Re Decmil Group Ltd; [No 2]
[2024] WASC 293
•15 AUGUST 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE DECMIL GROUP LTD; EX PARTE DECMIL GROUP LTD [No 2] [2024] WASC 293
CORAM: HILL J
HEARD: 5 AUGUST 2024
DELIVERED : 5 AUGUST 2024
PUBLISHED : 15 AUGUST 2024
FILE NO/S: COR 77 of 2024
MATTER: IN THE MATTER OF DECMIL GROUP LTD
EX PARTE
DECMIL GROUP LTD
Plaintiff
MACMAHON HOLDINGS LTD
Interested Party
Catchwords:
Corporations - Schemes of arrangement - Application for orders approving the schemes under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving schemes
Legislation:
Corporations Act 2001 (Cth) s 411(4)(b), s 411(6), s 411(11), s 411(17)
Result:
Orders made approving schemes
Category: B
Representation:
Counsel:
Plaintiff : J M Healy Interested Party : C E McKay Solicitors:
Plaintiff : Steinepreis Paganin Interested Party : HWL Ebsworth Cases referred to in decision:
Re Decmil Group Ltd; Ex parte Decmil Group Ltd [2024] WASC 243
Re International Goldfields Ltd [2004] WASC 112
Re MAC Services Group Ltd [2010] NSWSC 1474
Re National Australia Bank Ltd [2016] VSC 62
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Wesfarmers Ltd [No 2] [2018] WASC 357
HILL J:
1The plaintiff, Decmil Group Limited (Decmil), applies for orders approving two inter-conditional schemes of arrangement (Schemes). The background to the matter is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing on 24 June 2024, I made orders for the Scheme meetings to be convened on 31 July 2024 (Orders).
[1] Re Decmil Group Ltd; Ex parte Decmil Group Ltd [2024] WASC 243 (First Reasons).
Scheme meetings
2The Share Scheme meeting and RCPS Scheme meeting were convened and held on 31 July 2024. At the meetings, the resolutions were passed by the requisite statutory majorities.
3377 shareholders were present at the Share Scheme meeting in person and by proxy.[2] 89.12% of shareholders who voted at the meeting were in favour of the Share Scheme.[3] 98.83% of votes cast on the Share Scheme resolution were cast in favour of the resolution.[4]
[2] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
[3] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
[4] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
4In relation to the RCPS meeting, 179 RCPS holders were present in person and by proxy.[5] 96.02% of RCPS holders who voted at the meeting were in favour of the RCPS Scheme.[6] 98.74% of votes cast on the RCPS Scheme resolution were cast in favour of the resolution.[7]
[5] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
[6] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
[7] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
Approval of Schemes
5The originating process was listed before me for the second court hearing on 5 August 2024.
6In addition to the affidavits relied upon at the first court hearing, Decmil relied on an additional seven affidavits filed prior to the second court hearing. These were:
(a)an affidavit of Benjamin John Rogers, a solicitor at Steinepreis Paganin, the solicitors for Decmil, filed 1 August 2024;
(b)an affidavit of Danielle Maree Janette Petch, a project coordinator at Computershare Investor Services Pty Ltd (Computershare), filed 1 August 2024;
(c)an affidavit of Nicole Brooke Lewis, a relationship manager at Computershare, filed 1 August 2024;
(d)an affidavit of Pia Melanie Drummond, a partner at Steinepreis Paganin, filed 1 August 2024;
(e)an affidavit of Michael John Finnegan, the chief executive officer and managing director of Macmahon Holdings Ltd (Macmahon), filed 2 August 2024;
(f)an affidavit of Simone Basso, a solicitor at HWL Ebsworth, the solicitors for Macmahon, filed 2 August 2024; and
(g)an affidavit of James Patrick McAuliffe, a senior associate at Steinepreis Paganin, filed 5 August 2024.
7These additional affidavits address the matters Decmil was required to establish at the second court hearing.
Legal principles in respect of the Scheme approvals
8The 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 schemes of arrangement. The second stage is the approval of the Schemes by the requisite statutory majorities, which occurred at the Scheme meetings.
9At the second court hearing, the court has two tasks:[8]
[8] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[9]
(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.
[9] Re International Goldfields Ltd [2004] WASC 112 [7].
10The court has a discretion to approve a scheme under s 411(4)(b) of the Act 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.[10] 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.[11]
[10] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[11] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
11The factors that inform the court's discretion whether or not to approve a scheme are:[12]
(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.
[12] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
Disposition
Compliance with statutory and procedural requirements
12I was and am satisfied, on the basis of the additional affidavits that were filed by Decmil, that:
(a)a copy of the Orders was lodged with ASIC on 24 June 2024;[13]
(b)a copy of the Scheme booklet that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 25 June 2024;[14]
(c)the Scheme booklet and applicable proxy forms were despatched to securityholders in accordance with the Orders;
(d)the Scheme meetings were convened and held on 31 July 2024 in accordance with the Orders;[15]
(e)the Schemes were approved by the requisite statutory majorities;[16]
(f)notice of the second court hearing was given by way of an ASX announcement, which was released by Decmil and Macmahon on 26 July 2024;[17] and
(g)ASIC informed Decmil on 2 August 2024, pursuant to s 411(17)(b) of the Act, that it has no objection to the proposed Schemes.[18]
[13]Affidavit of Benjamin John Rogers filed 1 August 2024 [5].
[14]Affidavit of Benjamin John Rogers filed 1 August 2024 [7], 'BJR-16', 'BJR-17'.
[15] Affidavit of Pia Melanie Drummond filed 1 August 2024 [6].
[16] Affidavit of Pia Melanie Drummond filed 1 August 2024 [23].
[17] Affidavit of James McAuliffe filed 5 August 2024, 'JPM-11'.
[18] Affidavit of James McAuliffe filed 5 August 2024, 'JPM-15'.
13Counsel for Decmil drew my attention to the fact that the poll results were announced after each of the Scheme meetings was closed. At each Scheme meeting, the chairperson advised attendees that the poll results would be announced to the ASX platform shortly after the meetings once the votes were counted. The meetings were then declared closed.
14The approach of a chairperson advising the meeting that results will be the subject of an announcement pursuant to s 251AA of the Act, following completion of counting of the poll and after the meeting has been formally closed, has been approved by the courts on numerous occasions.[19] No issue arises in the present case concerning the manner in which the polls were conducted or announced.
[19] Re MAC Services Group Ltd [2010] NSWSC 1474; Re National Australia Bank Ltd [2016] VSC 62 [56].
15Accordingly, all statutory pre-conditions have been met.
Good faith and proper purpose
16I am satisfied on the evidence filed by Decmil that its members voted in good faith and for a proper purpose. The proposed Schemes are to effect the acquisition of shares and does not involve any novel treatment of rights. No-one appeared at the second court hearing to object to the approval of the proposed Schemes.
Fairness and reasonableness
17At the first court hearing, based on the evidence before the court, I was satisfied the proposed Schemes were of such a nature that there was no apparent reason that they should not receive approval if the requisite voting majorities were achieved at the Scheme meetings.
18Nothing has occurred since the date of the first hearing to change this view. The securityholders who voted at the meetings overwhelmingly supported the proposed Schemes.
19No securityholder appeared at the second court hearing to oppose the orders sought by Decmil. I was and am satisfied that the proposed Schemes are fair and reasonable and are Schemes that sensible businesspeople might consider to be of benefit to securityholders.
All relevant matters brought to the court's attention
20At the first court hearing, counsel for the plaintiff drew my attention to a number of matters which are summarised at [29] - [54] of the First Reasons.
21Two further matters were drawn to my attention by counsel at the second court hearing and in the submissions filed for this hearing.
22First, on 1 July 2024, external administrators were appointed to a significant client of Macmahon. The evidence before the court is that both Decmil and Macmahon considered whether this was required to be the subject of supplementary disclosure to securityholders and determined it was not. This was because this had no material impact on Macmahon's funding of the consideration for the Schemes.[20]
[20] Affidavit of Michael John Finnegan filed [14], 'MJF-6'.
23Second, all remaining conditions precedent (apart from court approval at the second court hearing) have been satisfied or waived.[21]
[21] Affidavit of James Patrick McAuliffe filed 5 August 2024, 'JPM-13', 'JPM-14'.
Full and fair disclosure
24At the first court hearing, based on the evidence before the court, I was satisfied the draft Scheme booklet would provide full and fair disclosure to securityholders.
25The additional affidavit evidence filed by Decmil establishes the Scheme booklet despatched to securityholders was in the form approved for distribution by the court. Nothing has arisen to suggest there has not been full and fair disclosure of all information which was material to the decision of securityholders prior to them voting on the Schemes.
Oppression of minorities
26There was no evidence that any minority has been oppressed.
Satisfaction of s 411(17) of the Act and ASIC's view
27ASIC 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,[22] which satisfies the requirements of s 411(17). Having regard to the nature of the proposed transaction, it cannot be said the Schemes were proposed to avoid the operation of ch 6 of the Act.
[22] Affidavit of James Patrick McAuliffe filed 5 August 2024, 'JPM-15'.
Public policy
28There 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.
Exemption from s 411(11) of the Act
29Decmil seeks 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 Decmil's constitution as the orders do not effect any change to the constitution. This exemption has become ordinary practice for transactions of this kind.
Amendment of schemes
30Decmil drew the court's attention to minor typographical errors in some of the cross-referencing in the proposed Schemes. In seeking orders approving the Schemes, counsel for Decmil accepted that it was appropriate for orders to be made under s 411(6) of the Act approving the Schemes with these minor amendments addressed.
31I was and am satisfied that these errors were minor typographical errors that could not have caused any confusion to securityholders. In the circumstances of this case, I was and am satisfied that it was appropriate to approve the Schemes subject to these amendments.
Conclusion and orders
32At the second court hearing before me, I was satisfied the substantive and procedural requirements under s 411(4) of the Act had been satisfied and that I should approve the proposed Schemes.
33For these reasons, at the conclusion of the hearing on 5 August 2024, 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.
JN
Associate to the Honourable Justice Hill
15 AUGUST 2024
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