Re Amcom Telecommunications Limited (No 3)

Case [2015] FCA 596

FEDERAL COURT OF AUSTRALIA

Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 3) [2015] FCA 596

Citation: Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 3) [2015] FCA 596
Parties: AMCOM TELECOMMUNICATIONS LIMITED ACN 062 046 217
File number: WAD 54 of 2015
Judge: MCKERRACHER J
Date of judgment: 16 June 2015
Catchwords: CORPORATIONS – scheme of arrangement – application for orders pursuant to s 1319 of the Corporations Act 2001 (Cth) – supplementary disclosure concerning the divestment of Vocus’ shares in Amcom – whether the Court ought to give leave to despatch a supplementary disclosure statement – whether Court should make an order reconvening the scheme meeting – whether the notice of scheme meeting remains valid – whether Court should make an order adjourning the second hearing – whether the proxy forms that have been lodged by shareholders are deemed to be valid unless revoked – whether the votes of the entities to whom Vocus divested its shares in Amcom should be tagged – whether the votes of entities holding shares in both Amcom and Vocus should be tagged – whether the votes of the lender should be tagged
Legislation: Corporations Act 2001 (Cth) ss 411(1), 411(4), 1319
Cases cited: Re Amcom Telecommunications Limited [2015] FCA 341
Re Amcom Telecommunications Limited (No 2) [2015] FCA 410
Re Amcor Limited (2000) 345 ACSR 199
Re Anzon Energy Ltd (No 2) (2008) 66 ACSR 355
Re Associated Advisory Practices Ltd (No 2) [2013] FCA 979
Re Australand Holdings Ltd (2005) 219 ALR 728
Re Australian Consolidated Press Limited (1994) 14 ACSR 639
Re Australian Gas Light Company (2006) 57 ACSR 67
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 112 ALR 627
Re Cellestis Ltd (No 2) [2011] VSC 329
Re Centro Properties Ltd (2011) 87 ACSR 131
Re Choiseul Investments Limited [2010] FCA 1189
Cleary v Australian Co-operative Foods Ltd (No 3) (1999) 32 ACSR 701
CMPS & F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366
Re Coates Hire Limited (No 2) [2007] FCA 2105
Re CSR Ltd (2010) 183 FCR 358
Re David Jones Ltd (No 2) (2014) 101 ACSR 381
Re Equigold NL (No 2) [2008] FCA 826
Re Horizon Oil Limited [2014] FCA 733
Re Invictus Gold Limited [2013] FCA 1132
Re Lend Lease Primelife Pty Ltd [2009] NSWSC 1340
Re Nexus Energy Ltd [2014] FCA 558
Re Professional Golfers Association of Australia Limited [2007] FCA 1571
Re Re1 Limited and Re2 Limited as responsible entities for Westfield Retail Trust 1 and Retail Trust 2 (No 3) (2014) 103 ACSR 262
Re Simavita Holdings Limited [2013] FCA 1274
Re Strategic Energy Resources Ltd (No 2) [2012] VSC 75
Re Texon Petroleum Limited (No 2) [2013] FCA 147
Date of hearing: 22 May 2015 and 26 May 2015
Place: Brisbane and Perth
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 87
Counsel for the Plaintiff: Mr S K Dharmananda SC with Mr CD Belyea
Solicitor for the Plaintiff:

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AGLC
Re Amcom Telecommunications Limited (No 3) [2015] FCA 596
Case
[2015] FCA 596
Decision Date

CaseChat Overview and Summary

Amcom Telecommunications Limited applied to the Federal Court for orders approving a scheme of arrangement involving the divestment of Vocus' shares in Amcom. The application included a request for supplementary disclosure concerning the divestment. The case involved several legal issues, including whether the court should permit the despatch of a supplementary disclosure statement, whether the scheme meeting should be reconvened, whether the notice of scheme meeting remains valid, and whether the votes of certain entities should be tagged.

The court found that the scheme meeting had been adjourned for more than a month, which required the issuance of a new notice of meeting. However, the court also had discretion under s 1319 of the Corporations Act 2001 (Cth) to make orders that would otherwise contravene the company’s Constitution. The court approved the supplementary explanatory statement and allowed the notice of meeting to remain valid. The court also deemed valid proxy forms lodged by shareholders unless revoked and exempted the plaintiff from compliance with certain procedural rules.

The court made orders approving the supplementary explanatory statement, reconvening the scheme meeting, deeming the notice of meeting to still be valid, deeming valid proxy forms lodged by shareholders unless revoked, and exempting the plaintiff from compliance with certain procedural rules. The proceeding was adjourned to 23 June 2015 for the hearing of an application to approve the scheme.

Orders

Orders of the court

1. Orders 2, 4 and 5 made by McKerracher J on 8 May 2015 be vacated.

2. Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act), the supplementary explanatory statement in a form substantially equivalent to the form that is annexure MAP17 to the seventh affidavit of Mark Anthony Paganin sworn on 25 May 2015, is approved for despatch to each ordinary shareholder of the plaintiff (Shareholder).

3. The supplementary explanatory statement be despatched to each Shareholder in the manner set out in subparagraphs 4(a), 4(b) and 4(c) of the orders in this proceeding on 30 March 2015.

4. Pursuant to s 1319 of the Act the Scheme Meeting be reconvened at 11:00am (AWST) on 15 June 2015 at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia, and that Mr Anthony James Grist or, failing him, Mr Clive Ralph Stein, be the chairperson of that meeting.

5. The notice of meeting issued to Shareholders by Amcom on 2 April 2015 is deemed to still be valid for the purposes of the meeting of members proposed to be held at 11:00am (AWST) on 15 June 2015.

6. The time by which Shareholders must return their proxy forms for the Scheme Meeting is 11:00am (AWST) on 12 June 2015.

7. Valid proxy forms for the Scheme Meeting that have been lodged by Amcom shareholders are deemed to still be valid unless revoked, and members who voted in favour of the Scheme are deemed to have voted in favour of the resolutions to be considered at the Scheme Meeting.

8. The plaintiff is to give notice of the hearing of the application pursuant to s 411(4) of the Act and that notice of the hearing of an application pursuant to s 411(4)(b) of the Act for orders approving the Scheme be published once in "The Australian" newspaper by an advertisement substantially in the form of Annexure A, such advertisement to be published on or before 16 June 2015 and the plaintiff be otherwise exempted from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).

9. The proceeding be adjourned to 23 June 2015 at 11:00am before Justice McKerracher for the hearing of an application to approve the Scheme.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A

Amcom Telecommunications Limited Notice of Hearing to Approve Scheme of Arrangement pursuant to section 411 of the Corporations Act 2001 (Cth)

To all members of Amcom Telecommunications Limited ACN 062 046 217 (Amcom)

TAKE NOTICE that at 11:00am on 23 June 2015, the Federal Court of Australia at Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth WA 6000 will hear an application by Amcom seeking the approval of the scheme of arrangement between Amcom and its ordinary shareholders, as proposed by a resolution passed by the meeting of ordinary shareholders held at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia 6000 at 11:00am on 15 June 2015.

If you wish to oppose the approval of the above arrangement, you must file and serve on Amcom a notice of appearance, in the prescribed form, together with any affidavit which you wish to rely on at the hearing. The notice of appearance and affidavit must be served on Amcom at its address for service by no later than one day before 22 June 2015.

The address for service of Amcom is c/- Clayton Utz, Level 27, QV.1 Building, 250 St Georges Terrace, Perth WA 6000 (Reference: Cameron Belyea) Facsimile: 08 9481 3095 Email: cbelyea@claytonutz.com.

A copy of the Scheme Booklet is available from the ASX's website at www.asx.com.au.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The suggestion that Amcom should, in effect, start again on this voting issue with Shareholders by requiring new proxy forms to replace existing voted proxies would have the unusual and, on the present state of the evidence, unnecessary result of requiring all those Shareholders who have already voted one way to vote again even though they may have no intention of changing their vote. CONCLUSION If I thought it unlikely that the Court would finally approve the Scheme, so that making orders of the nature now sought would be futile, it would be an inappropriate exercise of discretion to make the orders sought: Re CSR Ltd (2010) 183 FCR 358 per Keane CJ and Jacobson J (at [64]). I am unable to conclude that the Scheme, as proposed by reason of the orders presently sought or otherwise, is unlikely to be finally approved by the Court at the second court hearing in the event that the members vote in favour of the Scheme. As noted by Keane CJ and Jacobson J in CSR Ltd (at [59]), the first court hearing is not intended to resolve difficult questions on which reasonable minds may differ. Further, as noted by Barratt J in Re Australand Holdings Ltd (2005) 219 ALR 728 (at [29]), the Court should not decline to convene the meeting if there are matters that are ‘arguable’, but which do not represent ‘clear inhibitions’. It has been repeatedly observed that the proper forum for resolution of matters of that kind is the second court hearing, where there could be adequately developed argument inter partes, assuming any person wishes to do so. This approach has been taken, even though issues may be ‘of potentially great significance’: see Re Centro Properties Ltd (2011) 87 ACSR 131 per Barratt J (at [63]-[66]). While the opposition to the orders sought may not necessarily have the effect of terminating the Scheme, as Blue Call has quite rightly pointed out, the Scheme was implemented some six months ago and, while it has induced a deal of substantial commercial activity, it might be said that it is long overdue that the matter be put to the Shareholders of the company to decide one way or another as to whether they wish to approve the Scheme. It is not presently apparent to me that any of the suggested impediments raised by Blue Call prevent the desirability of matters moving forward in that fashion. For those reasons, I made the following orders:1.Orders 2, 4 and 5 that I made on 8 May 2015 be vacated.2.Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act), the supplementary explanatory statement in a form substantially equivalent to the form that is annexure MAP17 to the seventh affidavit of Mark Anthony Paganin sworn on 25 May 2015, is approved for despatch to each ordinary shareholder of the plaintiff (Shareholder).3.The supplementary explanatory statement be despatched to each Shareholder in the manner set out in subparagraphs 4(a), 4(b) and 4(c) of the orders in this proceeding on 30 March 2015.4.Pursuant to s 1319 of the Act the Scheme Meeting be reconvened at 11:00am (AWST) on 15 June 2015 at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia, and that Mr Anthony James Grist or, failing him, Mr Clive Ralph Stein, be the chairperson of that meeting.5.The notice of meeting issued to Shareholders by Amcom on 2 April 2015 is deemed to still be valid for the purposes of the meeting of members proposed to be held at 11:00am (AWST) on 15 June 2015.6.The time by which Shareholders must return their proxy forms for the Scheme Meeting is 11:00am (AWST) on 12 June 2015.7.Valid proxy forms for the Scheme Meeting that have been lodged by Amcom shareholders are deemed to still be valid unless revoked, and members who voted in favour of the Scheme are deemed to have voted in favour of the resolutions to be considered at the Scheme Meeting.8.The plaintiff is to give notice of the hearing of the application pursuant to s 411(4) of the Act and that notice of the hearing of an application pursuant to s 411(4)(b) of the Act for orders approving the Scheme be published once in "The Australian" newspaper by an advertisement substantially in the form of Annexure A, such advertisement to be published on or before 16 June 2015 and the plaintiff be otherwise exempted from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).9.The proceeding be adjourned to 23 June 2015 at 11:00am before me for the hearing of an application to approve the Scheme.

Ratio Decidendi

Legal Principle Established

Prima facie r 3.3(2) of the Federal Court (Corporations) Rules 2000 (Cth) provides that:[u]nless the Court otherwise orders, a meeting of members ordered under section 411 of the Corporations Act must be convened, held and conducted in accordance with:(a)the provisions of Part 2G.2 of the Corporations Act that apply to the members of a company; and(b)the provisions of the plaintiff's constitution that apply in relation to meetings of members and are not inconsistent with Part 2G.2 of the Corporations Act. Clause 46.1 of Amcom's Constitution provides: ‘[w]here a meeting is adjourned, new notice of the resumed meeting must be given if the meeting is adjourned for one month or more.’ Clause 38.1 of Amcom's Constitution provides: ‘[a]t least 28 days' notice of a general meeting must be given in writing to those persons who are entitled to receive notices from the Company unless the Act provides for a shorter minimum period of notice, in which case notice need be given for that period only.’ The Scheme Meeting has been adjourned for more than one month. The effect of r 3.3(2) of the Corporations Rules and cl 46 of Amcom's Constitution is that Amcom is required to issue a new notice of meeting to Shareholders with at least 28 days notice of the adjourned meeting: see Re Equigold NL (No 2) [2008] FCA 826; Re Professional Golfers Association of Australia Limited [2007] FCA 1571. However and as noted, s 1319 of the Act gives the Court a broad discretion to give directions with respect to the convening, holding or conduct of a meeting ordered by the Court, which includes making orders that would otherwise contravene the company’s Constitution. The Scheme Meeting is a ‘Court-ordered meeting’ convened pursuant to s 411 and is not, for the purposes now under consideration, a meeting provided for by Amcom's Constitution. Amcom seeks an order that the notice of the Scheme Meeting contained in the Scheme Booklet remains valid, despite the provisions of cl 38.1 and cl 46.1 of Amcom's Constitution. As will be seen, this was contested.Validity of proxies The discretion conferred on the Court by s 1319 is also sufficiently wide to authorise the court to give directions as to the return of proxies: Re Amcor Limited (2000) 345 ACSR 199 (at [30]); Re Australian Consolidated Press Limited (1994) 14 ACSR 639 (at 641). There is no amendment to the proposed Scheme as a consequence of the Vocus Divestment. Accordingly, there is presently no reason to doubt that all proxy forms submitted by Shareholders are deemed to still be valid: Amcom No 2 (at [16]). Accordingly, Amcom seeks an order that proxy forms for the Scheme Meeting that have been lodged by Shareholders are deemed to still be valid unless revoked. An important expression in the orders sought is ‘unless revoked’. Opposition raised to the orders sought For the reasons set out above, I intended to make the orders sought by Amcom at the return date of its application on Friday, 22 May 2015 in Brisbane. At the hearing on that return date, I was informed by senior counsel for Amcom that communication had been received from Mr Vrisakis, a solicitor engaged by TPG Telecom Limited, asking to be heard on behalf of TPG in relation to the orders sought.