Australia: Receivers in a nickel: Court directions under s424 of the Corporations Act 2001

This week's TGIF examines the determination of an application by receivers and managers (Receivers) for directions under section 424 of the Corporations Act 2001 (Cth) (Act). The receivers sought directions from the Supreme Court of Western Australia on whether they were justified in distributing the proceeds from a sale of assets to a secured party despite proceedings brought by a third party.


In Re Mirabela Nickel Ltd (receivers and managers appointed) (in liq); Ex Parte Madden [2018] WASC 335, Receivers were appointed to Mirabela Nickel Ltd (in liq) and Mirabela Investments Pty Ltd (in liq) (Mirabela Companies). The primary assets of the Mirabela Companies were shares in and loans owed by a Brazilian mining company (Mirabela Assets).

On 28 October 2015, the Receivers were appointed over all of the Mirabela Companies' present and after-acquired property by AET Structured Finance Services Pty Ltd (AET) pursuant to the terms of a General Security Deed.


In late 2017, Mining Standards International Pty Ltd (MSI), presented the Receivers with an offer for the Mirabela Assets. The Receivers, MSI and the Mirabela Companies subsequently entered into an Asset Sale Agreement (MSI Sale Agreement). Particulars of the MSI Sale Agreement remain in dispute between the Receivers and MSI. One issue in dispute concerned the date on which MSI was required to satisfy a condition precedent requiring it to obtain finance for the purchase price under the agreement.

On 22 November 2017, the Receivers issued a notice of termination in relation to the MSI Sale Agreement, relying on that condition precedent. The Receivers contended that the MSI Sale Agreement was validly terminated at this time. MSI contended that the Sale Agreement remained on foot, that it was entitled to specific performance and that it was therefore the equitable owner of, or had an equitable interest in, the Mirabela Assets.

The Receivers subsequently sold the Mirabela Assets to a group of Brazilian companies which were nominees of Appian Capital Advisory LLP (Appian). On 30 July 2018, the Receivers informed MSI that the Appian agreement had completed. Since late August 2018, the Receivers had been holding the proceeds of sale, being more than US$59.5 million.


On 23 October 2018, MSI applied to the Court for leave to issue a writ against Appian, the Mirabela Companies, the Receivers and the Brazilian mining company and its related advisers to be served overseas, in which it claimed specific performance of the MSI Sale Agreement and pleaded that the termination of the MSI Sale Agreement was wrongful, the MSI Sale Agreement remained on foot, and MSI's interest in the Mirabela Assets was superior to that of Appian (MSI Proceeding).


The Receivers applied to the Supreme Court of Western Australia for various directions under s 424 of the Act.

Justice Vaughan based his decision on the following principles emerging from case law as to the nature and scope of available directions under s 424:

  1. the directions that may be provided are a form of personal guidance or advice; they articulate the approach the controller is justified in taking;
  2. the power is to give directions in relation to matters identified in s 424(2), which should be interpreted broadly;
  3. there must be an issue calling for the exercise of legal judgment which is more than merely a business or commercial decision;
  4. the making of directions is not an adjudication which is determinative of parties' rights. The Court has no power to make directions that would have that consequence; and
  5. the fact that directions are sought in the context of an adversarial dispute does not mean that it is inappropriate to provide directions.

His Honour also determined that these principles must be interpreted consistently with the duties and functions of a receiver.


Justice Vaughan did not grant the first direction, which was that, subject to any contrary findings in the MSI Proceedings, the Receivers may act on the Appian agreement as though they had entered into the agreement after receiving a direction that they were justified in doing so (First Direction). Justice Vaughn held that the direction was of no practical effect as the Receivers conceded they had no remaining obligations under the agreement.


The Court granted the second direction that the Receivers could distribute amounts from the sale of the Mirabela Assets to AET under the General Security Deed upon giving prior notice to MSI, because otherwise, the prospect of the MSI Proceedings created a considerable degree of risk that might adversely affect the proper conduct of the receiverships.

This direction was made despite MSI's contention that the direction would require the Court to adjudicate on the substantive dispute between the parties. His Honour noted that it would be incompatible with the Receivers' principal duty to the secured creditor to defer the distribution to account for the mere chance that the third party might, at some point, commence proceedings.


Finally, the Court granted the direction that the Receivers were justified in defending the MSI Proceeding, as the Receivers' evidence established that its defence had a real, rational and logical prospect of succeeding.


This decision shows that a Court's directions can provide assistance to receivers in the context of hotly contested disputes and transactions, but they must have some degree of utility in order for the Court to make them.

Further, it emphasises that Courts will interpret receivers' powers and duties consistently with their basic purpose and functions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions