F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd

Federal Court of Australia|2005-07-08|Before: Finn J

THE COURT ORDERS THAT:

The first plaintiff, Kalgoorlie Lake View Pty Ltd ACN 004 990 274 ("KLV") convene, in accordance with this order, a meeting of all of its members ("the KLV meeting") for the purpose of considering, and if thought fit, agreeing to (with or without modification) the scheme of arrangement proposed between KLV and its members, a copy of which is included as Appendix 4 to the Explanatory Statement that is contained in the Scheme Booklet annexed as Schedule A to this order ("Explanatory Statement").

The second plaintiff, Macapa Pty Ltd ACN 008 979 986 ("Macapa") convene, in accordance with this order, a meeting of all of its members ("the Macapa meeting") for the purpose of considering, and if thought fit, agreeing to (with or without modification) the scheme of arrangement proposed between Macapa and its members, a copy of which is included as Appendix 4 to the Explanatory Statement.

The fourth plaintiff, Newmont GRPL Pty Ltd ACN 008 976 958 ("GRPL") convene, in accordance with this order, a meeting of all of its members ("the GRPL meeting") for the purpose of considering, and if thought fit, agreeing to (with or without modification) the scheme of arrangement proposed between GRPL and its members, a copy of which is included as Appendix 4 to the Explanatory Statement.

The fifth plaintiff, North Kalgurli Mines Pty Limited ACN 008 747 886 ("NKM") convene, in accordance with this order, a meeting of all of its members ("the NKM meeting") for the purpose of considering, and if thought fit, agreeing to (with or without modification) the scheme of arrangement proposed between NKM and its members, a copy of which is included as Appendix 4 to the Explanatory Statement.

The KLV meeting, the Macapa meeting, the Norkal meeting, the GRPL meeting and the NKM meeting (collectively "the Meetings") be convened by delivering to the members of each of KLV, Macapa, Norkal, GRPL and NKM at their respective registered offices on or before 8 July 2005 the Scheme Booklet that is Schedule A to this order ("Scheme Booklet").

6.1.1 written notice in the form of the Notice of Meeting a copy of which is included at section 3 of the Scheme Booklet;

6.1.2 a proxy form in the form of the document entitled "Kalgoorlie Lake View Pty Ltd ACN 004 900 274 Proxy Form for Court Ordered Scheme Meeting" which is included at Section 3 of the Scheme Booklet;

6.2.1 written notice in the form of the Notice of Meeting a copy of which is included at section 3 of the Scheme Booklet;

6.2.2 a proxy form in the form of the document entitled "Macapa Pty Ltd ACN 008 979 986 Proxy Form for Court Ordered Scheme Meeting" which is included at section 3 of the Scheme Booklet;

6.3.1 written notice in the form of the Notice of Meeting a copy of which is included at section 3 of the Scheme Booklet;

6.3.2 a proxy form in the form of the document entitled "Norkal Pty Ltd ACN 008 940 743 Proxy Form for Court Ordered Scheme Meeting" which is included at section 3 of the Scheme Booklet;

6.4.1 written notice in the form of the Notice of Meeting a copy of which is included at section 3 of the Scheme Booklet;

6.4.2 a proxy form in the form of the document entitled "Newmont GRPL Pty Ltd ACN 008 976 958 Proxy Form for Court Ordered Scheme Meeting" which is included at section 3 of the Scheme Booklet;

6.5.1 written notice in the form of the Notice of Meeting a copy of which is included at section 3 of the Scheme Booklet; and

6.5.2 a proxy form in the form of the document entitled "North Kalgurli Mines Pty Ltd ACN 008 747 886 Proxy Form for Court Ordered Scheme Meeting", which is included at section 3 of the Scheme Booklet.

That the Meetings be held at 100 Hutt Street, Adelaide, South Australia on 11 July 2005 and that:

7.1 the Macapa meeting shall commence at not before 10.00 am;

7.2 the Norkal meeting shall commence at not before 10.05 am;

7.3 the GRPL meeting shall commence at not before 10.10 am;

7.4 the NKM meeting shall commence at not before 10.15 am; and

7.5 the KLV meeting shall commence at not before 10.20 am.

Except as otherwise provided by this order, the Meetings be convened in accordance with the respective Constitutions of each of the plaintiffs.

Mr Andrew Robertson, or failing him, Ms Pauline Carr be the Chairperson of the Meetings and report the result of the Meetings to this Honourable Court.

If the Meetings approve the Scheme of Arrangement (with or without modification) and the plaintiffs seek an order that the Court grant approval of the Scheme of Arrangement, the plaintiffs must no later than 5 business days prior to the Court hearing the application by the plaintiffs that the Scheme of Arrangement be approved by the Court, publish a notice of hearing by advertisement, in the form of Schedule B to this order, in the business pages of "The Australian" newspaper.

The Explanatory Statement contain the following notation prominently displayed therein:

"The giving of directions for the holding of meetings of the members of Kalgoorlie Lake View Pty Ltd, Macapa Pty Ltd, Norkal Pty Ltd, Newmont GRPL Pty Ltd, and North Kalgurli Mines Pty Limited by the Federal Court of Australia does not in any way indicate that the Court has yet approved the contents of this Explanatory Statement or determined that it complies with the provisions of the Corporations Act".

The plaintiffs and all other interested parties, including the Australian Securities and Investments Commission, have liberty to apply.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: IN THE MATTER OF KALGOORLIE LAKE VIEW PTY LTD ACN 004 990 274, MACAPA PTY LTD ACN 008 979 986, NORKAL PTY LTD ACN 008 940 743, NEWMONT GRPL PTY LTD ACN 008 976 958 AND NORTH KALGURLI MINES PTY LIMITED ACN 008 747 886

AND: KALGOORLIE LAKE VIEW PTY LTD ACN 004 990 274

REASONS FOR JUDGMENT 1 This is an application under s 411 of the Corporations Act 2001 (Cth). The plaintiffs seek, for present purposes, an order from the court for meetings to be convened to allow the members of Newmont GRPL Pty Ltd, Kalgoorlie Lake View Pty Ltd, North Kalgurli Mines Pty Limited, Norkal Pty Ltd and Macapa Pty Ltd to consider, and if thought fit agree to, a scheme of arrangement between each of the companies and its shareholders. 2 The five plaintiff companies are all members of a group of companies, which for present purposes can be described as the Newmont Australia Group, which is wholly owned by an American parent company, Newmont Mining Corporation. The five companies have common directors and their shareholders are only Newmont Group companies. Each of the five companies is a participant in what can conveniently be described as the Kalgoorlie Joint Ventures in which one or a combination of them is a 50% participant in three contractual joint ventures with Barrick Gold of Australia Limited. The objective of the arrangement, set out in par 2.1 of the draft Explanatory Statement, is that: "The objective of the Arrangement is to consolidate the interests held by the Scheme Companies in the Kalgoorlie Joint Ventures into a single Newmont entity, KLV, for essentially four reasons: (a) to reduce the number of companies in the Newmont Australia Group; (b) to eliminate costly and time-consuming statutory accounting and inter Scheme Company accounting referrable to the Kalgoorlie Joint Ventures; (c) establish a basis on which it would be possible, with Barrick's consent, to consolidate the three Kalgoorlie Joint Ventures into a single joint venture or to streamline joint venture accounting for the Kalgoorlie Joint Ventures; and (d) to facilitate a more efficient management, administration and reporting structure for the Newmont Australia Group. The Arrangement will achieve each of these goals while not adversely affecting the interests of creditors, shareholders or other stakeholders." 3 What is proposed is that the business of four plaintiffs, Macapa, Norkal, GRPL and NKM, will be amalgamated with that of KLV so that their interests in the Kalgoorlie Joint Ventures will become owned and operated solely by KLV. 4 It is important to reiterate what the function of the court is where what is sought is the convening of a meeting which may ultimately lead to approval by the court of the scheme of arrangement. Austin J in Re GIO Building Society Ltd and Australian Securities and Investments Commission [2001] NSWSC 704 has conveniently described (at [3]-[5]) what that function involves: "An application for the convening of meetings to approve a scheme of arrangement is typically an ex parte application in which the plaintiff seeks the court's authorisation to begin a process which will involve, at later stages, consideration of a proposed scheme by the members and if they agree to it, an application to the court for approval of the scheme. At the first hearing, the issue for the court is whether to make orders that a meeting or meeting of members be convened. … Because the first hearing is conducted ex parte, and the court's function of approving the scheme is reserved by s 411 for the second hearing, after the members have considered it and any objections have emerged, the court is always careful not to decide issues at the first hearing which may later become matters of contention. Nevertheless, the first hearing is important because the court reviews the scheme and explanatory statement (and other relevant documents such as the independent expert's report in this case), and invites the plaintiff to attend to any matters which seem to the court to require attention before the distribution of the documents. … It has been said that 'the court will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that, if it achieves the statutory majority at the [members'] meeting the court would be likely to approve it on the hearing of a petition which is unopposed': F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72 per Street CJ; and see the other cases cited in Butterworths Ford's Principles of Corporations Law, looseleaf, vol 2, para [24.071]." 5 I have read several affidavits which include as annexures voluminous information relating to the Explanatory Statement, the present financial circumstances of the companies, the projected circumstances of the proposed amalgamated company, the state of their respective creditors, and the attitude as it presently is known of some number of those creditors. Importantly I would note that the principal affidavits in the proceedings itself were delivered to the Australian Securities and Investment Commission ("ASIC") on 7 June 2005. ASIC has since indicated that it has had a reasonable opportunity to examine the terms of the proposed scheme and that it did not intend to appear at today's hearing. I would also note that the plaintiffs sought the assent of ASIC under reg 5.1.01(1) of the Corporations Regulations 2001 (Cth) that the draft Explanatory Statement be issued without being accompanied by a copy of a report made by an independent expert. That assent has been forthcoming. 6 Having read the Explanatory Statement I am satisfied that the formal requirements specified in s 411(3) and s 412(1) have been complied with. 7 The present application is a somewhat unusual one given the relationship of the five companies and the fact that they are all promoters of the arrangement. There seems to be every prospect that if the meetings are held the resolution in favour of the proposed scheme will be passed. This emphasises the importance (i) of the second hearing at which the court's approval of the scheme itself will be in issue, and (ii) of the scrutiny to which it will there be subjected irrespective of whether there is third party opposition to the scheme at that hearing. For present purposes, however, I see no reason not to make the orders sought in the application. I am satisfied that the scheme is of a nature to which Street CJ referred in the Eastment case. 8 I have foreshadowed to the plaintiffs matters which might be of concern to me at the second hearing simply to facilitate their preparation for that hearing. Those matters, as the respondents themselves acknowledge, relate to the position under the scheme of the Commissioner of Taxation and the relevant Minister administering mining legislation in Western Australia. Those concerns do not vary my attitude to this application. Accordingly I make the orders proposed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate: Dated: 12 July 2005 Counsel for the First to Fifth Plaintiffs: Mr B Roberts

Solicitor for the First to Fifth Plaintiffs: Kelly & Co

Date of Hearing: 8 July 2005

Date of Judgment: 8 July 2005

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