FEDERAL COURT OF AUSTRALIA
David Jones Limited, in the matter of David Jones Limited (No 2) [2014] FCA 720
Citation: David Jones Limited, in the matter of David Jones Limited (No 2) [2014] FCA 720 Parties: DAVID JONES LIMITED (ABN 75 000 074 573) File number: NSD 419 of 2014 Judge: FARRELL J Date of judgment: 2 July 2014 Catchwords: CORPORATIONS – scheme of arrangement – application for directions pursuant to s 1319 of the Corporations Act 2001 (Cth) – supplementary disclosure – potential collateral benefits – whether independent expert valuation of benefit necessary for adequate disclosure – difficulty in providing information to expert Legislation: Corporations Act 2001 (Cth) Cases cited: Re Aston Resources Limited [2012] FCA 229
Re David Jones Limited [2014] FCA 530
Re iSOFT Group Limited [2011] FCA 680
Re Texon Petroleum Limited [2013] FCA 29Date of hearing: 2 July 2014 Date of last submissions: 2 July 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 49 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 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
BETWEEN: DAVID JONES LIMITED (ABN 75 000 074 573)
Plaintiff
JUDGE:
FARRELL J
DATE OF ORDER:
2 JULY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 1319 of the Corporations Act 2001 (Cth):
(a)there be dispatched to each ordinary shareholder of the Plaintiff (Scheme Shareholders), on or before 4 July 2014, a document substantially in the form of Exhibit 6 (Supplementary Disclosure).
(b)the Supplementary Disclosure be sent:
(i)in the case of Scheme Shareholders who have nominated an electronic address for the purposes of receiving notices of meeting and proxy forms from the Plaintiff (via t-he on-line "Investor Centre" maintained by Computershare Investor Services Pty Limited), by email to the nominated electronic address of the Scheme Shareholder; and
(ii)otherwise, to each other Scheme Shareholder by hand at, or prepaid post or courier to, the address of that Scheme Shareholder as set out in the register of members of the Plaintiff.
2.There be liberty to apply.
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
BETWEEN: DAVID JONES LIMITED (ABN 75 000 074 573)
Plaintiff
JUDGE:
FARRELL J
DATE:
2 JULY 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
At a hearing on 2 July 2014 I made orders under s 1319 of the Corporations Act 2001 (Corporations Act) pursuant to an application made on that day by the plaintiff (David Jones) in relation to despatch of supplementary disclosure to David Jones shareholders in connection with a Scheme Meeting scheduled to be held…
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- Re David Jones Ltd [No 2] [2014] FCA 720
- Case
- [2014] FCA 720
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CaseChat Overview and Summary
The court was tasked with deciding whether the supplementary disclosure could be effectively and timely despatched to the shareholders, given the new developments and the implications they had for the shareholders' ability to make informed decisions. This required the court to consider the necessity and reasonableness of the requested supplementary disclosure, as well as the impact on the timeline for the scheme meeting and the voting process.
The court found that the additional information required by the shareholders was significant and warranted the despatch of supplementary disclosure. It concluded that the proposed timetable for the scheme meeting and the voting process could accommodate the supplementary disclosure without undue delay. The court's reasoning hinged on the importance of ensuring that shareholders had all relevant information to make informed decisions, balanced against the need to maintain the efficiency and effectiveness of the corporate process. Consequently, the court made the orders sought by David Jones, allowing for the despatch of supplementary disclosure to the shareholders.
The final orders included the deferral of the scheme meeting to 14 July 2014, the despatch of supplementary disclosure to shareholders, and the deferral of the date for determining eligibility to vote at the scheme meeting to 12 July 2014. This decision was aimed at ensuring that shareholders received all necessary information in a timely manner, thereby upholding the principles of informed decision-making and corporate transparency.
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
At a hearing on 2 July 2014 I made orders under s 1319 of the Corporations Act 2001 (Corporations Act) pursuant to an application made on that day by the plaintiff (David Jones) in relation to despatch of supplementary disclosure to David Jones shareholders in connection with a Scheme Meeting scheduled to be held on 14 July 2014. I gave very brief ex tempore reasons and indicated that I would provide expanded written reasons subsequently.BACKGROUND On 22 May 2014 I made orders under s 411(1) for David Jones to convene a Scheme Meeting then proposed to be held on 30 June 2014. I approved despatch of a Scheme Booklet which contained a notice of the Scheme Meeting and explained the proposed Scheme under which Woolworths Holdings Limited (WHL) would acquire all of the shares in David Jones for a consideration of $4 per share: Re David Jones Limited [2014] FCA 530. Words defined in those reasons or in the Scheme Booklet bear the same meaning in these reasons. David Jones’ first application for directions under s 1319 was made on 19 June 2014. David Jones wished to: (1) defer the Scheme Meeting to 14 July 2014; (2) despatch supplementary disclosure to shareholders; and (3) defer the date for determining eligibility to vote at the scheme meeting until 12 July 2014. I made those orders and a letter dated 20 June 2014 was despatched to David Jones shareholders. David Jones took this course after Australian Retail Investments Pty Limited lodged a substantial holding notice on 18 June 2014 confirming that entities associated with Mr Solomon Lew hold 9.89% of David Jones’ issued shares. Entities associated with Mr Lew are involved in a range of activities with a focus on the retailing sector; these include interests in other ASX listed entities. For ease of reference, I will refer to Mr Solomon Lew and entities associated with him as Mr Lew.Country Road On 24 June 2014, WHL announced that it would make a bid for all of the shares in Country Road Limited (Country Road) which it does not already own at a price of $17 per share and that the bid will be conditional (among other things) on the Scheme proposed by David Jones being approved and taking effect (Country Road Bid). Country Road is registered in Australia and its shares are listed for quotation on the ASX. A subsidiary of WHL holds 87.88% and Mr Lew holds 11.8% of the issued shares. WHL made a takeover bid for Country Road in 1997 under which it offered $2 per share. At that time Mr Lew held approximately 10% of the shares in Country Road. He did not accept the offer so WHL could not reach the compulsory acquisition threshold of 90% with the result that WHL could not achieve 100% ownership of Country Road. Since then there have been a number of public disputes between WHL and Mr Lew about the strategic direction of Country Road. Best and final offer statements On 30 June 2014, WHL announced that the offer of $4 per David Jones share is its best and final offer in the absence of a Competing Proposal. On the same day WHL announced that the consideration of $17 under the Country Road Bid is its best and final offer and that, if the condition related to the David Jones Scheme is satisfied, it will waive all other conditions of the Country Road Bid other than the condition concerning Foreign Investment Review Board approval. THE APPLICATION