FEDERAL COURT OF AUSTRALIA
Avoca Resources Limited, in the matter of Avoca Resources Limited
[2011] FCA 208
Citation: Avoca Resources Limited, in the matter of Avoca Resources Limited [2011] FCA 208 Parties: AVOCA RESOURCES LIMITED (ABN 30 097 082 282) File number: WAD 378 of 2010 Judge: GILMOUR J Date of judgment: 10 March 2011 Legislation: Corporations Act 2001 (Cth) ss 411(4)(b), 411(11), (12) Cases cited: Central Pacific Minerals NL [2002] FCA 239
Chief Commissioner of Payroll Tax v Group Four Industries Pty Ltd (1984) 8 ACLR 973
F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
Lion Nathan Ltd, in the matter of Lion Nathan (No 2) [2009] FCA 1261Re Advance Bank Australia Ltd (1997) 22 ACSR 513
Re Dorman, Long & Co Limited [1934] Ch 635
Re MB Group PLC [1989] BCLC 672
Re Permanent Trustee Co Ltd (2002) 43 ACSR 601
Re Seven Network Ltd (No 3) (2010) 267 ALR 583
Re Simeon Wines Ltd (2002) 42 ACSR 454
Re Solution 6 Holdings Ltd (2004) 50 ACSR 113Date of hearing: 17 December 2010, 3 February 2011 Place: Perth Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 31 Counsel for the Plaintiff: Mr M Oakes (QC) with Mr N Landis Solicitor for the Plaintiff: Cochrane Lishman Carson Luscombe
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 378 of 2010
IN THE MATTER OF AVOCA RESOURCES LIMITED ABN 30 097 082 282
AVOCA RESOURCES LIMITED (ABN 30 097 082 282)
Plaintiff
JUDGE:
GILMOUR J
DATE OF ORDER:
3 FEBRUARY 2011
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement between the plaintiff and its shareholders in the form of attachment A to these orders be approved.
2.Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement between the plaintiff and holders of options to acquire shares in the plaintiff in the form of attachment B to these orders be approved.
3.Pursuant to s 411(12) of the Corporations Act 2001 (Cth), the Plaintiff be exempted from compliance with s 411(11) in relation to paragraphs 1 and 2.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 378 of 2010
IN THE MATTER OF AVOCA RESOURCES LIMITED ABN 30 097 082 282
AVOCA RESOURCES LIMITED (ABN 30 097 082 282)
Plaintiff
JUDGE:
GILMOUR J
DATE:
10 MARCH 2011
PLACE:
PERTH
REASONS FOR JUDGMENT
At the second hearing on 3 February 2011 (second court hearing) of its application under s 411(4)(b) and (12) of the Corporations Act 2001 (Cth) (the Act) I made orders approving the schemes of arrangement between Avoca Resources Limited and its members and optionholders and Anatolia Minerals Development Limited,…
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- AGLC
- re Avoca Resources Ltd [2011] FCA 208
- Case
- [2011] FCA 208
- Decision Date
CaseChat Overview and Summary
The court examined the five key considerations outlined by the Corporations and Markets Advisory Committee in previous cases to determine whether the scheme should be approved. These considerations include whether members voted in good faith, whether the proposal is fair and reasonable, whether full disclosure was made, whether there was full and frank disclosure of material information, and whether minority shareholders would be oppressed. The court found that the members and optionholders had voted in good faith and that the proposal was fair and reasonable, as indicated by the Independent Expert's Report and the statutory majorities obtained. The court also concluded that there was full and adequate disclosure, despite criticism from one shareholder, and that there was no oppression of minority shareholders.
The court approved the scheme of arrangement between the plaintiff and its shareholders, as well as the scheme between the plaintiff and holders of options to acquire shares. The court granted the plaintiff an exemption from compliance with certain provisions of the Corporations Act in relation to these schemes, as requested. The decision reflects the court's satisfaction with the fairness, reasonableness, and procedural integrity of the proposed merger, and the adequacy of the disclosure provided to the members.
Orders
Orders of the court
1. Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement between the plaintiff and its shareholders in the form of attachment A to these orders be approved.
2. Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement between the plaintiff and holders of options to acquire shares in the plaintiff in the form of attachment B to these orders be approved.
3. Pursuant to s 411(12) of the Corporations Act 2001 (Cth), the Plaintiff be exempted from compliance with s 411(11) in relation to paragraphs 1 and 2.
Note:
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
These two may generally be described as satisfaction of s 411(4)(a): Chief Commissioner of Payroll Tax v Group Four Industries Pty Ltd (1984) 8 ACLR 973 at 683F. Discretionary considerations The Court also exercises a "discretionary power": Re Dorman, Long & Co Ltd [1934] Ch 635 at 655 and noted in Group Four Industries at 684A to C. I have had regard to the five considerations which courts have taken into account as informing their discretion whether or not to approve a scheme. These were referred to by the Corporations and Markets Advisory Committee and noted in Re Seven Network Ltd (No 3) (2010) 267 ALR 583 at [35]-[39]. They are in summary as follows:(i)Whether the members have voted in good faith and not for an improper purpose. (ii)Whether the proposal is fair and reasonable so that an intelligent and honest man or woman who was a member of the relevant class, properly informed and acting alone might approve it.(iii)Whether the plaintiff has brought to the Court’s attention under the ex parte disclosure principle all information relevant to the exercise of the Court’s discretion.(iv)Whether there has been full and frank disclosure of all information material to the members’ decision.(v)Whether minority shareholders would be oppressed by the scheme. I am satisfied that there is nothing to suggest that members or optionholders voted other than in good faith or that they cast their votes for an improper purpose, nor anything which casts doubt on the procedural integrity of the meeting process. The Independent Expert's Report by Grant Samuel & Associates Pty Limited (Report), expresses the opinion that the merger is fair and reasonable and in the best interests of Avoca’s shareholders and optionholders. There is no contrary evidence and nothing in the Report on its face that suggests that the opinions expressed lacks validity. Fairness may also be inferred from the obtaining of the statutory majorities for the scheme in the circumstances of adequate and verified disclosure on the basis that those voting are the best judges of their own interest. The reasonableness of the scheme was prima facie established at the first court hearing under the Eastment principle. This of course was subject always to new matters being brought to the Court’s attention at the second court hearing. No relevant new matters have been identified. The actual Scheme Booklet and the sworn verification of the factual information in the Scheme Booklet are in evidence. There is criticism of disclosure made on behalf of one shareholder, Granic Pty Ltd, which Avoca submits and I find, for reasons which follow, is without substance. I infer from the actual text of the disclosure in the Scheme Booklet and the fact that there is no criticism of the disclosure by any regulatory body or optionholder, that full and adequate disclosure has been made. By letter addressed to my associate, dated 29 January 2011, Mr John Fielding, a director of Granic Pty Ltd, which is a shareholder in Avoca, set out a complaint in relation to disclosure. Mr Fielding forwarded a copy of this letter to ASIC which in turn brought it to the attention of Avoca. In summary, the complaint is that disclosure in the Scheme Booklet is inadequate because it fails to state that one effect of the merger is that franked dividends will not be available in the future as shares will be held in a Canadian company rather than an Australian company.