Re Vimy Resources Ltd [No 2] - [2022] WASC 257

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE VIMY RESOURCES LTD [No 2] [2022] WASC 257
CORAM:   STRK J
HEARD:   26 JULY 2022
DELIVERED          :   26 JULY 2022
PUBLISHED           :   11 AUGUST 2022
FILE NO/S:   COR 93 of 2022
MATTER:   IN THE MATTER OF VIMY RESOURCES LTD

EX PARTE
VIMY RESOURCES LTD
Plaintiff
DEEP YELLOW LTD
Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Application for orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) - Whether statutory and procedural requirements observed - Whether court ought to exercise its discretion to approve the scheme - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 411, s 1322

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos & V N Ghosh
Interested Party	:	P Tydde

Solicitors:

Plaintiff	:	MinterEllison
Interested Party	:	Gilbert + Tobin

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

iProperty Group Ltd (No 2) [2016] FCA 36
Re AGL Ltd [2022] NSWSC 576
Re Amcom Telecommunications Ltd [No 3] [2015] FCA 596
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 Bardoc Gold Ltd [No 2] [2022] WASC 113
Re Beadell Resources Ltd [No 2] [2019] WASC 53
Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83
Re Coles Group (No 2) [2007] VSC 523; (2007) 215 FLR 411
Re Cortona Resources Ltd [No 2] [2013] FCA 302
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re Decimal Software Ltd [No 2] [2018] FCA 2040
Re Dragontail Systems Ltd [2021] FCA 834
Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680
Re Galaxy Resources Ltd [No 2] [2021] WASC 314
Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169
Re Investa Listed Funds Management Ltd [2016] NSWSC 344
Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366
Re Nusantara Resources Ltd [2021] WASC 334
Re Nzuri Copper Ltd [No 4] [2020] WASC 10
Re Opus Group Ltd [2018] FCA 1413
Re Ozgrowth Ltd [No 2] [2022] WASC 167
Re Pensana Metals Ltd [2020] WASC 17
Re PetroNor E&P Ltd [No 2] [2022] WASC 81
Re Piedmont Lithium Ltd [No 3] [2021] WASC 173
Re Rebel Sport Ltd [No 2] [2007] FCA 458
Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32
Re Straits Resources Ltd [No 2] [2011] FCA 47
Re Swick Mining Services Ltd [2022] WASC 79
Re TriAusMin Ltd [No 2] [2014] FCA 833
Re Valmec Ltd [2021] WASC 420
Re Vimy Resources Ltd [2022] WASC 233
Re Wesfarmers Ltd [No 2] [2018] WASC 357
Re Western Areas Ltd [No 2] [2022] WASC 198
Re Zenith Energy Ltd [No 3] [2020] WASC 289
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396

TABLE OF CONTENTS

Overview

Evidence for the second court hearing

Legal principles in respect of scheme approval

Disposition

Compliance with statutory and procedural preconditions

Good faith and proper purpose

Fairness and reasonableness

Full and fair disclosure

Oppression of minorities

Specific matters brought to the court's attention

Minor amendments to the Scheme

Public policy

US Securities exemption

Exemption from s 411(11) of the Corporations Act

Section 411(17) of the Corporations Act

Conclusion and orders

Sch A: Orders made

STRK J:

Overview

The plaintiff, Vimy Resources Ltd, moves for orders approving a scheme of arrangement between Vimy and its shareholders (Scheme), pursuant to s 411(4) and, if necessary, s 411(6) of the Corporations Act 2001 (Cth).
Section 411 of the Corporations Act envisages three steps. First, the court approves the convening of a scheme meeting and the draft explanatory statement to be sent to the scheme members. Secondly, the members vote on the proposed Scheme at the scheme meeting. Thirdly, assuming the first two stages have occurred, a further application to the court for approval of the arrangement.
At the first court hearing on 15 June 2022, orders were made pursuant to s 411(1) of the Corporations Act to convene a meeting of holders of fully paid ordinary shares in the capital of Vimy. Orders were also made approving distribution of a scheme booklet comprising the explanatory statement required by s 412(1)(a) of the Corporations Act. Ancillary orders were made as to the convening and conduct of the meeting.
The reasons which ground the orders made at the first court hearing are set out in Re Vimy Resources Ltd [2022] WASC 233. I do not intend to repeat what was said in those reasons. These reasons should be read with and as if they incorporate the earlier reasons.
On 20 July 2022, the meeting was convened to consider the proposed Scheme whereby Deep Yellow Ltd would acquire 100% of the share capital of Vimy. Vimy shareholders were asked to vote on the following resolution:[1]
That under and in accordance with the provisions of section 411 of the Corporations Act 2001 (Cth), the members agree to the arrangement proposed between Vimy Resources Limited and the holders of its fully paid ordinary shares, designated the Scheme, as contained in and more particularly described in the Scheme Booklet accompanying the notice convening this meeting (with or without any alterations or conditions agreed or any alterations or conditions required by the Court) and the Board of Directors of Vimy is authorised to implement the Scheme with any such alterations or conditions.
[1] Second affidavit of ER Merven, EM-10.
At the meeting, the resolution was passed by the requisite statutory majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act.
350 shareholders were present at the scheme meeting in person and by proxy.[2] 97.13% of shareholders who voted at the meeting were in favour of the resolution.[3] 99% of votes cast on the scheme resolution were cast in favour of the resolution.[4] Excluding the votes of the shareholders who had subscribed under the capital raising, which were tagged, 98.89% of the shareholders who voted at the meeting and 96.96% of votes cast on the scheme resolution were in favour of the resolution.[5]
[2] Affidavit of SL Coates par 10(a).
[3] Submissions par 35; second affidavit of ER Merven par 23, EM-11; fifth affidavit of SB McRobert par 25.
[4] Submissions par 35; second affidavit of ER Merven par 23, EM-11; fifth affidavit of SB McRobert par 25.
[5] Submissions par 38; second affidavit of ER Merven par 32; fifth affidavit of SB McRobert par 30.
The second court hearing took place on 26 July 2022. Counsel for Deep Yellow appeared in support of the application. The Australian Securities and Investments Commission (ASIC) did not seek to be heard.[6]
[6] Seventh affidavit of SB McRobert par 9, SBM-49.
After hearing from counsel, I made orders in accordance with s 411(4) of the Corporations Act to approve the Scheme. I also made orders pursuant to s 1322 of the Corporations Act. My reasons are set out below and a copy of the orders made at the conclusion of the hearing are reproduced at sch A to these reasons.

Evidence for the second court hearing

In addition to the affidavits that were read at the first court hearing, Vimy filed 13 affidavits prior to the second court hearing which addressed the matters Vimy was required to establish at the second court hearing. All were read in support of the application. They were as follows.
First, the affidavit of Patricia Frances Kershaw sworn on 19 July 2022, which attached documents PK-1 to PK-6. Ms Kershaw is an executive assistant of Vimy and deposed to posting a hardcopy proxy form, opt-in notice and foreign declaration form to shareholders where electronic dispatch had bounced back. The attachments to Ms Kershaw's affidavit included email communications regarding distribution of materials from Ms Coates, company secretary of Vimy; screenshots of Australia Post delivery confirmations; and Australia post 'return to sender' delivery information.
The second was the affidavit of Lorena De Pellegrin affirmed on 19 July 2022, which attached documents LPD-1 to LPD-4. Ms De Pellegrin is the director of iPrint Plus and deposed to overseeing the preparation and postal distribution of packs of personalised materials for the scheme meeting to Vimy shareholders, as well as subsequent dispatch of materials to new Vimy shareholders. Ms De Pellegrin annexed to her affidavit copies of the printer's proofs of the materials to be issued; a copy of the envelope packing process checklist; and copies of Australia post lodgement confirmations.
The third was the affidavit of Kesone Sunphantry affirmed on 20 July 2022, which attached documents KS-1 to KS-3. Ms Sunphantry is a customer success manager at Automic Group Pty Ltd, which maintains Vimy's share register. Ms Sunphantry deposed to the uploading of the dispatch packs to Automic's file transfer portal, and to the electronic dispatch of notices of meeting and proxy forms to new Vimy shareholders. The attachments to Ms Sunphantry's affidavit included copies of email communications between herself and MinterEllison concerning the finalised forms, letters and emails for dispatch to shareholders; and a copy of the printer's proof provided by Ms De Pellegrin.
The fourth was the affidavit of Eric Roger Merven affirmed on 20 July 2022, which attached documents EM-1 to EM-8. Mr Merven is also a customer success manager at Automic and deposed to the electronic dispatch of notices of meeting and proxy forms to existing and new Vimy shareholders. The attachments included copies of email communications regarding distribution of materials from Ms Coates, Ms Kershaw and MinterEllison respectively; a copy of the report generated from the Automic registry system platform; a copy of the printer's proof provided by Ms De Pellegrin; and a copy of the sample dispatch packs.
The fifth was the affidavit of Shannon Louise Coates, the company secretary of Vimy, which was affirmed on 21 July 2022 and attached documents SC-1 to SC-7. Ms Coates deposed to the online voting at the scheme meeting; the making of various announcements to the Australian Securities Exchange (ASX); and to the voter turnout at the scheme meeting. The attachments to Ms Coate's affidavit included copies of screenshots of the virtual shareholder meeting; copies of the ASX announcements; and copies of proxy vote reports in respect of Vimy's 2020 and 2021 annual general meetings.
The sixth was the third affidavit of Steven George Michael sworn on 21 July 2022, which attached documents SGM-46 to SGM-48. Mr Michael is the managing director and chief executive officer of Vimy and deposed to engaging Morrow Sodali, a shareholder services advisory firm, to act as the point of contact for Vimy shareholders who had questions about the Scheme and to conduct a shareholder engagement campaign in respect of the scheme meeting. Mr Michael further deposed to publication of the notice of the second court hearing and directing the scheme booklet to be made available for inspection. Attached to Mr Michael's third affidavit were copies of the scripts for Morrow Sodali staff to recite and refer to when communicating with shareholders.
The seventh was the second affidavit of Ms Kershaw sworn on 22 July 2022, which attached document PK-7. Ms Kershaw deposed to the publication of the notice of the second court hearing. The attachments to Ms Kershaw's second affidavit included copies of the notices published in The West Australian and The Australian. Ms Kershaw further deposed to causing the scheme booklet to be published on Vimy's website and made available at its offices, and deposed that no hardcopy proxy forms were received in Vimy's post office box.
The eighth was the second affidavit of Mr Merven affirmed on 22 July 2022, which attached documents EM-9 to EM-13. Mr Merven deposed to the processing of electronically returned proxy forms; to his role as returning officer of the scheme meeting and oversight of the online platform hosting the meeting; to the results of voting at the scheme meeting and the tagging of certain votes; and to a database processing error which impacted eight Vimy shareholders. Attached to his second affidavit were copies of the voting summary report; the scheme meeting presentation; the scheme meeting report; the ASX announcement of 20 July 2022 concerning the results of the scheme meeting; and an email communication from MinterEllison concerning the tagging of votes.
The ninth was the fifth affidavit of Shaun Barry McRobert affirmed on 25 July 2022, which attached documents SB-31 to SB-39. McRobert is a partner of MinterEllison and acts for Vimy. He deposed to registering the scheme booklet and the orders of the court made at the first court hearing with ASIC; to having acted as the chairperson and to the procedure of the scheme meeting; to the results of voting at the scheme meeting, including the results of the tagged votes; and to the service of documents lodged for the second court hearing on ASIC. Attached to Mr McRobert's fifth affidavit were copies of email communications between MinterEllison and ASIC; a copy of the ASIC extract in respect of Vimy; a copy of the chairman's script for the scheme meeting; the scheme meeting presentation; the minutes of the scheme meeting; and the poll declaration.
The tenth was the fourth affidavit of Mr Michael sworn on 25 July 2022, which attached documents SGM-49 and SGM-50. By this affidavit, Mr Michael corrected an error in his third affidavit. He also deposed to the decision to engage Morrow Sodali and the process by which the Morrow Sodali script was drafted, reviewed and approved. Attached to his fourth affidavit were copies of the Morrow Sodali engagement document and the Morrow Sodali call campaign final report.
The eleventh was the affidavit of David Stephen Poskitt affirmed on 25 July 2022. Mr Poskitt is the director of client services at Morrow Sodali and deposed to his oversight of the call operators who were involved in the outbound campaign in relation to the Scheme.
The twelfth was the sixth affidavit of Mr McRobert affirmed on 25 July 2022, which attached documents SBM-40 to SBM-44. Mr McRobert deposed to his conferral with ASIC, as well as his separate correspondence with Mr Merven with respect to an Automic database processing error. Mr McRobert attached copies of all referenced correspondence to his sixth affidavit.
The thirteenth was the seventh affidavit of Mr McRobert affirmed on 26 July 2022, which attached SBM-45 to SBM-49. Mr McRobert deposed to the provision of conditions precedent certificates executed by Vimy and Deep Yellow, and also deposed to ASIC's provision of a final no objection letter under s 411(17)(b) of the Corporations Act. Attached to his affidavit were copies of the conditions precedent certificates, as well as correspondence with ASIC.
At the second court hearing, counsel on behalf of Vimy tendered one document, being an email communication from Ms Sarah Turner, a partner at Gilbert + Tobin, who agreed on behalf of Deep Yellow to certain alterations to the proposed Scheme.[7]
[7] Exhibit 1; ts 49 - 50 (26 July 2022).
At the second court hearing, Vimy also relied upon a written outline of submissions and a minute of proposed orders, both filed on 25 July 2022.

Legal principles in respect of scheme approval

As noted above, approval of the proposed scheme pursuant to s 411(4)(b) of the Corporations Act at the second court hearing is the third stage of approval for a scheme of arrangement. Justice Hill in Re Western Areas Ltd [No 2] [2022] WASC 198 recently summarised the legal principles relevant at the second court hearing, which I reproduce below and applied in determining Vimy's application:[8]
[8] See also submissions pars 8 - 11.
[8]At the second court hearing, the court has two tasks:
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:
(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.
[9]The court has a discretion to approve a scheme under s 411(4)(b) of the Act 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. 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.
[10]The factors that inform the court's discretion whether or not to approve a scheme are:
(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;
(e)whether ASIC has an objection to the scheme; and
(f)whether the scheme offends public policy.
(footnotes omitted)

Disposition

Compliance with statutory and procedural preconditions

On the basis of the additional affidavits filed by Vimy, I was and am satisfied that:
(a)a copy of the orders from the first court hearing was formally lodged with ASIC on 16 June 2022;[9]
(b)a copy of the scheme booklet as approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 16 June 2022;[10]
(c)the scheme booklet was dispatched to shareholders in accordance with the orders from the first court hearing. Vimy provided a detailed outline of this process;[11]
(d)the scheme meeting was convened and held on 20 July 2022, in accordance with the orders of the first court hearing;[12]
(e)Mr McRobert acted as chairperson of the scheme meeting;[13]
(f)the proposed Scheme was approved by the requisite statutory majorities by Vimy shareholders;[14]
(g)notice of the second court hearing was given by way of publication in The West Australian newspaper and The Australian newspaper on 18 July 2022;[15]
(h)the scheme booklet and notice of the meeting were available for inspection by Vimy shareholders on Vimy's website and at Vimy's registered office;[16] and
(i)pursuant to s 411(17)(b) of the Corporations Act, ASIC informed Vimy on 26 July 2022 that it has no objection to the proposed Scheme.
[9] Fifth affidavit of SB McRobert pars 5(b), 7 - 8.
[10] Fifth affidavit of SB McRobert pars 5(c), 7 - 8.
[11] Submissions pars 19 - 25. See also the first affidavit of PF Kershaw; affidavit of L De Pellegrin; affidavit of K Sunphantry; first affidavit of ER Merven.
[12] Fifth affidavit of SB McRobert par 9.
[13] Fifth affidavit of SB McRobert pars 10, 12.
[14] Submissions par 35; second affidavit of ER Merven pars 22 - 29, EM-11; fifth affidavit of SB McRobert par 28.
[15] Second affidavit of PF Kershaw pars 5 - 6, PK-7; third affidavit of SG Michael pars 11 - 13.
[16] Second affidavit of PF Kershaw pars 7 - 8; third affidavit of SG Michael pars 14 - 16.
No party sought to appear to oppose the approval of the Scheme.

Additional matters brought to the court's attention

In written and oral submissions, counsel for Vimy drew my attention to the following matters.

Tagged votes and outcome

Vimy agreed to tag the votes of the shareholders who had subscribed under the capital raising.[17] As recorded at [7] above, counsel confirmed that upon excluding the tagged votes the Scheme received sufficient votes to satisfy the requisite majorities and was comfortably passed.[18]

Voter turnout

[17] Re Vimy Resources Ltd [110] - [115].

[18] ts 58 (26 July 2022).

Counsel addressed the voter turnout of the scheme meeting. In this regard, counsel noted that of the 1,164,463,554 total Vimy shares on issue, 512,693,171 shares were voted at the meeting, representing 44.03% of the total number of voting shares.[19] However, only approximately 6.03% of all eligible Vimy shareholders by number voted at the scheme meeting (350 of the 5,770 shareholders).[20]
[19] Submissions par 40; affidavit of SL Coates par 10(b); fifth affidavit of SB McRobert par 28.
[20] Submissions par 41; affidavit of SL Coates par 10(a); fifth affidavit of SB McRobert par 28.
Counsel submitted that this turnout on votes is within the range of what is acceptable.[21] As counsel noted, Hill J in in Re Ozgrowth Ltd [No 2] [2022] WASC 167 considered low voter turnout in respect to a scheme meeting, and observed as follows:
[19]As was stated by Farrell J in Re TriAusMin Limited [No 2]:[22]
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)
[20]Relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.[23]
[21] Submissions par 42, citing Re Ozgrowth Ltd [No 2] [2022] WASC 167, [19] - [20] and footnote 28; ts 51 - 52 (26 July 2022).
[22] Re TriAusMin Ltd [No 2] [2014] FCA 833 [10] ‑ [11]
I was and am satisfied that there was sufficient turnout at the scheme meeting. I do not consider that the low voter turnout by number of Vimy shareholders 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) of the Corporations Act. In so concluding, I had regard to the following:
(a)the number of Vimy shareholders who voted at the scheme meeting, being approximately 6.03% of all eligible shareholders, exceeded the number of shareholders who voted at the two preceding annual general meetings of Vimy;[24]
(b)a significant majority of shareholders (by number) who voted at the scheme meeting voted in favour of the scheme resolution;
(c)there was no evidence which suggested any irregularity in the dispatch of the scheme booklet that would have affected voter turnout;[25] and
(d)there was no evidence of any issue which would have deterred Vimy shareholders from voting at or attending the scheme meeting.

Late dispatch of notice of scheme meeting for certain shareholders

[24] Submissions par 43; affidavit of SL Coates par 11; ts 51 - 52 (26 July 2022).

[25] This view was formed having had regard to the late dispatch of the notice of scheme meeting to the 26 shareholders (as addressed in the first affidavit of ER Merven) and the issue resulting in eight shareholders being unable to electronically lodge a proxy vote (as addressed in the second affidavit of ER Merven).

At the first court hearing, I ordered Vimy to dispatch materials on or before 20 June 2022 to shareholders who appeared on the register as at 5 pm on 17 June 2022. Counsel drew to my attention that there was an error in compliance with this order as the hardcopy materials were sent to those shareholders who appeared on Vimy's register as at 5 pm on 16 June 2022. Vimy sought to correct this error pursuant to s 1322 of the Corporations Act.
The evidence established that the error arose in circumstances where the printing company was sent the shareholder information report generated on 16 June 2022.[26] As a result, 26 shareholders who became shareholders after the report was generated had the scheme materials dispatched on 22 June 2022, and not on 20 June 2022 as required.
[26] Submissions par 63; first affidavit of ER Merven par 36; affidavit of L De Pellegrin pars 7 - 10; ts 52 (26 July 2022).
I am satisfied that, notwithstanding the error, there was substantial compliance with the orders made following the first court hearing. The inadvertent late dispatch of the materials to 26 shareholders is not such that it is likely to have caused any disenfranchisement of Vimy's members. In reaching this conclusion, I have weighed in the balance the following:
(a)the materials were dispatched on 22 June 2022, meaning that there were still 28 days for the dispatched materials to reach the shareholders before the scheme meeting;[27]
(b)the scheme booklet was publicly available on the ASX platform from 16 June 2022;[28] and
(c)the 26 affected shareholders collectively held 982,983 Vimy shares (representing 0.0845% of Vimy's share capital as at 5 pm on 17 June 2022). Counsel submitted that even if this group had missed the opportunity to vote, this amount of shares and shareholders could not have changed the outcome of the scheme meeting given the strong majorities attained.[29]
[27] Submissions pars 64, 70(a).
[28] Affidavit of SL Coates par 6, SC-4; submissions par 70(b).
[29] Submissions pars 66, 70(c); ts 53 (26 July 2022).
The failure is a procedural irregularity, being a defect, irregularity or deficiency in notice and time.[30] A scheme meeting is a proceeding under the Corporations Act. Accordingly, the effect of s 1322(2) of the Corporations Act is to provide for automatic validation of the scheme meeting despite the procedural irregularity, subject to a court order to the contrary.[31] In the circumstances described above, I am satisfied that the irregularity caused no substantial injustice and no order to the contrary ought be made.
[30] Corporations Act s 1322(1)(b)(ii).
[31] Submissions par 69; Re Wesfarmers Ltd [No 2] [2018] WASC 357 [28], [31]; Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [7].
Out of an abundance of caution, Vimy also sought a validation order under s 1322(4)(d) of the Corporations Act.[32] As to the necessity of the same, I note what Vaughan J stated in Re Wesfarmers Ltd [No 2] at [31]:
The validation order is not required. The issue that has arisen is a mere procedural irregularity and s 1322(2) provides for automatic validation. That said, the circumstance that s 1322(2) operates does not exclude the potential application of s 1322(4). There are a number of cases where the court has made curative orders under s 1322(4) notwithstanding that the irregularity is cured automatically by s 1322(2).[33] This is a large scheme. I readily understood the desirability of removing any doubt as to validity and was prepared to do so. (Although, if I considered the issue meant the scheme resolution was invalid, I would not approve the scheme under s 411(4)(b) - so it is implicit in the approval order that the irregularity does not result in invalidity.)
[32] Submissions par 72; ts 54 (26 July 2022).
[33] See eg iProperty Group Ltd (No 2) [2016] FCA 36 [15]; Re Opus Group Ltd [2018] FCA 1413 [15].
No order may be made under s 1322(4) of the Corporations Act unless there is satisfaction of the preconditions prescribed in s 1322(6). Counsel submitted that all were satisfied in that: the irregularity was of a procedural nature; Vimy had acted honestly; it was just and equitable that the order be made; and no substantial injustice has been or is likely to be caused to any person.[34] On the evidence, I was so satisfied.
[34] Submissions par 73.
There remains a residual discretion as to whether or not to make a validation order. I was satisfied that it was appropriate to exercise the discretion to grant the relief pressed in order to better facilitate the Scheme, in circumstances where it has the overwhelming support of Vimy's members. Accordingly, I made an order pursuant to s 1322(2)(d) of the Corporations Act extending the time for compliance with order 5(b) of the orders of 15 June 2022 to 22 June 2022.

Finding

I was and am satisfied that all statutory and procedural preconditions to the court's approval were satisfied. I so concluded having regard to the additional matters properly brought to the court's attention by counsel. I now turn to consider the discretionary considerations.

Good faith and proper purpose

There is no evidence that the Vimy shareholders voted for an improper purpose.[35] I was and am satisfied on the evidence that the members voted in good faith and for a proper purpose as:[36]
(a)the purpose of the proposed Scheme is to effect the acquisition by Deep Yellow of all Vimy shares on issue (with the Vimy Performance Rights and Vimy Options to be dealt with outside of the Scheme), a transaction of a kind ordinarily approved by the court. The transaction does not involve any novel treatment of shareholder rights;
(b)the independent expert report opined that in the absence of a superior proposal (and none since emerged), the Scheme is fair and reasonable and therefore is in the best interests of Vimy shareholders;[37] and
(c)neither ASIC nor any shareholder appeared at the second court hearing to object to approval of the proposed Scheme.

Fairness and reasonableness

[35] Submissions par 47.

[36] Submissions par 48.

[37] See also ts 46 (26 July 2022).

Based on the evidence before the court at the first court hearing, I was satisfied that the proposed Scheme 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.[38] Nothing had occurred since the date of the first hearing to change this view. Further, as noted by counsel in the written submissions, the independent expert opined that in the absence of an alternate proposal, the Scheme was in the best interests of Vimy shareholders and no alternate proposal emerged.[39] The shareholders of Vimy who voted at the meeting overwhelmingly supported the proposed Scheme and no Vimy shareholder appeared to oppose the orders sought at the second court hearing.
[38] Re Vimy Resources Ltd [163], [169].
[39] Submissions par 51.
I was satisfied at the first hearing that the proposed Scheme was fit for consideration by Vimy's members. My conclusion had not altered. I was and am satisfied that the proposed Scheme is fair and reasonable and is a Scheme that sensible businesspeople might consider to be of benefit to the shareholders of Vimy.

Full and fair disclosure

Based on the evidence before the court at the first court hearing, I was satisfied the proposed scheme booklet contained the prescribed information and provided proper disclosure to Vimy shareholders.[40] The additional affidavit evidence read by Vimy established that the scheme booklet dispatched to shareholders and made available at Vimy's registered office was in the form approved for distribution by the court.[41] Nothing had arisen to suggest there has not been proper disclosure of all information which was material to the decision of Vimy shareholders prior to voting on the Scheme.

Oppression of minorities

[40] Re Vimy Resources Ltd [64]. See also submissions par 54.

[41] Submissions pars 19 - 25. See also first affidavit of PF Kershaw; affidavit of L De Pellegrin; affidavit of K Sunphantry; first affidavit of ER Merven.

As counsel noted in the written submissions, there was no evidence before the court that any minority has been oppressed.[42]

Specific matters brought to the court's attention

[42] Submissions pars 57 - 58.

At the first court hearing, counsel for Vimy drew to my attention a number of matters which I weighed in the balance in determining that the Scheme was fit for consideration by Vimy's members. They included the directors' recommendations; the conditions precedent of the Scheme; the circumstances of the Vimy board's approval of the scheme implementation deed; Vimy's recent capital raising; Vimy's uranium business; the exclusivity provisions contained in the scheme implementation deed; a break fee provision; the voting intention statement from Paradice Investment Management Pty Ltd; and s 411(17) of the Corporations Act. The matters are addressed in Re Vimy Resources Ltd [70] - [161].
Counsel drew to my attention four further matters at the second court hearing, which I address below.

Voting system processing error

First, counsel drew to my attention that on 4 July 2022, there was a processing error that occurred in relation to the Vimy share database which resulted in the removal of eight shareholders from the Vimy shareholder register. As a result of the error, eight shareholders could not electronically lodge a proxy vote.[43] Seven of the eight shareholders did not have a phone number or email address registered with Automic and could not be contacted directly regarding the issue.[44] On 19 July 2022, the eight shareholders were reinstated to the Vimy shareholder register and, consequently, were able to vote at the scheme meeting.[45]
[43] Second affidavit of ER Merven par 33.
[44] ts 40 (26 July 2022).
[45] Second affidavit of ER Merven par 36.
The eight shareholders collectively held 334,289 Vimy shares, comprising 0.029% of the Vimy shares as at 18 July 2022.[46] None of the eight shareholders contacted the investor services team at Automic, nor did any of the eight shareholders attend the scheme meeting.[47]
[46] Second affidavit of ER Merven par 35.
[47] Submissions par 76; second affidavit of ER Merven pars 34, 37; sixth affidavit of SB McRobert par 9.
Counsel on behalf of Vimy submitted that given the share holdings were individually and collectively small, the votes of the eight shareholders would not have impacted the resolution concerning the Scheme, nor materially affected the majorities attained at the scheme meeting.[48] Further, the eight shareholders were not denied the important component of their right, that being the right to be able to vote on a resolution at the meeting.[49] While unfortunate, I accepted counsel's submission and did not consider that the inability of the eight shareholders to lodge a proxy form in circumstances where they were not denied the right to vote was a reason to exercise the court's discretion to not approve the proposed Scheme.

Conditions precedent

[48] Submissions par 78.

[49] ts 55 (26 July 2022).

Secondly, counsel noted that the implementation of the Scheme was subject to the satisfaction or waiver of various conditions precedent prescribed in cl 3.1 of the scheme implementation deed and cl 3 of the scheme of arrangement.[50] By the provision of conditions precedent certificates executed by both Vimy and Deep Yellow and by the grant of court approval I was and am satisfied all conditions precedent had been met.[51]

Shareholder intention statements

[50] The scheme implementation deed is annexure SGM-19 to the first affidavit of SG Michael; the scheme of arrangement is annexure SGM-20 to the first affidavit of SG Michael.

[51] Seventh affidavit of SB McRobert pars 5 - 6, SBM-45, SBM-46; ts 57 (26 July 2022).

Thirdly, as I noted in Re Vimy Resources Ltd [155], Paradice gave a statement that it intended to vote all of its shares in favour of the Scheme. At the time of giving the statement, Paradice held approximately 7.52% of the shares in Vimy and 7.88% of the shares in Deep Yellow. Mr Michael gave evidence for the purpose of the first court hearing that no collateral benefit or inducement was offered to Paradice to provide the voting intention statement.[52]
[52] First affidavit of SG Michael par 24; Re Vimy Resources Ltd [157].
At the second court hearing, counsel noted that the requisite statutory majorities would have been met even if the Paradice votes were excluded.[53]
[53] Submissions par 85.
In all the circumstances, the voting intention expressed by Paradice was not a reason to exercise the court's discretion to not approve the proposed Scheme.

Shareholder information campaign

Fourthly, counsel drew to my attention there had been communications with shareholders concerning the Scheme that had not been approved by the court.

Shareholder information line

On 25 May 2022, Vimy engaged Morrow Sodali, a shareholder services advisory firm, to act as the point of contact for shareholders who called the information line referenced in the scheme booklet and had questions or complaints about the Scheme.[54] Morrow Sodali prepared a script for incoming calls, which was based on information contained in the 'frequently asked questions' section of the scheme booklet (Information Line Script).[55] A copy of that script was attached to the third affidavit of Mr Michael and marked SGM‑46.
[54] Third affidavit of SG Michael par 6(a).
[55] Third affidavit of SG Michael par 8(a), SGM-46.
Counsel noted that among other things, the Information Line Script included the language to the following effect:[56]
[56] Submissions pars 88 - 89.
(a)the purpose of the scheme booklet was to explain the terms of the proposed acquisition by Deep Yellow of all of the Vimy shares;[57]
[57] Third affidavit of SG Michael, SGM-46, page 7.
(b)that the proposed structure provided the greatest certainty, if the Scheme was agreed to by shareholders and approved by the court, that Deep Yellow would gain 100% ownership and control within a specified time frame;[58]
[58] Third affidavit of SG Michael, SGM-46, page 7.
(c)there are risks associated with investment in the merged group, and the script set out the risks outlined in s 8 of the scheme booklet;[59]
(d)if the Scheme was not agreed, each shareholder's investment would remain the same, but Vimy will have incurred substantial costs and expended management time and resources for a proposed change of control transaction that does not proceed;[60]
(e)shareholders may sell their shares on the ASX at any time before the close of trading on the ASX on the effective date of the Scheme, which is expected to be 27 July 2022;[61]
(f)if the Scheme is implemented, then each Shareholder (other than Ineligible Shareholders and Small Shareholders who do not elect to receive scrip consideration) will be issued 0.294 shares in Deep Yellow for each Vimy share they own and their Vimy shares will become owned by Deep Yellow;[62]
(g) Ineligible Shareholders will receive consideration for their shares in cash and in accordance with the procedure, as set out in s 2.16(c) of the scheme booklet;[63]
(h) Small Shareholders may elect to receive their consideration in Deep Yellow shares as set out in s 2.16(c) of the scheme booklet;[64]
(i) the scheme meeting would be held virtually on 20 July 2022, and voting is not compulsory;[65]
(j) shareholders can vote online, or by proxy (and set out the process to submit a proxy form);[66]
(k) shareholders could vote for or against the Scheme, or sell their shares before the record date, or do nothing;[67] and
(l)the Vimy directions unanimously recommended shareholders vote for the Scheme, in absence of a superior proposal.[68]
[59] Third affidavit of SG Michael, SGM-46, page 8.
[60] Third affidavit of SG Michael, SGM-46, page 8.
[61] Third affidavit of SG Michael, SGM-46, page 9.
[62] Third affidavit of SG Michael, SGM-46, page 11.
[63] Third affidavit of SG Michael, SGM-46, pages 11 - 12.
[64] Third affidavit of SG Michael, SGM-46, pages 11 - 12.
[65] Third affidavit of SG Michael, SGM-46, page 13.
[66] Third affidavit of SG Michael, SGM-46, pages 13 - 14.
[67] Third affidavit of SG Michael, SGM-46, page 15.
[68] Third affidavit of SG Michael, SGM-46, pages 16 - 17.
The Information Line Script was reviewed by MinterEllison, Vimy's solicitors.[69]

Outbound calls

[69] Third affidavit of SG Michael par 8(a).

On 5 July 2022, Vimy engaged Morrow Sodali to conduct an outbound shareholder engagement campaign in respect of the scheme meeting.[70] Morrow Sodali began this engagement campaign on 6 July 2022 and used two scripts.
[70] Fourth affidavit of SG Michael par 12; third affidavit of SG Michael par 6(b). While Mr Michael in his third affidavit notes that this occurred on 25 May 2022, this was corrected in par 6 of his fourth affidavit.

First, a campaign script recited when outbound calls were made to shareholders, which was based on information contained in the scheme booklet (Outbound Campaign Script). A copy of the Outbound Campaign Script was attached to the third affidavit of Mr Michael and marked SGM‑47.
Secondly, a 'question and answer' script for operators to refer to during outbound calls when questions were asked, which was based on information contained in the scheme booklet and Vimy market announcements released to the ASX (Outbound Q&A Script). A copy of the Outbound Q&A Script was attached to the fourth affidavit of Mr Michael and marked SGM‑48.
Between 6 and 19 July 2022, Morrow Sodali made 1,203 calls and spoke to 184 shareholders (being 3.2% of the total number of shareholders) who held 21,416,662 shares (representing 1.8% of the total number of Vimy shares).[71] At the hearing, counsel informed the court that the top 2,000 shareholders by number of shares held were those targeted by the outbound campaign.[72]
[71] Fourth affidavit of SG Michael par 15, SGM-50.
[72] ts 48, 77 (26 July 2022); fourth affidavit of SG Michael, SGM-49, page 20.
The outbound campaign was not disclosed to the court or foreshadowed at the first court hearing. Mr Michael deposed that at the time of the first court hearing, Vimy had not decided whether or not to conduct an outbound campaign.[73] Mr Michael deposed that it had been mentioned at a meeting of legal and corporate advisers by Vimy's corporate advisers as a possibility for later consideration, but never otherwise progressed or further considered. Mr Michael further deposed that he was also unaware in early June that any script for an outbound campaign should be approved by the court.[74] Neither the Outbound Campaign Script nor the Outbound Q&A Script were approved by the court at the first court hearing or at any time before the scheme meeting.
[73] Fourth affidavit of SG Michael pars 7 - 9.
[74] Fourth affidavit of SG Michael pars 7 - 8.
At the second court hearing, counsel for Vimy submitted that the information provided by Morrow Sodali operators to shareholders in the course of the campaign was consistent with the disclosures in the scheme booklet and did not contain any new information or information that was misleading.[75] In this respect, counsel made the following points.
1.The Outbound Campaign Script contained instructions to the callers not to depart from the script in any material way.[76]
2.The Outbound Campaign Script and Outbound Q&A Script were based on information that was contained in the scheme booklet (and, in the case of the Outbound Q&A Script, based on Vimy's market announcements to the ASX).[77] The calls were made after the scheme booklet had reached shareholders so there was no subversion of the information contained within the scheme booklet.[78]
3.The Outbound Campaign Script asked shareholders (among other things) whether they supported the Scheme or not, and encouraged shareholders to vote.[79] There is no suggestion that the message discouraged shareholders from voting.[80] The key message included the Vimy board recommendation and set out some of the benefits of the Scheme, and referred to s 1.2 of the scheme booklet.[81]
4.The main purposes of the campaign were to ascertain feedback on likely voting intention and to encourage shareholders to vote on the Scheme.[82]
5.The Outbound Q&A Script was created for the purpose of answering questions from shareholders during the outbound call campaign and the information did not advocate for or against the Scheme itself - it was neutral on the Scheme.[83]
6.There was overlap between the Outbound Q&A Script and the Information Line Script.[84]
7.None of the scripts advocated for shareholders to vote to approve the Scheme. This is notwithstanding that some of the authorities have suggested that 'a degree of advocacy is permissible' so long as it is fair and honest.[85]
[75] Submissions par 104.
[76] Submissions par 95; third affidavit of SG Michael, SGM-47, pages 18, 21.
[77] Submissions par 106.
[78] ts 62 (26 July 2022).
[79] Submissions par 107; third affidavit of SG Michael, SGM-47, pages 20 - 21.
[80] ts 62 (26 July 2022).
[81] Submissions par 107(a); third affidavit of SG Michael, SGM-47, page 21.
[82] Submissions par 107(b); third affidavit of SG Michael, SGM-47, pages 20 - 21.
[83] Submissions par 108; third affidavit of SG Michael, SGM-47, pages 21 - 22.
[84] Submissions par 108.
[85] Submissions par 109, citing Re Investa Listed Funds Management Ltd [2016] NSWSC 344 [5] and Re AGL Ltd [2022] NSWSC 576 [42].
Counsel for Vimy further submitted that the impact of the outbound campaign on voting appeared to have been limited because of the 184 shareholders who were contacted:[86]
(a)38 shareholders (holding 9,576,098 shares) voted in favour of the Scheme;
(b)one shareholder (holding 50,000 shares) voted against the Scheme;
(c)four shareholders (holding 213,800 shares) voted 'discretionary' on the scheme resolution; and
(d)141 shareholders (holding 11,586,765 shares) did not vote on the scheme resolution.
[86] Submissions pars 110 - 111; fourth affidavit of SG Michael par 16; ts 45 (26 July 2022).
On behalf of Vimy, counsel also noted that no complaints about the outbound campaign had been received.[87]

ASIC's concerns in relation to the campaign

[87] Submissions par 112; fourth affidavit of SG Michael par 17.

It was brought to the court's attention that ASIC had raised a number of concerns with respect to the Information Line Script, the Outbound Campaign Script and the Outbound Q&A Script, including that:[88]
(a)each script referred to the unanimous recommendation of the directors without qualification. That is, it was not stated that shareholders should have regard to the interests of the directors in the outcome of the Scheme vote, which may differ from those of other Vimy shareholders;
(b) the risks referred to in the Outbound Campaign Script did not include the risk of a Material Adverse Effect event; and
(c) the Outbound Campaign Script suggested that outbound callers continue speaking to shareholders after they have declined to continue speaking.
[88] Sixth affidavit of SB McRobert par 5, SBM-40.
As to the concerns raised by ASIC, counsel for Vimy made the following submissions at the second court hearing.
First, counsel submitted that the scripts accurately described the directors' recommendations, and the directors' interests were extensively disclosed in the scheme booklet.[89] All shareholders could access the scheme booklet online and would have also received the scheme booklet before any call, enabling the shareholder to read the scheme booklet and receive the call in context. It was further submitted that the scripts were intended to provide answers to questions and encourage shareholders to engage and vote on the Scheme, but not to provide a complete disclosure of the materials in the scheme booklet and the Scheme itself.[90]
[89] Submissions par 115; ts 67 (26 July 2022).
[90] Submissions par 116.
Secondly, the Outbound Campaign Script itself did not substantively address the risks associated with the Scheme. The script encouraged shareholders to vote and attempted to ascertain voting intention. It also encouraged shareholders to read the scheme booklet, where the risk was disclosed.[91]
[91] Submissions par 117; third affidavit of SG Michael, SGM-47, page 22.
In this regard, counsel noted that both the Information Line Script and the Outbound Q&A Script referred to the risks of the Scheme and referred the shareholder to s 8 of the scheme booklet, which referred to the risk of termination of the scheme implementation deed as a result of a Material Adverse Effect event.[92] Further, counsel noted that the risk of the Scheme not completing as a result of a Material Adverse Effect event (the absence of which is a completion condition precedent), was addressed by the conditions precedent certificates executed by both Vimy and Deep Yellow.[93]
[92] Submissions par 118; third affidavit of SG Michael, SGM-48, page 25.
[93] Submissions par 119; ts 68 (26 July 2022).
Thirdly, counsel acknowledged that the Outbound Campaign Script did contain a statement where the caller would continue to speak even if the shareholder initially declined to speak.[94] Counsel further accepted that this can lead to concern if:
(a)there is overmuch pressure and an unbalanced message that is pushed if the shareholder is inclined to listen any further (rather than hanging up);
(b)the information is simply confusing; or
(c)there are excessive statements about voting only in favour of the Scheme, beyond ordinary advocacy based on a fair and honest reading of the message in the scheme booklet.
[94] Submissions par 120; third affidavit of SG Michael, SGM-47, page 20.
Counsel noted that 46 Shareholders were contacted but declined to answer.[95] Those shareholders potentially received additional information from Morrow Sodali after they had declined to speak. Counsel submitted that even if these callers did not hang up and were given the additional information, that itself is not problematic when the content of that message is examined, for the following reasons:[96]
[95] Submissions par 121; fourth affidavit of SG Michael, SGM-50.
[96] Submissions pars 122 - 129.
1.In the present case, the message was for the caller to be politely persistent but not to pressure, confuse or make excessive or unbalanced statements.
2.The immediate opening is to offer an apology for interruption, and then to note the Scheme consideration ratio for the exchange of Deep Yellow shares for Vimy shares. Noting the amount of proposed Scheme consideration is not offensive or inappropriate; rather, it ensures shareholders know that their rights could be changed.
3.The next statement that the board have carefully considered the proposal and unanimously recommend is an accurate statement. It is also accompanied by the important qualifiers:
(a)in the absence of a superior proposal; and
(b)the independent expert continuing to conclude that the Scheme is in the best interests of Vimy shareholders.
4.The point that a shareholder's vote is important is not pressure. To suggest then that the Scheme could be implemented if approved by requisite majorities at the scheme meeting does have a suggestive tone that the shareholder may be inclined to vote in favour. However, again, the language is temperate and there is an important confirmation that shareholders vote on the proposal at the scheme meeting.
5.Suggesting all the ways in which voting can occur is distinguishable from telling shareholders how to vote. There is no pressure in continuing to tell people about the ways that they can put in their vote, as their choice for their vote remains their choice.
6.The final paragraph of the script simply reveals proxy cut off times, to ensure a shareholder knows how they can get their vote in on time (whatever that vote may be) and then the call is terminated.
7.While there is a level of persistence in a call operator continuing on this line (again, if the shareholder has not already hung up), there is nothing in the nature of pressuring to vote a certain way.

Legal principles in respect of shareholder information campaigns

As to the dissemination of unapproved information to shareholders prior to a scheme meeting, I note as follows.
In Re Amcom Telecommunications Ltd [No 3] [2015] FCA 596, McKerracher J stated at [15] that:
… where a meeting has been convened under s 411 of the Act, only information approved by the Court for despatch to shareholders should be provided to members: Re Coates Hire Limited (No 2) [2007] FCA 2105; Re Associated Advisory Practices Ltd (No 2) [2013] FCA 979 per Farrell J (at [8]); Re Horizon Oil Limited [2014] FCA 733 per Farrell J (at [39]).
In Re Centro Retail Ltd and Centro MCS Manager Ltd [2011] NSWSC 1321, Barrett J at [11] noted that the rationale behind this rule is '[b]ecause the meeting is convened in accordance with an order of the court and the court has approved the explanatory statement, the court-approved "message" should not be interfered with by unilateral supplementation by the company'.
In this case, at the second court hearing, counsel referred to having appeared recently before Black J,[97] after the first court hearing but before the scheme meeting, where his Honour considered whether to approve a further communication to shareholders, by way of a process of telephone calls to shareholders to be undertaken by a third party in accordance with a specified script. Since the second court hearing in this matter, Black J has published reasons for decision in Re ResApp Health Ltd [2022] NSWSC 1014, in which his Honour made the following observations:
[97] ts 64, 65 (26 July 2022).
[15]I now turn to the well-established authorities concerning these issues. In Re Centro Retail Ltd [2011] NSWSC 1321, Barrett J emphasised (at [7]) the duty on a company and its directors to ensure that information placed in the hands of members before a meeting was complete as to material matters and fully and fairly informed them of what was to be considered at the meeting, and was not misleading or deceptive. His Honour also emphasised (at [10]), by reference to earlier authority, that, where the Court has ordered the convening of a meeting and has approved an explanatory statement (as, I interpolate, had occurred here), the company should not dispatch additional explanatory material without first obtaining Court approval.
[16]Many subsequent cases emphasise the principle that, if the Court has ordered the convening of a scheme meeting and approved an explanatory statement, its approval should be sought before additional explanatory material is dispatched, including at least Re Trust Company Ltd [2013] NSWSC 1946 at [6] ‑ [8]; Re Investa Listed Funds Management Ltd [2016] NSWSC 344 at [4]; Re Investa Listed Funds Management Ltd [2016] NSWSC 369 at [1]; Re Billabong International Ltd (No 2) [2018] FCA 496; Re Tawana Resources NL (No 2) [2018] FCA 1724 at [18]; Re Prime Media Group Ltd [2019] NSWSC 1888; and Re Walsh and Co Investments Ltd [2020] NSWSC 1746 at [66]. In Re Walsh and Co Ltd above at [66], I also dealt with the question where, by inadvertence in that case, there had been communications with shareholders which had not been approved by the Court, and observed that the ultimate question was whether the manner in which those communications had occurred had compromised the integrity of the voting process at the scheme meeting. That question will also arise here and will be a matter to be addressed at the second Court hearing.
[17]The need for the Court's approval of reminder to vote emails and investor presentations has also been noted in subsequent cases, including those to which I referred in Re Tabcorp Holdings Ltd [2022] NSWSC 448 at [22]. In that case, I accepted a submission of Senior Counsel that approval would generally be given to such communications, where the content of a proposed presentation 'largely mirrors that contained, in more detail, in the [scheme] booklet and it prominently directs recipients to read the [scheme] booklet before making any voting decision in respect of the proposed [scheme].' Plainly, however, that proposition depends upon the fairness of the applicable summary and the fact that it does not, for example, highlight advantages rather than disadvantages of the proposed scheme.
[18]Finally, although this principle ought to be too well-known to require repetition, applications in respect of schemes are often conducted on an ex parte basis, where there is no real contradictor. That position does not change where, as here, leave is granted to a potential acquirer to appear under rule 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW), because the potential acquirer will generally be in the same interest as the company which is the proponent of the scheme. The obligations upon the parties, and their legal representatives, in an ex parte application are well-established, and were summarised by Gageler J in Aristocrat Technologies Australia Pty Ltd [2016] HCA 3 at [15] as follows:
It is an elementary principle of our ordinarily adversarial system of justice that full and fair disclosure must be made by any person who seeks an order from a Court ex parte, with the result that failure to make such disclosure is ordinarily sufficient to warrant discharge of such order as might be made. The principle is not confined to particular types of interlocutory orders. Its rationale lies in the importance to the administration of justice of the Courts and the public being able to have confidence that an order will not be made in the absence of a person whose rights are immediately to be affected by that order unless the Court making the order has firstly been informed by the applicant of all facts known to the applicant which that absent person could be expected to have sought to place before the Court had the application for the order been contested.
…
[22]I record these matters to emphasise the significance, first, of seeking the Court's approval for substantive communications with shareholders and, secondly, drawing the Court's attention to matters that are relevant to those communications, recognising the duty of fair and full disclosure in an ex parte application. I accept that, in the present circumstances, the issues as to the first announcement made to ASX, so far as its substantive content is concerned, are likely to have been mitigated by the correcting announcement. The extent to which they may impact on the exercise of the Court's discretion whether to approve the scheme is, as I have noted above, a matter to be addressed at that second Court hearing, likely by reference to the approach adopted in Re Walsh and Co Ltd above, namely whether the information provided, in that first announcement, adversely affected the integrity of the voting process at the scheme meeting.
I further note that from my review of the authorities, it appears that the appropriateness of the use of a script in a shareholder engagement campaign has been considered by this court on only two occasions.
The decision of Hill J in Re Galaxy Resources Ltd [No 2], concerned an application for court approval of an arrangement in circumstances where at the first court hearing, the court was not informed of, and at no time had given prior approval to information to be given to shareholders as part of an outbound shareholder campaign. In that case, counsel who appeared for the applicant indicated that a motivation for the canvassing of shareholders was to encourage shareholders to vote at the scheme meeting.[98] Upon reviewing the scripts that had been used to make calls to shareholders of the applicant, Hill J found that there was nothing in the scripts that caused her any concern, her Honour finding the scripts to be consistent with the disclosure in the scheme booklet and not to contain any new information or any information that was misleading.[99]
[98] Re Galaxy Resources Ltd [No 2] [32].
[99] Re Galaxy Resources Ltd [No 2] [33].
Citing Re Amcom Telecommunications Ltd [No 3] [15], Hill J at [33] made the following observation and finding:
… in my view, it would be preferable for any intention or proposal to canvass shareholders to be drawn to the attention of the court at the first court hearing and approval sought as to the proposed script. This is consistent with the views previously expressed by the courts that where a meeting is convened under s 411 of the Act, only information approved by the court should be provided to members. In this case, given the scripts used by Georgeson [the entity engaged to run the shareholder communications program] are consistent with the information disclosed in the Scheme booklet, I do not consider this is a reason to refuse approval of the Scheme. (footnotes omitted)

Her Honour again came to consider additional shareholder engagement in Re Western Areas Ltd [2022] WASC 193, where at a first court hearing, the applicant (Western Areas) sought orders pursuant to s 1319 of the Corporations Act to cause certain Western Areas shareholders to be contacted via telephone by Western Areas' proxy solicitation agency, Morrow Sodali, and to cause a telephone information line to be operated by another entity. Her Honour at [84] observed that the scripts were consistent with the information in the scheme booklet and it was stressed that the scripts should not be departed from.
At [85] of the reason for decision, her Honour stated:
Where a company proposed to use a proxy solicitation agent, it is my view that this should be drawn to the attention of the court at the first court hearing and approval sought as to the proposed script.[100] I have reviewed the scripts proposed to be used in this matter and am satisfied that they are consistent with the disclosures in the Scheme Booklet and do not contain any new information or information that is misleading.
[100] Re Galaxy Resources Ltd [No 2] [31] - [33].
In this case, at the second court hearing, counsel for Vimy submitted that Hill J's position in relation to scripts 'appears to have evolved' as between Re Galaxy Resources Ltd [No 2] and Re Western Areas Ltd.[101] That is, her Honour had moved from expressing what is 'preferable' in relation to the provision of additional information to shareholders prior to a scheme meeting, to expressing what 'should' happen.
[101] Submissions pars 99 - 103.
I make the following observations in relation to this submission. First, the context in which her Honour came to consider additional shareholder engagement differed in each case. While permission was sought in the circumstances of Re Western Areas Ltd (at a first court hearing), something akin to forgiveness was sought in the circumstances of Re Galaxy Resources Ltd [No 2] (a second court hearing).
Secondly, in considering her Honour's reasons, I do not accept that there was any change or evolution of position. I understand her Honour's use of the words 'preferable' and 'should' were, in context, used to convey the same meaning. That is, a company should not dispatch additional explanatory material without first obtaining court approval. However, if it does, her Honour's reasons in Re Galaxy Resources Ltd [No 2] makes plain that the question then to be determined is whether such dispatch warrants withholding approval to the scheme, having regard to, among other things, whether new or misleading information was conveyed. In this regard, her Honour expressed a view entirely consistent with that expressed by Black J in Re ResApp Health Ltd. The company should not dispatch additional explanatory material without first obtaining court approval, but if it does, the question to be determined is whether such dispatch warrants withholding approval to the scheme.
I agree with and in this case applied the approach adopted by Hill J and Black J described above.
I note that at the second court hearing, counsel for Vimy observed that the court does not usually make orders approving a script for a shareholder information line or inbound call campaign.[102]
[102] ts 59 (26 July 2022).
I would expect that inbound calls may be initiated for varied reasons. Some may be administrative in nature. For example, a shareholder may call to request a copy of a document in a hard copy format, or to confirm a date or venue. There is no concern that a company, through a third party or directly, responds to the same. However, if a script is prepared with a view to engaging such callers in a substantive discussion concerning the scheme, and/or to provide additional information about the scheme, then in my view, prior approval of that script should be sought.
Some inbound calls may be substantive, for example, seeking further explanation as to the proposed scheme, or to engage as to merits. If such calls are answered by referring the caller to the appropriate parts of the scheme booklet, it is unsurprising that disclosure of such engagement has not typically been made, nor approval sought nor secured. However, if a script is prepared so as to engage such callers in a substantive discussion concerning the scheme, and/or to provide additional information about the scheme, then prior approval of that script should be sought.
There appears to be no reason to distinguish between scripts prepared for substantive (as opposed to administrative) engagement of inbound callers and those prepared for outbound calls. The court's approval for substantive communications with shareholders should be obtained and, the court's attention must be drawn to matters that are relevant to those communications, recognising the duty of fair and full disclosure in an ex parte application. In the end however, the ultimate question will be whether the manner in which communications with shareholders occurred compromised the integrity of the voting process at the scheme meeting. Whether use of an unsanctioned script in an unapproved shareholder campaign is reason to refuse to approve a proposed scheme is necessarily fact sensitive.

Conclusion

Vimy's shareholder information campaign had both inbound and outbound parts.
I gave little weight to the fact that no complaints concerning the outbound campaign were received.[103] I was also somewhat troubled by the efforts made to keep shareholders engaged with callers after they had declined to speak.
[103] ts 62 (26 July 2022).
I was concerned to understand how shareholders were selected for engagement, for example, whether they were retail investors. This concern was abated as counsel was able to confirm in response to my query that shareholders were not targeted by reference to any particular characteristic or vulnerability. Rather, the first 2,000 shareholders by size of shareholding were the subject of the outbound campaign.[104]
[104] ts 48, 77 (26 July 2022); fourth affidavit of SG Michael, SGM-49, page 20.
I reviewed the scripts used and was satisfied that there was nothing in the content that caused me concern. The scripts were consistent with the disclosure in the scheme booklet and did not contain new information or any information that was misleading. I took comfort that the scripts were referred to and approved by Vimy's solicitors prior to their use.[105] Further, the scripts encouraged shareholders to vote,[106] which is a legitimate object of an outbound campaign when the approval of a scheme depends, in part, upon the number of shareholders voting as well as the way in which they vote.[107]
[105] ts 63 (26 July 2022).
[106] Third affidavit of SG Michael, SGM-47, pages 20 - 21.
[107] Re ResApp Health Ltd [24].
On balance, I was satisfied that neither the information provided in the scripts nor the nature of the campaign adversely affected the integrity of the voting process at the scheme meeting. While there may be circumstances where the lack of court approval of a shareholder campaign script or campaign process may ground a basis to refuse to approve a proposed scheme, I was satisfied that this was not such an occasion.

Minor amendments to the Scheme

Vimy sought an order pursuant to s 411(6) of the Corporations Act to alter the Scheme that was approved by shareholders.
In considering whether it is just to approve a scheme in an amended form, it is relevant to consider whether the proposed amendment represents a substantial departure from the terms of the scheme that has been approved by shareholders.[108]
[108] Re Nzuri Copper Ltd [No 4] [2020] WASC 10 [7]; Re Ozgrowth [No 2] [67].
In this case, the amendments sought were to correct incomplete data and typographical errors.[109] Deep Yellow, through their solicitors, confirmed that the proposed alterations were agreed.[110]
[109] ts 72 (26 July 2022).
[110] Exhibit 1; ts 49 - 50 (26 July 2022).
I accepted counsel's submission that what was proposed were relatively minor alterations which did not affect the details or substance of the Scheme,[111] and I had no issue in approving the same.

Public policy

[111] Submissions par 133.

As with the first court hearing, I proceeded on the basis that the court's public policy discretion does not concern public policy matters at large, and the fact that Vimy and Deep Yellow operate in the industry of uranium mine development and mining is not a matter of concern to the court.[112] I remain of the same view and did not consider that there were any public policy grounds that warranted withholding approval to the Scheme.[113]

US Securities exemption

[112] Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358[35], [84] - [86]; Re CannPal Animal Therapeutics Ltd [48].

[113] See also ts 72 - 73 (26 July 2022).

At the first court hearing, counsel for Vimy also drew to my attention, the intention of Deep Yellow to rely on the court's approval of the Scheme to qualify for exemption under s 3(a)(10) of the Securities Act 1933 (USA). 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.
This has become common practice in schemes of arrangement,[114] and in the circumstances of this case, I was and am satisfied that it is appropriate to record as follows:
(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 Vimy'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) of the Corporations Act, it is necessary for the court to consider the fairness and reasonableness of the proposed Scheme. As set out at [43] ‑ [44] 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 Vimy to attend. Notice of the hearing was provided to all shareholders in accordance with the orders of the court made on 15 June 2022. The date of the hearing was published in both The West Australian and The Australian newspapers on 18 July 2022.
(d)No shareholder of Vimy gave notice of an 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.
(e)In my orders, I included a notation that Vimy and Deep Yellow would rely on this court's approval of the Scheme for the purpose of qualifying for exemption from the registration requirements under s 3(a)(10) of the Securities Act 1933 (USA). The notation was included to facilitate qualification for exemption prior to the publication of these written reasons.

Exemption from s 411(11) of the Corporations Act

[114] See, for example, Re Amcor Ltd [No 2] [2019] FCA 842 [33]; Re Beadell Resources Ltd [No 2] [2019] WASC 53 [62] - [64].

I note that Vimy sought an exemption from s 411(11) of the Corporations Act. This exemption has become ordinary practice for transactions of this kind.[115] Overall, I was and am satisfied there is no utility in requiring the court's orders approving the Scheme to be annexed to Vimy's constitution.[116] It was and is appropriate in the circumstances to make the orders sought pursuant to s 411(12) of the Corporations Act.

Section 411(17) of the Corporations Act

[115] Re Nusantara Resources Ltd [2021] WASC 334 [103].

[116] Submissions par 134 - 135.

Section 411(17) of the Corporations Act makes the court's approval conditional on satisfaction of one of two alternative conditions. Section 411(17) provides as follows:
(17)The Court must not approve a compromise or arrangement under this section unless:
(a)it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or
(b)there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement;
but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b).
As noted by counsel, it was observed by Vaughan J in Re Wesfarmers Ltd [No 2] that production of a 'no objection' letter from ASIC pursuant to s 411(17)(b) is usually the end of the issue; the court then does not need to consider the s 411(17)(a) issue.[117] However, a 'no objection' letter does not bring to the end the court's discretion.[118] His Honour observed that if for example the court were to find that a scheme had been proposed for the purpose of avoiding the operation of provisions within Ch 6 of the Corporations Act, that might be considered in the exercise of the discretion to approve the scheme under s 411(4)(b).[119]
[117] Submissions par 138.
[118] Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366 [29] - [30], as referenced in Re Wesfarmers Ltd [No 2] [18].
[119] Re Wesfarmers Ltd [No 2] [18], citing Re Coles Group (No 2)[2007] VSC 523; (2007) 215 FLR 411 [75] - [78].
It is well accepted that significance ought to be attached to the ASIC 'no objection' letter given in the terms of ASIC Regulatory Guide 60: Schemes of Arrangement. The Regulatory Guide confirms that a primary consideration for ASIC is whether, having regard to the principles in s 602 of the Corporations Act, shareholders are adversely affected by the takeover being implemented by a scheme of arrangement rather than a takeover bid.[120] ASIC will only issue a 'no objection' letter if satisfied as to the disclosure and that there are no other reasons to oppose the scheme.[121]
[120] ASIC Regulatory Guide 60: Schemes of Arrangement [RG 60.17]; as noted in Re Wesfarmers Ltd [No 2] [19].
[121] ASIC Regulatory Guide 60: Schemes of Arrangement [RG 60.106]; as noted in Re Wesfarmers Ltd [No 2] [19].
ASIC provided a written statement on 26 July 2022 that it did not object to the Scheme pursuant to s 411(17)(b) of the Corporations Act, and ASIC did not intend to appear and make submissions at the second court hearing. A copy of ASIC's communication of 26 July 2022 was before the court.[122] As a result, the requirements of s 411(17) were satisfied.
[122] Seventh affidavit of SB McRobert par 9, SBM-49.
In any event, for the reasons outlined by counsel in written submissions, having regard to the nature of the proposed transaction, I was and am satisfied that it cannot be said the Scheme was proposed to avoid the operation of Ch 6 of the Corporations Act.

Conclusion and orders

Upon considering the additional affidavit evidence filed and read in support of the application and upon considering the submissions made by counsel, I was satisfied that the substantive and procedural requirements of s 411(4) of the Corporations Act had been satisfied and that I should approve the proposed Scheme. The orders made at the conclusion of the second court hearing on 26 July 2022 are reproduced at sch A to these reasons.

Sch A: Orders made

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AI
Associate to the Honourable Justice Strk
11 AUGUST 2022

[23] 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 Ltd [No 2] [9] (10.94% of shareholders holding 52.9% of shares); Re Decimal Software Ltd [No 2] [2018] FCA 2040 [15] - [16] (5.21% of shareholders holding 52.85% of shares); Re Pensana Metals Ltd [2020] WASC 17 [12] (6.41% of shareholders holding 37.08% of shares); Re Zenith Energy Ltd [No 3] [2020] WASC 289 [18] (39% of shareholders holding 89.25% of shares); Re Saracen Mineral Holdings Ltd [No 2] [2021] WASC 32 [47] (9.50% of shareholders holding 75.46% of shares); Re CannPal Animal Therapeutics Ltd [No 2] [2021] WASC 83 [32] (6.63% of shareholders holding 55.46% of shares); Re Piedmont Lithium Ltd [No 3] [2021] WASC 173 (8.44% of shareholders holding 26.74% of shares); Re Galaxy Resources Ltd [No 2] [2021] WASC 314 (7.31% of shareholders holding 53.87% of shares); Re Nusantara Resources Ltd [2021] WASC 334 (29.79% of shareholders holding 59.16% of shares); Re Valmec Ltd [2021] WASC 420 (17.62% of shareholders holding 74.22% of shares); Re Swick Mining Services Ltd [2022] WASC 79(6% of shareholders holding 60.23% of shares); Re PetroNor E&P Ltd [No 2] [2022] WASC 81 (3.65% of shareholders holding 68.16% of shares); Re Bardoc Gold Ltd [No 2] [2022] WASC 113 [23] (8.03% of shareholders holding 37.1% of shares).