Re APN Property Group Ltd & APN Re Ltd
[2021] VSC 488
•29 July 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 01961
IN THE MATTER of APN PROPERTY GROUP LIMITED (ACN 109 846 068)
APPLICATION BY:
| APN PROPERTY GROUP LIMITED (ACN 109 846 068) | Plaintiff |
S ECI 2021 01963
IN THE MATTER of APN RE LIMITED (ACN 627 612 202)
APPLICATION BY:
| APN RE LIMITED (ACN 627 612 202) IN ITS CAPACITY AS THE RESPONSIBLE ENTITY OF THE APD TRUST (ARSN 629 330 007) | Plaintiff |
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JUDGE: | Gardiner AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 July 2021 |
DATE OF JUDGMENT: | 29 July 2021 |
DATE OF REASONS: | 2 August 2021 |
CASE MAY BE CITED AS: | Re APN Property Group Ltd & APN RE Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 488 (first revision 12 August 2021) |
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CORPORATIONS – Scheme of arrangement – Convening of a meeting to consider a resolution – Convening of a meeting of trust unit holders to consider a resolution – Enquiry by an Associate Judge – Meetings duly convened – Resolutions duly passed – r 16.6 of the Supreme Court (Corporations) Rules 2013 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B K Holmes | Gilbert + Tobin |
| For Dexus Nominee Pty Ltd and Dexus Funds Management Limited as interested parties | Mr N P De Young QC | King & Wood Mallesons |
HIS HONOUR:
By an originating process filed 7 June 2021, APN Property Group Limited (‘APN PG’) made application pursuant to ss 411 and 1319 of the Corporations Act 2001 (Cth) (‘the Act’) for orders that it be entitled to convene a meeting (‘APN PG Scheme Meeting’) to consider a scheme of arrangement proposed between APN PG and the holders of its fully paid ordinary shares (‘APD Shareholders’).
By an originating process of the same date, APN RE Limited (‘APN RE’) in its capacity as the responsibly entity for the APD Trust, sought orders pursuant to r 54(02)(c) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Civil Procedure Rules’) to convene and hold a meeting (‘Trust Scheme Meeting’) of the holders of the units in the APD Trust (‘Trust Unitholders’) for the purpose of considering proposed amendments to the constitution of the APD Trust pursuant to which the ordinary units in the APD Trust will be acquired by Dexus Nominee Pty Ltd (‘Dexus Nominee’).
On 15 June 2021, Riordan J of this Court made orders in each proceeding, being proceedings numbered S ECI 2021 01961 (‘APN PG Scheme Proceeding’) and S ECI 2021 01963 (‘Trust Scheme Proceeding’), that, amongst other things, provided for the convening of the APN PG Scheme Meeting and Trust Scheme Meeting (collectively, ‘Scheme Meetings’).
The orders of Riordan J in the APN PG Scheme proceeding provided that the APN PG Scheme Meeting:
...be held at 10:00 am on 27 July 2021 (Melbourne time) and is to be conducted electronically through an online platform without APD Shareholders being physically present, such online platform to be accessed via the following web address…
Orders were also made requiring information to be sent to APD Shareholders at least 28 days prior to the APN PG Scheme Meeting.
Riordan J ordered that the inquiry required by r 16.6 of the Supreme Court (Corporations) Rules 2013 (Vic) (‘Corporations Rules’) take place on 29 July 2021.
The orders of Riordan J in the Trust Scheme Proceeding provided that the Trust Scheme Meeting be held:
...at 10:10 am on 27 July 2021 (Melbourne time) or immediately following the APN PG Scheme Meeting, whichever is the later, the meeting to be conducted electronically through an online platform without Trust Unitholders being physically present, such online platform to be accessed via the following web address…
As with the APN PG Scheme Meeting, orders were made requiring information to be sent to Trust Unitholders at least 28 days prior to the Trust Scheme Meeting.
No specific order was made by Riordan J to conduct an enquiry in the Trust Scheme Proceeding pursuant to r 16.6 of the Corporations Rules. However, Mr Holmes, counsel for the plaintiffs, submitted that the orders of Riordan J ordered the convening of a meeting for the consideration of a resolution and the Trust Scheme Proceeding therefore fell within r 16.6(1) of the Corporations Rules as “an order… made for the convening of a meeting to consider a resolution”.[1] I accepted that submission and conducted the enquiry for the Trust Scheme Proceeding accordingly.
[1]Rule 16.6 of the Corporations Rules is extracted in full at paragraph 48 of these reasons.
In the same orders of 15 June 2021, Riordan J ordered that evidence in the APN PG Scheme Proceeding be evidence in the Trust Scheme Proceeding. I note that paragraph 9 of the orders made in the APN PG Proceeding provided as follows:
Subject to the requisite majorities of APD Shareholders voting in favour of the APN PG Scheme at the APN PG Scheme Meeting, APD publish a Notice of Hearing in The Australian newspaper, in substantially the form that appears at Annexure ‘B’ hereto not later than 5 days prior to the date fixed for the hearing of any application to approve the APN PG Scheme.
Annexure B to the order, however, provided for a notice of hearing directed to all the members of APN PG. At the hearing on 29 July 2021, Mr Holmes accepted that the order should have specified APN PG be required to complete that task rather than APD, the ticker code for the shares in APN PG and units in the APD Trust for the Australian Securities Exchange (‘ASX’). However, he submitted that no mischief arose from it because the purpose of the notice was achieved, namely to alert any shareholders of APN PG to the hearing on 4 August 2021. I accepted that submission.
The purpose of the hearing before me on 29 July 2021, was to conduct an enquiry pursuant to r 16.6 of the Corporations Rules. On that date I made declarations in each proceeding that the Scheme Meetings and corresponding resolutions, which are explained in more detail below, were duly convened and passed. I indicated that I would provide my reasons at a later date.
The plaintiffs rely on the following affidavits:
(a) Christopher John Aylward sworn 27 July 2021;
(b) Victoria Alice Serfozo sworn 27 July 2021;
(c) Mark Leslie Landsberg affirmed 27 July 2021;
(d) Julie Christine Stokes affirmed 28 July 2021; and
(e) Susannah Clare Macknay sworn 28 July 2021.
In his affidavit, Mr Aylward, who is the non-executive chairman of the board and director of APN PG and APN RE, describes the Scheme Meetings. After referring to the terms of the orders of Riordan J made in each proceeding and referred to above, Mr Aylward describes the conduct of the Scheme Meetings, of which he was the chairperson. The APN PG Scheme Meeting was held at 10am on 27 July 2021 and was conducted virtually through an online platform operated by Link Market Services on behalf of APN PG. He describes the manner in which the meeting proceeded. At the opening of the meeting he noted that a quorum was present and put the APN PG Scheme Resolution, being the entry into the scheme of arrangement proposed between APN PG and APD Shareholders, to a vote in accordance with the procedures that had been set out in a script that had been prepared for the purpose. Voting then proceeded via a poll conducted by the virtual meeting platform. He voted all undirected proxies allocated to him in favour of the APN PG Scheme resolution. He then closed the APN PG Scheme Meeting.
Mr Aylward then describes the conduct of the Trust Scheme Meeting which commenced at the conclusion of the APN PG Scheme Meeting, which was again conducted virtually by Link Market Services on behalf of APN RE. After opening the meeting, he noted that a quorum was present and again followed a script which had been prepared and which is exhibited to his affidavit. After conducting other formalities, Mr Aylward put the Trust Resolutions forward and the voting was again conducted via a poll on the virtual meeting platform. The Trust Resolutions comprised two resolutions: one to amend the constitution of the APD Trust (‘Trust Constitution Amendment Resolution’), the other to approve the acquisition of all the units in the APD Trust by the bidder, Dexus Nominee (‘Trust Acquisition Resolution’). Mr Aylward voted all undirected proxies allocated to him in favour of the Trust Resolutions. He requested that the representative from Link Market Services calculate the results of the poll for the Scheme Meetings, including votes cast by proxy, and then closed the Trust Scheme Meeting.
As to the APN PG Scheme resolution, the results of the poll were as follows:
(a) 258 APD Shareholders who were present at the APN PG Scheme Meeting (in person or by proxy), voted in favour of the APN PG Scheme Resolution; and
(b) seven APD Shareholders who were present at the APN PG Scheme Meeting (in person or by proxy), voted against the APN PG Scheme Resolution.
Accordingly, 97.36% of all APD Shareholders voting on the APN PG Scheme Resolution cast an aggregate of 240,863,629 votes, which represented 99.51% of the total eligible votes cast, in favour of the of resolution. 2.64% of all APD Shareholders voting on the APN PG Scheme Resolution cast an aggregate of 1,191,113 votes, representing 0.49% of the total eligible votes cast, against the resolution. No APD Shareholders abstained from voting.
As such, the APN PG Scheme resolution was passed:
(a) by a majority in number of APD Shareholders present and voting on the Scheme Resolution (in person or by proxy); and
(b) by more than 75% of the votes cast on the APN PG Scheme Resolution.
In relation to the APN PG Scheme, the procedure that must be adopted for the scheme to become binding is set out in Part 5.1 of the Act. This involved a two stage process:
(a) a resolution in favour of the APN PG Scheme was required to be passed by the requisite majorities of shareholders provided for by s 411(4)(a)(ii) of the Act, namely, by more than 50% of the members present and voting (either in person or by proxy) and by at least 75% of the votes cast on the resolution; and
(b) the scheme must be approved by the Court under s 411(4)(b) of the Act.
The application before me relates to the first part of this process.
As described above, there were two resolutions put to the Trust Scheme Meeting. As to the results of the poll on the Trust Constitution Amendment Resolution:
(a) 258 Trust Unitholders who were present at the Trust Scheme Meeting (in person or by proxy), voted in favour of the Trust Constitution Amendment Resolution;
(b) seven Trust Unitholders who were present at the Trust Scheme Meeting (in person or by proxy), voted against the Trust Constitution Amendment Resolution; and
(c) one Trust Unitholder holding an aggregate of 580,866 votes abstained from voting.
Thus, 97.36% of all Trust Unitholders voting on the Trust Constitution Amendment Resolution cast an aggregate of 240,282,763 votes, representing 99.51% of the total eligible votes cast in favour of the resolution. 2.64% of all Trust Unitholders voting on the Trust Constitution Amendment Resolution cast an aggregate of 1,191,113 votes, or 0.49% of the total eligible votes cast, against the resolution.
Accordingly, the Trust Constitution Amendment Resolution was passed by more than 75% of the total number of votes cast by Trust Unitholders present and voting on the Trust Constitution Amendment Resolution (in person or by proxy).
Mr Aylward deposes that the results of the poll on the Trust Acquisition Resolution were as follows:
(a) 258 Trust Unitholders who were present at the Trust Scheme Meeting (in person or by proxy), voted in favour of the Trust Acquisition Resolution; and
(b) seven Trust Unitholders who were present at the Trust Scheme Meeting (in person or by proxy), voted against the Trust Acquisition Resolution.
Accordingly, 97.36% of all Trust Unitholders voting on the Trust Acquisition Resolution cast an aggregate of 240,282,763 votes, representing 99.51% of the total eligible votes cast on the Trust Acquisition Resolution, in favour of the resolution. 2.64% of all Trust Unitholders voting on the Trust Acquisition Resolution cast an aggregate of 1,191,113 votes, representing 0.49% of the total eligible votes cast on the Trust Acquisition Resolution, against the resolution. One Trust Unitholder, holding an aggregate of 580,866 votes, abstained from voting.
Accordingly, the Trust Acquisition Resolution was passed by more than 50% of the total number of votes cast by Trust Unitholders present and voting on the Trust Acquisition Resolution (in person or by proxy).
Mr Aylward deposes that on 27 July 2021, the results of the poll from the Scheme Meetings were published on the ASX.
It was submitted that in relation to the Trust Scheme, no specific statutory mechanism applies. Rather, it is based on a combination of ss 601GC(1)(a) and 611 item 7 of the Act. In particular, in order for the Trust Scheme to take effect:
(a) the APD Trust Constitution must be amended, and s 601GC(1)(a) of the Act provides that this may be done by special resolution of the members of the managed investment scheme. A special resolution for the purposes of this provision is a resolution that has been passed by at least 75% of the votes cast by members entitled to vote on the resolution. For this purpose, at the Trust Scheme Meeting, Trust Unitholders considered the Trust Constitution Amendment Resolution, being a special resolution for the purposes of s 601GC(1) of the Act to approve amendments to the APD Trust Constitution to enable APN RE to implement the Trust Scheme; and
(b) an exception must apply to the prohibition in the Act on a bidder increasing its voting power in a target above 20%. Section 611 item 7 provides for such an exception if the members of the target approve the acquisition at a general meeting, by ordinary resolution, that is, by more than 50% of votes cast by members present and voting (either in person or by proxy). For this purpose, at the Trust Scheme Meeting, Trust Unitholders considered the Trust Acquisition Resolution, being an ordinary resolution for the purposes of item 7 of section 611 of the Corporations Act to approve the acquisition by the Bidder of the APD Trust Units.
Accordingly, APN RE was required to convene and hold a meeting of the Trust Unitholders in order to consider the Trust Resolutions. The scheme of arrangement provisions in Part 5.1 of the Act which pertain to companies do not apply to such a meeting. Rather, such a meeting is required to be convened and held accordance with the provisions of Part 2G.4 of the Act, which allow a responsible entity of a registered scheme to call a meeting of the scheme’s members by giving written notice of the meeting to each member of the scheme entitled to vote at the meeting.
It was submitted by Mr Holmes on behalf of APN RE that a responsible entity may implement a trust scheme in which it seeks judicial advice in a two-stage process by analogy with a scheme under Part 5.1 of the Act. APN RE relied on the decision of Black J in Re Mirvac Funds Management Ltd[2] in support of this proposition.
[2][2014] NSWSC 1669, [3].
It was submitted that in accordance with this established practice, the Trust Scheme involved a two-stage process:
(a) at the first stage (as reflected in the orders of Riordan J in the Trust Scheme Proceeding), APN RE obtained the opinion and advice of the Court pursuant to r 54(2) of the Civil Procedure Rules that APN RE is justified in convening and holding the Trust Scheme Meeting for the purposes of the Trust Unitholders considering the Trust Scheme Resolutions. The Trust Scheme Resolutions were agreed to at the Trust Scheme Meeting in accordance with the requirements of Part 2G.4 of the Act;
(b) at the second stage, APN RE seeks judicial advice that, having regard to the result of the Trust Scheme Meetings, it is justified in implementing the Trust Scheme.
The present application before me in the Trust Scheme Proceeding is part of the second stage.
In her affidavit, Ms Serfozo, an account manager at Link DigiCom Pty Ltd (‘Link DigiCom’) deposes that APN PG and APN RE engaged the services of Link DigiCom and Link Market Services, a part of the Link Group, to provide design, formatting and typesetting services in relation to a scheme booklet (and other documents) to be sent to APD security holders, being the interest holders in APN PG and APN RE, for the Scheme Meetings. She details the process of designing and printing of the scheme booklet and its delivery to Link DigiCom’s mail house.
In his affidavit, Mr Landsberg, an account manager at Manark Printing Pty Ltd, deposes to the details of the printing of the scheme booklet.
Ms Stokes, a Senior Client Relationship Manager of Link Market Services, deposes that Link Market Services maintains the register of APD security holders in accordance with the Act (‘register’). For each APD security holder, the register records:
(a) their name;
(b) a unique security reference number or holder identification number;
(c) their address;
(d) the number of ordinary shares held and voting entitlement; and
(e) whether they have requested to receive communications electronically and if so when, along with their email address.
Ms Stokes deposes that she ran a report of the register on 16 June 2021, at which time there were 1,512 APD security holders on the register. The register was split into two groups being those that requested electronic communication (‘email security holders’) and those that had not and who would receive a hard copy report for security holders (‘hard copy security holders’). There were 953 email security holders and 559 hard copy security holders, one of which had an address outside of Australia.
Ms Stokes states that she was responsible for coordinating the despatch of the hard copy materials for the Scheme Meetings and on 15 June 2021, instructed Ms Serfozo to arrange for 680 copies of the Scheme Booklet, Exhibit 1 of the plaintiffs in this proceeding, to be printed. Hard copy personalised proxy forms were printed for each hard copy security holder. Ms Stokes instructed two of her staff to assemble a hard copy package containing:
(a) a copy of the Scheme Booklet;
(b) a personalised proxy form for each of the APN PG Scheme Meeting and Trust Scheme Meeting; and
(c) for the purposes of the return of the completed proxy forms, a reply paid envelope for hard copy recipients located within Australia, and a self‑addressed envelope for hard copy recipients located overseas.
Address labels were created from the register and manual checks were carried out periodically to ensure that hard copy packages were collected and packaged correctly. 559 hard copy packages were lodged with Australia Post, with 558 copies mailed to addresses in Australia and one overseas.
Email security holders were sent an email containing links to:
(a) an electronic copy of the Scheme Booklet;
(b) online proxy voting forms;
(c) an online portal that enabled APD security holders to participate in the Scheme Meetings electronically; and
(d) an online meeting guide.
Ms Stokes details the process by which those links to those documents were emailed to email security holders. Ms Stokes does not specify a date on which the emails were sent to email security holders. Of the emails sent, 55 could not be delivered.
On 25 June 2021, 55 hard copy packages were sent to the addresses of email security holders whose emails could not be delivered.
As detailed above, a requirement of the orders of Riordan J was that the Scheme Meetings material be emailed to APD security holders at least 28 days prior to the Scheme Meetings. Ms Stokes did not specify when the emails were sent. When the issue was raised with counsel at the hearing, Mr Holmes submitted that the Court could infer that the email were sent within the required timeframe as hard copy material, sent to email security holders whose emails were undeliverable, was deposed as being sent on 25 June 2021 and that date was more than 28 days prior to the Scheme Meetings held on 27 July 2021.
Ms Stokes deposes that the deadline for receipt of valid proxy appointments was 10.10am on 25 July 2021, which was a Sunday.
Ms Stokes details the process adopted for the receipt and recoding of proxy votes. The APD security holders were given several means of lodgement of proxy being online, facsimile transmission, mail or hand delivery. She describes how the proxy forms lodged in each of those ways was processed. Those that were not correctly completed were noted as invalid. She notes that in respect of both the APN PG Scheme Meeting and the Trust Scheme Meeting, a total of 261 valid proxy forms were received before the deadline. Proxy forms received after the deadline were not counted and in each case one invalid proxy form was received.
She further deposes that in respect of the Scheme Meetings, she generated a report from the database maintained for that purpose detailing the position as to proxies lodged including the manner in which the proxy holder had directed (or not directed, as the case may be) a proxy to vote.
Ms Stokes describes the process adopted in respect of the registration of attendees at the respective meetings together with a detailed description of how voting took place at the Scheme Meetings. She then describes the manner in which the Scheme Meetings were conducted. Her evidence accords with that of Mr Aylward regarding the conduct and outcome of the Scheme Meetings.
Ms Macknay, a solicitor employed at Gilbert + Tobin, the solicitors for APN PG and APN RE, describes the process by which the scheme booklet was amended after the hearing before Riordan J on 15 June 2021. The scheme booklet was registered with the Australian Securities and Investment Commission (‘ASIC’) on 16 June 2021.
Ms Macknay deposes that an advertisement was placed in The Australian newspaper on 26 July 2021, a copy of which is exhibited to her affidavit. She states that she has been informed that no response to the advertisement has been received.
Rule 16.6
Rule 16.6 of the Corporations Rules provides:
(1) If an order has been made for the convening of a meeting to consider a resolution, the party obtaining the order or the party’s solicitor must, after the meeting has been held, attend before an Associate Judge on a date to be appointed by the Associate Judge.
(2) The Associate Judge shall inquire whether the meeting was duly convened and held and whether the resolution was duly passed at the meeting in accordance with the terms of the order.
(3) The Associate Judge shall by order declare—
(a) whether the meeting was duly convened and held and whether the resolution was duly passed; and
(b) if in the Associate Judge’s opinion any irregularity occurred in the convening or holding of the meeting or in the passing of the resolution, the nature and extent of the irregularity.
(4) No order based on any resolution mentioned in paragraph (1) shall be made until an order of the Associate Judge in accordance with this Rule has been filed.
Pursuant to r 16.6(2) of the Corporations Rules, the role of the Court in this instance is to inquire into whether the Scheme Meetings were duly convened and held and whether the APN PG Scheme Resolution and the Trust Resolutions (together, ‘the Resolutions’) were duly passed at the meetings in accordance with the terms of the Orders made by Riordan J in each proceeding on 15 June 2021.
There are two inquiries for present purposes:
(a) an inquiry in the APN PG Scheme Proceeding in relation to the APN PG Scheme Meeting; and
(b) an inquiry in the Trust Scheme Proceeding in relation to the Trust Scheme Meeting.
Orders are sought in each proceeding declaring that the relevant Scheme Meeting was duly convened and held in accordance with the orders of Riordan J made 15 June 2021 and the Resolutions were duly passed.
In conducting this inquiry, the Court will have regard to whether the orders of Riordan J have been complied with, whether all relevant procedural requirements have been satisfied, and whether the Schemes were approved by security holders in the requisite majorities.
On the basis of the evidence which has been summarised above, I consider that the Scheme Booklet was sent to hard copy security holders at least 28 days prior to the date of the Scheme Meetings. I accept counsel’s submission that the evidence shows that the emails were sent to email security holders before 25 June 2021, being more than 28 days prior to the date of the Scheme Meetings on 27 July 2021. I therefore consider that the email security holders were sent the Scheme Meetings information within the time period specified by the orders of Riordan J.
Based on the evidence summarised above, I consider that both the APN PG Scheme Meeting and the Trust Scheme Meeting were duly convened on 27 July 2021 in accordance with the orders of Riordan J made in each proceeding on 15 June 2021.
I consider that the APN PG Scheme resolution was duly passed by a majority in number of members present and voting (either in person or by proxy) at the APN PG Scheme Meeting and by more than 75% of the votes cast on the resolution, in accordance with s 411(4)(a)(ii) of the Act.
I consider that:
(a) the Trust Acquisition Resolution was duly passed by more than 50% of the votes cast by Trust Unitholders present and voting (either in person or by proxy) at the Trust Scheme Meeting, satisfying s 611 item 7of the Act; and
(b) the Trust Constitution Amendment Resolution was passed by more than 75% of the votes cast by members entitled to vote on the resolution, satisfying 601GC(1) of the Act.
I do not consider that any irregularity has occurred in the conduct of the Scheme Meetings or the passing of the Resolutions so as to require a declaration of the type contemplated by r 16.6(3)(b) of the Corporations Rules to be made.
I accordingly made orders on 29 July 2021 reflecting my above conclusions.
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