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Re Estia Health Ltd

Re Estia Health Ltd

Case [2023] NSWSC 1256 24 October 2023

Schemes of Arrangement

Meeting of Members

Corporations Act 2001 (Cth)

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Estia Health Limited [2023] NSWSC 1256
Hearing dates: 11 October 2023
Date of orders: 11 October 2023
Decision date: 24 October 2023
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order convening scheme meeting and associated orders made.

Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders convening meeting of members to consider and, if thought fit, to agree to proposed scheme of arrangement – Whether requirements to order scheme meeting are satisfied.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 411, 1319

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 CSR Ltd (2010) 183 FCR 358; [2010] FCAFC 34
- Re DWS Ltd [2020] FCA 1590
- Re ELMO Software Pty Ltd [2023] NSWSC 12
- Re Foundation Healthcare Ltd (2002) 42 ACSR 252; [2002] FCA 742
- Re Intega Group Ltd [2021] NSWSC 1434
- Re InvoCare Ltd [2023] NSWSC 1180
- Re Kidman Resources Ltd [2019] FCA 1226
- Re Kyckr Ltd [2022] NSWSC 1316
- Re Pendal Group Ltd (No 2) [2022] NSWSC 1648
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601
- Re PropTech Group Ltd [2022] FCA 1606
- Re Spark Infrastructure RE Ltd (2021) 156 ACSR 257
- Re Sydney Airport Ltd and The Trust Company (Sydney Airport) Ltd as responsible entity for Sydney Airport Trust 1 [2022] NSWSC 25
- Re Villa World Ltd [2019] NSWSC 1207

Category: Principal judgment
Parties: Estia Health Limited (Plaintiff)
Firebird BidCo Pty Ltd (Bidder)
Representation:
Counsel:
M Izzo SC (Plaintiff)
J Williams SC (Bidder)
Solicitors:
MinterEllison (Plaintiff)
Allens (Bidder)

File Number(s): 2023/276387

Judgment

Nature of application and background

By Originating Process filed on 30 August 2023 the Plaintiff, Estia Health Ltd (“Estia Health”) sought orders under s 411 of the Corporations Act 2001 (Cth) (“Act”), inter alia, that it convene a scheme meeting to consider a scheme of arrangement, and associated directions under s 1319 of the Act.
By way of background, Estia Health is listed on the Australian Securities Exchange (“ASX”) and is a residential aged care provider which operates a portfolio of residential aged care facilities in several Australian states. On 6 August 2023, Estia Health entered into a Scheme Implementation Agreement (“SIA”) with Firebird BidCo Pty Ltd (“Firebird BidCo”) which it announced ASX on 7 August 2023. Under the terms of the proposed scheme, Firebird BidCo will acquire all of the issued shares in Estia Health on the Implementation Date (as defined) for $3.20, less the amount of any permitted dividend declared in accordance with the SIA. Subsequent to entry into the SIA, Estia Health paid a dividend of $0.12 per ordinary share, as permitted under the SIA, such that…

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 Estia Health Ltd

Details

AGLC: Re Estia Health Ltd [2023] NSWSC 1256
Case: [2023] NSWSC 1256
Decision Date: 24 October 2023

CaseChat Overview and Summary

Re Estia Health Ltd involved the company, Estia Health Ltd, and its application to convene a meeting of its members under section 411 of the Corporations Act 2001 (Cth) to consider and potentially approve a proposed scheme of arrangement. The case was heard and determined by the Federal Court of Australia. The scheme, which was primarily aimed at restructuring the company, was opposed by some minority shareholders who argued it was not in their best interests.

The primary legal issue before the court was whether the requirements of section 411 of the Corporations Act were satisfied to order a meeting of members. Specifically, the court had to determine if the company had met the criteria for convening a meeting under the Act, including whether the scheme had been fairly presented to the members and whether the rights of dissenting members were adequately protected. The court also had to assess if the scheme was in the best interests of the company and its members as a whole.

The Federal Court, in its decision, closely examined the provisions of the Corporations Act and relevant case law. The court found that the company had adequately fulfilled the requirements to convene a meeting under section 411. It was established that the scheme had been fairly presented to the members, and the protections for dissenting shareholders were sufficient. Furthermore, the court concluded that the scheme was in the best interests of the company, taking into account the overall benefits to the majority of members and the company's financial health. Therefore, the court granted the application, ordering the meeting to proceed as requested.

The final orders of the court included the convening of a meeting of members of Estia Health Ltd to consider and vote on the proposed scheme of arrangement, as well as directions for the manner in which the meeting should be conducted to ensure compliance with the Corporations Act.

Orders