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Re Nzuri Copper Ltd [No 4]

Re Nzuri Copper Ltd [No 4]

Case [2020] WASC 10 15 January 2020

Jurisdiction

Scheme of Arrangement

Disclosure

Ratification Meeting

Corporate Law & Governance

Type to search within this case.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE NZURI COPPER LTD; EX PARTE NZURI COPPER LTD [No 4] [2020] WASC 10
CORAM:   VAUGHAN J
HEARD:   14 ‑ 15 JANUARY 2020
DELIVERED          :   15 JANUARY 2020
PUBLISHED           :   15 JANUARY 2020
FILE NO/S:   COR 109 of 2019
BETWEEN:   NZURI COPPER LTD
Plaintiff
XUCHEN INTERNATIONAL LTD
Interested Party

Catchwords:

Corporations - Scheme of arrangement - s 411 Corporations Act 2001 - Power of the court to make orders convening a ratification meeting approving a scheme resolution - Satisfaction of condition precedent - Disclosure - Distribution of replacement scheme booklet - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 411, s 1319

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos
Interested Party	:	W Zappia

Solicitors:

Plaintiff	:	HWL Ebsworth
Interested Party	:	Gilbert + Tobin

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

Cleary v Australian Co-operative Foods Ltd (No 2) [1999] NSWSC 991; (1999) 32 ACSR 701
F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
PR Finance Group Limited (No 2) [2013] FCA 633
PR Finance Group Limited (No 3) [2013] FCA 704
Re Boart Longyear Ltd [2019] FCA 62
Re M B Group plc [1989] BCLC 672
Re Nzuri Copper Ltd; Ex parte Nzuri Copper Ltd [2019] WASC 189
Re Nzuri Copper Ltd; Ex parte Nzuri Copper Ltd [No 2] [2019] WASC 214
Re Nzuri Copper Ltd; Ex Parte Nzuri Copper Ltd [No 3] [2019] WASC 280
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2008] WASC 308
The Royal Bank of Scotland BV v TT International Ltd [2012] SGA 9

VAUGHAN J:

Overview

On 30 May 2019 I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) to convene a meeting of the holders of fully paid ordinary shares in Nzuri Copper Ltd (Nzuri). The meeting was convened to consider a proposed scheme of arrangement whereby Xuchen International Ltd (Xuchen) would acquire 100 per cent of the share capital of Nzuri by way of a scheme of arrangement. I also made orders approving distribution of a scheme booklet.
The scheme meeting was convened to be held on 8 July 2019. The chairperson caused the scheme meeting to be adjourned to 19 August 2019. At the scheme meeting on 19 August 2019 Nzuri's members approved the scheme of arrangement by 99.97 per cent of votes cast and 94.29 per cent of members present in person or by proxy.
On 14 January 2020 application was made for orders to convene a meeting of the members of Nzuri to ratify the resolution approving the scheme. I made orders to that effect the following day in the circumstances described below. I also made orders approving, for distribution to shareholders, a replacement scheme booklet. These are my reasons for those orders.

Background and additional evidence

Incorporation of earlier reasons

The proceedings have been before me on 10 occasions before 14 January 2020:

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 Nzuri Copper Ltd [No 4]

Details

AGLC: Re Nzuri Copper Ltd [No 4] [2020] WASC 10
Case: [2020] WASC 10
Decision Date: 15 JANUARY 2020

CaseChat Overview and Summary

The case of Re Nzuri Copper Ltd [No 4] involved Nzuri Copper Ltd, a company facing financial difficulties, and various stakeholders, including shareholders and creditors, who were affected by the company's proposed scheme of arrangement under the Corporations Act 2001. The primary dispute centred on whether the court had the authority to order a ratification meeting to approve the scheme resolution and whether the necessary conditions for such an order had been met. The case was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether section 411 of the Corporations Act 2001 empowered the court to make orders convening a ratification meeting to approve a scheme resolution, given that the requisite disclosure had not been made to the affected parties, and whether the court's power was limited to ordering distribution of a replacement scheme booklet. The court was required to determine if these actions constituted a condition precedent to the approval of the scheme, and if the failure to meet these conditions meant that the court could not exercise its discretion to convene a ratification meeting.

The court found that while section 411 of the Corporations Act 2001 provided the court with the power to make orders for the approval of a scheme resolution, it was not bound by a strict condition precedent in the form of prior disclosure or distribution of a replacement scheme booklet. The court held that the circumstances of each case would determine whether the failure to meet these conditions would prevent the court from exercising its discretion. In this instance, the court concluded that the failure to disclose and distribute the replacement scheme booklet did not necessarily preclude it from making the order. The court emphasised that the focus should be on whether the shareholders and creditors had received adequate information to make an informed decision about the scheme.

The final orders of the court were that it would make the order convening the ratification meeting, despite the failure to meet the condition precedent of disclosure and distribution of a replacement scheme booklet. The court determined that the shareholders and creditors had been provided with sufficient information to make an informed decision, and therefore, the scheme could proceed as planned.

Orders