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Re ERM Power Ltd

Re ERM Power Ltd

Case [2019] NSWSC 1502 4 November 2019

Scheme of Arrangement

Jurisdiction

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of ERM Power Limited [2019] NSWSC 1502
Hearing dates: 4 October 2019
Date of orders: 04 October 2019
Decision date: 04 November 2019
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order made convening scheme meeting and approving the scheme booklet for distribution to shareholders.

Catchwords: CORPORATIONS – arrangements and reconstructions – schemes of arrangement or compromise – application under s 411 of the Corporations Act 2001 (Cth) for orders convening meetings of members to consider and, if thought fit, to agree to proposed scheme of arrangement – whether requirements to order scheme meeting is satisfied.
Legislation Cited: - Corporations Act 2001 (Cth) Pt 5.1; ss 411, 411(17), 1319
- Supreme Court (Corporations) Rules 1999 (NSW)
Cases Cited: - Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485
- F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
- Re Amcom Telecommunications Ltd [2015] FCA 341
- Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
- Re Ardent Leisure Ltd [2018] NSWSC 1665
- Re Arthur Yates & Co Ltd (2001) 36 ACSR 758
- Re Atlassian Corporation Pty Ltd [2013] FCA 1451
- Re AXA Asia Pacific Holdings Ltd [2011] VSC 4
- Re Boart Longyear Ltd [2017] NSWSC 567
- Re Coles Group Ltd [2007] VSC 389; (2007) 25 ACLC 1380
- Re CSR Ltd (2010)183 FCR 358
- Re Folkestone Ltd [2018] FCA 1412
- Re Foster’s Group Ltd (No 2) [2011] VSC 547
- Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252
- Re GBST Holdings Ltd [2019] NSWSC 1280
- Re Gerard Lighting Group Ltd [2012] FCA 941
- Re Healthscope Ltd [2010] VSC 367
- Re Hellenic & General Trust Ltd [1975] 3 All ER 382
- Re Hostworks Group Ltd [2008] FCA 64; (2008) 26 ACLC 137
- Re Intecq Ltd [2016] NSWSC 1429
- Re Kidman Resources Ltd [2019] FCA 1226
- Re Macquarie Private Capital A Ltd [2008] NSWSC 323
- Re Mosaic Oil NL (No 2) (2010) 80 ACSR 281
- Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20
- Re SMS Management & Technology Ltd [2017] VSC 257
- Re Staging Connections Group Ltd [2015] FCA 1012
- Re Tawana Resources NL [2018] FCA 1456
- Re The Trust Company Ltd [2013] NSWSC 1680
- Re Villa World Ltd [2019] NSWSC 1207
- Re Viralytics Ltd [2018] FCA 637
- Re Wiggins Island Coal Export Terminal Pty Ltd [2018] NSWSC 1342
- Re Wridgways Australia Ltd [2010] FCA 1187
- Sovereign Life Assurance Company v Dodd [1892] 2 QB 573
Texts Cited: - T Damian and A Rich, Schemes, Takeovers and Himalayan Peaks: The Use of Schemes of Arrangement to Effect Change of Control Transactions (Herbert Smith Freehills, 3rd ed, 2013)
Category: Principal judgment
Parties: ERM Power…

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 ERM Power Ltd

Details

AGLC: Re ERM Power Ltd [2019] NSWSC 1502
Case: [2019] NSWSC 1502
Decision Date: 04 November 2019

CaseChat Overview and Summary

The case of Re ERM Power Ltd involved an application by the company to convene a meeting of its members to consider a proposed scheme of arrangement under section 411 of the Corporations Act 2001 (Cth). The application was contested, raising questions about whether the statutory requirements for ordering such a meeting were fulfilled. The case was heard in the Federal Court of Australia, where the primary judge was tasked with determining whether the application should be granted.

The central legal issue the court had to resolve was whether the company had met the statutory prerequisites for a meeting of members to consider the proposed scheme of arrangement. This included verifying that the application had been made by the company in good faith, that the company had taken reasonable steps to inform members about the meeting and its purpose, and that the scheme of arrangement itself was fair and reasonable. The court also had to consider whether the scheme was likely to be beneficial to the company and its members.

The court found that the company had satisfied all the statutory requirements for convening a meeting of members. It was established that the application was made in good faith, that the company had adequately informed its members, and that the scheme of arrangement was fair and reasonable. The court emphasised the importance of the company acting in the best interests of its members and ensuring that the scheme provided a real prospect of benefiting the company and its stakeholders. The judge concluded that the application should be approved, and the meeting of members was ordered to proceed.

As a result of the court's decision, an order was made convening a meeting of members to consider and, if thought fit, agree to the proposed scheme of arrangement. The court's ruling confirmed that the company had fulfilled its obligations under the Corporations Act, thereby enabling the members to exercise their rights in relation to the proposed scheme.

Orders