Re Transcomm Credit Co-operative Ltd - [2016] VSC 835

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2016 00069

IN THE MATTER OF AN APPLICATION BY

TRANSCOMM CREDIT CO-OPERATIVE LIMITED (ACN 087 651 750)

Plaintiff

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 June 2016
DATE OF RULING:	24 June 2016
CASE MAY BE CITED AS:	Re Transcomm Credit Co-Operative Limited
MEDIUM NEUTRAL CITATION:	[2016] VSC 835

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CORPORATIONS – Scheme of arrangement – Second court hearing – Section 411 Corporations Act 2001 (Cth) – Procedural irregularities – Exemption from compliance with convening orders where no prejudice to shareholders – Abridgement of time provided for in r 3.4(3)(b) of the Supreme Court (Corporations) Rules2013 pursuant to s 1322(4)(d) of the Corporations Act – Exemption from s 411(11) – Scheme approved.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B K Holmes	Wisewould Mahony

HIS HONOUR:

Introduction

This proceeding was commenced by way of originating process on 8 April 2016, under the Supreme Court (Corporations) Rules 2013 (the Rules), seeking orders:

(a) that a scheme meeting of the shareholders of the plaintiff, Transcomm Credit Co-operative Ltd (Transcomm), be convened pursuant to s 411(1) of the Corporations Act 2001 (the Act) to consider a scheme of arrangement (the scheme);

(b) for approval of the scheme under ss 411(4)(b) and 411(6) of the Act, in the event that it was agreed to by the shareholders, and

(c) that Transcomm be exempt from compliance with the requirements of s 411(11) pursuant to s 412 of the Act.

Background

Transcomm is a public company limited by shares. It is a Melbourne-based, member-owned credit union. It provides a range of financial services to members, including savings accounts, term deposits and personal loans. Transcomm’s constitution provides that Transcomm can take deposits from customers or lend money to customers only where the customers are also Transcomm members.

The proposed scheme is part of a broad proposal involving the demutualisation of Transcomm and its merger with CSF Pty Ltd (CSF). The proposal involves the payment of a sum of $4,850,000 by CSF, which will be applied in consideration of the members of Transcomm surrendering all rights and entitlements they have as members of Transcomm. Transcomm members are also customers of the financial services provided by Transcomm. Their rights in this respect will not be affected by the proposed scheme or the demutualisation.

The demutualisation requires amendments to be made to Transcomm’s constitution. Those amendments were to be voted on at a separate general meeting to immediately follow the scheme meeting. The approval of those amendments is a condition precedent to the scheme.

As a small credit union, Transcomm has been unable to operate profitably. It lacks scale, its membership base is in decline, and the costs of operations and compliance continue to rise.

The independent expert has concluded that if the scheme does not proceed, it is almost inevitable that Transcomm will be forced to merge with another credit union, but will not receive any financial…

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] VSC 835
Decision Date: 24 June 2016

CaseChat Overview and Summary

Transcomm Credit Co-operative Limited sought approval of a court scheme of arrangement. The dispute was heard in the Federal Court of Australia. The primary legal issue was whether procedural irregularities during the convening of the meeting could be overlooked due to the lack of prejudice to shareholders. Another issue was the application for an exemption from the time limit set out in rule 3.4(3)(b) of the Supreme Court (Corporations) Rules 2013, as well as from section 411(11) of the Corporations Act 2001 (Cth). The court determined that despite the procedural errors, the shareholders were not prejudiced by these issues. The court also found that the application for an exemption from the time limit and from section 411(11) was appropriate given the circumstances. The court granted the exemptions and approved the scheme of arrangement.

Orders