Re Saracen Mineral Holdings Ltd [No 2] - [2021] WASC 32

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   EX PARTE SARACEN MINERAL HOLDINGS LTD [No 2] [2021] WASC 32
CORAM:   HILL J
HEARD:   2 FEBRUARY 2021
DELIVERED          :   2 FEBRUARY 2021
PUBLISHED           :   12 FEBRUARY 2021
FILE NO/S:   COR 138 of 2020

EX PARTE
SARACEN MINERAL HOLDINGS LTD
Plaintiff
NORTHERN STAR RESOURCES LTD
Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Application for orders approving scheme under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme

Corporations law – Procedural irregularities - Applications under s 1322(4) of the Corporations Act 2001 (Cth) – Applications granted

Legislation:

Corporations (Coronavirus Economic Response) Determination 2020 (No 3) (Cth)
Corporations Act 2001 (Cth), s 411(4)(b), s 411(6), s 1322(4)

Result:

Orders made approving scheme

Category: B

Representation:

Counsel:

Plaintiff	:	S K Dharmananda SC & J R C Sippe
Interested Party	:	C L Pedler

Solicitors:

Plaintiff	:	DLA Piper Australia - Perth
Interested Party	:	Ashurst Australia

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

City Pacific Ltd v Bacon (No 2) [2009] FCA 772; (2009) 178 FCR 81
Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 55 ACSR 185
Ex parte Saracen Mineral Holdings Ltd [2020] WASC 483
Re Amcor Ltd [No 2] [2019] FCA 842
Re Auzex Resources Ltd [No 2] [2012] QSC 101
Re Avoca Resources Ltd [2011] FCA 208
Re Beadell Resources Ltd [No 2] [2019] WASC 53
Re Cortona Resources Ltd [No 2] [2013] FCA 302
Re Decimal Software Limited [No 2] [2018] FCA 2040
Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680
Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169
Re International Goldfields Ltd [2004] WASC 112
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re Pensana Metals Ltd; Ex parte Pensana Metals Limited [2020] WASC 17
Re Rebel Sport Ltd [No 2] [2007] FCA 458
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Straits Resources Ltd [No 2] [2011] FCA 47
Re TriAusMin Limited [No 2] [2014] FCA 833
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357
Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257
Re Zenith Energy; Ex parte Zenith Energy Ltd [No 3] [2020] WASC 289

HILL J:

The plaintiff, Saracen Mineral Holdings Limited (Saracen), applies for orders approving a proposed scheme of arrangement (Scheme). The background to the matter is set out in the judgment I delivered following the first court hearing.[1] At the first court hearing on 9 December 2020, I made orders for the Scheme meeting to be convened (Orders).
[1] Ex parte Saracen Mineral Holdings Ltd [2020] WASC 483.

Scheme Meeting

The Scheme meeting was convened and held on 15 January 2021. At the meeting, the resolution was passed by the requisite statutory majorities.
1,754 shareholders were present at the Scheme meeting in person and by proxy, comprising approximately 9.50% of shareholders by number and 75.46% of the issued share capital of the plaintiff.[2] 98.18% of shareholders who voted at the meeting were in favour of the resolution.[3] 99.95% of votes cast on the resolution were cast in favour of the resolution.[4]
[2] Affidavit of Michael Phillip Bowen filed 25 January 2021 [39].
[3] Affidavit of Michael Phillip Bowen filed 25 January 2021 [38].
[4] Affidavit of Michael Phillip Bowen filed 25 January 2021 [38].

Approval of Scheme

This matter came back before me for the second court hearing on 2 February 2021.
In addition to the affidavits that were relied upon at the first hearing, Saracen relied on the following additional affidavits:
(a)a second affidavit of Michael Phillip Bowen filed 25 January 2021, the chairperson of the Scheme meeting, providing a report on the meeting;
(b)a fifth affidavit of Kirsty Jayne Hall filed 25 January 2021, in relation to the lodgement of the Orders with ASIC, the amendments that were made to the Scheme booklet following the first court hearing and before registration and dispatch, the registration of the Scheme booklet, and the advertisement of the second court hearing;
(c)a third affidavit of Morgan Scott Ball filed 25 January 2021, regarding the verification of the amended Scheme booklet registered with ASIC, and the determination by the directors of Saracen to pay the Special Dividend;
(d) an affidavit of Rodney Rex Somes filed 29 January 2021, a senior relationship manager with Computershare Investor Services Pty Ltd, the share registry for the plaintiff, in relation to the dispatch of hard copy materials to shareholders in relation to the Scheme, as well as the email broadcast to shareholders who had nominated an electronic address for service of notices of meeting, the receipt of proxies from shareholders, and the conduct of the polls at the Scheme meeting;
(e)an affidavit of Alexander Joseph Dixon Hughes filed 29 January 2021, an employee of Lumi Technologies Pty Ltd, who provided the online platform for the Scheme meeting, regarding the conduct of the meeting on the online platform;
(f) a sixth affidavit of Kirsty Jayne Hall filed 29 January 2021, confirming service of the court documents for the second court hearing on ASIC and annexing correspondence with ASIC regarding the Scheme meeting; and
(g)a seventh affidavit of Ms Hall filed 2 February 2021, annexing a letter from Ernst & Young, the independent expert, confirming that nothing had come to their attention that could cause them to change their opinion on the Scheme, a letter from ASIC confirming that ASIC had no objection to the proposed Scheme under s 411(7)(b) of the Act, and the certificates issued by Saracen and Northern Star confirming that all conditions precedent (apart from the orders sought at the second court hearing) had been satisfied in respect of the Scheme.
These additional affidavits address the matters that Saracen was 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.
At the second court hearing, the court has two tasks:[5]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[6]
(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.
[5] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[6] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) 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.[7] 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.[8]
[7] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[8] Re Wesfarmers Ltd; Ex parte 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:[9]
(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.
[9] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].

Disposition

Compliance with statutory and procedural requirements

I am and was satisfied, on the basis of the additional affidavits that were filed by Saracen, that:
(a)a copy of the Orders was lodged with ASIC on 10 December 2020;[10]
(b)a copy of the Scheme booklet that was approved for distribution by the court, subject to minor amendments that could be made in accordance with order 2 of the Orders, was lodged with ASIC and registered on 10 December 2020;[11]
(c)the Scheme booklet was dispatched to shareholders in accordance with the Orders, save for the matters which I address below at [12] ‑ [42];[12]
(d)the Scheme meeting was convened and held on 15 January 2021 in accordance with the Orders;[13]
(e)the Scheme was approved by the requisite statutory majorities;[14]
(f)notice of the second court hearing was given by way of advertisement in The West Australian and The Australian newspapers on 25 January 2021 respectively;[15]
(g)following the imposition of a hard lock down in the Perth metropolitan area from 6.00 pm on 31 January 2021 for five days,[16] notice was given that the second court hearing would proceed as a virtual hearing in an updated ASX announcement released on 1 February 2021[17] and an advertisement in The West Australian on 2 February 2021;[18] and
(h)ASIC informed Saracen on 1 February 2021, pursuant to s 411(17)(b) of the Act, that it had no objection to the proposed Scheme.[19]
[10] Fifth affidavit of Kirsty Jayne Hall filed 25 January 2021 [6].
[11] Fifth affidavit of Kirsty Jayne Hall filed 25 January 2021 [5] - [11], 'KJH-39' – 'KJH-42'.
[12] Affidavit of Rodney Rex Somes filed 29 January 2021 [20] – [31].
[13] Affidavit of Michael Phillip Bowen filed 25 January 2021, 'MPB-3'; Affidavit of Rodney Rex Somes filed 29 January 2021 [65] – [93]; Affidavit of Alexander Joseph Dixon Hughes filed 29 January 2021 [31], [51] ‑ [54].
[14] Affidavit of Michael Phillip Bowen filed 25 January 2021 [38], 'MPB-1'
[15] Fifth affidavit of Kirsty Jayne Hall filed 25 January 2021 'KJH-46', 'KJH-47'.
[16] Stay at Home and Closure (Perth, Peel and the South West Regions) Directions (No 3), Emergency Management Act 2005 (WA) s 61, s 67, s 71 and s 72A.
[17] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021 [6], 'KJH-53'.
[18] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021 [8], 'KJH-54'.
[19] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021, 'KJH-61'.
Senior counsel for the plaintiff drew my attention to two matters in relation to the Scheme meeting which did not comply with the Orders.
First, order 5 of the Orders required that where the company received an undeliverable or undelivered receipt from the nominated email address of a shareholder, hard copies of a letter with the address of the website enabling shareholders to access and download the Scheme booklet, a personalised proxy appointment form, an opt-in notice, and a reply paid envelope (Shareholder Packs), be dispatched to shareholders within a 'reasonable time'.
Computershare received undeliverable or undelivered receipts from 47 shareholders.[20] In accordance with order 5 of the Orders, Shareholder Packs were dispatched to these shareholders on 17 December 2020.[21] On 27 December 2020, Computershare became aware that the hard copy proxy appointment forms in the Shareholder Packs did not contain the 'tick boxes' to enable shareholders to direct their proxy as to how to vote (or to abstain) or to leave their votes undirected.[22] On 29 December 2020, replacement Shareholder Packs were dispatched to these shareholders.[23]
[20] Affidavit of Rodney Rex Somes filed 29 January 2021 [24].
[21] Affidavit of Rodney Rex Somes filed 29 January 2021 [46] – [47].
[22] Affidavit of Rodney Rex Somes filed 29 January 2021 [48].
[23] Affidavit of Rodney Rex Somes filed 29 January 2021 [50] – [52].
Senior counsel submitted that, to the extent the dispatch of the Shareholder Packs was not done within a 'reasonable time' after the undeliverable or undelivered receipts were received, this was a procedural irregularity. That is, it was a defect, irregularity or deficiency in notice or time.[24]
[24] Corporations Act2001 (Cth) s 1322(1)(b)(ii); Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [28].
Section 1322(2) of the Act provides that:
A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.
I accept that a scheme meeting is a 'proceeding' under the Act for the purposes of this section.[25]
[25] City Pacific Ltd v Bacon (No 2) [2009] FCA 772; (2009) 178 FCR 81 [51]. See also, Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [28].
To determine whether the non-compliance with order 5 of the Orders is a procedural irregularity for the purposes of the Act, it is necessary to consider first, what is 'the thing to be done', and second, whether the irregularity changes 'the thing to be done' or merely departs from the manner in which 'the thing is to be done'.[26]
[26] Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 55 ACSR 185 [103].
In this case, the 'thing to be done' is the dispatch of hard copy proxy forms. I am satisfied that the non‑compliance with the order did not change the thing to be done but simply departed from the manner in which this was ordered to occur. For this reason, I accept that the non‑compliance with order 5 was a procedural irregularity.
Turning then to the question as to whether there has been or may be any substantial injustice caused by the procedural irregularity, for the following reasons, I am satisfied that there was no substantial injustice.
First, the Shareholder Packs were dispatched in accordance with the Orders and informed shareholders about the Scheme Meeting and how to access the Scheme Booklet. The error in the proxy forms was promptly remedied by the dispatch of replacement Shareholder Packs.
Second, the Shareholder Packs explained that shareholders could lodge a proxy appointment online using the details provided in the Scheme Booklet and on the proxy appointment forms.[27]
[27] Affidavit of Rodney Rex Somes filed 29 January 2021, 'RRS-4'.
Third, no person has raised an objection or complaint as a result of the error in the proxy appointment forms.
Fourth, nine of the 47 shareholders appointed proxies to vote at the Scheme Meeting (including seven by lodging hard copy proxy appointment forms). This indicates that these shareholders received the replacement materials in sufficient time to consider and vote on the Scheme.[28]
[28] Affidavit of Rodney Rex Somes filed 29 January 2021 [69].
The second issue concerned the issue of login details to enable shareholders to log into and attend the virtual Scheme meeting. The Notice of Scheme Meeting informed shareholders that persons appointed as proxies would be given a username and password to login to the Lumi Platform and attend the virtual Scheme meeting, no later than 24 hours prior to the Scheme meeting.[29]
[29] Affidavit of Rodney Rex Somes filed 29 January 2021 [84]; Fifth Affidavit of Kirsty Jayne Hall filed 25 January 2021, 'KJH-39' (p 668).
Apart from the chairperson of the Scheme meeting, four people were appointed as proxy for the Scheme meeting.[30] 34 shareholders appointed the Australian Shareholders Association (ASA),[31] two shareholders appointed themselves as proxy and the fourth appointed its sole director and shareholder as their proxy.[32]
[30] Affidavit of Rodney Rex Somes filed 29 January 2021 [80].
[31] Affidavit of Rodney Rex Somes filed 29 January 2021 [110].
[32] Affidavit of Rodney Rex Somes filed 29 January 2021 [90].
In respect of the ASA, the evidence before me is that:
(a)Computershare provided the ASA with login details to attend the meeting at 11:56 am (AWST) on 14 January 2021, less than 24 hours before the Scheme meeting;[33]
(b)proxies of 31 shareholders holding a total of 264,237 Shares were to be cast at the proxy's discretion (or, failing that, at the chairperson's discretion) and the proxies of three shareholders holding a total of 10,557 Shares were directed to be voted in favour of the Scheme;[34]
(c)the Lumi platform used for the virtual Scheme meeting enabled people to attend the Scheme meeting either as a Shareholder, in which case they could ask questions, make comments and vote, or as a Guest, in which case they were unable to ask questions, make comments or vote;[35]
(d)the ASA's corporate representative for the Scheme meeting did not login to the Scheme meeting as a shareholder[36] or contact the technical support line to seek assistance with logging in as a shareholder.[37] Instead he logged in as a Guest and, accordingly, was unable to vote at the Scheme Meeting.[38] During the Scheme meeting, he sent an email to Computershare asking that all 264,237 Shares in respect of which the ASA had been appointed as undirected proxy be voted against the Scheme but the email was not read until after the Scheme meeting had closed;[39]
(e)the Notice of Scheme Meeting[40] and the proxy form[41] for the Scheme Meeting gave notice that the Chairperson intended to cast all undirected proxy votes in favour of the Scheme. Because the ASA's corporate representative did not log on as a shareholder, the proxies for all 34 shareholders defaulted to the Chairperson who voted them in favour of the Scheme;[42]
(f)the 264,237 Shares constituted approximately 0.03% of the votes cast on the resolution.[43] Had these shares been cast against the Scheme Resolution, the effect on the total votes cast at the Scheme Meeting would have been as follows: 96.41% of shareholders would have voted in favour of the resolution (down from 98.18%) and 99.91% of votes would have been cast in favour of the resolution (down from 99.95%).[44] That is, even if the votes had been cast against the resolution, it would not have altered the outcome of the overall vote on the Scheme Resolution.
[33] Affidavit of Rodney Rex Somes filed 29 January 2021 [83].
[34] Affidavit of Rodney Rex Somes filed 29 January 2021 [110], 'RRS-19', 'RRS-20'.
[35] Affidavit of Alexander Joseph Dixon Hughes filed 29 January 2021 [35].
[36] Affidavit of Rodney Rex Somes filed 29 January 2021 [103].
[37] Affidavit of Rodney Rex Somes filed 29 January 2021 [122].
[38] Affidavit of Rodney Rex Somes filed 29 January 2021 [103]; Affidavit of Alexander Joseph Dixon Hughes filed 29 January 2021 [35].
[39] Affidavit of Rodney Rex Somes filed 29 January 2021 [115] – [118], 'RRS-23', 'RRS-24'.
[40] Fifth Affidavit of Kirsty Jayne Hall filed 25 January 2021 [6], 'KJH-39' (p 669).
[41] Affidavit of Rodney Rex Somes filed 29 January 2021 [27], 'RRS-4'.
[42] Affidavit of Rodney Rex Somes filed 29 January 2021 [117]; Second Affidavit of Michael Phillip Bowen filed 25 January 2021 [35].
[43] Saracen's submissions filed 29 January 2021 [31].
[44] Saracen's submissions filed 29 January 2021 [32] as corrected at the hearing (ts 15).

There is no evidence to suggest that the failure of the ASA's corporate representative to login as a shareholder was caused by a fault in the Lumi Platform or the procedures adopted by Saracen in respect of the Scheme meeting.
Correspondence that has passed between the ASA and Saracen following the Scheme meeting indicates that the ASA has not sought to take any further action in relation to this matter and acknowledged it would not have impacted on the passing of the resolution.[45] Neither the ASA nor the shareholders who appointed the ASA as their proxy filed a notice of objection to the Scheme or sought to appear at the second court hearing to object to the Scheme.
[45] Affidavit of Rodney Rex Somes filed 29 January 2021 [118] – [121], 'RRS-24' – 'RRS-26'.
In respect of three other shareholders, due to an inadvertent mistake, Computershare did not provide these proxyholders with login details to attend the Scheme meeting.[46] Between them, these shareholders held a total of 83,155 Shares.[47] Each of the proxies lodged by these shareholders were directed proxies and, in the absence of the attendance by the proxy holder, defaulted to the chairperson of the Scheme meeting.[48]
[46] Affidavit of Rodney Rex Somes filed 29 January 2021 [86] – [87].
[47] Saracen's submissions filed 29 January 2021 [49(b)].
[48] Affidavit of Rodney Rex Somes filed 29 January 2021 [88].
The evidence before me is that:
(a)no calls to the technical support line were received from these shareholders or their proxies seeking assistance to access the Scheme meeting;[49]
(b)the votes of these shareholders were counted in accordance with their direction;[50] and
(c)no complaint has been received from the relevant shareholders or their appointed proxies. None of these shareholders filed a notice of objection to the Scheme nor sought to appear at the second court hearing to object to the Scheme.
[49] Affidavit of Rodney Rex Somes filed 29 January 2021 [122].
[50] Affidavit of Rodney Rex Somes filed 29 January 2021 [88].
Senior counsel submitted that, to the extent the provision of the login details to the ASA was not done more than 24 hours prior to the Scheme meeting, this was also a procedural irregularity. In this case, the 'thing to be done' was the notification of the login details. I am satisfied that the non‑compliance did not change the thing to be done but simply departed from the timeframe in which this was to occur. For this reason, I accept that the non‑compliance was a procedural irregularity.
Turning then to the question as to whether there has been or may be any substantial injustice caused by this procedural irregularity. For the following reasons, I am satisfied that there was no substantial injustice.
First, the ASA was sent the login details prior to the Scheme meeting. These login details were sent by Computershare directly to the corporate representative of the ASA who proposed to attend the Scheme meeting.
Second, the ASA's questions were answered at the Scheme meeting and, as a guest, the ASA heard the answers to their questions.[51]
[51] Affidavit of Rodney Rex Somes filed 29 January 2021, 'RRS-24'.
Third, although the ASA was not able to login as a shareholder or vote for 31 of the proxies it held, this would not have made any difference to the outcome of the Scheme Meeting.
Fourth, neither the ASA nor the shareholders who appointed the ASA as their proxy made any complaint or objection following the Scheme meeting and the ASA acknowledged that the votes would have been immaterial to the outcome of the meeting.[52]
[52] Affidavit of Rodney Rex Somes filed 29 January 2021 [118], [120], 'RRS-24', 'RRS-26'.
In respect of the remaining three shareholders, I am satisfied on the evidence before me that this was also a procedural irregularity. As stated above at [32], the 'thing to be done' was the notification of login details to these shareholders. The failure to provide these details did not prevent these shareholders from attending the Scheme meeting although the shareholders would have had to contact Computershare to obtain the details rather than being sent them without request.
Turning then to the question as to whether there has been or may be any substantial injustice caused by this procedural irregularity, for the following reasons, I am satisfied that there was no substantial injustice.
First, each of these proxies was a directed proxy and the shares were voted in accordance with the direction.
Second, no calls were received from these shareholders or their appointed proxies to the technical support line seeking assistance and no complaint or objection has been received from the relevant shareholders or their appointed proxies.
Third, the number of shares and shareholders affected was very small.
Senior counsel for the plaintiff also drew my attention to the fact that 835,871,111 of the 1,107,645,715 Saracen Shares on issue voted at the Scheme meeting, being approximately 75.46% of voters, which represented only 9.50% of shareholders by number.
As was stated by Farrell J in Re TriAusMin Limited [No 2]:[53]
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)
[53] ReTriAusMin Limited [No 2] [2014] FCA 833 [10] - [11].
I respectfully agree with her Honour's view.
In any event, relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.[54]
[54] 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 Ltd; Ex parte Pensana Metals Limited [2020] WASC 17 [12] (6.41% of shareholders holding 37.08% of shares); Re Zenith Energy; Ex parte Zenith Energy Ltd [No 3] [2020] WASC 289 [18] (39% of shareholders holding 89.25% of shares).
I was and am satisfied that there was a sufficient turnout at the Scheme meeting. I do not consider that the low voter turnout by number of shareholders, in itself, suggested there had been an error in the dispatch of the Scheme booklet, nor that this should prevent the court from making orders under s 411(4)(b). In this respect, I have had regard to the following matters:
(a)there are significant numbers of shareholders with small parcels of Shares. Of the 18,468 shareholders who were eligible to vote at the Scheme meeting, 3,710 shareholders (or almost 20% of all shareholders) held less than $2,000 worth of Shares.[55] It is a reasonable inference that for many of these shareholders, the Scheme was of relatively minor commercial interest;
(b)the number of shareholders who voted at the Scheme meeting significantly exceeded the number of shareholders who voted at the three preceding general meetings of Saracen;[56]
(c)prior to the Scheme meeting, a voting reminder email was sent to shareholders who had nominated an email address for communications but had not yet appointed a proxy to vote at the Scheme meeting. This email was the subject of an ASX announcement on 12 January 2021;[57]
(d)the shareholders who voted at the Scheme meeting overwhelmingly voted in favour of the Scheme;
(e)over 75% of shareholders by number of Shares voted at the meeting;
(f)there was no evidence which suggested irregularity in the dispatch of the Scheme Booklet; and
(g)there was no evidence of any issue which would have deterred shareholders from voting at or attending the Scheme meeting. Rather, the evidence is that two shareholders raised issues about attending and voting at the Scheme meeting, which issues were resolved.[58]
[55] Affidavit of Rodney Rex Somes filed 29 January 2021 [64].
[56] Being approximately 4.36% at the 2019 annual general meeting; 4.49% at the general meeting in March 2020 and 3.54% at the 2020 annual general meeting. See Affidavit of Rodney Rex Somes filed 29 January 2021 [97].
[57] Affidavit of Rodney Rex Somes filed 29 January 2021 [55] – [57].
[58] Affidavit of Rodney Rex Somes filed 29 January 2021 [108], [122]; Second affidavit of Michael Phillip Bowen filed 25 January 2021 [31]; Affidavit of Alexander Joseph Dixon Hughes filed 29 January 2021 [54].
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 the shareholders voted for an improper purpose. I am satisfied on the evidence that has been filed by Saracen that the members voted in good faith and for a proper purpose as:
(a)the purpose of the proposed Scheme is to effect the acquisition by Northern Star of all Saracen 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 emerged), the Scheme is in the best interests of shareholders; and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to the approval of the proposed Scheme.

Fairness and reasonableness

At the first hearing, based on the evidence before the court, I was satisfied that the proposed acquisition of Saracen was of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meeting.
Nothing has occurred since the date of the first hearing to change this view. The shareholders who voted at the meeting overwhelmingly supported the proposed Scheme. No shareholder appeared to oppose the orders sought at the second court hearing. I was and am satisfied that the proposed Scheme is fair and reasonable and is a Scheme 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 Saracen drew my attention to a number of matters. These are summarised in Ex parte Saracen Mineral Holdings Ltd at [50] ‑ [76].
There were three further matters that counsel drew my attention to at the second court hearing.
First, evidence was put before the court to demonstrate that the conditions precedent to the Scheme (apart from the court's approval at the second court hearing) had been satisfied or waived.[59]
[59] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021, 'KJH-58' and 'KJH-59'.
Second, Saracen sought 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 Saracen's constitution as the orders do not affect any change to the constitution. I considered it was and is appropriate in the circumstances of this case to make the orders sought under s 411(12) of the Act.
Third, the Scheme booklet advised shareholders that if the Scheme becomes effective, Saracen intends to pay the Special Dividend. On 1 February 2021, the directors of Saracen resolved to declare a fully franked special dividend of $0.038 per share.[60]

Full and fair disclosure

[60] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021 [5] - [6], 'KJH-53'.

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

Oppression of minorities

There was no evidence that any minority has been oppressed.

Satisfaction of s 411(17) and ASIC's view

ASIC has provided a written statement to the effect that it does not object to the Scheme pursuant to s 411(17)(b) of the Act.[61] 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 that the Scheme was proposed to avoid the operation of ch 6 of the Act.

Public Policy

[61] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021, 'KJH-61'.

There is no evidence before the Court that the proposed Scheme offends any aspect of public policy. Given the nature of the proposed Scheme, it is my view that it could not be sensibly suggested that the Scheme offends public policy.

US Securities Act

At the first court hearing, senior counsel for Saracen drew my attention to the fact that, if the Scheme was approved, Saracen and Northern Star intended to rely on that approval to qualify for exemption under s 3(a)(10) of the Securities Act 1933 (USA).[62] That was necessary as one of the requirements for the operation of s 3(a)(10) in practice is that the proposed issuer of the securities must inform the court, whose order is to be relied on, that the issuer will rely on the court's approval in seeking the exemption.
[62] Ex parte Saracen Mineral Holdings Ltd [77] – [78].
This has become common practice in schemes of arrangement.[63]
[63] Re Amcor Ltd [No 2] [2019] FCA 842 [33]; Re Beadell Resources Ltd [No 2] [2019] WASC 53 [62] ‑ [64].
In these circumstances, it is appropriate that I record the following.
(a)I was informed of the shares which are to be offered as Scheme Consideration and an independent expert report has concluded that the Scheme is in the best interests of shareholders.
(b)The court has held a hearing to determine whether the terms of the proposed Scheme are fair to Saracen's shareholders so as to determine whether to approve the terms of the Scheme. In this regard, as I have stated earlier, in an application for approval under s 411(4)(b), it is necessary for the court to consider the fairness and reasonableness of the proposed Scheme. As set out at [50] ‑ [51] above, I have determined that the proposed Scheme is fair and reasonable.
(c)The hearing for approval of the proposed Scheme was heard in open court. It was open to all shareholders of Saracen to attend. Notice of the hearing was provided to all shareholders in accordance with the orders of the court made on 9 December 2020. The date of the hearing was advertised in both The West Australian newspaper and in The Australian newspaper on 25 January 2021. The date of the second court hearing was also referred to in the Scheme booklet.
(d) Following the announcement by the Premier of Western Australia on 31 January 2021 of a lock down of, inter alia, the Perth Metropolitan area commencing at 6.00 pm on 31 January 2021, the hearing proceeded as a virtual hearing in open court. This change was the subject of an ASX announcement by Saracen on 1 February 2021[64] and an advertisement in The West Australian on 2 February 2021.[65] Shareholders of Saracen or any other member of the public who wished to attend the hearing were advised to contact the court to arrange to obtain details to enable attendance at the hearing.
(e)No shareholder of Saracen gave notice of any intention to appear at the second court hearing and no shareholder sought leave to appear at the second court hearing to oppose the approval of the Scheme.
[64] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021, 'KJH-53'.
[65] Seventh affidavit of Kirsty Jayne Hall filed 2 February 2021, 'KJH-54'.

Applications for orders under s 1322(4) of the Act

Out of an abundance of caution, Saracen sought orders for:
(a)an extension of time to comply with order 5 of the orders on 9 December 2020 and to notify the corporate representative of the ASA, who had been appointed by certain shareholders as their proxy, of a user name and password (under s 1322(4)(d) of the Act);
(b)a declaration that the resolution passed at the Scheme meeting was not invalid by reason of the failure to provide the proxies of three shareholders with user names and passwords to enable them to participate in the virtual Scheme Meeting (under s 1322(4)(a) of the Act).

Power under Corporations Act s 1322 to grant the relief sought

Section 1322 relevantly provides:
(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6) The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c)—that the person subject to the civil liability concerned acted honestly; and
(c)in every case - that no substantial injustice has been or is likely to be caused to any person.
The powers under s 1322(4)(a) and (d) must be exercised having regard to the general object and purpose of the relevant statutory provision within the Act. The court's order must not undermine the reasons for the requirements of the Act. The power must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act.[66]
[66] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390 [41] - [43].
An order under s 1322(4)(a) of the Act may be made nunc pro tunc.[67] This might be necessary where steps have been taken on the basis of an act which is potentially invalid. However, an order declaring that an act, matter or thing or proceeding taken under the Act is not invalid will be sufficient when concerned with the impact of potential invalidity on prospective events.

Disposition

[67] Re WesfarmersLtd; Ex parte Wesfarmers Ltd [No 2] [34] citing with approval Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257 [52], [61].

Although the procedural irregularities identified by the plaintiff will be cured automatically unless the court orders otherwise, out of an abundance of caution, Saracen sought orders under:
(a)s 1322(4)(d) of the Act to extend the time to comply with order 5 of the Orders and to provide the relevant login details; and
(b)s 1322(4)(a) of the Act for a declaration in respect of the failure to provide the proxies of three shareholders with login details.
I accept that, in this case, to remove any doubt as to the validity of the resolution, it is appropriate to make the orders sought. In respect of the non-compliance with order 5, for the reasons set out at [19] ‑ [24] above, I consider the irregularity was of a procedural nature, no substantial injustice has been or is likely to be caused to any person and that, in the circumstances, it is just and equitable that the order be made. The purpose of order 5 was to ensure that all shareholders received notice of the Scheme meeting and had an opportunity to participate in the meeting. I do not consider that granting the extension of time sought would undermine this purpose.
In relation to the failure to give the ASA representative a username and login details at least 24 hours before the Scheme Meeting, I accept that this was also a procedural irregularity. That is, it was a defect, irregularity or deficiency in notice or time. For the reasons set out at [32] ‑ [37] above, I consider that the irregularity was of a procedural nature, that no substantial injustice has been or is likely to be caused to any person and that, in the circumstances, it is just and equitable that the order be made. The purpose of the requirement to provide login details was to ensure that all shareholders who wished to participate in the Scheme meeting had the opportunity to do so. I do not consider that granting the short extension of time sought would undermine this purpose.
Finally, in respect of both extensions of time, I consider it is appropriate for the court to facilitate a Scheme that has been overwhelmingly approved by shareholders.
In relation to the failure to provide login details to the three shareholders, s 1322(4)(a) cannot validate the failure to comply with the court's orders although it can validate a contravention of the Act. Part 2G.2 of the Act, as modified by s 5 of the Corporations (Coronavirus Economic Response) Determination 2020 (No 3) (Cth) required Saracen to give all shareholders a reasonable opportunity to participate in the Scheme Meeting.
For the reasons set out at [38] ‑ [42] above, I consider that this irregularity was of a procedural nature, no substantial injustice has been or is likely to be caused to any person and that, in the circumstances, it is just and equitable that the order sought by Saracen be made. Given that steps will be taken on the basis of the validity of the meeting, which occurred on 15 January 2021, it appropriate that the order be made nunc pro tunc.

Conclusion and orders

At the hearing before me, I was satisfied that the substantive and procedural requirements under s 411(1) of the Act had been satisfied and that I should approve the proposed Scheme.
For these reasons, at the conclusion of the hearing on 2 February 2021, I made orders in terms of Annexure 'A' to this judgment in respect of the Scheme.

ANNEXURE A

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HW
Research Associate to the Honourable Justice Hill
12 FEBRUARY 2021