Re QT Mutual Bank Ltd (No 2) - [2016] QSC 265

SUPREME COURT OF QUEENSLAND

CITATION:

Re QT Mutual Bank Ltd (No 2) [2016] QSC 265

PARTIES:

QT MUTUAL BANK LTD
ABN 83 087 651 054

(applicant)

FILE NO/S:

SC No 9068 of 2016

DIVISION:

Trial Division

PROCEEDING:

Originating Application

DELIVERED ON:

9 November 2016, ex tempore

DELIVERED AT:

Brisbane

HEARING DATE:

9 November 2016

JUDGE:

Bond J

ORDER:

The orders of the Court are that:

1. Pursuant to subsection 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the Applicant and its members, in the form of Exhibit 1 in the proceeding, be approved.

2. The Applicant lodge with the Australian Securities and Investments Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders.

3. Pursuant to section 411(12) of the Act, the Applicant be exempted from compliance with section 411(11) of the Act in relation to Order 1.

4. There be no order as to costs.

CATCHWORDS:

CORPORATIONS – ARRANGEMENTS AND RECONSTRUCTIONS – SCHEMES OF ARRANGEMENT OR COMPROMISE – APPROVAL OF SCHEME BY COURT – EXERCISE OF COURT’S DISCRETION – GENERALLY – where applicant convened a meeting of the applicant company’s shareholders – where scheme has obtained a statutory majority at the meeting – where defect in compliance with previous order regarding the manner of notification to be given to members – where applicant decided to not notify deceased members of the meeting – whether the irregularity has caused, or may cause, substantial injustice – whether failure a reason to withhold the court’s approval of the scheme

Corporations Act 2001 (Cth), s 411, s 1319, s 1322

Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 194 FLR 322; (2005) 55 ACSR 185, cited
Re Pembury Pty Ltd [1993] 1 Qd R 125; (1991) 4 ACSR 759, cited
Re Permanent Trustee Company Limited [2002] NSWSC 1177, cited
Re QT Mutual Bank Ltd [2016] QSC 228, referred to
Re Seven Network Limited (No 3) [2010] FCA 400, followed
Ryan v South Sydney Junior Rugby League Club Limited (1974) 3 ACLR 486, followed

Scullion v Family Planning Association of Queensland (1985) 10 ACLR 249, followed

COUNSEL:

M Oakes SC for the applicant

M Stewart QC for Royal Automobile Club of Queensland Ltd

SOLICITORS:

Clayton Utz for the applicant

McCullough Robertson for Royal Automobile Club of Queensland Ltd

This is the second court hearing in respect of an application, pursuant to s 411 of the Corporations Act 2001 (Cth), concerning a scheme of arrangement between the applicant, QT Mutual Bank Limited (which I will refer to as “QTMB”) and its members.
The first hearing was heard before me on 21 September 2016 and my judgment is found in Re QT Mutual Bank Ltd [2016] QSC 228. The judgment records the nature of the scheme and the reasons I had for forming the view that, amongst other things, there was no apparent reason why the scheme should…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] QSC 265
Decision Date: 9 November 2016, ex tempore

CaseChat Overview and Summary

The case of Re QT Mutual Bank Ltd (No 2) involved a dispute regarding the approval of a scheme of arrangement by the court. The applicant, QT Mutual Bank Ltd, sought the court’s approval of a proposed scheme which had already achieved a statutory majority at a meeting of its shareholders. However, there was a defect in the manner in which the meeting had been notified to the shareholders, specifically concerning deceased members who had not been notified. This non-compliance raised questions about whether the irregularity might cause, or had caused, substantial injustice, and if it provided a reason to withhold the court’s approval of the scheme.

The central legal issues before the court were whether the irregularity in notification to deceased shareholders warranted withholding approval of the scheme under subsection 411(4)(b) of the Corporations Act 2001 (Cth), and if the defect had caused, or might cause, substantial injustice. The court had to balance the procedural requirements of the Act with the principle of fairness and the practical implications of the defect.

In determining the case, the court examined the nature and extent of the irregularity and its potential impact on the fairness of the scheme. The court concluded that the defect, while significant, did not result in substantial injustice and was not a sufficient reason to withhold approval of the scheme. The court found that the applicant’s decision to not notify deceased members did not prejudice their rights and that the statutory majority achieved at the meeting demonstrated the scheme's overall fairness and acceptance by the majority of shareholders. The court, therefore, exercised its discretion under the Act to approve the scheme.

Accordingly, the court made orders approving the scheme of arrangement between QT Mutual Bank Ltd and its members, exempting the applicant from certain compliance requirements, and making no order as to costs. The scheme was to be lodged with the Australian Securities and Investments Commission along with a copy of the court's orders.

Orders

Orders of the court

The orders of the Court are that:

1. Pursuant to subsection 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the Applicant and its members, in the form of Exhibit 1 in the proceeding, be approved.

2. The Applicant lodge with the Australian Securities and Investments Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders.

3. Pursuant to section 411(12) of the Act, the Applicant be exempted from compliance with section 411(11) of the Act in relation to Order 1.

4. There be no order as to costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Re QT Mutual Bank Ltd (No 2) [2016] QSC 265
PARTIES:	QT MUTUAL BANK LTD ABN 83 087 651 054 (applicant)
FILE NO/S:	SC No 9068 of 2016
DIVISION:	Trial Division
PROCEEDING:	Originating Application
DELIVERED ON:	9 November 2016, ex tempore
DELIVERED AT:	Brisbane
HEARING DATE:	9 November 2016
JUDGE:	Bond J
ORDER:	The orders of the Court are that: 1. Pursuant to subsection 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the Applicant and its members, in the form of Exhibit 1 in the proceeding, be approved. 2. The Applicant lodge with the Australian Securities and Investments Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders. 3. Pursuant to section 411(12) of the Act, the Applicant be exempted from compliance with section 411(11) of the Act in relation to Order 1. 4. There be no order as to costs.
CATCHWORDS:	CORPORATIONS – ARRANGEMENTS AND RECONSTRUCTIONS – SCHEMES OF ARRANGEMENT OR COMPROMISE – APPROVAL OF SCHEME BY COURT – EXERCISE OF COURT’S DISCRETION – GENERALLY – where applicant convened a meeting of the applicant company’s shareholders – where scheme has obtained a statutory majority at the meeting – where defect in compliance with previous order regarding the manner of notification to be given to members – where applicant decided to not notify deceased members of the meeting – whether the irregularity has caused, or may cause, substantial injustice – whether failure a reason to withhold the court’s approval of the scheme Corporations Act 2001 (Cth), s 411, s 1319, s 1322 Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 194 FLR 322; (2005) 55 ACSR 185, cited Re Pembury Pty Ltd [1993] 1 Qd R 125; (1991) 4 ACSR 759, cited Re Permanent Trustee Company Limited [2002] NSWSC 1177, cited Re QT Mutual Bank Ltd [2016] QSC 228, referred to Re Seven Network Limited (No 3) [2010] FCA 400, followed Ryan v South Sydney Junior Rugby League Club Limited (1974) 3 ACLR 486, followed Scullion v Family Planning Association of Queensland (1985) 10 ACLR 249, followed
COUNSEL:	M Oakes SC for the applicant M Stewart QC for Royal Automobile Club of Queensland Ltd
SOLICITORS:	Clayton Utz for the applicant McCullough Robertson for Royal Automobile Club of Queensland Ltd