Brandrill v Newmont Yandal

LEGISLATION CITED : Corporations Act 2001 (Cth) ss 444D, 444E, 444G, 444H, 445A, 447A, 562, 562A

Ansett Australia Ltd v Ansett Australia Ground Staff Superannuation Plan Pty Ltd [2002] VSC 114 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 Gibbons v LibertyOne Ltd (in liq) (2002) 41 ACSR 442 CASES CITED : J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145 Mulvaney v Rob Wintulich (1995) 60 FCR 81 Re Pasminco Ltd (Subject to Deed of Company Arrangement) (No 2) [2004] FCA 656 Re Wood Parsons Pty Ltd (in liq) (2002) 43 ACSR 257

Brandrill Pty Ltd (P1, XD4) Lumley General Insurance Limited and CGU Insurance Limited (P2, P3, XD5, XD6) Newmont Yandal Operations Pty Ltd (D1, XC1) PARTIES : Clynton Court Pty Ltd (subject to deed of company arrangement) (D2, XD1) Mark Francis Xavier Mentha and Mark Anthony Korda (D3, D4, XD2, XD3) XL London Market Limited and Zurich Australia Insurance Limited (XD7, XD8) Australian Metals Corporation Pty Ltd, Great Central Holdings Pty Ltd, Great Central Investments Pty Ltd, Eagle Mining Pty Ltd, Newmont Wiluna Mines Pty Ltd, Hunter Resources Pty Ltd, Quotidian No.117 Pty Ltd, Matlock Mining Pty Ltd, Newmont Wiluna Metals Pty Ltd, Newmont Wiluna Gold Pty Ltd, Great Central Mines Pty Ltd, Matlock Castellano Pty Ltd, Newmont Australia Limited (XC2-14)

P M Wood (D1, XC1, XC2-14) COUNSEL : M J Stevens (P1-P3, XD4, XD5, XD6) N Whittaker (D2, XD1, D3, D4, XD2, XD3) S Walsh (Sol) (XD7, XD8)

Arnold Bloch Leibler (D1, XC1, XC2-14) SOLICITORS : Lincoln Smith & Company (as agent for Nash Clavey) (P1-P3, XD4, XD5, XD6) Gadens Lawyers (D2, XD1, D3, D4, XD2, XD3) Griffin Hilditch Lawyers (XD7, XD8)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5143/03 BRANDRILL LIMITED & 2 ORS V NEWMONT YANDAL OPERATIONS PTY LIMITED & 3 ORS JUDGMENT 1 HIS HONOUR: This judgment relates to a cross-claim, made by interlocutory process filed pursuant to leave granted on 8 December 2005, for rectification of deeds of company arrangement ("DOCAs") affecting the Newmont Yandal Group companies. The cross-claim seeks to rectify the DOCAs, and an associated Assumption Deed and Deed of Release. The cross-claimants are the companies that were subject to the DOCAs, namely Newmont Yandal Operations Pty Ltd ("NYOL") and 12 subsidiaries of that company, and also Newmont Australia Ltd (which contributed funds in accordance with the Principal DOCA). The cross-defendants include the other parties to the DOCAs (namely, the administration company for the deeds, Clynton Court, and the Deed Administrators, Messrs Korda and Mentha). The cross-defendants also include the plaintiffs in the present proceeding (Brandrill Ltd, Lumley General Insurance Ltd and CGU Insurance Ltd) and the insurers of NYOL (XL London Market Ltd and Zürich Australia Insurance Ltd). 2 The DOCAs are under challenge in the present proceeding and in a proceeding brought in this court by another creditor. For the purposes of this judgment I shall assume that they are valid and not subject to termination by the court. My description of the terms and operation of the Deeds reflects my construction of the documents and should not be taken to imply any finding that they came into effect validly or operated in the manner in which, according to my construction, they purported to operate. Background to the cross-claim 3 On 26 November 2002 Brandrill commenced a proceeding in the Supreme Court of Western Australia against NYOL. Brandrill is the first plaintiff in the Western Australian proceeding and its insurers, purporting to exercise their rights of subjugation, are the second plaintiffs. The claim was for damages for negligence relating to equipment losses when a wall collapsed at the Bronzewing mine in Western Australia, a mine operated by NYOL. NYOL claims to be indemnified by insurers in respect of any such liability, and has issued third-party notices to XL London Market Ltd and Zürich Australia Insurance Ltd. 4 On 3 July 2003 the directors of NYOL resolved to place NYOL and its subsidiary companies in voluntary administration, and they appointed Messrs Korda and Mentha as voluntary administrators. On 8 September 2003 NYOL and its subsidiaries entered into DOCAs under Part 5.3A of the Corporations Act. Broadly speaking, the DOCAs reflected arrangements whereby the Newmont Mining group (through Newmont Australia) would acquire control of the assets of the NYOL group, and the creditors of companies in the NYOL Group would receive distributions out of funds provided by Newmont Australia. Messrs Korda and Mentha were appointed Deed Administrators and Clynton Court (a subsidiary of NYOL) was appointed an administration company for the purposes of the Deeds. The DOCAs provided for employees and trade creditors to receive 100 cents in the dollar, and for other creditors to receive distributions at a rate substantially less than 50 cents in the dollar. J Aron Corporation and The Goldman Sachs Group Inc ("J Aron"), who claim to be a creditor of NYOL for over US$57 million, have commenced proceedings in this court seeking to terminate the DOCAs. 5 There was a Principal DOCA relating to Clynton Court, and Secondary DOCAs for NYOL and each of the subsidiaries. Each DOCA contained provisions making it interdependent with the other deeds. Provisions of the DOCAs had the effect that the business and affairs of the NYOL Group companies would be immediately returned to the officers of the companies. Although there is no specific evidence of this on the present application, it appears from judgments in the J Aron matter (for example, J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145 at [43]) that after the execution and implementation of the DOCAs, the Group's mining businesses continued to operate, transactions of various kinds occurred and consequently third party rights were created. 6 The plaintiffs have taken the view that the DOCAs operate against them in a manner that is oppressive, unfairly prejudicial and unfairly discriminatory. They say that if NYOL had been in liquidation rather than under administration, Brandrill would have been protected by s 562 of the Corporations Act, which would have required the liquidator of NYOL to pay over to it the full proceeds of any insurance recovery by NYOL from its insurers in respect Brandrill's claim for damages for the collapse of the mine wall. The plaintiffs' prejudice is said to arise because the DOCAs do not make any effective provision equivalent to s 562. The plaintiffs contend that this outcome is contrary to a representation made on behalf of Newmont Australia at the creditors' meetings which approved the DOCAs, that no creditor would be worse off than they would have been if NYOL had gone into liquidation, and contrary to the intention underlying some clauses inserted in the DOCAs which, as it happened, did not give effect to the intention of the drafter. 7 In October 2003 the plaintiffs commenced the present proceeding, seeking orders under s 445D terminating the principal DOCA and the secondary DOCA relating to NYOL, and orders for the appointment of liquidators to NYOL and Clynton Court. In the alternative, they are seeking orders under s 447A(1). The originating process spoke about orders under s 447A amending the DOCA "such that the plaintiffs be entitled to continue to pursue their claims" against NYOL in the Supreme Court of Western Australia. The statement of claim, filed in February 2004, speaks about orders under s 447A to amend the DOCAs to "ameliorate" the misleading or deceptive nature of the representation that has been made, and the oppressive, unfairly prejudicial or unfairly discriminatory effect of the DOCAs. Neither pleading attempts to address the content of a s 447A order in any specific terms. 8 At a directions hearing on 4 November 2005, NYOL filed an interlocutory process applying for leave to file the cross-claim that is presently before the court. The cross-claim seeks orders under s 447A. The effect of the orders is not significantly different from the effect envisaged by the plaintiffs in their originating process and statement of claim: that is, the orders would put Brandrill in approximately the same position under the DOCAs as it would have been in under s 562 in a liquidation of NYOL. The NYOL proposal is distinguished by the fact that its lawyers have worked out, in elaborate detail, the content of the s 447A orders and an associated Deed of Rectification to achieve the desired outcome. It will be necessary to deal with the detail of the proposed orders and the Deed of Rectification later in these reasons for judgment. 9 Not surprisingly, the plaintiffs support the relief sought in the cross-claim. On 4 November 2005 I directed NYOL to serve J Aron with the interlocutory process seeking leave, for reasons I delivered ex tempore. Essentially this was because of a concern I had that orders for rectification that would take Brandrill out of the pool of Other Participating Creditors and give it exclusive access to NYOL's insurance proceeds might have an adverse impact on the remaining Other Participating Creditors under the Principal DOCA (J Aron being the largest and most active of this class). By a letter to my Associate dated 6 December 2005 (Exhibit A3), the solicitors for J Aron stated that their clients do not claim any right or interest in respect of the NYOL application and that they did not wish to appear at the hearing of the application. On 8 December 2005 I heard the leave application, and made orders granting NYOL leave under s 444E(3) to begin and proceed with the cross-claim. I also made orders for the joinder of appropriate parties. 10 The interlocutory process making the cross-claim was filed and served pursuant to that leave. At the hearing of the cross-claim on 6 April 2006, the London insurers of NYOL appeared and informed the court that they neither consented to nor opposed the orders sought by the NYOL Group companies. Counsel for the applicants informed the court that if the cross-claim was successful, the effect would be to determine the present proceeding, except for the question of costs. The DOCAs would remain standing (subject to the challenge in the J Aron proceedings) but, as rectified, they would not limit Brandrill's access to any insurance recovery by NYOL. 11 Accordingly the court is presented with an application to rectify, in technical and detailed ways, some deeds of company arrangement that have long since been substantially performed, some of which have been terminated, where the authority to do so is said to be found in the general provisions of s 447A(1). All parties to the deeds are parties to the application, and another potentially interested entity (J Aron) has been notified and has chosen not to appear. The application is not a consent application, but there is no opposition to it. In the circumstances the court must take care to ensure, as best it can in the absence of a contradictor, that it has the power to make the orders that are sought and can do so at this stage, and that it is appropriate to act in the manner proposed. To address these matters, I shall: · examine how the DOCAs apply to Brandrill; · consider how the proposed orders and draft Deed of Rectification would affect the operation of the Deeds; · investigate the court's power to make such orders; and · on the basis that such power exists, consider whether the court should, in its discretion, exercise the power in the manner proposed. Application of the DOCAs to Brandrill 12 The documents executed to give effect to the deeds of company arrangement were as follows: (a) Clynton Court, the NYOL Group companies, the Administrators and Newmont Australia entered into the Principal DOCA; (b) each company in the NYOL Group (except Clynton Court) entered into a Secondary DOCA with the Administrators and Newmont Australia; (c) Clynton Court, the NYOL Group companies and the Administrators entered into the Deed of Release; and (d) Clynton Court, the NYOL Group companies and the Administrators entered into the Assumption Deed. 13 In the present case there are two DOCAs of particular relevance, namely the Principal DOCA and the NYOL DOCA. I shall consider them in turn, making references to the Assumption Deed and the Deed of Release whether appropriate.

Principal DOCA 14 The Principal DOCA commenced on 8 September 2003, upon the execution of each DOCA by all parties. Its application to Brandrill's claim against NYOL for damages depends crucially on certain definitions found in clause 1.1. 15 "Claim" is defined as: "(a) a debt payable by, or claim against, [Clynton Court] (whether based in contract, tort, workers compensation or otherwise, present or future, certain or contingent, ascertained or sounding only in damages), being a debt or claim the circumstances giving rise to which occurred on or before the [date of appointment of the voluntary administrators, 3 July 2003] that would be admissible to proof against [Clynton Court] in accordance with Division 6 of Part 5.6 of the [Corporations] Act if [Clynton Court] were to be wound up; and (b) an Assumed Claim." 16 Brandrill's claim for damages does not fall within para (a) of this definition because it is not a claim against Clynton Court (apart from the assumption of liability). The question is whether it is a "Claim" for the purposes of the Principal DOCA by virtue of being an "Assumed Claim". 17 "Assumed Claims" are defined by reference to clause 14 of the principal DOCA. Under that clause, Clynton Court is obliged to execute an Assumption Deed and to assume all liability in respect of "Assumed Claims". Each person bound by the DOCA is deemed to consent to the novation of all liability in respect of Assumed Claims pursuant to the terms of the Assumption Deed, and to release and discharge each Ongoing Company (the NYOL Group companies) from liability in respect of those claims. The Assumption Deed was executed by Clynton Court, the NYOL Group companies and the Deed Administrators on 10 September 2003. It relies for the scope of its operation on the definition of "Assumed Claim" in the Principal DOCA. 18 There is an element of circularity in the definition of "Assumed Claim", which I need not trace here. By clause 11.4 the term includes any "Claim" which was, as at 3 July 2003, the subject of proceedings against an NYOL Group company or its property in any court. Whatever be the defects of the definition of "Assumed Claim" in other respects, clause 11.4 makes it clear that Brandrill's claim in the Western Australian proceeding is an "Assumed Claim" for the purposes of the principal DOCA. Consequently, by force of the Assumption Deed and clause 14 of the Principal DOCA, NYOL's liability in negligence to Brandrill (if any) is assumed by Clynton Court, and Brandrill's claim is an "Assumed Claim" and therefore a "claim" for the purposes of the Principal DOCA. 19 That conclusion leads to various consequences, in terms of other definitions in the Principal DOCA, as follows: · Brandrill, not being a "Non Participating Creditor" (a term defined by reference to certain related creditors), has a "Participating Creditor Claim"; · Brandrill is therefore a "Deed Creditor", and consequently a "Participating Creditor", and (not being an Employee or a claimant in respect of Trade Creditor Claims) an "Other Participating Creditor"; · Brandrill, being a Deed Creditor, is bound by the Principal DOCA according to clause 10.1, and is therefore a "person bound by this Deed". 20 Some relevant provisions of the Principal DOCA are the following: · the Deed (clause 27) establishes a Distribution Fund from contributions to be made by Newmont Australia and the establishment of an "Existing Assets Pool" by transfers from the NYOL Group companies; · the Deed Administrators have access to the Distribution Fund for their remuneration (clause 7); · one of the components of the Distribution Fund is the "NAL General Contribution", an amount capped at US $22,981,060 but reduced by any requests for payment made within 5 business days of the second creditors meeting by J Aron Corporation or noteholders (clause 27.2); · Newmont Australia is obliged to top up the Distribution Fund so that there are sufficient funds to meet the "Expected Liquidation Return" of any Participating Creditor, calculated by a complex formula, the approximate effect of which is to give each Participating Creditor an expectation of top-up to what it would have received in liquidation, subject to an overall cap of US $150 million; · the Deed Administrators are required to apply the NAL General Contribution in a certain order of priority which includes payment of up to 40.53 cents in the dollar of the Claims of Other Participating Creditors (clause 28.4); · Deed Creditors are prohibited from pursuing their Claims otherwise than by proving under the Principal DOCA (clause 10); · Clynton Court assumes the liabilities of the NYOL Group companies in respect of Assumed Claims (clause 14 and the Assumption Deed), and each person bound by the Principal DOCA is deemed to consent to the novation of liability and to release each NYOL Group Company from liability; · on and from the Commencement Date (8 September 2003) each Claim of a Participating Creditor is terminated and discharged (clause 15), and each Participating Creditor releases and discharges each NYOL Group company, their directors, employees, auditors and advisers from any Claim (clause 16 and the Deed of Release dated 8 September 2003); · Participating Creditors are entitled to prove in the administration in respect of their Claims. 21 It will be seen from this brief outline that on 8 September 2003: (a) NYOL's liability for damages to Brandrill (if any) was assumed by Clynton Court and Brandrill was required to release and discharge NYOL; (b) Brandrill's Assumed Claim against Clynton Court was terminated and discharged, and it released and discharged Clynton Court from that liability; (c) Brandrill, in respect of its damages claim, was entitled to take part in any distribution out of the NAL General Contribution, as an Other Participating Creditor, the distribution being restricted to no more than 40.53 cents in the dollar, and to be protected by Newmont Australia's top-up obligation (although the precise application of the formula in the case of Brandrill is far from straightforward). 22 It is necessary to consider whether this analysis is affected by clauses 27.4 and 27.5, inserted as a result of negotiations between the representatives of Newmont Mining and Brandrill's insurers at the second creditors meeting, in circumstances that I shall describe. Those causes are as follows: " 27.4 Proceeds of insurance or reinsurance Notwithstanding any other provisions of this Deed, the proceeds of contracts of insurance or reinsurance received by [Clynton Court] or any [NYOL Group company] will be applied by [Clynton Court] or that [NYOL Group company] in the manner that they would be applied under section 562 or 562A of the [Corporations] Act if [Clynton Court] or that [NYOL Group company] were being wound up. 27.5 Reduction of Claim Any amount received by a Participating Creditor by virtue of the operation of clause 27.4 will be deemed to have reduced the Claim or Discharged Claim of that Participating Creditor accordingly." 23 Section 562 has the effect that if a company in liquidation or its liquidator receives a payment from the company's insurer in respect of a liability incurred by the company to a third party, the amount of the payment, net of expenses, is to be paid by the liquidator to the third party in discharge of the liability, in priority to the claims of unsecured creditors. Clause 562A, which applies where the company is an insurer and is insured under a contract of reinsurance, requires the liquidator to apply reinsurance proceeds to meet insurance claims against the company, in priority to the claims of unsecured creditors. 24 The objective of the drafter of clauses 27.4 and 27.5 was manifestly to replicate the effect of these two sections, so as to allow Brandrill to have the benefit of recoveries from NYOL's insurers. But it is arguable that clauses 27.4 and 27.5 failed to achieve the drafter's objective, because of the operation of other provisions of the Principal DOCA and the NYOL DOCA. Those other provisions extinguished NYOL's liability in respect of Brandrill's Claim, leaving Brandrill to prove against the Distribution Fund. Arguably, the extinguishment of NYOL's liability to Brandrill had the consequence of extinguishing the loss against which NYOL's insurers had indemnified NYOL, with the result that there was no longer any viable claim by anyone against the insurers. 25 The matter is not entirely clear, partly because clause 3 of the Assumption Deed provides: "If and to the extent that this Deed creates benefits for persons who are not parties to this Deed, those benefits will be held on trust for those persons by the Deed Administrators and [Clynton Court]". The effect, if any, of this clause on the position of NYOL's insurers is obviously open to doubt. Independently of clause 3, there is the possibility of some restitutionary claim being brought against the insurers, though again there would be considerable doubt about the claim, including doubt as to the identity of the appropriate claimant.

NYOL DOCA 26 The NYOL DOCA commenced on 8 September 2003, upon the execution of each DOCA by all parties (clause 3.1). The parties are NYOL, Newmont Australia and the Deed Administrators/Voluntary Administrators. 27 "Claim" is defined in clause 1.1 to include a claim against NYOL based in tort and sounding only in damages, the circumstances giving rise to which occurred before 3 July 2003 and which would be admissible to proof against NYOL in a winding up. Brandrill's claim for damages against NYOL is a "Claim" within this definition. It therefore is a "Participating Creditor Claim", and consequently Brandrill is a "Deed Creditor" and a "Participating Creditor". Brandrill is bound by the DOCA (clause 10.1), and is precluded from pursuing the Claim (clause 10.2). 28 Brandrill's damages claim is an "Assumed Claim" as defined, because it is a Claim, liability for which is to be assumed by Clynton Court pursuant to the Principal Deed, and also by virtue of the express provisions of clause 11.3. Clause 13 obliges NYOL to execute the Assumption Deed and states that each person bound by the NYOL DOCA (including Brandrill) consents to the "novation" of liability in respect of Assumed Claims pursuant to the Assumption Deed, and releases and discharges NYOL from liability in respect of Assumed Claims. 29 Clause 12 provides for the sequence of events on the Commencement Date. It says that after Clynton Court has assumed liability in respect of the Assumed Claims, the NYOL DOCA terminates. 30 There are provisions for the discharge of Claims and releases, in clauses 14 and 15 of the NYOL DOCA, very similar to the equivalent clauses (clauses 15 and 16) in the Principal DOCA. It is not clear to me how those clauses operate in conjunction with the provisions about assumption of liability. If it is correct that Brandrill's damages claim is a Claim and an Assumed Claim for the purposes of the NYOL DOCA, there are some provisions purporting to cause that Claim to be assumed by Clynton Court, while some other provisions purport to terminate, discharge and release it. 31 I need not resolve that problem here. It is sufficient for present purposes to proceed on the basis that, one way or another, the combined effect of the Deeds is to extinguish Brandrill's damages claim. That is the effect that gives rise to difficulty with respect to NYOL's right of indemnity against its insurers. 32 Clause 23.4 provides: " 23.4 Proceeds of insurance or reinsurance Notwithstanding any other provisions of this Deed, the proceeds of contracts of insurance or reinsurance received by [NYOL] will be applied by [NYOL] in the manner that they would be applied under section 562 or 562A of the [Corporations] Act if [NYOL] were being wound up." 33 Arguably, this clause has the same defect as clauses 27.4 and 27.5 of the Principal DOCA. Assuming that the DOCAs have extinguished Brandrill's claim for damages, NYOL's insured loss has arguably been eliminated and its insurers no longer have any liability to indemnify it. The proposed orders and draft Deed of Rectification 34 The orders proposed in the cross-claim are directed to the position of creditors of an NYOL Group company whose claims are or may be protected by insurance indemnifying that company. The intention underlying the proposed orders is to put those creditors in no worse position than they would have been in liquidation. In a liquidation they would have the benefit of s 562. 35 The proposed orders are to be made under s 447A(1), by reference to a draft Deed of Rectification, which is Schedule 2 to the cross-claim. Section 447A(1) states: "The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company." 36 The pivotal idea in the Deed of Rectification is said to be that it creates a new class of claim ("Conditional Claim") and a new class of creditor ("Conditional Creditor"). A Conditional Creditor converts into a Participating Creditor in the circumstances described below. The new class of claim consists of claims in respect of an Insured Liability, being a liability which at 8 September 2003 was or may have been an insured risk under any insurance policy effected by or on behalf of NYOL or any other NYOL Group company (see NYOL's written submissions dated 2 November 2005, para 21). 37 Under the proposed orders and Deed of Rectification, the new class of claim is treated differently from other classes of claim in the following ways (see written submissions, para 22): (a) initially the Conditional Creditor is not a Participating Creditor, does not release or discharge the NYOL Group companies from liability, is free to pursue the Conditional Claim by litigation or otherwise, and is entitled (if successful in its claim) to the proceeds of any relevant insurance policy in a way similar to the operation of s 562 in the case of a liquidation; (b) then there is a critical date, the Determination Date, being the earliest of: (i) the date on which the insurer pays all amounts which it assumes liability for or agrees to pay or is found by a court to be liable to pay; (ii) the date on which the Conditional Creditor or the relevant NYOL Group company exhausts all reasonably available remedies against the insurer; or (iii) the date on which the insurer is found by a court to be not liable to pay under the relevant insurance policy; (c) after the Determination Date, the Conditional Creditor (if it has not been paid in full from the insurance proceeds) becomes a Participating Creditor, releases and discharges its Conditional Claim, and is subject to the moratorium, bars and other restrictions applicable to all other Deed Creditors; and it is entitled to prove for the shortfall with the other Participating Creditors in accordance with the terms of the principal DOCA. 38 In my opinion this is a coherent and comprehensive scheme for addressing the problem that has been exposed. I have reviewed the drafting of the Schedules to the Deed of Rectification with a view to satisfying myself that they reflect the scheme that I have just outlined. I am satisfied that they do. I have not attempted to review or assess the drafting as such. That is a matter for which the applicants must take responsibility. 39 There are four principal orders proposed, rectifying respectively the Principal DOCA, the Secondary DOCAs, the Assumption Deed and the Deed of Release. In each case the text of the rectification effected by the order is identified by reference to the relevant schedule of the Deed of Rectification. That seems to me an appropriate method of achieving precision. 40 The cross-claim provides two alternative forms of order for the rectification of the DOCAs. The first form, while it is said to be made pursuant to s 447A(1), is an order that the DOCA be rectified in accordance with and upon the terms specified in the relevant schedule to the Deed of Rectification. The second form, an alternative to the first, is an order under s 447A(1) that Part 5.3A is to operate in relation to a company (specifying the company to which the particular DOCA relates) as if the deed of company arrangement given effect to pursuant to s 444A and executed pursuant to s 444B was constituted by the DOCA dated 8 September 2003 between the stated parties, as rectified in accordance with and upon the terms of the relevant schedule to the Deed of Rectification. 41 In my opinion the second alternative form of order is to be preferred, because it is faithful to the wording of s 447A(1), which is the source of the power to make the order. The court is authorised by that subsection to make an order as to how Part 5.3A is to operate in relation to a particular company. It is desirable, in my opinion, to adopt a form of words that transparently indicates that the court is doing what the subsection authorises. 42 The two proposed orders rectifying the DOCAs are expressed to take effect when the Deed of Rectification is executed by all the parties to it. There is a requirement, within 7 days of execution, for NYOL to notify Other Participating Creditors (as defined) by giving them a notice of the kind contemplated by s 450B(a) (the notice which a deed administrator must give to each creditor when a deed of company arrangement is executed). The order requires NYOL to cause the notice to be published in a national newspaper, and to lodge a copy of the Deed of Rectification and a copy of the orders with ASIC. Those requirements seem to me to be appropriate. 43 The draft Deed of Rectification is between Newmont Australia, Clynton Court, each NYOL Group company, and Messrs Mentha and Korda in their capacity as former voluntary administrators and as deed administrators of Clynton Court and the NYOL Group companies. After recitals and definitions, the draft Deed contains acknowledgements by the parties as to their intention to preserve creditors' rights with respect to insurance policies of NYOL Group companies, at the time of the execution of the DOCAs, the Assumption Deed in the Deed of Release. Then the proposed Deed provides that the respective instruments are each rectified, and that the parties agree to the corrections in the respective schedules, with effect from 8 September 2003. The court's power to make the proposed orders 44 The cross-claim contemplates, as I have explained, that the parties to all of the instruments to be rectified will execute a Deed of Rectification, declaring their true intention and stating their agreement that the instruments be "rectified" in specified ways. One might ask why it is necessary for the court to make any order at all, if the parties have reached such an agreement. 45 Part of the answer to that question lies in the parties' wish for their agreed "rectification" to be effected as from 8 September 2003. An agreement inter partes to alter the effect of their prior agreement is a variation, rather than a rectification, of what they have previously agreed. In the absence of a court order for rectification, it cannot operate to correct the mistake retrospectively. This problem could be addressed by the court exercising its general equitable jurisdiction to rectify the instruments. In my view the evidence clearly shows that the parties were in agreement as to what they wished to achieve, namely arrangements in which creditors would not be in a worse position than in a liquidation, but by common mistake in the drafting of the deeds, their intention was not properly effectuated. There is therefore jurisdiction to rectify the instruments (generally as to equity's jurisdiction to rectify, see Meagher, Gummow & Lehane's Equity Doctrines & Remedies, 4th ed, 2002, Ch 26). That jurisdiction may be sufficient for the rectification of the Assumption Deed and the Deed of Release, though since they are supplementary to the DOCAs, which make provision for them to be executed, they are also amenable to any statutory jurisdiction which allows the court to rectify the DOCAs. 46 Another part of the answer to the question is that a deed of company arrangement has a statutory effect, and orders of the court are needed to alter that statutory effect. Part 5.3A gives a deed of company arrangement special characteristics including the following: · the deed binds all creditors of the company, as regards claims arising on or before the specified day (s 444D(1)); · the person bound by the deed cannot make an application to wind the company up, or bring or proceed with any proceeding against the company without the court's leave (s 444E); · the deed binds the company's officers and members, as well as the company itself and the deed's administrator (s 444G); · the deed releases the company from a debt if the deed provides for the release and the creditor is bound by the deed (s 444H). 47 An instrument inter partes could not achieve those outcomes by its own force. To the extent that the varied instrument needs to rely for its efficacy on any of those statutory effects, it is necessary that the variation become part of the deed of company arrangement for the purposes of the statute. A fortiori, if the intention is to rectify the instrument so that it is treated as if it was always in the rectified form. Those outcomes can only be achieved if the court makes an order having statutory effect. The only available provision for doing so is s 447A(1). The question is whether it is wide enough to permit the court to make the orders sought in the cross-claim, and if it is as a general matter, whether the orders may be made now, several years after the DOCAs were made and substantially performed, and after some of the DOCAs have been terminated. 48 The breadth of the court's power under s 447A(1) was confirmed by the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270. The particular question before the court in that case was whether s 447A(1) confers on the court the power to make an order altering the time fixed by s 439A within which the second meeting of creditors must be held. The High Court found that the section was wide enough to permit such an order to be made, and their Honours (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) made some more general observations about the scope of s 447A and the limitations inherent in it. They held that there was nothing on the face of s 447A suggesting that should be read down (at 279). They recognised that the scope of the section was limited by the words "how this Part is to operate", an expression looking to the future, not the past. But those words are satisfied if the order has effect only from the time of its making, although the order relates to past matters or events (at 282). 49 In the present case, orders can be made that Part 5.3A (which includes such provisions as ss 444D, 444E, 444G and 444H) is to operate in relation to Clynton Court and each of the NYOL Group companies as if the deed of company arrangement adopted on 8 September 2003 was the deed in rectified form. The order has the effect that hereafter, Part 5.3A is to be applied as if the DOCA was in the rectified form from the time of its execution. 50 It is now well established that orders of this kind, amounting to orders for the rectification or amendment of a deed of company arrangement, can be made under s 447A(1). A recent example of such an order may be found in Ansett Australia Ltd v Ansett Australia Ground Staff Superannuation Plan Pty Ltd [2002] VSC 114. In that case Warren J (as she then was) reviewed the authorities and concluded that they support the making of orders for the amendment of a deed of company arrangement. The foundation case is Mulvaney v Rob Wintulich (1995) 60 FCR 81, at 83 per Branson J. That case was decided before Australasian Memory, but Australasian Memory confirms the breadth of the power and reinforces the line of cases on amendments to deeds. I see no difference in principle, as regards the scope of the power, between an order amending a deed for the future, and an order having the effect of treating the deed as rectified from the time of its execution. 51 Counsel for the cross-claimants drew my attention to the question whether it is necessary, before making an order rectifying a deed of company arrangement, to make orders for the representation of the creditors affected by the deed. The issue was raised by Finkelstein J in Re Pasminco Ltd (Subject to Deed of Company Arrangement) (No 2) [2004] FCA 656. His Honour acknowledged that in earlier cases, orders for the amendment of a deed of company arrangement had been made without the creditors bound by the deed being before the court (including, I interpolate, the cases cited above). However, he said (at [19]) that he was not prepared to assume that an effective order could be made without the presence of the creditors. 52 It is not necessary for me to decide this issue in general terms. In the present case, the rectification of the Deeds will put all parties in the position that they were led to expect would be the position obtaining under the Deeds, when the issue was raised at the second creditors meetings (see below). The orders will have the effect of removing Brandrill (and, theoretically, any other creditor in the same position) from the class of Other Participating Creditors, except to the extent of any shortfall in the insurance recovery. To the extent that Brandrill's claim is satisfied from insurance proceeds, there will necessarily be a greater amount available from the NAL General Contribution for distribution to the remaining Other Participating Creditors. Consequently the rectification orders can only benefit other creditors. I am fortified in that conclusion by the fact that, having been given the opportunity to appear at the hearing of the cross-claim, J. Aron (the main Other Participating Creditor in terms of size of claim) chose not to do so. 53 In my opinion the facts that the DOCAs have been largely performed, and that some of them have been terminated, do not present obstacles to the making of orders under s 447A(1) in the present case. The orders will not adversely affect accrued rights of creditors, for the reason I have just given. NYOL's insurers are before the court as cross-defendants and do not oppose the orders. No other accrued third-party rights will be affected by the orders. 54 In the Australasian Memory case the High Court expressly rejected a submission that s 447A does not apply unless there is a continuing administration or an extant deed of company arrangement (at 282). That reasoning has been applied to hold, for example, that s of 447A may be used to relieve the liquidator, in a creditors voluntary winding up that has arisen from a voluntary administration, from the requirement to convene and hold a meeting of members under s 508(1)(b) (Gibbons v LibertyOne Ltd (in liq) (2002) 41 ACSR 442), and to cure a lack of quorum of properly appointed directors at a meeting where a resolution is purportedly passed to appoint voluntary administrators (Re Wood Parsons Pty Ltd (in liq) (2002) 43 ACSR 257). The power is wide enough to permit orders having the effect of rectifying deeds of company arrangement that have been terminated. Discretionary considerations 55 In my opinion, the cross-claimants have made out the case for the court to exercise its power in the manner proposed. The principal consideration bearing on the exercise of the court's discretion is that at the second creditors meetings, Newmont Mining's solicitor represented to the solicitor of Brandrill's insurers that creditors would not be worse off than they would be in a liquidation, after his attention was specifically drawn to the problem concerning insurance proceeds and s 562. 56 Leon Zwier, now the solicitor for NYOL, gave affidavit evidence in support of the cross-claim. He attended the second meetings of creditors on behalf of Newmont Mining Corporation and its subsidiary, Newmont Australia. He had the following conversation with Terry Clavey, a solicitor who attended the meetings on behalf of Brandrill's insurers (as reflected in the minutes of the meetings): Mr Clavey: "Mr Zwier, you've said that the DOCA doesn't operate in a prejudicial way. In relation to Brandrill's claims made by its insurer which are subject to Supreme Court proceedings, in the event that the company is liquidated, Brandrill by its insurers will have a right to pursue Newmont's insurers directly. If the DOCA is passed, that right is lost and the claims made by the insurers are compromised for a lower amount. Would you concede that in that respect the DOCA operates prejudicially in relation to their interests and would you be prepared to amend the DOCA to accommodate that situation by excluding the Supreme Court action from the compromise? Mr Zwier: "Can I just say this very briefly: the DOCA has got a guarantee about creditors not being worse off than what they would be in a liquidation, and that's contained within its terms. Secondly, we're drilling down into the kind of level of detail which I think I said to you before would be best dealt with by us off line rather than having every single creditor involved in it, but I can tell you that Newmont's commitment is that no creditor, including you, should be unfairly prejudiced by this proposal, and its proposal is lawful and proper. It is put into its DOCA that the liquidation proof rules apply so that the rights of set-off that would apply in a liquidation will apply equally here, and to the extent that there may be underlying insurance issues, we should look at it and deal with it off line. I think that's probably the better way to do it." 57 Mr Zwier gave evidence that shortly after the second meetings of creditors had approved the DOCA, he reviewed the proposed deeds in light of Mr Clavey's concerns. He added clauses 27.4 and 27.5 to the Principal DOCA and clause 23.4 to the secondary DOCAs. 58 Subsequently Mr Clavey's firm and Mr Zwier's firm engaged in correspondence in which Mr Clavey's firm expressed concern that Brandrill's claim in the Supreme Court of Western Australia might be prejudiced as a result of the DOCAs in the form in which they were entered into. The present proceeding was initiated and eventually Mr Zwier's firm and counsel prepared the cross-claim and draft Deed of Rectification. 59 In my opinion it is appropriate for the court to exercise its power with a view to giving effect to the intention that the relevant parties had when the proposed DOCAs were considered by creditors, and at all subsequent times. 60 I have considered whether it would be preferable for the Deed Administrators to seek a variation of the DOCAs by a resolution of creditors under s 445A. I think rectification by court order is preferable for two reasons. One is that the orders can have the effect that the instruments are to be read hereafter as if they were always in the rectified form. The other is that the issues for consideration are complex technical issues better dealt with by the court than in a general meeting of creditors, even allowing for the fact that most of the former creditors have by now been paid. Conclusions 61 I shall make orders in terms of paragraphs 2, 4, 5 and 6 of the interlocutory process for the cross-claim. I shall direct the cross-claimants to prepare short minutes of orders replicating those paragraphs, and attaching a copy of the draft Deed of Rectification, so that I can formally make the orders in chambers. 62 The cross-claim seeks an order for costs. Counsel for the plaintiffs indicated at the hearing of the cross-claim that he wishes to have the opportunity to make submissions as to costs, especially given the likelihood that my decision on the cross-claim would bring to an end the proceeding as a whole. I shall fix a time to hear the submissions of the parties on costs.

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