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[2005] FCA 1440
Federal Court of Australia
2005-09-26
Mansfield J
Original judgment source is linked above.
THE COURT ORDERS THAT: 1. Pursuant to section 411(6) of the Act, the scheme of arrangement ("the Scheme"), a copy of which is Schedule A to this order proposed between the plaintiffs and their respective members be approved. 2. Orders 3 to 8 below be made pursuant to section 413 of the Act for the purpose of facilitating the Scheme and are made subject to, and in accordance with, the terms of the Scheme. 3. Pursuant to section 413(1)(a) of the Act, the whole of the undertakings, property, and assets of Macapa, Norkal, GRPL and NKM shall be transferred to, and vested in, KLV without any further act or deed. 4. Pursuant to section 413(1)(a) of the Act, all liabilities, obligations and duties of Macapa, Norkal, GRPL and NKM, other than any Excluded Tax Liabilities, shall be transferred to and become the liabilities, obligations and duties of KLV, without any further act or deed. 5. Pursuant to section 413(1)(c) of the Act, all legal proceedings by or against each of Macapa, Norkal, GRPL and NKM shall be deemed to be continued by or against KLV (as the case may be) without any further act or deed. 6. Pursuant to section 413(1)(g) where, before the Effective Date, documentary or other evidence would have been admissible for or against the interests of Macapa, Norkal, GRPL and NKM, that evidence is admissible, on or at any time after that day, for or against the interests of KLV. 7. Pursuant to section 413(1)(g) of the Act, KLV will be taken, without any further act or deed to have: 7.1 credited to appropriate reserve accounts (including a reconstruction reserve account) the sums reflecting retained earnings (or accumulated losses), capital profits/asset revaluations and other reserves respectively in Macapa, Norkal, GRPL and NKM as at the Effective Date so that these amounts retain the same characteristics in KLV as previously existed in Macapa, Norkal, GRPL and NKM respectively; and 7.2 transferred from retained earnings to share capital, without the issue of any share, an amount equivalent to the gain, if any, arising from the difference between the net value of assets acquired from Macapa, Norkal, GRPL and NKM as a result of the scheme of arrangement and the carrying value of KLV's investments in Macapa, Norkal, GRPL and NKM, to the extent available in retained earnings, as at the Effective Date. 8. Pursuant to section 413(1)(d) of the Act, each of Macapa, Norkal, GRPL and NKM shall be deregistered without winding up and without further act or deed, following the expiry of 60 days from the date of service on the Australian Securities and Investments Commission of a notice of deregistration from Macapa, Norkal, GRPL and NKM. 9. Compliance with section 411(11) of the Act be dispensed with. 10. Liberty to apply. For the purpose of these orders: "Act" means the Corporations Act 2001 (Cth). "assets" means any property, or a right, of any kind, and includes: (a) any legal or equitable estate or interest (whether present or future, vested or contingent or tangible or intangible) in real or personal property of any kind, and (b) any chose in action; (c) any right, interest or claim of any kind, including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing), (d) any asset within the meaning of Part IIIA of the Income Tax Assessment Act 1936 of the Commonwealth. "Effective Date" means the last day of the month in which the last of the following occurs: (a) office copies of any order of this Honourable Court pursuant to section 411(4)(b) of the Act approving the scheme of arrangement between each of the plaintiffs and their respective members; and (b) the last of the conditions precedent to the scheme of arrangement are satisfied. "Excluded Tax Liabilities" means liabilities for income tax but not contractual liabilities or rights to receivables arising under any contractual agreement for the sharing of any group tax liability arising in relation to the NAL tax consolidated group and any contractual agreement as between members of the NAL tax consolidated group, designed to provide compensation for various loss entities within the group by the various taxable entities within the group. "GRPL" means the fourth plaintiff. "KLV" means the first plaintiff. "legal proceedings" means: (a) any action, arbitration, regulatory inquiry or proceeding or cause of action which is at the Effective Date pending or existing by, against, in respect of, or in favour of, Macapa, Norkal, GRPL and NKM; and (b) any cause of action, arbitration, regulatory inquiry or proceeding by, or against, in respect of, or in favour of, Macapa, Norkal, GRPL and NKM which arises after the Effective Date in respect of a contract made by Macapa, Norkal, GRPL and NKM before the Effective Date or which arises in respect of anything done or omitted to be done by Macapa, Norkal, GRPL and NKM before the Effective Date. "liabilities" means a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective). "Macapa" means the second plaintiff. "NAL tax consolidated group" means the group of companies comprising NAL and its eligible wholly owned subsidiaries from time to time in accordance with election made pursuant to section 703-50 of the Income Tax Assessment Act 1936 (Cth) to form a tax consolidated group from 1 January 2003. "NKM" means the fifth plaintiff. "Norkal" means the third plaintiff. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
SCHEDULE A Scheme of Arrangement Pursuant to Section 411 of the Corporations Act between each of the Scheme Companies and their Members
3.2 The Preliminary Stage involves the following: (a) Newmont will provide sufficient financing by way of inter-company advances to the Debtor Companies to enable the Debtor Companies to repay all debts owing by Debtor Companies to the Scheme Companies in full. Each Debtor Company will use the inter-company advances from Newmont to repay all debts due to the Scheme Companies. The Scheme Companies will advance to Newmont the funds received from the Debtor Companies. (b) Newmont will provide each Scheme Company with sufficient inter-company advances to discharge all debts owing by Scheme Companies to Creditor Companies in full. Each Scheme Company will use the inter-company advances from Newmont to repay all debts due to the Creditor Companies. The Creditor Companies will advance to Newmont the funds received from the Scheme Companies. (c) Newmont shall procure the Member to subscribe $100 million in new equity into KLV and shall to the extent necessary, advance to the Member sufficient funds to allow the Member to subscribe for shares in KLV as aforesaid. (d) KLV shall use the $100 million equity subscribed by the Member in accordance with clause 3.2(c) to repay $100 million of net debt due to Newmont.
4.2 Stage 2 As from the occurrence of Stage 1 of the Scheme, Stage 2 of the Scheme will then be commenced by each or any of Macapa, Norkal, GRPL or NKM serving a notice of de-registration on ASIC and at the expiry of 60 days after service of such a notice of de-registration by Macapa, Norkal, GRPL or NKM, those Scheme Companies in question shall be deregistered without winding up pursuant to section 413(1)(d) of the Act and without further act or deed.
4.3 Further Obligations - Scheme Companies As from the occurrence of Stage 1 of the Scheme, each of Macapa, Norkal, GRPL and NKM must: (a) take the steps necessary for them to determine their liability for income tax in a diligent manner; and (b) not do anything which is not provided for in the Scheme or which is inconsistent with the Scheme, or which would result in any of them acquiring any undertakings, property, liabilities, obligations or duties other than as required to effect to and implement the Scheme, other than with the leave of the Court.
4.4 Further Obligations - KLV As from the occurrence of Stage 1 of the Scheme, KLV must do all things necessary that it is required to do to give effect to the matters referred to in clauses 4.1 and 4.2. 5. notice to the members 5.1 In the event that the Court makes orders approving the Scheme in respect of a Scheme Company and the orders to be sought pursuant to section 413 of the Law as set out in the Schedule or as otherwise envisaged in the Scheme, that Scheme Company concerned will serve a copy of the orders on its Shareholder not later than 7 days after the making of the orders. 5.2 In the event that the Court refuses to make the orders approving the Scheme in respect of a Scheme Company or the orders to be sought pursuant to section 413 of the Law, the Scheme Company concerned will serve a notice to that effect on its Shareholder not later than 7 days after the date of the refusal. 6. Protective conditions 6.1 The implementation of the Scheme is conditional upon none of the following occurring prior to the Effective Date: (a) One or more of the provisions of the constitution of the Scheme Companies being altered in any way; (b) Any Scheme Company resolving to reduce its share capital in any way other than pursuant to the Scheme; (c) Any Scheme Company resolving to be wound up; (d) A provisional liquidator or administrator is appointed to a Scheme Company; (e) A court making an order for the winding up of any Scheme Company; (f) A receiver, or a receiver and manager being appointed, in relation to the whole, or a substantial part, of the property of any Scheme Company. 7. general 7.1 This Scheme becomes effective on the day on which an office copy of the Court order approving this Scheme pursuant to section 411(4)(b) of the Law is lodged with the ASIC as required by section 411(10) of the Act, and Stages 1 and 2 of the Scheme will commence on the Effective Date. 7.2 Should the Court propose to approve the Scheme subject to any alterations or conditions, the Scheme Companies may by their solicitors or counsel consent to those alterations or conditions on behalf of all persons concerned. 7.3 Each of the Scheme Companies shall use their best endeavours to enforce the Implementation Agreement. 7.4 To the extent that there is inconsistency between the Scheme and any of the Scheme Companies' Constitution, the Scheme overrides the Scheme Companies' Constitution and binds each of the Scheme Companies and the Shareholders. 7.5 The Member consents to each of the Scheme Companies doing all things necessary or incidental to implement the Scheme. 7.6 The Member, without the need for any further act or deed, irrevocably appoints each of the Scheme Companies and each of their respective directors and secretaries (jointly and severally) as its attorney and agent for the purpose of executing any document or doing anything necessary to give effect to this Scheme. 7.7 Each Scheme Company, without the need for any further act or deed, irrevocably appoints the Member and each of the Member's directors and secretaries (jointly and severally) as its attorney and agent for the purpose of executing any document or doing anything necessary to give effect to this Scheme. 7.8 The proper law of this Scheme is the law of the State of South Australia. 7.9 To the extent allowed and required at law, KLV shall pay any stamp duty and other costs which are payable on or in respect of this Scheme or on any document referred to in this Scheme; otherwise the Member shall bear the same. 8. definitions and interpretation 8.1 Except where the context requires otherwise, in this Scheme: "Act" means the Corporations Act 2001 (Cth). "Arrangement" means the proposed reconstruction arrangement by way of the Scheme between each of the Scheme Companies and their respective Shareholder, as described in the Statement. "ASIC" means the Australian Securities and Investments Commission. "ATO" means the Australian Tax Office. "Business" means the entire undertakings, property, liabilities, obligations and duties of a Scheme Company. "Court" means the Federal Court of Australia. "Creditor Company"means a company in the Newmont Australia Group to which a Scheme Company is indebted. "Debtor Company"means a company in the Newmont Australia Group which is indebted to a Scheme Company. "Effective Date"means the last day of the month in which the last of the following occurs: (i) office copies of the Scheme Orders are lodged with ASIC; and (ii) the last of the Conditions Precedent are satisfied. "Excluded Tax Liabilities"means liabilities for income tax but not contractual liabilities or rights to receivablesarising under and Tax Funding Agreement or Tax Sharing Agreement between members of the NAL Tax consolidated group. "GRPL" means Newmont GRPL Pty Ltd ACN 008 976 958. "Implementation Agreement" means the agreement between the Scheme Companies, Newmont and the Member a copy of which is Appendix 2 to the Statement. "Macapa"means Macapa Pty Ltd ACN 008 979 986. "Member" means Newmont GMK Holdings Pty Ltd ACN 008 955 217 as the sole shareholder of KLV. "NAL tax consolidated group"means the group of companies comprising Newmont and its eligible wholly owned subsidiaries from time to time in accordance with the election made pursuant to section 703-50 of the 1997 Act to form a tax consolidated group from 1 January 2003. "Newmont Australia Group" means Newmont and the entities which it controls. "Newmont" means Newmont Australia Limited (ABN 86 009 295 765). "NKM" means North Kalgurli Mines Pty Ltd ACN 008 747 886. "Norkal" means Norkal Pty Ltd ACN 008 940 743. "Preliminary Stage" means the stage of the Arrangement set out in Clause 3. "Tax Funding Agreement"means any contractual agreement, as between members of the NAL tax consolidated group, designed to provide compensation for various loss entities within the group by the various taxable entities within the group. "Tax Sharing Agreement"means any contractual agreement for the sharing of any group tax liability arising in relation to the NAL tax consolidated group. "Scheme" means this Scheme of Arrangement, a copy of which is Appendix 3 to the Statement. "Scheme Companies" means each of KLV, Macapa, Norkal, GRPL and NKM. "Scheme Meetings" means the meetings convened by an order of the Court pursuant to section 411 of the Law. "Shareholder" means with respect to each Scheme Company, its sole shareholder. "Statement" means the Explanatory Statement. "1997 Act" means the Income Tax Assessment Act 1997 (Cth). 8.2 A reference to any legislation or legislative provision includes any statutory modification or amendment to that legislation and any statutory instrument issued under that legislation or legislative provision. 8.3 A word denoting the singular includes the plural and vice versa. 8.4 A word denoting an individual or person includes a corporation, firm, authority, government or governmental authority and vice versa. 8.5 A word denoting gender includes all genders. 8.6 A reference to a paragraph is to a paragraph in this Scheme and likewise for Appendices. 8.7 A reference to a subsidiary of a body corporate is to a body corporate which is a subsidiary of the first-mentioned body corporate under section 46 of the Corporations Act. 8.8 A reference to currency is to an amount in Australian currency. 8.9 Words and phrases defined in the corporations Law have the meanings ascribed to them. 8.10 The headings are for convenience of reference only and are not to affect interpretation. 8.11 Where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning.
REASONS FOR JUDGMENT 1 This is an application for approval of the Court pursuant to ss 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth) (the Act), in relation to a scheme of arrangement between the five plaintiff companies and their respective members. The five plaintiff companies are all members of a group of companies called the Newmont Australia Group which is wholly owned by Newmont Mining Corporation, an American parent company. The five companies have common directors, and all of the shareholders of the five companies are Newmont Group companies. 2 Each of the plaintiffs is a participant in the 'Kalgoorlie Joint Ventures', a series of three contractual joint venture agreements between Barrick Gold of Australia Limited (Barrick Gold) as a 50 per cent participant, and one or more of the plaintiff companies. The proposed scheme of arrangement will amalgamate the business of four plaintiffs, Macapa Pty Ltd, Norkal Pty Ltd, Newmont GRPL Pty Ltd, and North Kalgurli Mines Pty Ltd, with that of Kalgoorlie Lake View Proprietary Ltd (KLV) so that their interest in the Kalgoorlie Joint Ventures will become owned and operated solely by KLV. 3 The objective of the arrangement is set out in par 2.1 of the Explanatory Statement: ' … to consolidate the interests held by the Scheme Companies in the Kalgoorlie Joint Ventures into a single Newmont entity, 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.' [Yellow Tab A] 4 On 8 July 2005, Finn J ordered pursuant to S 411(1) of the Act that each of the plaintiff companies convene a meeting of its members for the purpose of considering, and if thought fit, agreeing to (with or without modification), the scheme of arrangement proposed. Those orders were slightly amended by further orders of 20 July 2005 and 21 July 2005. 5 Meetings of the members of each of the plaintiff companies have now been convened in accordance with the orders of the Court. At each meeting, a resolution in favour of the scheme of arrangement was passed by the sole member of each of the plaintiff companies. At each of these meetings, an amendment was made to paragraph 4.2 of the scheme of arrangement concerning the date of deregistration of the second to fifth plaintiffs. Resolutions have been passed by the members of each of the plaintiff companies approving this amendment. 6 The particular amendment involved the deletion of a sunset date for the de-registration of each of the plaintiff companies other than KLV. The scheme of arrangement as proposed originally, and as subject to the orders of Finn J for the holding of meetings, provided that what was called stage two would by 31 December 2005 involve the deregistration of the other four plaintiff companies. The amendment is simply to delete the reference to 31 December 2005 as the date by which, in any event, those four plaintiff companies should be deregistered. 7 I am satisfied that the proposed amendment is a minor one. Under s 411(6), the Court is empowered to approve a compromise or arrangement of the scheme as put forward to the members with such alterations and additions as it thinks just. In Re Mattine Limited (1998) 28 ACSR 268, Santow J said at 284: 'The discretion of the Court under s 411(6) is at large, but the Court would obviously have regard to whether the proposed variation was so novel or substantial as to take the varied Scheme beyond the reasonable contemplation of shareholders at the time they agreed to it.' 8 In this case, the scheme has not varied in essence from the scheme as originally proposed. Moreover, the members of each of the plaintiff companies have agreed to the proposed variation. 9 On the material before me, the variation is directed to addressing a particular problem. It is a problem to which Finn J adverted when his Honour gave approval for the holding of the meetings: In the Matter of Kalgoorlie Lake View Pty Limited [2005] FCA 960 at [8]. His Honour referred to the significance of the views of the relevant Minister administering the Mining Legislation in Western Australia as to the scheme. Under the relevant Western Australian legislation, applications for exploration licences do not constitute property rights and are not transmissible, except in certain circumstances. The scheme as originally proposed contemplated that in some form exploration licence applications made by one or other of the plaintiff companies, other than KLV, would be transmitted to KLV, so that the place in the queue which they presently hold would not be lost. Apparently that itself is a valuable asset in some form. The dealings with the relevant Department in Western Australia and the Minister were to explore the way in which those exploration licence applications might be transmitted as part of the orders of the Court, so that the place in the queue where those applications presently exist would not be lost. It has now been accepted by the plaintiff companies that that cannot be done. They are content, therefore, for those exploration licence applications to remain in the names of the respective plaintiffs, so that when and if the exploration licences to which the applications refer are granted, they will be granted in the name of the particular plaintiff company and will then be assigned by deed by the particular plaintiff company to KLV. Hence, the plan to deregister the plaintiff companies other than KLV had not been pursued. They will remain in existence for the time being for that limited purpose. 10 In those circumstances it is not necessary further to consider the particular attitude of the Minister of the Department of Industry and Resources in Western Australia to the application. That was the only issue which was of concern to the Minister. The solicitors for the plaintiffs by letter of 15 July 2005, wrote to the Director of the Department of Industry and Resources, inter alia raising the question: 'Prior to de-registration an application will be made pursuant to Regulation 102 of the Mining Regulations 1981 (WA) for devolution of a number of tenement applications made jointly with Barrick Gold of Australia Ltd by each of NKM and Norkal.' A schedule of those applications was enclosed. It was that particular aspect which drew the comment of the relevant Minister, who otherwise did not regard it as necessary to appear at the hearing having been served otherwise with the proposed application, including details of the scheme. The Minister's response was to seek further written submissions as to why the devolution proposed could apply to the scheme of arrangement. The Minister then proposed that that would be explored by advice from the State Solicitor's Office. As I have said, that was the only issue concerning the Minister. It is no longer an issue, because the sunset clause for the deregistration of the plaintiffs other than KLV is not to take place. There is no proposal under the scheme to 'transfer' the exploration licence applications from the plaintiff companies other than KLV to KLV. 11 In those circumstances it seems to me that the variation is of minor nature. Subject to being otherwise satisfied that the scheme should be approved, I will approve the scheme with that variation. 12 The Court is, of course, not bound to approve the scheme simply because it has previously made orders for the convening of meetings and because the requisite majority of members, in this case a sole member of each of the plaintiff companies, has agreed to it: see for instance Re NRMA Ltd (2000) 33 ACSR 595 at 607 (Re NRMA Ltd). The function of the Court in deciding whether or not to approve the scheme has been described in the following terms: 'In exercising the discretion to approve the scheme, the court will determine: 1. whether all the conditions required by CA s 411 have been complied with; 2. whether the majority of the members or creditors, through acting regularly, have acted in good faith and not in pursuit of some illegitimate purpose; and 3. whether the proposal was "at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such member, might approve it". Fundamentally, the jurisdiction is supervisory; the court is concerned to be satisfied that there has been an absence of oppression and that the compromise or arrangement is one which is capable of being accepted.' That passage is from Renard and Santamaria, Takeovers and Reconstruction in Australia, at 15,061. It was cited with approval in Re NRMA Ltd at 607. See also Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213 at 247; Re Dorman Long & Co Ltd [1934] Ch 635; Scottish Insurance Corp Ltd v Wilsons and Clyde Coal Co Ltd [1949] AC 462 at 486. 13 I am satisfied on the whole of the material that the scheme is in truth a member scheme and is not a creditor scheme. Subject to my addressing the interests of particular creditors below, it is plain that the creditors of each of the plaintiff companies will become creditors of KLV and will share in a greater pool of assets than each of them individually presently have access to: see Re AGL Sydney Ltd (1994) 13 ACSR 597; Re Clydesdale Bank Ltd [1950] SC 30. 14 I am also mindful that I should not substitute or, or indeed presume to substitute, my commercial judgment regarding the desirability of the scheme as proposed for that of the members of the scheme. Santow J in re NRMA Ltd (No 2) (2000) 34 ACSR 261 said at 270: 'When it comes to appraising the fairness of a scheme, the court does not determine that the scheme is intrinsically in the members' interests or otherwise.' 15 As I have said the scheme, in essence, involves the transfer of the assets and liabilities of the plaintiff companies other than KLV to KLV. It is to achieve that end that the Court is also asked to make orders pursuant to s 413 of the Act so that, by virtue of its order, the transfer of assets and liabilities will take place without further act or deed. The Court is empowered to make such orders by s 413(1)(a) of the Act. 16 There are a number of matters to which the Court should have regard before approving the proposed scheme. 17 One of course is the interests of creditors of the plaintiff companies. The proposed scheme was publicly advertised on 14 July 2005. The advertisement drew attention to the nature of the scheme, and gave any person interested the opportunity to oppose the approval of the scheme by filing and serving a notice to that effect in the Court and then of course to appear. No notice has been filed or served in the Court, and there is no appearance of any creditor or any other person opposing the scheme. I also accept on the evidence that no communication from any entity seeking to oppose the making of an order approving the scheme has been received by any of the plaintiff companies through their solicitors. 18 Creditors of the plaintiff companies are, as counsel for the plaintiff companies indicated, broken into a number of categories. 19 There is of course the joint venture company, Barrick Mines. It is aware of the scheme. It has been served with the details of the scheme. It consents to the scheme. There are creditors in the nature of third party financiers of one or more of the plaintiff companies. They are two substantial banking entities. They have been served with the details of the scheme and the application. They consent to the proposed scheme. There is a third party equipment financier to one or more of the plaintiff companies, SP Rentals Pty Limited. It too was served with the scheme and details of the application. It too has consented to the proposed scheme. There are, as one might expect, a number of inter-company creditors, being themselves members of the Newmont Australia Group. They are fully aware of the scheme and its circumstances and their interests are properly protected. 20 There is also the question as to trade creditors of the group venture. The manager of the joint venture is Kalgoorlie Consolidated Gold Mines Pty Limited. On the material before me, the trade creditors are all trade creditors directly of the joint venture manager, rather than of individual plaintiff companies. They will continue to deal with the manager of the joint venture and have access to it, and then behind the joint venture manager (if necessary) to the assets of the joint venturers to secure their liabilities. They too are not at risk by the approval of the proposed scheme. On the evidence there are no trade creditors of the individual plaintiff companies whose interests need to be addressed. 21 Finally, there is the Australian Taxation Office. There are difficulties, as counsel for the plaintiff companies acknowledged, of liabilities for taxation under the Income Tax Assessment Act 1936 (Cth) being passed with the scheme. I do not need to go into the details of that. The details of the scheme have been conveyed to the Commissioner of Taxation. Upon a certain condition, namely the delivery of a Deed Poll duly executed to secure payment of the current taxation liabilities, the Commissioner of Taxation does not object to the proposed scheme. I am satisfied that the condition imposed by the Commissioner of Taxation upon his non-objection to approval of the proposed scheme, namely the delivery of the duly executed Deed Poll, has been fulfilled. 22 Accordingly, I am satisfied that in respect of existing creditors of any of the plaintiff companies, those creditors are properly protected and consent to or do not oppose the proposed scheme or, in the case of trade creditors of the joint venture, they are at least no worse off. 23 In addition, it is plain on the material before me that each of the plaintiff companies is solvent and comfortably so, and that following approval of the proposed scheme, the creditors of the individual plaintiffs will have access to a larger pool because of the transfer of assets to KLV and access to KLV to secure payment of any outstanding indebtedness. The proposed scheme will not diminish in any way the assets available, presently individually and after approval collectively through KLV. 24 I do not think in the circumstances that it is necessary to convene meetings of any creditors to approve the proposed scheme. 25 In fact, the evidence before me shows that the proposed accounting treatment upon the amalgamation will secure proper maintenance of the share capital of each of the plaintiff companies, so as to protect their creditors. The independent accounting advice, as well as the internal accounting advice, shows that the proposed accounting treatment following the amalgamation will accord with the Australian requirements now imposed by the International Reporting Standards in an appropriate way. 26 I am also mindful in that regard that the Australian Securities and Investment Commission has no objection to the proposed scheme. 27 Those comments are sufficient to indicate that I am satisfied that the proposed scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act. 28 I am also satisfied that the additional requirement imposed by s 411(17) - namely, that they produce to the Court a statement in writing by ASIC, stating that ASIC has no objection to the compromise to the proposed scheme - has been complied with. 29 I further observe, relevant to approval or otherwise of the proposed scheme, that the Western Australian Stamp Duties Office has indicated that, in the event that the Court makes the order sought approving the proposed scheme and as to its manner of implementation, the scheme will be able to be implemented and that appropriate relief from stamp duty which might otherwise be payable upon the giving effect to the scheme will be granted in Western Australia. 30 The remaining matter that I need to address is the application under s 411(12) of the Act exempting the plaintiff companies from complying with s 411(11) of the Act, namely, that a copy of any orders of the Court be annexed to every copy of the constitution of the scheme companies. The purpose of s 411(11) was referred to by Heenan J in Re Equinox Resources Limited [2004] WASC 143 at [22]. His Honour said that its purpose: ' … is to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved.' 31 I do not know whether his Honour was intending to exclude from consideration the interests of existing creditors of the plaintiff companies. In my view, part of the purpose of s 411(11) of the Act could be also to ensure that those existing creditors of the plaintiff companies, whose assets may be significantly affected by a proposed scheme will be informed of the nature of the proposed scheme so that whereas they become aware that entitlement to recover any indebtedness from a particular plaintiff company becomes an entitlement to recover that indebtedness against a different entity, KLV. In this matter, on the material before me, there is no need for that information to be conveyed by means of the constitution of the plaintiff companies. That is because, as I have said, each of the existing creditors of the plaintiff companies is aware of and has consented to the proposed scheme other than the trade creditors of the joint venture, and as I have indicated the trade creditors of the joint venture are primarily able to recover their indebtedness from the manager of the joint venture itself and then indirectly, if necessary, from the assets of the joint venture. The assets of the joint venture are not affected. 32 Accordingly I propose to make the order sought under s 411(12) of the Act. I am otherwise satisfied, as Finn J was, that all of the formal requirements of the Act have been complied with. I do not think it is necessary to record each of the steps involved in being satisfied of those matters. 33 For those reasons, in my view, this is an appropriate matter in which to grant the orders sought. I will make orders in terms of the draft minutes of order as altered and initialled by me this day. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.
[2004] WASC 143