Technology Metals Australia Limited v Australian Vanadium Limited - [2024] WASC 26

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   TECHNOLOGY METALS AUSTRALIA LIMITED -v- AUSTRALIAN VANADIUM LIMITED [2024] WASC 26
CORAM:   LUNDBERG J
HEARD:   4, 20 DECEMBER 2023 & 19 JANUARY 2024
DELIVERED          :   7 FEBRUARY 2024
FILE NO/S:   COR 173 of 2023
BETWEEN:   TECHNOLOGY METALS AUSTRALIA LIMITED
Plaintiff
AND
AUSTRALIAN VANADIUM LIMITED
Interested Party

Catchwords:

Corporations Law - Scheme of arrangement under s 411 of the Corporations Act 2001 (Cth) - Plaintiff mining company to be wholly acquired by another ASX listed mining company - First court hearing - Early statements of intended opposition from plaintiff's shareholders - Independent expert of the opinion that proposed scheme is not fair but is reasonable and in the best interests of the shareholders - Whether appropriate for orders to be made convening scheme meeting and for dispatch of scheme booklet

Corporations Law - Plaintiff amended the scheme consideration following first court hearing - Orders sought to dispatch a supplementary disclosure statement to plaintiff's shareholders - Importance of ensuring that shareholders are not confused by new material - Whether appropriate for orders to be made - Alteration of voting intentions by certain shareholders

Corporations Law - Final court hearing seeking approval of scheme under s 411(4) of the Corporations Act 2001 (Cth) - Whether appropriate for approval and associated orders to be made

Legislation:

ASIC Regulatory Guide 25 - Takeovers - false and misleading statements
ASIC Regulatory Guide 60 - Schemes of Arrangement
Corporations Act 2001 (Cth), s 411, s 1319
Corporations Regulations 2001 (Cth), sch 8
Securities Act of 1933 (US)
Takeovers Panel Guidance Note 23 - Shareholder Intention Statements

Result:

Orders made on 4 December 2023 to convene scheme meeting and for dispatch of scheme booklet

Orders made on 20 December 2023 to approve dispatch of supplementary disclosure statement

Orders made on 19 January 2024 to approve scheme

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos & S M Murphy
Interested Party	:	K Sleiman

Solicitors:

Plaintiff	:	DLA Piper Australia - Perth
Interested Party	:	Corrs Chambers Westgarth

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

FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
Re Anatolia Energy Limited [2015] FCA 1134
Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600
Re Beadell Resources Ltd [No 2] [2019] WASC 53
Re Citect Corporation Ltd [2006] NSWSC 143; (2006) 225 ALR 137
Re Creso Pharma Ltd [2019] WASC 472
Re DDH1 [2023] FCA 982
Re DDH1 Ltd (No 2) [2023] FCA 1046
Re Essential Metals Ltd [2023] FCA 1101
Re Galaxy Resources [2021] WASC 277
Re International Goldfields Ltd [2004] WASC 112
Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349
Re NTM Gold Ltd; Ex parte NTM Gold Ltd [2021] WASC 22
Re Piedmont Lithium Ltd [No 2] [2021] WASC 106
Re Prime Media Group Ltd [2019] NSWSC 1888
Re Programmed Maintenance Services Ltd [2017] FCA 1265
Re ResApp Health Ltd [2022] NSWSC 1116
Re SRG Ltd [2018] FCA 1092
Re Tawana Resources NL (No 2) [2018] FCA 1724
Re Tawana Resources NL [2018] FCA 1456
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357
Re Zenith Energy Ltd [2020] WASC 266

Table of Contents

A. Introduction and overview

B. Framework of the Scheme

C. Legislative framework

D. First court hearing - 4 December 2023

Overview

Issues for determination

Court's discretion

The independent expert's opinion

Shareholder voting intention statements

Further matters

Shareholder communications

E. Second court hearing - 20 December 2023

Overview

Issues for determination

Best and final statement by AVL

Shareholder voting intention statements

Directors' support and the independent experts' opinion

Proxy forms

F. Third court hearing - 19 January 2024

Overview

Shareholder communications

Securities Act of 1933 (US)

G. Conclusion and orders

Attachment A Orders made on 4 December 2023

Attachment B Orders made on 20 December 2023

Attachment C Orders made on 19 January 2024

Attachment D Diagram showing location of major projects

LUNDBERG J:

A. Introduction and overview

This proceeding was commenced by originating process filed on 15 November 2023, seeking orders to initiate, and ultimately approve, a scheme of arrangement between the plaintiff and its members (other than certain excluded members)[1] (Scheme). I will refer to the members bound by the Scheme as the Scheme Shareholders.
[1] Other than those entities who are also members of the acquiring company or controlled by the acquiring company.
The orders were sought by the plaintiff pursuant to s 411(1), s 411(4) and s 1319 of the Corporations Act 2001 (Cth) (CA).[2] Such applications are now subject to the harmonised practice direction which has relatively recently been adopted in this court.[3]
[2] References to statutory provisions in these reasons are to the CA unless stated otherwise.
[3] Consolidated Practice Directions PD 9.5.2.
I will refer to the plaintiff company, which is Technology Metals Australia Limited, as either the plaintiff or TMT. TMT is an ASX‑listed Australian mining company focused on exploration and mining for vanadium in Western Australia.
Pursuant to the Scheme, the Scheme Shareholders would receive new fully paid ordinary shares in the acquiring company. As will be explained in more detail, the independent experts engaged by the plaintiff for the purposes of the Scheme had opined that the Scheme was not fair, but was reasonable and in the best interests of the Scheme Shareholders.
The acquiring company under the Scheme is Australian Vanadium Limited, which I will refer to as AVL. As that company's name suggests, it also has a focus on the mining of vanadium. Indeed, AVL and TMT both have vanadium projects which are situated in relatively close proximity in the mid‑west region of Western Australia, which provides one of the rationales for the Scheme itself.
The proceedings were listed for an initial hearing on 4 December 2023 to consider whether orders should be made for the purposes of the first step in the scheme of arrangement process, namely to convene a scheme meeting (to be held in January 2024) and for associated orders for the dispatch of a scheme booklet (and its associated explanatory statement), which I will refer to as the Scheme Booklet. These reasons explain why I was satisfied those orders should be made. The orders I made are set out in Attachment A to these reasons.
One of the aspects of the Scheme process which emerged at the first hearing was the receipt by the plaintiff of voting intention statements from shareholders signalling an intention to vote against the Scheme. That is a matter on which the plaintiff's counsel made submissions and on which I have made particular comment in these reasons.
Unexpectedly, a further interlocutory hearing was required in the matter ahead of the scheme meeting which had been ordered. The further hearing was held on 20 December 2023. It was required after the plaintiff proposed an increase in the consideration payable under the Scheme, and so that the plaintiff could seek approval for the dispatch of a supplementary disclosure statement to its members (the Supplementary Disclosure Statement). These reasons explain why I was satisfied the court should approve the Supplementary Disclosure Statement, the orders in respect of which are set out in Attachment B to these reasons.
The third hearing in the matter was held on 19 January 2024, following the scheme meeting being held and the scheme being voted on by members on 16 January 2024. These reasons explain why I was satisfied the court should approve the Scheme pursuant to s 411(4), the orders in respect of which are set out in Attachment C to these reasons.

B. Framework of the Scheme

I will commence these reasons with a summary of the framework of the Scheme and the principal instruments. In general terms, the Scheme presented as conventionally and conservatively structured.
On 23 September 2023, AVL and TMT entered into a Scheme Implementation Deed (SID).[4] The terms of the Scheme are detailed in the Scheme of Arrangement document, which was attached to the second affidavit of Kirsty Jayne Hall affirmed on 1 December 2023, filed for the purposes of the first hearing.[5] Additionally, by the terms of a Deed Poll, AVL had, in effect, given effect to its obligations under the Scheme to provide or procure the provision of the Scheme Consideration to each Scheme Shareholder.[6]
[4] Affidavit of Ian Prentice affirmed 15 November 2023, Attachment IP‑12, page 775.
[5] Affidavit of Kirsty Jayne Hall affirmed 1 December 2023, Attachment KJH-16.
[6] Affidavit of Louis Mostert sworn 30 November 2023, Attachment LM-2.
The Scheme, if a scheme meeting is held and the Scheme is voted up by the members, and then ultimately approved by the court, will involve the acquisition by an acquiring company, AVL, of all of the shares in TMT. TMT will then become a wholly owned subsidiary of the acquiring company.[7]
[7] Scheme, cl 2.3.
As initially proposed, each shareholder in TMT would receive 12 new fully paid ordinary shares in the acquiring company (at the price of those shares at the record date), which I will refer to as the Scheme Consideration.[8] As at 23 September 2023 (being the date of entry into the SID), the implied value of the transaction for the acquisition of TMT was $83.9 m.
[8] Except for ineligible overseas shareholders and small parcel shareholders.
As will be seen, the terms of the Scheme were altered by TMT following the first court hearing, in order to modify the Scheme Consideration. The Scheme Consideration was increased from 12 shares in AVL to 14 shares in AVL.
The terms of the Scheme not only address the manner in which the rights of holders of ordinary shares are dealt with, but also how the rights of holders of options in TMT, holders of performance rights in TMT, as well as ineligible overseas shareholders and small parcel shareholders, are to be dealt with.
By way of explanation as to the commercial rationale for the Scheme, it is pertinent to observe that TMT controls the Murchison Technology Metals Project which is located 40 km south‑southeast of Meekatharra, comprising the Gabanintha and Yarrabubba deposits, with the latter being about 20 km away from the former. The whole project itself is stated to have proven and probable ore reserves of 44.84 Mt at 0.89% vanadium pentoxide (V₂O₅).
As for AVL, it controls the Australian Vanadium Project. That project covers mining tenements adjacent to TMT's Gabanintha project and surrounding TMT's Yarrabubba project, in respect of which AVL proposes to develop an open cut mine to access the underlying vanadium, titanium and magnetite ore body. AVL intends to develop a crushing, milling and beneficiation plant to produce magnetite concentrate, and develop a plant at Tenindewa east of Geraldton for processing the magnetite concentrate to produce high purity vanadium pentoxide.
The diagram in Attachment D to these reasons conveniently demonstrates the geographic proximity of the major projects being developed by the plaintiff and by AVL.[9] In the language of the Scheme materials, the Scheme is said to involve the:
… logical combination of two adjacent projects across one orebody providing a unique opportunity to realise operational and corporate synergies by creating a single integrated project.[10]
[9] Scheme Booklet, page 11.
[10] Scheme Booklet, page 11.
The Scheme Booklet prepared for the Scheme was comprehensive and adopted the content and style which has become customary for schemes of this nature. The booklet incorporated letters addressed to the Scheme Shareholders from the chairpersons of both TMT and AVL, together with an initial summary which explained the reasons to vote in favour of, and against, the Scheme, as well as identifying other considerations.[11]
[11] Scheme Booklet, pages 1 - 24.
The Scheme Booklet included an independent expert report prepared by Sherif Andrawes and Adam Myers of the accounting firm, BDO (the IER).[12] The IER is comprehensive.
[12] Scheme Booklet, Appendix 1.
In summary, the independent experts concluded as follows (as at the date of the first court hearing in this matter):[13]
We have considered the terms of the Scheme as outlined in the body of this report and have concluded that, in the absence of a superior proposal, the Scheme is not fair but reasonable to Shareholders. Therefore, we consider the Scheme to be in the best interest of Shareholders.
In our opinion, the Scheme is not fair because the value of 12 shares in the Proposed Merged Entity (on a minority interest basis) is lower than the value of a share in TMT prior to the Scheme (on a controlling interest basis). However, we consider the Scheme to be reasonable because the advantages of approving the Scheme outweigh the disadvantages. In particular, following the implementation of the Scheme shareholders will have an interest in an enlarged entity which will have consolidated ownership of two adjoining projects which may enable improved ability to develop the projects and easier access to capital. (emphasis added)
[13] IER, page 2.
The independent experts thus opined that the Scheme was not fair, but was reasonable and in the best interests of the Scheme Shareholders.
The IER incorporated an independent valuation report (IVR) prepared by Valuation and Resource Management Pty Ltd (VRM).[14] The IVR includes an independent technical assessment report and a valuation for the mineral assets of both TMT and AVL.
[14] Scheme Booklet, Appendix 3 to the IER.
The mineral assets detailed and valued in the IVR were the advanced Murchison Technology Metals Project which is 100% owned by TMT and the Australian Vanadium Project which is 100% owned by AVL. Additionally, two early‑stage exploration projects were documented in the report, being the Coates Project and Nowthanna Project, which are both 100% owned by AVL. All the projects are located in Western Australia.[15] As explained in the IVR, the tenements that constitute the two primary projects are adjacent and the geology of the projects is contiguous.
[15] IVR, page 1.
The directors of TMT unanimously recommended that Scheme Shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the independent experts maintaining the view that the Scheme is in the best interests of the shareholders.

C. Legislative framework

The relevant legislative framework is found in s 411. The principal requirements which must be satisfied for a proposal to come within the legislative framework are set out in s 411(1), which is in the following terms:
Where a compromise or arrangement is proposed between a Part 5.1 body and its creditors or any class of them or between a Part 5.1 body and its members or any class of them, the Court may, on the application in a summary way of the body or of any creditor or member of the body, or, in the case of a body being wound up, of the liquidator, order a meeting or meetings of the creditors or class of creditors or of the members of the body or class of members to be convened in such manner, and to be held in such place or places (in this jurisdiction or elsewhere), as the Court directs and, where the Court makes such an order, the Court may approve the explanatory statement required by paragraph 412(1)(a) to accompany notices of the meeting or meetings.
The legislation thus requires that the court be satisfied the scheme is an arrangement, and that it is between a Part 5.1 body and its members. Further, an issue may arise as to whether the arrangement has properly characterised the class or classes of members to be bound by the Scheme.
None of these matters is contentious in the present case. The proposal before the court is an arrangement. It concerns a change in the rights of members in their capacity as members. The plaintiff is a Part 5.1 body, being a company registered under the CA. The scheme participants are members of the plaintiff, and the proposed scheme meeting will be convened between members of the same class as all shareholders have the same rights under the Scheme, namely the right to receive the Scheme Consideration for their shares.
As to the class identification issue, it is noted that Resource Capital Fund VII LP (RCF) is a substantial shareholder of each of TMT (18.02%) and AVL (18.52%). I accept that this is not class‑creating.[16] Similarly, the manner in which other securities in TMT is dealt with by the Scheme does not create any class issues.[17]
[16] See, by analogy, Re Essential Metals Ltd [2023] FCA 1101 [55].
[17] Plaintiff's submissions dated 30 November 2023, [32] - [46].

D. First court hearing - 4 December 2023

Overview

The proceedings were listed for hearing on 4 December 2023 to consider whether orders should be made for the purposes of the first step in the scheme of arrangement process, namely to convene a scheme meeting (to be held in January 2024) and for associated orders for the dispatch of a scheme booklet (and its associated explanatory statement).
The plaintiff filed a detailed outline of submissions for the purposes of the first hearing on 4 December 2023, which incorporated a checklist which confirmed that the statutory and regulatory requirements applicable to the Scheme had been satisfied.
The plaintiff and AVL relied on the following affidavits at the first hearing:
(a)an affidavit of Ian Prentice affirmed on 15 November 2023 (the Managing Director of TMT), which attached the first draft of the Scheme Booklet as Attachment IP‑9;
(b)an affidavit of Kirsty Jayne Hall affirmed on 30 November 2023 (a solicitor at DLA Piper), which attached the amendments to the Scheme Booklet as Attachment KJH‑6;
(c)an affidavit of Louis Hendrik Mostert sworn 30 November 2023 (the Chief Legal and Commercial Officer and Joint Company Secretary of AVL);
(d)a second affidavit of Ms Hall affirmed on 1 December 2023; and
(e)a third affidavit of Ms Hall affirmed on 4 December 2023.

Issues for determination

It is well settled that the court should order the convening of a scheme meeting and approve the dispatch of an explanatory statement if satisfied of the following matters:
(a)the scheme is an arrangement in respect of which the court may order a meeting of the members or creditors: s 411(1). That is, the scheme is an arrangement, the company is a Part 5.1 Body, the scheme participants are members of the scheme company, and the scheme meeting will be convened between members of the same class;
(b)ASIC has had a reasonable opportunity to: (i) examine the terms of the scheme and explanatory statement; and (ii) make submissions to the court in relation thereto: s 411(2)(b);
(c)the explanatory statement provides adequate disclosure (s 412(1)(a)(i)) and contains the prescribed information as required by s 412(1)(a)(ii), reg 5.1.01 and Schedule 8 cl 8301 to cl 8310 of the Corporations Regulations 2001 (Cth) (Corporations Regulations);
(d)the procedural requirements of the Rules have been met and an independent person will chair the scheme meeting;
(e)the proposed scheme is bona fide and properly proposed; and
(f)that there is no apparent reason why the scheme should not, in due course, receive the court's approval if the necessary majority of members' votes is achieved.
If the statutory and procedural requirements are satisfied, the court has a discretion to convene the Scheme Meeting and approve the dispatch of the Scheme Booklet. That will require that I consider whether the Scheme was properly proposed (that is, bona fide) and within power (intra vires),[18] and the Scheme is of such a nature and cast in such terms that, if agreed to by the requisite majorities at the Scheme Meeting, the court will be likely to approve it on the hearing of an application which is unopposed.[19]
[18] Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349[24]; Re Programmed Maintenance Services Ltd [2017] FCA 1265 [48]; Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [2018] WASC 308 [63(1)].
[19] Re Wesfarmers Ltd [63(2)]; Re Zenith Energy Ltd [2020] WASC 266 [28(g)].

It is of course uncontroversial that, at the first stage of the scheme process, the standard of review is whether the scheme is not inappropriate and is one that sensible businesspeople might consider of benefit to the scheme's members. If the proposed arrangement is one that seems fit for consideration by a meeting of members and is a commercial proposition likely to gain the court's approval if passed by the necessary majority, leave should be given to convene the meeting.[20]
[20] FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69, 72; Re SRG Ltd [2018] FCA 1092 [12]; Re Wesfarmers Ltd [63] - [65], [72] - [76].
The oft‑cited statement of Street CJ (with whom Hutley and Samuels JJA agreed) in FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd is in the following terms:
The function of the court when consideration an application under s 181 is not in doubt. We have been referred by Mr Rogers QC, who appears for the appellant, to the decision of Maugham J in Re Dorman Long and Co Ltd [1934] 1 Ch 635, in particular at 655 and 656, and to some later decisions in this State and Victoria. There is no occasion to cite from these judgments. The approach taken upon a summons is that the court will not ordinarily summon a meeting unless a scheme is of such a nature and cast in such terms that, if it achieves the statutory majority at the creditors' meeting the court would be likely to approve it on the hearing of a petition which is unopposed.[21]
[21] FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (72).
Put another way, the role of the court at the first stage of the process of a company propounding and implementing a scheme of arrangement is not to scrutinise the commercial merits (or demerits) of whether the scheme should be approved.[22] The approval decision must await the expression of the will of the members at the meeting and any argument that may be advanced on behalf of dissenting members or other interested parties at the time of the application for approval.[23]
[22] Re Wesfarmers Ltd [72] - [75].
[23] Re Anatolia Energy Limited [2015] FCA 1134 [28] and Re Wesfarmers Ltd [73].
I was satisfied at the conclusion of the first hearing that the statutory and procedural requirements had been demonstrated by the plaintiff. I will address these matters below, and then deal with the discretion and certain features of the Scheme which require specific comment.
As earlier noted, I am satisfied the Scheme meets the statutory requirements set out in s 411(1).
I am also satisfied, given the letter received from ASIC, that ASIC has had the requisite opportunity to examine the terms of the Scheme and explanatory statement, and make submissions to the court. I note the Scheme Booklet was first lodged with ASIC on 15 November 2023.[24] A letter from ASIC dated 4 December 2023 was provided to the court confirming these matters and indicating that ASIC did not propose to appear to make submissions or intervene to oppose the Scheme at the first hearing.[25]
[24] Affidavit of Ian Prentice affirmed 15 November 2023, [18] and Attachment IP‑10.
[25] Third Affidavit of Kirsty Jayne Hall affirmed 4 December 2023, Attachment KJH‑22.
As to the adequacy of disclosure and compliance with the regulatory requirements, I have reviewed the Scheme Booklet and I also had regard to the detailed checklist which has been provided to the court by the plaintiff's solicitors. That checklist confirms the Scheme Booklet meets the requirements of Schedule 8 to the Corporations Regulations as well as the requirements set out in ASIC Regulatory Guide 60.[26] The Scheme Booklet is of course required to essentially set out 'all the main facts as will enable shareholders to exercise their judgement on the proposed scheme'.[27] At the first hearing stage, the court should be satisfied, prima facie, that there has been proper disclosure with nothing misleading or deceptive in any material sense.
[26] Plaintiff's submissions dated 30 November 2023, Appendix B.
[27] Re NRMA Insurance Ltd (No 1) [16].
I was satisfied that TMT had undertaken a process to verify the accuracy of the contents of the information for which it was responsible in the Scheme Booklet, including to ensure that the information did not contain any false, misleading or deceptive statement (including by omission) and did not omit any required or material information.[28]
[28] Affidavit of Ian Prentice affirmed 15 November 2023, [65] - [74].
Mr Prentice specifically deposed that all material statements as they relate to TMT were complete and accurate in all material respects, and not misleading or deceptive or likely to mislead or deceive, and that there was no omission of material information from the Scheme Booklet in relation to TMT.[29] The board of directors of TMT approved the submission to ASIC of the draft Scheme Booklet with ASIC.[30]
[29] Affidavit of Ian Prentice affirmed 15 November 2023, [74].
[30] Affidavit of Ian Prentice affirmed 15 November 2023, [72].
AVL followed a similar process for the purpose of verifying the accuracy of the statements in the Scheme Booklet for which it was responsible.[31]
[31] Affidavit of Louis Mostert sworn 30 November 2023, [10] - [27].
As to the procedural matters to be satisfied, the plaintiff dealt with the requirements concerning the nomination of the chairperson for the Scheme Meeting through the affidavit of Mr Prentice.[32] I refer to Rule 3.2 of the Corporations Rules in this regard, and also note that Practice Direction 9.5.2.3(d) provides that the consent of the chairperson and alternate chairperson of the Scheme Meeting can permissibly be provided by evidence led on information and belief. Mr Michael Fry, the non‑executive chairperson of TMT, was nominated to be the chairperson of the Scheme Meeting.[33]

Court's discretion

[32] Affidavit of Ian Prentice affirmed 15 November 2023, [52] - [53].

[33] Affidavit of Ian Prentice affirmed 15 November 2023, [52] - [53].

In light of the above matters, I was satisfied that the court's discretion to convene the Scheme Meeting and approve the dispatch of the Scheme Booklet was enlivened. In this regard, there are particular aspects of the Scheme upon which I should comment, which were the subject of specific submissions from counsel for the plaintiff.

The independent expert's opinion

The first matter concerns the opinion of the independent experts as contained in the IER. The independent experts opined that the terms of the Scheme were not fair, but reasonable, and that in the absence of a superior proposal, the Scheme was in the best interests of Scheme Shareholders. Counsel drew my attention to the decision in Re Beadell Resources Ltd[34] in this regard. In essence, Vaughan J observed as follows:
(a)Where an independent expert reports that a scheme is 'not fair' there is a serious question for investigation by the court.
(b)That said, as long as the scheme participants are properly informed that the independent expert considers the scheme not to be fair (and why), it is then ultimately for the members to decide whether it is an offer that they should accept.
(c)A key consideration is whether the independent expert report satisfactorily discloses the basis of the expert's opinion. The members must be provided with a proper opportunity to understand and assess the basis of the opinion. The court should consider whether shareholders will be acting on sufficient information in order to make an informed decision as to whether to accept the scheme consideration for their shares.
(d)The court will also assess the independent expert's explanation for his or her conclusion.
[34] Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600.
In the present case, the IER includes a conclusion that the proposed Scheme is not fair as the independent expert has assessed the value of a TMT share prior to the scheme (on a control basis) to be between $0.318 and $0.496 with a mid‑point of $0.407. However, the independent expert has assessed the value of the Scheme Consideration (on a minority interest basis) to be between $0.264 and $0.360 with a mid‑point of $0.312.
The independent expert concluded, however, that the proposed Scheme is reasonable because, following implementation of the Scheme, Shareholders will have an interest in an enlarged entity which will have consolidated ownership of two adjoining projects which may enable improved ability to develop the projects and easier access to capital. That is, there is a justifiable commercial rationale that may be accepted by Shareholders for the proposed Scheme.
The IER also included the observation that there were other advantages to the Scheme, including that TMT's tenure issues at the Yarrabubba deposit (surrounded by AVL's tenure) will be resolved, the Scheme would create a group with a stronger balance sheet and access to AVL's cash reserves, and the Board of Directors and management team of the proposed merged entity would have increased experience and broader expertise.
Further, the IER also explained that if the proposed Scheme was not approved, transaction costs of approximately $1.18 million would be borne by TMT with no achieved outcome, and there was a potential break fee of $839,900 that might be payable to AVL, depending on the circumstances under which the Scheme did not proceed (which does not include the circumstance where TMT does not obtain the requisite approval level from Shareholders).
In the circumstances, I considered there was proper disclosure of the reasons for the independent experts' opinion and thus the matter was one for the commercial judgment of the Scheme Shareholders.

Shareholder voting intention statements

The court was informed at the first hearing that TMT had received written correspondence from various shareholders indicating that they intended to vote for the Scheme, and from other shareholders indicating an intention to vote against the Scheme.
The communications received by TMT consisted of:[35]
(a)statements from four Shareholders (representing approximately 26.22% of all shares, including RCF) indicating that they intended to vote for the Scheme; and
(b)statements from 50 Shareholders (representing approximately 16.93% of all shares) indicating that they intended to attend the Scheme Meeting to vote against the Scheme in the absence of a superior proposal.
[35] Affidavit of Ian Prentice affirmed on 15 November 2023, [105] - [109]; Affidavit of Kirsty Jayne Hall affirmed 30 November 2023, [14] ‑ [17].
I will address the voting intention statements in favour of the Scheme first. Consistently with the authorities,[36] these statements were disclosed in the Scheme Booklet in the appropriate manner as to identity, holding and appropriate qualifications, with confirmation given in the Scheme Booklet that they were not obtained by improper promise or inducement.[37]
[36] Re Tawana Resources NL [2018] FCA 1456 [53] ‑ [55]; Re NTM Gold Ltd; Ex parte NTM Gold Ltd [2021] WASC 22 [70] ‑ [75]. See the Takeovers Panel Guidance Note 23 - Shareholder Intention Statements dated 11 December 2015 (Guidance Note 23).
[37] I refer to the ASX Announcements made by TMT on 23 and 26 September 2023, contained in Attachments IP‑13 and IP‑27 to the affidavit of Mr Prentice, and also to the Scheme Booklet, page 6.
The affidavit evidence confirmed that TMT had not provided any advantage, benefit, promise or inducement to any shareholders to elicit the voting intention statements in favour of the Scheme, or to vote in the way described therein.[38]
[38] Affidavit of Ian Prentice affirmed on 15 November 2023, [104].
I also accepted that the presence of these statements did not give rise to the creation of a separate class for the purposes of the Scheme.
As to the voting intention statements against the Scheme, I did not consider that the receipt of these statements provided a reason to refuse to convene the Scheme Meeting or to approve the Scheme Booklet for dispatch. However, as the collective experience of the court and counsel was that this represented a somewhat unusual circumstance,[39] it is appropriate I make some comment on the issue.
[39] ts 6 (4 December 2023).
The statements of intention against the Scheme were drafted in similar terms, and appeared to have been obtained in a coordinated manner. The statements were unsophisticated in nature and were largely received from retail shareholders. They were (obviously) received by the plaintiff prior to dispatch of the Scheme Booklet or the IER. One of the shareholders who provided such a statement, Standard Pastoral Company Pty Ltd, was a substantial shareholder.[40]
[40] Affidavit of Kirsty Jayne Hall affirmed 30 November 2023, Attachment KJH-3, page 18.
The statements each included a paragraph to the following effect:[41]
… we intend to attend (either in person, by proxy, power of attorney of body corporate representative) the meeting to be convened to consider the Scheme (or at any adjournment or postponement thereof) (Scheme Meeting), and at such Scheme Meeting we intend to vote or cause to be voted, by proxy or otherwise all of the TMT Shares that we own or control at the time AGAINST the Scheme in the absence of a superior proposal.
[41] Affidavit of Kirsty Jayne Hall affirmed 30 November 2023, Attachment KJH-3, pages 23 - 125.
The solicitors for the plaintiff provided copies of these voting intention statements to ASIC, under cover of a comprehensive letter which identified its concerns with the statements. In particular, the solicitors expressed a concern that ASIC's Truth in Takeover Policy was unlikely to apply to these statements, and that there was a material uncertainty as to whether the statements were binding in nature. That is, the solicitors identified a concern that these shareholders may be able to change their mind and vote otherwise than in accordance with those statements at any time in the future without notice to the plaintiff.[42]
[42] Affidavit of Kirsty Jayne Hall affirmed 30 November 2023, Attachment KJH-3, page 18.
The solicitors also expressed a concern, given the apparent coordinated manner in which the statements had been obtained, including the fact the statements were in an identical form, executed by multiple signatories, and provided at the same time to the plaintiff through a common channel, that there had been collective action by the shareholders and an impermissible association.
In my view, these concerns were legitimately expressed.
The applicable ASIC Guidance Note, being Guidance Note 23, extends to intention statements which accept or reject a particular proposal or offer.[43] Guidance Note 23 emphasises two policy bases as follows:[44]
The policy bases for this note are that shareholder intention statements should not inhibit:
•the acquisition of control over voting shares taking place in an efficient, competitive and informed market; and
•shareholders and directors being given enough information to enable them to assess the merits of a proposal.
[43] Guidance Note 23.
[44] Guidance Note 23, [3].
Guidance Note 23 states that concerns can arise upon receipt of such statements, depending on how the statement has been obtained and how it is used, 'particularly where the interests the subject of the statement, when aggregated with the bidder's interest, exceed 20%'.[45]
[45] Guidance Note 23, [4].
Further, Guidance Note 23 draws attention to the risk that such a statement will be misleading, or at least confusing, if expressed in terms that are unclear in meaning (such as an intention expressed as a 'present' intention), where a qualification is made and that qualification is ambiguous, and if the statement is published without detailed information regarding the holdings.[46]
[46] Guidance Note 23, [8].
The note identifies the concern of the Takeovers Panel as to whether a statement has an effect that precludes, or might preclude, the opportunity for a competing proposal.[47] Finally, the note identifies a range of considerations which will guide the Takeovers Panel in identifying whether such statements give rise to unacceptable circumstances.[48]
[47] Guidance Note 23, [9].
[48] Guidance Note 23, [10] - [11].
Beyond the general guidance provided in the above note, I was informed by counsel there was no direct authority addressing a circumstance in which shareholders had lodged voting intention statements against a scheme in a manner such as the present. As a matter of first principles, I consider the following propositions are consistent with the legislative framework which applies to the process by which schemes of arrangement are proposed, regulated, considered by shareholders through a court‑ordered meeting and (if appropriate) ultimately approved by the court. These observations are largely drawn from the submissions filed by the plaintiff in this regard.
First, statements made by shareholders prior to the convening of the scheme meeting and the dispatch of the scheme booklet should not be allowed to frustrate the intention of s 411 that all shareholders should be entitled to fully consider the proposed scheme upon receiving the statutory contemplated and court‑approved disclosure under s 412. A small or select group of shareholders should not be permitted to prevent fair and equal consideration of the Scheme by all of the shareholders.
Second, it would be premature to refuse to order that a scheme meeting be convened (with the effect of thereby refusing the scheme itself), on the assumption that such voting intention statements will be acted upon and that the shareholders will not change their mind when they receive the court‑approved scheme booklet.
Third, the statutory process contemplates that the scheme proponent will examine the relevant considerations and formulate appropriate disclosures in the scheme booklet, which will be examined by the regulator and approved by the court for dispatch to scheme shareholders.
Fourth, any alleged unfairness said to arise, properly characterised, from all shareholders, fully informed by the scheme booklet, considering and voting upon the proposed Scheme as contemplated by s 411, can be raised by any of these shareholders as objectors at the final court hearing.
Having regard to the foregoing propositions, I was of the view that these voting intention statements did not preclude orders being made for the convening of the Scheme Meeting or dispatch of the Scheme Booklet. I reached that view for the following reasons:
(a)These statements had been made before the publication of the Scheme Booklet and the IER, and so were uninformed by the contents of those documents.
(b)With the possible exception of the one substantial shareholder who provided such a statement, the balance of these shareholders were not required by ASIC Regulatory Guide 25 (Takeovers: False and misleading statements) to adhere to the statements they have made indicating they intended to vote against the Scheme. There was thus a material uncertainty as to whether these shareholders may be able to resile from and vote otherwise than in accordance with the statements against the Scheme at any time without giving notice to the plaintiff. I was informed that two of the shareholders had in fact withdrawn their statements of opposition.
(c)The identities of the relevant shareholders (to the extent known to the plaintiff) intending to vote against the Scheme had been disclosed within the Scheme Booklet.
(d)Collectively, the statements of voting intention against the Scheme represented less than 17% of the shareholders by value in the plaintiff, and a very small percentage by number. Taken at its highest, the votes of these shareholders would not be sufficient to defeat the Scheme at the Scheme Meeting.
(e)The plaintiff had informed ASIC of the statements.
(f)It was open for the shareholders concerned, or indeed ASIC, to attend at the first hearing to make submissions in relation to the orders sought by the plaintiff. As it transpired, there was no appearance by any of these shareholders at the first hearing in early December 2023.

The receipt of voting intention statements against the Scheme was thus not a reason to refuse to convene the Scheme Meeting or to approve the Scheme Booklet for dispatch.

Further matters

Specific submissions were made by counsel as to a number of additional matters,[49] such as the performance risk issue,[50] the exclusivity provisions in the SID,[51] the reciprocal reimbursement or break fee provisions in the SID,[52] the absence of any collateral benefits which might otherwise offend the equality principle in s 602(c), the terms of the directors' recommendations, the deemed warranties in the Scheme,[53] and the customary no liability when acting in good faith provision in the Scheme.[54]
[49] Plaintiff's submissions dated 30 November 2023, [103] - [141].
[50] Scheme, cl 4.1, cl 4.2(b), cl 5.2(j), cl 6.2, cl 6.4, cl 6.7, cl 7.1.
[51] SID, cl 12 and cl 13.
[52] SID, cl 10 and cl 11. The reimbursement fee is under the 1% threshold identified by the Takeovers Panel in Guidance Note 7. The fee has been calculated as 1% of the implied equity value of TMT, as determined by Macquarie Capital (appointed by AVL) to be approximately $83.99 million. These matters were addressed by the plaintiff in the affidavit of Ian Prentice affirmed 15 November 2023, [78(a)] and Attachment IP‑24.
[53] Scheme, cl 6.5. See Re Creso Pharma Ltd [2019] WASC 472 [94].
[54] Scheme, cl 12.4. The clause excludes liability for things done or omitted to be done in performance of the Scheme and in good faith, and thus these types of clauses are generally not considered problematic: Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357 [49(4)]; Re Galaxy Resources [2021] WASC 277 [71] ‑ [72].
I was satisfied these matters had all been satisfactorily disclosed in the Scheme Booklet and, in substance, were all within principle and precedent. No issue thereby arose which would justify withholding approval to convene the Scheme Meeting and order the dispatch of the Scheme Booklet, as had been sought by the plaintiff and supported by AVL.

Shareholder communications

I also received detailed submissions as to the manner in which the court should approach communications with shareholders by shareholder engagement firms, and through other means outside the Scheme Booklet.
In this regard, the plaintiff outlined to the court its intention to undertake a broad communications strategy by which the Scheme Shareholders are notified of the Scheme Booklet, with some key messages being emphasised, as well as reminding Scheme Shareholders to vote.[55]
[55] Plaintiff's submissions dated 30 November 2023, [153].
The material adduced by the plaintiff included a number of documents (which the plaintiff submitted had been reviewed for consistency with the Scheme Booklet) which dealt with the following aspects of shareholder communication:
(a)the outbound shareholder engagement calls;
(b)inbound scripts for shareholder calls;
(c)a professional shareholder engagement firm had been secured and that firm has been instructed that in all discussions with TMT relating to the Scheme that no other, new or materially different information to what is contained in the Scheme Booklet, is to be provided, and TMT Shareholders must be reminded to read the Scheme Booklet in full, including as to advantages and disadvantages and the IER;
(d)there was to be a media board room lunch, by which TMT would provide a media briefing on the Scheme;
(e)there was to be a postcard dispatched to Shareholders and social media posts on social media platforms; and
(f)there was to be a webinar, in the form of a presentation video available online with a PowerPoint slide pack, for which invitation would be announced to the ASX, and for which interactive online questions were contemplated.
TMT indicated to the court through counsel that it intended to report to the court at the final hearing to ensure that the above approach was maintained, or as to any material deviation therefrom.
I was satisfied this approach was appropriate. At the final hearing, I anticipated that some evidence would be adduced to confirm that the engagement strategy was implemented as outlined above, including that the shareholder engagement firm followed a script or used materials which were consistent with the Scheme Booklet and there was a process of checking compliance. Any material departure would require additional evidence from the proponent at the approval hearing to properly explain the issue. This approach finds support in the decisions of Colvin J in Re DDH1[56] and Jackson J in Re Essential Metals Ltd.[57]
[56] Re DDH1 [2023] FCA 982 [50] ‑ [51].
[57] Re Essential Metals Ltd [77].

E. Second court hearing - 20 December 2023

Overview

The proceedings were listed for a second hearing on 20 December 2023 for the purposes of seeking approval for the dispatch of the Supplementary Disclosure Statement to Scheme Shareholders.
The core reason for such a statement to be issued was the change to the Scheme Implementation Deed which was agreed by TMT and AVL on 11 December 2023, by which the Scheme Consideration was to be increased. Specifically, the parties entered into a deed of amendment (Deed of Amendment) which amended the Scheme Implementation Deed and which increased the Scheme Consideration from 12 to 14 AVL Shares for each Scheme Share held, and which amended the Scheme accordingly (Amended Scheme).
These modifications to the commercial arrangements were announced to the ASX on 12 December 2023.[58] The announcement to the market included the following statements:
Australian Vanadium Limited … and Technology Metals Australia Limited … are pleased to announce AVL has increased the total consideration offered under the scheme of arrangement (Scheme) announced on 25 September 2023 (Announcement Date) from 12 AVL shares for every 1 TMT share (Original Scheme Consideration) to 14 AVL shares for every 1 TMT share (Revised Scheme Consideration).
Based on the closing price of AVL Shares on 8 December 2023 (being the last date that AVL and TMT shares traded prior to this announcement), the implied value of the Revised Scheme Consideration is $0.308 per TMT share which represents a premium of 43.3% to the closing TMT share price of $0.215 per TMT share on 8 December 2023.
Based on the Revised Scheme Consideration, if the Scheme is implemented, TMT shareholders will hold approximately 42% of the merged group, gaining greater exposure to the unique opportunity to realise operational and corporate synergies through creating a single integrated project.
AVL has confirmed the Revised Scheme Consideration is its best and final proposal as to consideration under the Scheme and AVL will not increase the consideration further, subject to no competing proposal for TMT emerging.[59] (emphasis added)
[58] Affidavit of Ian Prentice affirmed 18 December 2023, Attachment IP‑33.
[59] Affidavit of Ian Prentice affirmed 18 December 2023, Attachment IP‑33.
At the Scheme Meeting, TMT foreshadowed that it would propose an additional resolution that would, if passed, amend the Scheme to reflect the increase in the Scheme Consideration. That is, at the Scheme Meeting the shareholders would first be asked to consider an additional resolution to amend the existing scheme resolution to take account of the revised scheme consideration. In the event that resolution was passed, shareholders would then be invited to vote on the amended scheme resolution for the proposed scheme, as follows:
Amending Resolution - That, pursuant to and in accordance with section 411 of the Corporations Act, the scheme of arrangement proposed between TMT and the holders of its ordinary shares as contained in and more particularly described in the Scheme Booklet (as amended by the Supplementary Scheme Booklet …) of which the Notice of Scheme Meeting forms part, is agreed to (with or without alterations or conditions as approved by the Court to which TMT and AVL agree), and TMT is authorised, subject to the terms of the Scheme Implementation Deed to agree to such alterations or conditions, and subject to approval by the Court, to implement the Scheme with any such alterations or conditions.
This approach is in conformity with the practice typically adopted where there is sufficient time prior to the Scheme Meeting.[60]
[60] See, for example, Re Citect Corporation Ltd [2006] NSWSC 143; (2006) 225 ALR 137 (Barrett J).
In short, the Supplementary Scheme Booklet addressed the increase in Scheme Consideration, provided a supplementary IER and addressed some other matters of disclosure. The Supplementary Scheme Booklet had also been subject to a verification process.
As one might rationally expect, the increase in Scheme Consideration had an impact on some of the adverse voter intention statements. Further, the modification in commercial arrangements was accompanied by a best and final statement from AVL, which I will address further below.
The plaintiff and AVL relied on the following affidavits at the second hearing:
(a)the second affidavit of Ian Prentice affirmed 18 December 2023;
(b)the fourth affidavit of Kirsty Jayne Hall affirmed 18 December 2023;
(c)the affidavit of Emma Marie Collins affirmed 18 December 2023; and
(d)the second affidavit of Louis Hendrik Mostert sworn 18 December 2023.

Issues for determination

It is well accepted the court has power under s 411 and s 1319 to make orders for the approval and dispatch of supplementary disclosure materials for the purposes of the scheme of arrangement, and related or ancillary orders.[61]
[61] Re Tawana Resources NL (No 2) [2018] FCA 1724 [20]; Re Piedmont Lithium Ltd [No 2] [2021] WASC 106 [11] ‑ [12].
I refer to and respectfully adopt the principles and considerations set out by Hill J in Re Piedmont Lithium Ltd [No 2] concerning the approval of supplementary disclosure material to members. Following her Honour's identification of the relevant provisions of ASIC Regulatory Guide 60,[62] her Honour sets out the following considerations:
[62] Which provides that in general, shareholders should be given at least 10 days' notice of any material new information in relation to a scheme. Hill J observed that while the court should take this time period into account, it is ultimately a matter for the court to assess whether there is sufficient time for shareholders to consider the information and to understand its effect, referring to the comments of Black J in Re Prime Media Group Ltd [2019] NSWSC 1888 [8] and the authorities cited therein.
(a)whether there remains utility in the proposed scheme (with or without modification) being put to the shareholders in the sense that something is capable of approval at a second court hearing if agreed by the requisite majorities;
(b)whether any proposed modification to the scheme or some other development in the related transactions is permissible (to the same standard as at the first hearing in the sense of the modification being lawful and for a proper purpose, class‑creating, fair, not unreasonable and not oppressive of a minority);
(c)whether the court should grant leave to despatch any proposed supplementary disclosure to shareholders having regard to:
(i)there being a change in circumstances that warrants further disclosure;
(ii)the obligation of the company and its directors to provide members with new material information about a proposed scheme;
(iii)the court being satisfied prima facie that there will be proper disclosure by sending the proposed supplementary materials;
(d)whether there has been notice to ASIC and ASIC's position (including from RG 60.94‑60.96 of the ASIC Regulatory Guide 60);
(e)whether there are any other matters relevant to the court's discretion to allow the proposed scheme to be considered; and
(f)what procedural directions under s 1319 are appropriate in the circumstances for any adjourned or postponed scheme meeting, including:
(i)dispatch of any replacement or supplementary notice of meeting;
(ii)the sufficiency of notice, both as to time and content;
(iii)treatment of existing votes and proxies;
(iv)setting of the time for eligibility to vote;
(v)validation of any steps and advertisement; and
(vi)any other consequential or ancillary orders.
In general terms, a potential risk associated with any circumstance in which a scheme process involves the provision of supplementary disclosure to the members is that the additional material may confuse, rather than inform, those members. Scheme processes are typically undertaken over a very short time scale. Even low value, straightforward schemes involve the dispatch of hundreds of pages of information to the scheme participants. Supplementing the primary scheme materials with a second salvo of information, particularly in the case of retail investors, and particularly in close proximity to the receipt of the primary material, carries the risk that the recipients' ability to properly understand the nature, effect, risks and implications of the scheme are unfairly reduced.
These matters emphasise the need for the court to scrutinise the necessity, the terms, and the timing of any supplementary material sought to be dispatched by a scheme proponent, and to consider whether the modifications to the scheme are so significant in nature that it is appropriate for the scheme process to be re‑started, rather than merely amended. The observations of Santow J in Re NRMA Insurance (No 1) as to the importance of a shareholder's ability to properly and fairly form their own judgment should be borne in mind in this regard.[63]
[63] Re NRMA Insurance (No 1) [3].
In the present matter, it was quite apparent that the increase in Scheme Consideration required that there be further disclosure to the Scheme Shareholders. The preparation and dispatch of supplementary disclosure material was undoubtedly necessary in those circumstances. This was also an appropriate case in which the modification to the scheme, to vary the consideration, was appropriate to be implemented through an amendment to the scheme rather than requiring the proponent to recommence the entire process, with all the attendant costs associated therewith.

Best and final statement by AVL

Allied to the foregoing reason for requiring supplementary disclosure, the court was informed that AVL had issued a best and final statement in conjunction with the improved scheme consideration proposal. I have extracted this statement earlier in these reasons.
The fact this statement had been issued by AVL may well have been relevant to those shareholders of TMT who were at that stage inclined to vote against the offer on the basis they considered AVL might improve its offer.
In general terms, as set out in ASIC Regulatory Guide 25 entitled 'Takeovers: false and misleading statements', a best and final statement precludes the person from departing from the stated position. ASIC Regulatory 25 states ASIC's position as follows:
RG 25.4A market participant that makes a last and final statement and then seeks to depart from it risks:
(a)regulatory action by us for contravention of misleading or deceptive conduct provisions, particularly s670A and 1041H; or
(b)an application by us or another party to the Takeovers Panel for a declaration of unacceptable circumstances.
A 'last and final statement' is a statement made by a market participant that it will or will not do something in the course of the bid. One example is a statement by a bidder that it will not improve the consideration offered under its bid ('no increase statement'): for other examples see RG 25.21 - RG 25.34.
RG 25.5A market participant departs from a last and final statement if the market participant's conduct (action or statement) is inconsistent with it. For example a bidder departs from a no increase statement if it improves the consideration under its bid or buys onmarket at a price higher than its bid price: see RG 25.25.
RG 25.6The market participant may reserve the right to depart from its last and final statement by attaching to it a clear, express qualification. Whatever language the market participant uses, it must clearly convey the message to all holders of securities in the target that it is reserving the right to change its mind.
The best and final statement made by AVL was therefore a matter which itself warranted supplementary disclosure to the shareholders.[64]
[64] Re ResApp Health Ltd [2022] NSWSC 1116 [9] (Black J).
As the Supplementary Scheme Booklet has been the subject of further verification by TMT and AVL,[65] had been notified to ASIC and been the subject of exchanges of communications with ASIC,[66] and as I considered the Scheme Shareholders would have sufficient time to consider the materials,[67] I was ultimately satisfied the orders as sought should be made. There are some matters that require particular comment, however.

Shareholder voting intention statements

[65] Affidavit of Ian Prentice affirmed 18 December 2023, [21] ‑ [23]; Affidavit of Louis Hendrik Mostert sworn 18 December 2023, [9] ‑ [20].

[66] Affidavit of Kirsty Jayne Hall affirmed 18 December 2023, [11] ‑ [16] and Attachments KJH‑35 and KJH‑37.

[67] In excess of the ASIC 10 day requirement, although noting the disclosure would occur over the Christmas period.

At the second hearing, my attention was drawn to the following matters by counsel.
First, that a voting intention statement had been received by TMT from Standard Pastoral Company Pty Ltd, which as noted earlier, is a substantial shareholder. That shareholder has previously submitted an adverse voting intention statement. In contrast, the new statement which was received, following the increase in Scheme Consideration, was favourable.
It was submitted by the plaintiff that the fresh statement was compliant in the sense that it was expressed as being subject to the usual and appropriate qualifications, and there was evidence that the statement was not secured by inducement. I accepted this submission, having regard to the observations in Re NTM Gold Ltd[68] and the requirements stated in the Takeovers Panel Guidance Note 23: Shareholder Intention Statements.
[68] Re NTM Gold Ltd [70] ‑ [75] (Vaughan J).
Further, I noted that the change in position of this shareholder was appropriately disclosed in the Supplementary Scheme Booklet.[69]
[69] Supplementary Scheme Booklet, page 5.
Second, I was informed that a number of other shareholders who had previously submitted adverse voting intention statements had now supplied favourable statements to the company.[70] It was submitted by the plaintiff that the earlier statements, in effect, fell away as they had been expressed as 'subject to a Superior Proposal', which the Amended Scheme now provides.
[70] Submissions dated 18 December 2023, [10] and [22].
The approach adopted by the plaintiff, with which I agreed, was that the change in position of these shareholders should be disclosed in the Supplementary Scheme Booklet. The terms of the disclosure was as follows, which included an indication that some of the shareholders who had previously provided adverse statements had not modified their position, but that the plaintiff regarded the Amended Scheme as a superior proposal:
As noted on pages 17 to 20 of the Scheme Booklet, certain TMT Shareholders (Rejecting Shareholders) had previously provided TMT with written correspondence that they intended to attend the Scheme Meeting to vote against the Scheme in the absence of a superior proposal (Rejection Statements). Some, but not all, of the Rejecting Shareholders have changed their Rejection Statements and confirmed their intention to vote the TMT Shares they hold or control in favour of the Amended Scheme, subject to no superior proposal emerging and the Independent Expert continuing to opine that the Amended Scheme is in the best interests of the TMT Shareholders.
In relation to those TMT Shareholders who have not changed their Rejection Statements, as disclosed in the Scheme Booklet, TMT had concerns there was material uncertainty regarding the binding nature of the Rejection Statements. In any case, TMT considers the Amended Scheme constitutes a superior proposal. Accordingly, TMT considers each of the Rejecting Shareholders are no longer bound by their Rejection Statements and accordingly may resile from and vote otherwise than in accordance with those statements at any time without giving notice to TMT. (emphasis added)

Directors' support and the independent experts' opinion

I was informed that the TMT directors continued to unanimously support the Scheme and that the independent experts continued to conclude that the Scheme was in the best interest of Shareholders (although the experts remained of the opinion that it was not fair, but reasonable). Both the views of the directors and the independent experts remained subject to the usual and appropriate qualifications.[71]
[71] Affidavit of Ian Prentice affirmed 18 December 2023, [19] ‑ [20] and [24].
I was satisfied these matters were appropriately and prominently disclosed in the Supplementary Scheme Booklet. I had a reservation as to whether it was necessary to include a copy of the original IVR with the supplementary IER, given the IVR is quite voluminous and remains unchanged. I was informed by counsel, however, that the independent experts required that the IVR remain attached to their report.

Proxy forms

The plaintiff proposed an order concerning the validity of proxy forms which was in conformity with the form of order typically made when there is supplementary disclosure (see order 7).[72] The order preserves the validity of proxy forms which have already been lodged, but also facilitates a process for proxies to be withdrawn, revoked or modified.
[72] Re Tawana Resources NL (No 2), Re Piedmont Lithium Ltd [No 2], Re DDH1 Ltd (No 2) [2023] FCA 1046.
I was satisfied the order was appropriate, having regard to the approach adopted in the authorities identified in the preceding paragraph.

F. Third court hearing - 19 January 2024

Overview

The proceedings were last heard on 19 January 2024, at which hearing the plaintiff moved for final orders approving the Amended Scheme. The orders for approval of the Amended Scheme were sought pursuant to s 411(4).
A scheme of arrangement is binding upon the members of a company if it is approved by order of the court under s 411(4)(b), provided there has been satisfaction of the requirements expressed in s 411(4)(a)(ii) (being the applicable provision in the current circumstances) and compliance with certain other statutory and procedural matters.
To summarise, these matters are:
(a)whether the scheme meeting was convened and held in accordance with the court's earlier orders;
(b)whether the resolution approving the Amended Scheme was passed with the requisite statutory majorities in accordance with s 411(4)(a)(ii); and
(c)whether the plaintiff has otherwise complied with the court's earlier orders.[73]
[73] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under, and its power is derived from, s 411(4)(b). Of course, the court is not bound to approve a scheme merely because the court has previously made orders for the convening of a meeting or because the statutory majorities have been achieved.[74]
[74] Re Wesfarmers Ltd [13] (Vaughan J).
For the purposes of the final hearing, the plaintiff relied on the following affidavits:
(a)the second affidavit of Emma Collins affirmed 11 January 2024;
(b)the fifth affidavit of Kristy Jayne Hall affirmed 16 January 2024;
(c)the affidavit of Michael John Fry affirmed 17 January 2024;
(d)the third affidavit of Ian Prentice affirmed 17 January 2024;
(e)the third affidavit of Emma Marie Collins affirmed 17 January 2024; and
(f)the sixth affidavit of Kristy Jayne Hall affirmed 19 January 2024.
The affidavit material disclosed that the Scheme Meeting had been advertised and held as ordered, the Scheme Booklet and Supplementary Disclosure Statement had been dispatched as ordered, and the requisite statutory majorities had been achieved in support of the Amending Resolution and the Scheme Resolution, in relation to the Amended Scheme. The table below, which is reproduced from the plaintiff's submissions, summarises the voting outcomes at the Scheme Meeting held on 16 January 2024:[75]
[75] Submissions dated 17 January 2024. See also the affidavit of Michael John Fry affirmed 17 January 2024, [24] and the third affidavit of Emma Marie Collins affirmed 17 January 2024 at Attachment EMC‑30.
As is apparent from the above table, the majorities were well above the thresholds required by s 411(4)(a)(ii)(A) (being the headcount threshold) and s 411(4)(a)(ii)(B) (being the votes threshold). I was informed the turnout at the Scheme Meeting was greater than the voter turnout at the plaintiff's most recent AGMs, and greater in many instances than the voter turnout in other transactions as appears from the authorities. This at least demonstrates the absence of any problems connected with the ability of the plaintiff's shareholders to fairly participate in the voting process for this Scheme.
I was therefore satisfied the procedural requirements had been satisfied by the plaintiff.[76] I was also satisfied the conditions precedent to the Amended Scheme had either been satisfied or waived.[77]
[76] Submissions dated 17 January 2024, [7] ‑ [32].
[77] Affidavit of Kristy Jayne Hall affirmed 19 January 2024, [4] ‑ [7].
As to the discretionary considerations, there was no evidence that the shareholders had voted for an improper purpose and I was able to be satisfied the members had voted in good faith. As already noted, the Amended Scheme is a relatively orthodox commercial arrangement for the acquisition of a company through a scheme, and does not introduce any novel or exotic devices for the treatment of the rights of the members. I also have the benefit of the considered report from the independent experts, and clear evidence that ASIC had been properly informed of the outcome of the Scheme Meeting and neither ASIC nor any shareholders had elected to appear before me to make submissions at the final hearing. I had also been provided with a copy of the usual no objection letter from ASIC pursuant to s 411(17(b).[78]
[78] Affidavit of Kristy Jayne Hall affirmed 19 January 2024, page 19.
Ultimately I was satisfied that the Amended Scheme was fair and reasonable in the sense that an intelligent and honest shareholder, properly informed, might approve it.
There are two specific matters upon which I should comment.

Shareholder communications

The first matter concerns the plaintiff's communications with its shareholders outside of the Scheme Booklet and Supplementary Disclosure Statement processes. I have commented on this aspect earlier in these reasons.
At the final hearing, the court was informed that no concerns had arisen from the conduct of these communications which might otherwise cut across the approved disclosure processes.[79] Further, the initial intention to conduct a postcard dispatch process and to conduct an outbound call campaign were ultimately not pursued.
[79] Submissions dated 17 January 2024, [48] and the affidavit evidence referred to therein.
I was therefore satisfied that the additional communications with the plaintiff's shareholders had been appropriate and presented no reason to withhold approval of the Amended Scheme.

Securities Act of 1933 (US)

The second matter concerns the Securities Act of 1933 (US). The plaintiff had, at the first hearing, foreshadowed its intention to rely on s 3(a)(10) thereof, which provides an exemption from the registration requirements of that statute, and to rely on the court's approval of the Scheme (among other matters) to qualify for that exemption, in relation to Shareholders with registered addresses in the United States.
This intention had been drawn to the attention of the Shareholders in the Important Notices section at the start of the Scheme Booklet.
As noted, s 3(a)(10) operates as an exemption from the requirement in the legislation for the registration for offers and sales of securities in specified exchange transactions. The exemption in s 3(a)(10) is in the following terms:
Except with respect to a security exchanged in a case under title 11 of the United States Code, any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court, or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval.
I was referred on the subject of the Securities Act of 1933 (US) to the decision of Vaughan J (as his Honour then was) in Re Beadell Resources Ltd [No 2].[80] In the context of the scheme before him, Vaughan J confirmed that the court had considered the fairness and reasonableness of the scheme within the court's discretion to approve the scheme, so as to make the exemption applicable, even though the expert in that case had identified unfairness based on valuation, while nonetheless opining it was overall in the shareholders' best interests.
[80] Re Beadell Resources Ltd [No 2] [2019] WASC 53, [62] - [64].
In the circumstances of the present scheme, given the terms of the IER adduced by the plaintiff and having regard to the submissions made on behalf of the plaintiff, I was satisfied it was appropriate to include within the orders of the court a brief note that the court had concluded the scheme was fair and reasonable.[81]
[81] Orders made on 19 January 2024, notes [1] - [5].

G. Conclusion and orders

For the foregoing reasons, I was satisfied that the orders set out in Attachments A, B and C were appropriate to be made at the respective hearings on 4 December 2023, 20 December 2023 and 19 January 2024.

Attachment A
Orders made on 4 December 2023

Attachment B
Orders made on 20 December 2023

Attachment C
Orders made on 19 January 2024

Attachment D
Diagram showing location of major projects

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LM
Associate to the Honourable Justice Lundberg
7 FEBRUARY 2024