FEDERAL COURT OF AUSTRALIA
David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753
Citation: David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753 Parties: DAVID JONES LIMITED (ABN 75 000 074 573) File number: NSD 419 of 2014 Judge: FARRELL J Date of judgment: 17 July 2014 Catchwords: CORPORATIONS – scheme of arrangement – approval of scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) – where the Australian Securities & Investments Commission has not provided letter under s 411(17)(b) – collateral benefit – whether disclosure to shareholders adequate – no independent expert valuation of benefit – integrity of scheme process Legislation: Corporations Act 2001 (Cth) Cases cited: Boral Energy Resources Ltd v TU Australia (Queensland) Pty Ltd (1998) 28 ACSR 1
Re Central Pacific Minerals NL [2002] FCA 239
Re David Jones Limited (No 2) [2014] FCA 720
Re David Jones Limited [2014] FCA 530
Re Permanent Trustee Company Limited (2002) 43 ACSR 601
Re Seven Network Limited (No 3) [2010] FCA 400
Re Solution 6 Holdings Ltd (2004) 50 ACSR 113Date of hearing: 17 July 2014 Date of last submissions: 17 July 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 27 Counsel for the Plaintiff: Mr IM Jackman SC and Mr DFC Thomas Solicitor for the Plaintiff: Herbert Smith Freehills Counsel for Woolworths Holdings Limited: Mr N Hutley SC and Mr RM Foreman Counsel for the Amicus Curiae (Australian Securities & Investments Commission): Mr JA Halley SC
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 419 of 2014
IN THE MATTER OF DAVID JONES LIMITED (ABN 75 000 074 573)
BETWEEN: DAVID JONES LIMITED (ABN 75 000 074 573)
Plaintiff
JUDGE:
FARRELL J
DATE OF ORDER:
17 JULY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the Plaintiff and its ordinary shareholders (Scheme), in the form contained in Annexure D of the scheme booklet which is Exhibit 1 in this proceeding, is approved.
2.Pursuant to section 411(12) of the Act, the Plaintiff is exempt from compliance with section 411(11) of the Act in relation to the Scheme.
3.These orders be entered forthwith.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 419 of 2014
IN THE MATTER OF DAVID JONES LIMITED (ABN 75 000 074 573)
BETWEEN: DAVID JONES LIMITED (ABN 75 000 074 573)
Plaintiff
JUDGE:
FARRELL J
DATE:
17 JULY 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
These are my reasons for making an order under s 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act) approving a scheme of arrangement between the plaintiff (David Jones) and its ordinary shareholders in the form of Annexure D of the Scheme Booklet which is…
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- Re David Jones Limited (No 3) [2014] FCA 753
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CaseChat Overview and Summary
The court found that the procedural requirements of the Corporations Act had been met. The scheme booklet and other relevant documents were produced and despatched in accordance with the court's orders. The scheme meeting was held at the specified time and place, and the resolution approving the scheme was passed by a majority that substantially exceeded the required threshold. The court also found that all conditions precedent to the scheme, other than court approval and lodgement with ASIC, had been satisfied or waived. Furthermore, the court was satisfied that the scheme was fair and reasonable, and that there was full and fair disclosure to David Jones shareholders of all information material to the decision whether to vote for or against the scheme. The court concluded that the scheme was not proposed for the purpose of avoiding the provisions of Chapter 6 of the Corporations Act.
Based on these findings, the court approved the scheme of arrangement between David Jones and its shareholders. The court's decision was made under section 411(4)(b) of the Corporations Act, and an order was made under section 411(12). The court's approval allowed WHL to acquire all outstanding shares in David Jones, effectively completing the takeover. The court's decision was based on a thorough consideration of the relevant legal issues and the evidence presented before it.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
These are my reasons for making an order under s 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act) approving a scheme of arrangement between the plaintiff (David Jones) and its ordinary shareholders in the form of Annexure D of the Scheme Booklet which is Exhibit 1 in this proceeding (Scheme) and an order under s 411(12). These reasons have been expanded from the reasons I delivered ex tempore at the time I made the orders. Terms used in these reasons bear the same meaning as in my reasons for making orders under s 411(1) on 22 May 2014: see Re David Jones Limited [2014] FCA 530. The Scheme Meeting was held on 14 July 2014 pursuant to directions which I made on 19 June 2014 under s 1319 of the Corporations Act. The background to those orders and further directions I made on 2 July 2014 relating to the despatch of supplementary information (Supplementary Information) to David Jones shareholders is set out in Re David Jones Limited (No 2) [2014] FCA 720 (David Jones (No 2)). The matters the Court must take into account in deciding whether to approve the Scheme include:a.whether the orders of the Court convening the Scheme Meeting were complied with;b.whether the resolution to approve the Scheme was passed by the requisite majority and whether other statutory requirements have been satisfied;c.whether all conditions to which the Scheme is subject (other than Court approval and lodgement of the Court’s orders with ASIC) have been met or waived;d.whether the Scheme is fair and reasonable so that an intelligent and honest David Jones shareholder, properly informed and acting alone, might approve it. In considering this question, it is not the role of the Court to usurp the decision of shareholders by imposing its own commercial judgement on the Scheme or to consider whether a better scheme might have been proposed;e.whether David Jones has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court’s discretion; andf.whether there was full and fair disclosure to David Jones shareholders of all information material to the decision whether to vote for or against the Scheme.See Re Solution 6 Holdings Ltd (2004) 50 ACSR 113 at [18]-[24]; Re Permanent Trustee Company Limited (2002) 43 ACSR 601 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14]; Re Seven Network Limited (No 3) [2010] FCA 400 at [35]-[39]. Affidavits of Mr Gordon Cairns, chairman of David Jones, affirmed on 15 July 2014, Ms Maria Dzopalic, a senior relationship manager at Computershare Investor Services Pty Limited, sworn on 15 July 2014, Mr Luke Hastings affirmed on 16 July 2014 and Mr Craig Semple sworn on 16 July 2014 were read. The certificates relating to satisfaction of conditions precedent signed by David Jones (17 July 2014) and Vela Investments Pty Ltd (Bidder) (16 July 2014) were tendered. I am satisfied that the procedural requirements of s 411 and other formal matters have been addressed based on the affidavits and documents referred to at [4] and the affidavits read and documents tendered at the first court hearing. I note in particular:a.the Scheme Booklet and other correspondence with David Jones shareholders was produced and despatched in accordance with the Court’s orders;b.the Scheme Meeting was held at the time and place specified in orders made by the Court, Mr Cairns acted as chairman of the Scheme Meeting and the resolution approving the Scheme was passed by a majority which substantially exceeded that required under s 411(4)(a)(ii). Of 537,137,845 shares on issue:·267,782,527 or 96.81% of shares and 15,203 or 89.64% of shareholders present and voting voted “for” the resolution; in person or by proxy;·8,834,078 or 3.19% of shares and 1,758 or 10.36% of shareholders present and voting voted “against” the resolution, and·53,861,408 shares held by 107 shareholders abstained. Of these, 53,119,754 shares or 9.89% of the issued shares were held by an entity associated with Mr Solomon Lew (Mr Lew). c.the date and place of the second court hearing were published in The Australian on 8 July 2014 in accordance with orders of the Court;d.the conditions precedent to the Scheme (other than the Court approving the Scheme and lodgement of orders with ASIC) have been satisfied or waived; e.a deed poll in the usual form was executed by Woolworths Holdings Limited (WHL) and the Bidder on 10 May 2014; andf.the Scheme was not proposed for the purpose of avoiding the provisions of Chapter 6 of the Corporations Act. Due to the complexity of WHL’s financing arrangements in relation to the acquisition of shares in David Jones it was necessary that it acquire all or none of the shares and the mechanism provided by s 411 was most appropriate for this purpose.