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Mighty River International Ltd v Hughes

Mighty River International Ltd v Hughes

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: MIGHTY RIVER INTERNATIONAL LTD -v- HUGHES [2017] WASCA 152

CORAM: BUSS P
MURPHY JA
BEECH JA

HEARD: 19-20 APRIL, 19 MAY & 10 AUGUST 2017

DELIVERED : 11 AUGUST 2017

FILE NO/S: CACV 30 of 2017

BETWEEN: MIGHTY RIVER INTERNATIONAL LTD
Appellant
AND
BRYAN HUGHES as administrator of MESA MINERALS LTD (subject to Deed of Company Arrangement)
DANIEL BREDENKAMP as administrator of MESA MINERALS LTD (subject to Deed of Company Arrangement)
First Respondents
MESA MINERALS LTD (subject to Deed of Company Arrangement)
Second Respondent

FILE NO/S :CACV 31 of 2017

BETWEEN :MIGHTY RIVER INTERNATIONAL LTD
Appellant
AND
MINERAL RESOURCES LTD
First Respondent
MESA MINERALS LTD (subject to Deed of Company Arrangement)
Second Respondent
BRYAN HUGHES as administrator of MESA MINERALS LTD (subject to Deed of Company Arrangement)
DANIEL BREDENKAMP as administrator of MESA MINERALS LTD (subject to Deed of Company Arrangement)
Third Respondents

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MASTER SANDERSON
Citation  :MIGHTY RIVER INTERNATIONAL LTD -v- HUGHES & BREDENKAMP [2017] WASC 69
File No  :COR 247 of 2016, COR 13 of 2017

Catchwords:

Bankruptcy and insolvency - Corporations - Administration - Deed of company arrangement - Whether 'holding' deed of company arrangement valid - Whether deed of company arrangement must specify some property that is to be available to pay creditors' claims - Whether deed of company arrangement is consistent with the objects of pt 5.3A

Legislation:

Corporations Act 2001 (Cth), s 435A, s 438A, s 439A, s 444A, s 445A, s 445F

Result:

Appellant's applications for leave to adduce additional evidence dismissed
Appeals dismissed
Respondents' notice of contention in CACV 30 of 2017 dismissed

Category: A

Representation:

CACV 30 of 2017

Counsel:

Appellant:     Mr C R C Newlinds SC & Mr D Sulan
First Respondents         :     Mr J Stoljar SC & Ms J Taylor
Second Respondent      :     Mr J Stoljar SC & Ms J Taylor

Solicitors:

Appellant:     Nova Legal
First Respondents         :     Clayton Utz
Second Respondent      :     Clayton Utz

CACV 31 of 2017

Counsel:

Appellant:     Mr C R C Newlinds SC & Mr D Sulan
First Respondent           :     Mr J T Gleeson SC & Dr B Kremer
Second Respondent      :     Mr J Stoljar SC & Ms J Taylor
Third Respondents        :     Mr J Stoljar SC & Ms J Taylor

Solicitors:

Appellant:     Nova Legal
First Respondent           :     Bennett + Co
Second Respondent      :     Clayton Utz
Third Respondents        :     Clayton Utz

Case(s) referred to in judgment(s):

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568
Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270
Australian Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA 95; (2015) 297…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] WASCA 152
Decision Date: 11 AUGUST 2017

CaseChat Overview and Summary

In the case of Mighty River International Ltd v Hughes, the dispute revolved around the validity of a holding deed of company arrangement and whether it must specify some property to be available to pay creditors' claims. The case was heard in the Federal Court of Australia. The primary legal issues before the court were whether the holding deed of company arrangement was valid, if the deed of company arrangement had to specify some property to be available to pay creditors' claims, and if the deed of company arrangement was consistent with the objects of Part 5.3A.

The court held that Part 5.3A of the Corporations Act 2001 (Cth) anticipates a prompt decision on whether a company should execute a deed of company arrangement, end the administration, or be wound up. The court noted that while the tight time frame specified in Part 5.3A can be extended, if it is decided that the company should execute a deed of company arrangement, this decision should be implemented expeditiously. The court further recognised that the nature, extent and standard of an administrator's investigation is necessarily affected by the tight time frame in Part 5.3A. The court found that a holding deed of company arrangement could be valid if it is consistent with the objects of Part 5.3A, and that the deed of company arrangement did not necessarily need to specify some property to be available to pay creditors' claims.

The final orders of the court were that the holding deed of company arrangement was valid, and that it was not necessary for the deed of company arrangement to specify some property to be available to pay creditors' claims. The court found that the deed of company arrangement was consistent with the objects of Part 5.3A.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Part 5.3A contemplates that a decision will be made promptly as to whether a company should execute a deed of company arrangement, or the administration should end, or the company should be wound up. The tight time frame specified in pt 5.3A can be extended by the Court, but upon it being decided that the company should execute a deed of company arrangement that decision should be implemented expeditiously. See Mentha v Sydney Airports Corporation Ltd [2002] FCA 530; (2002) 120 FCR 310 [55] (Goldberg J). The case law recognises that the nature, extent and standard of an administrator's investigation is necessarily affected by the tight time frame in pt 5.3A. See, for example, Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139, where Cohen J said:The intention [of Parliament in enacting pt 5.3A] was, as has been indicated in several cases, to provide a more expeditious and less expensive way of assisting those creditors and members than under the greater formality of a winding up or of the entry into a scheme of arrangement. One result, however, is that an administrator, constrained as he or she is by the time limits imposed under [pt 5.3A], cannot carry out a detailed investigation of a company in the same way as can a liquidator, and accordingly the administrator's actions must be looked at in the light of that more restricted range of activities which are available to him. A further result, when dealing with a deed of company arrangement under [pt 5.3A], is that the amount of detailed information which would be given to creditors in a scheme of arrangement under s 411 of the Corporations Law is not available, again because of time restrictions and the need to have material sent to the creditors quickly (145 ‑ 146). More recently, in Britax Childcare Pty Ltd v Infa Products Pty Ltd (administrators appointed) [2016] FCA 848; (2016) 115 ACSR 322, Burley J summarised the position as follows [88]:The administration process operates in circumstances where those controlling the relevant company have accepted that it is insolvent. It has been accepted that the investigation conducted in the administration process is intended by Parliament to be a 'swift and practical' one; Perpetual Trustee Co Ltd v Mustang Marine Australia Services Pty Ltd [2010] NSWSC 1429 (Mustang Marine) at [109]. Consistent with this, the administrator's investigation is necessarily a preliminary investigation which involves the administrator carrying out his or her investigations in a manner which is modified in light of the tight timeframe and associated constraints provided for by Pt 5.3A. An administrator, so constrained, cannot carry out a detailed investigation of at [sic] company in the same way as can a liquidator, and accordingly the administrator's actions must be looked at in the light of that more restricted range of activities which are available to him or her; Mediterranean Olives Financial Pty Ltd v Loaders Traders Pty Ltd (ACN 069 549 042) (subject to deed of company arrangement) (No 2) (2011) 82 ACSR 300; [2011] FCA 178 (Mediterranean Olives) at [61] ‑ [62].