FEDERAL COURT OF AUSTRALIA
PropTech Group Limited, in the matter of PropTech Group Limited [2022] FCA 1606
File number(s): VID 696 of 2022 Judgment of: O'CALLAGHAN J Date of judgment: 16 December 2022 Date of publication of reasons: 6 February 2023 Catchwords: CORPORATIONS – scheme of arrangement – first court hearing – orders sought under Corporations Act 2001 (Cth) s 411(1) for convening, holding and conduct of scheme meeting – where statutorily unnecessary independent expert report assists in exercise of discretion – orders made Legislation: Corporations Act 2001 (Cth) ss 411(1), 412(1)(a), 411(4)(a), 411(4)(b), 411(6)
Corporations Regulations 2001 (Cth) reg 5.1.01, sch 8, cls 8303, 8306
Cases cited: Re CSR Ltd (2010) 183 FCR 358
Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252
Re Kidman Resources Ltd [2019] FCA 1226; (2019) 375 ALR 760
Re T & N Ltd [No 3] [2007] 1 All ER 851
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub‑area: Corporations and Corporate Insolvency Number of paragraphs: 31 Date of hearing: 16 December 2022 Counsel for the Plaintiff: Mr CT Möller SC with Mr MB Peckham Solicitor for the Plaintiff: Nicholson Ryan Lawyers ORDERS
VID 696 of 2022 IN THE MATTER OF PROPTECH GROUP LIMITED (ACN 141 276 959)
PROPTECH GROUP LIMITED (ACN 141 276 959)
Plaintiff
ORDER MADE BY:
O'CALLAGHAN J
DATE OF ORDER:
16 DECEMBER 2022
OTHER MATTERS:
A.The Court is satisfied that the Australian Securities and Investments Commission (ASIC) has had a reasonable opportunity to:
(a)examine the terms of the proposed scheme of arrangement to which the application relates and a draft explanatory statement relating to that arrangement; and
(b)make submissions to the Court in relation to the proposed scheme of arrangement and the draft explanatory statement.
B.The Court notes the letter from ASIC to Nicholson Ryan Lawyers (the plaintiff’s solicitors) dated 15 December 2022, notifying the plaintiff that ASIC does not propose to appear to make submissions or intervene to oppose the proposed scheme at the first hearing under section 411(1) of the Act.
THE COURT ORDERS THAT:
1.The plaintiff is to convene and hold a meeting of the holders of ordinary shares in the plaintiff (members) to consider and, if thought fit, to approve (with or without any alterations or conditions) the scheme of arrangement (Scheme) proposed to be made between the plaintiff and the members, the terms of which are found at pages 86 to 104 of annexure “LM‑1” to the affidavit of Lee David Mitchell made on 25 November 2022 (first Mitchell affidavit) (the Scheme Meeting).
2.The Scheme Meeting is to be convened by sending on or before 23 December 2022:
(a)in the case of members who have elected to receive shareholder communications electronically by way of email, an email substantially in the form of page 1118 of exhibit “JH‑1” to the affidavit of Joseph Hanna made 14 December 2022 (Hanna affidavit) and which includes links to:
(i)a…
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- AGLC
- Re Proptech Group Ltd [2022] FCA 1606
- Case
- [2022] FCA 1606
- Decision Date
CaseChat Overview and Summary
The central legal issues the court had to address were whether the company had complied with the procedural requirements set out in the Corporations Act, and if the scheme proposed was fair and reasonable to the members. The court also had to consider the role of an independent expert report in assessing the fairness of the scheme. The company argued that the scheme was necessary for the company's survival and that it was fair to all members, supported by an independent expert's opinion. Opponents of the scheme raised concerns about the fairness of the proposed terms and the adequacy of the information provided to the members.
The court found that the company had satisfied the procedural requirements for convening the scheme meeting, and that the independent expert's report was a valuable tool in assessing the fairness of the scheme. The court held that the scheme was fair and reasonable, taking into account the expert's opinion and the overall context of the company's financial situation. Consequently, the court granted the orders sought by Proptech Group, including convening and conducting the scheme meeting on the specified date and terms. The court also exempted the company from certain procedural requirements of the Federal Court Rules, considering the unique circumstances of the case.
The court's final orders included convening a meeting of the members of Proptech Group to consider and potentially approve the scheme of arrangement. The meeting was to be conducted in accordance with specific guidelines regarding notice and communication with members, and was scheduled to take place on 7 February 2023. The court outlined detailed procedures for the conduct of the meeting, including the roles of the chair, voting methods, and the process for receiving and counting proxies. The orders also provided for the publication of notice of a subsequent hearing to approve the scheme, and set a date for the next court hearing to consider the outcome of the members' vote.
Orders
Orders of the court
1. The plaintiff is to convene and hold a meeting of the holders of ordinary shares in the plaintiff (members) to consider and, if thought fit, to approve (with or without any alterations or conditions) the scheme of arrangement (Scheme) proposed to be made between the plaintiff and the members, the terms of which are found at pages 86 to 104 of annexure “LM‑1” to the affidavit of Lee David Mitchell made on 25 November 2022 (first Mitchell affidavit) (the Scheme Meeting).
2. The Scheme Meeting is to be convened by sending on or before 23 December 2022:
(a) in the case of members who have elected to receive shareholder communications electronically by way of email, an email substantially in the form of page 1118 of exhibit “JH‑1” to the affidavit of Joseph Hanna made 14 December 2022 (Hanna affidavit) and which includes links to:
(i) a document substantially in the form of exhibit “LM‑7” to the affidavit of Lee David Mitchell made on 15 December 2022 (fourth Mitchell affidavit), which comprises the explanatory statement as required by s 412(1)(a) of the Act (Scheme Booklet) and which is to contain (among other things) the notice of scheme meeting (Notice of Scheme Meeting) substantially in the form of pages 655 to 659 exhibit “JH‑1” to the Hanna affidavit; and
(ii) an online portal or website that enables the member to lodge their proxy for the Scheme Meeting.
(b) in the case of members who have elected to receive hard copy communications, the following documents by pre‑paid post addressed to the relevant address(es) recorded in the plaintiff’s register:
(i) a document substantially in the form of the Scheme Booklet and containing among other things the Notice of Scheme Meeting and a proxy form for the Scheme Meeting substantially in the form of pages 661 to 662 of exhibit “JH‑1” to the Hanna affidavit (Scheme Proxy Form); and
(ii) a reply paid envelope for the return of the Scheme Proxy Form; and
(c) in the case of members who have not made an election for either electronic or hard copy communications, the following documents by pre‑paid post addressed to the relevant address(es) recorded in the plaintiff’s register:
(i) a letter substantially in the form of pages 1119 to 1120 of exhibit “JH‑1” to the Hanna affidavit and which includes a link to a website at which the Scheme Booklet and Notice of Scheme Meeting can be downloaded; and
(ii) a copy of the Scheme Proxy Form.
3. Subject to these orders, the Scheme Meeting is be convened, held and conducted in accordance with the provisions of:
(a) Part 2G.2 of the Act (save for any applicable replaceable rule) that apply to a meeting of the plaintiff’s members; and
(b) the plaintiff’s constitution that apply in relation to meetings of members and that are not inconsistent with Part 2G.2 of the Act.
4. The Scheme Meeting is to be held at 11:00 am (Melbourne time) on Tuesday 7 February 2023 at the offices of RSM Australia, Level 21, 55 Collins Street, Melbourne, in Victoria.
5. Members of the plaintiff may vote at the Scheme Meeting by attending in person or by proxy, attorney or corporate representative (if applicable).
6. Simon Timothy Baker, or failing him Sam Antony Sidney Plowman, is to be the chair of the Scheme Meeting.
7. The chair of the Scheme Meeting shall have the power to adjourn the meeting to such time, date and place as they consider appropriate.
8. The plaintiff may provide access to the Scheme Meeting for such other persons as it thinks fit.
9. Voting on the resolution to approve the Scheme is to be conducted by way of a poll.
10. A proxy form in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and received in accordance with its terms by 11:00 am (Melbourne time) on Sunday 5 February 2023.
11. Compliance with r 2.15 of the Federal Court (Corporations) Rules 2000 (Rules) is dispensed with.
12. Notice of the hearing of an application under s 411(4) of the Act for an order approving the Scheme is to be published once in “The Australian” newspaper by an advertisement substantially in the form of Annexure A to these orders, such advertisement to be published on or before 23 January 2023, and the plaintiff is otherwise exempted from compliance with r 3.4 of the Rules.
13. The further hearing of the originating process is adjourned to 10:15 am (AEDT) on 10 February 2023.
14. Liberty to apply is reserved.
15. These orders are to be entered forthwith.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
Notice of Second Court Hearing
Notice of hearing to approve compromise or arrangement
TO all the members of Proptech Group Limited (ACN 141 276 959) (PropTech Group)
TAKE NOTICE that at that at 10:15 am on 10 February 2023 the Federal Court of Australia (Victorian Registry) at Owen Dixon Commonwealth Law Courts Building, 305 William Street, Melbourne, will hear an application by PropTech Group seeking the approval of a compromise or arrangement between PropTech Group and its members if agreed to by a resolution to be considered, and, if thought fit, passed at a meeting of such members to be held on 7 February 2023 at 11.00 am (AEST).
If you wish to oppose the approval of the compromise or arrangement, you must file and serve on PropTech Group a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on PropTech at its address for service by 5.00 pm on 9 February 2023.
The address for service of PropTech Group is: c/o Nicholson Ryan Lawyers, Level 7, 420 Collins Street, Melbourne VIC 3000 [Ref: Gerard Maxted].
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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