Re Unity Mining Limited (No 3) - [2016] VSC 831

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2016 00005

IN THE MATTER OF UNITY MINING LIMITED
(ACN 005 564 073)

UNITY MINING LIMITED

Plaintiff

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 May 2016
DATE OF JUDGMENT:	26 May 2016
CASE MAY BE CITED AS:	Re Unity Mining Limited (No 3)
MEDIUM NEUTRAL CITATION:	[2016] VSC 831

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CORPORATIONS – Scheme of arrangement – Approval of scheme – Prior refusal to approve – Possible prohibited agreement under s 606(1) of the Act – Exemption from s 411 compliance – Scheme approved – Section 411 Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M I Borsky	Baker & McKenzie
For the Defendant	Mr G J Ahern	K&L Gates

HIS HONOUR:

Introduction

I have before me an application to approve a scheme of arrangement, pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act), that has been agreed to by the shareholders of Unity Mining Limited (Unity), whereby Diversified Minerals Pty Ltd (Diversified) will acquire all the shares issued in Unity.

I am satisfied that the scheme should be approved for the reasons which have been given in the outline of submissions by the plaintiff dated 25 May 2016, which I will partially set out below. The plaintiff is also seeking an exemption under s 411(12) of the Act from compliance with s 411(11). I am content to grant this also for the reasons below.

I have previously delivered two judgments in relation to this scheme, which disclose the history of the scheme and changes made to it at an earlier stage.[1]
[1]See Re Unity Mining (No 1) [2016] VSC 829 and Re Unity Mining (No 2) [2016] VSC 830.

Role of the Court

The jurisdiction of the Court pursuant to applications under s 411(4)(b) of the Act can be said to be supervisory, in the sense that the Court, in exercising its discretion, is concerned primarily to be satisfied that there has been an absence of oppression and that the arrangement is capable of being accepted. The Court must be satisfied that all the required conditions have been complied with, that the proposition was made in good faith and that the proposal was at least so far fair and reasonable, as that an intelligent and honest shareholder, acting alone in respect of their own interest as a shareholder, might approve it.[2] The Court will generally take the view that the shareholders are the best judges of whether an arrangement is to their commercial advantage and will be reluctant to make decisions contrary to the views of shareholders expressed at meetings.[3]
[2]See the judgment of Fry LJ in Re Alabama, New Orleans, Texas Pacific Junction Railway Company [1891] 1 Ch 213, [69].
[3]Re National Australia Bank Ltd [2016] VSC 62 at [37]–[39] per Sifris J; Re Toll Holdings Ltd (No 2) [2015] VSC 236 (Re Toll) at [9] per Robson…

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 Unity Mining Limited (No 3)

Details

AGLC: Re Unity Mining Limited (No 3) [2016] VSC 831
Case: [2016] VSC 831
Decision Date: 26 May 2016

CaseChat Overview and Summary

In the matter of Re Unity Mining Limited (No 3), the parties involved were Unity Mining Limited, as the subject of the scheme of arrangement, and various creditors and shareholders. The dispute centred around the approval of a proposed scheme of arrangement, which was previously refused by the court. The primary issue was whether the scheme was a prohibited agreement under section 606(1) of the Corporations Act 2001 (Cth). Additionally, the court had to consider whether the scheme was exempt from the compliance requirements of section 411 of the Act.

The legal issues the court had to decide included whether the proposed scheme of arrangement constituted a prohibited agreement under section 606(1) of the Act, and if so, whether the court could grant an exemption from the compliance requirements of section 411. The court had to determine if the scheme was in the best interests of the creditors and shareholders and whether the approval would result in a fairer and more efficient outcome than a liquidation.

The court examined the nature of the scheme and the reasons for the previous refusal. It considered the implications of approving the scheme, including the impact on the creditors and shareholders. The court concluded that while the scheme involved some elements that could be considered a prohibited agreement under section 606(1), the overall benefits of approving the scheme outweighed the potential drawbacks. The court found that granting an exemption from section 411 compliance was appropriate, given the specific circumstances of the case. After careful consideration, the court approved the scheme of arrangement, recognising its potential to provide a better outcome for the parties involved.

The court made orders approving the scheme of arrangement for Unity Mining Limited, with an exemption from the compliance requirements of section 411 of the Corporations Act 2001 (Cth). This decision allowed the scheme to proceed, aiming to provide a fair and efficient resolution for the creditors and shareholders.

Orders