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[2017] FCA 1076
Federal Court of Australia
2017-09-01
Barker J
Original judgment source is linked above.
ORDERS WAD 379 of 2017
IN THE MATTERS OF BARRICK (AUSTRALIA PACIFIC EXPLORATION) PTY LIMITED (ACN 008 648 440), BARRICK (GSM) PTY LIMITED (ACN 002 594 881), DELTA GOLD PTY LIMITED (ACN 002 527 899), BARRICK (KALGOORLIE) PTY LIMITED (ACN 009 712 092), AURIONGOLD PTY LIMITED (ACN 008 560 978) AND BARRICK (GRANNY SMITH) PTY LIMITED (ACN 009 466 175)
BETWEEN: BARRICK (AUSTRALIA PACIFIC EXPLORATION) PTY LIMITED ACN 008 648 440 First Plaintiff
BARRICK (GSM) PTY LIMITED ACN 002 594 881 Second Plaintiff
DELTA GOLD PTY LIMITED ACN 002 527 899 (and others named in the Schedule) Third Plaintiff
AND: BARRICK (PD) AUSTRALIA PTY LIMITED ACN 050 284 967 Defendant
JUDGE: BARKER J DATE OF ORDER: 1 SEPTEMBER 2017
THE COURT ORDERS THAT:
BARKER J: 1 On 1 September 2017, I made orders approving schemes of arrangement between each of the plaintiffs and its members under s 411(4)(b) of the Corporations Act 2001 (Cth), for consequential and related orders under s 413 and for exemption from compliance with the requirements of s 411(11). These are the reasons for so doing, which reflect the comprehensive written submissions of counsel for the plaintiffs. 2 The Court is asked to decide whether approval should be granted for schemes of arrangement concerning: the first plaintiff, Barrick (Australia Pacific Exploration) Pty Limited (ACN 008 648 440) (BAPE), and its sole shareholder (BAPE Shareholder); the second plaintiff, Barrick (GSM) Pty Limited (ACN 002 594 881) (GSM), and its sole shareholder (GSM Shareholder); the third plaintiff, Delta Gold Pty Limited (ACN 002 527 899), and its sole shareholder (Delta Shareholder); the fourth plaintiff, Barrick (Kalgoorlie) Pty Limited (ACN 009 712 092) (B(Kal)), and its sole shareholder (B(Kal) Shareholder); the fifth plaintiff, AurionGold Pty Limited (ACN 008 560 978), and its sole shareholder (AurionGold Shareholder); and the sixth plaintiff, Barrick (Granny Smith) Pty Limited (ACN 009 466 175) (Granny Smith), and its sole shareholder (Granny Smith Shareholder), (together, the Schemes). 3 By the terms of the Schemes and additional orders now proposed under s 413, it is proposed that there be a reconstruction or amalgamation to reduce the expense and complexity of corporate administration. 4 On 16 August 2017, I made orders at the first court hearing for meetings of the respective shareholder of each of the plaintiffs to be convened to consider the Schemes (Scheme Meetings): Barrick (Australia Pacific Exploration) Pty Limited v Barrick (PD) Australia Pty Limited [2017] FCA 998. The nature, purpose and details of the Schemes may be found in the reasons for those orders.
ISSUES 5 The issues falling for consideration at this second hearing are whether: (1) The statutory requirements have been met, including compliance with the Court's orders to convene the Scheme Meetings and s 411(17) of the Corporations Act. (2) The Schemes are fair in a general sense. Put another way, that (a) members have voted in good faith and not for an improper purpose; (b) the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it; (c) the plaintiffs have brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; (d) there has been full and frank disclosure of all information material to the member's decisions; and (e) minority shareholders would not be oppressed by the Schemes.
materials relied upon 6 The plaintiffs rely on the following materials: An affidavit of Ms Teressa Estelle Trezise, a legal assistant at the plaintiffs and the defendant, of 28 August 2017 (Trezise Affidavit) confirming that advertisements were placed in The Australian and The West Australian newspapers of the second court hearing. An affidavit of Mr Daniel David Kirk of 30 August 2017 (Second Kirk Affidavit) which explains the conduct of the Scheme Meetings, attaining statutory majorities and the resolutions in favour of the Schemes. An affidavit of Mr Daniel Paul Butler of 30 August 2017 (Third Butler Affidavit) which confirm that a copy of the extracted orders of the Court of 16 August 2017 and the final Scheme Booklet approved by the Court on 16 August 2017 were lodged with ASIC and attests to various other correspondence with contingent and potential creditors of the plaintiffs. The affidavits upon which the plaintiff relied at the first court hearing, which contain details of the Schemes and disclosure to members relating to the Schemes. The affidavit of Mr Luke Reginald Stephenson Fleming of 31 August 2017 (Third Fleming Affidavit) which addresses matters as to creditors and intercompany loans between the plaintiff entities and companies in the group. The affidavit of Mr Daniel David Kirk of 1 September 2017 (Third Kirk Affidavit) which confirm that ASIC has given a statement in writing pursuant to s 411(17)(b) of the Corporations Act and that no objections to the Schemes have been raised.
the court's jurisdiction and the standard of review 7 An arrangement is binding upon members of a company if it is approved by order of the Court: Corporations Act, s 411(4)(b). 8 The Court's jurisdiction in relation to an arrangement is supervisory: Re Rusina Mining NL (No 2) [2010] FCA 609, [5] (Barker J). 9 The Court must be satisfied that the meeting to approve the Scheme has been completed, that the resolution has been passed in accordance with the statutory requirements and that it is fair in a general sense: Re Central Pacific Minerals NL [2002] FCA 239, [12] (Emmett J); Rusina, [5] (Barker J). 10 The Court has a broad discretion to approve a scheme. It is not bound to approve it merely because the Court has previously made orders for the convening of a meeting or because the statutory majorities have been achieved: Re NRMA Ltd (No 2) (2000) 34 ACSR 261, 269 [21] (Santow J); [2000] NSWSC 408. 11 Courts are generally reluctant to intervene with schemes in which fully informed members have reached the requisite majority: Re Mitre 10 Limited [2010] VSC 100, [10] (Robson J); Re Auvex Resources Ltd [2011] FCA 820, [9] and [14] (Gilmour J). 12 The principles which govern the Court's discretion to approve a scheme were set out by Jacobson J in Re Seven Network Ltd (No 3) (2010) 267 ALR 583, 588-9 [35]-[40]; [2010] FCA 400: (1) whether the members have voted in good faith and not for an improper purpose; (2) whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it (the test of fairness was set out by Fry LJ in Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213, 247); (3) whether the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; (4) whether there has been full and frank disclosure of all information material to the members' decision; and (5) whether minority shareholders would be oppressed by the scheme. 13 This approach has been taken in recent cases before this Court, including: Re Texon Petroleum Limited (No 2) [2013] FCA 147, [6] (Farrell J); Re Talison Lithium Ltd (No 2) [2013] FCA 535, [12] (Gilmour J).
Voting majorities obtained 14 An arrangement is only binding if there is satisfaction of the requirements for the two types of majority votes at the court ordered meeting of members and the court approves the arrangement specified in s 411(4) of the Corporations Act. 15 The two types of majorities required are: (1) a majority in number of the members present and voting (either in person or by proxy): s 411(4)(a)(ii)(A) (Headcount Test); and (2) 75% of the votes cast on the resolution: s 411(4)(a)(ii)(B) (Votes Test). 16 The requisite majorities have been achieved for each plaintiff and each proposed Scheme. 17 The following table sets out the results of the vote in respect of the Scheme Resolution at the Scheme Meeting for the first plaintiff. First plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 5,000,000 0 100%
18 The following table sets out the results of the vote in respect of the Scheme Resolution at the Scheme Meeting for the second plaintiff. Second plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 5 0 100%
19 The following table sets out the results of the vote in respect of the Scheme Meeting for the third plaintiff. Third plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 1,000,000 0 100%
20 The following table sets out the results of the vote in respect of the Scheme Meeting for the fourth plaintiff. Fourth plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 177,763,984 0 100%
21 The following table sets out the results of the vote in respect of the Scheme Meeting for the fifth plaintiff. Fifth plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 512,370,012 0 100%
22 The following table sets out the results of the vote in respect of the Scheme Meeting for the sixth plaintiff. Sixth plaintiff For Against % in favour Number of Shareholders voting 1 0 100% Number of votes cast 2 0 100%
23 There were no "Abstain" votes recorded on any of the resolutions. 24 Both the Headcount Test (more than 50% of shareholders voting voted in favour) and the Votes Test (more than 75% of shares voted were in favour) are satisfied for each Scheme.
Other procedural requirements 25 The materials before me confirm that the plaintiffs have satisfied the following requirements: (a) the Scheme Booklet was registered with ASIC; (b) the orders made on 16 August 2017 were lodged with ASIC; (c) the Scheme Booklet was dispatched to the member of each plaintiff in accordance with orders (3) and (4) of those orders; (d) the Scheme Meetings were convened and held in accordance with orders (1) and (3)-(11) of those orders; (e) the statutory majorities were obtained at the Scheme Meetings; and (f) notice of the second court hearing was given in accordance with order (13) of those orders.
Section 411(17) of the Corporations Act 26 The Court's ultimate approval of the Schemes is dependent upon fulfilment of one of two alternative conditions set out in s 411(17) of the Corporations Act. 27 In the present case, s 411(17)(a) is not applicable as it is plain that schemes to effect the amalgamation or reconstruction of companies, accompanied by orders under s 413, are not capable of being undertaken by way of a takeover under Chapter 6 of the Corporations Act. 28 ASIC has provided a written statement to the effect that it has no objection to the Schemes. The second alternative (s 411(17)(b) of the Corporations Act) is thus satisfied by the ASIC no objection letter. 29 While production of an ASIC no objection letter usually brings an end to the issue, the letter does not bring to an end the Court's discretion: Re Macquarie Private Capital A Ltd [2008] NSWSC 323, [29]. In the present case, as s 411(17) is inapplicable by reason of the types of transactions to be effected by the Schemes, I consider there is no reason for the Court to exercise its discretion adversely to the plaintiffs.
Good faith and proper purpose 30 There is no evidence before the Court that the shareholders voting in favour of the Schemes have acted other than in good faith or in pursuit of any illegitimate or improper purpose. See Re Foundation Healthcare Ltd (No 2) (2002) 43 ACSR 680, 689 [27(2)] and 690 [30] (French J); [2002] FCA 973; Re Integra Mining Limited (No 2) [2013] FCA 220 [11] (McKerracher J).
Fair and reasonable scheme 31 The Court generally takes the view that the members are the best judges of whether an arrangement is to their commercial advantage and will be reluctant to make a decision contrary to the views expressed at meetings. 32 The Court may withhold its approval in the following instances: (1) where a majority is shown to be acting in bad faith; (2) where a majority's acceptance is in the nature of a fraud on the minority; or (3) where there is an objection to the scheme such that a reasonable person might not approve it. 33 Proof of the relevant statutory majorities is sufficient to establish prima facie evidence of fairness. The shareholder of each of the plaintiffs has voted all shares they had in each plaintiff in favour of the respective Schemes, with the requisite majorities attained at the Scheme Meetings. There are no minority shareholders for any of the plaintiffs. 34 The affidavit evidence of a director of the plaintiffs (and the defendant) has concluded that, after separate board consideration, the Schemes are in the best interests of the shareholder.
Full and frank disclosure 35 At the first court hearing, the plaintiffs led evidence as to: (1) the various materials and disclosures in the Scheme Booklet; (2) the verification processes of the plaintiffs and the defendant for information in the Scheme Booklet; (3) the benefits to directors and officers of the plaintiffs, as explained in the Scheme Booklet, if the Schemes are implemented; and (4) the ASIC exemption to a full independent expert's report and the accounting information of the plaintiffs and defendant. 36 I noted at the first court hearing that the level of disclosure in the Scheme Booklet was satisfactory. 37 Since the first court hearing and after the Scheme Meetings, it has been identified by the director and officers of the plaintiffs that: (1) the balance sheet of Granny Smith had a sum of intercompany receivables and a sum of "other payables" (which were intercompany payables) that were each erroneously stated as $580,374 less than the true position, as a result of an amount of $580,374 owing by Granny Smith to GSM being erroneously netted off against Granny Smith's intercompany receivables amount rather than reflected as an additional intercompany payable; and (2) the balance sheet of GSM had similarly understated its "intercompany receivables" and its "other payables" positions by an equivalent amount, as a result of the receivable owing to GSM by Granny Smith being netted off against GSM's other payables amount rather than reflected as an additional intercompany receivable. 38 Accordingly, the Granny Smith Shareholder and GSM Shareholder were not informed of this precise position by the explanatory statement. 39 I accept the explanation in the Third Fleming affidavit that: (1) the sum was not material in the context of the balance sheets distributed and did not affect the net assets position of either Granny Smith or GSM; (2) the sum was part of an intercompany arrangement between two of the plaintiffs in any event, so that following the reconstruction or amalgamation, it should make no difference; and (3) in any event, the director of each of the Granny Smith Shareholder and GSM Shareholder has confirmed it would not have made any difference to the vote placed at the relevant Scheme Meetings.
Minority oppression 40 As there is only a single shareholder of each plaintiff, no minority is in existence and capable of being oppressed.
The significance of no objection from ASIC 41 ASIC Regulatory Guide 60 provides that the primary consideration for ASIC is whether, having regard to the principles in s 602 of the Corporations Act, shareholders are adversely affected by the takeover being implemented by a scheme of arrangement rather than a takeover bid undertaken pursuant to Chapter 6 of the Corporations Act (see paragraph 60.16). These principles relate to ensuring there is: (1) sufficient time for the plaintiffs' shareholders to make a decision; (2) sufficient information to make a decision; and (3) a reasonable and equal opportunity to share in any benefits that flow from a person acquiring a substantial interest in their company. 42 These matters are not of concern to reconstruction and amalgamation Schemes such as these.
Section 411(11) of the Corporations Act exemption 43 Section 411(11) of the Corporations Act requires a copy of every order of the Court made for the purposes of s 411(4)(b) of the Corporations Act to be annexed to every copy of the relevant company's constitution issued after the order was made. An exemption from this requirement may be granted under s 411(12) of the Corporations Act, and will be granted 44 If the Court approves the Schemes, the orders will not effect any alteration of the plaintiffs' constitutions and will not affect their true construction. Further, the plaintiffs will be deregistered without winding up. As such, there is no purpose to be served in having the order annexed to the plaintiffs' constitutions. An exemption pursuant to s 411(12) of the Corporations Act will be granted, as in other cases where there is no utility in this requirement.
Creditors in no worse position 45 At the first court hearing, submissions were made that creditors of the plaintiffs appear to be in no worse position based on: (1) the evidence from the director and financial accountant for the plaintiffs, including as to the director's belief in solvency and ability of the amalgamated entity to meet debts as and when they fall due; (2) verification of the unaudited balance sheets of the plaintiffs, including on a consolidated basis post-implementation of the schemes; and (3) a deed of cross-guarantee for creditors of BPDA (the defendant) which has been confirmed by the director as in place to give access to creditors of BPDA (post implementation of the schemes) to assets of other Group Entities as defined in that cross-guarantee. 46 All identified, contingent, possible or future creditors identified at the first court hearing were provided with notice of the second court hearing (which was additional to the ordinary newspaper advertisements) as explained in the Third Butler affidavit. 47 ASIC has also been provided with all relevant documentation. 48 No creditor (or contingent or potential creditor) or ASIC has indicated an intention to appear, or has appeared, at the second court hearing or indicated opposition to the proposed schemes being approved.
Section 413 Orders 49 The proposed Schemes are reliant upon orders sought under s 413 of the Corporations Act, which provision relates to schemes of arrangement that propose an amalgamation or reconstruction between two Part 5.1 bodies. 50 At the first court hearing, the plaintiffs addressed the Court on aspects of reconstruction and amalgamation schemes earlier approved by the Court, and the requirements of s 413 were addressed. It was indicated that further submissions would be provided at the second court hearing. 51 The interrelationship between s 411 and s 413 is explained in AGL Energy Services (Queensland) Pty Ltd v AGL Energy Services Pty Ltd (No 1) [2010] FCA 452, [14]-[15] by Emmett J as follows: 14 A scheme for reconstruction or amalgamation within s 413 is not, of itself, a compromise or arrangement between a Part 5.1 body and its creditors within s 411. However, before the jurisdiction under s 413 can be exercised, there must be such a compromise or arrangement. As a practical matter, it may be that the compromise or arrangement is one that does not need to rely on s 411(4), because it is something that could be effected privately between a company and its members, as in this case, between the Company and the Company Member. However, there is nothing untoward, in invoking the powers conferred on the Court by s 411 as a prerequisite to enlivening the further provisions of s 413 (see, for example, Re Clydesdale Bank Limited (1950) SC 30 at 36 ff, where a clear distinction was drawn between a compromise or arrangement and a scheme of reconstruction or amalgamation under s 206 and s 208 of the Companies Act 1948 (United Kingdom), which correspond with ss 411 and 413 of the Act). 15 The element of compromise or arrangement that is necessary to satisfy s 411 need not be of any great magnitude or significance, so long as what is proposed can fairly be characterised as a compromise or arrangement between a company, on the one hand, and its members, on the other. That will suffice to enliven the Court's powers under s 413, so long as the compromise or arrangement is proposed for the purposes of, or in connection with, a scheme for the reconstruction or amalgamation. Clearly enough, what is being proposed is for the purposes of, and in connection with, such a scheme. 52 Section 413 confers jurisdiction on the Court to make orders if three conditions precedent are met: (1) there must be a compromise or arrangement (that is addressed above); (2) the compromise or arrangement must have been proposed "for the purposes of or in connection with a scheme for a reconstruction of any Part 5.1 body or bodies or the amalgamation of any two or more Part 5.1 bodies" (addressed below); and (3) under the scheme, "the whole or any part of the undertaking or of the property of a body concerned in the scheme is to be transferred to a company" (addressed below). 53 If these are satisfied, the Court can make orders either at the approval of the compromise or arrangement (at the second court hearing on the scheme) or by any subsequent order. 54 I reached a provisional view at the first court hearing that there was no jurisdictional impediment to making these foreshadowed orders under s 413.
There is a reconstruction and/or amalgamation 55 I accept counsel's submission that the Schemes all satisfy the requirements of a "reconstruction" or "amalgamation" or both. 56 In Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849, [76], Lindgren J said that: (1) a restrictive interpretation should not be placed on either the term "reconstruction" or the term "amalgamation"; and (2) the approach should be simply to inquire whether the circumstances of a particular case fall within one or the other or both of the words, without first attempting to delineate their respective boundaries of meaning. 57 See also SGIC Insurance Ltd v Insurance Australia Ltd (2004) 51 ACSR 593, 594 [4]; [2004] FCA 1638, where Jacobson J noted that it was unnecessary to "analyse in any detail" whether the transaction in that case was either a "reconstruction" or an "amalgamation" when satisfied "they [were] either for the reconstruction or amalgamation". 58 I am satisfied nonetheless that the Schemes are essentially reconstructions or amalgamations or both. 59 There is little or no property left in each plaintiff and there is no substantial business activity or undertaking left for each plaintiff to conduct. However, that does not mean that there is nothing to transfer from each plaintiff to the defendant to effect a reconstruction. 60 The "undertaking" (or "business") of each plaintiff company is being transferred to BPDA. In my view, the identification of the "undertaking" or business is a matter of classification for each particular corporate entity according to its circumstances. 61 I accept the submission that the plaintiff entities do have an undertaking, however limited that undertaking now is, because: (1) in the case of each of the plaintiffs, they were entities formerly involved in the economic exploitation of gold mines, mineral exploration or the provision of services in connection with those operations; (2) their present undertaking or business is the eventual shutting down of those former gold mining operations and mineral exploration operations, and dealing with the disposal of assets and addressing of remaining liabilities (or waiting for unknown liabilities or asserted liabilities to be raised so they can be addressed); and (3) the matter identified in (2) above, it is submitted, is sufficient to constitute an undertaking or business which may be transferred for a reconstruction under s 413. 62 Substantially the same business as is conducted now by the generally dormant plaintiff entities will be conducted by the defendant, their parent, following the reconstruction. As such, I accept the shareholders of the transferor plaintiff companies will also still be the same as the transferee company (which all form part of the Barrick group). 63 The Schemes, therefore, effect reconstructions. This conclusion is consistent with the view expressed in Barrick (Lawlers) Pty Ltd v Barrick Mining Company (Australia) Pty Ltd, in the matter of Barrick (Lawlers) Pty Ltd (No 2) [2016] FCA 110 (Barrick (Lawlers) No 2), [8]. 64 The Schemes, however, may also constitute "amalgamations" within the formulations expressed in The Citizens and Graziers' Life Assurance Company Ltd v Commonwealth Life (Amalgamated) Assurances Ltd (1934) 51 CLR 422, 445-7 (Starke J, with Gavan Duffy CJ agreeing) and 455-8 (Dixon J, with Rich and McTiernan JJ agreeing); [1934] HCA 22. 65 That is, acknowledging that "amalgamation" has no definite legal meaning, there is to be the transfer of one or more companies' assets and liabilities to an existing company with a view to consolidating the constituent elements of the old companies into one or to the merger into one company the constituent elements of the others. 66 In the present Schemes: (1) the stated purpose of the Schemes is corporate consolidation with a single parent entity; (2) for the plaintiffs, that is immediately apparent as they will be deregistered following the Schemes becoming effective and their assets and liabilities transferring to the defendant; and (3) in due course, the constituent elements of each of the plaintiffs will merge into the defendant, thereby amalgamating all seven entities. 67 As such, the requirements of s 413 for a reconstruction, or amalgamation, or both are satisfied by these Schemes.
Whole or part of undertaking or property of a body to be transferred to a company (s 413(1)) 68 This requirement of s 413(1) is satisfied. 69 By cll 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7 of the proposed Schemes, the whole of the property of the plaintiffs is to be transferred to BPDA. 70 As indicated at the first court hearing, it could be said against the plaintiffs that, as they are otherwise dormant entities with very few remaining assets and liabilities, that the Schemes involve no transfer of "undertaking" or "property". 71 As to all of the plaintiff companies, the undertaking or business (identified above) is to be transferred to the defendant. Again, while that undertaking or business is not substantial as the plaintiffs are "dormant" in the sense of not presently operating gold mines or providing associated services as they once were, there are still marginal business operations that each plaintiff conducts. These business activities are sufficient to form an undertaking for a reconstruction or amalgamation scheme under the Act. 72 Further, as to each of the plaintiffs other than BAPE, there are intercompany receivables or other assets listed as assets on their balance sheets, which are being transferred as part of the Schemes.
Assets to be transferred (s 413(1)(a)) 73 For present purposes, I consider that the assets of the plaintiffs will be transferred to the defendant. 74 The Schemes refer to the assets to be transferred (cll 1 and 4) but it is the orders of the Court under s 413 that will give effect to this transfer. 75 The orders for transfer of assets under s 413(1)(a) are in terms generally consistent to those in earlier cases before the Court: Legrand Australia Pty Ltd v HPM Industries Pty Ltd (No 2) [2009] FCA 1239 (Lindgren J), orders (3)(a) and (4)(a), Millennium CHPP Pty Ltd v Millennium Coal Pty Ltd (No 2) [2011] FCA 4 (Stone J), orders (4)(a)-(b) (first roman numeral in each) and All Star Funds Management Ltd v Venture Investment Management Ltd (No 2) [2012] FCA 564 (Jagot J), orders (4)(a)-(k) (first roman numeral in each).
Liabilities to be transferred (s 413(1)(a)) 76 The protection of creditors was to be considered at the second court hearing and by the orders made at the second court hearing under s 413: Re AGL Sydney Ltd (1994) 13 ACSR 597, 598 (Young J). 77 For a reconstruction or amalgamation scheme which proceeds as a members' scheme, a protection for creditors is their ability to appear at the second court hearing: SGIC Insurance Ltd v Insurance Australia Ltd (2004) 51 ACSR 470, 471 [10]-[11]; [2004] FCA 1492. 78 In the present case, there are no objectors and at the time of these submissions no creditors (or contingent or potential creditors) have come forward since the advertisement of the second court hearing to raise any concerns about the proposed Schemes. 79 Further, the evidence of the accountant and director of the plaintiffs is that the liabilities of the plaintiffs should be adequately covered by assets of the defendant following implementation of the Schemes and the cross-guarantee - which were addressed at the first court hearing. 80 Further, no additional evidence has been put forward since the first court hearing as to previously unknown liabilities (other than the misdescription in the balance sheets for GSM and Granny Smith noted above) nor any contact made by third parties or objectors to suggest there are any "long tail liabilities" or known or foreshadowed contingent liabilities other than as already disclosed. 81 The advertisement approved by the Court in a form which would alert potential creditors was published in two newspapers. 82 In any event, it is not intended by the Schemes that liabilities of the plaintiffs disappear upon the Schemes becoming effective. It is intended that the liabilities will transfer to the defendant, BPDA. 83 By clauses 1.1, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7 of the proposed Schemes, "all liabilities" of the plaintiffs will transfer to BPDA once orders under section 413 are made by the Court. 84 The definition of "liabilities" contained in the proposed Schemes at clause 1.1 is very broad; it: means all liabilities howsoever arising and whether present, unascertained, immediate, future or contingent, including (without limitation): (a) any liabilities within the meaning of sub-section 413(4) of the Corporations Act; (b) any liability subject to a Security Interest (as that term is defined in the Personal Property Securities Act 2009 (Cth)); and (c) any liability under potential future proceedings (whether civil, regulatory or otherwise). 85 The definition of liabilities addressed at the first court hearing includes the statutory broad definition in s 413(4) which also covers liabilities "incapable under the general law of being assigned or performed vicariously" (emphasis added). 86 The evident purpose of s 411 and s 413 is to provide broad jurisdiction and powers to the Court for compromises, arrangements, reconstructions and amalgamations of companies in a diversity of circumstances with curial supervision of the process for those corporate changes rather than the merits of them. That purpose is furthered by giving the plain words of s 413(4) their ordinary meaning, and thereby providing a broad variety of potential uses for orders under s 413(1) where liabilities otherwise not transferrable are concerned. 87 Arguably, the definition in s 413(4) could cover obligations otherwise incapable of assignment at law in the absence of a novation (Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395, 404 [32]; [2006] FCAFC 40). 88 It is expected that all liabilities of the plaintiffs will thereby transfer. 89 As BPDA (the defendant) is a party to these proceedings and it is a party to the proposed Scheme, BPDA will be bound to the terms of the Scheme once effective and the orders made by the Court pursuant to s 413 of the Corporations Act. 90 Section 413(1)(a) is cast in broad terms so as to cover future or contingent liabilities of the scheme company: Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd (2007) 25 ACLC 208, 222 [91]-[92] (Lindgren J); [2006] FCA 1849; Achieve Foundation Ltd v ACNewCo Ltd (2010) 77 ACSR 673, 682 [58]-[61] (Foster J); [2010] FCA 382. 91 As indicated at the first court hearing, by reason of the activities of the plaintiffs (conducting mining operations, exploration or associated services), it is not impossible that some future liability, currently unknown, may arise. 92 The types of potential future liabilities were addressed at the first court hearing and it is intended that these will transfer to BPDA. 93 The notification of two worker's compensation claims made against Granny Smith is noted specifically in the explanatory statement. These claims, even if not commenced and within the ambit of the transfer of legal proceedings order, will constitute liabilities within the broad definition, as contingent or future liabilities, for which BPDA would become liable. 94 The potential liability to ASIC for alleged Corporations Act contraventions concerning group reporting by the plaintiffs in 2006 to 2011 and the extant failure to lodge compliant documents during the period, was explained at the first court hearing. In that regard: (1) while it is not clear as a matter of law whether a statutory penalty not yet issued against one entity could be issued against another entity after the former is deregistered, it has not been the subject of any further action by ASIC since raised in 2012 and 2013, and appears unlikely to be raised; (2) it is not a matter ASIC has raised as sufficient to justify refusal to approve the Schemes or to make the orders sought under s 413; (3) it is not a matter, which under any express provision of the Corporations Act, prohibits the approval of the schemes or the making of orders sought under section 413; and (4) it has not otherwise been continued from 2012 onwards (that is for the last 5 years), when otherwise compliant reporting has occurred. 95 As to the potential liability to the Office of State Revenue for pay-roll tax, also addressed at the first court hearing, any statutory tax liability (upon issue of the relevant assessment notice with any penalties or interest sums) may be considered transferred to BPDA pursuant to the orders under s 413(1)(a). 96 In Millennium, at Annexure A (the Scheme), the "Liabilities" as defined in clause 1 were defined to include Tax whether assessed or to be assessed ( "Tax" is further defined in clause 1). There, Stone J was content to approve the Scheme in terms that transferred such tax liabilities. I accept counsel's proposition that such tax liabilities would likely amount to existent or future statutory debts (Pape v Commissioner of Taxation of the Commonwealth of Australia (2009) 238 CLR 1 at 31 [38] (French CJ), 65-66 [140] (Gummow, Crennan and Bell JJ), 155 [452] (Heydon J); [2009] HCA 23). 97 Any liability of Granny Smith in the extant District Court proceedings would also transfer. As explained in the Third Butler affidavit, the solicitors for the plaintiff in those proceedings confirmed receipt of the explanatory statement and provided the quantum of damages sought in those proceedings, which sum does not exceed the net assets of the amalgamated BPDA post implementation of the schemes. 98 By reason of the orders to be sought pursuant to s 413(1)(a) and cll 4.2.2, 4.3.2, 4.4.2, 4.5.2, 4.6.2 and 4.7.2 of the proposed Schemes, contingent environmental, statutory, contractual or tortious liabilities of the plaintiffs that could arise in the future, including workers compensation liabilities of Granny Smith, will be liabilities of BPDA. 99 The orders for transfer of liabilities are in similar terms as in the Legrand, Millennium and All Star schemes above.
Transfer and continuation of legal proceedings - s 413(1)(c) 100 By s 413(1)(c), the Court may make orders for the continuation by or against the transferee company of any legal proceedings pending by or against the transferor body. 101 The definition of "legal proceedings" appears sufficiently wide to cover curial and administrative proceedings (to the extent that there may be administrative proceedings in a native title related body or workers compensation field). 102 The definition refers to "pending" proceedings, and suggests that proceedings need to have been commenced to be pending. 103 As such, the foreshadowed workers compensation claims may not fall within this order although, as explained above, as the liability for any such claim will be transferred to the defendant, it will then be named as the proper defendant in any workers compensation claim proceedings that might be commenced.
Deregistration of the plaintiffs - s 413(1)(d) 104 By s 413(1)(d), the Court may make orders for the deregistration by ASIC of the plaintiffs, as the transferor bodies, without winding up. 105 The deregistration will occur upon these Schemes becoming effective, being upon lodgement of orders approving the Schemes with ASIC. 106 ASIC has not opposed this course. 107 There is no evident reason why such orders should not be made by the Court and I will make them.
Other orders - s 413(1)(g) 108 By s 413(1)(g), the Court may make orders as to such incidental, consequential and supplemental matters as are necessary to ensure that the reconstruction or amalgamation is fully and effectively carried out. 109 Two additional orders are sought. Both are appropriate. 110 The first order is to authorise the defendant and its directors and authorised employees to take such steps and execute and lodge documents for the plaintiffs as might be needed to give effect to the Schemes. 111 This first order is uncontroversial, is consistent with a desire to ensure the Schemes become effective and meets the objects of s 413(1)(g). Orders in these terms have been made in other schemes, including Legrand (order (8)), Millennium (order (6)) and Barrick (Lawlers) (No 2), (order (4)). 112 The second order is to effectively authorise the defendant, as recipient of any information the plaintiffs possessed, to use that information on the same terms as the plaintiffs could. 113 By way of example, if a plaintiff had received confidential information in documents from a third party under an agreement, and those documents, being part of the books and records of a plaintiff were transferred to the defendant, there could be a concern that the defendant, or its officers, would be in breach of an equitable obligation of confidence by its mere receipt or review, or use. 114 To address this issue, in other schemes, an order has been made which gives some measure of protection to the defendant (the transferee company) who receives the information. However, the order is drafted so that it confers upon the defendant no higher or better right to use confidential, personal, privileged or otherwise protected information than the relevant plaintiff has. 115 While there is no evidence before the Court as to any specific concern of the plaintiffs, it is apparent that the plaintiffs were involved in substantial commercial enterprises, including transactions concerning mining tenements. It is appropriate to assume that the books and records of the plaintiffs may include commercially sensitive information of third parties. 116 Such orders were also made in Legrand (order (7)), Equatorial Mining Pty Ltd v Antofagasta Investment Co Limited (No 2) [2014] FCA 61 (order (7)) and Barrick (Lawlers) (No 2) (order (5)). 117 Further, it may be noted that these orders were not advertised as relief the plaintiffs would seek at the second court hearing. It may be immediately noted that in Legrand, the advertisement did not set out any of the section 413 relief that would be sought. Notwithstanding that, a practice has been developed to advertise that section 413 relief will be sought. 118 Broadly: (1) these orders will assist the Schemes and give effect to the intention of the defendant shareholder to have the Schemes brought into operation; (2) as to the first order, the authorisation to the defendant to do things to bring the Schemes into effect is reasonable and warranted; and (3) as to the second order, the substantial s 413 orders (that assets and liabilities would be transferred and deregistration occur) were clearly advertised, and this should have been enough to alert any party who is concerned about their documents or information with the plaintiffs to have raised their concern.
Conclusion 119 In my view, in conclusion: (1) the Court's directions and the statutory requirements have been complied with, including the absence of an objection from ASIC; (2) the Schemes are fair in a general sense, and there is no reason for the Court to exercise its discretion against approval of the Schemes; and (3) no creditors have appeared to raise any issues unforeseen in the terms of the Schemes proposed and the orders under s 413, which are intended to involve a transfer of assets and liabilities that do not adversely affect their rights. 120 The orders proposed in the Minute of Proposed Orders that I have dated 1 September 2017 should be made. I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.
SCHEDULE OF PARTIES WAD 379 of 2017 Plaintiffs Fourth Plaintiff: BARRICK (KALGOORLIE) PTY LIMITED ACN 009 712 092 Fifth Plaintiff: AURIONGOLD PTY LIMITED ACN 008 560 978 Sixth Plaintiff: BARRICK (GRANNY SMITH) PTY LIMITED ACN 009 466 175
Barrick (Australia Pacific Exploration) Pty Limited
Barrick
[2009] HCA 23
[2010] VSC 100
(2006) 149 FCR 395
(2009) 238 CLR 1
(2010) 267 ALR 583
(1934) 51 CLR 422