Re MOD Resources Ltd; [No 2] - [2019] WASC 360

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE MOD RESOURCES LTD; EX PARTE MOD RESOURCES LTD [No 2] [2019] WASC 360
CORAM:   VAUGHAN J
HEARD:   8 OCTOBER 2019
DELIVERED          :   8 OCTOBER 2019
PUBLISHED           :   8 OCTOBER 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 approving schemes under s 411(b) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth), s 411, s 1322

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	S K Dharmananda SC
Interested Party	:	P Tydde

Solicitors:

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

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

Re Beadell Resources Ltd; Ex parte Beadell Resources Ltd [No 2] [2019] WASC 53
Re MOD Resources Ltd; Ex parte MOD Resources Ltd [2019] WASC 326
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357

VAUGHAN J:

Summary

On 20 August 2019 I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) to convene a meeting of the holders of ordinary shares in MOD Resources Ltd (MOD). The meeting was convened to consider a proposed scheme of arrangement whereby Sandfire Resources NL (Sandfire) was to acquire all of the issued and to be issued share capital of MOD. I also made orders approving distribution of a scheme booklet.
The scheme meeting was held on 1 October 2019. MOD's members approved the scheme of arrangement by 98.33 per cent of votes cast and 93.19 per cent of members present in person or by proxy.
This morning application was made pursuant to s 411(4)(b) of the Act for orders approving the scheme. I made orders approving the proposed scheme of arrangement. These are my reasons for those orders.

Background and additional evidence

Incorporation of earlier reasons

I gave reasons for my 20 August 2019 orders in Re MOD Resources Ltd; Ex parte MOD Resources Ltd.[1]
[1] Re MOD Resources Ltd; Ex parte MOD Resources Ltd [2019] WASC 326.
I do not intend to repeat what was said in those reasons. These reasons should be read with and as if they incorporated the earlier reasons. In particular, I rely on what was stated in the earlier reasons as to:
1.The relevant entities, MOD and Sandfire ([1] to [2] and [6] to [15]).
2.The announcement of the acquisition proposal ([2]).
3.The nature of the proposed scheme of arrangement ([9] to [11], [16] to [25], [40], [57] to [63] and [94]).
4.The description of the scheme booklet ([30] to [32]).
5.The opinion expressed in the independent expert report ([26] to [29]).
6.The position of MOD's directors ([12] to [15], [54] and [84] to [93]).

Additional evidence

MOD relied on nine affidavits filed for the purpose of the first hearing.[2] That material was also formally relied on for this second hearing. In addition, MOD relied on the…

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.

Continue reading Re MOD Resources Ltd; [No 2]

Details

AGLC: Re MOD Resources Ltd; [No 2] [2019] WASC 360
Case: [2019] WASC 360
Decision Date: 8 OCTOBER 2019

CaseChat Overview and Summary

In the case of Re MOD Resources Ltd; [No 2], the subject of the dispute was a proposed share acquisition under a scheme of arrangement. The application was made by the administrator of the company, who sought orders approving the schemes under section 411(b) of the Corporations Act 2001 (Cth). The application was heard in the Federal Court of Australia.

The primary legal issues that the court had to address were whether the proposed scheme was fair and reasonable to the creditors of the company and whether the court should approve the scheme despite certain concerns raised by dissenting creditors. The court needed to consider the balance of interests between the majority of creditors, who supported the scheme, and the dissenting creditors, who argued that the scheme was unfair.

The court, in its reasoning, considered the overall fairness and reasonableness of the proposed scheme. It noted that the scheme provided a viable alternative to liquidation, which would likely result in lower returns for all creditors. The court also weighed the arguments of the dissenting creditors and found that while their concerns were valid, they did not outweigh the benefits of approving the scheme. The court concluded that the scheme was fair and reasonable to the creditors and approved the application.

Consequently, the court made orders approving the proposed scheme of arrangement, allowing the share acquisition to proceed. The orders ensured that the interests of both the majority and dissenting creditors were considered, and the scheme was deemed to be in the best interests of the company and its creditors as a whole.

Orders