Kaboko Mining Ltd v Noble Resources International Pte Ltd
[2015] WASC 67
•24 FEBRUARY 2015
KABOKO MINING LTD -v- NOBLE RESOURCES INTERNATIONAL PTE LTD [2015] WASC 67
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 67 | |
| Case No: | COR:180/2014 | 20 JANUARY 2015 | |
| Coram: | MASTER SANDERSON | 24/02/15 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Demand set aside | ||
| B | |||
| PDF Version |
| Parties: | KABOKO MINING LTD NOBLE RESOURCES INTERNATIONAL PTE LTD |
Catchwords: | Corporations law Application to set aside statutory demand Turns on own facts |
Legislation: | Corporations Act 2001 (Cth) |
Case References: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
NOBLE RESOURCES INTERNATIONAL PTE LTD
Defendant
Catchwords:
Corporations law - Application to set aside statutory demand - Turns on own facts
Legislation:
Corporations Act 2001 (Cth)
Result:
Demand set aside
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett
Defendant : Mr S K Dharmananda SC
Solicitors:
Plaintiff : Bennett + Co
Defendant : Clayton Utz
Case(s) referred to in judgment(s):
Nil
1 MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. A copy of the demand appears as attachment JRF-1 to the affidavit of Jane Rosemary Flegg, sworn 18 September 2014, and filed in support to this application. In the schedule to the demand, under the heading 'Description of the Debt', there appears the following:
Principal amount due under cl 11(c) of the Amended and Restated Prepayment Facility Agreement dated 26 July 2012 between the Creditor, the Company and African Asian Mining Development Ltd.
2 The amount of the debt is said to be $US5,950,000. (No point is taken by the plaintiff that the amount of the debt is stated in US dollars with no conversion rate specified.) There is also a misdescription of the agreement pursuant to which the debt is allegedly due. It was not submitted by the plaintiff that was sufficient to give rise to a reason to set aside the demand under s 459J of the Corporations Act 2001 (Cth).
3 The background facts, while reasonably complicated, were not in dispute between the parties. The plaintiff is an exploration and development company producing manganese, with its principal mining projects located in Zambia, Africa. It is listed on the Australian Securities Exchange (ASX). The plaintiff is the parent company of African Asian Mining Ltd (AAMD), a company which is incorporated in Mauritius. Impondo Zambia Ltd (Impondo) is incorporated in Zambia and is a subsidiary of AAMD. Impondo provides consulting services to the plaintiff in Zambia. Mansa Manganese Mining Ltd (Mansa) is also incorporated in Zambia. At all relevant times, AAMD owned 51% of the shares in Mansa. By way of further background, Mansa is a city in the Luapala province of Zambia. Several manganese mining operations are found in and around Mansa.
4 The defendant is a company registered in Singapore. It is a subsidiary of Noble Resources Ltd, a company also registered in Singapore, and part of a group of 'Noble' entities trading on the Singapore Stock Exchange. The Noble group operates in various metals, energy and agriculture markets.
5 In or about mid-July 2012, the plaintiff and the defendant entered into a suite of agreements to facilitate and fund the plaintiff's mining operations in Zambia. These agreements included an Offtake Agreement and a Prepayment Facility Agreement. These agreements underwent several rounds of amendment, resulting in a Deed of Amendment and Restatement, annexed to which are amended and restated versions of the Offtake Agreement and Prepayment Facility Agreement. An affidavit of Marten Robertson, sworn 30 October 2014, was filed by the defendant in opposition to this application. In his affidavit, Mr Robertson states that the Restated Prepayment Facility Agreement was executed on 25 July 2013. In or about December 2012, Noble Resources purported to novate the Prepayment Facility Agreement to its subsidiary, the defendant. That is why subsequent agreements refer to the defendant rather than Noble Resources.
6 In essence the suite of agreements was designed to achieve the following ends. First, the defendant acquired the right under the Offtake Agreement to the ore mined. That is, it was to purchase all of the ore mined by the plaintiff on the relevant licences which essentially guaranteed a buyer for the ore. Second, the defendant would provide 'Advances' to the plaintiff by establishing a facility under the Prepayment Facility Agreement against which the plaintiff could drawdown. This was intended to allow the plaintiff to develop and conduct the mining. Third, the plaintiff would repay the Advances by 'setting off' the Advances against the amounts payable by the defendant to the plaintiff under the Offtake Agreement. There was a stipulation in the Restated Payment Facility Agreement that the total of all Advances were to be repaid in full by certain dates.
7 As at 18 September 2014, the plaintiff (and/or its subsidiary AAMD) had received $US5,950,000 pursuant to the Prepayment Facility Agreement. This is the amount referred to in the statutory demand. Thus there is no dispute as to the actual amount of the demand.
8 It would seem the relationship between the plaintiff and the defendant was fraught. Various disputes arose between the parties over the course of their dealings subsequent to the entry into the various agreements. That led to the parties entering into a further agreement which is referred to as the 'Binding Terms Sheet'. A copy of that document appears as attachment JRF-13 to Ms Flegg's affidavit. The effect of this agreement and, to some extent, its actual terms, played a large part in the plaintiff's case. It is therefore necessary to look closely at what the agreement actually says. Primarily, it was designed to settle all disputes between all of the involved parties. The defendant (the Purchaser) is to pay to 'the Vendors' - being the plaintiff, AAMD, Impondo and Mansa Manganese - $US6,300,000 in respect of forgiveness of debt pursuant to advances made under the Prepayment Facility Agreement. As identified in Ms Flegg's affidavit, this amount included interest. The plaintiff points out that the amount of the statutory demand is actually included in the amount mentioned in the terms sheet. There appears to be no dispute on that issue.
9 In exchange for the payment by the defendant, the Vendors agreed to 'sell or procure the relevant entity to sell the [commercial licences] within Mansa Manganese and Impondo Zambia'. Particulars of the licences, including the relevant registered holders, are set out in cl 4 of the terms sheet. The defendant was to pay to the plaintiff a royalty of $5 per tonne of saleable manganese exported from the 'commercial licences'. By cl 3(b) of the terms sheet, the parties contemplated the payment of $US250,000 to the plaintiff 'on the basis that the purchaser conducts a site visit to verify current stockpiles in good faith'.
10 The terms sheet stipulates that the 'completion of the acquisition' is conditional upon the satisfaction (or waiver) of numerous conditions precedent which include:
1. verification of the plaintiff's manganese ore inventory on the commercial licences;
2. preparation of a 'formal purchase agreement' which, upon execution, would terminate the prepayment facility and the offtake agreement - the 'comprehensive' purchase agreement was to incorporate the terms and conditions in the terms sheet and 'additional terms and conditions appropriate for a transaction of this nature';
3. the parties (that is, each of the vendors and purchasers) obtaining consent and acknowledgement from local partners in respect of each of the commercial licences; and
4. finalisation and presentation of a complete and updated geological report.
11 The timeframe stipulated for these things to occur was 'on or before 5 pm (WST) on 30 June 2014'. In the event this did not occur (or was not extended in writing), 'the agreement constituted by this terms sheet will be at an end and the parties will be released from their obligations under this terms sheet'.
12 For the present, the terms sheet can be put to one side. The first issue is whether the plaintiff committed defaults under the Prepayment Facility Agreement which triggered the plaintiff's payment or debt obligation to the defendant. The defendant says it did; the plaintiff says it did not. It is only if there was a default the terms sheet becomes relevant. The nature of the alleged default is found in two letters from the defendant to the plaintiff - the first dated 21 July 2014 and the second dated 1 August 2014. These letters appear as attachments JRF-16 and JRF-19 to Ms Flegg's affidavit. There is no dispute between the parties that the defendant alleged three defaults - and only three. It is convenient to deal with each in turn.
13 The first default is what is referred to by the parties as 'sale to third party default'. The defendant says the plaintiff breached cl 8.1(1) of the Prepayment Facility Agreement on the basis that 'the sellers [Kaboko and AAMD] have sold product to third parties in breach of the undertaking'. This is said to constitute an 'event of default under cl 10(b) of the Prepayment Facility Agreement'. Clause 8.1(1) reads to the effect that other than pursuant to the transaction documents the sellers will not 'sell or otherwise dispose of or create an interest in any product produced by it and which is to be sold to the buyer under the offtake agreement … without the buyer's prior written consent'.
14 The plaintiff says the defendant's letter of 21 July 2014 does not provide any particulars of the allegation. Nor, it is said, does the letter of 1 August 2014. No time period pertaining to the alleged breach is specified and no particular incident or conduct is identified. The plaintiff says the allegation is so vague and lacking in detail that this, in and of itself, must give rise to a dispute as to whether there has been a breach. Furthermore, on 25 July 2014, the plaintiff made an announcement to the ASX in which it expressly disputed the default allegation. Further, the plaintiff says the restated agreements contain contractual procedures for reconciliation or resolution of disputes in relation to ore that has been mined for the purposes of the parties' arrangements: see cl 9.4 of the Restated Offtake Agreement. The plaintiff points out no attempt has been made by the defendant to utilise these procedures.
15 In answer to the plaintiff's position, the defendant refers to an email dated 16 June 2014 from Mr Robertson of the defendant to Mr Landau of the plaintiff. The defendant raised the issue of the plaintiff's supply of manganese ore to third parties. Mr Landau responded in terms which the defendant says is an admission of a supply to third parties. A copy of the relevant email appears at attachment MR-5 to Mr Robertson's affidavit. Relevantly, the email reads;
It was made very clear to your people on the site visit that the sales were made to ensure local partners and tenements were kept in tact to ensure there would be no problems in the sale of the project to noble [sic] -if you consider that destructive I would suggest you get on a plane to zambia [sic].
16 In response, the plaintiff points to an email from Mr Van Heerden of the plaintiff sent to Mr Robertson on 1 March 2014. This email appears as part of attachment MR-2 to Mr Robertson's affidavit. Relevantly, it reads as follows;
If you refer to the 68 tons of material sold to the indian smelter, you should also be aware that Mr Chikonde had 210 t of material on the mine when we took it over. He has requested that we sell it on his behalf and our intention is just that. No material mines [sic] by Impondo since the agreement was signed have been sold.
17 The matter does not need to be developed any further. It is clear there is a dispute between the parties as to whether or not there has been a breach of the agreement and I am satisfied the dispute is genuine. It may be that the one allegedly sold by the plaintiff was owned by a third party.
18 The second alleged default is what is referred to as the 'JORC Resource Statement default'. This alleged default is also asserted in the letters of 21 July 2014 and 1 August 2014. In essence, what is alleged is that the plaintiff and AAMD failed to prepare a JORC Resources Statement in respect of the PECO project by 30 September 2013. It is not in dispute between the parties that no such report was prepared by the due date. It would appear then there is an event of default. The plaintiff points to cl 10 of the Amended and Restated Payment Facility Agreement. That clause is headed 'Events of Default'. By cl 10(b)(ii), if there is an event of default which amounts to a 'failure to comply' and that default is capable of remedy, then the defendant is obliged to provide the plaintiff with five business days to remedy the default. The plaintiff says this was not done and it is arguable there is no default.
19 In my view, it is arguable that there was no default. Contrary to the submissions put on behalf of the defendant, it does not seem to me to be clearly a case where the non-compliance is incapable of remedy so that the provisions of cl 10(b)(i) apply. Of course, I do not have to make a final decision on this question. But in my view, there is a serious question to be tried.
20 The third alleged default is that the plaintiff (by its directors) made 'untrue' statements, representations or warranties regarding the ownership of 'specified licences' in a letter of 11 January 2013: see attachment MR-8 to Mr Robertson's affidavit.
21 The focus of this dispute is a licence designated 13704-HQ-SML. There would not appear to be any dispute that, at all material times, this licence was owned by a party other than the plaintiff. It is in relation to this dispute the Building Terms Sheet is relevant.
22 It seems clear from the document that prior to the entry of the parties into the Building Terms Sheet, the defendant had concerns about whether or not the plaintiff actually had ownership of all the relevant licences. Clause 4 of the Building Terms Sheet refers to the plaintiff agreeing 'to sell, or procure the relevant entity to sell' the 'commercial licences'. As was submitted by the plaintiff, verification of the ownership 13704-HQ-SML was not expressed to be a condition precedent in the terms sheet. Furthermore, there is an email correspondence between Mr Robertson and Mr Landau and a Mr D'Sylva which had raised questions about certain of the licences, including 13704-HQ-SML. It would seem to me, based upon the documents available, there is a real question as to whether or not the defendant, through its agents, knew the ownership of the tenement by a party other than the plaintiff. In the circumstances, I am satisfied it is arguable there was some form of acquiescence or waiver on the part of the defendant such as would call into question the right of the defendant to terminate the agreement for default.
23 In the circumstances then, I am satisfied there is a genuine dispute in relation to the debt the subject of the statutory demand. In reaching that conclusion, I have not found it necessary to make any findings in relation to the terms sheet. So far as my decision is concerned, its relevance is limited to whether there has been a default in relation to ownership of the tenement. Otherwise, the terms sheet is of interest as background.
24 The demand will be set aside. The defendant ought pay the plaintiff's costs of the application, including the reserved costs.
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