Re Excelsior Gold Limited

Case [2018] FCA 2064

FEDERAL COURT OF AUSTRALIA

Excelsior Gold Limited, in the matter of Excelsior Gold Limited [2018] FCA 2064

File number: WAD 333 of 2018
Judge: MCKERRACHER J
Date of judgment: 21 September 2018
Date of publication of reasons: 19 December 2018
Catchwords:

CORPORATIONS – scheme of arrangement – first court hearing – application to convene a members’ meeting pursuant to s 411(1) of the Corporations Act 2001 (Cth) – orders made convening the meeting

CORPORATIONS – scheme of arrangement – second court hearing – application for approval – scheme approved 

Legislation:

Corporations Act 2001 (Cth) ss 9, 411, 411(1), 411(2), 411(2)(a), 411(2)(b), 411(3), 411(4)(a), 411(4)(a)(ii), 411(4)(b), 411(6), 411(11), 411(12), 411(17), 411(17)(b), 412, 636, 710, 711, 712, 713, 1319, 1322, 1322(2), Pt 5.1

Property Law Act 1969 (WA) s 11

Cases cited:

Alinta Limited (ABN 11 119 985 590), in the matter of Alinta Limited (ABN 11 119 985 590) No 3 [2007] FCA 1416

Anatolia Energy Limited, in the matter of Anatolia Energy Limited [2015] FCA 1134

Re APN News & Media Ltd (2007) 62 ACSR 400

Re Coles Group Ltd (No 2) (2007) 215 FLR 411

Re CSR Ltd (2010) 183 FCR 358

Re Dorman Long & Co Ltd [1934] Ch 635

EcoBiotics Limited, in the matter of EcoBiotics Limited (No 2) [2017] FCA 1031

First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78

FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69

G8 Communications Ltd, in the matter of G8 Communications Ltd [2016] FCA 297

In the matter of Foundation Healthcare Limited ACN 002 611 501 (2002) 43 ACSR 680

Re International Goldfields Ltd [2004] WASC 112

iProperty Group Limited, in the matter of iProperty Group Limited (No 2) [2016] FCA 36

Re Macquarie Private Capital A Ltd [2008] NSWSC 323

Mantra Group Limited, in the matter of Mantra Group Limited [2018] FCA 510

Mosaic Oil NL, in the matter of Mosaic Oil NL (No 2) [2010] FCA 1186

Re NRMA Ltd (No 1) (2000) 156 FLR 349

Opus Group Limited, in the matter of Opus Group Limited (No 2) [2018] FCA 1413

Programmed Maintenance Services Limited, in the matter of [2017] FCA 1265

Seven Network Limited (ACN 052 816 789), in the matter of Seven Network Limited [2010] FCA 220

Seven Network Limited, in the matter of Seven Network Limited (No 3) (2010) 267 ALR 583

Signature Gold Ltd, in the matter of Signature Gold Ltd [2017] FCA 1481

Sovereign Life Assurance Company v Dodd [1892] 2 QB 573

SRG Limited, in the matter of SRG Limited [2018] FCA 1092

Re Stockbridge Ltd (1993) 9 ACSR 637

Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771

Re Tatts Group Ltd (No 2) [2017] VSC 770

TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833

Date of hearing: 10 August and 21 September 2018
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate…

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AGLC
Re Excelsior Gold Limited [2018] FCA 2064
Case
[2018] FCA 2064
Decision Date

CaseChat Overview and Summary

In the case of Re Excelsior Gold Limited, Excelsior, a company, sought court approval for a scheme of arrangement involving its members. The scheme was proposed to be implemented through a meeting of the company's members, in accordance with section 411 of the Corporations Act 2001 (Cth). The court was required to determine whether the necessary legal and procedural conditions for convening a members' meeting and approving the scheme were met.

The central legal issue the court had to decide was whether the requirements under section 411(1) of the Corporations Act were satisfied for the approval of the scheme. This included verifying that the scheme was an arrangement concerning the rights and obligations of the company and its members, that Excelsior was a Part 5.1 body, that the members were properly classified, and that the explanatory statement provided adequate disclosure and contained the prescribed information. The court also had to consider whether the Australian Securities and Investments Commission (ASIC) had been given an opportunity to review the scheme and whether there were any objections that would impede the scheme's approval.

The court concluded that all the necessary conditions were fulfilled. The scheme was deemed an arrangement concerning the company and its members, Excelsior qualified as a Part 5.1 body, the members were appropriately classified, and the explanatory statement met the statutory requirements. ASIC had been given a reasonable opportunity to review the scheme, and no objections had been raised. Consequently, the court approved the scheme of arrangement between Excelsior and its members, as well as exempting Excelsior from compliance with certain procedural requirements under the Act.

The final orders of the court included the approval of the scheme of arrangement, the exemption of Excelsior from certain compliance obligations, and a directive for Excelsior to lodge a copy of the orders with ASIC. These orders effectively facilitated the implementation of the scheme, enabling Excelsior to proceed with the proposed arrangement involving its members.

Orders

Orders of the court

1. Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) the scheme of arrangement between the plaintiff (Excelsior) and its members (other than Spitfire Materials Limited), in the form contained in Annexure C of the final scheme booklet which is part of Annexure ZF-02 to the fourth affidavit of Zachary Tyrone Friend sworn on 18 September 2018, is approved.

2. Pursuant to s 411(12) of the Act, Excelsior is exempted from compliance with s 411(11) of the Act, in relation to the scheme of arrangement referred to in order 1.

3. Excelsior is to lodge an office copy of these orders with Australian Securities and Investments Commission as soon as practicable.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Otherwise, the only amendments sought to the proposed orders concerned relisting the matter for a subsequent hearing and a small amendment to the dispatch date, which still preserves sufficient time for notification. Conclusion In light of these considerations, I was satisfied that each of the matters relevant to an order convening a scheme meeting under s 411 was addressed and that it was appropriate to make the orders on 10 August 2018 sought by Excelsior (subject to the amendments identified above), including those relating to the convening of the meeting, approving the Scheme Booklet for distribution and the conduct of the scheme meeting.THE SCHEME MEETING Following the Court’s orders on 10 August 2018, relevantly providing for Excelsior to convene a meeting of members to consider and, if thought fit, agree to the Scheme, the Scheme Meeting was held and the Scheme was passed. At the Scheme Meeting on 19 September 2018, the requisite majorities for the purposes of s 411(4)(a)(ii) of the Act were satisfied, namely: (a)97.69% of Shareholders present and voting (in person or proxy) voted in favour of the Scheme; and (b)99.65% of the votes cast on the resolution at the Scheme Meeting were cast in favour of the Scheme. SECOND APPLICATION TO THE COURT At the second court hearing on 21 September 2018, an application under s 411(4)(b) of the Act was made for orders that the Scheme between Excelsior and its members be approved. Specifically, Excelsior sought orders in the following terms:1.Pursuant to s 411(4)(b) of the [Act] the scheme of arrangement between the plaintiff (Excelsior) and its members (other than Spitfire Materials Limited), in the form contained in Annexure C of the final scheme booklet which is part of Annexure ZF-02 to the fourth affidavit of Zachary Tyrone Friend sworn on 18 September 2018, is approved. 2.Pursuant to s 411(12) of the Act, Excelsior is exempted from compliance with s 411(11) of the Act, in relation to the scheme of arrangement referred to in order 1. 3Excelsior is to lodge an office copy of these orders with Australian Securities and Investments Commission as soon as practicable. At the second court hearing I made the orders sought for the reasons that now follow.Materials before the Court In addition to the affidavits relied upon at the first court hearing, the following material was relied upon by Excelsior at the second court hearing: (a)the affidavit of Suzanne Thelma Zollo affirmed 13 September 2018 (Zollo Affidavit) explaining the printing, collation and dispatch procedure for Scheme Booklets and proxy forms; (b)the affidavit of Jarrod Michael Egan sworn 14 September 2018 (Egan Affidavit) as to printing of the Scheme Booklet;(c)a further affidavit of Zachary Tyrone Friend, a solicitor of Steinepreis Paganin sworn 18 September 2018 (Fourth Friend Affidavit) which confirms that a copy of the extracted Meeting Orders and the Scheme Booklet approved by the Court on 10 August 2018 were lodged with ASIC;(d)the affidavit of Amanda Grace Sparks, the Company Secretary of Excelsior, sworn 19 September 2018 (Sparks Affidavit) that provides evidence of the receipt of proxy forms from Excelsior Shareholders prior to the Scheme Meeting and that Excelsior has placed an advertisement in The Australian newspaper of the second court hearing; (e)the affidavit of Chantell Anne Randall of Computershare Investor Services Pty Limited sworn 19 September 2018 (Randall Affidavit) which gives evidence as to the maintenance of the share register and arranging printing and dispatch of the Scheme Booklet; (f)the affidavit of Nicole Brooke Lewis of Computershare Investor Services Pty Limited sworn 19 September 2018 (Lewis Affidavit) which gives evidence as to the receipt of proxy forms and the conduct of the Scheme Meeting in her capacity as returning officer;(g)a further affidavit of David Frank Hatch, the Non-Executive Chairman of Excelsior and the Scheme Meeting Chairman, sworn 19 September 2018 (Second Hatch Affidavit), which demonstrates that the Scheme Meeting was held in accordance with the Act, Meeting Orders and constitution of Excelsior and that statutory majorities on the resolution to approve the Scheme were obtained; and(h)a final affidavit of Zachary Tyrone Friend (Fifth Friend Affidavit), sworn on 21 September 2018 and filed shortly prior to the second hearing, which confirmed that all conditions precedent have been waived or satisfied, that ASIC has given a statement in writing pursuant to section 411(17)(b) of the Act and that no objections to the scheme have been raised. The Court’s jurisdiction

Ratio Decidendi

Legal Principle Established

Nonetheless, it is relatively settled that this Court should order the convening of the Scheme Meeting and approve the dispatch of the Scheme Booklet (explanatory statement) if satisfied of the following matters:(a)The Scheme is an arrangement in respect of which the Court may order a meeting of the members or creditors: s 411(1) of the Act. That is: (i)the Scheme is an arrangement; (ii)Excelsior is a Part 5.1 Body; (iii)the Scheme participants are members or creditors of Excelsior; and (iv)the Scheme Meeting will be convened between members of the same class.(b)ASIC has had a reasonable opportunity to: (i)examine the terms of the Scheme and explanatory statement; and (ii)make submissions to the Court in relation thereto: s 411(2)(b) of the Act.(c)The explanatory statement:(i)provides adequate disclosure: s 412(1)(a)(i) of the Act; and(ii)contains the prescribed information: s 412(1)(a)(ii) of the Act, reg 5.1.01 and Sch 8 cl 8301- 8310 of the Corporations Regulations.(d)The procedural requirements of the Federal Court (Corporations) Rules 2000 (Cth) have been met.(e)There is no apparent reason why the Scheme should not, in due course, receive the Court’s approval if the necessary majority of member’s votes is achieved.See, for example, Re NRMA Ltd (No 1) (2000) 156 FLR 349 per Santow J (at [3] and [14]-[41]); Re CSR Ltd (at [12]); Re Anatolia (at [9]); Re Mantra Group (at [16]) and Re SRG Limited (at [11]).Principal matters – s 411(1) members’ schemeArrangement The word ‘arrangement’ is of wide import. As was said in Re NRMA per Santow J (at [20]):Generally speaking, unless the arrangement is ultra vires the company or seeks to deal with a matter for which a special procedure is laid down by the Corporations Law or to evade a restriction imposed by the Corporations Law, almost any arrangement otherwise legal which touches or concerns the rights and obligations of the company or its members or creditors, and which is properly proposed, may come under s 411 … It is not controversial that the proposal before the Court is an arrangement.Pt 5.1 body Section 411 of the Act confers jurisdiction on the Court in respect of a Pt 5.1 body. The term ‘Part 5.1 body’ is defined in s 9 of the Act to mean, relevantly, a company. Excelsior is a company.Members The term ‘member’ is defined in s 9 to mean, in relation to a company, a person who is a member under s 231. Broadly, a person is a member of a company if they are a member of the company on its registration, or agree to become a member of the company after its registration and their name is entered on the register of members. The Excelsior Shareholders are members of Excelsior.Classes An arrangement to which s 411(1) applies is one between a company and its members or creditors or any class of them. It is only such an arrangement to which the Court may grant its approval pursuant to s 411(6). Section 411 does not define the term ‘class’. However, in Sovereign Life Assurance Company v Dodd [1892] 2 QB 573, Bowen LJ said (at 583) that the term ought to be given such a meaning:… as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest.See too First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78 per Bathurst CJ (at [77]-[81]) (with whom Beazley and Leeming JA agreed).