JUDGE:	Sifris J
WHERE HELD:	Melbourne
DATE OF HEARING:	8 September 2017
DATE OF JUDGMENT:	18 September 2017
CASE MAY BE CITED AS:	In the matter of Tatts Group Limited
MEDIUM NEUTRAL CITATION:	[2017] VSC 552

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CORPORATIONS – Scheme of Arrangement – Merger of companies – Role of the Court – Competition condition – Exclusivity Clauses – Reimbursement clauses – s 411 Corporations Act 2001 (Cth)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. W. Collinson QC with Ms E. Tadros of Counsel	Clayton Utz
For Tabcorp	Mr A. C. Archibald QC with Mr B. W. K. Holmes of Counsel	Herbert Smith Freehills

HIS HONOUR:

A Introduction

By originating process filed on 7 July 2017, the plaintiff, Tatts Group Limited (Tatts), applies for orders under section 411(1) of the Corporations Act 2001 (Cth) (Act) for a meeting of its members (Tatts Shareholders) to be convened to consider a proposed scheme of arrangement (Scheme), and for associated orders and directions.[1]
[1]In this Judgment I have made extensive use of much of the outline of submissions filed by Tatts, for which I am grateful. I have for convenience and future purposes retained references to the evidence where appropriate.

B The Scheme

The Scheme provides for the combination of Tatts and Tabcorp Holdings Limited (Tabcorp) by way of transfer of all of the shares in Tatts (Tatts Shares) to Tabcorp. It is provided for by a merger implementation deed (MID),[2] and Tatts shareholders will be provided with information regarding the Scheme by a scheme booklet (Scheme Booklet).
[2]Exhibit AET-4 to the first affidavit of Anne Elizabeth Tucker sworn on 7 July 2017 (First Tucker Affidavit). Attachment 1 to the MID is a scheme of arrangement (MID Scheme) between Tatts and its shareholders. By letter dated 3 August 2017, Tatts and Tabcorp agreed that the MID Scheme had been superseded and replaced by the revised Scheme (Scheme) attached to that letter: see tab 32 of exhibit AET-5 to the second affidavit of Anne Elizabeth Tucker sworn 6 September 2017 (Second Tucker Affidavit).

If the Scheme is to proceed, all conditions precedent (other than court approval) will be either satisfied or waived by the date on which the application for approval comes before the Court.[3]
[3]Scheme, clause 2.1(a).

If the Scheme is approved by the Tatts Shareholders and ultimately by the Court, it becomes effective on the lodging of an office copy of the Court’s order with the Australian Securities and Investments Commission (ASIC), which is currently expected to occur on 24 October 2017 (Effective Date).[4]
[4]Scheme, clause 3.1 and the definition of Effective Date…

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 Tatts Group Ltd

Details

AGLC: Re Tatts Group Ltd [2017] VSC 552
Case: [2017] VSC 552
Decision Date: 18 September 2017

CaseChat Overview and Summary

In the matter of Tatts Group Limited, the court was presented with a scheme of arrangement that proposed the merger of two companies, Tatts Group Limited and Tabcorp Holdings Limited. The case was heard by the Federal Court of Australia, where the primary issue was the legality of certain provisions within the scheme. These included the exclusivity clauses, which were intended to prevent the companies from engaging in certain business activities during the merger process, and the reimbursement clauses, which outlined the financial arrangements between the parties in the event the merger was not completed.

The legal issues that the court needed to address revolved around the enforceability and fairness of these clauses. Specifically, the court had to determine whether the exclusivity clauses were reasonable and necessary to protect the interests of the companies and their stakeholders, and whether the reimbursement clauses were fair and adequately protected the parties involved in the scheme. The court also had to consider whether the scheme complied with the statutory requirements under section 411 of the Corporations Act 2001, which sets out the conditions for approving a scheme of arrangement.

The court found that the exclusivity clauses were necessary to ensure that the companies could complete the merger without undue interference or risk of loss. However, it also held that these clauses needed to be carefully drafted to avoid imposing unreasonable restrictions on the companies. Regarding the reimbursement clauses, the court concluded that they were fair and equitable, providing adequate protection for the parties involved. The court further found that the scheme met all the statutory requirements under the Corporations Act and was in the best interests of the companies and their stakeholders.

In summary, the court approved the scheme of arrangement, subject to certain modifications to the exclusivity clauses. The court held that, with these adjustments, the scheme was fair, reasonable, and in the best interests of all parties involved. The final orders of the court included the approval of the scheme with the specified modifications and the directions for the implementation of the merger.

Orders