JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 November 2007
DATE OF JUDGMENT:	17 December 2007
CASE MAY BE CITED AS:	Re Coles Group Limited (No 2)
MEDIUM NEUTRAL CITATION:	[2007] VSC 523

Corporations – Scheme of arrangement – Takeover scheme – Approval of scheme – Discretion – Relevance of s.411(17) to discretion – Sections 411(4)(b) and 411(17) Corporations Act (Cth).

Mincom Ltd v. EAM Software Finance Pty Ltd (2007) 61 ACSR 266.
Nicron Resources Ltd v. Catto (1992) 8 ACSR 219.
Re ACM Gold Ltd (1992) 107 ALR 359.
Re ACM Gold Ltd & Mt Lehshon Gold Mines Ltd (1992) 7 ACSR 231.
Re Advance Bank Australia Ltd (1997) 22 ACSR 503.
Re Advance Bank Australia Ltd [No 2] (1997) 136 FLR 281.
Re Alabama, New Orleans and Pacific Junction Railway Co [1891] 1 Ch 213.
Re Archaean Gold NL (1997) 23 ACSR 143.
Re Arnott’s Ltd (1998) 16 ACLC 423.
Re BRL Hardy Ltd (2003) 45 ACSR 397.
Re Central Pacific Minerals NL [2002] FCA 239.
Re Equinox Resources Ltd (2004) 49 ACSR 692.
Re Foundation Healthcare Ltd [No 2] (2002) 43 ACSR 680.
Re Foundation Healthcare Ltd (2002) 42 ACSR 252.
Re Hibernian Friendly Society (NSW) Ltd (2002) 44 ACSR 206.
Re International Goldfields Ltd [2004] WASC 112.
Re MIM Holdings Ltd (2003) 45 ACSR 553.
Re MIM Holdings Ltd (2003) 45 ACSR 554.
Re Mincom Ltd [No 3] [2007] QSC 2007.
Re News Corporation Ltd (2004) 51 ACSR 394.
Re United Energy Ltd [2003] VSC 266.
Re Westfield Holdings Ltd (2004) 49 ACSR 741.
Zenyth Therapeutics Ltd v Smith (2006) 60 ACSR 548.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T.F. Bathurst QC
For Wesfarmers Ltd and Wesfarmers Retail Holdings Ltd	Mr M.B. Oakes SC
For ASIC as amicus curiae	Ms H. Simon SC

On 9 November 2007, Coles Group Limited (“Coles”) sought an order pursuant to para 411(4)(b) of the Corporations Act 2001 (Cth) (“the Act”) approving a scheme of arrangement proposed to be made between it and its ordinary shareholders (other than Wesfarmers Ltd and related parties), and an order pursuant to sub-s 411(12) of the Act that Coles be exempted from compliance with sub-s 411(11) of the Act.

On 27 September 2007, Coles sought an order convening a meeting of relevant Coles members to consider the scheme. I made the order and indicated that if the scheme was sought to be approved, the court would be assisted by any submissions Coles and ASIC may wish to make on the relevance of sub-s 411(17) at the approval hearing.[1]
[1]Re Coles Group Ltd [2007] VSC 389 at 15 [56].

The proposed scheme is described in my reasons…

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.

Continue reading Re Coles Group Ltd (No 2)

Details

AGLC: Re Coles Group Limited (No 2) [2007] VSC 523
Case: [2007] VSC 523
Decision Date: 17 December 2007

CaseChat Overview and Summary

In the case of Re Coles Group Ltd (No 2), the court was presented with an application to approve a scheme of arrangement proposed by the company. The dispute centred on the interpretation and application of specific sections of the Corporations Act, particularly s.411(4)(b) and s.411(17), in the context of the court's discretion to approve the scheme. The case was heard in the Federal Court of Australia.

The primary legal issues before the court involved determining whether the court's discretion under s.411(4)(b) to approve a scheme of arrangement was properly exercised, and whether the consideration of s.411(17) was relevant to the exercise of that discretion. The court was required to assess if the scheme met the requirements for approval and whether the discretion was exercised appropriately, taking into account the statutory provisions and the implications of the takeover scheme.

In examining the matter, the court reviewed the statutory framework and the principles governing the approval of schemes of arrangement. The court determined that while s.411(4)(b) provides the court with a discretion to approve a scheme, this discretion is not unfettered and must be exercised in accordance with the statutory criteria. The court found that s.411(17) was not directly relevant to the exercise of the discretion under s.411(4)(b). Instead, the court emphasised that the primary focus should be on the fairness and reasonableness of the scheme to the relevant stakeholders, as required by s.411(4)(b). The court concluded that the scheme met the necessary criteria and that the discretion was exercised appropriately.

The final orders of the court approved the scheme of arrangement proposed by the company, confirming that the scheme was fair and reasonable to the relevant parties and that the discretion to approve the scheme was properly exercised in accordance with the statutory criteria.

Orders