Australian Unity Funds Management Limited v NorthWest Healthcare Australia Re Limited

[2021] NSWSC 914

Supreme Court

New South Wales

Medium Neutral Citation:

Australian Unity Funds Management Limited v NorthWest Healthcare Australia RE Limited [2021] NSWSC 914

Hearing dates:

15 July 2021

Date of orders:

15 July 2021

Decision date:

15 July 2021

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Consequential orders cancelling the unitholders meeting made under s 1322(4).

Catchwords:

CORPORATIONS — Meeting of unitholders — Where transfer resolution to be put to unitholders at meeting withdrawn — Where entity that requisitioned meeting advised unitholders not to attend — Whether Court has power to cancel meeting under s 1322 of the Corporations Act 2001 (Cth) — Whether “just and equitable” to cancel meeting.

Legislation Cited:

- Corporations Act 2001 (Cth), ss 1319, 1322

Cases Cited:

-NRMA Insurance Group Ltd v Spragg (2001) 38 ACSR 174; [2001] NSWSC 381

- Re Lehman Brothers Australia Ltd (in liq) (No 2) (2013) 95 ACSR 685; [2013] FCA 965

- Re Ross Human Directions Ltd (No 3) [2010] FCA 1400

-Woolworths Ltd v GetUp Ltd (2012) 90 ACSR 670; [2012] FCA 726

Category:

Procedural rulings

Parties:

Australian Unity Funds Management Limited (Plaintiff/First Cross-Defendant)
NorthWest Healthcare Australia RE Limited (Defendant/Cross-Claimant)

Representation:

Counsel:
J Rudd (Plaintiff/First Cross-Defendant)
T Wong SC/T Phillips (Defendant/Cross-Claimant)

Solicitors:
Herbert Smith Freehills (Plaintiff/First Cross-Defendant)
Ashurst (Defendant/Cross-Claimant)

File Number(s):

2021/166157

Judgment – ex tempore (Revised 15 July 2021)

1. By Summons filed on 9 June 2021, Australian Unity Funds Management Ltd (“AUFM”) sought judicial advice as to whether it would be required to give effect to a resolution to amend the constitution of the Australian Unity Healthcare Property Trust (“AUHPT”), in a manner that would give effect to an acquisition of all the units in AUHPT by NorthWest Healthcare Australia RE Ltd (“NorthWest”). NorthWest had exercised its rights as a unitholder in AUHPT to convene a unitholders meeting at which the resolution was to be put, and that meeting (which had previously been adjourned by order of the Court) was scheduled to take place early next week on 19 July 2021.

2. By Interlocutory Process dated 12 July 2021, NorthWest sought an order that the meeting adjourned from 19 July 2021 to 7 September 2021. That Interlocutory Process was ultimately not filed and not determined by the Court, because evidence filed by AUFM in respect of the Interlocutory Process indicated that sufficient proxy votes had been lodged by unitholders opposed to the constitutional amendment proposed by NorthWest that it would not be passed at the unitholders meeting in any event. In those circumstances, NorthWest properly recognised that there would be little utility in holding the meeting, where, unless the unitholders who opposed the amendment changed the position already reflected in their proxies, the resolution could not be passed.

3. On 14 July 2021, NorthWest advised unitholders that “the proposal to be considered at the AUHPT unitholder meeting has been withdrawn and will not go ahead on 19 July 2021 as planned.” That announcement also advised that AUHPT unitholders should not seek to attend the meeting venue at the previously notified date and time. On one view, that announcement somewhat anticipated events, because, although NorthWest had rightly recognised that the resolution could not succeed, the question whether the meeting would need to go ahead had not then been determined. It is now common ground between AUFM and NorthWest that the meeting should be cancelled. That result seems to be in the interests of both AUFM and NorthWest, so far as it avoids wasted costs on their part, and in the interest of unitholders, since there would be little utility in their attending the meeting at which the substantive resolution would not be put.

4. A question then arises as to whether the Court has jurisdiction to make an order cancelling that meeting. The making of such an order is, in one respect, a modest extension of existing case law. There are cases where the Court has made orders cancelling scheme meetings under s 1319 of the Corporations Act 2001 (Cth): see, for example, Re Ross Human Directions Ltd (No 3) [2010] FCA 1400; Re Lehman Brothers Australia (in liq) (No 2) (2013) 95 ACSR 685; [2013] FCA 965. Those orders could be made under that section because the Court had ordered that the relevant meeting be convened in respect of the relevant scheme. Here, the meeting had not been convened by order of the Court, but called by NorthWest in its capacity as a unitholder in AUHPT, and the Court does not have power to make such an order under that section.

5. There are also cases where the Court has made orders adjourning meetings including meetings requisitioned by shareholders under s 1322(4)(d) of the Corporations Act: see, for example, NRMA Insurance Group Ltd v Spragg [2001] NSWSC 381 and Woolworths Ltd v GetUp Ltd (2012) 90 ACSR 670; [2012] FCA 726. Such an order is ready made under s 1322(4)(d) which authorises the Court to make an order extending the period for doing any act. However, s 1322(4)(a)-(d) do not specifically permit the cancellation of a meeting and Counsel’s researches have not identified any case in which the Court has made an order under s 1322(4) of the Act cancelling a shareholders or unitholders meeting.

6. Here, NorthWest has already advised unitholders that the proposal to be considered at the meeting on 19 July has been withdrawn and will not go ahead at the 19 July meeting and has anticipated events by advising unitholders that they “should not seek to attend” the meeting venue at the previously notified time and date. That was pragmatic advice in the circumstances, since one would expect that unitholders would not wish to attend a meeting, particularly in person, only to find that the meeting did not proceed to consider the substantive resolution which would no longer be put. It seems to me that, in these circumstances, the Court has power under s 1322(4)(a) of the Act, on application by NorthWest and AUFM, which are both interested persons in respect of the meeting, to make an order declaring that an act purporting to have been done by NorthWest, relevantly the advice that unitholders need not attend the meeting, in relation to a proceeding under the Act, namely the meeting convened by NorthWest under the Act, is not invalid by reason of any non-compliance with the Act or AUHPT’s constitution, so far as neither the Act nor that constitution specifically authorises the giving of the advice that unitholders need not attend that meeting. I am satisfied that the requirement that it is just and equitable that the order be made under s 1322(6) of the Act is satisfied. There would be no utility in unitholders being required to attend a meeting at which nothing substantive would be achieved.

7. I am also satisfied that, in those circumstances, the Court can go one step further, because s 1322(4) authorises the Court to make any consequential or ancillary order that the Court thinks fit. Where the Court has, in effect, validated the advice given by NorthWest to unitholders that unitholders should not seek to attend the meeting on 19 July 2021, then it seems to me it is within the scope of a consequential or ancillary order for the Court to formally cancel that meeting, so that it is clear that it will not proceed, where unitholders had been advised that they should not attend it.

8. For these reasons, I am satisfied that I can make an order in the form agreed by the parties, which cancels the meeting to take place on 19 July 2021. I will amend that order, consistent with this judgment, to include a declaration that the advice given by the Defendant on 14 July 2021 that the proposal to be considered at the meeting on 19 July 2021 will not go ahead and unitholders should not attend is not invalid by reason of any lack of power to cancel the meeting under the Corporations Act and AUHPT's constitution. The balance of the order then provides for the consequential cancellation of the meeting.

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Decision last updated: 03 August 2021