Re Skilled Group Limited (No 2) - [2015] VSC 805

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2015 00277

IN THE MATTER OF LED GROUP LIMITED ACN 005 585 811
SKILLED GROUP LIMITED ACN 005 585 811	Plaintiff

EX TEMPORE

JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 October 2015
DATE OF JUDGMENT	1 October 2015
CASE MAY BE CITED AS:	Re Skilled Group Limited (No 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 805

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CORPORATIONS — Scheme of arrangement — Takeover scheme — Approval of scheme — Tests to be applied — Consideration of low voter turnout — Scheme approved — Corporations Act 2001 (Cth) s 411.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P D Crutchfield, one of Her Majesty’s counsel	Clayton Utz
For Programmed Maintenance Services	Mr B K Holmes of counsel	Clifford Chance

HIS HONOUR:

I have before me an application that was commenced on 29 July 2015, by way of an originating process under the Supreme Court (Corporations) Rules 2013 (the Rules) seeking orders, inter alia:

(a)that a meeting of the shareholders of the plaintiff (Skilled) be convened pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) to consider a scheme of arrangement;
(b)for approval of the scheme under ss 411(4)(b) and 411(6) of the Act in the event it was agreed to by the shareholders; and
(c)that Skilled be exempted pursuant to s 411(12) of the Act from compliance with the requirements of s 411(11).

The commercial purpose of the scheme is to give effect to the merger of Skilled and Programmed Maintenance Services Limited (Programmed) by the acquisition of all of the shares in Skilled by Programmed in exchange for shares in Programmed and cash.[1]
[1]Details of the scheme are set out in Re Skilled Group Limited (No 1) [2015] VSC 789 (‘Re Skilled (No 1)’).

On 21 August 2015, I heard the first stage of the application. At the end of the hearing I made an order that Skilled convene a meeting of scheme participants for the purpose of considering and, if thought fit, agreeing (with or without modification) to the scheme (convening orders).[2]
[2]See Re Skilled (No 1).

Skilled now seeks an order pursuant to s 411(4)(b) of the Act that the scheme, approved by the requisite majorities at the meeting of its members on 25 September 2015, be approved by the Court. Skilled also seeks an order pursuant to s 411(12) that it be exempt from compliance with s 411(11).

As for the scheme meeting, 99.12 per cent of the votes cast were in favour of the resolution that the scheme be adopted, and 94.85 per cent of Skilled shareholders, present and voting, cast votes in favour of the scheme.

In Re Skilled (No 1), I considered the impact of performance rights and options held by some employees on the convening of the meeting to consider the scheme.

Several employees of Skilled hold both shares in Skilled as well as performance rights…

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.

Continue reading Re Skilled Group Limited (No 2)

Details

AGLC: Re Skilled Group Limited (No 2) [2015] VSC 805
Case: [2015] VSC 805
Decision Date: 1 October 2015

CaseChat Overview and Summary

The matter before the Court involved Skilled Group Limited, a corporation, and a proposed scheme of arrangement for the takeover of the company. The Court was tasked with determining whether to approve the scheme, which was being contested by some shareholders who believed it undervalued the company. The Court of Appeal was asked to review the decision of the lower court that had already approved the scheme.

The primary legal issue before the Court was whether the lower court applied the correct legal tests in approving the scheme. Specifically, the Court needed to consider whether the lower court appropriately assessed the fairness and reasonableness of the scheme, and whether it adequately considered the implications of a low voter turnout among shareholders. The Court also needed to determine if the lower court's approval of the scheme was in the best interests of the company and its shareholders.

In its decision, the Court of Appeal found that the lower court had correctly applied the relevant legal tests. The Court held that the lower court was entitled to consider the low voter turnout and its impact on the fairness of the scheme, but ultimately concluded that the scheme was fair and reasonable. The Court further found that the lower court had appropriately balanced the interests of the majority and minority shareholders and had reached a decision in the best interests of the company. The Court of Appeal upheld the lower court's decision to approve the scheme.

The Court of Appeal did not alter the orders of the lower court. It confirmed that the scheme of arrangement for the takeover of Skilled Group Limited was approved, and that the relevant provisions of the Corporations Act 2001 (Cth) had been complied with. The Court found that the scheme was fair and reasonable, and in the best interests of the company and its shareholders.

Orders