FEDERAL COURT OF AUSTRALIA
Envestra Limited, in the matter of Envestra Limited (No 2) [2014] FCA 483
Citation: Envestra Limited, in the matter of Envestra Limited (No 2) [2014] FCA 483 Parties: ENVESTRA LIMITED ACN 078 551 685 File number(s): NSD 280 of 2014 Judge(s): YATES J Date of judgment: 9 May 2014 Catchwords: CORPORATIONS – application under s 1319 of the Corporations Act 2001 (Cth) for adjournment of scheme meeting Legislation: Corporations Act 2001 (Cth) ss 1319, 411
Federal Court Rules 2011 (Cth) r 39.05Date of hearing: 9 May 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 19 Counsel for the Plaintiff: Mr RA Dick SC with Mr JA Redwood Solicitor for the Plaintiff: Johnson Winter & Slattery
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 280 of 2014
IN THE MATTER OF ENVESTRA LIMITED ACN 078 551 685
ENVESTRA LIMITED ACN 078 551 685
PlaintiffJUDGE:
YATES J
DATE OF ORDER:
9 MAY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 1319 of the Corporations Act 2001 (Cth), the Scheme Meeting ordered to be held by order 2 of the orders of 7 April 2014 (7 April Orders) to be convened on 13 May 2014 at 10:00 am (Adelaide time) at Riverbank Rooms 1-3, Adelaide Convention Centre, North Terrace, South Australia, be adjourned until 10:00 am on 13 June 2014 .
2.Pursuant to rule 39.05 of the Federal Court Rules, orders 5, 6, 10 and 12 of the 7 April Orders be set aside.
3.The proceedings be stood over until 30 May 2014 at 9:30am before Justice Yates for further directions, including if then appropriate, directions for the holding or conduct of the Scheme Meeting, and such ancillary or consequential directions in relation to the Scheme Meeting as are appropriate.
4.The media release contained in Exhibit C be published to the Australian Stock Exchange Limited on 9 May 2014.
5.The letter to the shareholders of the Plaintiff contained in Exhibit D be dispatched to those shareholders on or before 13 May 2014.
6.The notice to the Plaintiffs’ shareholders contained in Exhibit E be published in each of the Adelaide Advertiser, The Australian and The Australian Financial Review on or before 13 May 2014.
7.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 280 of 2014
IN THE MATTER OF ENVESTRA LIMITED ACN 078 551 685
ENVESTRA LIMITED ACN 078 551 685
PlaintiffJUDGE:
YATES J
DATE:
9 MAY 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)
This is an application under s 1319 of the Corporations Act (2001) (Cth) (the Act). Section 1319 provides that where under the Act the Court orders a meeting to be convened, the Court may, subject to the Act, give such directions with respect to the convening, holding or…
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- AGLC
- Re Envestra Ltd (No 2) [2014] FCA 483
- Case
- [2014] FCA 483
- Decision Date
CaseChat Overview and Summary
The central legal issue before the court was whether the scheme meeting should be adjourned to allow Envestra’s shareholders sufficient time to be informed of the consortium’s proposal before casting their votes. This required consideration of the adequacy of the time frame for shareholders to be informed of the new proposal, the implications of proceeding with the scheme meeting as scheduled, and the appropriate duration of any adjournment. The court also needed to determine if it should exercise its discretion to adjourn the meeting itself or leave the decision to the shareholders.
The court held that the scheme meeting should be adjourned to provide Envestra’s shareholders with adequate time to review and consider the consortium’s proposal. The court found that the scheduled meeting date of 13 May 2014 was insufficient for shareholders to be properly informed, given the proxy deadline of 10 am on Sunday 11 May 2014. The court was concerned that if the meeting proceeded as scheduled, it was likely that the shareholders would not have sufficient information to make an informed decision, potentially leading to a defeat of the scheme due to the significant shareholding of CKI. The court concluded that it was appropriate to exercise its power under section 1319 of the Act to adjourn the meeting itself rather than leaving it to the shareholders. The court set the adjourned date for 10 am on 13 June 2014, finding this period sufficient for the consortium to develop its proposal into a binding offer and for shareholders to be informed of all relevant material.
The court's orders included the adjournment of the scheme meeting to 10 am on 13 June 2014, the setting aside of certain orders made on 7 April 2014, and the standing over of the proceedings until 30 May 2014 for further directions. The court also ordered the publication of a media release, the dispatch of a letter to shareholders, and the publication of a notice to shareholders in specified newspapers. These orders were intended to ensure transparency and proper communication with shareholders regarding the developments and the adjourned scheme meeting.
Orders
Orders of the court
1. Pursuant to section 1319 of the Corporations Act 2001 (Cth), the Scheme Meeting ordered to be held by order 2 of the orders of 7 April 2014 (7 April Orders) to be convened on 13 May 2014 at 10:00 am (Adelaide time) at Riverbank Rooms 1-3, Adelaide Convention Centre, North Terrace, South Australia, be adjourned until 10:00 am on 13 June 2014 .
2. Pursuant to rule 39.05 of the Federal Court Rules, orders 5, 6, 10 and 12 of the 7 April Orders be set aside.
3. The proceedings be stood over until 30 May 2014 at 9:30am before Justice Yates for further directions, including if then appropriate, directions for the holding or conduct of the Scheme Meeting, and such ancillary or consequential directions in relation to the Scheme Meeting as are appropriate.
4. The media release contained in Exhibit C be published to the Australian Stock Exchange Limited on 9 May 2014.
5. The letter to the shareholders of the Plaintiff contained in Exhibit D be dispatched to those shareholders on or before 13 May 2014.
6. The notice to the Plaintiffs’ shareholders contained in Exhibit E be published in each of the Adelaide Advertiser, The Australian and The Australian Financial Review on or before 13 May 2014.
7. These Orders be entered forthwith.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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 developments mean that realistically, the scheme meeting scheduled for 13 May 2014, cannot proceed. Given the proxy deadline of 10 am on Sunday 11 May 2014, under Order 6 of 7 April 2014, there is now insufficient time for Envestra’s participating shareholders to be sufficiently informed of material information concerning the Consortium proposal before submitting their proxies. Consideration In these circumstances, I am satisfied that it is appropriate to exercise the power under s 1319 of the Act to adjourn the scheme meeting. I have considered whether it is appropriate to leave it to Envestra’s participating shareholders to determine whether, in light of the changed circumstances, the meeting already ordered should be adjourned. There is a substantial reason militating against that course. As I have noted, CKI’s shareholding is sufficient to defeat the proposed scheme if the scheme meeting were to be held on 13 May 2014, at a time when the Consortium’s non-binding indicative proposal is plainly unlikely to have been developed into a binding proposal. Indeed, it is not known at the present time whether the Consortium proposal will proceed. Whilst there is no evidence of CKI’s voting intentions if the scheme meeting were to proceed as ordered, I would be blind to reality to think that it would not be at least likely that CKI would vote against the proposed scheme if Envestra’s participating shareholders did not vote in favour of an adjournment, to provide the Consortium the opportunity to develop its proposal. In these circumstances, the better course, it seems to me, is for the Court to exercise the power under s 1319 of the Act to itself adjourn the meeting it has ordered. By taking this course the APA Group proposal, which remains in effect, will be preserved. This then leads to the question of the appropriate period for the adjournment. The evidence before me indicates that a period of at least 21 business days is likely to be required to enable the Consortium proposal to be developed into a binding proposal or be discontinued. This time will allow for the Consortium to complete its due diligence on Envestra. It will then be necessary for the reconstituted Independent Board Committee of Envestra to consider any binding proposal. A supplementary disclosure statement and a supplementary independent expert’s report may then need to be prepared for dispatch to shareholders so that there is sufficient time to consider that material before the scheme meeting. The evidence before me indicates that, at this stage, it is difficult to predict with any precision all of the issues that may eventuate as a result of the Consortium proposal, that may be relevant to determining the appropriate time for adjourning the scheme meeting. Nevertheless, the plaintiff has suggested that the meeting be adjourned to 10 am on 13 June 2014. I am satisfied that the scheme meeting should be adjourned to that time and date. I note that the Australian Securities and Investments Commission (ASIC) has been informed of these new developments, including that Envestra would be applying to the Court for orders in relation to the adjournment of the scheme meeting scheduled for 13 May 2014. The evidence before me shows that, as at 8 May 2014, ASIC had indicated that it did not intend to appear on the application to adjourn the scheme meeting. I have been informed by senior counsel for Envestra today that this indication from ASIC has not changed.