JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GLENCORE NICKEL PTY LTD [2003] WASC 18
CORAM: MCLURE J
HEARD: 18 NOVEMBER, 17 DECEMBER 2002,
15 & 17 JANUARY 2003
DELIVERED : 7 FEBRUARY 2003
FILE NO/S: COR 305 of 2002
MATTER :Section 411 of the Corporations Act 2001 (Cth)
Glencore Nickel Pty Ltd (ABN 67 076 513 034)
BETWEEN: GLENCORE NICKEL PTY LTD (ABN 67 076 513 034)
Plaintiff
FILE NO/S :COR 306 of 2002
MATTER :Glenmurrin Pty Ltd (ABN 50 076 684 396)
BETWEEN :GLENMURRIN PTY LTD (ACN 076 684 396)
Plaintiff
Catchwords:
Corporations - Scheme of arrangement application for meetings of creditors - Factors for consideration - Foreign creditors - Contracts governed by foreign law - Ancillary proceedings in the United States - Power to restrain scheme creditors under s 411(16) of Corporations Act - Abridgement of time - Approval of the Schemes
Legislation:
Corporations Act 2001 (Cth), s 411, s 1322(4)(a)
Corporations Regulations 2001 (Cth), reg 5.1.01(1), reg 5.6.14A, reg 5.6.36
Result:
Applications granted
Category: B
Representation:
COR 305 of 2002
Counsel:
Plaintiff: Mr C M Scerri QC & Mr S G E McLeish
Solicitors:
Plaintiff: Mallesons Stephen Jaques
COR 306 of 2002
Counsel:
Plaintiff: Mr C M Scerri QC & Mr S G E McLeish
Solicitors:
Plaintiff: Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Bond Corporation Holdings Ltd v Western Australia (No 2) (1992) 7 ACSR 472
Bulong Nickel Pty Ltd [2002] WASC 126
Bulong Nickel Pty Ltd [2002] WASC 226
Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370
Re Amcor Ltd (2000) VSC 157; (2000) 34 ACSR 199
Re Bond Corporation Holdings Ltd (1991) 5 ACSR 304
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re Glendale Land Development Ltd (in liq) (1982) 7 ACLR 171
Re Hills Motorway Ltd (2002) 43 ACSR 101
Re Hudson Conway Ltd (2000) 33 ACSR 657
Re Ranger Minerals Ltd; Ex parte Ranger Minerals Ltd (2002) 42 ACSR 582
Re Reid Murray Acceptance Ltd [1964] VR 82
Re Sonodyne International Ltd (1994) 15 ACSR 494
Re Stockbridge Ltd (1993) 9 ACSR 637
Re Victorian Grain Service Ltd [2000] VSC 334; (2000) 35 ACSR 198
Thorpe v Bristile Ltd (1996) 16 WAR 500
Case(s) also cited:
FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
Re Alabama, New Orleans, Texas & Pacific Junction Railway Company [1891] 1 Ch 213
Re Australian Co-operative Foods Ltd (2001) 38 ACSR 71
Re Central Pacific Minerals NL [2002] FCA 239
Re Chevron (Sydney) Ltd [1963] VR 249
Re Mercantile Mutual Insurance (Australia) Ltd (2002) 43 ACSR 128
Re NRMA Insurance Ltd (2000) 33 ACSR 523
Re Timor Sea Petroleum NL (2000) 35 ACSR 186
MCLURE J:
Introduction
Glencore Nickel Pty Ltd ("Glencore Nickel") and Glenmurrin Pty Ltd ("Glenmurrin") applied for orders pursuant to…
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- AGLC
- Re Glencore Nickel Pty Ltd [2003] WASC 18
- Case
- [2003] WASC 18
- Decision Date
CaseChat Overview and Summary
The court held that it had jurisdiction to approve the scheme, even if it modified the rights of foreign creditors whose obligations were governed by the law of the State of New York. This conclusion was based on the interpretation of the Corporations Act, which was seen as accommodating the rights and interests of creditors under a foreign system of law, provided that the scheme was approved in accordance with Australian law. The court also recognised that while the scheme might not bind dissenting bondholders in the United States, the inclusion of a term requiring the initiation of 304 proceedings in the United States was a sufficient safeguard. The court further emphasised that it should not order a meeting if there was a significant likelihood that the scheme would ultimately be disapproved.
The court concluded that it had jurisdiction to approve the scheme and that the proposed terms adequately addressed the concerns related to the rights of foreign creditors. The court granted the application for the convening of a meeting of creditors, subject to certain conditions designed to protect the interests of the foreign creditors. The final orders included the convening of the creditors' meeting and the conditions for the approval of the scheme, including the requirement for 304 proceedings to be initiated in the United States.
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
However, a court should decline to order a meeting if there exists some feature in the scheme which makes it unlikely that the court will ultimately approve it: Re Bond Corporation Holdings Ltd (1991) 5 ACSR 304 at 316; Re Stockbridge Ltd (1993) 9 ACSR 637 at 646. The plaintiffs are corporations incorporated in New South Wales with their registered offices and principal assets in Western Australia. In particular, the Murrin Murrin joint venture nickel and cobalt project which they are developing and operating is located in Western Australia. The Scheme Creditors include the Bondholders. The Bondholders are individuals or entities resident outside Australia and the Bonds are regulated by documents governed by the law of the State of New York. The Court would not order a meeting of creditors if it did not have jurisdiction to approve the Schemes. The question of jurisdiction was considered by Heenan J in Bulong Nickel Pty Ltd (supra) and Bulong Nickel Pty Ltd [2002] WASC 226 with the benefit of detailed submissions by ASIC. The Bulong Scheme considered by Heenan J had the effect of modifying the rights of bond or note holders resident outside Australia which were also governed by the law of the State of New York. Heenan J said (at par 15):"I am satisfied that a proper characterisation of Pt 5.1 and s 411 of the Act is to treat it as a law relating to insolvency of corporations and, as such, to recognise that it accommodates the rights and interests not only of the company concerned, its members and creditors but also the interests of the community in which it has been conducting business and incurring obligations. This characterisation leads to the conclusion that the compulsory variation of the rights between the company and some of its creditors or members, if so approved in accordance with the legislation, is a discharge or variation of those contractual rights in accordance with the law of the forum which, because of its association with insolvency, will be effective notwithstanding that some, or even all, of the obligations between the company debtor and its creditors are governed by a foreign system of law … It follows that I am satisfied that s 411 confers on this Court a power to approve a compromise or arrangement even if the effect of the scheme of arrangement will be to modify or discharge obligations existing between the company concerned and third parties under a contract which stipulates that it is to be governed by a foreign system of law." I agree with Heenan J's statement of the law. Further, there was no suggestion in this case that the Court does not have jurisdiction in relation to the Scheme Creditors' other contractual or property rights affected by the Schemes (as to which, see Collins L, "Dicey and Morris on the Conflict of Laws", 13th ed, Sweet & Maxwell, London, 2000, Vol 2 Rules 111 and 112; Sykes E I and Pryles M C, "Australia Private International Law", 3rd ed, The Law Book Company Limited, Sydney, 1991, Ch 21). However, it is possible that the Schemes, if approved, may not be binding upon a dissentient or non‑participating Bondholder who sought to enforce rights under the Bonds or the securities in the United States. For that reason, it is a term of the Schemes that, on or before the Effective Date, applications are to be made in the United States under s 304 of the United States Bankruptcy Code ("304 proceedings") to enjoin Scheme Creditors from taking action in the United States in relation to any property or rights dealt with under the Schemes.