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Re Zenith Energy Ltd

Re Zenith Energy Ltd

Case [2020] WASC 266 16 July 2020

Scheme of Arrangement

Corporate Meetings

Voting Rights

Statutory Compliance

Corporate Law & Governance

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RE ZENITH ENERGY LTD; EX PARTE ZENITH ENERGY LTD [2020] WASC 266
CORAM:   HILL J
HEARD:   25 JUNE 2020
DELIVERED          :   16 JULY 2020
FILE NO/S:   COR 51 of 2020

EX PARTE
ZENITH ENERGY LTD
Plaintiff
ELEMENTAL INFRASTRUCTURE BIDCO PTY LTD
Interested Party

Catchwords:

Corporations law - Scheme of arrangement - Application for orders convening scheme meetings under s 411(1) of the Corporations Act 2001 (Cth) - Whether requirements to order scheme meetings are satisfied - Virtual scheme meetings - Whether executive directors should make a voting recommendation to members - Orders made convening meeting

Legislation:

Corporations Act 2001 (Cth), s 411, s 1319
Corporations (Coronavirus Economic Response) Determination (No 1) 2020 (Cth), cl 5
Supreme Court (Corporations) (WA) Rules 2004 (WA)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	SK Dharmananda SC & J Sippe
Interested Party	:	S C Davies SC

Solicitors:

Plaintiff	:	Allens
Interested Party	:	Minter Ellison

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

First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116; (2017) 320 FLR 78
Pacific Energy Limited [2019] WASC 443
Re Amcom Telecommunications Ltd [2015] FCA 341
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re David Jones Ltd [No 2] [2014] FCA 753
Re Doray Minerals Ltd [2019] WASC 57
Re Dreamscape Networks Ltd [2019] WASC 412
Re DUET Management Company 1 Ltd [2013] NSWSC 817; (2013) 95 ACSR 34
Re Dulux Group [2019] FCA 961; (2019) 136 ACSR 546
Re Gazal Corporation Ltd [2019] FCA 701
Re Healthscope Ltd [2019] FCA 542; (2019) 139 ACSR 608
Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101
Re Investa Properties Ltd [2007] FCA 1104
Re Kangaroo Resources Ltd [2018] WASC 327
Re Macquarie Private Capital A Ltd [2008] NSWSC 323
Re MOD Resources Ltd [2019] WASC 326
Re Navitas Limited [2019] WASC 180
Re Navitas Ltd [No 2] [2019] WASC 218
Re NRMA Ltd [2000] NSWSC 82; (2000) 156 FLR 349
Re Nzuri Copper Ltd [2019] WASC 189
Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20
Re QMS Media Limited [2019] FCA 2172
Re Scarborough Equities Ltd [No 2] [2009] FCA 484
Re SMS Management and Technology Limited [2017] VSC 257
Re SRG Limited [2018] FCA 1092
Re Villa World Ltd [2019] NSWSC 1207
Re Wellcom Group Ltd [2019] FCA 1655
Re Wesfarmers Ltd [2018] WASC 308

HILL J:

The plaintiff, Zenith Energy Limited (Zenith Energy), is an Australian public company listed on the official list of the ASX Ltd (ASX).
On 6 March 2020, Zenith Energy announced that it had entered into a scheme implementation deed (Original SID) with Elemental Infrastructure BidCo Pty Ltd (Elemental). Under the Original SID, it was proposed that Elemental would acquire 100% of the fully paid ordinary shares in Zenith Energy by way of…

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 Zenith Energy Ltd

Details

AGLC: Re Zenith Energy Ltd [2020] WASC 266
Case: [2020] WASC 266
Decision Date: 16 JULY 2020

CaseChat Overview and Summary

The matter before the Court involved an application by Zenith Energy Ltd to convene meetings of its members and creditors to consider a proposed scheme of arrangement. The application was made under section 411(1) of the Corporations Act 2001 (Cth). The primary issue before the Court was whether the conditions necessary to order such meetings were met, specifically whether the requisite majority of members and creditors in number and value had resolved to convene the meetings. Additionally, the Court considered whether executive directors should be required to make a voting recommendation to members regarding the proposed scheme.

The Court examined the application and the relevant provisions of the Corporations Act, including section 411(1), and considered the submissions made by Zenith Energy Ltd and the objectors to the scheme. The Court found that the requirements for convening the meetings were satisfied, as the requisite majorities had indeed resolved to convene the meetings. The Court also considered the issue of whether executive directors should be required to make a voting recommendation to members. While acknowledging the potential benefits of such a recommendation, the Court concluded that it was not appropriate to impose such a requirement as a matter of law, given the particular circumstances of the case and the absence of any relevant statutory provision mandating such a recommendation.

The Court ordered the convening of meetings of the members and creditors of Zenith Energy Ltd to consider the proposed scheme of arrangement. It was noted that the scheme meetings would be conducted virtually due to the prevailing circumstances. The Court did not impose a requirement on the executive directors to make a voting recommendation to members. The orders made by the Court provided for the scheme meetings to be held, with the timing and manner of the meetings to be determined in accordance with the Court's directions.

Orders