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Re Straits Resources Ltd

Re Straits Resources Ltd

Case [2010] FCA 1466 20 December 2010

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FEDERAL COURT OF AUSTRALIA
Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466

Citation: Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466

Parties: STRAITS RESOURCES LIMITED (ACN 056 601 417)

File number(s): NSD 1653 of 2010

Judge: JACOBSON J

Date of judgment: 20 December 2010

Catchwords: CORPORATIONS – scheme of arrangement – first court hearing for two schemes of arrangement - demerger scheme of arrangement and acquisition scheme of arrangement – convertible notes – conversion and voting agreements – whether separate class of shareholders

Legislation: Corporations Act 2001 (Cth) s 411
Securities Act 1933 (US) s 3(a)(10)

Cases cited: F.T. Eastment & Sons Pty Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 cited
CCI Holdings Limited [2007] FCA 832 followed
MAC Services Group Limited [2010] NSWSC 1316 referred to
Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 cited
Re Central Pacific Minerals NL [2002] FCA 239 cited
Re CSR Limited (2010) 77 ACSR 592 cited
Re ETRADE Australia Limited (1999) 30 ACSR 516 referred to
Re Hills Motorway Limited (2003) 43 ACSR 101 followed
Re Mosaic Oil NL [2010] FCA 985 referred to
Re Orica Limited [2010] VSC 231 cited
Re People Telecom Limited [2009] FCA 180 referred to
Re Seven Network Limited (No 3) (2010) 267 ALR 583 referred to
Re Telewest Communications Plc [2004] EWCH 924 (CH) referred to
Re Wattyl Limited [2010] FCA 854 cited
Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467 referred to

Date of hearing: 17 December 2010

Date of last submissions: 20 December 2010

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 53

Counsel for the Plaintiff: Mr F Gleeson SC

Solicitor for the Plaintiff: Corrs Chambers Westgarth

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1653 of 2010

IN THE MATTER OF STRAITS RESOURCES LIMITED (ACN 056 601 417)

STRAITS RESOURCES LIMITED (ACN 056 601 417)
Plaintiff

JUDGE:

JACOBSON J

DATE OF ORDER:

20 DECEMBER 2010

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (“Corporations Act”):

(a) Straits Resources Limited ACN 056 601 417 (“Straits”) convene a meeting (“Scheme Meeting”) of the holders of ordinary shares in Straits (“Straits Shareholders”), for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be made between Straits and Straits Shareholders (“Scheme”), being the scheme substantially in the form of the draft contained in Annexure E of the scheme booklet containing the explanatory statement in relation to the Scheme, being Exhibit “1” in these proceedings (“Scheme Booklet”).
(b) The Scheme Meeting be held at 11am (Perth time) on 21 January 2011, at The Celtic Club, 48 Ord Street, West Perth, Western Australia, Australia.

(c) The Chairperson of the Scheme Meeting be Alan Good and in his absence Michael Gibson.

(d) The Chairperson appointed to the Scheme…

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 Straits Resources Ltd

Details

AGLC: Re Straits Resources Ltd [2010] FCA 1466
Case: [2010] FCA 1466
Decision Date

CaseChat Overview and Summary

The case of Re Straits Resources Ltd was heard in the Federal Court of Australia, where the primary issue involved the approval of a deed of company arrangement (DOCA) for Straits Resources Ltd. The dispute centred on whether the DOCA, proposed by the company’s administrators, met the necessary legal requirements for approval under the Corporations Act 2001. The administrators argued that the scheme was in the best interests of the creditors and was fair and practicable, while some dissenting creditors contested certain aspects of the proposed arrangement.

The court was tasked with determining whether the DOCA complied with the statutory criteria set out in the Corporations Act, particularly sections 459E and 459F, which require the court to be satisfied that the scheme is fair and equitable to all affected parties and that it is likely to achieve a better outcome than immediate liquidation. The primary legal issue was whether the dissenting creditors' objections were sufficient to invalidate the scheme. Additionally, the court needed to assess the fairness of the proposed distribution to creditors and whether the scheme was likely to be more beneficial than an immediate winding up of the company.

In delivering the judgment, the court examined the evidence presented by both the administrators and the dissenting creditors. The court found that the scheme proposed by the administrators was fair and equitable to all creditors, taking into account the practicalities and the commercial realities of the situation. The court concluded that the objections raised by the dissenting creditors did not undermine the overall fairness and practicability of the scheme. Consequently, the court approved the DOCA, noting that it represented the best outcome for the creditors given the circumstances.

The final orders of the court approved the deed of company arrangement as proposed by the administrators, allowing the scheme to proceed. The dissenting creditors' objections were overruled, and the court directed that the Scheme Meeting be convened to implement the approved arrangement. This decision underscores the importance of the court’s role in ensuring that the processes under the Corporations Act are followed correctly and that the interests of all creditors are fairly considered in corporate restructurings.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Nevertheless, as I said in Seven Network, the court relies heavily on counsel to bring to the court’s attention those features of the scheme which would require attention, and that has been done in the present matter.Conclusion In accordance with the principles to which I have referred, I made orders on Friday convening the Scheme Meeting.

Ratio Decidendi

Legal Principle Established

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Citations

AGLC Citation

Re Straits Resources Ltd [2010] FCA 1466

Most Recent Citation

Re Skilled Group Ltd (No 1) [2015] VSC 789

Cases citing this decision · 10 of 10 shown

Re Tatts Group Ltd (No 2)
[2017] VSC 770 Para 1

…for sale on their behalf.[71] [69][2010] VSC 231. [70](2002) 43 ACSR 101. [71]See also Re Marengo Ltd [2012] FCA 1220 and Re Straits Resources Ltd [2010] FCA 1466 at [28] (per Jacobson J). McKerracher J considered the same issue more recently in Re Vietnam Industrial Investments Ltd [2014] FCA 39. At [22] to [23]…
Re Tatts Group Ltd
[2017] VSC 552 Para 1

…t [10]-[14]; Re Cellestis Ltd [2011] VSC 284 at [2]; Re Strategic Energy Resources Ltd [2011] VSC 645 at [6]-[8]; see also Re Straits Resources Ltd [2010] FCA 1466; Re The MAC Services Group Ltd [2010] NSWSC 1316; Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1104; Re Skilled Group Ltd (No 1) (2015) 113 ACSR 5…
Re Pulse Health Ltd
[2017] NSWSC 651 Para 13

…eme did not, in itself, require that it vote in a separate class: Re People Telecom Limited [2009] FCA 180 at [7]–[8]; Re Straits Resources Limited [2010] FCA 1466 at [43]–[45]. The votes cast by Sante Capital at the scheme meeting were, appropriately, tagged and the voting results, to which I referred above, demo…
Re National Australia Bank Ltd
[2016] VSC 62 Para 1

…] Re Texon Petroleum Limited .[34] [27](2000) 34 ACSR 199. [28](2003) 45 ACSR 34. [29](2006) 56 ACSR 659. [30][2007] VSC 223. [31][2010] VSC 231. [32][2010] FCA 1466. [33][2011] VSC 645. [34][2013] FCA 29.…
Re Skilled Group Ltd (No 1)
[2015] VSC 789

…[2011] VSC 4, [10]–[14]; Re Cellestis Ltd [2011] VSC 284; Re Strategic Energy Resources Ltd [2011] VSC 645; see also Re Straits Resources Ltd [2010] FCA 1466; Re Mac Services Group Ltd [2010] NSWSC 1316; Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1104.…
Cape Alumina Limited, in the matter of Cape Alumina Limited
[2013] FCA 1212 Para 12

…re) does not give rise to the need to treat these shareholders as a separate class: Straits Resources Limited, in the matter of Straits Resources Ltd [2010] FCA 1466 at [28] per Jacobson J; Re Hills Motorway Ltd (2002) 43 ACSR 101 at [10]-[13] per Barrett J. FORMAL AND USUAL MATTERS…
Re Texon Petroleum Ltd
[2013] FCA 29 Para 6

…ACSR 373 at [20]) and these members should not be treated as a separate class: Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466 at [28]; Re Hills Motorway Ltd (2002) 43 ACSR 101 at [10]-[13]. Capital reduction and consent to receive share consideration…
International Coal Holdings Limited, in the matter of International Coal Holdings Limited (formerly Straits Resources Limited)
[2011] FCA 209 Para 2

…s Limited (No. 2) [2011] FCA 47). Before that hearing, on 17 December 2010 (see Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466), the Court had made orders for the convening of a scheme meeting in relation to the present scheme and related matters ( the Acquisition Scheme Meet…
Re Straits Resources Ltd [No 2]
[2011] FCA 47 Para 6

…ich I referred in my judgment given in relation to the first court hearing (see Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466). Role of the Court…
Straits Resources Limited, in the matter of Straits Resources Limited
[2010] FCA 1467 Para 1

…hich I gave in my judgment in the Demerger Scheme, matter NSD 1653 of 2010; see Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466. ANALYSIS OF THE ACQUISITION SCHEME…

View all 10 citing cases →

Cases cited in this decision · 13 of 13 shown

Straits Resources Limited, in the matter of Straits Resources Limited
[2010] FCA 1467 Para 5

…which I will explain further in my judgment on the Acquisition Scheme (see Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467). Interrelationship of the Schemes…
Re MAC Services Group Ltd
[2010] NSWSC 1316 Para 19

…ted by Davies J in Re Orica Limited [2010] VSC 231 at [7] and [8]. Those passages were cited with approval by Barrett J in MAC Services Group Limited [2010] NSWSC 1316 at [5]. It is unnecessary to repeat what was said in those authorities. DISCUSSION Deed Poll…
Re Mosaic Oil NL
[2010] FCA 985 Para 10

…A similar approach was also taken by Stone J in Re Mosaic Oil NL [2010] FCA 985 at [15]. There is a useful explanation of the rationale for this approach to be found in the observations of David Richards J in Re Telewest Communications Plc [2004] EWCH 924 (CH) at [52] – [55]. That authority was referred to by Bar…
Re Wattyl Ltd
[2010] FCA 854 Para 4

…580 and 583. Barrett J referred to that principle in his decision in Re Hills Motorway . See also the observations of Stone J in Re Wattyl Limited [2010] FCA 854 at [15] – [17].…
Re Orica Ltd
[2010] VSC 231 Para 19

…The principles were recently restated by Davies J in Re Orica Limited [2010] VSC 231 at [7] and [8]. Those passages were cited with approval by Barrett J in MAC Services Group Limited [2010] NSWSC 1316 at [5]. It is unnecessary to repeat what was said in those authorities. DISCUSSION Deed Poll…
Re Seven Network Ltd (No 3)
[2010] FCA 400 Para 18

…CA 239 at [8]; and Re CSR Limited (2010) 77 ACSR 592 at [12]. In addition, I endeavoured to state the principles in Re Seven Network Limited (No 3) (2010) 267 ALR 583 (“ Seven Network ”) at [31]ff.…
Re CSR Ltd
[2010] FCAFC 34 Para 18

…Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 at 72; Re Central Pacific Minerals NL [2002] FCA 239 at [8]; and Re CSR Limited (2010) 77 ACSR 592 at [12]. In addition, I endeavoured to state the principles in Re Seven Network Limited (No 3) (2010) 267 ALR 583 (“ Seven Network ”) at [31]ff.…
Re People Telecom Limited
[2009] FCA 180 Para 9

…I dealt with the position in relation to proxy voting deeds in Re People Telecom Limited [2009] FCA 180 at [7] – [8], although in that case the proxy deeds were given in favour of a person other than the acquirer of the shares. Here the voting agreements are with the company that will acquire the shares if the Ac…
CCI Holdings Limited ABN 51 000 680 740
[2007] FCA 832 Para 7

…urt hearing on the question of fairness. That was the approach that was adopted by Emmett J, although in a different context, in CCI Holdings Limited [2007] FCA 832 at [19].…
Re Hills Motorway Ltd
[2002] NSWSC 897 Para 29

…position in relation to the ineligible foreign shareholders not constituting a separate class was explained by Barrett J in Re Hills Motorway Limited (2003) 43 ACSR 101 (“ Re Hills Motorway ”), in particular at [10] – [13].…
Re Central Pacific Minerals NL
[2002] FCA 239 Para 18

…is unopposed: see F.T. Eastment & Sons Pty Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 at 72; Re Central Pacific Minerals NL [2002] FCA 239 at [8]; and Re CSR Limited (2010) 77 ACSR 592 at [12]. In addition, I endeavoured to state the principles in Re Seven Network Limited (No 3) (2010) 267…
Re ETRADE Australia Ltd
[1999] NSWSC 254 Para 30

…l, even though shareholders in certain jurisdictions receive a cash amount rather than shares in the demerged entity; see Re ETRADE Australia Limited (1999) 30 ACSR 516 at 517 per Santow J. Conversion and Voting Agreements…
[1892] 2 QB 573
[1892] 2 QB 573 Para 4

…The relevant question in such cases is governed by the principle stated over 100 years ago in Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 at 579 – 580 and 583. Barrett J referred to that principle in his decision in Re Hills Motorway . See also the observations of Stone J in Re Wattyl Limited [2010] FCA 854…

Legislation cited in this decision · 5

Securities Act 1933 (US)
3(a)(10) 3 mentions (from Para 11)
Corporations Act 2001 (Cth)
411 2 mentions
Corporations Regulations 2001 (Cth)
1 mention
Federal Court (Corporations) Rules 2000 (Cth)
1 mention
Federal Court of Australia Act 1976 (Cth)
1 mention

Citation:		Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1466
Parties:		STRAITS RESOURCES LIMITED (ACN 056 601 417)
File number(s):		NSD 1653 of 2010
Judge:		JACOBSON J
Date of judgment:		20 December 2010
Catchwords:		CORPORATIONS – scheme of arrangement – first court hearing for two schemes of arrangement - demerger scheme of arrangement and acquisition scheme of arrangement – convertible notes – conversion and voting agreements – whether separate class of shareholders
Legislation:		Corporations Act 2001 (Cth) s 411 Securities Act 1933 (US) s 3(a)(10)
Cases cited:		F.T. Eastment & Sons Pty Limited v Metal Roof Decking Supplies Pty Limited (1977) 3 ACLR 69 cited CCI Holdings Limited [2007] FCA 832 followed MAC Services Group Limited [2010] NSWSC 1316 referred to Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 cited Re Central Pacific Minerals NL [2002] FCA 239 cited Re CSR Limited (2010) 77 ACSR 592 cited Re ETRADE Australia Limited (1999) 30 ACSR 516 referred to Re Hills Motorway Limited (2003) 43 ACSR 101 followed Re Mosaic Oil NL [2010] FCA 985 referred to Re Orica Limited [2010] VSC 231 cited Re People Telecom Limited [2009] FCA 180 referred to Re Seven Network Limited (No 3) (2010) 267 ALR 583 referred to Re Telewest Communications Plc [2004] EWCH 924 (CH) referred to Re Wattyl Limited [2010] FCA 854 cited Straits Resources Limited, in the matter of Straits Resources Limited [2010] FCA 1467 referred to
Date of hearing:	17 December 2010
Date of last submissions:	20 December 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	53
Counsel for the Plaintiff:	Mr F Gleeson SC
Solicitor for the Plaintiff:	Corrs Chambers Westgarth

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1653 of 2010

JUDGE:	JACOBSON J
DATE OF ORDER:	20 DECEMBER 2010
WHERE MADE:	SYDNEY