Firefly Resources Limited [No 2]

[2021] WASC 492

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   FIREFLY RESOURCES LIMITED [No 2] [2021] WASC 492

CORAM:   STRK J

HEARD:   1 NOVEMBER 2021

DELIVERED          :   1 NOVEMBER 2021

PUBLISHED           :   16 MARCH 2023

FILE NO/S:   COR 143 of 2021

EX PARTE

FIREFLY RESOURCES LIMITED

Plaintiff

GASCOYNE RESOURCES LIMITED

Interested Party

WESTGOLD RESOURCES LIMITED

Interested Party

ROBERT JEWSON

Interested Party

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Proposed share acquisition - Application for orders approving a scheme under the Corporations Act 2001 (Cth) s 411(4)(b) - Whether the scheme offends public policy - Whether the scheme implementation deed contravened the Corporations Act 2001 (Cth) s 602

Legislation:

Corporations Act 2001 (Cth)

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos and S P Tomasich
Gascoyne Resources Limited	:	J Sippe
Westgold Resources Limited	:	J M Healy
Robert Jewson	:	B Dharmananda SC & S Gibson
Australian Securities and Investments Commission	:	T Winters

Solicitors:

Plaintiff	:	HWL Ebsworth Lawyers
Gascoyne Resources Limited	:	Herbert Smith Freehills
Westgold Resources Limited	:	Hopgood Ganim
Robert Jewson	:	Thomson Geer
Australian Securities and Investments Commission	:	Australian Securities and Investment Commission

Case(s) referred to in decision(s):

APN News & Media Ltd, in the matter of APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400

Attorney General of the Commonwealth v Alinta [2008] HCA 2; [2008] 233 CLR 542

Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485

Firefly Resources Limited [2021] WASC 376

Gnych v Polish Club Ltd [2015] HCA 23; (2015) 255 CLR 414

Mincom Ltd v EAM Software Finance Pty Ltd [2007] QSC 037; (2007) 61 ACSR 266

Phosphate Co-operative Co of Australia Ltd v Shears (No 3) [1989] VR 665; (1988) 14 ACLR 323; (1988) 6 ACLC 1046

Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Re Advance Bank Australia Ltd (1997) 136 FLR 281

Re Arthur Yates & Co Ltd [2001] NSWSC 40; (2001) 36 ACSR 758

Re Austral Coal (No 2 & 2R) [2005] ATP 13; (2005) 55 ACSR 60

Re Bolnisi Gold NL (No 2) [2007] FCA 2078; (2007) 165 FCR 45

Re Bolnisi Gold NL [2007] FCA 1668

Re Cannpal Animal Therapeutics Ltd; Ex parte Cannpal Animal Therapeutics Ltd [No 2] [2021] WASC 83

Re Cascade Pools Australia Pty Ltd (1985) 9 ACLR 995

Re Coles Group (No 2) [2007] VSC 523; (2007) 215 FLR 411

Re Consolidated Minerals Ltd 03 [2007] ATP 25; (2007) 25 ACLC 1729

Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358

Re Egnia Pty Ltd (in liq) (1991) 7 WAR 322; (1991) 6 ACSR 640

Re Galaxy Resources Ltd; Ex parte Galaxy Resources Ltd [No 2] [2021] WASC 314

Re International Goldfields Ltd [2004] WASC 112

Re Kangaroo Resources Ltd; Ex parte Kangaroo Resources Ltd [2018] WASC 327

Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366

Re Pacific Energy Ltd [2019] WASC 443

Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583

Re Seven Network Ltd [2010] FCA 220

Re Timor Sea Petroleum NL (2000) VSC 337; (2000) 35 ACSR 186

Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357

Ross Human Directions Ltd [2010] ATP 8

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

Table of Contents

Overview

Background

Scheme implementation deed

Activity after the first court hearing

Additional evidence and submissions

Firefly evidence and submissions

Gascoyne evidence and submissions

Westgold's evidence and submissions

Mr Jewson's evidence and submissions

ASIC's preliminary view - first letter of 1 November 2021

Legal principles in respect of scheme approval

Disposition

Compliance with statutory and procedural requirements

Good faith and proper purpose

Fairness and reasonableness

All relevant matters brought to the court's attention

Full and fair disclosure

Oppression of minorities

Public policy

Satisfaction of s 411(17) of the Corporations Act

Exemption from compliance with s 411(11) of the Corporations Act

Conclusion and orders

Sch A – Orders made on 1 November 2021

Sch B - Key provisions of the scheme implementation deed

STRK J:

Overview

1. On 6 September 2021, orders were made pursuant to s 411(1) of the Corporations Act 2001 (Cth) to convene a meeting of holders of fully paid ordinary shares in the capital of Firefly Resources Limited (Firefly shares), to consider and vote on a proposed scheme of arrangement. By the scheme Gascoyne Resources Limited (Gascoyne) sought to acquire all Firefly shares. A scheme booklet containing the explanatory statement required by s 412(1)(a) of the Corporations Act was approved for distribution, and ancillary orders were made concerning the scheme meeting.  On 15 October 2021, further orders were made approving additional disclosure to Firefly shareholders and postponing the meeting in order to allow creditors time to consider that material.  By orders made on 15 October 2021, the application to approve the proposed scheme was listed on 1 November 2021 for a second court hearing.  Reasons for the orders made on 6 September 2021 and 15 October 2021 were published in Firefly Resources Limited [2021] WASC 376, and the orders made on each occasion were reproduced in the schedules to the same. I do not intend to repeat here what was said in those reasons. These reasons should be read with my earlier reasons.

2. The scheme meeting was held on 27 October 2021 in person and electronically. The resolution was passed by the requisite statutory majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act.

3. On 29 October 2021, a notice of appearance was filed on behalf of Westgold Resources Limited (Westgold). The notice disclosed an intention on the part of Westgold to seek leave to appear at the second court hearing as an interested party to oppose the application on two grounds. First, on the basis that the implementation of the scheme between Firefly and its members would be against public policy having regard to the terms and impact of the scheme implementation deed between Firefly and Gascoyne dated 15 June 2021 in contravention of s 602 of the Corporations Act.[1]  Secondly, based upon disclosure and compliance matters arising from the materials filed with the court, in relation to which Westgold intended to seek access.[2]  No particulars of the disclosure and compliance matters were provided in the notice of appearance.

   [1] Westgold's notice of appearance filed 29 October 2021.

   [2] Westgold's notice of appearance filed 29 October 2021.

4. The notice of appearance was filed on behalf of Westgold in circumstances where Westgold had made an unsolicited conditional off‑market takeover offer for Gascoyne, conditional upon Gascoyne not proceeding with the Firefly scheme.[3]  By the additional disclosure approved for distribution on 15 October 2021, Firefly shareholders were informed of the Westgold takeover bid for Gascoyne and that Westgold had lodged an application with the Australian Takeovers Panel asserting that, among other things, the scheme implementation deed entered into by Firefly and Gascoyne operated as an unacceptable lock‑up device such that 'an entity that wishes to acquire a stand‑alone or pre‑merger Gascoyne is practically prevented from doing so'.[4]

   [3] Firefly Resources Limited [13].

   [4] Firefly Resources Limited [151]; second supplementary affidavit of S I Lawson sworn 14 October 2021 par 21, SIL‑44.

5. A notice of appearance was also filed prior to the second court hearing on behalf of Mr Robert Jewson, a shareholder of Firefly.[5]  Mr Jewson sought leave to appear at the second court hearing to support the application as a shareholder who had voted in favour of the scheme at the scheme meeting.

   [5] Mr Jewson's notice of appearance filed 1 November 2021.

6. At the second court hearing, submissions were made on behalf of Firefly, Gascoyne and Mr Jewson in support of the application.  Counsel on behalf of the Australian Securities and Investments Commission (ASIC) also attended the second court hearing and after hearing submissions made, articulated ASIC's view.

7. At the commencement of the second court hearing, the court was informed by counsel for Westgold that it no longer pressed its application to be heard in opposition to the application.  The withdrawal was made on the basis that there would be no order as to costs as between Firefly and Westgold, and that there be liberty to apply with respect to the costs of other interested parties.[6]  Despite this withdrawal, the concerns that had been articulated on behalf of Westgold were comprehensively addressed at the second court hearing and were considered in the disposition of the application.

   [6] ts 34 - 35 (1 November 2021).

8. Without notice to the court, during the course of the second court hearing, M L Coulson in her capacity as a director of Troca Enterprises Pty Ltd (Troca Enterprises) requested leave to be heard.  Ms Coulson acknowledged that Troca Enterprises was a corporation that had not engaged a legal practitioner to appear on its behalf at the second court hearing, and sought leave to appear so as to apply for the second court hearing to be adjourned.  The adjournment was sought so that Troca Enterprises might engage legal representation to appear at the second court hearing so as to oppose the application.  While Ms Coulson was also a legal practitioner, she was not in a position to accept instructions on behalf of Troca Enterprises.[7]

   [7] ts 36 - 37 (1 November 2021).

9. I understood Ms Coulson to indicate that Troca Enterprises was a shareholder of Gascoyne and Troca Enterprises' opposition to the application was the same as that which had concerned Westgold, namely that Gascoyne considered the revised offer from Westgold to be superior in value for Gascoyne shareholders were it capable of being completed.[8]

   [8] ts 37 - 38 (1 November 2021).

10. The adjournment of the second court hearing was opposed by Firefly and Mr Jewson.  Counsel for Firefly submitted that the oral application for adjournment made on behalf of Troca Enterprises ought be refused in circumstances where no prior notice of the application had been given, and in circumstances where the court had the benefit of the concerns that had been articulated on behalf of Westgold.[9]  Counsel for Mr Jewson noted that the concern sought to be agitated by Troca Enterprises at an adjourned second hearing was the same that Westgold had articulated, and with which ASIC had been engaged.[10]  As to the position of Gascoyne, in circumstances where counsel did not have instructions in relation to the sought adjournment, Gascoyne made no submissions in relation to the same.[11]

    [9] ts 36 - 37 (1 November 2021).

    [10] ts 38 (1 November 2021).

    [11] ts 38 (1 November 2021).

11. In circumstances where the concern sought to be agitated by Troca Enterprises was squarely before the court in the form of Westgold's written submissions, with counsel on behalf of ASIC also present at the second court hearing to assist the court, the application by Troca Enterprises to adjourn so as to instruct solicitors so as to appear at the second court hearing was refused.[12]

    [12] ts 38 - 39 (1 November 2021).

12. During the course of the second hearing, the court received by email a communication from Ms Coulson which attached a copy of a letter that had been issued by Troca Enterprises to Gascoyne dated 31 October 2021, in which Troca Enterprises set out the basis for its objection to the scheme; and by reference to which Ms Coulson sought to emphasise that Troca Enterprises' objection arose from its concerns that Gascoyne's board would be acting in breach of its fiduciary duty by proceeding with the scheme.[13]  The letter of objection was marked for identification and provided to all counsel appearing at the second court hearing.  I considered the issues raised in the letter in the disposition of the application.[14]

    [13] ts 60 - 61 (1 November 2021).

    [14] Troca Enterprises' letter dated 31 October 2021, MFI-2.

13. After hearing counsel on behalf of Firefly, Gascoyne and Mr Jewson at the second court hearing, after considering the issues that had been raised by Westgold, the position of Troca Enterprises, the position of ASIC, and after considering whether approval of the scheme would offend public policy or offend the principles of ch 6 of the Corporations Act having regard to the terms and impact of the scheme implementation deed, at the second court hearing I made an order pursuant to s 411(4)(b) of the Corporations Act approving the scheme and gave brief reasons.  A copy of the orders made at the second court hearing are reproduced at sch A, and set out below are my detailed reasons for the same.

Background

1. In Firefly Resources Limited at [34] to [47], I describe the proposed scheme.

Scheme implementation deed

1. As was recorded in Firefly Resources Limited at [4], on 16 June 2021, Firefly announced to the Australian Securities Exchange (ASX) that it had entered into a scheme implementation deed with Gascoyne, which set out the terms and conditions on which Firefly and Gascoyne agreed that Gascoyne would acquire by the scheme all of the Firefly shares on issue as at the record date for the scheme.

2. Clause 11 of the scheme implementation deed is reproduced at sch B to these reasons.  The clause concerned exclusivity and contained lock up devices in the form of 'no shop', 'no talk', 'notification obligations' and 'matching right' provisions.

3. By way of overview, I note that cl 11.1 to cl 11.6 of the scheme implementation deed limited, during the Exclusivity Period,[15] Firefly's ability to obtain a transaction better than the proposed scheme with Gascoyne, which limits were subject to a carve‑out in cl 11.2 to ensure Firefly's board could meet their fiduciary obligations as to a 'Firefly Superior Proposal'.  The term 'Firefly Competing Proposal' was defined in the scheme implementation deed, which definition is reproduced at sch B to these reasons.

   [15] The scheme implementation deed is annexed to the affidavit of G W Hummel sworn 16 August 2021, GWH‑1.  The term 'Exclusivity Period' is defined in sch 1 of the scheme implementation deed.

4. While cl 11 did not on its terms operate to prevent a takeover bid of Gascoyne during the Exclusivity Period, cl 11.7 to cl 11.9 limited, during the Exclusivity Period, Gascoyne's ability to enter into a transaction which, if entered into or completed, would have prevented Gascoyne from proceeding with the scheme.  The term 'Gascoyne Competing Proposal' was used, which term was defined in the scheme implementation deed and which definition is also reproduced at sch B to these reasons.

5. Clause 11.10 carved‑out the normal provision of information from the restrictions which otherwise flowed from the operation of cl 11.

6. Under cl 12, a reimbursement fee of $500,000 was payable in prescribed circumstances by Firefly to Gascoyne, and by Gascoyne to Firefly.

7. Clause 13 of the scheme implementation deed concerned termination, and is reproduced at sch B to these reasons.  Under cl 13, Gascoyne had the right to terminate the scheme implementation deed in prescribed circumstances, including where there was a material breach of the deed by Firefly;[16] where Firefly entered into a Firefly Competing Proposal;[17] or if termination was agreed to by Gascoyne and Firefly.[18]

   [16] Scheme implementation deed cl 13.1(a)(1).

   [17] Scheme implementation deed cl 13.1(d).

   [18] Scheme implementation deed cl 13.2(c).

8. While Firefly was entitled to terminate the deed if Gascoyne entered into a Gascoyne Competing Proposal, Gascoyne was not afforded the right to terminate the deed in circumstances where Gascoyne determined it advantageous to pursue a Gascoyne Competing Proposal (which in short was a proposal the effect of which would have been to prevent Gascoyne from proceeding with the scheme).

9. The exclusivity provisions and the reimbursement fee were brought to the court's attention at the first court hearing by written and oral submissions.[19]

Activity after the first court hearing

[19] Firefly Resources Limited [88], [102] - [109].

1. Pursuant to the orders made on 6 September 2021, the next day Firefly announced to the ASX that the court had made orders to convene the scheme meeting.[20]  The scheme booklet as approved by the court was lodged with ASIC on 8 September 2021 and was dispatched to Firefly shareholders on 10 September 2021.[21]

   [20] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 5, SIL‑31.

   [21] Second supplementary affidavit of S I Lawson sworn 14 October 2021 pars 6 - 7, SIL-32, SIL‑33.

2. On 30 September 2021, Westgold publicly announced a takeover bid under ch 6 of the Corporations Act for all shares in Gascoyne.[22]  The bid was stated as being subject to a condition that the scheme not proceed.[23]  Later that day, Gascoyne also made an announcement advising of Westgold's intention to make an unsolicited and conditional off‑market takeover offer.[24]

   [22] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 10, SIL‑35.

   [23] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 10, SIL‑35.

   [24] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 11, SIL‑36.

3. The bidder's statement at s 7.2(a) provided that the Westgold offer was subject to the scheme with Firefly not proceeding and being validly terminated.[25]  I understood that Gascoyne had formed the view that the scheme implementation deed was not capable of being terminated in such circumstances without Firefly's agreement.[26]

   [25] As noted in Gascoyne's ASX announcement of 29 October 2021, attached to the fourth affidavit of T J Langdon sworn 31 October 2021, TJL‑20.

   [26] As was noted in Gascoyne's ASX announcement of 29 October 2021, attached to the fourth affidavit of T J Langdon sworn 31 October 2021, TJL‑20.

4. On 8 October 2021, Westgold announced that it intended to make an offer in the week commencing 10 October 2021.[27]  Gascoyne responded by way of an announcement stating it had formed a 'takeover response assessment team' comprised of its legal and financial advisers.[28]

   [27] Second supplementary affidavit of S I Lawson sworn 14 October 2021, SIL-38.

   [28] Second supplementary affidavit of S I Lawson sworn 14 October 2021, SIL-39.

5. On 13 October 2021, Gascoyne published an announcement on the ASX stating that it did not consider the Westgold offer to be a superior alternative to the scheme, and that Gascoyne's major shareholder did not support Westgold's takeover.[29]  Gascoyne also announced updates to its business plan, which included a postponement of capital works in order to increase cashflow and reduce exposure to the higher cost operating environment in Western Australia.[30]

   [29] Second supplementary affidavit of S I Lawson sworn 14 October 2021 pars 17 - 18, SIL‑41.

   [30] Second supplementary affidavit of S I Lawson sworn 14 October 2021 pars 17 - 18, SIL‑41.

6. Also on 13 October 2021, Westgold made an application to the Takeovers Panel seeking a declaration in relation to particular terms of the scheme implementation deed, specifically that Gascoyne be given a right to terminate in the event of a 'Gascoyne Superior Proposal'.[31] The Takeovers Panel made an announcement in respect of the application from Westgold,[32] and ultimately declined to conduct proceedings.[33]

   [31] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 21, SIL-44; second affidavit of G W Hummel sworn 29 October 2021 par 15, GWH-21.

   [32] Second supplementary affidavit of S I Lawson sworn 14 October 2021, SIL-44.

   [33] Second affidavit of G W Hummel sworn 29 October 2021 par 15, GWH‑21; on 22 October 2021, the Takeovers Panel announced that it refused to conduct an inquiry on Westgold's application.

1. Firefly considered these matters to be new material circumstances which comprised information that should be disclosed to Firefly shareholders ahead of the scheme meeting.[34]  On 14 October 2021, Firefly informed the court of Gascoyne's ASX announcement, and that on 13 October 2021 Firefly had entered a trading halt in response.[35]  Firefly sought a hearing so that it might seek approval to issue supplementary disclosure to Firefly shareholders, and to reschedule the scheme meeting so as to allow Firefly shareholders additional time to consider the additional information.[36]

   [34] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 25.

   [35] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 20.

   [36] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 26.

2. On 15 October 2021, after hearing from counsel on behalf of Firefly and Gascoyne, and considering the position of ASIC, I made orders which supplemented, varied or otherwise vacated those made on 6 September 2021.  Among other things, the orders made on 15 October 2021 provided for the scheme meeting to be postponed to 27 October 2021 at 2.00 pm, and for Firefly to distribute a supplementary explanatory statement to its shareholders.[37]

   [37] Firefly Resources Limited sch B.

3. On 15 October 2021, Firefly published the supplementary explanatory statement approved by the court on the ASX's market announcements platform, and on 18 October 2021 the suspension of trading in the securities of Firefly was lifted.[38]  In the supplementary explanatory statement, the Westgold offer and the application by Westgold to the Takeovers Panel were described in the following terms:[39]

   2.2 Westgold Offer

   On 30 September 2021, Westgold announced an intention to make an unsolicited and conditional off-market takeover offer for all of the issued shares in Gascoyne (Westgold Offer) at an offer ratio of one (1) Westgold share for every four (4) Gascoyne Shares.  The Westgold Offer is conditional on, amongst other things, the Scheme being announced by Gascoyne as not proceeding including, as a result of the valid termination of the Scheme Implementation Deed, and Westgold having a relevant interest in at least 50.1% of Gascoyne Shares at or before the end of the offer period.

   Gascoyne has stated that, after careful consideration of the Westgold Offer information that Westgold has made available to date, the Gascoyne Board believes that the Westgold Offer undervalues Gascoyne Shares and does not represent a superior alternative for Gascoyne Shareholders when compared to the Scheme, which the Gascoyne Board is committed to deliver.  Consequently, Gascoyne has stated that the Gascoyne Board unanimously recommends that Gascoyne Shareholders continue to take no action in response to correspondence from Westgold and to reject the Westgold Offer.  Furthermore, Gascoyne has stated that each of the Gascoyne Board members who have a relevant interest in Gascoyne Shares intend to reject the Westgold Offer in relation to their Gascoyne Shares.

   2.3 Westgold application to the Takeovers Panel

   On 13 October 2021, Westgold made an application to the Takeovers Panel pursuant to section 657C(2) of the Corporations Act under which Westgold is seeking a declaration of unacceptable circumstances and interim orders to adjourn, defer or postpone the Scheme Meeting (Application).  The Application relates to the exclusivity rights granted by Gascoyne under clause 11.7(b) of the Scheme Implementation Deed for the benefit of Firefly which include a 'no talk' restriction.  That provision prevents Gascoyne from (amongst other matters) negotiating with any potential party which could lead to a 'Gascoyne Competing Proposal' (as defined in the Scheme Implementation Deed) unless Gascoyne determines (after consulting with its advisers) that the competing proposal is a 'Gascoyne Superior Proposal'.  The Scheme Implementation Deed does not include a right for Gascoyne to terminate the Scheme Implementation Deed on receipt of a Gascoyne Superior Proposal.  Westgold has asserted, amongst other things, that the 'no talk' restriction in the Scheme Implementation Deed constitutes unacceptable circumstances because it prevents Gascoyne from supporting any superior proposal which is conditional on the Scheme not proceeding.

   [38] Second affidavit of G W Hummel sworn 29 October 2021 pars 10 ‑ 11, GWH‑16, GWH‑17.

   [39] Second supplementary affidavit of S I Lawson sworn 14 October 2021, SIL‑48.

4. On 18 October 2021, Westgold announced that it had lodged a bidder's statement with ASIC in relation to its off‑market takeover bid for Gascoyne, and attached a copy of the bidder's statement to the announcement.[40]

   [40] Second affidavit of G W Hummel sworn 29 October 2021 par 13, GWH-19.

5. On 22 October 2021, the Takeovers Panel published a media release stating that the Takeovers Panel had declined to conduct proceedings on the application dated 13 October 2021 made by Westgold in relation to the affairs of Gascoyne.[41]

   [41] Second affidavit of G W Hummel sworn 29 October 2021 par 15, GWH-21.

6. On 25 October 2021, Westgold announced an increase in its price offer (from one Westgold share for every four Gascoyne shares to three Westgold shares for every 11 Gascoyne shares), which offer remained subject to the scheme not proceeding.  Westgold also applied for a review of the decision of the Takeovers Panel, and the Takeovers Panel publicly announced the receipt of the review application on 26 October 2021.[42]  On 27 October 2021, the Takeovers Panel announced that it declined to make an interim order to defer the scheme meeting, but was still considering whether to conduct proceedings on the review.[43]

   [42] Second affidavit of G W Hummel sworn 29 October 2021 par 16, GWH-22, and par 18, GWH-24.

   [43] Second affidavit of G W Hummel sworn 29 October 2021 par 19, GWH-25.

7. On 27 October 2021, Gascoyne announced that:[44]

   (a)NRW Holdings Limited, which owned 14.71% of Gascoyne's issued capital, intended to accept Westgold's offer;

   (b)Deutsche Balaton Aktiengenesellschaft (Deutsche Balaton), which owned 22.09% of Gascoyne's issued capital, reserved its rights in respect of Westgold's offer;

   (c)Deutsche Balaton considered the Westgold offer to be superior to the scheme; and

   (d)Gascoyne was continuing to review Westgold's offer and reiterated that Gascoyne shareholders should take no action in relation to the Westgold offer.

   [44] Second affidavit of G W Hummel sworn 29 October 2021 par 20, GWH-26.

8. The scheme meeting was held on 27 October 2021 and was passed by the requisite majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act.  92.69% of Firefly shareholders present and voting voted in favour of the scheme and 99.64% of the votes cast on the resolution at the scheme meeting were in favour of the scheme.[45]  On the same day, Firefly published an announcement that Firefly shareholders had voted at the scheme meeting in favour of both the scheme and the demerger.[46]

   [45] Firefly's submissions filed 29 October 2021 par 2; second affidavit of C Hill affirmed 29 October 2021 par 79; second affidavit of D J Carpenter affirmed 28 October 2021 pars 19 ‑ 22, DJC‑3.

   [46] Second affidavit of G W Hummel sworn 29 October 2021 par 21, GWH‑27.

9. On 29 October 2021, Westgold lodged with the ASX a supplementary bidder's statement.[47]

   [47] Affidavit of R A Ferguson sworn 29 October 2021 par 23, RAF-12.

10. That same day, Gascoyne announced that its board had considered the revised offer from Westgold and determined that it would be superior in value for Gascoyne shareholders were it capable of being completed.[48]  It was also recorded in Gascoyne's announcement that the Firefly scheme was not capable of being terminated without Firefly's agreement and accordingly Gascoyne had written to Firefly enquiring as to whether Firefly would exercise its right to terminate the scheme implementation deed should the board of directors of Gascoyne determine that the Westgold offer was superior, and Firefly had declined to confirm that it would exercise its right to terminate in such a circumstance.[49]

    [48] Fourth affidavit of T J Langdon affirmed 31 October 2021 par 7, TJL‑20.

    [49] As was also noted in Gascoyne's ASX announcement of 29 October 2021, attached to the fourth affidavit of T J Langdon affirmed 31 October 2021, TJL-20.

11. In another announcement made by Gascoyne on 29 October 2021, Gascoyne announced that Westgold's offer opened on 29 October 2021 and would close at 5.00 pm Perth time on 29 November 2021; that the offer remained subject to the condition that the scheme not proceed; that it was not possible to determine the status of the condition as the matter was before the Takeovers Panel and subject to the second court hearing; and until the status of the condition of Westgold's offer was known, Gascoyne shareholders should take no action in relation to the offer.[50]

    [50] Second affidavit of G W Hummel sworn 29 October 2021 par 22, GWH-28.

12. Later that day, the Takeovers Panel announced that it had declined conduct review proceedings as had been sought by Westgold.[51]  The media release issued by the Takeovers Panel recorded that:

    The review Panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances.  Accordingly, the review Panel declined to conduct proceedings.

    [51] Fourth affidavit of T J Langdon affirmed 31 October 2021, TJL-19.

13. In these circumstances, the court requested that a representative of ASIC attend the second court hearing to address the application and to be of assistance to the court.  Counsel was instructed and appeared on behalf of ASIC at the second court hearing.  Prior to the hearing, ASIC also set out in writing what was then its position in relation to the application, summarised at [181] to [187] below.

Additional evidence and submissions

Firefly evidence and submissions

1. In addition to the affidavits that were read at the first court hearing and on 15 October 2021, which described the proposed scheme and proposed disclosure to Firefly shareholders,[52] the following 16 affidavits were filed on behalf of Firefly prior to the second hearing and all were read in support of the application.  The first seven affidavits described below addressed the substantial logistical undertaking that was necessitated by the electronic and physical dispatch of the approved letters, the proxy information form, the proxy form, the scheme booklet, and the supplementary explanatory statement to Firefly shareholders.

First affidavit of C Hill

[52] ts 39 (1 November 2021), which evidence was described in Firefly Resources Limited [19] ‑ [30], and [127] ‑ [132].

1. First, the affidavit of Christopher Hill, an employee of Automic Group, affirmed on 26 October 2021.  Mr Hill attached to his affidavit documents marked CH‑1 to CH‑34.  Among other things, Mr Hill deposed that since approximately January 2020, Automic had been responsible for maintaining Firefly's register of members;[53] that Automic had been retained by Firefly to arrange for the printing, packaging and dispatch of all communications to Firefly shareholders for the purposes of the scheme meeting;[54] and as at 4.00 pm on 6 September 2021, there were 974 shareholders who had nominated an electronic address for the purpose of receiving notices of meeting from Firefly and 2,328 shareholders who had not so nominated and would receive notices via post.[55]

   [53] Affidavit of C Hill affirmed 26 October 2021 par 8.

   [54] Affidavit of C Hill affirmed 26 October 2021 par 9.

   [55] Affidavit of C Hill affirmed 26 October 2021 par 11.

2. Mr Hill deposed that he was responsible for dispatching materials for the purposes of the scheme meeting to each shareholder who had nominated an electronic address for the purpose of receiving notices of meeting from Firefly, and that he attended to that dispatch on 10 September 2021.  Mr Hill also deposed that in relation to the issue of hard copy materials, Automic engaged iPrint Plus to print and mail the same; and to the instructions given to Lorena De Pellegrin of iPrint Plus.[56]

   [56] Affidavit of C Hill affirmed 26 October 2021 pars 19 - 36.

3. Mr Hill deposed that as at 5.00 pm on 13 October 2021, there were 937 shareholders who had nominated an electronic address for the purpose of receiving notices of meeting from Firefly and 2,247 shareholders who had not so nominated and would receive notices via post.[57]  Further, that he was responsible for dispatching the supplementary explanatory statement for the purposes of the scheme meeting to each shareholder who had nominated an electronic address for the purpose of receiving notices of meeting from Firefly, and that he attended to that dispatch on 16 October 2021.[58]  Mr Hill also deposed that in relation to the issue of hard copy materials, Automic engaged iPrint Plus to print and mail the same; and to the instructions given to Lorena De Pellegrin and Marvi Adolfina Douglas of iPrint Plus.[59]

Affidavit of L De Pellegrin

[57] Affidavit of C Hill affirmed 26 October 2021 par 35.

[58] Affidavit of C Hill affirmed 26 October 2021 pars 45 - 47.

[59] Affidavit of C Hill affirmed 26 October 2021 pars 51 - 63.

1. Secondly, the affidavit of Lorena De Pellegrin, director of iPrint Plus, affirmed on 26 October 2021.  Ms De Pellegrin attached to her affidavit documents marked LDP‑1 to LDP‑18.  Ms De Pellegrin deposed that iPrint Plus is in the business of, among other things, printing and mass distribution of documents by post; had been engaged by Automic to provide printing, collation and dispatch services in relation to the scheme; and to the steps undertaken to dispatch materials in September 2021 and October 2021 for the purposes of the scheme meeting.

Affidavit of B P Hogan

1. The third was the affidavit of Brendan Patrick Hogan, a machine operator employed by iPrint Plus, affirmed 26 October 2021.  Mr Hogan attached to his affidavit documents marked BPH‑1 and BPH‑2.  Among other things, Mr Hogan deposed to receipt of dispatch instructions from Ms De Pellegrin and to his execution of the same in September 2021.

Affidavit of M A Douglas

1. The fourth was the affidavit of Marvi Adolfina Douglas, a director of iPrint Plus, affirmed 26 October 2021 and which attached documents marked MAD‑1 to MAD‑5.  Among other things, Ms Douglas deposed to receipt of instructions from Automic in relation to the dispatch of materials in October 2021 for the purposes of the scheme meeting, and the steps undertaken to dispatch the same.

Affidavit of D J Donnelly

1. The fifth was the affidavit of Danny James Donnelly, a print finishing mail machine operator employed by iPrint Plus, affirmed 26 October 2021.  Mr Donnelly deposed to the steps that he, together with his colleague Christopher Felice Valente, undertook to dispatch materials in October 2021 for the purposes of the scheme meeting under the supervision of Ms Douglas.

Affidavit of C F Valente

1. The sixth was the affidavit of Christopher Felice Valente, a print finishing mail machine operator employed by iPrint Plus, affirmed 26 October 2021.  Mr Valente attached to his affidavit a document marked CFV‑1.  Mr Valente deposed to the steps that he, together with his colleague Mr Donnelly, undertook to dispatch materials in October 2021 for the purposes of the scheme meeting under the supervision of Ms Douglas.

Second affidavit of C Hill

1. The seventh affidavit read was the second affidavit of Mr Hill affirmed on 29 October 2021, to which he attached documents marked CH‑1 to CH‑9.  Mr Hill by his second affidavit deposed, among other things, that the scheme booklet and supplementary disclosure included proxy forms and instructions to lodge proxy forms, either physically at Automic's offices, by mail, or electronically; and by 2.00 pm on 25 October 2021, 102 proxies had been nominated by shareholders online.[60]  He further deposed to having generated reports indicating (among other things) the number of physical and online meeting proxies that had been received by Automic.[61]

   [60] Second affidavit of C Hill affirmed 29 October 2021 par 20.

   [61] Second affidavit of C Hill affirmed 29 October 2021 pars 21 - 24.

2. Mr Hill also described in his second affidavit the scheme meeting.  He deposed that as at 4.00 pm on 25 October 2021, the total number of shareholders was 3,155 collectively holding 308,339,530 Firefly shares;[62] that the scheme meeting was held on 27 October 2021 as a hybrid in person and online meeting; that once the scheme meeting commenced, every shareholder who had connected to the meeting through the Zoom webpage or the Zoom application, and remained connected, received a live audio and visual stream of the scheme meeting which was held at BDO Australia, 38 Station Street, Subiaco, Western Australia; and at the scheme meeting, no written questions were asked via the Zoom 'Q&A' function, and no scheme shareholder who attended the meeting in person requested to ask a question.[63]

   [62] Second affidavit of C Hill affirmed 29 October 2021 par 25.

   [63] Second affidavit of C Hill affirmed 29 October 2021 pars 26 - 55.

3. In his second affidavit, Mr Hill describes the position adopted by Sparta AG, a Firefly shareholder, during the course of the scheme meeting.  Mr Hill deposed that:

   (a)during the scheme meeting, at around 2.20 pm, Mr Hill was informed by Ann Nguyen of Automic that at approximately 2.19 pm, Philipp Wiedmann of Sparta AG spoke to Ms Nguyen by telephone and said words to the effect that Sparta AG wished to vote against the resolution;[64]

   (b)according to Firefly's registry, which Mr Hill viewed on Automic's computer system, Sparta AG held 25,600,000 Firefly shares at 4.00 pm on 25 October 2021, which were held in two parcels on the Firefly register; one parcel of 25,300,000 Firefly shares (the larger parcel) and the second of 300,000 Firefly shares (the smaller parcel);[65]

   (c)by 2.20 pm, the poll in relation to the resolution had closed and Mr Hill informed the chair, Deanna Carpenter, that Sparta AG had told Ms Nguyen that it wished to change its vote, and Ms Carpenter said words to the effect that because the poll had closed, it was too late to change any votes;[66]

   (d)he was informed by Steven Wood, a company secretary of Firefly, that at 2.08 pm and 2.17 pm Mr Wood had received missed calls from Jacob Coulson of Canaccord Genuity Financial Limited, and that Mr Wood did not answer those calls because the scheme meeting was in progress;[67]

   (e)he was informed by Mr Wood that between 2.08 pm and 2.17 pm Mr Wood had received text messages from Mr Coulson, including messages at 2.10 pm and 2.16 pm, informing Mr Wood that Sparta AG wished to change its vote, and that Mr Wood did not read the messages regarding a change of vote until after the poll had closed at the scheme meeting;[68]

   (f)he was informed by Mr Wood that at 2.13 pm, Mr Wood had received an email from Mr Wiedmann of Sparta AG, but did not read that email until after the poll had closed at the scheme meeting;[69]

   (g)on 21 October 2021, Sparta AG had registered an online proxy to vote 'For' the resolution in respect of the larger parcel of shares and according to the database, Sparta AG did not revoke that proxy when registering to attend the scheme meeting on 27 October 2021;[70]

   (h)according to Automic's registration records for the scheme meeting, Sparta AG registered online to attend the scheme meeting at approximately 2.04 pm on 27 October 2021, and according to records that Mr Hill accessed in the Zoom application, Mr Wiedmann of Sparta AG attended via Zoom the scheme meeting at 2.04 pm, and left the scheme meeting at approximately 2.06 pm;[71]

   (i)according to the poll report, the larger parcel was voted for the resolution in accordance with Sparta AG's proxy, while the smaller parcel was voted against the resolution, by Sparta AG having used the meeting page while the poll was taken and voting in respect of the smaller parcel;[72] and

   (j)Mr Wiedmann did not communicate through the Zoom platform that he was having any difficulties with voting the larger parcel using the meeting page.[73]

   [64] Second affidavit of C Hill affirmed 29 October 2021 par 56.

   [65] Second affidavit of C Hill affirmed 29 October 2021 pars 57 - 58.

   [66] Second affidavit of C Hill affirmed 29 October 2021 par 59.

   [67] Second affidavit of C Hill affirmed 29 October 2021 par 60.

   [68] Second affidavit of C Hill affirmed 29 October 2021 par 61.

   [69] Second affidavit of C Hill affirmed 29 October 2021 par 62.

   [70] Second affidavit of C Hill affirmed 29 October 2021 par 63.

   [71] Second affidavit of C Hill affirmed 29 October 2021 par 64.

   [72] Second affidavit of C Hill affirmed 29 October 2021 par 65.

   [73] Second affidavit of C Hill affirmed 29 October 2021 par 66.

1. Mr Hill described in his second affidavit the voting procedure adopted at the scheme meeting.[74]  Among other things, he deposed that the ability to vote using the meeting page was only available to Firefly shareholders who had indicated that they wished to vote at the scheme meeting when they registered (thereby revoking any proxy they had lodged);[75] and proxies who had been appointed to exercise the nominating Firefly shareholder's vote (that is, where the Firefly shareholder had not directed the proxy to vote in a particular way).[76]  Further, he deposed that the scheme meeting chair declared the poll closed after approximately five minutes, and that at approximately the four minute mark, the chair said words to the effect that voting would close in approximately one minute, and that shareholders should cast their votes immediately.[77]  After the chair declared the poll closed, Mr Hill deposed that he used Automic's computer system to close the poll on the meeting page, which prevented any further votes being cast via the meeting page.[78]

   [74] Second affidavit of C Hill affirmed 29 October 2021 pars 67 - 68.

   [75] Second affidavit of C Hill affirmed 29 October 2021 par 73.

   [76] Second affidavit of C Hill affirmed 29 October 2021 par 73.

   [77] Second affidavit of C Hill affirmed 29 October 2021 par 76.

   [78] Second affidavit of C Hill affirmed 29 October 2021 par 77.

2. Mr Hill deposed that after the poll was closed, he used Automic's computer system to update the information regarding the voting based on the proxy report and the votes cast on the meeting page with the votes from the floor, to provide a final electronic record of the outcome of the voting process for the scheme meeting (the full voting report).  Mr Hill noted that the full voting report included the proxy lodged by Sparta AG to vote 'for' the resolution in respect of the larger parcel.[79]

   [79] Second affidavit of C Hill affirmed 29 October 2021 par 78.

3. Mr Hill deposed that the results of the resolution, as declared by the chair of the scheme meeting and which reflected the data in the full voting report, were as follows:[80]

   (a)132 shareholders voted for the resolution, who collectively held 162,143,838 Firefly shares as at 4.00 pm on 25 October 2021 (the 132 shareholders included Sparta AG and the 162,143,838 Firefly shares included the larger parcel being 25,600,000 shares held by Sparta AG as at 4.00 pm on 25 October 2021);

   (b)nine shareholders voted against the resolution, who collectively held 580,634 Firefly shares as at 4.00 pm on 25 October 2021;

   (c)one shareholder abstained from voting, who held 1,110 Firefly shares as at 4.00 pm on 25 October 2021; and

   (d)no shareholders cast invalid votes.

   [80] Second affidavit of C Hill affirmed 29 October 2021 par 79(a) ‑ (d).

4. Finally, Mr Hill deposed that Automic had been instructed to tag the votes cast by Firefly shareholders who, as at 6 September 2021, held options issued by Firefly.[81]  Mr Hill attached to his affidavit a report that he prepared on 27 October 2021, detailing the tagged votes of those shareholders who held options issued by Firefly.[82]

Second affidavit of D J Carpenter

[81] Second affidavit of C Hill affirmed 29 October 2021 par 80.

[82] Second affidavit of C Hill affirmed 29 October 2021 par 81, CH-9.

1. The eighth was the second affidavit made by Deanna Jayne Carpenter for the purposes of this proceeding, which was affirmed on 28 October 2021.  Ms Carpenter deposed to having acted as chair of the scheme meeting in accordance with order 8 of the orders made on 6 September 2021, and that Mr Hill of Automic had been appointed to supervise the voting procedures and the counting of votes at the scheme meeting, and to report to her the voting outcome.[83]

   [83] Second affidavit of D J Carpenter affirmed 28 October 2021 par 6.

2. Among other things, Ms Carpenter deposed that approximately two or three minutes after she had declared the poll open, Mr Wood showed her a text message on his phone that he had received from Mr Coulson of Canaccord Genuity Financial Limited, which stated that Sparta AG wished to change its proxy vote from 'for' the resolution to 'against'.[84]  She further deposed that at the time Mr Wood showed her that text message, she had determined that all Firefly shareholders present and entitled to vote on the scheme resolution (including those attending by the Zoom platform) had been given an opportunity to vote; and she had further formed the view that Mr Coulson's text message could not be an effective revocation of Sparta AG's proxy, because Mr Coulson was not a director, duly appointed proxy, or other authorised representative of Sparta AG.  Ms Carpenter deposed that she said to Mr Wood words to the effect that the Sparta AG proxy had not been validly revoked and that Sparta AG's shares should be voted in accordance with its proxy.[85]

   [84] Second affidavit of D J Carpenter affirmed 28 October 2021 par 14.

   [85] Second affidavit of D J Carpenter affirmed 28 October 2021 par 15.

3. Ms Carpenter also deposed that approximately five minutes after she had declared the poll closed and adjourned the meeting, Mr Hill of Automic said to her words to the effect that his Sydney colleague, Ann Nguyen, was on the phone to Mr Wiedmann of Sparta AG, and that Sparta AG wished to change its vote from 'for' to 'against', and Mr Hill asked whether it was possible to change Sparta AG's vote.[86]  Ms Carpenter deposed that she said words to the effect that because the poll had closed and counting was in progress, it was not possible for Sparta AG to change its vote.[87]

   [86] Second affidavit of D J Carpenter affirmed 28 October 2021 par 16.

   [87] Second affidavit of D J Carpenter affirmed 28 October 2021 par 17.

4. Ms Carpenter deposed that following the counting of the votes, she reconvened the meeting, was provided with a poll report by Mr Hill of Automic and read out the results on the resolution and announced that it had been carried.[88]

   [88] Second affidavit of D J Carpenter affirmed 28 October 2021 par 18.

5. Finally, Ms Carpenter deposed for completeness only that, hypothetically, had Sparta AG validly revoked its proxy in respect of the larger parcel of shares and voted all of its shares against the resolution, the resolution would still have been approved with 92.91% of the number of shareholders voting, and 84.09% of the number of votes cast.[89]

Affidavit of S D Wood

[89] Second affidavit of D J Carpenter affirmed 28 October 2021 par 26.

1. The ninth was the affidavit of Steven Douglas Wood, one of the company secretaries of Firefly, sworn 28 October 2021.  Mr Wood deposed to having attended the scheme meeting on 27 October 2021 in person at the offices of BDO Australia, which opened at approximately 2.00 pm;[90] to having received communications from and on behalf of Sparta AG during the scheme meeting;[91] and to his communications with Ms Carpenter in relation to the same.[92]

Affidavit of S Q Teo

[90] Affidavit of S D Wood sworn 28 October 2021 par 5.

[91] Affidavit of S D Wood sworn 28 October 2021 pars 5 - 14.

[92] Affidavit of S D Wood sworn 28 October 2021 pars 15 - 17.

1. The tenth was the affidavit of Shu Qing (Natalie) Teo, a company secretary of Firefly, sworn 28 October 2021, to which she attached a document marked SQT‑1.  Ms Teo deposed that on 27 October 2021 Firefly provided a notice to the public of the second court hearing by advertisement in The Australian newspaper, and attached to her affidavit a copy of that notice.[93]

Affidavit of M P Carolan

[93] Affidavit of S Q Teo sworn 28 October 2021 par 5, SQT-1.

1. The eleventh was the affidavit of Mia Patricia Carolan, a solicitor employed by HWL Ebsworth (the solicitors for Firefly in this proceeding), affirmed on 28 October 2021, to which she attached documents marked MPC‑1 to MPC‑5.  Ms Carolan deposed to having lodged with ASIC the orders made by the court at the first court hearing on 6 September 2021 and on 15 October 2021, together with other documents filed in this proceeding.[94]

Second affidavit of G W Hummel

[94] Affidavit of M P Carolan affirmed 28 October 2021 pars 5 - 11, MPC-1 to MPC-5.

1. The twelfth was the second affidavit deposed to by Grant William Hummel, a partner of HWL Ebsworth, for the purposes of this proceeding.  Mr Hummel's second affidavit was sworn on 29 October 2021, to which he attached documents marked GWH‑1 to GWH‑28.  Among other things, Mr Hummel deposed to his communications made on behalf of Firefly with ASIC; and to the developments regarding the Westgold takeover bid between 15 and 29 October 2021.

Affidavit of K Pretki

1. The thirteenth was the affidavit of Kane Pretki, an employee of Automic, affirmed 29 October 2021.  Among other things, Mr Pretki deposed to Automic having been responsible for maintaining Firefly's register of members;[95] that the Firefly register was maintained in accordance with the Corporations Act and was stored on a computer database; to the usual processes adopted by Automic for dealing with proxy forms; that for the purposes of receiving, reviewing and processing proxy forms for Firefly's scheme meeting, Automic's Investor Services Team in Sydney, which comprised between 20 and 30 employees, followed its usual processes; and the database recorded that 20 physical meeting proxies were processed in this manner and entered into the database.[96]

Fourth affidavit of T J Langdon

[95] Affidavit of K Pretki affirmed 29 October 2021 par 7.

[96] Affidavit of K Pretki affirmed 29 October 2021 pars 8 - 17.

1. The fourteenth was the fourth affidavit deposed to by Thomas James Langdon, a solicitor employed by HWL Ebsworth, for the purposes of this proceeding.  Mr Langdon affirmed his fourth affidavit on 31 October 2021, to which he attached documents marked TJL‑19 to TJL‑26.

2. Among other things, Mr Langdon deposed to the refusal by the Takeovers Panel to conduct review proceedings as sought by Westgold's application;[97] and to the announcements made by Westgold and Gascoyne on 29 October 2021 (described at [38] to [40] above).[98]  Mr Langdon also deposed to communications as between HWL Ebsworth on behalf of Firefly and HopgoodGanim on behalf of Westgold in advance of the second court hearing; and to communications with Thomson Geer on behalf of Mr Jewson, who intended to support the application.[99]

Affidavit of A Nguyen

[97] Fourth affidavit of T J Langdon affirmed 31 October 2021 par 6.

[98] Fourth affidavit of T J Langdon affirmed 31 October 2021 pars 7, 8.

[99] Fourth affidavit of T J Langdon affirmed 31 October 2021 pars 9 - 17.

1. The fifteenth was the affidavit of Ann Nguyen, an employee of Automic, affirmed 1 November 2021.  Among other things, Ms Nguyen deposed that on 27 October 2021 at approximately 2.13 pm, she missed a telephone call from Mr Wiedmann of Sparta AG.[100]  Ms Nguyen deposed that she returned Mr Wiedmann's telephone call at approximately 2.19 pm and Mr Coulson was also on that telephone call; and during that telephone call, Mr Wiedmann said words to the effect that Sparta AG wished to change its vote and to vote against the resolution to approve the scheme.  Further, she deposed that Mr Wiedmann said words to the effect that he was logged in to Automic's online meeting but was unable to vote on the resolution, and had sent an email to Mr Wood, company secretary of Firefly.[101]

   [100] Affidavit of A Nguyen affirmed 1 November 2021 par 10.

   [101] Affidavit of A Nguyen affirmed 1 November 2021 par 11.

2. Ms Nguyen deposed to her subsequent communications with Mr Hill and Mr Wiedmann, including her telephone call with Mr Wiedmann during which she said words to the effect that because the poll had closed, it was not possible to change Sparta AG's vote.[102]  Ms Nguyen attached to her affidavit a copy of her Microsoft Teams conversation with Mr Hill, which was marked AN‑1.

Fifth affidavit of T J Langdon

[102] Affidavit of A Nguyen affirmed 1 November 2021 par 16.

1. The sixteenth was the fifth affidavit deposed to by Mr Langdon, affirmed on 1 November 2021 and to which he attached documents marked TJL‑27 to TJL‑37.

2. Among other things, Mr Langdon deposed to further communications as between HWL Ebsworth and ASIC,[103] and attached to his affidavit an email communication received from ASIC at 10.17 am on 1 November 2021, which recorded as follows: [104]

   ASIC has been asked to provide a no-objection letter advising that, under s 411(17)(b) of the Corporations Act 2001, ASIC has no objection to the proposed scheme of arrangement under Part 5.1 of the Act between Firefly Resources Limited and its members (Scheme).

   ASIC was minded to provide its no-objection letter, however since Westgold Resources Limited (Westgold) has indicated it will appear and object to the scheme today, ASIC's practice is to attend the hearing to listen to any objections during the course of the hearing before deciding whether to provide its letter of no-objection, as set out in Regulatory Guide 60: Schemes of arrangement.  Should ASIC decide to provide its no-objection letter, it will do so at the hearing.  The parties should not interpret ASIC withholding its no-objection letter prior to the hearing as ASIC objecting to the Scheme.

   ASIC also intends to provide a separate letter later today setting out its position in advance of the hearing.

   [103] Fifth affidavit of T J Langdon affirmed 1 November 2021 par 8.

   [104] Fifth affidavit of T J Langdon affirmed 1 November 2021, TJL-34.

3. Mr Langdon also attached to his affidavit a copy of a certificate executed by Firefly for the purposes of cl 3 and cl 5.2(h) of the scheme implementation deed, certifying that conditions precedent had been satisfied under that deed;[105] and a copy of the certificate executed by Gascoyne for the purposes of cl 3 and cl 5.3(i) of the scheme implementation deed, certifying that conditions precedent had been satisfied.[106]

Submissions

[105] Fifth affidavit of T J Langdon affirmed 1 November 2021, TJL-35.

[106] Fifth affidavit of T J Langdon affirmed 1 November 2021, TJL-36.

1. In advance of the hearing, counsel for Firefly filed a written outline of submissions on 29 October 2021, and an outline of submissions on 31 October 2021 in reply to the outline  of submissions filed on behalf of Westgold.

2. At the hearing of the application, counsel for Westgold emphasised six matters, none of which counsel submitted warranted the court withholding approval of the scheme. They were the votes of Sparta AG at the scheme meeting; the tagging of votes of option holders at the scheme meeting that had been requested by ASIC; the outcome of the demerger meeting; the status of the conditions precedent under the scheme implementation deed; satisfaction of s 411(17) of the Corporations Act; and whether the court could be satisfied that the scheme was not contrary to public policy.[107]  In addition to the matters raised in the written outline of submissions of Firefly and Westgold, and by Troca Enterprises, I consider each of these matters below.

Gascoyne evidence and submissions

[107] Counsel for Firefly's overview of the six matters, see ts 42 (1 November 2021).

1. Counsel for Gascoyne appeared at the first and second court hearing.  At the first court hearing on 6 September 2021 counsel for Gascoyne appeared in support of the application.[108]  No affidavits were filed on behalf of Gascoyne for the purposes of the application.

   [108] Firefly Resources Limited [11].

2. By way of outline, I note that at the second court hearing counsel referred to the written outline of submissions filed on 1 November 2021,[109] where the position of Gascoyne at the second court hearing was expressed as follows:[110]

   (a)If the Court does not approve the Scheme, then Gascoyne will seek to terminate the SID, subject to and in accordance with its terms (including clause 3.4(e)), and, subject to such termination, recommend that its shareholders accept the Revised Westgold Offer in the absence of a superior proposal.

   (b)If the Court does approve the Scheme, then Gascoyne will have contractual obligations under the SID to implement the Scheme as approved by the Court.  In those circumstances, Gascoyne shareholders will not have the opportunity to participate in the Revised Westgold Offer because it is subject to the condition that the Scheme not proceed.

   [109] ts 74 - 75 (1 November 2021).

   [110] Gascoyne's submissions filed 1 November 2021 par 19.

3. Counsel noted that this position was adopted in a context where it had been publicly announced that Gascoyne's three largest shareholders holding approximately 47% of Gascoyne shares had indicated support for the revised Westgold offer.[111]

   [111] ts 72 (1 November 2021); as noted in Gascoyne's submissions filed 1 November 2021 par 9.

4. Counsel also rejected the submissions that there had or may be a breach of fiduciary duty by the directors of Gascoyne in connection with Gascoyne's entry into the scheme implementation deed.  In this regard, Gascoyne referred to and agreed with the submissions made in support of the application that there was no evidence of breach.[112]

Westgold's evidence and submissions

[112] ts 73 (1 November 2021).

1. Shortly prior to the second court hearing, an affidavit sworn by Robyn Anne Ferguson on 29 October 2021 was filed which attached documents marked RAF‑01 to RAF‑15.  Ms Ferguson is a partner of HopgoodGanim Lawyers who act for Westgold.  The attachments to Ms Ferguson's affidavits included media releases issued by the Takeovers Panel, and ASX announcements made by Westgold, Firefly and Gascoyne.  A written outline of submissions was also filed on behalf of Westgold on 1 November 2021.

2. Although Westgold in the end did not oppose the application, and counsel for Westgold was excused from attending the whole of the second court hearing, Ms Ferguson's affidavit was read by counsel for Firefly, and Westgold's submissions filed on 1 November 2021 were marked for identification.[113]  Westgold's concerns as articulated in its written submissions are set out in some detail below at [147] to [177], and were ventilated at the second court hearing.

Mr Jewson's evidence and submissions

[113] ts 35 ‑ 36 (1 November 2021).

1. At the second court hearing counsel for Mr Robert Jewson was heard in support of the application.  Counsel relied upon the written submissions dated 31 October 2021 and filed on 1 November 2021, and read the short affidavit deposed by Mr Jewson on 1 November 2021 in which Mr Jewson deposed to the following matters.[114]

   [114] ts 39, 41 (1 November 2021).

2. Mr Jewson is a shareholder of Firefly, who at the time he deposed his affidavit held 17,647,017 Firefly shares.  On 13 June 2021, Mr Jewson entered into a deed in which he agreed to vote in favour of the scheme of arrangement, and he subsequently voted in favour of the scheme.  Mr Jewson supported Firefly's application to approve the scheme.[115]

   [115] Affidavit of R Jewson sworn 1 November 2021 pars 1 - 5.

3. From the written outline of submissions filed on behalf of Mr Jewson, I understood that he was one of the three largest shareholders of Firefly.[116]

ASIC's preliminary view - first letter of 1 November 2021

[116] Mr Jewson's submissions filed 1 November 2021 par 1.

1. For the purpose of the first court hearing, ASIC provided a letter indicating that it did not propose to appear to make submissions, nor intervene to oppose the scheme at the first court hearing, and that intention was based on ASIC's examination of the terms of the scheme and the draft explanatory statements, in accordance with ASIC Regulatory Guide 60: Schemes of Arrangement.

2. Shortly before the commencement of the second court hearing, ASIC set out in a letter dated 1 November 2021 its preliminary view in relation to the application.  The letter provided an indication of ASIC's intentions, having regard to events that had occurred since the first court hearing, specifically Westgold's applications to the Takeovers Panel in relation to the affairs of Gascoyne, and the filing of Westgold's outline of submissions in this proceeding in which Westgold set out the basis upon which it opposed the scheme and indicated an intention to appear at the second court hearing.

1. Through its letter of 1 November 2021, ASIC indicated that in light of Westgold's (then maintained) objection to the scheme, ASIC considered it appropriate to take account of those objections before forming a view on whether it would provide a letter of no objection, and to that end, ASIC had considered Westgold's outline of submissions and the submissions and evidence of the other parties and persons intending to appear at the second court hearing.  Based on the material available to it, ASIC indicated that it continued to be of the view that it did not intend to appear to make submissions or intervene to oppose the scheme at the second court hearing, and accordingly, ASIC was then minded to provide a letter that it did not object to the scheme.  However, ASIC also noted that it wished to consider any final submissions put by Westgold and the other parties before finalising its position, and in the absence of Westgold or another party giving submissions or presenting evidence that would cause ASIC to revisit its present view, ASIC would provide Firefly with a letter of no objection immediately after the parties had addressed the court.

2. The basis for the view then held by ASIC was set out in ASIC's first letter of 1 November 2021 (which ASIC made plain was not a letter of no objection for the purposes of s 411(17)(b) of the Corporations Act).  ASIC's views on the objections then raised, as were expressed in its first letter of 1 November 2021, are summarised at [181] to [187] below.

Legal principles in respect of scheme approval

1. A scheme of arrangement becomes binding on members if and only if it is agreed to by the requisite majority of members prescribed by s 411(4)(a) of the Corporations Act and approved by order of the court under s 411(4)(b) of the Corporations Act. The court has a discretion to approve a scheme under s 411(4)(b).

2. In Re Galaxy Resources Ltd; Ex parte Galaxy Resources Ltd [No 2] [2021] WASC 314, Hill J succinctly summarised the legal principles to be applied at the second court hearing, which I reproduce below and applied in determining this application.[117]

   [117] In summarising the principles, Hill J applied Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357 [12], [13]; Re International Goldfields Ltd [2004] WASC 112 [7]; Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583 [31] ‑ [33], [35] ‑ [40], [50], [52].

   [7]The approval of the proposed Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meeting.

   [8]At the second court hearing, the court has two tasks:

   (a)to ensure that all statutory and procedural requirements have been satisfied.  This includes confirming that:

   (i)the meeting was convened and held in accordance with the court's earlier orders;

   (ii)the resolutions were passed with the requisite statutory majorities; and

   (iii)the plaintiff otherwise complied with the court's earlier orders;

   (b)to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.

   [9]The court has a discretion to approve a scheme under s 411(4)(b) of the Act and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved. That said, the court will usually approach the task on the basis that shareholders are better judges of what is in their commercial interests than the court.

   [10]The factors that inform the court's discretion whether or not to approve a scheme are:

   (a)whether the members have voted in good faith and not for an improper purpose;

   (b)whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it;

   (c)whether the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion;

   (d)whether there has been full and frank disclosure of all information material to the members' decision;

   (e)whether minority shareholders would be oppressed by the scheme;

   (f)whether the court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act;

   (g)whether ASIC has an objection to the scheme; and

   (h)whether the scheme offends public policy.

   (Footnotes omitted)

3. As to consideration of public policy, a scheme that undermines the policy underlying the provisions of the Corporations Act will not ordinarily be approved: Re Timor Sea Petroleum NL (2000) VSC 337; (2000) 35 ACSR 186 at [24], citing Re Cascade Pools Australia Pty Ltd (1985) 9 ACLR 995.

4. As was noted by Hill J in Re Cannpal Animal Therapeutics Ltd; Ex parte Cannpal Animal Therapeutics Ltd [No 2] [2021] WASC 83 at [44], the question as to what could be taken into account by the court in considering whether a scheme offends public policy was considered by the Full Court of the Federal Court in Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358. As Keane CJ and Jacobson J observed:[118]

   The only considerations of 'public policy' or 'commercial morality' which are relevant for the purpose of s 411(1) of the Act are those which find a basis in the terms of the Act or its underlying purpose.

   [118] Re CSR Ltd [35].

5. Keane CJ and Jacobson J went on to state:[119]

   The 'public policy' or 'commercial morality' which informs s 265B and its analogues is concerned with the interests of shareholders and creditors.  This was explained by Professor Ford: 'So long as the reduction will not prejudice creditors or shareholders the court is not concerned with any ulterior purpose for which the reduction is being made …' (Ford, Company Law (1974) p 159).

   [119] Re CSR Ltd [54].

6. In the same case, Finkelstein J expressed the view that:[120]

   There is a real problem with 'commercial morality' being applied to discretionary decision-making.  It suggests the existence of a fixed set of standards by which the community assesses conduct to be legitimate or acceptable.  Putting to one side the obvious difficulty which confronts a judge in attempting to discover what are the relevant community standards, the fact is that many so-called standards, when they exist, are not fixed.  They are constantly changing. … In my view, notions of commercial morality should be jettisoned from the matters to be considered in approving a scheme.  It is dangerous to bring to decision‑making an ill‑defined and largely subjective set of criteria purporting to represent the views of the community when, in reality, no one can be sure of that.

   [120] Re CSR Ltd [84], [86].

7. In considering a scheme, public policy considerations are not at large and are properly confined to considering the interests of shareholders of the target, its creditors or anyone else who might deal with it in the future.[121]  In this regard, Finkelstein J observed that their interests are, however, adequately protected by an inquiry whether the scheme is fair or reasonable.  So, considerations of public policy seem to add nothing to existing principles.[122]

   [121] Re CSR Ltd [51] ‑ [54], [82].

   [122] Re CSR Ltd [82].

8. In determining the application, I was cognisant that evidence that the directors of the target company are in breach of their fiduciary duties will be highly pertinent for the court: Phosphate Co-operative Co of Australia Ltd v Shears (No 3) [1989] VR 665; (1988) 14 ACLR 323; (1988) 6 ACLC 1046, but does not always lead the court to refuse the orders sought: Re Egnia Pty Ltd (in liq) (1991) 7 WAR 322; (1991) 6 ACSR 640.

Disposition

Compliance with statutory and procedural requirements

1. The affidavits filed on behalf of Firefly disclosed that the statutory and procedural requirements had been satisfied.

Lodgement of the court's orders and the scheme booklet with ASIC

1. In accordance with this court's orders, a copy of the orders made on 6 September 2021 and 15 October 2021 were lodged with ASIC on the day the respective orders were made.[123]  Also in accordance with this court's orders, a copy of the scheme booklet as approved for distribution by this court was also lodged with ASIC and registered on 8 September 2021.[124]

Dispatch

[123] Affidavit of M P Carolan affirmed 28 October 2021 pars 6 - 7, 9 - 10.

[124] Second supplementary affidavit of S I Lawson sworn 14 October 2021 par 6.

1. The additional affidavits filed prior to the second court hearing satisfied me that save as mentioned below, in accordance with this court's orders 5 and 7 made on 6 September 2021, the scheme booklet was dispatched to Firefly shareholders.  I was also satisfied that the supplementary explanatory statement in the form approved by the court for dispatch by the orders made on 15 October 2021 was dispatched to Firefly shareholders in accordance with orders 6 and 7.

2. Counsel for Firefly appropriately brought to the court's attention that additional communications were provided to shareholders as part of the dispatch that had not been approved by the court on 6 September 2021 or on 15 October 2021.  What occurred was summarised in the submissions filed on behalf of Firefly on 29 October 2021 as follows.

3. First, Foreign Ineligible Shareholders received special notice with their approved letter following the first court hearing.  A copy of the notice was attached to the affidavit of Ms De Pellegrin affirmed on 26 October 2021 and marked LDP‑1 at p 17.  The notice to Foreign Ineligible Shareholders informed them that only 'Eligible Shareholders' would receive 'New Gascoyne Shares', and directed their attention to s 5.7 and s 5.8 of the scheme booklet.[125]

   [125] Firefly's submissions filed 29 October 2021 par 33(a).

4. Counsel for Firefly submitted that while the notice was not approved by the court, it served to direct the attention of Foreign Ineligible Shareholders directly to the sections of the scheme booklet which made it clear how Foreign Ineligible Shareholders were intended to be dealt with under the scheme.  Further, the inclusion gave sufficient prominence to the arrangements for Foreign Ineligible Shareholders so they were fully and clearly informed of what was to occur with respect to their shares in Firefly.[126]

   [126] Firefly's submissions filed 29 October 2021 par 33(a).

5. Secondly, those that received hardcopy dispatch of the scheme materials after the first court hearing also received copies of announcements made to the ASX by Firefly on 7 and 8 September 2021.[127]

   [127] Firefly's submissions filed 29 October 2021 par 33(a).

6. Counsel for Firefly submitted that again, while dispatch of the announcements had not been approved by the court, the announcements had been published to the market, and providing a copy of the announcements by way of hardcopy dispatch to Firefly shareholders simply served to ensure that all Firefly shareholders were adequately informed.[128]  It was submitted on behalf of Firefly that accordingly, the court should have no concerns about this additional material being provided to Firefly shareholders, and they were not matters that could be characterised as causing injustice or prejudice.[129]

   [128] Firefly's submissions filed 29 October 2021 par 33(b).

   [129] Firefly's submissions filed 29 October 2021 par 34.

7. Having regard to the additional affidavits filed for the purpose of the second court hearing, and taking into account the nature of the irregularities described above, I was satisfied that there had been substantial compliance with the court's dispatch orders.

Scheme meeting

1. I was satisfied that in accordance with orders made on 6 September 2021 and 15 October 2021, the scheme meeting was convened and held on 27 October 2021.[130]

   [130] Second affidavit of D J Carpenter affirmed 28 October 2021 pars 5 - 13; second affidavit of C Hill affirmed 29 October 2021 pars 26 - 51; affidavit of S D Wood sworn 28 October 2021 par 5; affidavit of R A Ferguson sworn 29 October 2021 par 17; affidavit of SQ Teo sworn 28 October 2021 par 4.

2. Ms Carpenter acted as chair in accordance with order 8 of the orders made on 6 September 2021.  I also had regard to the second affidavit of Mr Hill, where he deposed to the procedures adopted for the receipt and collation of proxy forms, the preparation of a proxy report and registration;[131] and to the procedures relating to voting and the poll procedures implemented at the scheme meeting.[132]  On the affidavit evidence filed, I was satisfied that the scheme meeting had been conducted, and the procedures for return and lodgement of proxy forms had been observed, in accordance with orders 5 to 16 of the orders made at the first court hearing, augmented by orders 6, 10 and 11 of the orders made on 15 October 2021.

Voting majorities obtained

[131] Second affidavit of C Hill affirmed 29 October 2021 pars 10 - 25.

[132] Second affidavit of C Hill affirmed 29 October 2021 pars 67 - 68.

1. The two types of majorities required at a scheme meeting are first, a majority in number of the members present and voting (either in person or by proxy): s 411(4)(a)(ii)(A) (headcount test); and secondly, 75% of the votes cast on the resolution: s 411(4)(a)(ii)(B) (votes test).

2. At the scheme meeting, the scheme was approved by a resolution with the required statutory majorities.  One hundred and forty-two Firefly shareholders were present at the scheme meeting in person and by proxy.  One hundred and forty-one of 3,155 eligible shareholders in Firefly voted (that is, about 4.47% voted).  One Firefly shareholder, holding 1,110 shares abstained from voting.  The Firefly shares voted were 162,724,472 of the 308,339,530 Firefly shares on issue, which was approximately 52.77% of Firefly shares on issue.  The scheme was approved by 99.64% of the votes cast and 92.69% of the members present by person or by proxy.[133]

Notice of the second court hearing

[133] Second affidavit of D J Carpenter affirmed 28 October 2021 pars 19 - 22, DJC-3; Firefly's submissions filed 29 October 2021 pars 2, 17 - 19.

1. Notice of the second court hearing was given by way of advertisement in The Australian newspaper on 27 October 2021, as required by order 17 of the orders made on 6 September 2021.[134]

Good faith and proper purpose

[134] Firefly's submissions filed 29 October 2021 par 35; affidavit of SQ Teo sworn 28 October 2021 par 5, SQT‑1.

1. There was nothing in the voluminous evidence before me to suggest that the statutory majorities were obtained in a manner otherwise than in good faith and for a proper purpose.  I was cognisant that the scheme was of a kind ordinarily approved by the courts and did not involve a novel treatment of shareholder rights.  Further, the independent expert had opined that in the absence of any other relevant information or alternative proposal (and none was on offer), the scheme was in the best interests of Firefly shareholders.  I was also satisfied that the Firefly shareholders were adequately informed of all disclosure relevant to the scheme and were in a position to understand the kind of acquisition proposed.

2. While at the time of the scheme meeting, Westgold maintained its objection to the scheme and was pursuing relief before the Takeovers Panel, there was no evidence to suggest that Westgold's concerns had a substantive bearing upon the voting intentions of the Firefly shareholders in relation to the scheme.

Fairness and reasonableness

1. In ordering that the scheme meeting be convened, I was cognisant that the court generally takes the view that the members are the best judges of whether an arrangement is to their commercial advantage.  The role of the court is not to assess the commerciality of schemes overall, but to assess whether it is a scheme that sensible business people might consider to be to the benefit of the members.

2. After the first court hearing, I was satisfied that there was no apparent reason why the scheme should not, in due course, receive the court's approval if the necessary majority of member's votes were achieved.[135]

   [135] Firefly Resources Limited [87], [116].

3. At the conclusion of the second court hearing, I was satisfied that the scheme was fair and reasonable such that an intelligent Firefly shareholder, properly informed, might approve it.  My satisfaction was informed by, among other things, the following observations.

4. First, the independent expert had opined that the proposed scheme was in the best interests of the Firefly shareholders (absent an alternative proposal).[136]

   [136] ts 59 (1 November 2021); Firefly's submissions filed 31 October 2021 par 6(c).

5. Secondly, there was a unanimous recommendation by the board of directors of Firefly in the scheme booklet and supplementary explanatory statement that Firefly shareholders vote in favour of the scheme.[137]

   [137] Firefly's submissions filed 29 October 2021 par 41(c).

6. Thirdly, the proposed scheme had been supported by those members who attended the meeting and voted in person or by proxy.  There is no evidence before me that the majorities voted otherwise than in good faith.

7. Fourthly, while Sparta AG had sought to change its proxy votes during the course of the scheme meeting in relation to its larger parcel of Firefly shares, its attempts appeared not to accord with applicable processes.  In any event, had Sparta AG managed to change all of its proxy votes so to vote against the resolution, it would not have materially affected the outcome of the scheme meeting.[138]

   [138] Second affidavit of D J Carpenter affirmed 28 October 2021 par 26, as discussed at [63] above.

8. As to the position of Sparta AG, counsel for Firefly submitted and I also had regard to the following matters.[139]

   (a)the time and date of the scheme meeting had been published well ahead of the scheme meeting;

   (b)it appeared that Sparta AG had time to change its proxy ahead of the scheme meeting, as during the scheme meeting, Sparta AG successfully changed its proxy vote in relation to the smaller of its two parcels of Firefly shares; and

   (c)there was no evidence of any other Firefly shareholders attempting to, but ultimately being unable to, change their proxy votes ahead of or during the scheme meeting.

   [139] Firefly's submissions filed 29 October 2021 par 26.

9. Fifthly, while Westgold did not pursue its objection of the scheme at the second court hearing and the second court hearing was not adjourned as requested by Troca Enterprises, the concern that had been agitated by Westgold and Troca Enterprises was squarely before the court and ventilated at the second court hearing.[140]  The court had before it the submissions filed on behalf of Westgold prior to the hearing (which were addressed by counsel for Firefly and Mr Jewson at the second court hearing), the affidavit deposed to by Ms Ferguson (which was read by counsel for Firefly), and Troca Enterprises' letter of 31 October 2021.

   [140] ts 38 - 39 (1 November 2021).

10. In all of the circumstances, I was satisfied that the 'fairness and reasonableness' criterion as explained in Re Seven Network Ltd (No 3) was met.

All relevant matters brought to the court's attention

1. For the purpose of the first court hearing, counsel for Firefly brought to the court's attention a number of specific matters and made submissions in relation to the same.  They included the demerger proposal; the scheme being subject to satisfaction of conditions precedent; the recommendations made by Firefly's directors in the context of their respective interests; the minutes of the meeting of the board of Firefly which record the resolution to enter into the scheme implementation deed; the question of whether any benefit existed for one shareholder in particular so as to bring into question the overall fairness of the scheme; performance risk; the exclusivity provisions; the potential for a reimbursement fee to become payable under the scheme implementation deed; and the inclusion of cl 9.6 of the scheme implementation deed (that is, a no liability when acting in good faith provision): see Firefly Resources Limited [88] to [116].

provided that:

(c) the actual, proposed or potential Firefly Competing Proposal was not directly or indirectly brought about by, or facilitated by, a breach of clause 11.1(a); and

(d) Firefly immediately notifies Gascoyne of each action or inaction by it, any of its Related Bodies Corporate or any of their respective Related Persons in reliance on this clause 11.2.

11.3 Notification of approaches

(a) During the Exclusivity Period, Firefly must as soon as possible (and in any event within 24 hours) notify Gascoyne in writing if it, any of its Related Bodies Corporate or any of their respective Related Persons, becomes aware of any:

(1) negotiations, discussions or other communications, approach or attempt to initiate any negotiations, discussions or other communications, or intention to make such an approach or attempt to initiate any negotiations, discussions or other communications in respect of any inquiry, expression of interest, offer, proposal or discussion in relation to an actual, proposed or potential Firefly Competing Proposal;

(2) proposal made to Firefly, any of its Related Bodies Corporate or any of their respective Related Persons in connection with, or in respect of any exploration or completion of, an actual, proposed or potential Firefly Competing Proposal; or

(3) provision by Firefly, any of its Related Bodies Corporate or any of their respective Related Persons of any non-public information concerning the business or operations of Firefly or the Firefly Group to any to a Third Party in connection with an actual, proposed or potential Firefly Competing Proposal,

whether direct or indirect, solicited or unsolicited, and in writing or otherwise.  For the avoidance of doubt, any of the acts described in paragraphs (1) to (3) may only be taken by Firefly, its Related Bodies Corporate or their respective Related Persons if not proscribed by clause 11.1 or if permitted by clause 11.2.

(b) A notification given under clause 11.3(a) must include the identity of the relevant person making or proposing the relevant actual, proposed or potential Firefly Competing Proposal, together with all material terms and conditions of the actual, proposed or potential Firefly Competing Proposal (including price and form of consideration, conditions precedent, proposed deal protection arrangements and timetable), in each case to the extent known by Firefly or any of its Related Persons.

(c) During the Exclusivity Period, Firefly must also notify Gascoyne in writing as soon as possible after it, any of its Related Bodies Corporate or any of their respective Related Persons, becomes aware of any material developments in relation to the actual, proposed or potential Firefly Competing Proposal, including in respect of any of the information previously provided to Gascoyne pursuant to this clause 11.3.

11.4 Matching right

(a) Without limiting clause 11.3(a), during the Exclusivity Period, Firefly:

(1) must not, and must procure that each of its Related Bodies Corporate do not, enter into any legally binding agreement, arrangement or understanding (whether or not in writing) pursuant to which one or more of a Third Party, Firefly or any Related Body Corporate of Firefly proposes or propose to undertake or give effect to an actual, proposed or potential Firefly Competing Proposal; and

(2) must procure that none of its directors change their recommendation in favour of the Scheme, publicly recommend an actual, proposed or potential Firefly Competing Proposal (or recommend against the Transaction) or make any public statement to the effect that they may do so at a future point,

unless:

(3) the Firefly Board acting in good faith and in order to satisfy what the Firefly Board Members consider to be their statutory or fiduciary duties (having received written legal advice from its external legal advisers) determines that the Firefly Competing Proposal is a, or would be or would be reasonably likely to be an actual, proposed or potential, Firefly Superior Proposal;

(4) Firefly has provided Gascoyne with the material terms and conditions of the actual, proposed or potential Firefly Competing Proposal (including price and form of consideration, conditions precedent, proposed deal protection arrangements and timetable) (in each case, to the extent known) and the identity of the Third Party making the actual, proposed or potential Firefly Competing Proposal;

(5) Firefly has given Gascoyne at least 5 Business Days after the date of the provision of the information referred to in clause 11.4(a)(4) to provide a matching or superior proposal to the terms of the actual, proposed or potential Firefly Competing Proposal; and

(6) Gascoyne has not announced or otherwise formally proposed to Firefly a matching or superior proposal to the terms of the actual, proposed or potential Firefly Competing Proposal by the expiry of the five Business Day period in clause 11.4(a)(5).

(b) If Gascoyne proposes to Firefly, or announces, amendments to the Scheme or a new proposal that constitute a matching or superior proposal to the terms of the actual, proposed or potential Firefly Competing Proposal (Bidder Counterproposal) by the expiry of the five Business Day period in clause 11.4(a)(5), Firefly must procure that the Firefly Board considers the Bidder Counterproposal and if the Firefly Board, acting reasonably and in good faith, determines that the Bidder Counterproposal would provide an equivalent or superior outcome for Firefly Shareholders as a whole (other than Excluded Shareholders) compared with the Firefly Competing Proposal, taking into account all of the terms and conditions of the Bidder Counterproposal, then Firefly and Gascoyne must use their best endeavours to agree the amendments to this deed, the Scheme and the Deed Poll (as applicable) that are reasonably necessary to reflect the Bidder Counterproposal and to implement the Bidder Counterproposal, in each case as soon as reasonably practicable, and Firefly must procure that each of the directors of Firefly continues to recommend the Transaction (as modified by the Bidder Counterproposal) to Firefly Shareholders.

(c) For the purposes of this clause 11.4, each successive material modification of any Firefly Competing Proposal or potential Firefly Competing Proposal will constitute a new Firefly Competing Proposal or potential Firefly Competing Proposal, and the procedures set out in this clause 11.4 must again be followed prior to any member of the Firefly Group entering into any agreement, arrangement, understanding or commitment in respect of such Firefly Competing Proposal or potential Firefly Competing Proposal.

(d) Despite any other provision in this deed, a statement by Firefly or the Firefly Board to the effect that:

(1) the Firefly Board has determined that a Firefly Competing Proposal is a Firefly Superior Proposal and has commenced the matching right process set out in this clause 11.4; or

(2) Firefly Shareholders should take no action pending the completion of the matching right process set out in this clause 11.4,

does not of itself:

(3) constitute a change, withdrawal, modification or qualification of the recommendation by the Firefly Directors or an endorsement of a Firefly Competing Proposal;

(4) contravene this deed;

(5) give rise to an obligation to pay the Reimbursement Fee under clause 12.2; or

(6) give rise to a termination right under clause 13.1.

11.5 Firefly - Cease discussions

Firefly must, and must procure that its Related Bodies Corporate, cease any negotiations, discussions or other communications existing as at the date of this deed relating to:

(a) any actual, proposed or potential Firefly Competing Proposal; or

(b) any transaction that would, or would reasonably be expected to, reduce the likelihood of success of the Transaction.

11.6 Provision of information

(a) Subject to clause 11.6(b), during the Exclusivity Period, Firefly must as soon as possible (and, in any event, within 2 Business Days) provide Gascoyne with:

(1) in the case of written materials, a copy of; and

(2) in any other case, a written statement of, any material non-public information about the business or affairs of Firefly or the Firefly Group disclosed or otherwise provided by Firefly, a Related Body Corporate of Firefly or any of their respective Related Persons to any Third Party in connection with an actual, proposed or potential Firefly Competing Proposal that has not previously been provided to Gascoyne.

(b) During the Exclusivity Period, Firefly must not, and must ensure that each of its Related Persons and Related Bodies Corporate and the Related Persons of those Related Bodies Corporate do not, directly or indirectly disclose or otherwise provide or make available any non-public information about the business or affairs of the Firefly Group to a Third Party in connection with an actual, proposed or potential Firefly Competing Proposal unless:

(1) permitted by clause 11.2; and

(2) before that information is disclosed or otherwise provided or made available to that Third Party, the Third Party has entered into a confidentiality agreement with Firefly that contains obligations on the Third Party that are on less onerous terms in any material respect than the obligations of Gascoyne under the Confidentiality Agreement.

11.7 Gascoyne - No shop and no talk

During the Exclusivity Period, Gascoyne must not, and must ensure that each of its Related Persons and Related Bodies Corporate and the Related Persons of those Related Bodies Corporate do not, directly or indirectly:

(a) (no shop) solicit, invite, encourage or initiate (including by the provision of non-public information to any Third Party) any inquiry, expression of interest, offer, proposal, discussion or other communication by any person in relation to, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Gascoyne Competing Proposal or communicate to any person an intention to do anything referred to in this clause 11.7(a); or

(b) (no talk) subject to clause 11.8:

(1) facilitate, participate in or continue any negotiations, discussions or other communications with respect to any inquiry, expression of interest, offer, proposal or discussion by any person to make, or which would reasonably be expected to encourage or lead to the making of, an actual, proposed or potential Gascoyne Competing Proposal;

(2) negotiate, accept or enter into, or offer or agree to negotiate, accept or enter into, any agreement, arrangement or understanding regarding an actual, proposed or potential Gascoyne Competing Proposal;

(3) disclose or otherwise provide or make available any non-public information about the business or affairs of the Gascoyne Group to a Third Party (other than a Government Agency that has the right to obtain that information and has sought it) in connection with, with a view to obtaining, or which would reasonably be expected to encourage or lead to the formulation, receipt or announcement of, an actual, proposed or potential Gascoyne Competing Proposal (including, without limitation, providing such information for the purposes of the conduct of due diligence investigations in respect of the Gascoyne Group) whether by that Third Party or another person; or

(4) communicate to any person an intention to do anything referred to in the preceding paragraphs of this clause 11.7(b).

11.8 Gascoyne - Fiduciary exception

The restrictions in clause 11.7(b) do not prohibit or require any action or inaction by Gascoyne, any of its Related Bodies Corporate or any of their respective Related Persons, in relation to an actual, proposed or potential Gascoyne Competing Proposal if the Gascoyne Board determines acting in good faith that:

(a) after consultation with its advisers, such actual, proposed or potential Gascoyne Competing Proposal is a Gascoyne Superior Proposal or could reasonably be expected to become a Gascoyne Superior Proposal; and

(b) after receiving written legal advice from its external legal advisers, compliance with that clause would, or would be reasonably likely to, constitute a breach of any of the fiduciary or statutory duties of the directors of Gascoyne, provided that:

(c) the actual, proposed or potential Gascoyne Competing Proposal was not directly or indirectly brought about by, or facilitated by, a breach of clause 11.7(a); and

(d) Gascoyne immediately notifies Firefly of each action or inaction by it, any of its Related Bodies Corporate or any of their respective Related Persons in reliance on this clause 11.8.

11.9 Gascoyne - Cease discussions

Gascoyne must, and must procure that its Related Bodies Corporate, cease any negotiations, discussions or other communications existing as at the date of this deed relating to:

(a) any actual, proposed or potential Gascoyne Competing Proposal; or

(b) any transaction that would, or would reasonably be expected to, reduce the likelihood of success of the Transaction.

11.10 Normal provision of information

Nothing in this clause 11 prevents a party from:

(a) providing information to its Related Persons;

(b) providing information to any Government Agency;

(c) providing information to its auditors, customers, financiers, joint venturers and suppliers acting in that capacity in the ordinary course of business;

(d) providing information required to be provided by law, including to satisfy its obligations of disclosure under the Listing Rules or to any Government Agency; or

(e) making presentations to brokers, portfolio investors, analysts and other third parties in the ordinary course of business.

1. Termination

13.1 Termination

(a)Either party may terminate this deed by written notice to the other party:

(1)other than in respect of a breach of either a Gascoyne Representation and Warranty or a Firefly Representation and Warranty (which are dealt with in clause 13.2), at any time before 8.00am on the Second Court Date, if the other party has materially breached this deed, the party entitled to terminate has given written notice to the party in breach of this deed setting out the relevant circumstances and stating an intention to terminate this deed, and the other party has failed to remedy the breach within 5 Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given;

(2)at any time before 8.00am on the Second Court Date if the Court or another Government Agency (including any other court) has taken any action permanently restraining or otherwise prohibiting or preventing the Transaction, or has refused to do anything necessary to permit the Transaction to be implemented by the End Date, and the action or refusal has become final and cannot be appealed or reviewed or the party, acting reasonably, believes that there is no realistic prospect of an appeal or review succeeding by the End Date;

(3)in the circumstances set out in, and in accordance with, clause 3.4;

(4)if the Effective Date for the Scheme has not occurred, or will not occur, on or before the End Date; or

(5)if Firefly's Shareholders have not agreed to the Scheme at the Scheme Meeting by the requisite majorities.

(b)Gascoyne may terminate this deed by written notice to Firefly at any time before 8.00am on the Second Court Date if:

(1)there is a Firefly Material Adverse Change, Firefly Prescribed Occurrence or Firefly Regulated Event; or

(2)any Firefly Board Member:

(A)fails to recommend the Scheme;

(B)withdraws, adversely changes, adversely modifies or adversely qualifies their support of the Scheme or their recommendation that Firefly Shareholders (other than Excluded Shareholders) vote in favour of the Scheme; or

(C)makes a public statement indicating that he or she no longer recommends the Transaction or recommends, supports or endorses another transaction (including any Firefly Competing Proposal but excluding a statement that no action should be taken by Firefly Shareholders pending assessment of a Firefly Competing Proposal by the Firefly Board or the completion of the matching right process set out in clause 11.4),

other than where any Firefly Board Member is required or requested by a court or Government Agency to abstain or withdraw from making a recommendation that Firefly Shareholders (other than Excluded Shareholders) vote in favour of the Scheme after the date of this deed.

(c)Firefly may terminate this deed by written notice to Gascoyne at any time before 8.00am on the Second Court Date if:

(1)any Gascoyne Board Member makes a public statement indicating that he or she recommends, supports or endorses a Gascoyne Competing Proposal;

(2)there is a Gascoyne Material Adverse Change, Gascoyne Prescribed Occurrence or Gascoyne Regulated Event;

(3)the Firefly Board or a majority of the Firefly Board has changed, withdrawn, modified or qualified its recommendation as permitted under clause 5.6 and, if required to do so under clause 5.6, Firefly pays the Reimbursement Fee to Gascoyne.

(d)Gascoyne may terminate this deed by written notice to Firefly at any time before 8.00am on the Second Court Date if in any circumstances (including, for the avoidance of doubt, where permitted by clause 11.4) Firefly enters into any legally binding agreement, arrangement or understanding in relation to the undertaking or giving effect to any actual, proposed or potential Firefly Competing Proposal.

(e)Firefly may terminate this deed by written notice to Gascoyne at any time before 8.00am on the Second Court Date if in any circumstances Gascoyne enters into any legally binding agreement, arrangement or understanding in relation to the undertaking or giving effect to any actual, proposed or potential Gascoyne Competing Proposal.

13.2 Termination for breach of representations and warranties

(a)Gascoyne may, at any time prior to 8.00am on the Second Court Date, terminate this deed for breach of a Firefly Representation and Warranty only if:

(1)Gascoyne has given written notice to Firefly setting out the relevant circumstances and stating an intention to terminate or to allow the Scheme to lapse; and

(2)the relevant breach continues to exist 5 Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given under clause 13.2(a)(1).

(b)Firefly may, at any time before 8.00am on the Second Court Date, terminate this deed for breach of a Gascoyne Representation and Warranty only if:

(1)Firefly has given written notice to Gascoyne setting out the relevant circumstances and stating an intention to terminate or to allow the Scheme to lapse; and

(2)the relevant breach continues to exist 5 Business Days (or any shorter period ending at 5.00pm on the Business Day before the Second Court Date) after the date on which the notice is given under clause 13.2(b)(1).

(c)This deed is terminable if agreed to in writing by Gascoyne and Firefly.

13.3 Effect of termination

If this deed is terminated by either party under clauses 3.4, 13.1 or 13.2:

(a)each party will be released from its obligations under this deed, except that this clause 13.3, and clauses 1, 7.5 to 7.8, 8.1, 8.2, 10, 12, 14, 15, 16 and 17 (except clause 17.10), will survive termination and remain in force;

(b)each party will retain the rights it has or may have against the other party in respect of any past breach of this deed; and

(c)in all other respects, all future obligations of the parties under this deed will immediately terminate and be of no further force and effect including any further obligations in respect of the Scheme.

13.4 Termination

Where a party has a right to terminate this deed, that right for all purposes will be validly exercised if the party delivers a notice in writing to the other party stating that it terminates this deed and the provision under which it is terminating this deed.

13.5 No other termination

Neither party may terminate or rescind this deed except as permitted under clauses 3.4,13.1 or 13.2.

Schedule 1

Definitions and interpretation

1.1Definitions

TermMeaning

Deed Poll

a deed poll substantially in the form of Attachment 3 under which Gascoyne covenants in favour of the Scheme Shareholders to perform the obligations attributed to it under the Scheme.

Excluded Shareholders

any Firefly Shareholder who is (or becomes under clause 5.3(m)) a member of the Gascoyne Group or any Firefly Shareholder who holds any Firefly Shares on behalf of, or for the benefit of, any member of the Gascoyne Group and does not hold Firefly Shares on behalf of, or for the benefit of, any other person.

Exclusivity Period

the period from and including the date of this deed to the earlier of:

1 the date of termination of this deed;
2 the End Date; and

3 the Effective Date.

Firefly Competing Proposal

other than the Paterson Demerger, any proposal, agreement, arrangement or transaction (or expression of interest therefor), which, if entered into or completed, would mean a Third Party (either alone or together with any Associate) may:

1 directly or indirectly acquire a Relevant Interest in, or have a right to acquire, a legal, beneficial or economic interest in, or control of, 20% or more of the Firefly Shares or of the share capital of any Subsidiary of Firefly;

2 acquire Control of Firefly or any Subsidiary of Firefly;

3 directly or indirectly acquire or become the holder of, or otherwise acquire or have a right to acquire, a legal, beneficial or economic interest in, or control of, all or a substantial part of Firefly's business or assets or the business or assets of the Firefly Group;

4 otherwise directly or indirectly acquire or merge, or be involved in an amalgamation or reconstruction (as those terms are used in section 413(1) of the Corporations Act), with Firefly or a Subsidiary of Firefly; or

5 require Firefly to abandon, or otherwise fail to proceed with, the Transaction,

whether by way of takeover bid, members' or creditors' scheme of arrangement, reverse takeover, shareholder approved acquisition, capital reduction, buy back, sale or purchase of shares, other securities or assets, assignment of assets and liabilities, incorporated or unincorporated joint venture, dual-listed company (or other synthetic merger), deed of company arrangement, any debt for equity arrangement, recapitalisation, refinancing or other transaction or arrangement.

For the avoidance of doubt, each successive material modification or variation of any proposal, agreement, arrangement or transaction in relation to a Firefly Competing Proposal will constitute a new Firefly Competing Proposal.

Firefly Superior Proposal

a bona fide Firefly Competing Proposal of a kind referred to in paragraph 2, 3, 4 or 5 of the definition of Firefly Competing Proposal not resulting from a breach by Firefly of any of its obligations under clause 11 of this deed (it being understood that any actions by the Related Persons of Firefly not permitted by clause 11 will be deemed to be a breach by Firefly for the purposes hereof), that the Firefly Board, acting in good faith, and after
receiving written legal advice from its external legal advisers and written financial advice from its Financial Adviser, determines:

1 is reasonably capable of being valued and completed in a reasonable timeframe; and

2 would, if completed substantially in accordance with its terms, be more favourable to Firefly Shareholders (as a whole) than the Transaction (and, if applicable, than the Transaction as amended or varied following application of the matching right set out in clause 11.4), in each case taking into account all terms and conditions and other aspects of the Firefly Competing Proposal (including any timing considerations, any conditions precedent, the identity of the proponent or other matters affecting the probability of the Firefly Competing Proposal being completed) and of the Transaction.

Gascoyne Competing Proposal

any proposal, agreement, arrangement or transaction (or expression of interest therefor) other than the Transaction, which, if entered into or completed, the effect of which would be to prevent Gascoyne or any Gascoyne Group Member (either alone or together with any Associate) from proceeding with the Transaction.

Gascoyne Superior Proposal

a bona fide Gascoyne Competing Proposal not resulting from a breach by Gascoyne of any of its obligations under clause 11 of this deed (it being understood that any actions by the Related Persons of Gascoyne not permitted by clause 11 will be deemed to be a breach by Gascoyne for the purposes hereof), that the Gascoyne Board, acting in good faith, and after receiving written legal advice from its external legal advisers and written financial advice from its Financial Adviser, determines:

1 is reasonably capable of being valued and completed in a reasonable timeframe; and

2 would, if completed substantially in accordance with its terms, be more favourable to Gascoyne Shareholders (as a whole) than the Transaction,

in each case taking into account all terms and conditions and other aspects of the Gascoyne Competing Proposal (including any timing considerations, any conditions precedent, the identity of the proponent or other matters affecting the probability of the Gascoyne Competing Proposal being completed) and of the Transaction.

Third Party

a person other than Gascoyne, its Related Bodies Corporate and its other Associates.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

RW

Associate to Honourable Justice Strk

16 MARCH 2023