Bell Coal v UB Minerals [1999] NSWSC 301

New South Wales Supreme Court CITATION : Bell Coal v UB Minerals [1999] NSWSC 301 revised - 31/08/99 CURRENT JURISDICTION : Commercial FILE NUMBER(S) : 50009/1999 HEARING DATE(S) : 29/03/99 JUDGMENT DATE : 7 April 1999

Bell Coal Pty Limited - Plaintiff PARTIES : UB Minerals Inc (In Liquidation) - First Defendant Mr R.A.F. England - Second Defendant JUDGMENT OF : Rolfe J

COUNSEL : Mr T.F. Bathurst QC/Mr T.G.R. Parker - Plaintiff Mr R.J. Whitington QC - Defendants SOLICITORS : Blake Dawson Waldron - Plaintiff Fisher Jeffries - Defendants CATCHWORDS : DECISION : Plaintiff refused leave to proceed under s.471B of the Corporations Law with these proceedings on the ground that all matters in issue can be determined in other proceedings:; Capita Financial Group Limited v Rothwells Limited (No 2) 1987) 7 ACLC 634; Vamgramd Pty Limited (in liquidation) v Fielding & Ors (1993) 10 ACSR 373; Ogilvie-Grant v East (1983) 7 ACLC 667 referred to.

22 I N D E X

Page

Introduction 1

Some Matters Apparently Not In Issue 7

The Present Case 15

The Exercise Of Discretion 18

Two Sets Of Proceedings 19

The Position Of The Liquidator 20

Costs 21

Orders 22

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

ROLFE J

WEDNESDAY, 7 APRIL 1999

50009/1999 - BELL COAL PTY LIMITED v UB MINERALS INC (IN LIQUIDATION) & ANOR

JUDGMENT

HIS HONOUR:

Introduction

1 By a Summons issued on 28 January 1999 the plaintiff, Bell Coal Pty Limited, "Bell Coal", for which Mr T.F. Bathurst of Queen's Counsel and Mr T.G.R. Parker of Counsel appeared, sued the first defendant, UB Minerals Inc (In Liquidation), ("UBN"), and Mr R.A.F. England, who was appointed as its liquidator on 29 February 1996. Mr R.J. Whitington of Queen's Counsel appeared on behalf of the defendants. I shall refer to these proceedings as "the New South Wales proceedings". 2 By that Summons Bell Coal sought declarations that the purported avoidance by Mr England, on his own behalf and on behalf of UBN, of a certain guarantee is invalid and of no effect; that Bell Coal is not indebted to UBN in the sum of US$1,554,590 as claimed by Mr England; and that an agreement referred to as the Set-Off Agreement is not, and never has been, of any legal effect or, alternatively, has, in the circumstances which have happened, been avoided by Bell Coal. Bell Coal also sought judgment against UBN in the sum of US$4,866,725.48 together with interest; a declaration that as from 3 December 1992 UBN holds the proceeds of the US Tax Refund on trust for it; and orders that there be an inquiry into what moneys and other assets have, since 3 December 1992, been held by UBN and/or Mr England representing the proceeds of that Refund. To the extent that such moneys or other assets are still held by them an order is sought that they be transferred to Bell Coal, and, to the extent that such moneys and other assets are not now held by them, that they pay to Bell Coal equitable compensation together with interest pursuant to equitable principles or alternatively s.94 of the Supreme Court Act . 3 In the portion of the Summons dealing with the nature of the dispute it is pleaded that it arises out of an agreement entered into on 20 September 1989 between Bell Coal and a company in the Bond Group, BBH Bond Brewing BV, ("BBH"), whereby Bell Coal sold to BBH one of its wholly owned subsidiaries, a company incorporated in Louisiana and called UB Minerals Inc, ("UBL"). It is pleaded that UBN, which was also known as UB Minerals Inc but which had been incorporated in Nevada, is a wholly owned subsidiary of UBL and by an agreement dated 25 September 1989 guaranteed the obligations of BBH under the sale agreement. 4 It is pleaded that the sale price was to be adjusted for any tax refunds. Subsequently there was a tax refund of US$4.87m from the US Inland Revenue authorities and a tax assessment of A$1.98m from the Australian Tax authorities and, in 1992, the Set-Off Agreement was entered into between Bell Coal and UBN's administration in consequence of which the plaintiff was paid US$1.55m from the US Tax Refund and UBN retained the balance and agreed to meet the Australian Tax assessment. It is asserted that UBN had not at the time of the Set-Off Agreement, and has not subsequently, been adjudged liable to pay the Australian assessment, and is now engaged in litigation with the Australian Taxation Office "in which it seeks to escape liability for the assessment". 5 On 2 December 1998 the solicitors for Mr England wrote to Bell Coal stating that they acted for the liquidator of UBN and:- "The Liquidator hereby avoids:- 1. The agreement made on 3 December 1992 between Australian Consolidated Investments Limited and/or Bell Coal Pty Limited and the Scheme Administrators of Bond Corporation Holdings Limited whereby Australian Consolidated Investments Limited and/or Bell Coal Pty Limited received the sum of US$1,554,590 from UBN.