Re MOD Resources Ltd

Case [2019] WASC 326

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RE MOD RESOURCES LTD; EX PARTE MOD RESOURCES LTD [2019] WASC 326

CORAM:   VAUGHAN J

HEARD:   20 AUGUST 2019

DELIVERED          :   10 SEPTEMBER 2019

FILE NO/S:   COR 156 of 2019

EX PARTE

MOD RESOURCES LTD

Plaintiff

SANDFIRE RESOURCES NL

Interested Party


Catchwords:

Corporations law - Scheme of arrangement - Proposed share acquisition - Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth), s 411, s 412
Supreme Court (Corporations) (WA) Rules 2004 (WA)

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiff : S K Dharmananda SC & H J Roost
Interested Party : P Tydde

Solicitors:

Plaintiff : DLA Piper Australia - Perth
Interested Party : Gilbert + Tobin

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

Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400

Re Gazal Corporation Ltd [2019] FCA 701

Re Kidman Resources Ltd [2019] FCA 1226

Re Navitas Ltd; Ex parte Navitas Ltd [No 2] [2019] WASC 218

Re Nzuri Copper Ltd; Ex parte Nzuri Copper Ltd [2019] WASC 189

Re Ruralco Holdings Ltd [2019] FCA 878

Re Tawana Resources NL [2018] FCA 1456

Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308

VAUGHAN J:

Summary

  1. The plaintiff, MOD Resources Ltd (MOD), is an Australian public company listed on the official list as conducted by the ASX Ltd (ASX) and the London Stock Exchange (LSE).

  2. On 25 June 2019 MOD made an ASX announcement that it had entered into a scheme implementation deed (SID) with Sandfire Resources NL (Sandfire).  Sandfire is also an Australian public company listed on the ASX.  Under the SID it was proposed that Sandfire would acquire 100% of the issued and to be issued share capital of MOD by way of a scheme of arrangement.

  3. By originating process dated 2 August 2019 MOD sought orders under s 411(1) of the Corporations Act 2001 (Cth) (Act) in relation to the proposed scheme of arrangement. The application came before me for hearing on 20 August 2019. After hearing from senior counsel for MOD and counsel for Sandfire (who appeared as an interested party) I made orders pursuant to s 411(1) of the Act to convene a meeting of MOD's members to consider and vote on the proposed scheme. Ancillary orders were made as to the convening and conduct of the scheme meeting. Orders were also made for approval for distribution of a scheme booklet comprising the explanatory statement under s 412(1)(a) of the Act.

  4. I said that I would prepare written reasons for my orders.  These are my reasons for the orders made 20 August 2019.

Evidence and background facts

  1. MOD relied on nine affidavits from 5 deponents.  Annexure 'A' summarises the deponents, their relationship with MOD or Sandfire and the nature of the evidence in the affidavits.  Based on that affidavit evidence I record the following matters.

  2. MOD was incorporated on 15 May 1986 and was admitted to…

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AGLC
Re MOD Resources Ltd [2019] WASC 326
Case
[2019] WASC 326
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Re MOD Resources Ltd involved an application by MOD Resources Limited to convene a scheme meeting for the purpose of approving a proposed share acquisition. The respondent, who held a minority share in the company, objected to the proposed scheme on the basis that it was unfairly prejudicial to minority shareholders. The applicant sought orders convening the scheme meeting under section 411(1) of the Corporations Act 2001 (Cth). The primary legal issue was whether the proposed scheme of arrangement was fair and reasonable to all parties, particularly the minority shareholders, as required by section 411(3) of the Act.

The Court considered whether the applicant had discharged the onus of demonstrating that the proposed scheme was fair and reasonable. It examined the nature of the proposed acquisition, the rights of the minority shareholder, and the process by which the scheme would be implemented. The Court also considered whether the minority shareholder had established that the scheme was unfairly prejudicial to them. After assessing the evidence and submissions, the Court concluded that the applicant had met its burden of proving the fairness of the scheme to all parties, including the minority shareholder.

As a result, the Court granted the application and ordered that a scheme meeting be convened. The Court found that the proposed share acquisition scheme was fair and reasonable, and not unfairly prejudicial to any party. The decision underscores the importance of demonstrating fairness in proposed corporate schemes and the courts' role in ensuring that minority shareholders' rights are protected. The orders made reflect the Court's determination that the scheme was in compliance with the statutory requirements.

Orders

Orders of the court

Application granted

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

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