Re Ozgrowth Ltd [No 2] - [2022] WASC 167

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE OZGROWTH LTD; EX PARTE OZGROWTH LTD [No 2] [2022] WASC 167
CORAM:   HILL J
HEARD:   8 APRIL 2022
DELIVERED          :   8 APRIL 2022
PUBLISHED           :   13 MAY 2022
FILE NO/S:   COR 26 of 2022

EX PARTE
OZGROWTH LTD
Plaintiff
WAM CAPITAL LTD
Interested Party

FILE NO/S: COR 27 of 2022

EX PARTE
WESTOZ INVESTMENT COMPANY LTD
Plaintiff
WAM CAPITAL LTD
Interested Party

Catchwords:

Corporations - Schemes of arrangement - Application for orders approving amended schemes under s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) - Agreement to increase scheme consideration on morning of scheme meetings - Short adjournment of scheme meetings - Orders made approving amended schemes

Legislation:

Corporations Act 2001 (Cth), s 411(4), s 411(6), s 411(11), s 411 (17)

Result:

Orders made approving amended schemes

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

Cases referred to in decision:

Perpetual Custodians Ltd (as custodian for Tamoran Pty Ltd as trustee for Crivelli) v IOOF Investment Management Ltd [2013] NSWCA 231; (2013) 304 ALR 436
Re Asaleo Care Limited (No 2) [2021] FCA 636
Re Auzex Resources Ltd [No 2] [2012] QSC 101
Re Avoca Resources Ltd [2011] FCA 208
Re Bardoc Gold Ltd [No 2] [2022] WASC 113
Re Billabong international Ltd [No 2] [2018] FCA 496
Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83
Re Cortona Resources Ltd [No 2] [2013] FCA 302
Re CSG Limited (No 2) [2020] NSWSC 39
Re Decimal Software Limited [No 2] [2018] FCA 2040
Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680
Re Galaxy Resources Ltd [No 2] [2021] WASC 314
Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169
Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485; (2006) 57 ACSR 791
Re International Goldfields Ltd [2004] WASC 112
Re MAC Services Group Ltd [2010] NSWSC 1474
Re National Australia Bank Ltd [2016] VSC 62
Re NTM Gold Ltd [2021] WASC 22
Re Nusantara Resources Ltd [2021] WASC 334
Re Nzuri Copper Ltd [No 4] [2020] WASC 10
Re Ozgrowth Ltd [2022] WASC 107
Re Pensana Metals Limited [2020] WASC 17
Re PetroNor E&P Limited [No 2] [2022] WASC 81
Re Piedmont Lithium Ltd [No 3] [2021] WASC 173
Re Rebel Sport Ltd [No 2] [2007] FCA 458
Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Straits Resources Ltd [No 2] [2011] FCA 47
Re Swick Mining Services Ltd [2022] WASC 79
Re TriAusMin Limited [No 2] [2014] FCA 833
Re Valmec Ltd [2021] WASC 420
Re Wesfarmers Ltd [No 2] [2018] WASC 357
Re Zenith Energy Ltd [No 3] [2020] WASC 289
Scook v Premier Building Solutions Pty Ltd [2003] WASCA 263; (2003) 28 WAR 124

HILL J:

In each of these matters, which were ordered to be heard concurrently, Ozgrowth Limited (Ozgrowth) and Westoz Investment Company Limited (Westoz) apply for orders approving a proposed scheme of arrangement (respectively, Ozgrowth Scheme and Westoz Scheme) (collectively, Schemes). The background to these matters is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing on 28 February 2022, I made orders for meetings for each of the Ozgrowth Scheme and the Westoz Scheme to be convened on 4 April 2022 (Orders).
[1] Re Ozgrowth Ltd [2022] WASC 107.

Scheme meetings

Each of the Scheme meetings was convened on 4 April 2022. At the commencement of each Scheme meeting, Mr Murray, the chairperson of each Scheme meeting, for the reasons set out below at [31] - [36], adjourned each meeting until 6 April 2022.
On 6 April 2022, each of the Scheme meetings was re-convened. At each Scheme meeting, the relevant resolution was passed by the requisite statutory majorities.
In relation to the Ozgrowth Scheme meeting, 108 shareholders were present in person and by proxy,[2] comprising approximately 17.97% of shareholders by number.[3] 94.44% of shareholders who voted at the meeting and 99.84% of votes cast on the Ozgrowth Scheme resolution were in favour of the resolution.[4] Excluding the votes of the shares that were tagged, 94.12% of shareholders who voted at the meeting and 99.64% of votes cast were in favour of the resolution.[5]
[2] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022, 'JM-4' (COR 26 of 2022).
[3] Submissions [45] (COR 26 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022 [22] (COR 26 of 2022); Affidavit of James Ian Ferguson filed 7 April 2022 [14], 'JIF-9' (COR 26 of 2022).
[4] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [26] (COR 26 of 2022).
[5] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [28] (COR 26 of 2022).
In relation to the Westoz Scheme meeting, 224 shareholders were present in person and by proxy,[6] comprising approximately 14.03% of shareholders by number.[7] 93.75% of shareholders who voted at the meeting and 98.94% of votes cast on the Westoz Scheme resolution were cast in favour of the resolution.[8] Excluding the votes of the shares that were tagged, 93.58% of shareholders who voted at the meeting and 97.86% of votes cast were in favour of the resolution.[9]
[6] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [26] (COR 27 of 2022).
[7] Submissions [46] (COR 27 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022 [23] (COR 27 of 2022); Affidavit of James Ian Ferguson filed 7 April 2022 [14], 'JIF-9' (COR 27 of 2022).
[8] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [26] (COR 27 of 2022).
[9] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [29] (COR 27 of 2022).

Approval of Schemes

These matters came back before me for the second court hearing on 8 April 2022.
In addition to the affidavits that were relied upon at the first court hearing, each of Ozgrowth and Westoz relied on 13 additional affidavits that were filed prior to the second court hearing. These were:
(a)an affidavit of Cassandra Rodgers filed 24 March 2022, a production manager at Zipform Digital Pty Ltd (Zipform), who was retained by Computershare Investor Services Pty Ltd (Computershare). Ms Rodgers' affidavit detailed the printing, packaging and dispatch of the Scheme booklets and proxy forms (Scheme materials) to shareholders who had not elected to receive information electronically;
(b)an affidavit of Emilia Varga filed 28 March 2022, a client support officer at Computershare, in relation to the electronic dispatch of Scheme materials to shareholders who had elected to receive information electronically;
(c)a fifth affidavit of Matthew Adam Ireland filed 5 April 2022, a partner at Steinepreis Paganin, the solicitors of the plaintiffs. Mr Ireland confirmed registration of the Scheme booklets with the Australian Securities and Investments Commission (ASIC), publication of notices in The West Australian and The Australian newspapers, and that Ozgrowth and Westoz had published weekly updates on the Australian Securities Exchange (ASX) as to the estimated calculation of the Scheme Consideration. Copies of these documents, together with the voting intention statements of Euroz Hartleys Group Ltd (Euroz) and correspondence with ASIC, were annexed to his affidavit. Mr Ireland confirmed that ASIC had requested the tagging of the votes of Euroz as well as the directors of each company;
(d)a second affidavit of Ms Varga filed 6 April 2022, in relation to the dispatch of Scheme materials to those shareholders of Ozgrowth and Westoz who had become shareholders since the initial dispatch of the Scheme materials;
(e)a second affidavit of Ms Rodgers filed 6 April 2022, in relation to the printing, packaging and dispatch of the Scheme materials to the new Ozgrowth and Westoz shareholders;
(f)an affidavit of Anthony David Hewett filed 6 April 2022, the company secretary for both Ozgrowth and Westoz. Mr Hewett deposed to the requests he received from shareholders in relation to each of the Schemes, the announcements made regarding the estimated calculation of the Scheme Consideration for each company, and the turnouts at each of the 2020 and 2021 annual general meetings for both Ozgrowth and Westoz;
(g)a second affidavit of Simon Joyner filed 6 April 2022, an independent non-executive director of both Ozgrowth and Westoz. Mr Joyner deposed to the giving of a notice of breach of the material adverse event condition precedent of each of the Schemes, the subsequent negotiations and entry into deeds of variation of each of the Scheme Implementation Agreements on 3 April 2022 (to increase the Scheme Consideration) and the request by the directors of each of Ozgrowth and Westoz to the chairperson of the Scheme meetings to adjourn each Scheme meeting for two days;
(h)an affidavit of Rachel Marie Crane filed 6 April 2022, a relationship manager at Computershare, who deposed to the receipt of proxy forms for the Scheme meetings, the registration of attendees, the voting procedure, and the poll reports of each Scheme meeting;
(i)a second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022, the nominated chairperson of the Scheme meetings, who deposed to the conduct and results of the Scheme meetings, including a 'tagged voting' report detailing the results of the meeting having tagged the votes of Euroz and the directors of Ozgrowth and Westoz respectively;
(j)a third affidavit of Mr Joyner filed 7 April 2022 in relation to the voting intention statement of Euroz in respect of the Schemes;
(k)an affidavit of James Ian Ferguson filed 7 April 2022, an associate of Steinepreis Paganin. Mr Ferguson gave evidence of the email exchanges between Steinepreis Paganin and ASIC, as well as service of the materials for the second court hearing on ASIC, and annexed copies of these documents;
(l)a second affidavit of Jesse Hamilton filed 7 April 2022, the company secretary of WAM Capital Limited (WAM Capital) and the chief financial officer of WAM Capital's investment manager, Wilson Asset Management (International) Pty Ltd. Mr Hamilton deposed to the receipt of the notice of breach, the negotiations to vary the Scheme Consideration, and the entry into the deed of variation of the Scheme Implementation Agreements. He confirmed there were no other material changes or other matters in relation to the Schemes which required disclosure by WAM Capital; and
(m)a second affidavit of Mr Ferguson filed 8 April 2022 confirming no objection to the Schemes had been received and attaching the certificates executed by Westoz or Ozgrowth (on the one hand) and WAM Capital (on the other) confirming that each of the conditions precedent of the Schemes had been satisfied or waived, as well as a letter from ASIC confirming ASIC had no objection to the proposed Scheme under s 411(17) of the Act.
These additional affidavits address the matters Ozgrowth and Westoz were 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 for each of the Schemes.
At the second court hearing, the court has two tasks:[10]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[11]
(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.
[10] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[11] 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.[12] 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.[13]
[12] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[13] 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:[14]
(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 ASIC has an objection to the scheme; and
(h)whether the scheme offends public policy.
[14] 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 Ozgrowth and Westoz, that:
(a)a copy of the Orders was lodged with ASIC on 28 February 2022;[15]
(b)a copy of the Ozgrowth Scheme booklet that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 1 March 2022;[16]
(c)a copy of the Westoz Scheme booklet that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 1 March 2022;[17]
(d)the Scheme booklets were dispatched to the Ozgrowth and Westoz shareholders (as the case may be) in accordance with the Orders. Both Ozgrowth and Westoz provided a detailed outline of this process and the tasks each relevant individual was responsible for;[18]
(e)the Scheme meetings were convened on 4 April 2022, adjourned until 6 April 2022, and held on 6 April 2022 in accordance with the Orders;[19]
(f)the Schemes were approved by the requisite statutory majorities;[20]
(g)notices of the second court hearing were given by way of advertisement in The West Australian newspaper and The Australian newspaper on 1 April 2022;[21] and
(h)ASIC informed Ozgrowth and Westoz on 8 April 2022, pursuant to s 411(17)(b) of the Act, that it has no objection to either of the proposed Schemes.[22]
[15] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [6] (COR 26 of 2022); Fifth Affidavit of Matthew Adam Ireland filed 5 April 2022 [6] (COR 27 of 2022).
[16] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [8] (COR 26 of 2022).
[17] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [8] (COR 27 of 2022).
[18] Affidavit of Emilia Varga filed 28 March 2022 [10] - [16] (COR 26 of 2022); Affidavit of Emilia Varga filed 28 March 2022 [10] - [16], [18] (COR 27 of 2022); Affidavit of Cassandra Rodgers filed 24 March 2022 [9] - [24] (COR 26 of 2022); Affidavit of Cassandra Rodgers filed 24 March 2022 [9] - [34] (COR 27 of 2022); Second affidavit of Emilia Varga filed 6 April 2022 [5] - [8] (COR 26 of 2022); Second affidavit of Emilia Varga filed 6 April 2022 [8] - [11] (COR 27 of 2022); Second affidavit of Cassandra Rodgers filed 6 April 2022 [14] - [52] (COR 26 of 2022); Second affidavit of Cassandra Rodgers filed 6 April 2022 [10] - [48] (COR 27 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022 [8] - [11] (COR 26 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022 [7] - [11] (COR 27 of 2022).
[19] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 (COR 26 of 2022); Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 (COR 27 of 2022).
[20] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [26] - [27], 'JM-4' (COR 26 of 2022); Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [26] - [27], 'JM-3' (COR 27 of 2022).
[21] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [19], 'MAI-11' (COR 26 of 2022); Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [19], 'MAI-11' (COR 27 of 2022).
[22] Second affidavit of James Ian Ferguson filed 8 April 2022, 'JIF-7' (COR 26 of 2022); Second affidavit of James Ian Ferguson filed 8 April 2022, 'JIF-7' (COR 27 of 2022).
In written and oral submissions, counsel for the plaintiffs drew my attention to three matters in relation to the Scheme meetings.
First, the adjournment of each Scheme meeting on 4 April 2022 until 6 April 2022. The Scheme meetings were initially convened on 4 April 2022 in accordance with Order 1(b) of my Orders. After opening the meeting, Mr Murray, who chaired each of the meetings in accordance with Order 8 of my Orders, adjourned each meeting until 6 April 2022 at the same time as the original meeting. This was in accordance with Order 9 of my Orders. On 6 April 2022, the Scheme meetings were re-convened and Mr Murray chaired the resumed Scheme meetings.
I am satisfied that the Scheme meetings were convened and held in accordance with my Orders.
The second matter was the voter turnout at the Scheme meetings. Of the 350,460,353 total Ozgrowth shares on issue, 284,068,833 shares were voted at the Ozgrowth Scheme meeting, comprising approximately 81.05% of the Ozgrowth shares on issue.[23] However, only 108 out of 601 eligible Ozgrowth shareholders voted at the Scheme meeting, representing approximately only 17.97% of eligible shareholders by number.[24]
[23] Affidavit of Anthony David Hewett filed 6 April 2022 [22] (COR 26 of 2022).
[24] Affidavit of Anthony David Hewett filed 6 April 2022 [22] (COR 26 of 2022).
Similarly, of the 133,686,000 total Westoz shares on issue, 74,953,224 shares were voted at the Westoz Scheme meeting, comprising approximately 56.07% of the Westoz shares on issue.[25] However, only 227 out of 1,618 eligible Westoz shareholders voted at the Scheme meeting, representing approximately only 14.03% of eligible shareholders by number.[26]
[25] Affidavit of Anthony David Hewett filed 6 April 2022 [23] (COR 27 of 2022).
[26] Affidavit of Anthony David Hewett filed 6 April 2022 [23] (COR 27 of 2022).
As was stated by Farrell J in Re TriAusMin Limited [No 2]:[27]
It is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme; apathy should not be presumed to be antagonism.
Nonetheless it does call for consideration to ensure that the vote [was] not unrepresentative, since the court retains the discretion to withhold its approval in that case. It is relevant to consider whether members have been deterred from attending or voting at the meeting. (footnotes omitted)
[27] Re TriAusMin Limited [No 2] [2014] FCA 833 [10] - [11].
Relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.[28]
[28] See for example Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680 [22] (44.23% of shareholders voting); Re Rebel Sport Ltd [No 2] [2007] FCA 458 [6] (24.99% of shareholders holding 83.59% of shares) Re Avoca Resources Ltd [2011] FCA 208 [25] (11.49% of shareholders holding 72.38% of shares); Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169 [3] (24.6% of shareholders voting); Re Straits Resources Ltd [No 2] [2011] FCA 47 [12] (10.8% of shareholders holding 74% of shares); Re Cortona Resources Ltd [No 2] [2013] FCA 302 [12] (17.5% of shareholders holding 45.2% of shares); Re Auzex Resources Ltd [No 2] [2012] QSC 101 [18] (9.75% of shareholders representing 42.3% of votes); Re TriAusMin Limited [No 2] [9] (10.94% of shareholders holding 52.9% of shares); Re Decimal Software Limited [No 2] [2018] FCA 2040 [15] - [16] (5.21% of shareholders holding 52.85% of shares); Re Pensana Metals Limited [2020] WASC 17 [12] (6.41% of shareholders holding 37.08% of shares); Re Zenith Energy Ltd [No 3] [2020] WASC 289 [18] (39% of shareholders holding 89.25% of shares); Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32 [47] (9.50% of shareholders holding 75.46% of shares); Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83 [32] (6.63% of shareholders holding 55.46% of shares); Re Piedmont Lithium Ltd [No 3] [2021] WASC 173 (8.44% of shareholders holding 26.74% of shares); Re Galaxy Resources Ltd [No 2] [2021] WASC 314 (7.31% of shareholders holding 53.87% of shares); Re Nusantara Resources Ltd [2021] WASC 334 (29.79% of shareholders holding 59.16% of shares); Re Valmec Ltd [2021] WASC 420 (17.62% of shareholders holding 74.22% of shares); Re Swick Mining Services Ltd [2022] WASC 79(6% of shareholders holding 60.23% of shares); Re PetroNor E&P Limited [No 2] [2022] WASC 81 (3.65% of shareholders holding 68.16% of shares); Re Bardoc Gold Ltd [No 2] [2022] WASC 113 [23] (8.03% of shareholders holding 37.1% of shares).

I was and am satisfied that there was sufficient turnout at the Scheme meetings. I do not consider that the low voter turnout by number of shareholders suggested there had been an error in the dispatch of either of the Scheme booklets, nor that this should prevent the court from making orders under s 411(4)(b) of the Act. In this respect, I have had regard to the following matters:
(a)the number of shareholders who voted at the Ozgrowth Scheme meeting, being approximately 17.97% of all eligible shareholders, exceeded the number of shareholders who voted at the two preceding general meetings of Ozgrowth;[29]
(b)the number of shareholders who voted at the Westoz Scheme meeting, being approximately 14.03% of all eligible shareholders, exceeded the number of shareholders who voted at the two preceding general meetings of Westoz;[30]
(c)a significant majority of shareholders (by number) who voted at the Scheme meetings voted in favour of the Schemes;
(d)there was no evidence which suggested any irregularity in the dispatch of the Scheme booklets; and
(e)there was no evidence of any issue which would have deterred shareholders from voting at or attending the Scheme meetings.
[29] Being approximately 8.5% at the 2020 annual general meeting and 7.89% at the 2021 annual general meeting: Affidavit of Anthony David Hewett filed 6 April 2022 [23], 'ADH-12' (COR 26 of 2022).
[30] Being approximately 6.59% at the 2020 annual general meeting and 5.74% at the 2021 annual general meeting: Affidavit of Anthony David Hewett filed 6 April 2022 [24], 'ADH-11' (COR 27 of 2022).
The third matter that counsel drew my attention to was the fact that the results of the polls were announced after each of the Scheme meetings was closed. Mr Murray was the chairperson of each of the Scheme meetings. Mr Murray deposed that at each of the Scheme meetings, he advised attendees that the results of the poll would be announced to the ASX platform shortly after the meeting once the votes were counted. He then declared the meeting closed, subject to the conclusion of the poll.[31]
[31] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [13] - [24] (COR 26 of 2022); Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [13] - [24] (COR 27 of 2022).
The approach of the 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 formally been closed, has been approved by the courts on numerous occasions.[32] No issue arises in the present case concerning the manner in which the polls were conducted or announced.
[32] Re Asaleo Care Limited (No 2) [2021] FCA 636 [26] - [28]; Re CSG Limited (No 2) [2020] NSWSC 39 [6] - [8]; Re National Australia Bank Ltd [2016] VSC 62 [56]; Re MAC Services Group Ltd [2010] NSWSC 1474.
Accordingly, I was and am satisfied that all statutory pre-conditions have been met. I now turn to consider the discretionary considerations.

Good faith and proper purpose

There is no evidence that either the Ozgrowth or Westoz shareholders voted for an improper purpose. I am satisfied on the evidence that has been filed by Ozgrowth and Westoz that the members of each of these companies voted in good faith and for a proper purpose as:
(a)the purpose of the proposed Schemes is to effect the acquisition by WAM Capital of all Ozgrowth and Westoz shares on issue, a transaction of a kind ordinarily approved by the court. It does not involve any novel treatment of rights;
(b)the independent expert opined that in the absence of an alternate proposal (and none has since emerged), the Schemes are in the best interests of shareholders; and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to approval of the proposed Schemes.

Fairness and reasonableness

At the first court hearing, based on the evidence before the court, I was satisfied that 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 shareholders who voted at the meetings overwhelmingly supported the proposed Schemes. No shareholder 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 business people might consider to be of benefit to shareholders.

All relevant matters brought to the court's attention

At the first court hearing, counsel for Ozgrowth and Westoz drew my attention to a number of matters. These are summarised in Re Ozgrowth Ltd at [56] - [94].
There were five further matters that counsel for the plaintiffs drew my attention to at the second court hearing.
First, in accordance with my reasons in Re Ozgrowth Ltd at [66] - [67], Ms McKay, counsel for the plaintiff, confirmed the uncertainty associated with the calculation of the Scheme Consideration was elevated to be the first mentioned reason shareholders may vote against each of the Schemes in the final Scheme booklets. I am satisfied that this occurred in numerous places throughout the Scheme booklets. I am also satisfied the Scheme booklets were amended to include reference to the provision of weekly updates on the estimated Scheme Consideration by way of announcements to the ASX. With respect to these updates, I am satisfied that Ozgrowth and Westoz shareholders were provided with updates by way of ASX announcements on 2 March 2022, 9 March 2022, 16 March 2022, 23 March 2022, and 30 March 2022.[33]
[33] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [10] - [12], 'MAI-4' (COR 26 of 2022); Fifth affidavit of Matthew Adam Ireland filed 5 April 2022 [10] - [12], 'MAI-4' (COR 27 of 2022).
Second, the breach of the Material Adverse Effect condition precedent of each of the Schemes. As noted in my reasons in Re Ozgrowth Ltd at [46], it is a condition precedent to the implementation of each Scheme that there be no Material Adverse Effect between the date the Scheme Implementation Agreement was entered into and 8.00 am on the Second Court Date. Material Adverse Effect is a defined term in each Scheme and relevantly requires the premium at which WAM Capital Shares are trading to remain between 12.5% and 25% of WAM Capital's Net Tangible Assets (NTA) as at the Calculation Date.
After close of trading on 31 March 2022, the directors of both Ozgrowth and Westoz were informed that WAM Capital's share price premium to its NTA as at close of trading on the Calculation Date was estimated to be approximately 31%. The directors of each company determined that none of the relevant exceptions applied and that, as a result, a Material Adverse Effect had occurred.[34]
[34] Second affidavit of Simon Joyner filed 6 April 2022 [5] (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [5] (COR 27 of 2022).
On 1 April 2022, each of Ozgrowth and Westoz gave WAM Capital notice of this breach under cl 3.5(b) of the Scheme Implementation Agreement (SIA).[35] In accordance with the terms of the SIA, each of Ozgrowth and Westoz consulted in good faith with WAM Capital to determine whether the Schemes could proceed.[36] While this occurred, both Ozgrowth and Westoz requested a trading halt, which was acceded to by the ASX.[37] On the afternoon of 1 April 2022, each of Ozgrowth and Westoz accepted a proposal from WAM Capital to vary the WAM Capital component of the Scheme Consideration formula from a 1 day VWAP to a 7 day VWAP. This offer was conditional on the maintenance of the current Scheme timetable.[38]
[35] Second affidavit of Simon Joyner filed 6 April 2022 [6], 'SJ-1' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [6], 'SJ-1' (COR 27 of 2022).
[36] Second affidavit of Simon Joyner filed 6 April 2022 [7], 'SJ-1' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [7], 'SJ-1' (COR 27 of 2022).
[37] Second affidavit of Simon Joyner filed 6 April 2022 [8], 'SJ-2' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [8], 'SJ-2' (COR 27 of 2022).
[38] Second affidavit of Simon Joyner filed 6 April 2022 [12] - [14], 'SJ-4' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [12] - [14], 'SJ-4' (COR 27 of 2022).
The effect of the amendment to the Ozgrowth Scheme Consideration was that Ozgrowth shareholders will receive 0.177 WAM Capital shares per Ozgrowth share, rather than 0.175 WAM Capital shares per Ozgrowth share. The effect for Westoz shareholders was that they will now receive 0.686 WAM Capital shares per Westoz share, rather than 0.679 WAM Capital shares per Westoz share.
On the basis of this amendment, Ozgrowth and Westoz each agreed to waive the breach of this condition precedent. In addition, the directors of each company agreed to maintain their recommendation in respect of the Schemes subject to the independent expert continuing to conclude the Scheme was in the best interests of their shareholders.[39] The independent expert issued a letter to each of Ozgrowth and Westoz expressing the opinion that, taking into account the breach and the variation to the Scheme Consideration, each scheme was in the best interests of shareholders.[40]
[39] Second affidavit of Simon Joyner filed 6 April 2022 [13] - [14], 'SJ-4' (COR 26 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022, 'ADH-9' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [13] - [14], 'SJ-4' (COR 27 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022, 'ADH-8' (COR 27 of 2022).
[40] Affidavit of Anthony David Hewett filed 6 April 2022, 'ADH-9' (COR 26 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022, 'ADH-8' (COR 27 of 2022).
On 3 April 2022, each of Ozgrowth and Westoz executed a variation deed with WAM Capital, varying the definition of WAM Capital VWAP in cl 1.1 of the Schemes.[41]
[41] Second affidavit of Simon Joyner filed 6 April 2022, 'SJ-5' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022, 'SJ-5' (COR 27 of 2022).
On 4 April 2022, both Ozgrowth and Westoz released an ASX announcement confirming they had entered into an agreement to vary the SIA. The announcement gave notice that each had requested the chairperson of the Scheme meetings to adjourn the meeting for two business days until 6 April 2022 to give shareholders the opportunity to consider the impact of this amendment, which the chairperson had agreed to do.[42]
[42] Affidavit of Anthony David Hewett filed 6 April 2022 [19], 'ADH-9' (COR 26 of 2022); Affidavit of Anthony David Hewett filed 6 April 2022 [20], 'ADH-8' (COR 27 of 2022).
Counsel for the plaintiffs submitted, which I accept, that an increase in the Scheme Consideration should not require any or any significant additional time for shareholders voting in favour of the Scheme to consider whether to change their vote. This is because an objective and commercially rational approach to an increase in Scheme Consideration is not to change their vote or require more time to consider the matter.
Third, counsel for the plaintiff drew to my attention the adjournment of the Scheme meetings and that no supplementary Scheme booklets had been provided to Ozgrowth and Westoz shareholders in relation to the increased Scheme Consideration.
In respect of both matters, on the morning of the date of the scheduled Scheme meetings, each of Ozgrowth and Westoz announced the Scheme Consideration had been varied. As a result of these amendments and to enable shareholders to consider the effect of the amendment, the boards of Ozgrowth and Westoz requested the chairperson of each meeting adjourn the Scheme meeting for two business days to 6 April 2022, which occurred.[43] During the Scheme meetings on 6 April 2022, Mr Murray addressed the meetings on the variation to the Scheme Consideration and explained the new formula that would apply to the calculation of the Scheme Consideration. The resolution put to each meeting sought approval for the Schemes proposed by the Orders I made on 28 February 2022. That is, when the members of each of Ozgrowth and Westoz voted on the Schemes, they did not vote to amend the Schemes. However, voting on the resolution took place on the basis the SIA had been varied, the Scheme Consideration had been increased and that the court, on this application, would be asked to modify the Scheme approved by members to provide for the increased Scheme Consideration.
[43] Second affidavit of Simon Joyner filed 6 April 2022 [17] (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022 [17] (COR 27 of 2022).
Ordinarily, where there is a material change to a proposed scheme, the company should approach the court to approve further material to be dispatched to shareholders before the scheme meeting[44] and for shareholders to be given sufficient time to consider the proposed amendment. In this case, neither Ozgrowth nor Westoz sought nor obtained that approval.
[44] Perpetual Custodians Ltd (as custodian for Tamoran Pty Ltd as trustee for Crivelli) v IOOF Investment Management Ltd [2013] NSWCA 231; (2013) 304 ALR 436 [49]; Re Galaxy Resources Ltd [No 2] [33].
Not all new information that may be relevant to a proposed scheme of arrangement will require supplementary disclosure. Disclosure of alterations to the terms of the scheme or of new information will generally only be required if it is material to the decision of members in deciding how to vote on the proposed scheme or whether to attend the scheme meeting.[45] As noted by Yates J in Re Billabong international Ltd [No 2][46] at [13]:
The circumstances in which the Court might be asked to approve a scheme subject to alterations or conditions will vary. Further, in the case of alterations, the alterations might be of a minor, technical or peripheral nature or they might be more substantive.
[45] Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485; (2006) 57 ACSR 791 [91].
[46] Re Billabong international Ltd [No 2] [2018] FCA 496.
I accept that the consideration a shareholder will receive is a material consideration in deciding whether to vote in favour of a proposed scheme. However, the materiality of the proposed change in these cases must be seen in the context that it is unambiguously advantageous to the shareholders. It is difficult to think that, the shareholders would have any cause for concern or complaint about being paid a greater price for their shares than provided by the scheme proposed by the orders made at the first court hearing.[47]
[47] Re Billabong international Ltd [No 2] [17].
In these matters, for the following reasons, I consider that the failure to provide a supplementary Scheme booklet or further time for shareholders to consider the amendment is not a basis upon which the court should exercise its discretion to refuse to approve the Schemes.
First, in both the Ozgrowth Scheme and the Westoz Scheme, the effect of the amendment to the SIA is that shareholders will receive an increase in the consideration for their shares. It is difficult to see what further information could have been provided to shareholders or what further time was required to enable shareholders to understand the significance of the amendment that had been made to the calculation of the Scheme Consideration.
Second, the offer of increased consideration was made on the basis that the current timetable was maintained.[48] In these circumstances, it is understandable that Ozgrowth and Westoz proceeded with the Scheme meetings after a short adjournment so as not to jeopardise the prospect their shareholders would receive the benefit of the increased Scheme Consideration.
[48] Second affidavit of Jesse Hamilton filed 7 April 2022 [15] (COR 26 of 2022); Second affidavit of Jesse Hamilton filed 7 April 2022 [15] (COR 27 of 2022).
Third, there is nothing in the alteration to the Scheme Consideration that caused unfairness to shareholders. It is difficult to imagine a circumstance where shareholders who were in favour of the Scheme would change their view upon being given notice they will be placed in a better position than originally contemplated. The strong majorities obtained at each Scheme meeting, the support of the independent expert, and the absence of any objector to either Scheme confirm this.
Fourth, in these matters, because of the variable Scheme Consideration, shareholders of both Ozgrowth and Westoz were reminded in the Scheme booklet to regularly review the ASX announcements which would provide updates on the calculation of the Scheme Consideration. For this reason, it is likely that shareholders were aware of the amendment to the Scheme Consideration at the time it occurred and could consider whether or not to attend the Scheme meeting and vote on the resolution.
In reaching this conclusion, I have also taken into account the position of ASIC, as set out in their letters dated 8 April 2022. ASIC's position was that:
(a)s 602 of the Act provides that shareholders should have a reasonable time to consider any proposal in which a person will acquire a substantial interest in a company;
(b)a change in consideration at or shortly prior to a scheme meeting may, in some circumstances, be inconsistent with this principle and may have a coercive effect on undecided voters;
(c)it had been provided with the submissions and affidavits in relation to each of the matters which make plain that the resolution to approve each Scheme was likely to have been approved even if the Scheme Consideration had not been amended, the votes cast at the Scheme meetings were not determinative (due to the proxies that had been received), and more than 98% of votes cast on the resolution at each meeting were in favour of the resolution;
(d)the independent expert maintained their opinion on each of the Schemes;
(e)these factors mitigated (but did not completely alleviate) the concerns that would otherwise arise from the short period of time that members had to consider the variation to the SIA.
The fourth matter that was raised by counsel for the plaintiffs was the voting intention statements announced by Euroz. On 10 March 2022, after the Scheme booklets were dispatched to shareholders, Euroz announced to the ASX that it intended to vote all their shares in favour of each Scheme.[49] As at that date, Euroz held approximately 41.57% of the shares in Ozgrowth and approximately 26.34% of the shares in Westoz.
[49] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-6' (COR 26 of 2022); Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-6' (COR 27 of 2022).
Following the amendment to the Scheme Consideration for each Scheme, ASIC asked the solicitors for Ozgrowth and Westoz to ensure Euroz was aware of the amendment and that it confirm its present intention.[50] On 4 April 2022, Euroz confirmed its voting intention statements.[51]
[50] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-10' (COR 26 of 2022); Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-10' (COR 27 of 2022).
[51] Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-7' (COR 26 of 2022); Fifth affidavit of Matthew Adam Ireland filed 5 April 2022, 'MAI-7' (COR 27 of 2022).
The terms of any voting intention statement by a member with a substantial shareholding is likely to attract the attention of both ASIC and the court. In these matters, Euroz's voting intention statements state the number and percentage terms of Euroz's holding in each company and contain appropriate qualifications, namely that they are subject to:
(a)the absence of a superior proposal being publicly announced prior to the Scheme meeting; and
(b)the independent expert continuing to conclude during the period before the Scheme meeting that the Scheme is in the best interests of shareholders.

These statements are consistent with the Takeovers Panel's Guidance Note 23: Shareholder intention statements.[52]
[52] See also Re NTM Gold Ltd [2021] WASC 22 [70] - [75].
Ozgrowth and Westoz agreed to tag the votes of Euroz at the Scheme meetings.[53]As set out above, even if these votes were excluded, each Scheme would have received sufficient votes to satisfy the requisite majorities and that each resolution was properly passed.[54]
[53] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [28] (COR 26 of 2022); Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [29] (COR 27 of 2022).
[54] Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [28] (COR 26 of 2022); Second affidavit of Jonathan Heath Stuart Murray filed 6 April 2022 [29] (COR 27 of 2022).
Fifth, counsel for the plaintiff drew my attention to the electronic execution of the deed of variation of the SIA. On 3 April 2022, each of Ozgrowth and Westoz executed these deeds electronically.[55]
[55] Second affidavit of Simon Joyner filed 6 April 2022, 'SJ-5' (COR 26 of 2022); Second affidavit of Simon Joyner filed 6 April 2022, 'SJ-5' (COR 27 of 2022).
On 22 February 2022, the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) came into effect. This Act, amongst other things, amended s 127 of the Act, which addresses execution of documents by a company including deeds. Section 127(3A) of the Act now provides:
(3A)A company may execute a document as a deed in accordance with subsection (1):
(a)without that execution being witnessed; and
(b)regardless of whether the document signed by the director or company secretary of the company, as applicable, is in physical form or electronic form.
Counsel for the plaintiffs submitted that the effect of this amendment, when read with s 126(6)(b), s 110(1) and s 110A of the Act, is that the common law requirements (including the requirements that it be written on paper and signed, that is, have a 'wet signature')[56] do not apply where a company, which is registered under the Act, executes a deed in accordance with s 127 of the Act.
[56] Scook v Premier Building Solutions Pty Ltd [2003] WASCA 263; (2003) 28 WAR 124 [22].
Section 127(3A) has not yet been the subject of judicial consideration. On its terms, the text of the section makes plain that a company may execute a deed electronically. This construction is consistent with the context and purpose of these amendments, which were first introduced as temporary measures to address the challenges associated with the COVID-19 pandemic. To the extent of the inconsistency between s 127 of the Act and s 9 of the Property Law Act 1969 (WA), I accept the provisions of s 127 of the Act will prevail.
For these reasons, I am satisfied the variation deeds were validly executed.

Full and fair disclosure

At the first court hearing, based on the evidence before the court, I was satisfied that the draft Scheme booklets would provide full and fair disclosure to shareholders.
The additional affidavit evidence filed by Ozgrowth and Westoz establishes that the Scheme booklets dispatched to shareholders were in the form approved for distribution by the court. Nothing has arisen to suggest there has not been full and fair disclosure of all information which was material to the decision of shareholders prior to them voting on each of the Schemes.

Oppression of minorities

There was no evidence that any minority has been oppressed in either of the Schemes.

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.[57] 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 Scheme was proposed to avoid the operation of ch 6 of the Act.

Public policy

[57] Second affidavit of James Ian Ferguson filed 8 April 2022, 'JIF-7' (COR 26 of 2022); Second affidavit of James Ian Ferguson filed 8 April 2022, 'JIF-7' (COR 27 of 2022).

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

Both Ozgrowth and Westoz seek an exemption from s 411(11) of the Act. In my view, there is no utility in requiring the court's orders approving the Scheme to be annexed to either company's constitution as the orders do not effect any change to those constitutions. This exemption has become ordinary practice for transactions of this kind.

Amendment to Scheme

As noted above, as a result of the amendment of the Scheme Consideration on 3 April 2022, each of Ozgrowth and Westoz sought an order pursuant to s 411(6) of the Act to alter the Scheme that was approved by their shareholders. The circumstances in which this occurred is set out at [31] - [49] above.
In considering whether it is just to approve a scheme in an amended form, it is relevant to consider whether the proposed amendment represents a substantial departure from the terms of the scheme that has been approved by shareholders.[58]
[58] Re Nzuri Copper Ltd [No 4] [2020] WASC 10 [7].
In this case, I am satisfied that the amendment proposed to each Scheme, which seeks to increase the Scheme Consideration payable to shareholders is not a substantial change to the Schemes that were approved by shareholders.

Conclusion and orders

At the second court hearing, I was satisfied that the substantive and procedural requirements under s 411(4) of the Act had been satisfied and that I should approve the proposed Schemes, subject to the amendment to the definition of 'WAM Capital VWAP' to reflect the agreed amendment to the Scheme Consideration.
For these reasons, at the conclusion of the hearing on 8 April 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
13 MAY 2022