Re Healthscope Ltd (No 2)

Case [2019] FCA 759

FEDERAL COURT OF AUSTRALIA

Healthscope Limited, in the matter of Healthscope Limited (No 2)

[2019] FCA 759

File number(s): VID 253 of 2019
Judge(s): BEACH J
Date of judgment: 24 May 2019
Catchwords: CORPORATIONS – members’ scheme of arrangement – second court hearing – conditions precedent to scheme –approval of scheme under s 411(4)(b) of Corporations Act 2001 (Cth) – relevance of ss 411(17)(a) and (b), Chapter 6 question – approval granted
Legislation: Corporations Act 2001 (Cth) Ch 6, ss 411(4)(a) and (b),(6),(10),(11),(12),(17), 602
Cases cited:

Fowler v Lindholm (2009) 178 FCR 563

Healthscope Limited, in the matter of Healthscope Limited [2019] FCA 542

In re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213

Re Boart Longyear Ltd (No 2) (2017) 323 FLR 241

Re Equinox Resources Ltd (2004) 49 ACSR 692

Re Matine Ltd (1998) 28 ACSR 268

Re Rusina Mining NL (No 2) (2010) 78 ACSR 615

Date of hearing: 24 May 2019
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 42
Counsel for the Plaintiff: Mr PD Crutchfield QC and Mr BK Holmes
Solicitor for the Plaintiff: Herbert Smith Freehills
Counsel for the Intervener: Mr RJ Boadle
Solicitor for the Intervener: Australian Securities and Investments Commission
Counsel for the Interested Persons: Mr N De Young
Solicitor for the Interested Persons: King & Wood Mallesons

ORDERS

VID 253 of 2019

IN THE MATTER OF HEALTHSCOPE LIMITED
BETWEEN:

HEALTHSCOPE LIMITED ACN 144 840 639

Plaintiff
AND:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Intervener

ANZ HOSPITALS PTY LTD (ACN 631 014 938)

Interested Person

ANZ HOSPITAL TOPCO LIMITED (ACN 631 014 965)

Interested Person

BCP VIG HOLDINGS L.P.

Interested Person

JUDGE:

BEACH J

DATE OF ORDER:

24 MAY 2019

OTHER MATTERS:

A.The Australian Securities and Investments Commission declined to provide a statement in writing in accordance with s 411(17)(b) of the Corporations Act 2001 (Cth).

B.Nevertheless ASIC has no formal objection to the Scheme of Arrangement referred to in this Order.

THE COURT ORDERS THAT:

1.Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the Plaintiff and its members agreed to by the said members at the meeting held on 22 May 2019 (the terms of which are as set out in Annexure A to these orders) be and is hereby approved.

2.Pursuant to s 411(12) of the Act, the Plaintiff be exempted from compliance with s 411(11) of the Act.

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

ANNEXURE A

Scheme of Arrangement
_________________________________________________
[The order entered is available on the Commonwealth Courts Portal, which attaches the Scheme]


REASONS FOR JUDGMENT

BEACH J:

  1. As I said in my reasons concerning the first court hearing (Healthscope Limited, in the matter of Healthscope Limited [2019] FCA 542), Healthscope Limited is a healthcare provider that operates private hospitals in Australia and pathology services across New Zealand and…

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AGLC
Healthscope Limited, in the matter of Healthscope Limited (No 2) [2019] FCA 759
Case
[2019] FCA 759
Decision Date

CaseChat Overview and Summary

In the case of Re Healthscope Ltd (No 2), the matter was before the court to seek approval for a proposed scheme of arrangement between Healthscope Ltd and its members. The court had to determine whether the scheme met the legal requirements for approval under the Corporations Act 2001 (Cth). Specifically, the court needed to assess whether the scheme had a proscribed purpose under section 411(17)(a) and whether the scheme was fair and reasonable to the shareholders, as required by section 411(17)(b). Additionally, the court had to consider the implications of section 411(11) and whether an exemption from its requirements was warranted.

The court found that the scheme did not have a proscribed purpose and that the overwhelming support from the shareholders, the independent expert's opinion on the fairness of the scheme, and the comprehensive disclosure in the transaction booklet were sufficient to approve the scheme. The court also determined that exemption from the requirement to annex the court's orders to the company's constitution under section 411(11) was appropriate because the scheme would not alter the company's constitution or the rights of its shareholders, creditors, or other stakeholders. The court reasoned that the orders would become irrelevant once the scheme was implemented, and Healthscope became a wholly owned subsidiary of Brookfield BidCo.

Consequently, the court granted the orders sought by Healthscope, approving the scheme of arrangement and exempting Healthscope from compliance with section 411(11) of the Corporations Act. The orders were to be entered in accordance with Rule 39.32 of the Federal Court Rules 2011, and the scheme's terms were to be annexed to the court's orders.

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 and its members agreed to by the said members at the meeting held on 22 May 2019 (the terms of which are as set out in Annexure A to these orders) be and is hereby approved.

2. Pursuant to s 411(12) of the Act, the Plaintiff be exempted from compliance with s 411(11) of the Act.

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

ANNEXURE A

Scheme of Arrangement

_________________________________________________

[The order entered is available on the Commonwealth Courts Portal, which attaches the Scheme]

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The position has not changed in this respect since the first court hearing, and I am satisfied that there is no proscribed purpose as described in s 411(17)(a). And as I say, it is well established that the Court should not refuse approval of a scheme of arrangement merely because it could have been effected under Ch 6.Conclusion In summary, I propose to exercise my discretion to approve the Scheme for, inter-alia, the following reasons:(a)the overwhelming support of the Scheme shareholders as reflected in the voting results of the Scheme meeting;(b)the opinion of the independent expert that the Scheme is fair and reasonable and in the best interests of Scheme shareholders;(c)the absence of opposition to the Scheme by any Scheme shareholder; and(d)the comprehensive disclosure in the transaction booklet of the potential benefits and disadvantages of the Scheme. I also propose to grant an exemption from the requirements of s 411(11). Section 411(11) requires, subject to s 411(12), that a copy of the Court’s order approving a scheme of arrangement be annexed to every copy of the company’s constitution issued after the order is made. But s 411(12) allows me to exempt a body from compliance with this provision. In Re Equinox Resources Ltd (2004) 49 ACSR 692, EM Heenan J at [22] indicated that the purpose of s 411(11) was:... to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved. In my view, exemption from compliance with s 411(11) is appropriate given that the Scheme will not alter the constitution of Healthscope or the rights of shareholders, creditors or other persons dealing with the company. Current shareholders are fully informed of the Scheme and will be informed in the event that the Court approves the Scheme. Further, no ongoing purpose will be served by requiring the orders approving the Scheme to be annexed to Healthscope’s constitution. The orders will be irrelevant once the Scheme is implemented and Healthscope becomes a wholly owned subsidiary of Brookfield BidCo. In summary, I will grant the orders sought by Healthscope.

Ratio Decidendi

Legal Principle Established

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