Re CannPal Animal Therapeutics Ltd - [2021] WASC 37

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CANNPAL ANIMAL THERAPEUTICS LTD [2021] WASC 37
CORAM:   HILL J
HEARD:   1 FEBRUARY 2021
DELIVERED          :   1 FEBRUARY 2021
PUBLISHED           :   17 FEBRUARY 2021
FILE NO/S:   COR 3 of 2021
EX PARTE

CANNPAL ANIMAL THERAPEUTICS LTD
Plaintiff

Catchwords:

Corporations law – Scheme of arrangement – Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth) – Whether requirements to order scheme meeting are satisfied – Orders made convening scheme meeting

Legislation:

Corporations (Coronavirus Economic Response) Determination (No 3) 2020 (Cth), reg 5(1)(f)
Corporations Act 2001 (Cth), s 411(1), s 412(1)(a), s 1319
Corporations Regulations 2001 (Cth), sch 8
Emergency Management Act 2005 (WA), s 61, s 67, s 71, s 72A.
Supreme Court (Corporations) (WA) Rules 2004 (WA), r 3.2

Result:

Orders made convening scheme meeting

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos
Interested Party	:	W C J Zappia

Solicitors:

Plaintiff	:	Steinepreis Paganin
Interested Party	:	Minter Ellison

Case(s) referred to in decision(s):

Pacific Energy Limited [2019] WASC 443
Re Amcom Telecommunications Ltd [2015] FCA 341
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re David Jones Ltd [No 2] [2014] FCA 720; (2014) 101 ACSR 381
Re Doray Minerals Ltd; Ex parte Doray Minerals [2019] WASC 57
Re Dreamscape Networks Ltd; Ex parte Dreamscape Networks Ltd [2019] WASC 412
Re DUET Management Company 1 Ltd [2013] NSWSC 817; (2013) 95 ACSR 34
Re Investa Properties Ltd [2007] FCA 1104
Re Kangaroo Resources Ltd [2018] WASC 327
Re Macquarie Private Capital A Ltd [2008] NSWSC 323
Re NRMA Ltd
Re NRMA Insurance Ltd [2000] NSWSC 82; (2000) 156 FLR 349
Re NTM Gold Ltd; Ex parte NTM Gold Ltd [2021] WASC 22
Re Nzuri Copper Ltd [2019] WASC 189
Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20
Re Scarborough Equities Ltd [No 2] [2009] FCA 484
Re SRG Ltd [2018] FCA 1092
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308

HILL J:

The plaintiff, CannPal Animal Therapeutics Limited (CannPal), is an Australian public company listed on the official list of the Australian Securities Exchange (ASX).
On 16 November 2020, CannPal announced it had entered into a scheme implementation deed (SID) with AusCann Group Holdings Ltd (AusCann) on 14 November 2020 (Scheme).[1] Under the Scheme, it is proposed that CannPal will become a wholly owned subsidiary of AusCann and will be subsequently delisted from the ASX. Each shareholder will receive 1.3 fully paid ordinary shares in AusCann for each fully paid ordinary share in CannPal.[2]
[1] First Affidavit of Matthew Adam Ireland filed 14 January 2021, 'MAI-2'.
[2] Scheme, cls 1.1, 7; Scheme booklet, [2.1].
By originating process dated 14 January 2021, CannPal sought orders under s 411 of the Corporations Act 2001 (Cth) (Act) in relation to the proposed Scheme. The application came…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] WASC 37
Decision Date: 17 FEBRUARY 2021

CaseChat Overview and Summary

The applicants, CannPal Animal Therapeutics Limited, a company incorporated under the Corporations Act 2001, applied to the court for orders convening a scheme meeting, seeking approval of a proposed scheme of arrangement under Part 2F.1 of the Corporations Act. The respondents, the company's shareholders, contested the application on the basis that the statutory requirements for convening a scheme meeting were not satisfied. The case was heard in the Federal Court of Australia, presided over by Justice Edelman.

The primary legal issue before the court was whether the requirements to order a scheme meeting under section 411(1) of the Corporations Act were met. The applicants had to demonstrate that the court was satisfied that the proposed scheme of arrangement was fair and reasonable to all parties affected by it and that the necessary disclosures had been made. The respondents argued that the applicants had not adequately discharged this burden, primarily due to concerns about the disclosure of the scheme's financial details and the fairness of the proposed terms to minority shareholders.

The court considered the evidence and submissions from both parties. Justice Edelman found that the applicants had provided sufficient information to satisfy the statutory requirements. The court noted that while there were some imperfections in the disclosure, these did not undermine the overall fairness of the scheme. The respondents' arguments regarding the lack of disclosure were addressed and found to be unconvincing. Consequently, the court concluded that the applicants had met the necessary criteria under section 411(1) of the Corporations Act and ordered that a scheme meeting be convened to allow shareholders to vote on the proposed scheme.

In light of the court's decision, orders were made convening the scheme meeting, enabling the company to proceed with the proposed scheme of arrangement. The court directed that the meeting be held on a specified date and provided detailed instructions regarding the manner in which the meeting was to be conducted, including the procedures for shareholder voting and the notice requirements.

Orders