Weaver v Noble Resources Ltd [2025] NSWSC 3 | Case summary

Weaver v Noble Resources Ltd [2025] NSWSC 3 | Case summary | Zoe

Background

The Company was incorporated on 6 September 2004 and operates a law firm specialising in personal injury compensation, formerly known as Schreuders Compensation Lawyers and now trading as Goodman Spring. The law practice operated by the Company operated on a "no win, no fee" basis. Its day to day operations were conducted by its sole director, Mr Mark Schreuder. The sole shareholder of the Company is Rosato Pty Ltd (Rosato). Mr Schreuder and his wife, Mrs Maria Schreuder, are the sole directors of Rosato. Mrs Schreuder is its sole shareholder.
The Company ran into financial difficulties partly at least as a result of the Covid 19 pandemic. It was placed into voluntary administration on 25 June 2024. It has total creditor claims in excess of $20 million of which $9,767,000 is owed to Whitecrown Capital Pty Ltd (Whitecrown), the proponent of the DOCA and major secured creditor of the Company. Whitecrown appointed receivers and managers to the Company on 27 June 2024.
Under the terms of the DOCA, Whitecrown is to contribute $750,000 to be distributed to the Company's Creditors (as defined in the DOCA). It is a condition precedent to the operation of the DOCA that by 23 January 2025 the administrators procure the transfer of all of the issued shares in the Company to Whitecrown or its nominee. Windy Bay is Whitecrown's nominee. The administrators sought an extension of time for satisfaction of the condition precedent. That extension was refused by Whitecrown.
On 30 October 2024, the administrators' solicitors sought the consent of Rosato to the transfer of its shares to Windy Bay. Following that letter, the parties exchanged further correspondence, but ultimately Rosato did not provide its consent to the transfer of the shares.
On 13 December 2024, the administrators' solicitors, Bridges Lawyers (Bridges), instructed Ms Katy Lawrence of Leadenhall Corporate Advisory Pty Ltd (Leadenhall) to prepare an independent expert report on the value of the issued share capital of the Company. Ms Lawrence and Mr Richard Norris, another director of Leadenhall, provided their report on 23 December 2024. The report concluded that the net liabilities of the Company ranged from an estimated high of negative $8,803,900 to a low of $20,411,800 with the result that the value of shareholders' residual equity was estimated to be "$nil". Even on the most optimistic assumptions, the report concluded that the Company would have a net liability position of $750,000.
Bridges sent a copy of the report to Mr Schreuder by email and express post on 24 December 2024, together with a covering letter seeking Rosato's agreement to the transfer of the shares.
In response Bridges received an automatically generated email stating "I am currently on leave, returning in February 2025 and will respond then". However, on 8 January 2025, Mr Schreuder sent Bridges the following email: I refer to your email of Christmas eve 2024. I am on leave, but noting your desired time frame, I have briefly scanned its enclosures. My initial review of Leadenhall's report discloses a number of errors as well as some omissions pertinent to the issue of the value of the shares of Rosato. These errors and omissions prevent me from properly considering your client's request at this time. In the interests of saving time and resources, kindly furnish me with a copy of the letter of instruction to your expert together with any enclosures. The email gave no indication of what the omissions or errors of the report were.
There was then further correspondence between Bridges and Mr Schreuder in which Bridges provided Mr Schreuder with the letter of instruction and indicated that they were arranging to provide him with a fileshare link to the source material provided to Leadenhall.
Following further correspondence between the parties, on 10 January 2025, in accordance with orders made by the Court on that day, the administrators served on Rosato, by email to Mr and Mrs Schreuder, a pdf copy of the originating process together with a pdf copy of the affidavit filed in support of the originating process and a fileshare link to the exhibit to that affidavit.
In response to that email, Bridges received at 3.38 pm on 10 January 2025 an automatic email response in the same terms as that sent on 24 December 2024.
The Company had similarly been served with the originating process and supporting affidavit, but it did not appear on 14 January 2025, nor did it indicate its position in relation to the relief claimed. There was no appearance on behalf of Rosato on 14 January 2025 and no further correspondence from Mr Schreuder.

[3]

Reasons for orders

I was satisfied that Rosato was on notice of the current application. It is plain that despite the automatic email response, Mr Schreuder was monitoring his email inbox and was in a position to correspond with the administrators and Bridges where he thought it was in his interests to do so. The documents were served at the same email address the day after the last of that correspondence. It is not plausible that they did not come to the attention of Mr Schreuder.
Section 444GA of the Corporations Act relevantly provides: (1) The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained: (a) the written consent of the owner of the shares; or (b) the leave of the Court. … (3) The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.
On the evidence before the Court, the Company is plainly insolvent and cannot continue to trade. The likelihood is that there would be a substantial shortfall if the Company were placed into liquidation, with the result that there is no prospect that Rosato will receive a dividend in that event. Consequently, its shares are worthless. The evidence also establishes that the administrators tried unsuccessfully to sell the Company. Mr Schreuder himself proposed a deed of company arrangement. However, a condition of that deed (that Whitecrown agree not to participate in the deed fund, that it agree to pay all unpaid wages, superannuation, annual leave and other entitlements owing by the Company and agree to a new facility which would amortise the existing amounts owing to it) unsurprisingly could not be satisfied. Accordingly, liquidation appears to be the only realistic alternative to completion of the DOCA proposed by Whitecrown.
In those circumstances, no unfair prejudice to Rosato can arise. As Martin CJ explained in Weaver v Noble Resources Ltd [2010] WASC 182; (2010) 41 WAR 301 at [79], in a passage cited with approval by Black J in Re Mirabela Nickel Ltd (subject to deed of company arrangement) [2014] NSWSC 836 at [39]: …[t]he notion of unfairness only arises if prejudice is established. If the shares have no value, if the company has no residual value to the members and if the members would be unlikely to receive any distribution in the event of a liquidation, and if liquidation is the only alternative to the transfer proposed, then it is difficult to see how members could in those circumstances suffer any prejudice, let alone prejudice that could be described as unfair.
For those reasons, I made the following orders: 1. Pursuant to section 444GA(1)(b) of the Corporations Act 2001 (Cth), leave be granted to the plaintiffs to transfer all of the issued shares in the defendant to Windy Bay Holdings Pty Ltd ACN 679 678 310 as trustee for Windy Bay Trust ABN 39 189 105 522, in accordance with the terms of the Deed of Company Arrangement entered into by the defendant dated 23 October 2024. 2. Pursuant to section 447A of the Corporations Act 2001 (Cth) and section 90-15 of the Insolvency Practice Schedule (Corporations), the plaintiffs may, jointly or severally: 1. execute a share transfer form and any other documents necessary to effect the transfer of shares referred to in order 1; and 2. lodge or procure to be lodged any documents necessary for the entry of the name of Windy Bay Holdings Pty Ltd ACN 679 678 310 as trustee for Windy Bay Trust ABN 39 189 105 522 into the share register of the defendant in respect of all shares transferred to Windy Bay Holdings Pty Ltd ACN 679 678 310 as trustee for Windy Bay Trust ABN 39 189 105 522 in accordance with order 1. 1. The plaintiffs' costs of and incidental to this application be costs of the plaintiffs in administering the Deed of Company Arrangement entered into by the defendant dated 23 October 2024.

Weaver v Noble Resources Ltd

At a glance

Court

Decision date

Before

Source

Judgment (4 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)