Re Greenstone Resources Ltd; [No 2]
[2024] WASC 206
•6 JUNE 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE GREENSTONE RESOURCES LTD; EX PARTE RE GREENSTONE RESOURCES LTD [No 2] [2024] WASC 206
CORAM: HILL J
HEARD: 5 JUNE 2024
DELIVERED : 5 JUNE 2024
PUBLISHED : 6 JUNE 2024
FILE NO/S: COR 53 of 2024
MATTER: IN THE MATTER OF GREENSTONE RESOURCES LTD
EX PARTE
GREENSTONE RESOURCES LTD
Plaintiff
Catchwords:
Corporations law - Scheme of arrangement - Application for orders approving the scheme under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme
Legislation:
Corporations Act 2001 (Cth) s 411(4)(b), s 411(11), s 411(17)
Result:
Orders made approving scheme
Category: B
Representation:
Counsel:
| Plaintiff | : | J M Healy |
Solicitors:
| Plaintiff | : | Steinepreis Paganin |
Cases referred to in decision:
Re Asaleo Care Limited (No 2) [2021] FCA 636
Re CSG Ltd (No 2) [2020] NSWSC 39
Re Greenstone Resources Ltd [2024] WASC 171
Re International Goldfields Ltd [2004] WASC 112
Re Kingwest Resources Ltd [2023] WASC 190
Re MAC Services Group Ltd [2010] NSWSC 1474
Re National Australia Bank Ltd [2016] VSC 62
Re Ozgrowth Ltd [No 2] [2022] WASC 167
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Wesfarmers Ltd [No 2] [2018] WASC 357
HILL J:
The plaintiff, Greenstone Resources Ltd (Greenstone), applies for orders approving two inter-conditional schemes of arrangement. The background to the application is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing, I made orders for the Scheme meetings to be convened on 31 May 2024 (Orders).
[1] Re Greenstone Resources Ltd [2024] WASC 171 (First Reasons).
Scheme meetings
The Scheme meetings were convened and held on 31 May 2024. At each of the meetings, the resolution was passed by the requisite statutory majorities.
282 shareholders were present at the Share Scheme meeting in person and by proxy. 85.46% of shareholders who voted at the meeting were in favour of the resolution. 96.88% of votes cast on the Share Scheme resolution were cast in favour of the resolution.[2]
[2] Second affidavit of Jonathan Heath Stuart Murray filed 31 May 2024 [24] - [26]; Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-1'.
In respect of the meeting to consider the Option Scheme, 39 optionholders were present at the Option Scheme meeting in person and by proxy. 94.87% of optionholders who voted at the meeting were in favour of the resolution. 99.14% of votes cast on the Option Scheme resolution were cast in favour of the resolution.[3]
[3] Second affidavit of Jonathan Heath Stuart Murray filed 31 May 2024 [24], [27]; Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-1'.
Approval of Schemes
The originating process was listed before me for the second court hearing on 5 June 2024.
In addition to the affidavits relied upon at the first court hearing, Greenstone relied on an additional six affidavits filed prior to the second court hearing. These affidavits were:
(a)an eighth affidavit of Anna Barningham filed 29 May 2024;
(b)two affidavits of Flynn Robert Orman Mitchell, a customer success manager at Automic Pty Ltd (Automic), which maintains the registers of Greenstone's securityholders, filed 31 May 2024;
(c)an affidavit of Lachlan Hunter Wiley Strong, a manager of investment engagement at Automic, filed 31 May 2024;
(d)a second affidavit of Jonathan Heath Stuart Murray, a partner of Steinepreis Paganin and the chairperson of the Scheme Meetings, filed 31 May 2024; and
(e)an affidavit of Stephanie Lauren Angela di Virgilio, a solicitor employed by Steinepreis Paganin, filed 5 June 2024.
These additional affidavits address the matters Greenstone was required to establish at the second court hearing.
Legal principles in respect of the Scheme approval
The approval of the proposed Scheme 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 a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meeting.
At the second court hearing, the court has two tasks:[4]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[5]
(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.
[4] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[5] Re International Goldfields Ltd [2004] WASC 112 [7].
The 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.[6] 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.[7]
[6] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[7] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
The factors that inform the court's discretion whether or not to approve a scheme are:[8]
(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 the Australian Securities and Investments Commission (ASIC) has an objection to the scheme; and
(h)whether the scheme offends public policy.
[8] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
Disposition
Compliance with statutory and procedural requirements
I was and am satisfied, on the basis of the additional affidavits that were filed by Greenstone, that:
(a)a copy of the Orders was lodged with ASIC;[9]
(b)a copy of the Scheme booklet that was approved for distribution by the court was lodged with ASIC and registered on 1 May 2024;[10]
(c)the Scheme booklet was despatched to securityholders in accordance with the Orders;[11]
(d)the Scheme meetings were convened and held on 31 May 2024 in accordance with the Orders;[12]
(f)the Schemes were approved by the requisite statutory majorities;[13]
(g)notice of the second court hearing was given by way of announcement via the Australian Securities Exchange (ASX) on 28 May 2024;[14] and
(h)ASIC informed Greenstone on 4 June 2024, pursuant to s 411(17)(b) of the Act, that it had no objection to the proposed Schemes.[15]
[9] Eighth affidavit of Anna Barningham filed 29 May 2024 [5] - [6], 'AB-1'.
[10] Eighth affidavit of Anna Barningham filed 29 May 2024 [7] - [9], 'AB-2'.
[11] Affidavit of Flynn Robert Orman Mitchell filed 31 May 2024.
[12] Second affidavit of Jonathan Heath Stuart Murray filed 31 May 2024.
[13] Second affidavit of Jonathan Heath Stuart Murray filed 31 May 2024; Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-1'.
[14] Eighth affidavit of Anna Barningham filed 29 May 2024 [11], 'AB-5'.
[15] Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-4'.
Counsel for Greenstone drew my attention to the fact that the poll results were announced after each of the Scheme meetings was closed. Mr Murray was the chairperson at each of the Scheme meetings. At each Scheme meeting, he 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.[16]
[16] Second affidavit of Jonathan Heath Stuart Murray filed 31 May 2024 [19] - [22].
The 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.[17] No issue arises in the present case concerning the manner in which the polls were conducted or announced.
Fairness and reasonableness
[17] Re Kingwest Resources Ltd [2023] WASC 190 [117] - [118]; Re Ozgrowth Ltd [No 2] [2022] WASC 167 [22] - [23]; Re Asaleo Care Limited (No 2) [2021] FCA 636 [26] - [28]; Re CSG Ltd (No 2) [2020] NSWSC 39 [6] - [8]; Re National Australia Bank Ltd [2016] VSC 62 [56]; Re MAC Services Group Ltd [2010] NSWSC 1474.
At 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.
Nothing has occurred since the date of the first hearing to change this view. The securityholders who voted at the Scheme meetings overwhelmingly supported the proposed Schemes, as well as a clear majority of securityholders by number.
No securityholder appeared to oppose the orders sought at the second court hearing. 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
At the first court hearing, counsel for Greenstone drew my attention to a number of matters. These are summarised above in the First Reasons at [35] - [58].
Two further matters were drawn to my attention by counsel in submissions at the second court hearing.
First, the satisfaction of the conditions precedent to the implementation of the Scheme. The remaining conditions precedent (apart from court approval at the second court hearing) were satisfied or waived as evidenced by the certificates put before me.[18]
[18] Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-2', 'SDV-3'.
Second, Greenstone confirmed that communications with shareholders (apart from the Scheme booklet) had occurred between the first court hearing and the second court hearing. The scripts that were used for the outbound calls were in evidence before me.[19] These scripts are consistent with the information in the Scheme booklet. In these circumstances, I am satisfied that there is no evidence before the court which would support any inference being drawn that this campaign compromised the integrity of the voting process.
Full and fair disclosure
[19] Affidavit of Lachlan Hunter Wiley Strong filed 31 May 2024.
At 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.
The additional affidavit evidence filed by Greenstone 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 material information prior to securityholders voting on the Schemes.
Oppression of minorities
There was no evidence that any minority has been oppressed.
Satisfaction of s 411(17) of the Act and ASIC's view
ASIC 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.[20] As a result, the requirements of s 411(17) have been satisfied. In any event, 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.
Public policy
[20] Affidavit of Stephanie Lauren Angela di Virgilio filed 5 June 2024, 'SDV-4'.
There 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
Greenstone sought an 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 Greenstone's constitution as the orders do not effect any change to the constitution. This exemption has become ordinary practice for transactions of this kind.
Conclusion and orders
At 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.
For these reasons, at the conclusion of the hearing on 5 June 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
6 JUNE 2024
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