Re Cassini Resources Ltd; [No 2]
[2020] WASC 354
•5 OCTOBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: RE CASSINI RESOURCES LTD; EX PARTE CASSINI RESOURCES LTD [No 2] [2020] WASC 354
CORAM: HILL J
HEARD: 23 SEPTEMBER 2020
DELIVERED : 23 SEPTEMBER 2020
PUBLISHED : 5 OCTOBER 2020
FILE NO/S: COR 96 of 2020
MATTER: Cassini Resources Ltd
EX PARTE
CASSINI RESOURCES LTD
Plaintiff
OZ MINERALS LTD
Interested Party
FILE NO/S: COR 97 of 2020
EX PARTE
CASSINI RESOURCES LIMITED
Plaintiff
Catchwords:
Corporations law - Schemes of arrangement - Interconditional schemes of arrangement and associated proposed capital reduction - Application for orders approving amended schemes under s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) - Orders made approving schemes
Corporations law - Whether non-compliance with orders for dispatch a 'procedural irregularity' under s 1322(2) of the Corporations Act 2001 (Cth)
Legislation:
Corporations Act 2001 (Cth), s 411(4)(b), s 411(6), s 1322(2)
Result:
Orders made approving schemes
Category: B
Representation:
COR 96 of 2020
Counsel:
| Plaintiff | : | A J Papamatheos |
| Interested Party | : | P J Tydde |
Solicitors:
| Plaintiff | : | Thomson Geer |
| Interested Party | : | Gilbert + Tobin |
COR 97 of 2020
Counsel:
| Plaintiff | : | A J Papamatheos |
Solicitors:
| Plaintiff | : | Thomson Geer |
Case(s) referred to in decision(s):
City Pacific Ltd v Bacon (No 2) [2009] FCA 772; (2009) 178 FCR 81
Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 55 ACSR 185
Re Cassini Resources Ltd; Ex Parte Cassini Resources Ltd [2020] WASC 317
Re International Goldfields Ltd [2004] WASC 112
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [No 2] [2018] WASC 357
HILL J:
The plaintiff, Cassini Resources Ltd (Cassini), applies for orders approving two proposed schemes of arrangement (Acquisition Scheme and Demerger Scheme). The background to the matter is set out in the judgment that I gave following the first court hearing.[1] At the first court hearing, I made orders for the Scheme meetings to be convened.
[1] Re Cassini Resources Ltd; Ex Parte Cassini Resources Ltd [2020] WASC 317.
Scheme Meetings
The Acquisition Scheme meeting and the Demerger Scheme meeting were convened and held on 21 September 2020. At each of these meetings, the resolution was passed by the requisite statutory majorities.
241 shareholders were present at the Acquisition Scheme meeting in person and by proxy, comprising approximately 23.16% of shareholders by number[2] and 69.92% of the issued share capital of the plaintiff.[3] 99.98% of shareholders who voted at the meeting were in favour of the resolution.[4] 99.57% of votes cast on the resolution were cast in favour of the resolution.[5]
[2] Second affidavit of Christopher Francis Hill filed 21 September 2020 (COR 96 of 2020) [19].
[3] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 96 of 2020) [12].
[4] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 96 of 2020) [13.1].
[5] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 96 of 2020) [13.2].
The Demerger Scheme meeting was held immediately following the Acquisition Scheme meeting. 236 shareholders were present in person and by proxy, comprising approximately 22.61% of shareholders by number[6] and 68.95% of the issued share capital of the plaintiff.[7] 100% of the shareholders who voted at the meeting were in favour of the resolution and 100% of the votes were cast in favour of the resolution.[8]
[6] Second affidavit of Christopher Francis Hill filed 21 September 2020 (COR 97 of 2020) [19].
[7] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020) [12].
[8] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020) [13].
Following both Scheme meetings, a general meeting was held to consider Cassini's capital reduction (Capital Reduction meeting). The total number of votes cast was 68.86% of the total number of the issued share capital of the plaintiff.[9] 99.99% of votes cast on the resolution were in favour of the resolution.[10]
[9] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020) [17].
[10] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020) [18].
Preliminary matters
On 15 September 2020, a notice of change of representation was filed by the plaintiff in both matters. This was because the corporate team instructed by the plaintiff changed firms as from 14 September 2020.
As a result of the change of representation, the plaintiff sought an amendment to the orders of 12 August 2020 to change the address in the advertisement they were required to give of the second court hearing. On 15 September 2020, I made orders administratively in each action to reflect this change.
To ensure that the change of address would be seen by shareholders and any party who wanted to appear at the second hearing and object to the Scheme, the plaintiff also noted this change in its ASX announcement following the Scheme meetings.[11]
[11] Fifth affidavit of Michael Choon Ming Ng filed 23 September 2020, 'MCN-19'.
Approval of Scheme
This matter came back before me for the second court hearing on 23 September 2020.
In addition to the affidavits that were relied upon at the first hearing, Cassini relied on the following additional affidavits filed in each matter (which were ordered to be evidence in both matters):
(a)a second affidavit of Scott Douglas Gibson filed 21 September 2020 in COR 96 of 2020, the chairperson of the Acquisition Scheme meeting, providing a report on the meeting;
(b)a fourth affidavit of Michael Choon Ming Ng filed 21 September 2020, in relation to the lodgement with ASIC of the orders from the first court hearing, the registration of the Acquisition Scheme booklet and the advertisement of the second court hearing;
(c)an affidavit of Christopher Francis Hill filed 21 September 2020 in COR 96 of 2020, the relationship manager with Automic Registry Services, the share registry for the plaintiff, in relation to the printing of the Acquisition Scheme booklet and its dispatch, as well as the email broadcast to shareholders who had nominated an electronic address for service of notices of meeting;
(d)a second affidavit of Mr Hill filed 21 September 2020 in COR 96 of 2020, annexing the proxy form, sample voting card and poll report which was produced following the Acquisition Scheme meeting;
(e)an affidavit of Mr Hill filed 21 September 2020 in COR 97 of 2020, in relation to the printing and dispatch of the Demerger Scheme booklet, as well as the email broadcast to shareholders who had nominated an electronic address for service of notices of meeting;
(f)a second affidavit of Mr Hill filed 21 September 2020 in COR 97 of 2020, annexing the proxy forms and sample voting cards for the Demerger Scheme and Capital Reduction meetings and the poll reports produced following these meetings;
(g)a second affidavit of Mr Gibson filed 21 September 2020 in COR 97 of 2020, the chairperson of the Demerger Scheme meeting and Capital Reduction meeting, providing a report on these meetings;
(h)a fourth affidavit of Christopher John George Seotis filed 21 September 2020, in relation to the lodgement with ASIC of the orders from the first court hearing, the registration of Demerger Scheme booklet and the advertisement of the second court hearing;
(i)an affidavit of Marvi Adolfina Douglas filed 22 September 2020, a director of iPrintplus, a print and mail house, in relation to the printing of the Acquisition Scheme documents and their subsequent dispatch;
(j)a third affidavit of Mr Hill filed 22 September 2020 in each proceedings, in relation to the email broadcast sent to shareholders, containing a link to the website where the Scheme booklets could be downloaded and proxy forms lodged, as well as information about the certificate and forms submitted by New Zealand and foreign resident shareholders;
(k)a fifth affidavit of Mr Ng filed 23 September 2020, annexing the ASX announcements made by Cassini following the Scheme meetings, a letter from Grant Thornton confirming that nothing had come to their attention that could cause them to change their opinion on the Schemes, a letter from ASIC confirming that ASIC had no objection to the proposed Schemes under s 411(7)(b) of the Act, and the certificates issued by Cassini and OZ Minerals confirming that all conditions precedent (apart from the orders sought at the second court hearing) had been satisfied in respect of the Acquisition Scheme;
(l)an affidavit of Ms Douglas filed 22 September 2020, in relation to the printing of the Demerger Scheme documents and their subsequent dispatch;
(m)a fifth affidavit of Mr Seotis filed 23 September 2020, annexing the ASX announcements made by Cassini following the Scheme meetings, a letter from Grant Thornton confirming that nothing had come to their attention that could cause them to change their opinion on the Schemes, a letter from ASIC confirming that ASIC had no objection to the proposed Schemes under s 411(7)(b) of the Act, and the certificates issued by Cassini and Caspin Resources confirming that all conditions precedent (apart from the orders sought at the second court hearing) had been satisfied in respect of the Demerger Scheme;
(n)a sixth affidavit of Mr Ng filed 23 September 2020 in both proceedings, annexing the proxy reports from the Acquisition Scheme meeting, the Demerger Scheme meeting and the Capital Reduction meeting.
These additional affidavits address the matters that Cassini was required to establish at the second court hearing.
Legal Principles in respect of the Scheme Approval
The approval of the proposed Schemes 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 Schemes by the requisite statutory majorities, which occurred at the Scheme meetings.
At the second court hearing, the court has two tasks:[12]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[13]
(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.
[12] Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[13] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) 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.[14] 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.[15]
[14] Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[15] Re Wesfarmers Ltd; Ex Parte 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:[16]
(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.
[16] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
Disposition
Compliance with statutory and procedural requirements
I am and was satisfied, on the basis of the additional affidavits that were filed by Cassini, that:
(a)a copy of the court's orders made in both proceedings on 12 August 2020 were lodged with ASIC that day;[17]
(b)a copy of the Acquisition and Demerger Scheme booklets that were approved for distribution by the court were lodged with ASIC and registered on 13 August 2020;[18]
(c)the Scheme booklets were dispatched to security holders in accordance with my orders of 17 August 2020, save for the matters which I address below at [17] ‑ [24];[19]
(d)the Acquisition Scheme meeting and the Demerger Scheme meeting were convened and held on 21 September 2020 in accordance with my orders of 12 August 2020;[20]
(e)the Schemes were approved by the requisite statutory majorities;[21]
(f)notice of the second court hearing was given by way of advertisement in The West Australian and The Australian newspapers on 16 and 17 September 2020 respectively;[22] and
(g)ASIC informed Cassini on 22 September 2020, pursuant to s 411(17)(b) of the Act, that it has no objection to the proposed Schemes.[23]
[17] Fourth affidavit of Michael Choon Ming Ng filed 21 September 2020 [4], 'MCN-9'; Fourth affidavit of Christopher John George Seotis filed 21 September 2020 [4], 'CJS-9'.
[18] Fourth affidavit of Michael Choon Ming Ng filed 21 September 2020 [5], 'MCN-12'; Fourth affidavit of Christopher John George Seotis filed 21 September 2020 [5], 'CJS-12'.
[19] Affidavit of Christopher Francis Hill filed 21 September 2020 (COR 96 of 2020) [13], [25]; Affidavit of Christopher Francis Hill filed 21 September 2020 (COR 97 of 2020) [13], [24].
[20] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 96 of 2020); Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020).
[21] Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 96 of 2020) [11] - [14], 'SDG-2'; Second affidavit of Scott Douglas Gibson filed 21 September 2020 (COR 97 of 2020) [11] - [14], 'SDG-2'.
[22] Fourth affidavit of Michael Choon Ming Ng filed 21 September 2020, 'MCN-15', 'MCN-16'; Fourth affidavit of Christopher John George Seotis filed 21 September 2020, 'CJS-15', 'CJS-16'.
[23] Fifth affidavit of Michael Choon Ming Ng filed 23 September 2020 [7], 'MCN-23'.
Order 10(a) of the orders made on 12 August 2020 required that each shareholder who had nominated an electronic address for service was to receive an email containing a link to a website where the shareholder can access the Scheme booklet, lodge a proxy form and, in COR 96 of 2020, for small shareholders to access and lodge forms to make an election and for ineligible foreign shareholders to make a relevant declaration, and, in COR 97 of 2020, for shareholders whose registered addresses are in New Zealand to access and lodge a 'New Zealand Investor Certificate'.
The evidence before me is that the emails sent to the shareholders provided a link to a website where the Scheme booklets could be found, and each of the forms could be accessed and lodged.[24]
[24] Affidavit of Christopher Francis Hill filed 21 September 2020 (COR 96 of 2020), 'CFH1'; Affidavit of Christopher Francis Hill filed 21 September 2020 (COR 97 of 2020), 'CFH1'.
Counsel for the plaintiff drew to my attention that the email broadcast did not provide a precise link to the documents as required by the orders but provided a link through which the shareholders could access the documents. Counsel submitted that this was a procedural irregularity and that, by reason of s 1322(2) of the Act, this did not invalidate the Acquisition Scheme meeting or Demerger Scheme meeting.
Section 1322(2) of the Act provides that:
A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.
I accept that a scheme meeting is a 'proceeding' under the Act for the purposes of this section.[25]
[25] City Pacific Ltd v Bacon (No 2) [2009] FCA 772; (2009) 178 FCR 81 [15].
To determine whether the non-compliance with Order 10(a) of the orders made 12 August 2020 is a procedural irregularity for the purposes of the Act, it is important to consider first, what is 'the thing to be done' and second, whether the irregularity changes 'the thing to be done' or merely departs from the manner in which 'the thing is to be done'.[26]
[26] Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 55 ACSR 185 [103].
In this case, the 'thing to be done' in respect of both the Acquisition Meeting and the Demerger Meeting is to give shareholders electronic access to the Scheme booklets and the relevant forms to be lodged for the Scheme meetings. I am satisfied that the non‑compliance with the order did not change the thing to be done but simply departed from the manner in which this was ordered to occur. For this reason, I accept that the non‑compliance with Order 10(a) was a procedural irregularity.
Turning then to the question as to whether there has been or may be any substantial injustice caused by the procedural irregularity, for the following reasons, I am satisfied that there was no substantial injustice. First, shareholders could access all the relevant information and forms from the general links. Second, Cassini sent to each shareholder in hard copy a letter and the relevant forms. Third, the timeframe for foreign resident shareholders and New Zealand shareholders to lodge the relevant forms or certificate had not expired at the time of the hearing and could be lodged up until 28 September 2020. This timeframe will be the subject of the further ASX announcement following the second court hearing. Fourth, I am satisfied on the evidence before me that shareholders in New Zealand and overseas could find and lodge the necessary documents.[27]
[27] Third affidavit of Christopher Francis Hill filed 22 September 2020, 'CFH7'.
Finally, I was and am satisfied that there was a sufficient turnout at each of the meetings. 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 shareholders voted for an improper purpose. I am satisfied on the evidence that has been filed by Cassini that the members voted in good faith and for a proper purpose as:
(a)the purpose of the proposed Schemes is for an acquisition and associated demerger transaction of a kind ordinarily approved by the court, which do not involve the novel treatment of rights;
(b)the independent expert opined that in the absence of an alternate proposal (and none has emerged), the Schemes are in the best interests of shareholders; and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to approval of the proposed Schemes.
Fairness and reasonableness
At the first hearing, based on the evidence before the court, I was satisfied that the proposed acquisition of Cassini and demerger was of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meetings.
Nothing has occurred since the date of the first hearing to change this view. The shareholders who voted at the meetings overwhelmingly supported the proposed Acquisition and Demerger Schemes. No shareholder appeared to oppose the orders sought at the second court hearing. I was and am satisfied that the proposed Schemes are fair and reasonable and are Schemes 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 Cassini drew my attention to a number of matters. These are summarised in Re Cassini Resources Ltd; Ex Parte Cassini Resources Ltd at [60] ‑ [91].
There were four further matters that counsel drew my attention to at the second court hearing. First, evidence was put before the court to demonstrate that the conditions precedent to the Schemes (apart from the court's approval at the second court hearing) had been satisfied or waived.[28]
[28] Fifth affidavit of Michael Choon Ming Ng filed 23 September 2020 [9] - [10], 'MCN-24' and 'MCN-25'; Fifth affidavit of Christopher John George Seotis filed 23 September 2020 [13] - [14], 'CJS-22' and 'CJS-23'.
Second, Cassini sought an exemption from s 411(11) of the Act. In my view, there is no utility in requiring the court's orders approving the Schemes to be annexed to Cassini's constitution as the orders do not affect any change to the constitution. I considered it was and is appropriate in the circumstances of this case to make the orders sought under s 411(12) of the Act.
Third, on 8 September 2020, Cassini entered into a deed of amendment with OZ Minerals Ltd to correct a typographical error in the Acquisition Scheme. The error related to the deemed warranty provision, which provided that Cassini shareholders are taken to have warranted that they have the power and capacity to transfer their shares to Cassini, rather than OZ Minerals. Cassini sought orders at the second court hearing for the Court to approve an amended Scheme pursuant to s 411(6) of the Act. I accept that this was a typographical error and that it was appropriate to approve the amended Acquisition Scheme.
Fourth, the plaintiff's counsel, Mr Papamatheos drew to my attention that the ASX Announcement of the proxy votes immediately following the Scheme meetings was not in the form required under s 251AA of the Act.[29] This omission was discovered on 22 September 2020. A further ASX announcement was then released by Cassini in accordance with the provisions of s 251AA of the Act.[30] I am satisfied that this was an administrative oversight and is not a matter that should prevent approval of the Schemes.
Full and fair disclosure
[29] Fifth affidavit of Michael Choon Ming Ng filed 23 September 2020, 'MCN-19'.
[30] Fifth affidavit of Michael Choon Ming Ng filed 23 September 2020, 'MCN-20'.
At the first court hearing, based on the evidence before the court, I was satisfied that the draft Scheme booklets would provide full and fair disclosure to security holders.
The additional affidavit evidence filed by Cassini establishes that the Scheme booklets dispatched to shareholders were in the form approved for distribution by the court. Nothing has arisen to suggest that there has not been full and fair disclosure of all information that was material to the decision of shareholders prior to them voting on the Schemes.
Oppression of minorities
There was no evidence that any minority has been oppressed.
Satisfaction of s 411(17) and ASIC's view
ASIC has provided a written statement to the effect that it does not object to the Schemes 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 restructure, it cannot be said that the Schemes were proposed to avoid the operation of ch 6 of the Act.
Public Policy
[31] Fourth affidavit of Christopher John George Seotis filed 22 January 2020 [2], 'CJS18'.
There is no evidence before the Court that the proposed Schemes offend any aspect of public policy. Given the nature of the proposed Schemes, it is my view that it could not be sensibly suggested that the Schemes offend public policy.
Conclusion and orders
At the hearing before me, I was satisfied that the substantive and procedural requirements under s 411(1) of the Act had been satisfied and that I should approve the proposed Schemes.
For these reasons, at the conclusion of the hearing on 23 September 2020, I made orders in terms of Annexure 'A' to this judgment in respect of the Schemes.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill
5 OCTOBER 2020
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