Queensland Phosphate Pty Ltd v Korda [No 2]

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0016

QUEENSLAND PHOSPHATE PTY LTD
(ACN 609 384 894)

First applicant

PARADISE PHOSPHATE LIMITED

(ACN 154 180 882)

Second applicant

v

MARK ANTHONY KORDA AND CRAIG PETER SHEPARD AS JOINT AND SEVERAL LIQUIDATORS OF LEGEND INTERNATIONAL HOLDINGS INC (IN LIQUIDATION) (ARBN 120 855 352)

First respondent

LEGEND INTERNATIONAL HOLDINGS INC (IN LIQUIDATION) (ARBN 120 855 352) [No 2]

Second respondent

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JUDGES:	KYROU, McLEISH and NIALL JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	31 July 2019
DATE OF JUDGMENT:	30 September 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 215
JUDGMENT APPEALED FROM:	[2018] VSC 789 (Randall AsJ)

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INSOLVENCY – Dormant mining company with insufficient cash to meet liabilities – Ownership of valuable mining tenements through subsidiary – Whether tenements realisable within reasonable period to enable payment of debts – Whether company able to pay all its debts as and when they became due and payable – Whether fact that tenements necessary for company’s ongoing business precluded them from being treated as realisable assets – Jingellic Minerals NL v Beach Petroleum NL (1991) 56 SASR 532 considered – Rees v Bank of New South Wales (1964) 111 CLR 210, Re Timbatec Pty Ltd (1974) 24 FLR 30, Switz Pty Ltd v Glowbind Pty Ltd (2000) 18 ACLC 343 applied – Re Adnot Pty Ltd (1982) 7 ACLR 212, Re Newark Pty Ltd (in liq) [1993] 1 Qd R 409 distinguished – Corporations Act 2001 (Cth) ss 95A, 459A, 585.

INSOLVENCY – Whether subsidiary insolvent – Whether subsidiary should be wound up on the just and equitable ground – Corporations Act 2001 (Cth) ss 459A, 461(1)(k).

CORPORATIONS – Uncommercial transaction – Company gave security to lender over all its shares in subsidiary which owned valuable mining tenement pursuant to bond deed and general security deed – Company received $400,000 pursuant to bond deed – Onerous provisions including events of default and consequences of default – Whether reasonable person in company’s circumstances would not have entered into transaction – Corporations Act 2001 (Cth) ss 588FB, 588FC, 588FE, 588FF.

PRACTICE AND PROCEDURE – New ground sought to be argued on appeal which had been abandoned at trial – Leave to rely on new ground refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr J Evans QC with Mr D Ratnam	Coleman Greig Lawyers
For the Respondents	Dr C G Button QC with Ms R Zambelli	Arnold Bloch Leibler

TABLE OF CONTENTS

Introduction and summary ...............................................................................................	1
Facts ………………………………………………………………………………………..	10
Business activities of Legend and Paradise ………………………………………………...	10
IFFCO dispute ……………………………………………………………………………..	10
Communications leading  up to the execution of the deeds ………………………………..	11
Terms of the deeds ………………………………………………………………………….	17
Enforcement of award and appointment of receiver and manager of Paradise …………….	20
Winding up of Legend and commencement of proceeding …………………………………	21
Trial Division proceeding ………………………………………………………………..	21
Issues raised on appeal …………………………………………………………………..	25
Issue 1: Insolvency of Legend and Paradise …………………………………………...	26
Legislation …………………………………………………………………………………..	26
Principles …………………………………………………………………………………...	26
Associate judge’s findings ………………………………………………………………….