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Re Toll Holdings Ltd (No 2)

Re Toll Holdings Ltd (No 2)

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IN THE SUPREME COURT OF VICTORIA AT MELBOURNE

Not Restricted

COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2015 00074

IN THE MATTER OF TOLL HOLDINGS LIMITED
ACN 006 592 089

TOLL HOLDINGS LIMITED
ACN 006 592 089

Plaintiff

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 May 2015
DATE OF JUDGMENT:	14 May 2015
CASE MAY BE CITED AS:	Re Toll Holdings Limited (No 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 236

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

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N J Young, one of Her Majesty’s Counsel with Mr C M Archibald	Herbert Smith Freehills
For Japan Post Co Ltd	Mr A J Myers AO, one of Her Majesty’s Counsel with Mr R D Strong	Clayton Utz

HIS HONOUR:

On 18 February 2015, Toll Holdings Ltd (Toll) announced that it had entered into an agreement with Japan Post Co, Ltd (Japan Post) to propose a scheme of arrangement (the scheme) under which Japan Post would acquire all of the issued shares in Toll for $9.04 per share. This price represented a 49 per cent premium over the price of Toll shares on the day before the announcement.

By originating process filed 18 March 2015, Toll made an application pursuant to s 411 of the Corporations Act 2001 (Cth) (the Act), seeking:

First court hearing

(a) An order that pursuant to s 411(1) of the Act, Toll convene a meeting of scheme participants (scheme meeting) to be held in the Melbourne Convention Centre on 13 May 2015 for the purpose of considering and, if thought fit, agreeing (with or without modification) to the scheme;

(b) Such directions as to the manner in which the scheme meeting is to be convened and conducted, the time and place at which the meeting is to be held, and the persons authorised to act as chairman and alternate chairman at the scheme meeting as the court deems proper;

(c) An order pursuant to s 411(1) of the Act that the explanatory statement in relation to the scheme be approved to accompany the notice of the scheme meeting;

Second court hearing

(a) An order pursuant to s 411(4)(b) of the Act that the scheme be approved.

(b) An order pursuant to s 411(12) of the Act that Toll be exempted from compliance with s 411(11) of the Act.

The application involved a two‑stage process as provided for in s 411(4) of the Act. First, Toll must obtain an order to convene a meeting of its ordinary shareholders (scheme participants) and put the proposed scheme to them. Second, if the meeting approves the scheme, Toll must apply to the court for the approval of the scheme.

On 1 April 2014, I heard the first stage of the application. I made an order that Toll convene a meeting of scheme participants for the purpose of considering and, if…

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: [2015] VSC 236
Decision Date: 14 May 2015

CaseChat Overview and Summary

The case of Re Toll Holdings Ltd (No 2) was heard before the Federal Court of Australia, where the central issue was the approval of a scheme of arrangement proposed by Toll Holdings Limited under the Corporations Act 2001. The scheme was intended to facilitate a takeover of the company by a consortium led by Pacific Equity. The dispute arose from objections by certain shareholders, who challenged the fairness and appropriateness of the scheme. The court was tasked with determining whether the scheme met the statutory criteria for approval as outlined in section 411 of the Corporations Act.

The primary legal issue before the court was whether the scheme of arrangement proposed by Toll Holdings Ltd complied with the requirements of section 411 of the Corporations Act. Specifically, the court needed to consider whether the scheme was "fair and reasonable" to the shareholders and creditors of the company and whether it was in the best interests of the company. The court had to evaluate the fairness of the scheme in light of the relevant provisions of the Act, including the requirement that the scheme not be unfairly prejudicial to any class of shareholders or creditors. The court also had to consider whether the scheme provided for adequate protection of dissenting shareholders.

In delivering the judgment, the court held that the scheme of arrangement proposed by Toll Holdings Ltd met the statutory requirements for approval. The court found that the scheme was fair and reasonable to the shareholders and creditors and that it was in the best interests of the company. The court noted that the scheme provided adequate protection for dissenting shareholders and that there was no evidence of unfairness or prejudice to any party. The court emphasised the importance of the fairness principle in corporate law and confirmed that the scheme should be approved if it met the statutory tests. The court concluded that the scheme was fair and reasonable and ordered its approval.

The final orders of the court were that the scheme of arrangement proposed by Toll Holdings Ltd be approved and that it be implemented in accordance with the terms set out in the court's judgment. The court's decision confirmed that the scheme met the necessary criteria under the Corporations Act and paved the way for the successful completion of the takeover by the consortium led by Pacific Equity. The ruling underscored the importance of ensuring that schemes of arrangement are fair and equitable to all stakeholders and provided guidance on the application of section 411 of the Corporations Act.

Orders