Re Aspen Group Ltd

[2015] NSWSC 1718

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Aspen Group Limited; Aspen Funds Management Limited in its capacity as responsible entity of Aspen Property Trust; Aspen Parks Property Management Ltd and Aspen Funds Management Limited in its capacity as responsible entity of Aspen Parks Property Trust [2015] NSWSC 1718
Hearing dates:	23 October 2015, 3 November 2015
Decision date:	23 October 2015
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Orders in the form proposed by the Plaintiffs on 3 November 2015.
Catchwords:	CORPORATIONS – Schemes of arrangement – Application under s 411 Corporations Act 2001 (Cth) for orders convening a meeting of members to consider proposed schemes of arrangement and for approval of the proposed schemes of arrangement – where schemes of arrangement involved the merger of businesses operated by the four Plaintiffs – where merger involves the responsible entity for two trusts – whether to convene meeting of the members – judicial advice sought by responsible entities pursuant to Trustee Act 1925 (NSW) s 63.
Legislation Cited:	- Corporations Act 2001 (Cth) pt 5.1, ss 9, 411, 411(1), 411(17)(b), 601GC, 601GC(1), 1319 - Trustee Act 1925 (NSW) s 63
Cases Cited:	- CMPS&F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366 - Re ACM Gold Limited; Re Mt Leyshon Gold Mines (1992) 34 FCR 530 - Re Amcom Telecommunications Ltd (No 2) [2015] FCA 410 - Re APN News & Media Limited [2007] FCA 770; (2007) 62 ACSR 400 - Re Aurora Oil & Gas Ltd [2014] FCA 612 - Re Australian Gas Light Company [2006] FCA 346; (2006) 57 ACSR 67 - Re Cellestis Ltd (No 2) [2011] VSC 329 - Re Coles Group Limited [2007] VSC 389; (2007) 25 ACLC 1380 - Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101 - Re Hostworks Group Ltd [2008] FCA 64; (2008) 26 ACLC 137 - Re Lend Lease Primelife Ltd; Re Lend Lease Village Responsible Entity Ltd [2009] NSWSC 1340 - Re Macquarie Private Capital A Limited [2008] NSWSC 323; (2008) 26 ACLC 366 - Re Mirvac Funds Management Limited in its capacity as Responsible Entity of the Mirvac Industrial Trust [2014] NSWSC 1569 - Re Mirvac Limited [1999] NSWSC 457; (1999) 32 ACSR 107 - Re Mitchell Communication Group [2010] VSC 423 - Re Prime Infrastructure Holdings Limited [2010] NSWSC 1104; (2010) 80 ACSR 193 - Re Rural Press Limited [2007] FCA 314; (2007) 61 ACSR 373 - Re Westfield Holdings Limited [2004] NSWSC 458; (2004) 49 ACSR 734 - Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; (2014) 106 ACSR 12
Category:	Principal judgment
Parties:	Aspen Group Limited (First Plaintiff) Aspen Funds Management Limited in its capacity as responsible entity of Aspen Property Trust (Second Plaintiff) Aspen Parks Property Management Ltd (Third Plaintiff) Aspen Funds Management Limited in its capacity as responsible entity of Aspen Parks Property Trust (Fourth Plaintiff)
Representation:	Counsel: I M Jackman SC/DFC Thomas (Plaintiffs)   Solicitors: King & Wood Mallesons
File Number(s):	2015/290711

Judgment

The initial application on 23 October 2015

1. On 23 October 2015, I delivered a short summary of reasons indicating why I would make certain orders sought by the Plaintiffs in this application, indicating several issues that I had considered, on the basis that I would supplement that short summary by a judgment published in the usual way. This is the expanded version of that judgment. I have drawn, in what follows, on the helpful submissions of Mr Jackman and Mr Thomas, who appear for the Plaintiffs in this application.

2. By way of background, by an Originating Process filed on 6 October 2015, the First Plaintiff, Aspen Group Limited ("AGL") seeks orders under s 411(1) of the Corporations Act (2001) (Cth) to convene a meeting of the members of AGL to consider and vote upon a proposed scheme of arrangement between AGL and its members. By the same Originating Process, the Second Plaintiff, Aspen Funds Management Limited ("AFML") in its capacity as responsible entity of the Aspen Property Trust ("APT") seeks judicial advice under s 63 of the Trustee Act 1925 (NSW) in respect of certain questions concerning the proposed scheme of arrangement.

3. The Third Plaintiff, Aspen Parks Property Management Limited ("APPML") seeks similar orders under s 411(1) of the Corporations Act to convene a meeting of its members to consider and vote on a proposed scheme of arrangement between it and its members. The Fourth Plaintiff, AFML, now in its capacity as responsible entity of the Aspen Parks Property Trust ("APPT") seeks judicial advice under s 63 of the Trustee Act in respect of a proposal concerning APPT.

4. The application relates to a proposed merger of the businesses operated by the four plaintiffs. AGL and APT currently comprise a group known as the Aspen Group, which is an ASX listed property group which owns, manages and develops affordable accommodation. Shares in AGL and units in APT are stapled together and are presently traded on Australian Securities Exchange Limited (“ASX”). AFML and APPT together comprise the Aspen Parks Property Fund (“APPF”) which owns, develops and manages a portfolio of accommodation park properties throughout Australia. Shares in APPML and units in APPT are also stapled together, but are not listed or traded on ASX. Broadly, the proposal involves the creation of a merged group, by which Aspen Group securities will be stapled with APPF securities to comprise a four-way stapled security, comprising an AGL share, an APT unit, an APPML share and an APPT unit, and the merged group will be listed on, and its securities traded on, ASX.

Orders in respect of the company schemes of arrangement

5. The first company scheme which is the subject of this application is between AGL and its members (“AGL scheme”) and the terms of that scheme is set out in Annexure E to the explanatory memorandum. Under that scheme, AGL is required to make (and procure AFML, in its personal capacity and as trustee of Aspen Select Property Fund, to make) in-specie distributions of APPT securities to relevant AGL shareholders on a pro-rata basis. (The concept of “relevant AGL shareholders” excludes ineligible foreign shareholders, and the AGL shares held by those shareholders are to be transferred to a sale nominee.) Each relevant AGL shareholder authorises and directs AGL to apply on its behalf for the issue of new APPML shares and new APPT units at the issue prices specified in the scheme. AGL is required to make a capital return to relevant AGL shareholders to be applied by AGL on behalf of the shareholders in applying for new APPML shares and new APPT units, and AGL must issue new AGL shares at the issue price specified in the scheme to relevant APPML shareholders and APPT unitholders. Each relevant AGL shareholder agrees that after the implementation of the merger, AGL shares may only be transferred if there is a simultaneous transfer of the same number of APT units, APPML shares and APPT units, representing a four-way stapling.

6. The second company scheme which is the subject of this application is between APPML and its members (“APPML scheme”) and the terms of that scheme is also set out in Annexure E to the explanatory memorandum. That scheme provides that APPML is required to apply, on behalf of each relevant APPML shareholder, to AGL for the issue of new AGL shares and to AFML as responsible entity of the APT for the issue of new APT units at the issue prices specified in the scheme. APPML is required to make a capital return to relevant APPML shareholders to be applied by APPML on behalf of those shareholders for new AGL shares and new APT units. APPML must issue relevant AGL shareholders and relevant APT unitholders with new APPML shares at the issue prices set out in the scheme. The APPML scheme also contains a Sale Nominee and Sale Facility in broadly corresponding terms to that provided for in the AGL scheme, with the addition that APPML shareholders who elect to receive some or all of the merger consideration in the form of cash may also have any Merged Group Securities they retain, as a result of a cap on the amount payable under the buy-back and pro rata scaling back, sold pursuant to the Sale Facility.

7. It is proposed that two separate meetings of APPML shareholders will be convened for the purposes of the APPML scheme. Holders of fully paid ordinary shares in APPML (excluding AGL, AFML and AFML (in its capacity as trustee of Aspen Select Property Fund) (“AGL Group Entities”)) will be entitled to vote in the first meeting while only the AGL Group Entities will be entitled to vote in the second meeting.

8. The Plaintiffs rely on several affidavits in support of the application. I will not seek to list all of those affidavits. I note, however, that the Plaintiffs rely on the affidavit of Mr Adam Marrs Ekamper dated 21 October 2015. Mr Ekamper is the Chief Financial Officer of AGL and his affidavit deals with a number of substantive aspects of the proposal, including the structure and background to the proposal; the terms of the merger implementation deeds and proposed timetable, including exclusivity provisions to which I will refer below; and also outlines the relatively complex transactions contemplated by the proposal to which I will also refer below. Mr Ekamper also refers to alternative forms of consideration that are proposed to be available to APPF securityholders and to a sale facility which would be applicable in respect of certain APPF securityholders who elect for cash consideration, in particular circumstances. Mr Ekamper also refers, on information and belief and in the absence of the chairman of the relevant entities overseas, to the chairman's willingness to chair the relevant meetings, and also gives evidence of the verification and due diligence processes which have been adopted in respect of the scheme and steps which have been taken to manage conflicts of interest in that regard.

9. Mr Barker, the Head of Funds Management of AGL, also gives affidavit evidence in respect of the due diligence and verification process, and there is evidence, in common form, of alternate persons who would act as chairman of the scheme meetings if the companies’ chairman does not do so. There is also evidence, again in common form, as to the process by which an independent expert's report contained in the proposed explanatory memorandum for the schemes has been prepared. Mr Murphy, a partner in the firm representing the Plaintiffs, sets out the Plaintiffs' dealing with Australian Securities and Investments Commission (“ASIC”), ASX and the due diligence and verification process which has been adopted.

10. I should now turn to the nature of the Court's jurisdiction in respect of a first scheme hearing under s 411 of the Corporations Act and the first hearing of an application for judicial advice in respect of a trust scheme. The first stage, in respect of a scheme of arrangement under s 411 of the Act involves the Court's approval of the convening of a scheme meeting and approval of the scheme booklet. Mr Jackman and Mr Thomas, in their submissions, draw attention to the helpful summary of the Court's role in respect of the first hearing by Barrett J in Re Westfield Holdings Limited [2004] NSWSC 458; (2004) 49 ACSR 734 at 736, where his Honour identified several relevant matters that should be considered in determining whether to convene the first meeting, involving matters as to which the Court must be satisfied, and several wider matters, including the likelihood or otherwise of the Court's approving the scheme of arrangement, if a statutory majority of shareholders is achieved at the proposed scheme meeting, and whether there has been sufficient disclosure to the persons who will be affected by the scheme and a reasonable opportunity for ASIC to examine the terms of the scheme.

11. The case law establishes that the Court's role is not to substitute its business or commercial judgment for that of security holders to whom the scheme of arrangement is directed: Re Prime Infrastructure Holdings Limited [2010] NSWSC 1104; (2010) 80 ACSR 193 at [13]. In particular, the Court will have regard to several matters at the first hearing, including whether the plaintiff is a Pt 5.1 body; whether the scheme is an arrangement within the meaning of s 411 of the Act; the adequacy of disclosure, to which I have previously referred; the fact that the scheme is proposed in good faith; and, as I have noted above, ASIC's opportunity to examine the proposed scheme and to make submissions to the Court. In considering the wider matters to which I have referred, the Court will have regard to whether the scheme is one that sensible business people might consider is of benefit to its members, and leave would be given to convene the relevant meeting if the proposed arrangement is one that seems to be appropriate for members' consideration and is likely to gain the Court's approval if passed by the necessary majorities: Re ACM Gold Limited; Re Mt Leyshon Gold Mines (1992) 34 FCR 530 at 535.

12. I accept, for the reasons set out in Mr Jackman's and Mr Thomas' submissions, that each of the matters ordinarily required to make orders in respect of the company schemes has been satisfied. Each of AGL and APPML is a Pt 5.1 body as defined in s 9 of the Act. The schemes are properly described as in the nature of a compromise or arrangement within the scope of s 411 of the Act. There is evidence that ASIC has been served with the Originating Process, a draft of the securityholder booklets and explanatory memorandum more than 14 days before the first hearing date, and ASIC has in any event indicated in respect of each company that it does not seek to make submissions or intervene to oppose the scheme at this stage, although, consistent with its usual practice, it has left any final expression of a view as to s 411(17)(b) of the Act to the second hearing. As I have noted above, there is evidence as to the steps which have been taken by way of due diligence and verification in respect of the content of the explanatory memorandum, and an independent expert's report provides information relevant to securityholders’ consideration of the proposals and expresses the view that the transaction is fair and reasonable and/or, relevantly, in the best interests of both security holders of the Aspen Group and APPF.

13. I have also had regard to several other issues in determining whether the Court should order the first meetings in respect of the companies and the trust. First, as I have noted above, and as Mr Jackman and Mr Thomas fairly observed in submissions, the transactions contemplated by the proposals are relatively complex, although I also note that they are set out with clarity in a summary in section 10.6 of the explanatory memorandum for the schemes. Mr Jackman and Mr Thomas have taken me, in submissions, through the underpinnings to each of the relevant transactions, in terms of the provisions in the Corporations Act, in respect of the companies, the schemes and the proposed constitutions of each of the entities. I note that the third step in the transactions, involving the distribution, in specie, by AGL and associated entities of securities in APPF to its shareholders appears to be authorised by clauses 17.5 and 17.6 of AGL’s proposed constitution, which also provides a mechanism for shareholders’ agreement to receive those securities, and that transaction does not raise, as Mr Jackman fairly points out, any issue of in specie distribution of trust assets of the kind considered in Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; (2014) 106 ACSR 12. On the face of it, each of the transactions that are proposed is one that would be authorised by, relevantly, the Corporations Act, the scheme and the proposed constitutions of the relevant entities.

14. I have also had regard to the complexity of the relevant documents, although it should be noted that the explanatory memorandum could not be described as unique in that respect. The length and relative complexity of the explanatory memorandum seems to me to reflect the complexity of the relevant transaction and the need to provide information to securityholders for the various purposes served by that document. It seems to me that the proponents have done that which can reasonably to be done to maximise the prospect that securityholders will be able to access relevant information, including preparing securityholder booklets which draw attention to key issues addressed in the explanatory memorandum in greater detail and questions and answers which highlight significant issues and cross-reference the explanatory memorandum to where more detailed information is found. It seems to me that securityholders have been provided with information in a form that is likely to assist them in identifying those parts of the explanatory memorandum which they may wish to read to properly inform themselves as to the matters which are of greatest interest to them if they ultimately do not read the entirety of the document.

15. I have also had regard to several specific issues which were fairly raised by Mr Jackman and Mr Thomas in submissions. They point out that the cl 10 of the Merger Implementation Deed contains an exclusivity provision involving “no shop” and “no talk” provisions in relatively common form and the “no talk” provisions is subject, appropriately, to a fiduciary exception, and those provisions are fairly disclosed in the explanatory memorandum. The case law to which Mr Jackman and Mr Thomas refer confirms that that does not provide any reason to decline to convene the scheme meeting: Re Macquarie Private Capital A Limited [2008] NSWSC 323; (2008) 26 ACLC 366 at [18]–[19]; Re Coles Group Limited [2007] VSC 389; (2007) 25 ACLC 1380 at [62]–[63]; Re Hostworks Group Ltd [2008] FCA 64; (2008) 26 ACLC 137 at [34]–[37].

16. Mr Jackman and Mr Thomas also fairly recognise that there are a range of connections between AGL and APPF, including AGL's significant interest in APPF and its involvement with the responsible entity of APPT and the management of APPF, and the existence of common boards of AGL and AFML. Mr Jackman and Mr Thomas refer to the steps which have been taken to manage conflicts of interest, which are also addressed in Mr Ekamper's affidavit as I noted above, and those matters are also addressed in the explanatory memorandum. They also refer, in submissions, to a sale facility in respect of shares held by ineligible foreign securityholders and a deemed warranty to be given by such securityholders, which are each in common form, and have been accepted by the case law where fairly disclosed in the explanatory memorandum: Re APN News & Media Limited [2007] FCA 770; (2007) 62 ACSR 400 at [62]; Re Hostworks Group Ltd above at [41]; Re Coles Group Ltd above at [45]; Re Macquarie Private Capital A Limited above at [14]; Re Mitchell Communication Group [2010] VSC 423 at [10]–[12]; Re Rural Press Limited [2007] FCA 314; (2007) 61 ACSR 373 at [20]. I have had regard to both the question of management of conflicts of interest and that matter, and it seems to me that neither provide a reason not make an order to convening the scheme meetings.

17. Mr Jackman and Mr Thomas, and Mr Ekamper's affidavit, also fairly draw attention to an advertisement published in the media by a third party, Discovery Park Holdings Pty Ltd and Beston Parks Land Co Pty Ltd as trustee for Beston Accommodation Parks Trust, which invites certain holders of APPF securities to sell those securities to that third party at a specified price and to various criticisms which that third party has advanced of disclosures in earlier information concerning the scheme, in correspondence with ASIC and the solicitors for the Plaintiffs. The Plaintiffs drew attention to steps which have been taken to address several of those criticisms by providing disclosure in the explanatory memorandum, and my attention has been drawn to the amendments which address those issues. I am satisfied that those matters do not provide reason not to convene the scheme meeting. I would add that the third party’s solicitors requested the Plaintiffs' solicitors to draw their correspondence to the Court's attention and the Plaintiffs have done so, both in Mr Ekamper's affidavit and in submissions. It seems to me that I should fairly remark that, notwithstanding the third party's having raised those matters in correspondence, it did not choose to appear or seek to make submissions on those matters when the matter was called, and it did not seek to support, by direct submissions to the Court, those matters which it had raised in correspondence.

Trust schemes

18. So far as aspects of this scheme involve a trust scheme, they are in a well-established form, by which a responsible entity may seek judicial advice in a two stage process, by analogy with a scheme under Pt 5.1 of the Corporations Act: Re Mirvac Limited [1999] NSWSC 457; (1999) 32 ACSR 107. In Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101 at [24], Barrett J noted that:

“the procedures and precautions which attend the Pt 5.1 scheme will also be applied to and in relation to the processes involving the trust deed and the meeting of the holders of the stapled trust units. This is a result of the integrated nature of the proposal as a whole and the use of a single booklet for all relevant material to be sent to holders of the stapled securities. In a real sense, therefore, the effects of the Pt 5.1 procedures and precautions will provide a sufficient basis for the view that the trustee is justified in convening that meeting and placing the relevant matters before it by means of the same channels as will be followed under Pt 5.1 and for the purposes of the general meeting of the company.”

See also the numerous subsequent cases cited in Re Mirvac Funds Management Limited in its capacity as Responsible Entity of the Mirvac Industrial Trust [2014] NSWSC 1569 at [2]. At the first hearing, a responsible entity will typically seek judicial advice under s 63 of the Trustee Act that it is justified in propounding resolutions to implement the scheme and in proceeding on the basis that the proposed amendments to the constitution of the scheme to implement the scheme would be within the powers of alteration conferred by that document and s 601GC of the Corporations Act, and such advice is sought in this matter.

19. As Mr Jackman and Mr Thomas point out, proposed amendments to the constitutions of APT and APPT are summarised in the draft explanatory memorandum and set out the mechanisms by which the responsible entity of each trust will implement the merger and to allow the trusts to be operated consistently with AGL and APPML as part of the merged group. The amendments to the constitutions would be effected by way of special resolutions of Aspen Group securityholders, in their capacity as unitholders in APT, and APPF securityholders, in their capacity as unitholders in APPT, under s 601GC of the Corporations Act.

20. AFML (in its capacity as responsible entity of APT and APPT) seeks judicial advice, first, that it would be justified in those respective capacities in convening meetings of unitholders of APT and APPT respectively for the purpose of considering, and if thought, agreeing to special resolutions amending the constitutions of the trusts so as to give effect to the proposed merger. I have addressed the matters relevant to the exercise of the Court’s analogous discretion under s 411(1) of the Corporations Act above. Mr Jackman and Mr Thomas submit, and I accept, that there are no features of the trust schemes that would warrant the Court declining to permit meetings of unitholders to be convened to consider the proposed resolutions.

21. Second, AFML (as responsible entity of each of APT and APPT) seeks advice that it would be justified in proceeding on the basis that the making of the proposed amendments to the constitutions of the trusts, if approved by special resolution of unitholders, would be within their powers as trustee, including the powers of alteration conferred by the applicable constitution and by s 601GC of the Corporations Act. Clause 24 in each of the APT and APPT Constitutions permits the constitutions to be amended if the Corporations Act allows. Section 601GC(1) of the Act provides that the “constitution of a registered scheme may be modified … by special resolution of the members of the scheme”, and it seems to me that the amendments are within power on that basis.

22. Third, AFML (as responsible entity of each of APT and APPT) seeks advice that it would be justified in circulating an explanatory statement substantially in the form of the draft explanatory memorandum to unitholders, together with the Aspen Group securityholder booklet and APPF securityholder booklet respectively. I am satisfied that advice should be given, where the Court has approved the despatch of the explanatory statements pursuant to s 411(1) of the Act. Fourth, AFML in those capacities seeks an order that any person who claims that their rights as a unitholder will be prejudiced by the amendment of the APT constitution or APPT constitution, or by AFML implementing the respective proposals described in the draft explanatory memorandum, may, on or before the second Court hearing, apply to the Court for such orders or such directions as the circumstances require. Mr Jackman and Mr Thomas point out, and I accept that, an order in these terms is commonly made so that any objections to the merger brought by unitholders will be considered by the Court at the same time as any objections to the scheme.

23. I am satisfied, for the reasons sought in Mr Jackman's and Mr Thomas' submissions, that advice may properly be given in respect of those aspects of the scheme that are in the nature of a trust scheme in the form that is sought in the Originating Process.

Orders made on 23 October 2015

24. For these reasons, I made orders on 23 October 2015 in the form set out in the Originating Process, initialled by me and placed in the file.

Developments after 23 October

25. On 26 October 2015, the Plaintiffs’ solicitors advised the Court that Beston Parks Land Co Pty Ltd as trustee for Beston Accommodation Parks Trust (which, it appears is one of the entities that had previously made an invitation to certain APPF securityholders to which reference was made in the evidence at the hearing on 23 October 2015 and to which I have referred above) (“Discovery Parks”) had served a bidder’s statement, that had been lodged with ASIC on 23 October, on the Plaintiffs after the making of my orders of 23 October 2015. That bidder’s statement comprised an offer by Discovery Parks to acquire all APPF securities at an offer of $0.58 per stapled security.

26. By letter dated 30 October 2015, the Plaintiffs’ solicitors advised the Court that AGL had, on that day, announced a revised proposal for a merger with APPF which proposed, subject to orders of the Court, that the merger would proceed in substantially the same form as was considered at the Court hearing on 23 October 2015, but with changes to timetabling and the consideration payable under the merger. The matter was relisted for further hearing on 3 November 2015 to address those developments.

27. The Plaintiffs put a revised proposal before the Court at the hearing on 3 November 2015 which increased the consideration payable by Aspen Group, comprising AGL and APT, under the proposed merger such that APPF securityholders (other than ineligible foreign securityholders) who participated in the buy-back facility would receive $1.40 per merged group security, which was equivalent to $0.60 per APPF security (previously $0.52) and the cap on the cash consideration was increased from $35 million to $40.5 million. A revised explanatory memorandum and marked up versions of changes to the company schemes and the APT and APPT supplemental deeds were provided to the Court. A revised explanatory memorandum was also provided to the Court, which contained a revised independent expert report. The independent expert concluded, in that revised report, that the AGL scheme was fair, reasonable and in the best interests of securityholders, and that the APPML scheme was fair, reasonable and in the best interest of securityholders absent a superior proposal. The independent expert addressed the consideration offered to APPF securityholders under Discovery Parks’ bidder’s statement in addressing those views.

28. The Plaintiffs relied at that further hearing on a second affidavit of Mr Ekamper dated 3 November 2015, which set out proposed revisions to the timetable for the scheme resulting from developments in respect of Discovery Parks’ bidder’s statement and the amended proposal, which had the result that the relevant meetings would be deferred until 9 December 2015, the second Court hearing would take place 11 December 2015, and the effective date of the scheme, if approved, would be 14 December 2015. That affidavit also addressed the changes to the merger proposal that had been made by Aspen Group following the service of the Discovery Parks’ bidder’s statement and attached an amended explanatory memorandum, amended securityholder booklets and supplemental deeds, and reconfirmed the position in respect of due diligence and verification, including in respect of changes to the merger proposed documents. That affidavit also referred to information which had been released by announcements to Australian Stock Exchange Limited in respect of developments. A further affidavit of Mr Barker referred to a further meeting of the due diligence committee meeting since the first Court hearing, and to preparation of an updated verification report in respect of the amended explanatory memorandum and further steps that had been taken in the due diligence process.

29. Each of Mr Ekamper and Mr Barker confirmed that, having regard to their own knowledge of Aspen Group and APPF, they were not aware of any statement in relevant information contained in the relevant information included in the amended explanatory memorandum which was, or was likely to be false or misleading or deceptive, or of their being any material omission from the information included in the amended explanatory memorandum, or anything that caused them to believe that the issue of that information may involve misleading or deceptive conduct or conduct that was likely to mislead or deceive.

30. A further affidavit of one of the independent experts, Mr Hughes, referred to the revision of the independent expert report to address, inter alia, the revised terms of the proposed merger, changes in the price of the relevant securities and exchange rates and other market evidence since the previous draft of that report was prepared, and reconfirmed that he held the opinions contained in that report and was prepared to sign a copy of that report to be included in the explanatory memorandum.

31. By an affidavit read at that further hearing, Mr Frank Zipfinger indicated his willingness to act as chairman of the AGL scheme meeting and the APPML scheme meeting, and further affidavits of Messrs Farrands and Gillard were read by which they reconfirmed their willingness to act as chairman of the AGL scheme meeting and the APPML scheme meeting respectively if Mr Zipfinger did not do so. A further affidavit of the Plaintiffs’ solicitor, Mr Murphy, dealt with correspondence with ASIC since the first Court hearing, and further “no objection” letters from ASIC were in evidence in respect of each of the AGL and APPML schemes, and there was also evidence that ASX had reconfirmed the in principle waivers and confirmations previously provided by it in respect of the first court hearing.

32. The Plaintiffs submit that, in these circumstances, and where they no longer wished to propound the schemes in the form considered by the Court on 23 October 2015, the orders made on that date should be vacated. They acknowledged that they were, strictly, in default of those orders which had contemplated that the approved explanatory memorandum be distributed to securityholders by 2 November 2015. They submitted that that default did not warrant declining to vacate the original orders, or declining to make further orders, where the Plaintiffs had previously taken steps to advise the Court of developments. I accept that submission, where it seems to me that the despatch of the explanatory memorandum, in its original form, would have given rise to confusion for securityholders, where the Plaintiffs wished to proceed with an amended and not the original proposal.

33. Mr Jackman, who appeared with Mr Thomas for the Plaintiffs, relied on the proposition that the Court had jurisdiction to vacate its earlier order made on 23 October, both because it was an interlocutory order where there had been a change of circumstances which justified vacating the order, and alternatively under s 1319 of the Corporations Act, which provides that:

“Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit.”

It is, of course, well established that the Court may adjourn or cancel a meeting which it has already ordered under that section, where events have developed such that that meeting will no longer be of utility: CMPS&F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366; Re Australian Gas Light Company [2006] FCA 346; (2006) 57 ACSR 67; Re Lend Lease Primelife Ltd; Re Lend Lease Village Responsible Entity Ltd [2009] NSWSC 1340 at [16]; Re Cellestis Ltd (No 2) [2011] VSC 329 at [2]; Re Aurora Oil & Gas Ltd [2014] FCA 612 at [3]; Re Amcom Telecommunications Ltd (No 2) [2015] FCA 410 at [10].

34. It seems to me that the Court also has power to vacate orders which it has made that would permit that meeting to be convened, where it has not yet been convened, whether in its inherent jurisdiction or under s 1319 of the Act, and then to make orders convening a further meeting. It seems to me that no useful purpose would be served by holding a meeting to consider the original proposal, where the Plaintiffs now seek to propound the revised proposal, and the matters that I considered at the first hearing and the further matters set out above addressed at the second hearing support the making of orders, corresponding to those made at the first hearing, in respect of the amended proposal.

35. Accordingly, on 3 November 2015, I vacated the orders made on 23 October 2015 and made further orders in the form proposed by the Plaintiffs on 3 November 2015.

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Decision last updated: 11 December 2015