Hall v Slater and Gordon Limited

The case of Hall v Slater and Gordon Limited involves an application for approval of schemes of arrangement under section 411 of the Corporations Act 2001 (Cth). The application is interconnected with the approval of a settlement of representative proceedings under section 33V of the Federal Court of Australia Act 1976 (Cth). The primary dispute centres on whether the proposed schemes of arrangement and the settlement are fair and reasonable, particularly considering the differing interests of various shareholder groups. The legal issues revolve around the determination of whether the schemes are fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve them, and whether the differences in shareholders' interests create separate classes requiring distinct treatment.

The Court meticulously examined the fairness and reasonableness of the settlement by considering five interrelated aspects. These included the quantum of the settlement sum, the efficacy of releasing Slater & Gordon from the claims of the Other Shareholder Claimants, the inclusion of the Other Shareholder Claimants in the settlement fund, the quantum of the payment to Maurice Blackburn, and the quantum of the payment to ILP. The Court assessed the reasonableness of the proposed funder’s fee and legal costs based on the provided affidavits and submissions. The Court concluded that the settlement was fair and reasonable, taking into account Slater & Gordon’s dire financial situation and the preconditions for recapitalisation via the Senior Lender Scheme.

The Court approved both the schemes of arrangement and the settlement, finding them to be fair and reasonable. It also made specific amendments to the Shareholder Claimant Scheme and granted exemptions for the Scheme Company under the Corporations Act. The approval of these schemes and the settlement allows for the recapitalisation of Slater & Gordon, ensuring its continued operation and the preservation of shareholder interests.

Finally, the Court noted that the approval of the Senior Lender Scheme is essential for the Scheme Company and its subsidiaries to qualify for exemption from the registration requirements of the U.S. Securities Act of 1933. The Court's orders were entered forthwith, with specific attention to the procedural requirements under Rule 39.32 of the Federal Court Rules 2011.