Re Big River Gold Ltd; [No 2]
[2022] WASC 314
•14 SEPTEMBER 2022
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE BIG RIVER GOLD LTD; EX PARTE BIG RIVER GOLD LTD [No 2] [2022] WASC 314
CORAM: HILL J
HEARD: 8 SEPTEMBER 2022
DELIVERED : 8 SEPTEMBER 2022
PUBLISHED : 14 SEPTEMBER 2022
FILE NO/S: COR 134 of 2022
EX PARTE
BIG RIVER GOLD LTD
Plaintiff
Catchwords:
Corporations – Scheme of arrangement – Application for orders approving the scheme under s 411(4)(b) of the Corporations Act 2001 (Cth) – Orders made approving scheme
Legislation:
Corporations Act 2001 (Cth) s 411(4)(b), s 411(6), s 411(11), s 411(17)
Result:
Orders made approving scheme
Category: B
Representation:
Counsel:
| Plaintiff | : | A J Papamatheos & V N Ghosh |
Solicitors:
| Plaintiff | : | MinterEllison |
Cases referred to in decision:
Re Beadell Resources Ltd [No 2] [2019] WASC 53
Re Big River Gold Ltd [2022] WASC 296
Re International Goldfields Ltd [2004] WASC 112
Re Nzuri Copper Ltd (No 4) [2020] WASC 10
Re Ozgrowth Ltd [No 2] [2022] WASC 167
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re TriAusMin Ltd [No 2] [2014] FCA 833
Re Wesfarmers Ltd [No 2] [2018] WASC 357
Re Westgold Resources Ltd [No 2] [2012] WASC 395
HILL J:
The plaintiff, Big River Gold Ltd (Big River Gold), applies for orders approving a proposed scheme of arrangement (Scheme). The background to the matter is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing on 29 July 2022, I made orders for two Scheme meetings to be convened on 2 September 2022 to consider the proposed Scheme (Orders).
[1] Re Big River Gold Ltd [2022] WASC 296.
On 17 August 2022, the plaintiff approached this court for orders to approve an outbound telephone information campaign in relation to the Scheme (Outbound Campaign) which orders were made on 19 August 2022 (Supplementary Orders).
Scheme meetings
The Scheme meetings were convened and held on 2 September 2022. The first meeting was of Dundee Resources Ltd, the Relevant Shareholder (Relevant Shareholder Scheme Meeting). The second meeting involved all other shareholders of Big River Gold (General Scheme Meeting). At both meetings, the resolution was passed by the requisite statutory majorities.
100% of shareholders were present at the Relevant Shareholder Scheme Meeting and voted in favour of the resolution.[2]
[2] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [8], 'ALB-2'; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [18].
383 shareholders were present at the General Scheme Meeting in person and by proxy, comprising approximately 31.14% of shareholders by number.[3] 68.93% of shareholders who voted at the meeting were in favour of the resolution.[4] 95.78% of votes cast on the Scheme resolution were cast in favour of the resolution.[5]
[3] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [7], 'ALB-2'; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [40].
[4] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [7], 'ALB-2'; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [40].
[5] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [7], 'ALB-2'; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [40].
Approval of Scheme
This matter came back before me for the second court hearing on 8 September 2022. In addition to the affidavits that were relied upon at the first court hearing, Big River Gold relied on an additional 12 affidavits filed prior to the second court hearing. These were:
(a)a second affidavit of Andrew Lehane Richards filed 17 August 2022, an executive director and the executive chairman of Big River Gold. Mr Richards' affidavit gave an overview of the proposed Outbound Campaign and the engagement of Georgeson Shareholder Communications Australia Pty Ltd (Georgeson) to run the Outbound Campaign. His affidavit annexed, among other things, a copy of the proposed Outbound Campaign script and several ASX announcements in relation to Scheme and the Outbound Campaign;
(b)a fifth affidavit of Shaun Barry McRobert filed 17 August 2022, a partner of MinterEllison, the solicitors for the plaintiff, and the appointed chairperson for the Scheme meetings. Mr McRobert confirmed the Orders and the final version of the Scheme booklet had been lodged with ASIC on 1 August 2022;
(c)a sixth affidavit of Mr McRobert filed 19 August 2022, detailing correspondence with ASIC in relation to the hearing on 19 August 2022 and giving a brief overview of Georgeson's engagement regarding the issue of tracing notices to Big River Gold shareholders;
(d)an affidavit of Loyd David Godwin filed 31 August 2022, a customer success manager employed at Automic Group Pty Ltd (Automic), the share registry of the plaintiff, in relation to the despatch of the Scheme materials to those who had elected to receive communications by email (Email Shareholders) and the despatch of hardcopy shareholder packs to the remaining shareholders, including shareholders who came onto the register after 10 August 2022;
(e)an affidavit of Ian Montgomery filed 1 September 2022. Mr Montgomery is a solicitor and partner of Mourant Ozannes, a law firm in the British Virgin Islands. Mr Montgomery provided an expert legal opinion to the plaintiff's solicitors on the validity of the execution of the Scheme Implementation Deed and Deed Poll by Aura Minerals Inc (Aura) and Borborema Inc (JVCo) in accordance with the laws of the British Virgin Islands. His affidavit annexes, among other things, his legal opinion;
(f)an affidavit of Kane Pretki filed 2 September 2022, an investor services training manager at Automic, in relation to the receipt and processing of electronic and hardcopy proxy forms for the Scheme meetings;
(g)a second affidavit of Mr Godwin filed 2 September 2022. Mr Godwin's second affidavit outlined the receipt and process of proxy forms at the Scheme meetings, gave an overview of the conduct and voting procedure at the Scheme meetings, and annexed the poll report for each Scheme meeting;
(h)an affidavit of Yi Fei (Philip) Xuan filed 2 September 2022, an account director at Georgeson, who was retained by Big River Gold to conduct an outbound shareholder telephone line (Outbound Campaign). Mr Xuan outlined the conduct of the Outbound Campaign and annexed both the report and script from the Outbound Campaign;
(i)an affidavit of Andrew Lorne Beigel filed 5 September 2022, the company secretary of Big River Gold, in relation to the voter turnout at the General Scheme meeting, as well as voter turnout at the 2021 and 2022 annual general meetings. Mr Beigel attached copies of the advertisements of the second court hearing in The West Australian newspaper on 2 September 2022 and The Weekend Australian newspaper on 3 September 2022;
(j)an affidavit of Lorena De Pellegrin filed 5 September 2022, a director of De Pellegrin Pty Ltd as Trustee for the DP Unit Trust trading as iPrint Plus (iPrint Plus), who was engaged by Automic to undertake printing and mailing jobs for Big River Gold. Her affidavit outlined the printing process and despatch of Scheme materials to shareholders, as well as those shareholders who came onto the register after 10 August 2022;
(k)a seventh affidavit of Mr McRobert filed 5 September 2022. His affidavit provided an overview of the conduct of the Scheme meetings, detailed the results of the poll reports, and confirmed the service of the court documents for the second court hearing on ASIC; and
(l)an eighth affidavit of Mr McRobert filed 8 September 2022, confirming no objection to the Scheme had been received from any shareholder, attaching the certificates executed by Big River Gold and Aura confirming that each of the conditions precedent of the Scheme had been satisfied or waived, as well as attaching a letter from ASIC confirming it had no objection to the proposed Scheme under s 411(17) of the Act. Mr McRobert also outlined a proposed minor amendment to cl 2.1 of the Scheme.
These additional affidavits address the matters Big River Gold was required to establish at the second court hearing.
Legal Principles in respect of the Scheme Approval
The approval of the proposed Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meeting.
At the second court hearing, the court has two tasks:[6]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[7]
(i)the meeting was convened and held in accordance with the court's earlier orders;
(ii)the resolutions were passed with the requisite statutory majorities; and
(iii)the plaintiff otherwise complied with the court's earlier orders;
(b)to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.
[6] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[7] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) of the Act and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved.[8] That said, the court will usually approach the task on the basis that shareholders are better judges of what is in their commercial interests than the court.[9]
[8] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[9] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
The factors that inform the court's discretion whether or not to approve a scheme are:[10]
(a)whether the members have voted in good faith and not for an improper purpose;
(b)whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it;
(c)whether the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion;
(d)whether there has been full and frank disclosure of all information material to the members' decision;
(e)whether minority shareholders would be oppressed by the scheme;
(f)whether the court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act;
(g)whether ASIC has an objection to the scheme; and
(h)whether the scheme offends public policy.
[10] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
Disposition
Compliance with statutory and procedural requirements
I was and am satisfied, on the basis of the additional affidavits that were filed by Big River Gold, that:
(a)a copy of the Orders was lodged with ASIC on 29 July 2022;[11]
(b)a copy of the Scheme booklet that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 1 August 2022;[12]
(c)the Scheme booklet was despatched to shareholders in accordance with the Orders;[13]
(d)in accordance with the Orders, the Scheme booklet, as well as the notices of meeting, were available for inspection on Big River Gold's website and at its registered office both before, and during, the Scheme meetings;[14]
(e)the Scheme meetings were convened and held on 2 September 2022 in accordance with the Orders;[15]
(f)the Scheme was approved by the requisite statutory majorities;[16]
(g)notice of the second court hearing was given by way of advertisement in The West Australian newspaper on 2 September 2022 and The Weekend Australian newspaper on 3 September 2022.[17] Originally, the advertisement in The Weekend Australian was booked to be published in The Australian on 2 September 2022 but was omitted from publication and was subsequently published in The Weekend Australian on 3 September 2022;[18] and
(h)ASIC informed Big River Gold on 7 September 2022, pursuant to s 411(17)(b) of the Act, that it had no objection to the proposed Scheme.[19]
[11] Fifth affidavit of Shaun Barry McRobert filed 17 August 2022 [5].
[12] Fifth affidavit of Shaun Barry McRobert filed 17 August 2022 [7] - [9], 'SBM-40'.
[13] Affidavit of Loyd David Godwin filed 31 August 2022; Affidavit of Lorena De Pellegrin filed 5 September 2022.
[14] Second affidavit of Andrew Lehane Richards filed 17 August 2022 [16(c)], 'ALR-48'.
[15] Second affidavit of Loyd David Godwin filed 2 September 2022; Affidavit of Andrew Lorne Beigel filed 5 September 2022 [4], [7] – [9]; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022.
[16] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [7] - [8], 'ALB-2'; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [18], [40].
[17] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [10] - [11], 'ALB-4' - 'ALB-5'.
[18] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [12], 'ALB-6'.
[19] Eighth affidavit of Shaun Barry McRobert filed 8 September 2022 [12], 'SBM-62'.
In written and oral submissions, counsel for the plaintiff drew my attention to two matters in relation to the Scheme meetings.
The first matter was that individual scheme meetings were held for the two classes of shareholder in respect of the Scheme. That is, a Scheme meeting was held for the Relevant Shareholder at 9.30 am on 2 September 2022, and a separate Scheme meeting, the General Scheme Meeting, was held at 10.00 am on 2 September 2022 for the remaining Big River Gold Shareholders. On the evidence before me, I am satisfied that each of the Scheme meetings was held in accordance with my Orders and that the voting process at each of the Scheme meetings was accurate, reliable and secure.[20]
[20] See in particular, Second affidavit of Loyd David Godwin filed 2 September 2022 [43].
The second matter was the voter turnout and the votes cast at the General Scheme Meeting. Of the 199,655,811 Big River Gold shares on issue to General Shareholders, 123,228,099 shares were voted at the General Scheme Meeting, comprising approximately 61.72% of the Big River Gold shares on issue.[21] However, only 383 out of 1,230 eligible Big River Gold shareholders voted (with two shareholders abstaining) at the General Scheme Meeting. The total of shareholders who participated in the General Scheme Meeting represented approximately only 31.14% of eligible shareholders by number.
[21] Affidavit of Andrew Lorne Beigel filed 5 September 2022 [7(b)]; Seventh affidavit of Shaun Barry McRobert filed 5 September 2022 [45(b)].
As was stated by Farrell J in Re TriAusMin Ltd [No 2]:[22]
It is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme; apathy should not be presumed to be antagonism.
Nonetheless it does call for consideration to ensure that the vote [was] not unrepresentative, since the court retains the discretion to withhold its approval in that case. It is relevant to consider whether members have been deterred from attending or voting at the meeting. (footnotes omitted)
[22] Re TriAusMin Ltd [No 2] [2014] FCA 833 [10] – [11].
Relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.[23]
[23] See, for example, Re Ozgrowth Ltd [No 2] [2022] WASC 167 [18] (14.03% of shareholders holding 56.07% of shares) (for COR 27 of 2022) and the authorities cited at fn 28.
I was and am satisfied that there was sufficient turnout at the Scheme meetings. I do not consider the voter turnout by number of shareholders at the General Scheme Meeting suggested there had been an error in the despatch of the Scheme booklet, nor that this should prevent the court from making orders under s 411(4)(b) of the Act. In this respect, I have had regard to the following matters:
(a)the number of shareholders who voted (and abstained) at the General Scheme Meeting, being approximately 31.14% of all eligible shareholders, significantly exceeded the number of shareholders who voted at the two preceding general meetings of Big River Gold;[24]
(b)the clear majority of shareholders (by number) who voted at the Scheme meeting voted in favour of the Scheme;
(c)there was no evidence which suggested any irregularity in the despatch of the Scheme booklet;
(d)there was no evidence of any issue which would have deterred shareholders from voting at or attending the Scheme meeting; and
(e)no shareholder nor ASIC sought to appear at the second court hearing to object to the Scheme.
[24] Being approximately 4.25% at the 2021 annual general meeting and 3.82% at the 2022 annual general meeting: Affidavit of Andrew Lorne Beigel filed 5 September 2022 [9], 'ALB-3'.
While the number of shareholders who voted in favour of the Scheme is somewhat lower than other schemes that have been considered by the court, the number exceeds the statutory requirement of a majority of shareholders by a relatively significant margin.
Accordingly, I was and am satisfied that all statutory pre-conditions have been met. I now turn to consider the discretionary considerations.
Good faith and proper purpose
There is no evidence that the Big River Gold shareholders voted for an improper purpose. I am satisfied on the evidence filed by Big River Gold that its members voted in good faith and for a proper purpose as:
(a)the purpose of the proposed Scheme is to effect the acquisition by Aura, through Aura BidCo, of all Big River Gold shares on issue, a transaction of a kind ordinarily approved by the court. It does not involve any novel treatment of rights;
(b)the independent expert opined that, in the absence of an alternate proposal (and none has since emerged), the Scheme is in the best interests of shareholders; and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to the approval of the proposed Scheme.
Fairness and reasonableness
Courts have previously approved schemes where the independent expert has opined that the scheme is not fair but is reasonable, and therefore in the best interest of shareholders.[25] As I noted in my reasons in Re Western Areas Ltd at [52], at the second court hearing, the court looks to whether scheme shareholders are provided with sufficient information to make an informed vote.
[25] See, for example, Re Westgold Resources Ltd [No 2] [2012] WASC 395 [41]; Re Beadell Resources Ltd [No 2] [2019] WASC 53[61].
At the first court hearing, I was satisfied that sufficient information would be provided to shareholders to give them an opportunity to understand and assess for themselves the basis of the independent expert's opinion. Nothing has occurred since the date of the first hearing to change this view. A clear majority of shareholders who voted at the meeting supported the proposed Scheme. No shareholder appeared to oppose the orders sought at the second court hearing. I was and am satisfied that the proposed Scheme is a scheme that sensible business people might consider to be of benefit to shareholders.
All relevant matters brought to the court's attention
At the first court hearing, counsel for the plaintiff drew my attention to a number of matters. These were summarised at [44] - [109] of Re Big River Gold Ltd.
There were three further matters that counsel drew to my attention at the second court hearing.
First, the satisfaction of the conditions precedent to the implementation of the Scheme. The remaining conditions precedent (apart from court approval at the second court hearing) have been satisfied or waived as evidenced by the certificates put before me.[26]
[26] Eighth affidavit of Shaun Barry McRobert filed 8 September 2022 [5] - [6], 'SBM-54' - 'SBM-55'.
Second, as I noted in Re Big River Gold Ltd at [45], Aura and the Relevant Shareholder entered into a Cooperation and Commitment Deed (Deed) to facilitate the Scheme. Pursuant to clause 4.1 of the Deed, the Relevant Shareholder was required to vote its shareholding in favour of the resolution to approve the Scheme.[27] Counsel for the plaintiff submitted that the Deed was consistent with the Scheme and the Relevant Shareholder's role in the Scheme.[28] In all the circumstances, I do not consider the Deed between Big River Gold and Dundee Resources is a reason to withhold court approval for the proposed Scheme.
[27] Affidavit of Andrew Lehane Richards filed 14 July 2022 [34] - [36], 'ALR-15'.
[28] Submissions for second court hearing [99].
Third, pursuant to s 411(6) of the Act, counsel sought approval in relation to a proposed amendment to the Scheme. Specifically, the amendment was proposed in relation to cl 2.1 of the Scheme to remove the words 'As at [.] 2022, BRV had on issue [.] BRV Shares'. Aura agreed it was appropriate for this amendment to be made.[29]
[29] Eighth affidavit of Shaun Barry McRobert filed 8 September 2022 [14], 'SBM-64'.
In considering whether it is just to approve a scheme in an amended form, it is relevant to consider whether the proposed amendments represent a substantial departure from the terms of the scheme that has been approved by shareholders.[30]
[30] Re Nzuri Copper Ltd (No 4) [2020] WASC 10 [7].
In this case, I am satisfied that the amendment proposed, which seeks to remove this sentence from cl 2.1 of the Scheme, is not a substantial change to the Scheme that was approved by shareholders and is not a reason to refuse to approve the Scheme.
Full and fair disclosure
At the first court hearing, based on the evidence before the court, I was satisfied the draft Scheme booklet would provide full and fair disclosure to shareholders.
The additional affidavit evidence filed by Big River Gold establishes the Scheme booklet despatched to shareholders was in the form approved for distribution by the court. Nothing has arisen to suggest there has not been full and fair disclosure of all information which was material to the decision of shareholders prior to them voting on the Scheme.
Oppression of minorities
There was no evidence that any minority has been oppressed.
Satisfaction of s 411(17) of the Act and ASIC's view
ASIC has provided a written statement to the effect that it does not object to the Scheme pursuant to s 411(17)(b) of the Act.[31] As a result, the requirements of s 411(17) have been satisfied. In any event, having regard to the nature of the proposed transaction, it cannot be said the Scheme was proposed to avoid the operation of ch 6 of the Act.
Public policy
[31] Eighth affidavit of Shaun Barry McRobert filed 8 September 2022 [12], 'SBM-62'.
There is no evidence before the court that the proposed Scheme offends any aspect of public policy. Given the nature of the proposed Scheme, it is my view that it could not be sensibly suggested that the Scheme offends public policy.
Exemption from s 411(11) of the Act
Big River Gold seeks exemption from s 411(11) of the Act. In my view, there is no utility in requiring the court's orders approving the Scheme to be annexed to Big River Gold's constitution as the orders do not effect any change to the constitution. This exemption has become ordinary practice for transactions of this kind.
Conclusion and orders
At the second court hearing before me, I was satisfied the substantive and procedural requirements under s 411(4) of the Act had been satisfied and that I should approve the proposed Scheme.
For these reasons, at the conclusion of the hearing on 8 September 2022, I made orders in terms of Annexure 'A' in respect of the Scheme.
Annexure 'A'
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HW
Associate to the Honourable Justice Hill
14 SEPTEMBER 2022
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