Re Ozgrowth Ltd - [2022] WASC 107

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE OZGROWTH LTD; EX PARTE OZGROWTH LTD [2022] WASC 107
CORAM:   HILL J
HEARD:   28 FEBRUARY 2022
DELIVERED          :   28 FEBRUARY 2022
PUBLISHED           :   30 MARCH 2022
FILE NO/S:   COR 26 of 2022
MATTER:   IN THE MATTER OF OZGROWTH LTD
EX PARTE

OZGROWTH LIMITED
Plaintiff

WAM CAPITAY LTD
Interested Party

FILE NO/S: COR 27 of 2022
MATTER: IN THE MATTER OF WESTOZ INVESTMENT COMPANY LTD
EX PARTE

WESTOZ INVESTMENT COMPANY LTD
Plaintiff

WAM CAPITAL LTD
Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth) - Whether requirements to order scheme meeting are satisfied - Calculation of scheme consideration by reference to formula - Ratio of net tangible assets per share of target to one day volume weighted average price per share of acquirer - Orders made convening scheme meeting

Legislation:

Corporations Act 2001(Cth), s 411(1), s 412(1)(a), s 1319
Corporations Regulations 2001(Cth), sch 8
Supreme Court (Corporations) (WA) Rules 2004(WA), r 3.2

Result:

Orders made convening scheme meeting

Category: B

Representation:

COR 26 of 2022

Counsel:

Plaintiff	:	A J Papamatheos & C E McKay
Interested Party	:	W C J Zappia

Solicitors:

Plaintiff	:	Steinepreis Paganin
Interested Party	:	Mills Oakley

COR 27 of 2022

Counsel:

Plaintiff	:	A J Papamatheos & C E McKay
Interested Party	:	W C J Zappia

Solicitors:

Plaintiff	:	Steinepreis Paganin
Interested Party	:	Mills Oakley

Case(s) referred to in decision(s):

Re Amcom Telecommunications Ltd [2015] FCA 341
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re Blackthorn Resources Ltd [2014] FCA 1115
Re CannPal [2021] WASC 37
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re David Jones Ltd [No 2] [2014] FCA 720; (2014) 101 ACSR 381
Re Doray Minerals Ltd [2019] WASC 57
Re DUET Management Company 1 Ltd [2013] NSWSC 817; (2013) 95 ACSR 34
Re Excelsior Gold Limited [2018] FCA 2064
Re Galaxy Resources Ltd [2021] WASC 277
Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101
Re Investa Properties Ltd [2007] FCA 1104
Re Kangaroo Resources Ltd [2018] WASC 327
Re Macquarie Private Capital A Ltd [2008] NSWSC 323
Re Milton Corp Ltd [2021] FCA 992
Re NTM Gold Ltd; Ex parte NTM Gold Ltd [2021] WASC 22
Re Nzuri Copper Ltd [2019] WASC 189
Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20
Re Pacific Energy Ltd [2019] WASC 443
Re PM Capital Asian Opportunities Fund Ltd [2021] FCA 1380
Re Premium Investors Ltd [2012] FCA 1211
Re Scarborough Equities Ltd [2009] FCA 24
Re Scarborough Equities Ltd [No 2] [2009] FCA 484
Re SRG Ltd [2018] FCA 1092
Re Templeton Global Growth Fund Ltd [2021] NSWSC 1169
Re Wesfarmers Ltd [2018] WASC 308
Re Wesfarmers Ltd [No 2] [2018] WASC 357

HILL J:

Overview

Each of Ozgrowth Limited (Ozgrowth) and Westoz Investment Company Limited (Westoz) is an investment company listed on the official list of the Australian Securities Exchange (ASX). On 22 December 2021, each of them entered into a Scheme Implementation Agreement with WAM Capital Limited (WAM Capital) (SIA), which was announced to the market on 23 December 2021.[1] It is proposed that shareholders will receive ordinary shares in WAM Capital for their existing shares calculated by reference to a formula.
[1] Affidavit of Simon Joyner filed 15 February 2022 [14] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [14] (COR 27 of 2022).
By an originating process dated 11 February 2022, Ozgrowth sought orders pursuant to s 411 and s 1319 of the Corporations Act 2001 (Cth) (Corporations Act) convening a meeting of its members to consider a proposed scheme of arrangement (Ozgrowth Scheme). By a separate originating process dated 11 February 2022, Westoz also sought orders pursuant to s 411 and s 1319 of the Corporations Act convening a meeting of its members to consider a proposed scheme of arrangement (Westoz Scheme) (collectively Schemes). While the terms of the Schemes are substantially the same, each transaction is independent, and the two proposed Schemes are not inter‑conditional.[2]
[2] Affidavit of Simon Joyner filed 15 February 2022 [13] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [13] (COR 27 of 2022).
On 17 February 2022, I made orders that the matters be heard concurrently. As a result, both of the originating processes came before me for the first court hearing on 28 February 2022. On that date, I made orders pursuant to s 411(1) of the Corporations Act to convene separate meetings of Ozgrowth and Westoz members to consider and vote on the proposed Schemes. Orders were also made approving the distribution of Scheme booklets to their respective shareholders under s 412(1)(a) of the Corporations Act. I also made ancillary orders as to the convening and conduct of each of the Scheme meetings under s 1319 of the Corporations Act.
In making the orders on 28 February 2022, I stated that I would subsequently publish written reasons for my orders. These are my reasons for decision.

Factual background

Ozgrowth

Ozgrowth is a public company limited by shares based in Perth, Western Australia.[3] Ozgrowth's business activities and aims are to generate a positive return over the medium to long term from an actively managed portfolio of small cap ASX listed and unlisted investments and to provide shareholders with a consistent stream of dividends.[4] Ozgrowth's investment portfolio is managed by Westoz Funds Management Pty Limited (Westoz Funds Management).[5]
[3] Affidavit of Matthew Adam Ireland filed 11 February 2022 [11] - [12] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [6] (COR 26 of 2022).
[4] Affidavit of Simon Joyner filed 15 February 2022 [7] (COR 26 of 2022); Ozgrowth Scheme booklet [8.1] ‑ [8.2].
[5] Affidavit of Simon Joyner filed 15 February 2022 [11] (COR 26 of 2022).
As at 15 February 2022, Ozgrowth had an issued share capital of 350,460,353 fully paid ordinary shares.[6] It does not have any options, performance rights or other securities on issue.[7]

Westoz

[6] Affidavit of Simon Joyner filed 15 February 2022 [26] (COR 26 of 2022).

[7] Affidavit of Simon Joyner filed 15 February 2022 [31] (COR 26 of 2022).

Westoz is also a listed investment company based in Perth, Western Australia.[8] Westoz's business activities and aims are to generate a positive return over the medium to long term from an actively managed portfolio of small cap ASX listed and unlisted investments and to provide shareholders with a consistent stream of dividends.[9] Westoz's investment portfolio is also managed by Westoz Funds Management.[10]
[8] Affidavit of Matthew Adam Ireland filed 11 February 2022 [11] - [12] (COR 27 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [6] (COR 27 of 2022).
[9] Affidavit of Simon Joyner filed 15 February 2022 [7] (COR 27 of 2022); Westoz Scheme booklet [8.1] ‑ [8.2].
[10] Affidavit of Simon Joyner filed 15 February 2022 [11] (COR 27 of 2022).
As at 15 February 2022, Westoz had an issued share capital of 133,686,000 fully paid ordinary shares.[11] It does not have any options, performance rights or other securities on issue.[12]

WAM Capital

[11] Affidavit of Simon Joyner filed 15 February 2022 [26] (COR 27 of 2022).

[12] Affidavit of Simon Joyner filed 15 February 2022 [31] (COR 27 of 2022).

WAM Capital is a listed investment company based in Sydney, New South Wales.[13] WAM Capital provides investors with exposure to an actively managed, diversified portfolio of undervalued growth companies listed on the ASX, with a focus on small‑to‑medium sized businesses.[14] WAM Capital's investments are managed by Wilson Asset Management (International) Pty Ltd.[15]

Proposed Schemes

[13] Affidavit of Jesse Hamilton filed 25 February 2022 [6] (COR 26 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022 [6] (COR 27 of 2022).

[14] Ozgrowth Scheme booklet [9.2]; Westoz Scheme booklet [9.2].

[15] Affidavit of Jesse Hamilton filed 25 February 2022 [1] (COR 26 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022 [1] (COR 27 of 2022).

In October 2021, WAM Capital approached Ozgrowth and Westoz separately and at around the same time and offered to acquire the two companies on substantially the same terms.[16] Ozgrowth and Westoz have adopted a conflicts management protocol which the directors adhered to during the negotiation of each of the SIAs.[17]
[16] Affidavit of Simon Joyner filed 15 February 2022 [12] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [12] (COR 27 of 2022).
[17] Affidavit of Simon Joyner filed 15 February 2022 [99] - [106] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [99] - [106] (COR 27 of 2022).
If the Schemes are implemented, WAM Capital will acquire all ordinary shares held by Ozgrowth Shareholders (Ozgrowth Shares) and all shares held by Westoz Shareholders (Westoz Shares) on issue as at the Scheme implementation date. Ozgrowth and Westoz shareholders will each receive new WAM Capital shares for each Ozgrowth Share or Westoz Share they own as consideration for the acquisition of their Shares under the Scheme (Scheme Consideration). The number of shares that each shareholder will receive will be calculated using a formula based on the ratio of the volume weighted average price (VWAP) of shares in WAM Capital and a 7.5% premium to the net tangible assets (NTA) of Ozgrowth or Westoz (as the case may be) on the calculation date (Formula). The calculation date is expected to be 5pm on 31 March 2022, two business days prior to the proposed Scheme meetings (Calculation Date).
Ineligible Overseas Shareholders will be ineligible to receive the Scheme Consideration.
It is a condition precedent to each of the SIAs that Ozgrowth and Westoz (as the case may be) enter into a binding deed to terminate their respective management agreements with Westoz Funds Management by no later than the implementation date of each of the Schemes.[18]
[18] Ozgrowth SIA cl 3.1(f); Westoz SIA cl 3.1(f).
The directors of each of Ozgrowth and Westoz unanimously recommend that, in the absence of a superior proposal, their respective shareholders vote in favour of the proposed Schemes.[19]
[19] Ozgrowth Scheme booklet cover page; Westoz Scheme booklet cover page.
Ozgrowth and Westoz retained the same independent expert to provide an opinion and recommendation on the proposed Schemes. The independent expert, BDO Corporate Finance (WA) Pty Ltd (BDO), has concluded that, in the absence of a superior proposal, each of the proposed Schemes is fair and reasonable and in the interests of the respective shareholders.[20]
[20] Ozgrowth Scheme booklet, Annexure A [2.3], [14]; Westoz Scheme booklet, Annexure A [2.3], [14].

Evidence for the first court hearing

Each of Ozgrowth and Westoz relied on eight affidavits which were filed prior to the first hearing in each of the proceedings. These were:
(a)an affidavit of Matthew Adam Ireland filed 11 February 2022. Mr Ireland is a partner at Steinepreis Paganin, the solicitors for both Ozgrowth and Westoz. His affidavit gave an overview of the Scheme and the relevant company, and confirmed the Scheme booklet had been lodged with the Australian Securities and Investments Commission (ASIC) on 7 February 2022. Annexed to his affidavit, among other things, were copies of the SIA, the proposed Scheme, the draft Scheme booklet, and a company search of the relevant company obtained from ASIC;
(b)an affidavit of Simon Joyner filed 15 February 2022. Mr Joyner is an independent non-executive director of both Ozgrowth and Westoz. His affidavit described aspects of the Scheme including the conditions precedent and Scheme Consideration, the conflicts management protocol, the proposed notice of Scheme meeting to be given by the relevant company, the drafting and verification process of the Scheme booklets, and the recommendations of the directors in relation to the Schemes. Annexed to his affidavit, among other things, were the constitution of the relevant company, information about the company's shareholders, the management agreement with Westoz Funds Management as well as the protocol to manage conflicts that had been put in place by both companies;
(c)an affidavit of Jonathan Heath Stuart Murray filed 22 February 2022. Mr Murray is also a partner at Steinepreis Paganin and the nominated chairperson of the Scheme meetings. By his affidavits, Mr Murray consented to act as chairperson of the Scheme meetings and provided the necessary disclosures pursuant to r 3.2 of the Supreme Court (Corporations) (WA) Rules 2004 (WA) (Corporations Rules). Mr Murray also confirmed he would report the results of the Scheme meetings to the court at the second court hearing;
(d)an affidavit of Toby Albert Hicks filed 22 February 2022. Mr Hicks is also a partner at Steinepreis Paganin and is the proposed alternate chairperson of the Scheme meetings. By his affidavit, Mr Hicks consented to act as chairperson in the event that Mr Murray was unable to act and provided the necessary disclosures required by r 3.2 of the Corporations Rules;
(e)a second affidavit of Matthew Adam Ireland filed 24 February 2022. His second affidavit confirmed that ASIC had been served with the court documents and annexed correspondence between Steinepreis Paganin and ASIC regarding the draft Scheme booklet;
(f)an affidavit of Jesse Hamilton filed 25 February 2022. Mr Hamilton is the company secretary of WAM Capital and the chief financial officer of WAM Capital's investment manager, Wilson Asset Management (International) Pty Ltd. Mr Hamilton gave a brief overview of WAM Capital and attested to the verification process undertaken by WAM Capital in relation to the Scheme booklet. His affidavit annexed, among other things, the deed poll executed by WAM Capital, and the relevant verification certificates;
(g)a third affidavit of Matthew Adam Ireland filed 25 February 2022. Mr Ireland annexed further correspondence between Steinepreis Paganin and ASIC, and ASIC and the independent expert as well as the amended Scheme booklet;
(h)a fourth affidavit of Matthew Adam Ireland filed 28 February 2022. Mr Ireland annexed further correspondence between Steinepreis Paganin and ASIC as well as ASIC's letter of intention confirming that ASIC did not intend to appear or to oppose the Scheme at the first court hearing.

Nature of proposed Schemes

The proposed Schemes contemplate that WAM Capital will acquire all of the Shares in Ozgrowth and Westoz, with their respective shareholders receiving consideration in the form of new WAM Capital shares calculated by reference to the Formula. That is, the effect of the proposed Schemes is to make each of Ozgrowth and Westoz a wholly owned subsidiary of WAM Capital. Ozgrowth and Westoz will be subsequently delisted from the ASX.[21]
[21] Ozgrowth Scheme Booklet [9.22(a)]; Westoz Scheme Booklet [9.22(a)].
Shareholders who do not have a residential address in Australia are Ineligible Overseas Shareholders and will not receive the Scheme Consideration. The Ozgrowth Shares and Westoz Shares that would have been issued to these shareholders will be issued to a Sale Agent and sold as soon as is reasonably practicable on a 'best endeavours' basis.[22] The net proceeds will be paid by WAM Capital to these shareholders on a pro rata basis.[23]
[22] Ozgrowth Scheme cl 5.5(a)(ii); Westoz Scheme cl 5.5(a)(ii).
[23] Ozgrowth SIA cl 4.2(b); Westoz SIA cl 4.2(b). Ozgrowth Scheme cl 5.5(c); Westoz Scheme cl 5.5(c).
As at 9 February 2022, there were six Ineligible Overseas Ozgrowth Shareholders holding a total of 88,656 Ozgrowth Shares, collectively comprising approximately 0.03% of Ozgrowth Shares on issue.[24]
[24] Affidavit of Simon Joyner filed 15 February 2022 [37], 'SJ-5' (COR 26 of 2022).
As at the same date, there were eight Ineligible Overseas Westoz Shareholders holding a total of 35,604 Westoz Shares, collectively comprising approximately 0.03% of Westoz Shares on issue.[25]
[25] Affidavit of Simon Joyner filed 15 February 2022 [37], 'SJ-5' (COR 27 of 2022).
If the Schemes are implemented, Ozgrowth and Westoz will each become a wholly owned subsidiary of WAM Capital and will be delisted from the ASX. The Schemes will not be implemented unless and until a number of conditions precedent are satisfied or waived. The conditions precedent which are required to be satisfied are disclosed in each of the the Scheme booklets.[26]
[26] Ozgrowth Scheme booklet [13.5]; Westoz Scheme booklet [13.5].
The SIAs between Ozgrowth and WAM Capital and Westoz and WAM Capital set out the procedures for the implementation of the proposed Schemes.
If the Schemes are approved by shareholders and by the court at the second court hearing, on the implementation date, all the Shares in each of Ozgrowth and Westoz will be transferred to WAM Capital, WAM Capital will be entered in the register as the holder of these Shares, and WAM Capital will provide the Scheme Consideration to shareholders in return for their shares in Ozgrowth and Westoz.
The obligations of WAM Capital under each of the Schemes are supported by an executed Deed Poll (Deed Poll).[27]
[27] Affidavit of Jesse Hamilton filed 25 February 2022, 'JH-13' (COR 26 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022, 'JH-13' (COR 27 of 2022).
The directors of both Ozgrowth and Westoz unanimously recommend that their shareholders vote in favour of the Scheme.[28]
[28] Ozgrowth Scheme booklet cover page; Westoz Scheme booklet cover page.
An independent expert report (IER) on each of the Schemes has been prepared by BDO. The IER expresses the opinion that, in the absence of a superior proposal, each of the Schemes is fair and reasonable and is in the best interests of shareholders.[29]
[29] Ozgrowth Scheme booklet, Annexure A [2.3], [14]; Westoz Scheme booklet, Annexure A [2.3], [14].
In respect of Ozgrowth, the IER determined that the value of an Ozgrowth Share on a control basis is $0.323 and the value of the proposed Scheme Consideration is between $0.333 (low) and $0.426 (high).[30] On this basis, the IER concluded that the value of the Scheme Consideration is greater than the valuation of Ozgrowth. The basis for the valuation and the methodology used are set out in the IER. The consideration of advantages, disadvantages and other factors that are likely to impact shareholders are set out comprehensively in the IER.
[30] Ozgrowth Scheme booklet, Annexure A [2.4].
In respect of Westoz, the IER determined that the value of a Westoz Share on a control basis is $1.341 and the value of the proposed Scheme Consideration is between $1.300 (low) and $1.663 (high).[31] On this basis, the IER concluded that the value of the Scheme Consideration is within the valuation of Westoz, although at the lower end of the range of the valuation. The basis for the valuation and the methodology used are set out in the IER. The consideration of advantages, disadvantages and other factors that are likely to impact shareholders are set out comprehensively in the IER.
[31] Westoz Scheme booklet, Annexure A [2.4].
I was provided with each of the draft Scheme booklets which were lodged with ASIC on 7 February 2022[32] and the various amendments that have been made to these documents since then.[33] The queries raised by ASIC included questions about the timing of the calculation of the Scheme Consideration compared to the Scheme meeting, which I address below at [56] ‑ [67].
[32] Affidavit of Matthew Adam Ireland filed 11 February 2022, 'MAI-4' (COR 26 of 2022); Affidavit of Matthew Adam Ireland filed 11 February 2022, 'MAI-4' (COR 27 of 2022).
[33] Second affidavit of Matthew Adam Ireland filed 24 February 2022, 'MAI-7' (COR 26 of 2022); Second affidavit of Matthew Adam Ireland filed 24 February 2022, 'MAI-7' (COR 27 of 2022); Third affidavit of Matthew Adam Ireland filed 25 February 2022, 'MAI-7', 'MAI-9' (COR 26 of 2022); Third affidavit of Matthew Adam Ireland filed 25 February 2022, 'MAI-7', 'MAI-9' (COR 27 of 2022).

Each of the Scheme booklets contains the following sections:
(a)a listing of all important dates and times for the Scheme;
(b)highlights of the Scheme including a summary of the reasons to vote for or against the Scheme;
(c)a letter from the Chairman of the relevant company, which outlines the rationale for the Scheme as well as a letter from the chairman of WAM Capital;
(d)information on the Scheme meeting and how to vote;
(e)a 'frequently asked questions' table, which addresses all essential matters;
(f)an outline of the key considerations relevant to the vote of shareholders, including reasons to vote in favour of or against the Scheme;
(g)information on the relevant company (either Ozgrowth or Westoz) and WAM Capital and an overview of the combined group;
(h)a section on risk factors;
(i)a section on the taxation implications for shareholders;
(j)an overview of the implementation of the Scheme;
(k)a section on the Scheme Consideration and the formula to be applied in determining the number of WAM Capital Shares to be issued to each Scheme Shareholder;
(l)a section on the key terms of the SIA;
(m)a section on additional information, which includes details of the relevant interests of the Parties' directors and the benefits they will obtain if the Scheme is approved; and
(n)a glossary of defined terms.
Each of the Scheme booklets includes several important annexures which will form part of the Scheme booklet. These include the IER, the Scheme of Arrangement, the Deed Poll, and the Notice of Scheme meeting.

Legal principles in respect of the Scheme

Pursuant to s 411 of the Corporations Act, a scheme of arrangement can be used to re‑organise a company in a manner which will be binding on its members, provided that:
(a)the arrangement is agreed by the requisite majorities as prescribed by s 411(4)(a) of the Corporations Act, namely 75% of shareholders by value and 50% by number; and
(b)the court approves the arrangement pursuant to s 411(4)(b) of the Corporations Act.
There are three stages to an application under s 411 of the Corporations Act. First, the court approves the convening of a scheme meeting and the draft explanatory statement to be sent to the scheme members. Second, the members vote on the proposed scheme at the scheme meeting. Third, assuming the first two stages have occurred, the court approves the proposed scheme.[34]
[34] Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 [7].
There are well‑established principles which apply to the first stage of proceedings. The court will order the convening of the scheme meeting and approve the dispatch of the scheme booklet if it is satisfied that:[35]
(a)there is a pt 5.1 body;
(b)there is a compromise or arrangement within the meaning of s 411 of the Corporations Act;
(c)the proposed scheme booklet contains the prescribed information[36] and provides proper disclosure;[37]
(d)the scheme is bona fide and properly proposed;
(e)ASIC has had at least 14 days' notice of the proposed hearing date and a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions;[38]
(f)the procedural requirements of the Corporations Act and the Corporations Rules have been met;
(g)the scheme is of such a nature that, if it receives the necessary statutory majority at the scheme meeting, the court will be likely to approve it.
[35] Re SRG Ltd [2018] FCA 1092 [11]; Re Wesfarmers Ltd [2018] WASC 308 [60].
[36] Corporations Act 2001 (Cth) s 412(1)(a)(ii); Corporations Regulations 2001 (Cth) reg 5.1.01, Sch 8 cl 8301 ‑ 8310.
[37] Corporations Act 2001 (Cth) s 412(1)(a)(i).
[38] Corporations Act 2001 (Cth) s 411(2)(b).
Any issue about classes of members is usually determined at the first hearing.[39] This is so that costs and court time are not wasted which would otherwise occur if this issue was left to the second hearing.[40]
[39] Re CSR Ltd [73].
[40] Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20 [20].
The standard of review that is undertaken by the court at the first hearing is whether the proposed scheme is not inappropriate and is one that sensible businesspeople might consider is of benefit to its members.[41] If the proposed arrangement is one that appears fit for consideration by a meeting of members and is a commercial proposition likely to gain the court's approval if passed by the necessary majority, leave should be given to convene the meeting.[42]
[41] Re Amcom Telecommunications Ltd [2015] FCA 341 [10].
[42] Re SRG Ltd [12]; Re Wesfarmers Ltd [72] - [76].

Disposition

The formal matters that are required to be proved are satisfied.
Each of Ozgrowth and Westoz are companies and, accordingly, fall under the category of a pt 5.1 body. The proposed Schemes each constitute an 'arrangement'. These types of share acquisition schemes have been approved by courts as an arrangement on numerous occasions.
Affidavits have been filed as required by r 3.2 of the Corporations Rules regarding the persons who have been nominated to be the chairperson and alternate chairperson for each of the Scheme Meetings.[43]
[43] Affidavit of Jonathan Heath Stuart Murray filed 22 February 2022 (COR 26 of 2022); Affidavit of Toby Albert Hicks filed 22 February 2022 (COR 26 of 2022); Affidavit of Jonathan Heath Stuart Murray filed 22 February 2022 (COR 27 of 2022); Affidavit of Toby Albert Hicks filed 22 February 2022 (COR 27 of 2022).
By letters dated 28 February 2022, ASIC confirmed it had examined the terms of the Schemes and the draft explanatory statements of the Scheme booklets.[44] ASIC also gave notice that it did not propose to appear at the first hearing to make submissions or intervene to oppose the Scheme.[45] In providing this letter, ASIC set out its position on the Scheme Consideration as follows:
ASIC understands that [Ozgrowth/Westoz] shareholders will receive scrip in WAM Capital as consideration under the scheme. ASIC notes that the number of new WAM Capital Shares to be offered for each [Ozgrowth/Westoz] Share will be determined by a formula, based on the ratio of the volume weighted average price of WAM Capital Shares on the Calculation Date and a 7.5% premium to the [Ozgrowth/Westoz] NTA on the Calculation Date. ASIC notes that, under the proposed timetable, shareholders of the Company will be asked to vote on the Scheme before the exact consideration is known. ASIC is of the view that information about the exact consideration members could expect to receive is fundamentally material to a shareholder's decision whether to vote for or against a scheme.
Under the proposed timetable, shareholders of the Company will be asked to vote on the Scheme one business day after the Calculation Date, and the exact value of the scheme consideration will be announced no later than 6 April 2022. ASIC has been advised that there are commercial reasons for the proposed timing. However, consistent with ASIC's policy as set out in ASIC Regulatory Guide 60 at paragraph 60.96, ASIC is of the view that scheme proponents, including those voting by proxy, should be given at least ten days to consider any supplementary information before being required to vote on the scheme.
ASIC is currently reserving its position regarding this matter. Although ASIC does not seek to alter the proposed timetable at this stage, if considered necessary, ASIC may request the date of the Second Court Hearing be postponed to provide sufficient time for ASIC, or other interested parties, to decide whether to appear and make submissions.
[44] Fourth affidavit of Matthew Adam Ireland filed 28 February 2022, 'MAI-5' (COR 26 of 2022); Fourth affidavit of Matthew Adam Ireland filed 28 February 2022, 'MAI-5' (COR 27 of 2022).
[45] Fourth affidavit of Matthew Adam Ireland filed 28 February 2022, 'MAI-5' (COR 26 of 2022); Fourth affidavit of Matthew Adam Ireland filed 28 February 2022, 'MAI-5' (COR 27 of 2022).
I address these comments in more detail below at [56] ‑ [67] in my consideration of the Scheme Consideration.
On the materials before me, there was nothing to suggest that the Scheme was not properly proposed. The constitutions of each of Ozgrowth and Westoz do not prevent the Scheme.[46]
[46] Affidavit of Simon Joyner filed 15 February 2022, 'SJ-1' (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022, 'SJ-1' (COR 27 of 2022).
No class issues arise in relation to either of the Schemes. The treatment of the Ineligible Overseas Shareholders is commonplace and is not class creating.[47] All Ozgrowth and Westoz shareholders have the same rights in the Scheme, that is, the right to receive the Scheme Consideration,[48] are being treated equally and, as a result, constitute a single class.
[47] See Re Wesfarmers Ltd [96], Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101 [9] ‑ [13]; Re Excelsior Gold Limited [2018] FCA 2064 [37] - [43].
[48] Submissions [31].
The investment manager of WAM Capital, Wilson Asset Management, and its associated entities hold approximately 1.985% of the Shares in Ozgrowth and 7.631% of the Shares in Westoz. These members have informed WAM Capital that they will abstain from voting at either of the Scheme meetings. On this basis, no class issue arises in respect of these shareholders.
There are a number of conditions precedent to the Schemes.[49] Except for two conditions precedent regarding the termination of the management agreement (cl 3.1(f)) (which I address below at [75] ‑ [78]) and the non‑occurrence of a Material Adverse Effect (cl 3.1(g)), the SIAs contain commonly seen and uncontroversial conditions precedent.
[49] Ozgrowth SIA cl 3; Westoz SIA cl 3.
It is a condition precedent to the Scheme that there be no Material Adverse Effect between the date the SIA was entered into and 8.00 am on the Second Court Date.[50] Material Adverse Effect is defined in the SIA.[51] In essence, it requires the NTA of Ozgrowth and Westoz (as the case may be) at the Calculation Date not to have fallen more than 10% compared with that company's NTA at the time the Scheme was announced and, separately, that the premium at which WAM Capital Shares are trading remains between 12.5% and 25% of WAM Capital's NTA as at the Calculation Date. The definition expressly excludes any changes that occur as a consequence of changes in general economic or political conditions or conditions which impact the companies in a similar manner.
[50] Ozgrowth SIA cl 3.1(g); Westoz SIA cl 3.1(g).
[51] Ozgrowth SIA cl 1.1; Westoz SIA cl 1.1.
Under the express terms of each of the SIAs, WAM Capital is required to provide Ozgrowth and Westoz with a calculation of their NTA at the Calculation Date within two business days for the purpose of confirming no Material Adverse Effect has occurred.[52]
[52] Ozgrowth SIA cl 5.3(f); Westoz SIA cl 5.3(f).
Counsel for Ozgrowth and Westoz explained that the purpose of this clause was to address the position where, because of movements in the market, the Scheme Consideration has either increased or decreased beyond the point at which it no longer represents value for shareholders of either the target or the acquirer.[53] The independent expert has reviewed the range of the premium for WAM Capital shares and noted that in the previous 12 months, WAM Capital has traded at a premium of between 14% and 23.8% of its NTA.[54]
[53] Submissions [74] - [79].
[54] Third affidavit of Matthew Adam Ireland filed 25 February 2022 p 186 (COR 26 of 2022); Third affidavit of Matthew Adam Ireland filed 25 February 2022 p 179 (COR 27 of 2022).
Each of Ozgrowth, Westoz and WAM Capital have deposed that they are not aware of any basis to believe that any condition precedent will not be satisfied or waived prior to the second court hearing.[55]

Disclosure and Scheme booklets

[55] Affidavit of Simon Joyner filed 15 February 2022 [34] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [34] (COR 27 of 2022); Submissions [72].

I have read the initial draft of each of the Scheme booklets (as provided to ASIC). I have also been provided with the correspondence between ASIC and Steinepreis Paganin relating to ASIC's review of each of the draft Scheme booklets.[56]
[56] Second affidavit of Matthew Ireland filed 24 February 2022, 'MAI-4', 'MAI-7' (COR 26 of 2022); Second affidavit of Matthew Ireland filed 24 February 2022, 'MAI-4', 'MAI-7' (COR 27 of 2022); Third affidavit of Matthew Adam Ireland filed 25 February 2022, 'MAI-3', 'MAI-4' (COR 26 of 2022); Third affidavit of Matthew Adam Ireland filed 25 February 2022, 'MAI-3', 'MAI-4' (COR 27 of 2022).
I was and am satisfied that there will be proper disclosure as to the effect of each of the proposed Schemes and the material considerations for shareholders.
There is evidence before me as to the due diligence and verification process that was undertaken by each of Ozgrowth and Westoz,[57] as well as WAM Capital.[58] On the basis of this evidence, I accept that:
(a)Ozgrowth undertook a process of due diligence and verification to verify the accuracy of statements attributable to Ozgrowth in the Ozgrowth Scheme booklet;
(b)Westoz undertook a similar process to verify the statements attributable to them in the Westoz Scheme booklet;
(c)WAM Capital undertook a similar process to verify the statements attributable to them in each of the Scheme booklets; and
(d)appropriate steps have been taken to satisfy Ozgrowth or Westoz (as the case may be) and WAM Capital that the Scheme booklets do not omit any material information.
[57] Affidavit of Simon Joyner filed 15 February 2022 [54] - [67] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [54] - [67] (COR 27 of 2022).
[58] Affidavit of Jesse Hamilton filed 25 February 2022 [14] - [27] (COR 26 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022 [14] - [27] (COR 27 of 2022).
The directors of Ozgrowth and Westoz respectively have resolved to approve their Scheme booklet.[59]
[59] Affidavit of Simon Joyner filed 15 February 2022 [69] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [69] (COR 27 of 2022).
Based on the checklist provided by counsel for Ozgrowth and Westoz, I was satisfied that each of the Scheme booklets contained the prescribed information in accordance with s 412(1)(a)(ii) of the Corporations Act and sch 8 of the Corporations Regulations 2001 (Cth).
In written and oral submissions, counsel for Ozgrowth and Westoz drew my attention to some specific matters. I address each of these below.

Scheme Consideration

Each of the Schemes provides that on the implementation date, subject to the provision of the Scheme Consideration, all of the Shares in Ozgrowth and Westoz will be transferred to WAM Capital without the requirement for any further act on the part of shareholders. As consideration for the transfer of these Shares, WAM Capital has agreed to issue to each shareholder of Ozgrowth and Westoz (as the case may be) (other an Ineligible Overseas Shareholders) the Scheme Consideration, which is calculated by reference to the Formula.
Under the Ozgrowth SIA:
(a)Ozgrowth must procure that the Ozgrowth NTA is calculated and delivered to WAM Capital within two business days of the Calculation Date with sufficient supporting information to permit WAM Capital to review and confirm the calculation;[60]
(b)WAM Capital is obliged to confirm the calculation with two business days of receipt of this data;[61]
(c)WAM Capital must procure that the WAM Capital one‑day VWAP is calculated and delivered to Ozgrowth within two business days of the Calculation Date with sufficient supporting information to permit Ozgrowth to review and confirm the calculation;[62]
(d)Ozgrowth is obliged to confirm this calculation within two business days of receipt.[63]
[60] Ozgrowth SIA cl 5.2(u).
[61] Ozgrowth SIA cl 5.3(h).
[62] Ozgrowth SIA cl 5.3(g).
[63] Ozgrowth SIA cl 5.2(v).
Similar obligations arise under the Westoz SIA.[64]
[64] Westoz SIA cl 5.2(u), cl 5.3(h), cl 5.3(g) and cl 5.2(v).
In each Scheme, the Scheme Consideration will be calculated by reference to the Formula. It is apparent from the components of the formula that the Scheme Consideration can and is likely to vary over time. This is made clear in the Scheme booklet at a number of places including the inside cover under the heading 'Implied Value', in Scheme Highlights ([2.1]), and Reasons why you may choose to vote against the Scheme ([2.3], [2.5(d)] and [7.2]).
At present, the calculation date for the Scheme Consideration is 31 March 2022, two business days prior to the Scheme meeting, although the Scheme Consideration will not be finalised and announced until 6 April 2022, two days after the Scheme meeting. However, at all stages, the shareholders will be aware of the basis on which the Scheme Consideration is calculated. Each of the Scheme booklets includes an explanation of the formula used to calculate the Scheme Consideration. The draft Scheme booklets that were provided to me included worked examples as to the Scheme Consideration shareholders would receive on the assumption of a fixed NTA for Ozgrowth or Westoz and a variation in the share price or VWAP of WAM Capital.[65]
[65] Ozgrowth Scheme booklet [7.1(g)]; Westoz Scheme booklet [7.1(g)].
Prior to the hearing, counsel for Ozgrowth and Westoz provided me with a very helpful aide memoire. As was noted in the aide memoire, courts have previously accepted that the quantum of consideration for a scheme may be determined by reference to a formula.[66] In previous schemes involving listed investment companies, a market based variable consideration mechanism has been adopted without concern being expressed by the court at the first court hearing.[67] The rationale for the use of a formula is that for listed investment companies, whose assets comprise securities traded on the ASX or other stock exchanges, their NTA will vary each day with the listed prices of the various securities held by the company. For this reason, transactions involving listed investment companies tend to set the valuation and calculation of the consideration by reference to an agreed premium on NTA shortly prior to the implementation of the transaction.[68]
[66] Re Scarborough Equities Ltd [2009] FCA 24 [2].
[67] See for example Re Templeton Global Growth Fund Ltd [2021] NSWSC 1169; Re PM Capital Asian Opportunities Fund Ltd [2021] FCA 1380; Re Blackthorn Resources Ltd [2014] FCA 1115.
[68] Re Templeton Global Growth Fund Ltd [17].
In Re Premium Investors Ltd, Jagot J accepted that the fact the exact amount of the Scheme Consideration would not be known at the date of meeting was not a sufficient reason for the court not to convene the meeting, where this matter was prominently disclosed in the scheme booklet as part of the risks that apply to the scheme.[69]
[69] Re Premium Investors Ltd [2012] FCA 1211 [3].
This is consistent with the role of the court at the first court hearing which is to consider the 'legal efficacy of the proposed arrangement' as opposed to the commercial merits of the proposed transaction.[70] If the scheme is one which is open for shareholders to adopt, it is not the role of the court to be satisfied as to its commercial desirability.[71]
[70] Re Wesfarmers Ltd [72].
[71] Re Wesfarmers Ltd [74].
In most of the cases I was referred to concerning listed investment companies, the scheme consideration was calculated by using the same reference point for both the target and acquirer, generally the net tangible assets of each company. However, in one of the cases referred to by ASIC in their correspondence with Steinepreis Paganin, namely Re Milton Corp Ltd,[72] the formula for the calculation of the scheme consideration was a 10% premium of the adjusted NTA of the target divided by a one month VWAP of the acquirer's shares, both calculated as at the same date. Apart from setting out the formula for the calculation of the scheme consideration, there is no further discussion or commentary in relation to this formula or its different reference points.
[72] Re Milton Corp Ltd [2021] FCA 992.

During the first court hearing, counsel for Ozgrowth and Westoz explained the rationale for the different reference points in the formula and why a one day VWAP for the acquirer had been negotiated and agreed as opposed to its NTA. First, in relation to the different reference points, both Ozgrowth and Westoz trade at a discount to their NTA whereas WAM Capital trades at a premium to its NTA. The use of the different reference points reflects this position. Second, the calculation of the NTA of each of Ozgrowth and Westoz will involve a calculation of the closing share price of each of their assets on the Calculation Date. Given this, the use of a single day VWAP to calculate the value of the shares in WAM Capital applies a consistent methodology, namely a fixed price on a particular date.
Having had the benefit of both written and oral submissions from counsel, I am satisfied that I should follow the approach that has been adopted previously by the court on the basis that disclosure is sufficient to address these issues. Given that the focus of the courts is on disclosure, I raised two matters with counsel. First, at present the examples in the Scheme booklet only consider the impact of change in the WAM Capital Shares and do not reflect the position that the NTA of Ozgrowth or Westoz' Shares (as the case may be) is also subject to change. Second, I queried whether each of Ozgrowth and Westoz would adopt the approach in Re PM Capital Asian Opportunies Fund Ltd of keeping their shareholders informed weekly of the current estimate of Scheme Consideration. The reason the Scheme Consideration could only be estimated is that it would be based on the closing price of WAM Capital shares (which was readily discernible) as opposed to the one day VWAP (which was not). At the hearing, counsel for Ozgrowth and Westoz agreed that each of the Scheme booklets would be amended to reflect that a weekly announcement would be made by the company on the ASX on the estimate of the Scheme Consideration and directing shareholders' attention to this.[73] With this amendment, I was satisfied that there would be sufficient disclosure to shareholders in relation to the Scheme Consideration prior to the Scheme meeting to enable shareholders to consider their position.
[73] ts 23 - 25.
In addition, given the importance of this matter, I suggested to counsel, who agreed that, the uncertainty associated with the calculation of the Scheme Consideration should be elevated to be the first mentioned reason shareholders may vote against each of the Schemes.

Performance risk

I was and am satisfied that the nature and terms of each of the proposed Schemes are such that the shareholders are adequately protected against the risk that they will not receive the Scheme Consideration and have no capacity to sue WAM Capital to recover their shares or damages.
In that respect, I have had regard to the terms of the Schemes and the Deed Polls for each Scheme. Pursuant to these documents:
(a)WAM Capital must allot and issue (or procure the allotment and issue of) the Scheme Consideration to each eligible shareholder for each Ozgrowth Share or Westoz Share (as the case may be) that they hold on the Scheme implementation date;[74]
(b)WAM Capital is required to issue the Scheme Consideration on the Scheme implementation date;[75]
(c)transfer of the Scheme shares is subject to provision of the Scheme Consideration;[76]
(d)beneficial title in the Ozgrowth or Westoz Shares (as the case may be) does not pass unless the Scheme Consideration has been issued in accordance with the Scheme;[77] and
(e)Ozgrowth and Westoz and each Scheme participant will have individual rights against WAM Capital in the event that WAM Capital fails to provide the Scheme Consideration.[78]
[74] Ozgrowth Scheme cl 5; Westoz Scheme cl 5.
[75] Ozgrowth Scheme cl 4.2(a); Westoz Scheme cl 4.2(a).
[76] Ozgrowth Scheme cl 4.2; Westoz Scheme cl 4.2.
[77] Ozgrowth Scheme cl 9.4(b); Westoz Scheme cl 9.4(b).
[78] Ozgrowth Deed Poll cl 1.3; Westoz Scheme cl 1.3; Property Law Act 1969 (WA) s 11.
The arrangements under the terms of the proposed Schemes are supported by a Deed Poll. By each of the Deed Polls, WAM Capital covenants in favour of each Ozgrowth or Westoz shareholder (as the case may be) that it will perform all actions attributed to it under the Scheme. There is also an acknowledgement that the Deed Poll may be relied on and enforced by any Scheme shareholder in accordance with its terms.[79] In my view, the shareholders are sufficiently identified within the Deed Poll to enable them to enforce the Deed Poll as against WAM Capital.

Exclusivity provisions and break fee

[79] Ozgrowth Deed Poll cl 1.3; Westoz Scheme cl 1.3.

Each of the SIAs contain the customary lock up devices in the form of 'no shop', 'no talk', 'no due diligence', and 'matching right' provisions.[80] The 'no talk' and 'no due diligence' provisions are subject to a fiduciary carve out.[81]
[80] Ozgrowth SIA cl 9.2, cl 9.3, cl 9.4, cl 9.8; Westoz SIA cl 9.2, cl 9.3, cl 9.4, cl 9.8.
[81] Ozgrowth SIA cl 9.5; Westoz SIA cl 9.5.
In considering whether the exclusivity provisions impact on completion of the transaction and the duties of directors, the court has regard to:[82]
(a)the period of the exclusivity, which should be no more than a reasonable period and capable of precise ascertainment;
(b)whether the provisions are subject to an overriding obligation that the directors not breach their fiduciary duties or are otherwise unlawful; and
(c)whether there is adequate prominence given to these provisions in the Scheme booklet.
[82] Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 [29] - [35]; Re Kangaroo Resources Ltd [2018] WASC 327 [57] - [61]; Re Pacific Energy Ltd [2019] WASC 443 [58].
In this case, the exclusivity period in each of the SIAs is defined and, at most, is a period of five months. The no‑talk and no due diligence provisions contain appropriate fiduciary carve‑outs. The exclusivity arrangements are prominently disclosed in the Scheme booklet.[83]
[83] Ozgrowth Scheme booklet [15.2]; Westoz Scheme booklet [15.2].
The affidavits of Mr Joyner and Mr Hamilton explain that the inclusion of the exclusivity provisions in each of the SIAs followed arm's‑length commercial negotiations in which all parties were separately advised and represented by external legal and financial advisors.[84] I accept their evidence that the exclusivity provisions are reasonable and appropriate for a transaction of this nature.

No collateral benefit which should prevent approval of the Scheme

[84] Affidavit of Simon Joyner filed 15 February 2022 [86] (COR 26 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022 [12] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [86] (COR 27 of 2022); Affidavit of Jesse Hamilton filed 25 February 2022 [12] (COR 27 of 2022).

The court must examine whether a benefit exists for one shareholder in particular, so as to bring into question the overall fairness of the Scheme.[85] To determine whether there is a collateral benefit, the court considers the 'net benefits' test, to ensure that there is no overall disparity in favour of the party to the non‑Scheme transaction.[86] If no net benefit is present, then, prima facie, the equality principle under s 602(c) of the Corporations Act is satisfied.
[85] Re David Jones Ltd [No 2] [2014] FCA 720; (2014) 101 ACSR 381 [16] - [21] (Farrell J); Re Galaxy Resources Ltd [2021] WASC 277.
[86] Takeovers Panel, Guidance Note 21: Collateral Benefits [15].
Euroz Hartleys Group Limited (Euroz), which holds approximately 40.58% of the issued Ozgrowth Shares and approximately 26.25% of the issued Westoz Shares,[87] owns 100% of the shares in Westoz Funds Management,[88] the manager of the assets of each of Ozgrowth and Westoz pursuant to a management agreement (Management Agreement).[89]
[87] Submissions [100].
[88] Submissions [100].
[89] Affidavit of Simon Joyner filed 15 February 2022, 'SJ-12' (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022, 'SJ-12' (COR 27 of 2022).
It is a condition precedent to each of the Schemes that Ozgrowth and Westoz enter into a binding deed with Westoz Funds Management to terminate each of the Management Agreements with effect from no later than the Implementation Date. No termination fee will be payable on termination of these agreements.[90] On this basis, I am satisfied that there is no special or additional benefit or interest being provided to Euroz. Importantly, these matters are fully disclosed in each of the Scheme booklets.[91]
[90] Affidavit of Simon Joyner filed 15 February 2022 [107] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [107] (COR 27 of 2022).
[91] Ozgrowth Scheme booklet [9.19(c)]; Westoz Scheme booklet [9.19(c)].
On the evidence before me, no issue of collateral benefit arises in these Scheme applications.

Director benefits and director recommendations

Each Ozgrowth director, Mr Hughes, Mr Joyner, and Mr Jefferies, directly or indirectly holds Ozgrowth Shares, amounting to 5,861,891 of the 350,460,353 Ozgrowth shares on issue, or approximately 1.67%.[92] No Ozgrowth director has a relevant interest in any WAM Capital Shares.
[92] Ozgrowth Scheme booklet [8.10], [8.12].
Similarly, each Westoz director, Mr Hughes, Mr Joyner, and Mr Budge, directly or indirectly holds Westoz Shares, amounting to 1,676,248 of the 133,686,000 Westoz Shares on issue, or approximately 1.25%.[93] No Westoz director has a relevant interest in any WAM Capital Shares.
[93] Westoz Scheme booklet [8.10], [8.12].
For the following reasons, it was and is my view that it was not inappropriate for each of the directors to make a recommendation in respect of the Scheme.
First, in relation to the Shares that are owned by the directors, each of the directors will receive the same Scheme Consideration as all other shareholders.
Second, during negotiations surrounding the terms of the SIAs, a draft conflicts management protocol (Conflicts Protocol) was provided by the solicitors of the Parties to the directors of each of Ozgrowth and Westoz. The Conflicts Protocol[94] regulated matters including information disclosure, participation of certain directors in board discussions, and negotiations of the Schemes.[95] On 22 December 2021, the board of both Ozgrowth and Westoz formally adopted the Conflicts Protocol, to ensure that a process was in place for consideration of the draft SIA by the board and, if executed, the implementation of the SIA to pursue the proposed Scheme.[96] Counsel for Ozgrowth and Westoz submitted, which I accept, that there was nothing in the circumstances of this case to suggest that the directors of each of the companies did not consider each proposal individually and whether it was in the interests of their respective shareholders.
[94] Affidavit of Simon Joyner filed 15 February 2022, 'SJ-14' (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022, 'SJ-14' (COR 27 of 2022).
[95] Affidavit of Simon Joyner filed 15 February 2022 [99] - [103] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [99] - [103] (COR 27 of 2022).
[96] Affidavit of Simon Joyner filed 15 February 2022 [104] (COR 26 of 2022); Affidavit of Simon Joyner filed 15 February 2022 [104] (COR 27 of 2022).
Finally, and importantly, each of these matters are disclosed in the Scheme booklets.

No liability when acting in good faith

Counsel for Ozgrowth and Westoz drew to my attention the inclusion of cl 10.6 in the Schemes which provides Ozgrowth or Westoz (as the case may be) and WAM Capital with an exclusion from liability for acts or omissions done in good faith in performance of the Schemes or Deed Polls.
On its proper construction, it is my view that this clause does not exclude liability for acts or omissions in breach of the Schemes or the Deed Polls. Any such acts or omissions could not be in performance of the Schemes or Deed Polls. For this reason, I do not consider that this clause will deprive members of their intended benefits under the Schemes. I note that this is consistent with the conclusion of Vaughan J in Re Wesfarmers Ltd [No 2] in relation to a similar clause.[97]

Electronic dispatch of the Scheme booklets and proxy forms

[97] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [49].

Each of Ozgrowth and Westoz sought orders pursuant to s 1319 of the Corporations Act for electronic dispatch of the Scheme booklet and applicable proxy form by email to those shareholders who have nominated an electronic address for the purpose of receiving Shareholder communications (Email Shareholders). These orders are now common.[98] Details were provided as to the terms of the proposed electronic notification, namely that email notices would be sent to Ozgrowth and Westoz shareholders containing links to the Scheme booklet and proxy form.[99]
[98] See, for example, Re SRG Ltd [48]; Re Doray Minerals Ltd [2019] WASC 57[72].
[99] Submissions [118] - [119].
In respect of the remaining Ozgrowth and Westoz Shareholders (Postal Shareholders), it was proposed that the dispatch of hard copy documents by post by the provision of a letter including the links to the Scheme booklet and proxy form.[100] This letter includes a notation that shareholders can contact the company secretary to obtain a paper copy of the Scheme booklet which addresses the concern that has previously been expressed by the court.[101]

Deemed warranty provision

[100] Submissions [118] - [119].

[101] Re CannPal [2021] WASC 37[70] - [74]; Re NTM Gold LtdEx parte NTM Gold Ltd [2021] WASC 22 [81].

Counsel for Ozgrowth and Westoz drew my attention to the 'clear title' and 'deemed warranty' provisions in the proposed Scheme.[102]
[102] Ozgrowth Scheme cl 9.3(d), cl 9.4(a); Westoz Scheme cl 9.3(d), cl 9.4(a).
Each of the Schemes provides that, to the extent permitted by law, the Shares will transfer free from all security interests.[103] The terms of this clause is in standard terms and includes the opening words 'To the extent permitted by law'. The inclusion of these words address the concern that has previously been expressed as to whether third parties may otherwise gain the impression that their rights have been extinguished.[104]
[103] Ozgrowth Scheme cl 9.4(a); Westoz Scheme cl 9.4(a).
[104] Re Investa Properties Ltd [2007] FCA 1104 [25] ‑ [30]; Re Scarborough Equities Ltd [No 2] [2009] FCA 484 [9] - [10].
In relation to the warranty provision, this provision is disclosed in each of the Scheme booklets.[105] Deemed warranty clauses are not unusual and are acceptable provided there is adequate disclosure that it is a condition.[106]
[105] Ozgrowth Scheme booklet [2.5(e)], [15.5]; Westoz Scheme booklet [2.5(e)], [15.5].
[106] Re APN News and Media Ltd [57] - [63]; Re DUET Management Company 1 Ltd [2013] NSWSC 817; (2013) 95 ACSR 34 [23]; Re Nzuri Copper Ltd [2019] WASC 189 [90]; Re Macquarie Private Capital A Ltd [2008] NSWSC 323 [13] - [14]; Re Doray Minerals Ltd [71].
I was and am satisfied that adequate disclosure has been given of these clauses.

Scheme Meetings

The Scheme meetings are scheduled to be held virtually on 5 April 2022. Westoz and Ozgrowth intend to operate the meeting using a platform through Computershare.
I accept that this arrangement is appropriate in light of the COVID‑19 pandemic and the current restrictions on the numbers of people that can meet in person in Western Australia.

Conclusion on first hearing

At the first hearing before me, I was satisfied that the substantive and procedural requirements under s 411(1) and s 1319 of the Corporations Act had been satisfied and that each of the proposed Schemes were fit for consideration by the members of Ozgrowth and Westoz respectively.
Taking into account all of these matters, I considered that there was no apparent reason why each of the Schemes should not, if the necessary special resolution of shareholders is passed, receive the court's approval.
For these reasons, at the conclusion of the hearing on 28 February 2022, I made orders in terms of Annexure A in respect of the Ozgrowth Scheme and orders in terms of Annexure B in respect of the Westoz Scheme.

ANNEXURE A

ANNEXURE B

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
30 MARCH 2022