to provide the Financial Assurance is merely a ground for enlivening the court’s jurisdiction to make the orders sought by the applicant which do not include an order for the payment of the Financial Assurance. 

1. In my opinion the applicant’s argument has been made out.  The relief sought by the applicant against the first respondent does not make the applicant a creditor of the first respondent.  The applicant is not a person who has a pecuniary claim against the company[6].  The claims for relief in the present proceedings are simply not pecuniary claims.

   [6]See Re Glendale Land Development Ltd (In Liq) (1982) 2 NSWLR 563 at 565

1. Furthermore, the obligation to give a Financial Assurance is an obligation to give it in the amount and form at the time required by the administering body[7].  The amount of the Financial Assurance required was first identified in a letter dated 4 November 2005[8]. No obligation to give the Financial Assurance arose before the amount was notified. The obligation only arises when the amount has been determined by the administering authority under s 364(3) of the Environmental Protection Act.

   [7]See condition G2

   [8]Exhibit PLS-15 to Stephenson Affidavit

1. I am satisfied on the material that no creditor-debtor relationship was at any time created between the applicant and the first respondent particularly in light of the provisions which operate in relation to the requirement to give a Financial Assurance[9].

   [9]See s 233(1) and s 234(sub-s 2); s 364(3)

1. I determine this matter as follows:  that paragraph 14 of the Deed of Company Arrangement executed 27 February 2006 is not a bar to the present proceedings.