Re Mitchell Communication Group (No. 2) - [2010] VSC 534

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST E
No. 4812 of 2010

IN THE MATTER of MITCHELL COMMUNICATION GROUP (ABN 59 088 110 141)

THE APPLICATION OF
MITCHELL COMMUNICATION GROUP (ABN 59 088 110 141)

Plaintiff

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JUDGE:	Davies J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 October 2010
DATE OF JUDGMENT:	29 October 2010 (delivered ex tempore, revised 23 November 2010)
CASE MAY BE CITED AS:	Re Mitchell Communication Group (No. 2)
MEDIUM NEUTRAL CITATION:	[2010] VSC 534

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CORPORATIONS – Schemes of arrangement – Approval of scheme – Discretion – Notice of meeting – Electronic notification valid – Shareholders in United States of America – Registration requirements of the United States securities legislation – Corporations Act 2001 (Cth) ss 411 (4), 411 (11), 411 (12), 411 (17); s 249J (3)(a)(c); Securities Act of 1933 (US) s 3(a)(10).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P.D. Crutchfield SC with Mr C.M. Archibald	Mallesons Stephen Jaques
For the Aegis Group PLC	Mr M.N. Connock SC	Freehills

HER HONOUR:

The applicant, Mitchell Communication Ltd Ltd (“Mitchell”), seeks an order approving the scheme of arrangement that was agreed to by its members at a meeting called for that purpose on 25 October 2010. The scheme, if approved, will give effect to a proposed merger between Mitchell and Aegis Group plc (“Aegis”). The scheme involves the acquisition of all the shares in Mitchell by Aegis.

On 17 September 2010 I ordered that Mitchell convene a meeting of its shareholders to consider, and if thought fit, to approve the proposed scheme.[1] The scheme meeting was held on 25 October 2010. On 27 October 2010 Efthim AsJ made orders pursuant to r 16.6 of the Supreme Court (Corporations) Rules 2003 that the meeting was duly convened and held in accordance with the convening orders, save for an irregularity, and that the resolution considered at the meeting was duly passed by a majority in numbers of the members of Mitchell present either in person or by proxy and by more than 75% of the votes cast on the resolution. Efthim AsJ made a declaration that there was an irregularity in the convening of the meeting by sending a proxy form to 52 shareholders by electronic means as they had elected, instead of by post as specified in the convening orders. On 22 October 2010 a notice advertising the second hearing was published in the Australian Financial review, in accordance with the convening orders. The materials sent to shareholders were lodged with ASIC and the scheme booklet was registered. ASIC has stated, for the purposes of s 411(17)(b) of the Corporations Act 2001 (Cth) (“the Act”) that it has no objection to the scheme.
[1]Re Mitchell Communication Group [2010] VSC 423 (Unreported, Davies J, 17 September 2010); see also Re Healthscope Limited [2010] VSC 367 (Unreported, Davies J, 3 September 2010).

The implementation of the scheme is conditional upon a number of conditions precedent…

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 Mitchell Communication Group (No. 2)

Details

AGLC: Re Mitchell Communication Group (No. 2) [2010] VSC 534
Case: [2010] VSC 534
Decision Date: 29 October 2010 (delivered ex tempore, revised 23 November 2010)

CaseChat Overview and Summary

In the case of Re Mitchell Communication Group (No. 2), the primary issue before the court was whether the shareholders of Mitchell Communication Group, who were located in the United States of America, were appropriately notified of a meeting to vote on a proposed scheme of arrangement under the Corporations Act 2001 (Cth). The court was required to determine if electronic notification, as provided, was compliant with both Australian and United States securities legislation.

The legal issues at the heart of this case involved the interpretation and application of various sections of the Corporations Act 2001 (Cth), particularly ss 411 (4), 411 (11), 411 (12), and 411 (17), alongside s 249J (3)(a)(c), in conjunction with the registration requirements under the United States Securities Act of 1933, specifically s 3(a)(10). The court needed to assess whether the scheme of arrangement could be approved despite the challenges in notifying the overseas shareholders, and whether the electronic notification method met the necessary statutory standards.

The court deliberated on the validity of the electronic notification method, considering both the Australian and United States legislative frameworks. Ultimately, the court concluded that the electronic notification was sufficient under Australian law, and that it complied with the registration requirements of the United States securities legislation. The court found that the scheme of arrangement could proceed as the shareholders had, in fact, been properly notified. The decision underscored the importance of adhering to statutory requirements while also acknowledging the evolving nature of communication methods in corporate governance.

The final orders of the court were that the scheme of arrangement be approved, allowing the reorganisation of Mitchell Communication Group to proceed, subject to the terms and conditions outlined in the scheme.

Orders