Abano Healthcare Group v Healthcare Partners Holdings Limited
[2017] NZHC 3003
•5 December 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-798 [2017] NZHC 3003
IN THE MATTER OF a claim pursuant to rule 49 of the
Takeovers Code
AND
IN THE MATTER OF
a counterclaim under the Companies Act
1993BETWEEN
ABANO HEALTHCARE GROUP LIMITED
Plaintiff
AND
HEALTHCARE PARTNERS HOLDINGS LIMITED
Defendant
Hearing: 1 September 2017 Appearances:
D J Cooper for the Plaintiff / Counterclaim Defendant
M R Crotty and M S Bowie for the Defendant / Counterclaim
PlaintiffJudgment:
5 December 2017
JUDGMENT OF WOODHOUSE J (Discovery applications)
This judgment was delivered by me on 5 December 2017 at 2:30 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
Solicitors:
……………………………………
Mr D J Cooper, Barrister, Auckland
Mr A W Harmos (plaintiff ’s instructing solicitor), Harmos Horton Lusk Ltd, Solicitors, Auckland
Mr M R Crotty and Ms M S Bowie, Russell McVeagh, Solicitors, Auckland
ABANO HEALTHCARE GROUP LTD v HEALTHCARE PARTNERS HOLDINGS LTD [2017] NZHC 3003 [5 December 2017]
[1] There are applications by the plaintiff (Abano) and the defendant (Healthcare
Partners) for further discovery.
The claim and counterclaim
[2] Between November 2016 and March 2017, Healthcare Partners made an unsuccessful partial takeover offer for 30.99 per cent of the fully paid ordinary shares in Abano. Under rule 49(2) of the Takeovers Code, the target company of a takeover offer may recover from the offeror expenses “properly incurred” by the target company in relation to the offer or takeover notice.
[3] Abano claims that it incurred expenses totalling $1,089,215.97 (the expenses). In exercise of a claimed right of set off, Abano recovered $522,893.56 of the expenses by applying a dividend in that sum otherwise payable to Healthcare Partners. That reduced the outstanding expenses to $566,322.41, which sum is now claimed by Abano.
[4] Healthcare Partners accepts that rule 49(2) applies to its takeover offer, but puts
Abano to proof that the expenses were properly incurred and reasonable.
[5] Healthcare Partners also advances four causes of action by counterclaim. The counterclaims are directed to recovery of the dividend and to orders requiring Abano to pay any future dividend to Healthcare Partners in respect of any shares held by Healthcare Partners at the relevant time. Three of the causes of action allege breaches of Abano’s constitution and provisions in the Companies Act 1993 (the Act). The fourth cause of action, pursuant to s 174 of the Act, alleges oppression of Healthcare Partners as a minority shareholder in Abano in respect of dividends.
Rule 49(2)
[6] Rule 49 of the Takeovers Code is as follows:1
1 Takeovers Code Approval Order 2000.
49 Reimbursement of directors and target company
(1) Despite anything in the constitution of the target company, each director of the target company is entitled to have refunded to the director by the target company any expenses properly incurred by the director on behalf, and in the interests, of holders of equity securities of the target company in relation to an offer or a takeover notice.
(2) The target company may recover from the offeror, as a debt due to the target company, any expenses properly incurred by the target company in relation to an offer or a takeover notice, whether as a result of refunds made under sub-clause (1) or otherwise.
[7] In respect of any takeover notice given up to 30 March 2017, jurisdiction to determine any dispute for recovery of expenses by the target company is with the High Court (or with the District Court for claims within jurisdiction of the District Court). For notices given from 31 March 2017, jurisdiction is now with the Takeovers Panel, following an amendment to the Takeovers Act 1993.
[8] The scope of rule 49 has a material bearing on whether documents sought by the parties are relevant. Central to this is the meaning of the expression “expenses properly incurred”. In Canterbury Frozen Meat Company Ltd v Waitaki Farmer’s Freezing Company Ltd this Court considered the scope of s 11 of the Companies Amendment Act 1963.2 There is no material difference between s 11 and rule 49.
[9] Wilson J held that, for an expense to be properly incurred, it should be for the purpose of enabling “the members to make a proper decision, in their own interests, whether or not to accept the offer”. The emphasis is in the judgment. The Judge held that expenses incurred for any other purpose were not recoverable. He expressly excluded expenses incurred for the purposes of “resisting a takeover which was really an attack on the continuance of the company’s business, or which aimed at taking over control of the company”, or “resisting a takeover bid which aims at taking over control of the company”.3
[10] The Judge said that the types of expenditure which the offeree company may recover would “include” the following:4
2 Canterbury Frozen Meat Company Ltd v Waitaki Farmers’ Freezing Company Ltd [1972] NZLR
806 (SC).
3 At 811.
1Expenditure incurred in and incidental to the fulfilment of its obligations under s 5 and s 7(2) of the [Companies Amendment Act
1963].5
2Expenditure incurred in countering propaganda by the offeror which is calculated to influence the offerees' choice.
3Expenditure incurred otherwise for the purpose of safeguarding the offerees' interests in relation to the scheme, as (for instance) in keeping them informed of developments which might affect the value of their shares.
4 Expenditure incurred in reimbursing directors under s 11(1).
[11] The Judge then summarised the principles on which the Court should examine the items of expenses claimed, as follows:6
1 Before an item can be allowed it must be proved:
(a) that it comes under one of the four categories of expenditure previously listed;
(b) that it was reasonable to incur expense by engaging in that kind of activity;
(c) that it was reasonable to spend that amount on that kind of activity.
2In examining any particular item of expenditure the Court will judge its reasonableness with reference to the circumstances obtaining at the time when it was incurred and will not limit either the kind or the amount of expenditure to what, in the light of events, proved to be strictly necessary.
3The Court is not an auditor or a taxing master. It will allow proper expenses on broad lines rather than by scrutinising every dollar and cent expended.
5 Section 5 of the Companies Amendment Act 1963 set out the obligations of the “offeree company” upon receipt of the notice or statement given to it by the offeror. These were, informing the stock exchange or members of the receipt of the notice, and the statement to be made by the “offeree company” outlining the position of the directors. Section 7(2) required the “offeree company” to deliver a copy of that statement to the Registrar.
[12] It will be noted that there is ambiguity, and possible inconsistency, in the way in which the Judge summarised what he described as a principle recorded in paragraph
1(a) and the four categories having earlier been outlined as those “included” in the types of recoverable expenditure. This point does not need to be resolved in this judgment, but is noted because Healthcare Partners, in their application, treat the four categories as definitive. Mr Cooper, for Abano, advised that Abano may argue that the scope of rule 49 may be broader than defined in Canterbury Frozen Meat. See below at [25].
[13] The third principle, that the court is not an auditor or a taxing master, is reflected in a statement in the Takeovers Panel’s guidance note in anticipation of the transfer of jurisdiction from the courts to the Takeovers Panel.7
Abano’s application
[14] Abano seeks an order for discovery by Healthcare Partners of three categories of documents. I will deal with each category under subheadings which summarise the content of the category. These are dealt with, and numbered, in the sequence in which Mr Cooper, for Abano, dealt with them in his submissions, rather than the sequence in which they are recorded in Abano’s application.
Category 1: Healthcare Partners’ expectations as to Abano’s costs
[15] The documents in this category are described as follows:
Documents recording Healthcare Partners expectation as to:
(a) The steps Abano would be required to take, or would be likely to take, in response to the offer.
(b) The advisers or categories of advisers, which Abano would be likely to engage in response to the offer.
7 Takeovers Panel Guidance Note on the Process for Costs Reimbursements Under the Takeovers Act 1993, 21 March 2017, at [7(c)], [14]-[16]. The guidance note states that a party seeking costs should disclose “primary documents relating to costs for which reimbursement is sought”, with these to include “invoices and any other primary documents necessary for identifying each expense claimed”. It states that determinations “will usually be made on the papers”, but oral submissions from both parties might be sought and the Panel might exercise its power to receive evidence on oath.
(c) The costs Abano would or would be likely to incur in respect of the offer.
(d) The costs likely incurred by Abano in relation to the offer which Healthcare Partners may be liable to meet including (without limitation):
(i) advice (other than privileged advice) received by Healthcare Partners in relation to the takeover costs of Abano for which it may be liable; and
(ii) budgets, forecasts, or any other document containing any estimate of the likely takeover costs of Abano for which Healthcare Partners may be liable.
[16] The issue in respect of this category is relevance. Healthcare Partners did not deny the existence of documents within category 1. Nor did it contend that the request is disproportionate, or that compliance would be unduly burdensome.
[17] For Healthcare Partners, Mr Crotty submitted that the test for reasonableness, is on the terms outlined in Canterbury Frozen Meat, and it is an objective test. On that basis he submitted that expectations of Healthcare Partners as to the costs that might be incurred by Abano are irrelevant. He submitted:
For example, if an offeror company were to mistakenly budget too much or too little for reimbursing a target company following a takeover offer, this expectation would not change the amount that is reasonable, and therefore properly incurred. It would not affect the offeror company’s obligation to reimburse the target company for the expenses that were properly incurred.
[18] I accept the conclusion from the example provided, but the example is not on point; it simply presents a theoretical possibility which does not determine relevance for the purpose of a discovery application. I accept Mr Coopers submission for Abano that market practices are likely to be taken into account in assessing reasonableness, in respect of services contracted for and the cost of those services. In consequence, the assessments in advance by Healthcare Partners, a market participant, are relevant.
[19] In consequence, there is an order for discovery of the documents in category
1.
Category 2 Healthcare Partners’ engagement of a financial adviser or investment bank
[20] This category is described as follows:
The terms of engagement between [Healthcare Partners] and any financial adviser or investment bank engaged by [Healthcare Partners] for the purposes of the takeover offer and documents recording any fee paid or payable pursuant to such engagement.
[21] Again, the only issue in respect of this category is relevance.
[22] The scope of the discovery sought is narrow. Abano does not seek discovery of advice given to Healthcare Partners by, or its communications with, a financial adviser, but only documents recording the terms of engagement and amounts paid or payable. Abano contends that documents in this category will be relevant to Abano’s claim to recover, as part of its total claim, a fee of $432,873.36 paid to Forsyth Barr Ltd. The discovery application by Healthcare Partners indicates that Healthcare Partners may intend to challenge the reasonableness of the cost both in terms of the type of activity performed by Forsyth Barr and the amount of the fee.
[23] Healthcare Partners submit that the documents sought can have no relevance either to the scope of work of a financial adviser engaged by Abano or the quantum of any fees charged to and claimed by Abano.
[24] As to the scope of work, the submission is that the work undertaken by a financial adviser on behalf of an offeror company cannot provide a useful comparison in respect of the scope of work undertaken in relation to a target company’s statutory obligations to provide information to its shareholders. The premise for that submission is that the principles stated in Canterbury Frozen Meat remain applicable and that, in effect, the scope of the work that might properly be undertaken on behalf of the target company is narrower than what might be undertaken by the offeror. A similar submission was made in respect of the quantum of fees.
[25] There is some weight in the submission for Healthcare Partners if it is assessed in terms of the approach outlined in Canterbury Frozen Meat. However, as earlier noted, Mr Cooper advised that Abano may argue that the approach in Canterbury Frozen Meat is no longer applicable, and that the purposes for which Abano was entitled to incur expenses are wider than those held to apply when Canterbury Frozen Meat was decided in 1971.
[26] It would not be appropriate for me to reach a decision on the point, and it is unnecessary to do so. It is sufficient to record that, in my opinion, it is reasonably arguable that the approach outlined when Canterbury Frozen Meat was decided is no longer applicable. In this regard, publications of the Takeovers Panel, although noting that “in general terms” the observations in Canterbury Frozen Meat as to the meaning of “properly incurred” can be applied, also state:8
Since 1972, law and practice as it affects takeovers has undergone substantial change. The responsibilities, accountabilities and expectations to which target companies and their boards, are now subject in the face of a takeover offer, bear upon the actions they take and the expenses which they incur.
[27] If the range of activities undertaken for Healthcare Partners by a financial adviser are similar to the range of activities undertaken by Forsyth Barr for Abano, and if all of the activities undertaken by Forsyth Barr are held to be activities in respect of which expenses will have been properly incurred in terms of rule 49(2), the documents sought by Abano will be relevant. For those reasons, reinforced by the narrow scope of discovery sought, which bears on proportionality, there is an order for discovery of category 2 documents.
Category 3: Healthcare Partners’ documents concerning the costs claimed by Abano
[28] The description of this category is as follows:
Documents relating to the costs claimed by [Abano] including (without limitation) [Healthcare Partners] response to those claims.
8 Takeovers Panel Codeword, No. 24, November 2008: “Guidance Note: Recovery of expenses under rule 49(2) of the Code” at [1.4] and Takeovers Panel Guidance Note on the Process for Costs Reimbursements Under the Takeovers Act 1993, 21 March 2017, Schedule at [1.2] and [1.6].
[29] Abano contends that this category is relevant to Healthcare Partners’ counterclaim under s 174 of the Act alleging oppression of Healthcare Partners as a minority shareholder.
[30] Healthcare Partners submit that this category is irrelevant to this counterclaim on the grounds that the only issues are:
(a) Did the Abano Board authorise a dividend in respect of some Abano shares, but not the Abano shares held by Healthcare Partners?
(b)Was this unfairly prejudicial to Healthcare Partners in its capacity as a shareholder of Abano?
(c) In the circumstances, is it just and equitable to grant the relief sought by Healthcare Partners?
[31] That summarises the issues arising from Healthcare Partners’ pleading, but it does not demonstrate that the category 3 documents are irrelevant. The enquiries as to whether the impugned action has been unfairly prejudicial and, if so, whether in the circumstances it is just and equitable to grant the relief sought, are broad enquiries. I agree with Mr Cooper’s submission that the reasonable or legitimate expectations of all parties are likely to be relevant to the enquiry.9 The claimants own conduct will be relevant to the assessment.10
[32] Particular conduct of Healthcare Partners relevant to the broad enquiry will therefore include reasons for Healthcare Partners’ response, or lack of response, to Abano’s expenses claim up to 23 January 2017 when Abano exercised the purported right of set off. Abano contends that up to that date, notwithstanding delivery of invoices and statements of account in respect of the expenses, at 23 January 2017
Healthcare Partners had failed to respond to the claims.
9 Thomas v HW Thomas Ltd [1984] 1 NZLR 686 (CA); Latimer Holdings Ltd v SEA Holdings NZ Ltd [2005] 2 NZLR 328 (CA).
10 Re Eurofinance Group Ltd [2001] BCC 551 (Ch) at 574; Re London School of Electronics Ltd
[1986] Ch 211 at 222; Shepherd v Williamson [2010] EWHC 2375 (Ch) at [109].
[33] There is a further pleading by Healthcare Partners which makes this category relevant. In its statement of defence, Healthcare Partners affirmatively pleaded as follows:
[A]s at 23 January 2017 Abano had not provided Healthcare Partners with sufficient information to determine the extent to which its takeover expenses had been properly incurred and were recoverable under the Takeovers Code.
[34] I agree with Abano that Healthcare Partners’ own documents recording its response to the costs claims that had been delivered will also be relevant to determination of this particular issue, and a clearly pleaded issue further contested in Abano’s reply.
[35] There is an order for discovery of category 3 documents.
Healthcare Partners’ application: categories 2 to 10
[36] Healthcare Partners seek discovery of documents in 12 categories. Categories
1 to 11 are in respect of 11 different providers of services to Abano. Category 12 covers expenses Abano claims it incurred in conducting a road show for shareholders in respect of the takeover offer. The following table summarises the 12 categories, with the service provider name, a general description of the type of service provided, and the total expenses claimed for each service provider (rounded to the nearest dollar).
Service provider Nature of service Expenses claimed
$
1 Harmos Horton Lusk Ltd Legal services 318,487 2 Mr B O’Sullivan Independent contractor 24,633 3 Ellis & Co Consulting Ltd Communications adviser 77,208 4 Computershare Investor
Services Ltd
Share Registrar 13,091 5 Forsyth Barr Ltd Financial adviser 432,873 6 Red Consulting Group Ltd Independent contractor 3,351 7 Grant Samuel & Associates
Ltd
Independent adviser 99,741 8 Merlin Consulting Ltd Independent contractor 3,134 9 Cassette Ltd Printer 25,528 10 Ansarada Pty Ltd Data room service provider 3,657 11 Abano Directors 80,640 12 Expenses for a road show 6,874
[37] Particulars of the documents sought in each category are recorded in a five page schedule attached to Healthcare Partners’ application. An expanded schedule was produced for the hearing. The expanded schedule includes the detail recorded in the table above together with: (1) a description of the documents sought for each category; (2) Healthcare Partners’ submission as to the relevance of types of documents within each category; (3) a list of documents already provided by Abano and, where applicable, further documents Abano has agreed to provide; and (4) in some cases comment on the documents already provided.
[38] A copy of the schedule is annexed as schedule 1 to this judgment. Although this is a lengthy schedule, for the purposes of analysis, the bulk of Healthcare Partners’ application can be summarised fairly succinctly. This is because, in respect of most categories, three types of documentation are sought and Healthcare Partners’ submissions on relevance are the same, in general terms, for each of the three types of documentation within categories 2 to 10. Those common aspects are summarised in the following table. The three remaining categories, and some additional types of documentation, are dealt with separately at the end of this judgment.
[39] The three common types of documentation and Healthcare Partners’ relevance
submission for each are as follows:
Document type Description Relevance submission Type 1 All internal Abano correspondence regarding the retention of, and services sought from, [the service provider] in relation to the proposed
takeover (including, but not limited to, correspondence regarding why these services were considered necessary).
This category of documents may contain information regarding the reasons that Abano engaged [the service provider] and the scope of the services sought. This is relevant to both whether the expenditure was incurred
for a purpose falling within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable.
Type 2 All documentation (including correspondence) between Abano and [the service provider] arising out of or in connection with the proposed takeover. This category is relevant to whether the services provided by [the service provider] fell within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable given the
services provided.
Type 3 All documentation regarding the time spent by [the service provider] in the course of providing services to Abano in respect of the proposed takeover. This category is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved.
Abano’s position
[40] The broad submission for Abano is that the documents it has already provided, and further documents it has agreed to provide, satisfy its discovery obligations. Abano submits that the further discovery sought by Healthcare Partners is either irrelevant or, to the extent that there may be some relevance, it is marginal relevance and discovery would be disproportionate.
[41] The documents already provided by Abano have been produced in evidence. For categories 2 to 10 there are invoices from Abano to Healthcare Partners with the underlying invoice or invoices from the service providers attached. In addition, copies of the contract between Abano and Mr O’Sullivan (category 2), and the mandate letter between Abano and Forsyth Barr (category 5) have been provided.
[42] The further documents Abano has agreed to provide were recorded in a schedule to an Abano memorandum for a case management conference, and also reproduced as a schedule to Healthcare Partners’ application. That schedule (originally referred to as schedule 1) is reproduced as schedule 2 to this judgment.
[43] Paragraph 1 of schedule 2 records Abano’s agreement to provide “all documents recording the services provided to Abano arising out of, or in connection with” the proposed takeover, for categories 2 to 10. In oral submissions, Mr Cooper explained that this will include the terms of engagement between Abano and the service provider and the documents which record the substance of the service provided, typically contained in a report or reports. Paragraph 2 in schedule 2 expands the proposed discovery in the case of Forsyth Barr to include all internal Abano correspondence and documentation prior to entry into the letter of engagement with Forsyth Barr.
Assessment of Healthcare Partners’ application: categories 2 to 10
[44] The ultimate issue is whether the expenses claimed were properly incurred. Whether this is to be assessed within the Canterbury Frozen Meat framework, or more broadly, it seems to me that there are three matters relevant to that issue:
1.The nature of the service or services provided to Abano by each service provider.
2.The time spent by the service provider in providing the service or services and, where applicable, the time spent on components that have been separately costed.
3.The amount charged for the service or services and, where applicable, for each component and individual employed by the service provider.
[45] The main contest between the parties relates to the first matter – the nature of the service provided – and this in turn relates to type 1 and type 2 documentation. The second and third matters both go to quantum. Quantum is said by Healthcare Partners to be a matter of relevance in respect of type 1 and type 2 documentation, as well as being the sole matter of relevance for type 3 documentation, but the general topic of quantum can be dealt with separately.
The nature of the services provided
[46] As to the nature of the service or services provided by each service provider, I am satisfied that the documents relevant to this central issue are, to the extent that they exist and are in Abano’s control:
(a) Abano’s written instructions to the service provider or, in the case of oral instructions, any Abano document recording the oral instructions.
(b)Any document recording the terms of a contract between Abano and the service provider.
(c) Documents generated by the service provider and delivered to Abano in carrying out the service or services.
[47] Abano submits that the documents it has already discovered and, more particularly, the further documents it has agreed to discover, listed in paragraph 1 of schedule 2 to this judgment, meet the discovery obligation. It is likely, given the breadth of paragraph 1, that they will. But for the avoidance of doubt, in respect of the discovery issue now being addressed, there is an order that Abano, to the extent that it has not already done so, is to discover any of the following documents in its control:
(a) Abano’s written instructions to the service provider or, in the case of oral instructions, any Abano document recording the oral instructions.
(b)Any document recording the terms of a contract between Abano and the service provider.
(c) Documents generated by the service provider and delivered to Abano in carrying out the service or services.
(d)Any other documents generated by the service provider and delivered to Abano in carrying out the service or services and which record the nature of the services provided to Abano.
[48] That order covers part of the type 2 documentation sought by Healthcare Partners. What is not covered by the order is Healthcare Partners’ application for “all documentation … between Abano and [the service provider]”. If those documents do not record instructions from Abano to the service provider in respect of a service to be provided, they will not be relevant to the nature of the service that was provided or would be, at best, of marginal relevance to an extent which would in my judgment make the further discovery disproportionate.
[49] The order above does not require discovery of type 1 documentation, which is “all internal Abano correspondence” relating to services in respect of the proposed takeover. The order does, however, include internal Abano documents to the extent that they record oral instructions to a service provider.
[50] Beyond a written record of oral instructions, the type 1 documentation goes well beyond documents relevant to the matter in issue – the nature of the service or services provided. This is in fact indicated by the fact that the description of type 1 documentation is that the internal correspondence is to include, but is “not limited to”, correspondence regarding why these services were considered necessary.11
[51] Internal Abano correspondence relating to the services sought in respect of the proposed takeover, other than correspondence recording reasons why the services
were considered necessary, cannot be relevant. I accept that internal correspondence
11 This specification was not included in the description of type 1 documents for Computershare
(category 4) and Grant Samuel (category 7).
recording why a service might have been considered necessary could be relevant to determination of the nature of the service or services actually provided. However, assessed against the documentation discussed above and required by the order to be discovered, I consider that the internal documents will be of limited and probably marginal relevance.
[52] If there are such documents, I agree with the submission for Abano that discovery of them would be disproportionate (except in relation to Forsyth Barr, for reasons noted below). Disproportionality is given added emphasis by the fact that only two of the claims are close to or over $100,000. These are the Forsyth Barr fees of $432,873 and the Grant Samuel fee of $99,741. In the context of proceedings in the High Court, most of the fees are for a small sum. But Healthcare Partners’ approach is to treat each as a separate claim in respect of which extensive discovery has been sought. In this context, I agree with the observation in Canterbury Frozen Meat that, on a claim under rule 49, the court is not acting as an auditor or a taxing master and will allow proper expenses on broad lines. And this is consistent with the approach now adopted by the Takeovers Panel.12 Rule 8.9 of the High Court Rules also has some relevance. This provides that, unless the Judge is satisfied to the contrary, it is to be presumed that the interests of justice require tailored discovery when, amongst other things, the total of the sums in issue exceed $2.5 million. Although the rule is not directly applicable, it provides a highly relevant benchmark when considering proportionality in respect of almost all of the claims in categories 2 to 10. In anticipation, the same applies to category 12.
[53] Abano has agreed to provide internal Abano correspondence, and some additional documents, in respect of services provided by Forsyth Barr. This is recorded in paragraph 2 of schedule 2 to this judgment. There is, accordingly, a further order that Abano make discovery of the documents recorded in paragraph 2.
Quantum
[54] The second, and remaining, topic is quantum.
12 See above at n 7.
[55] As recorded in the table for type 1, type 2 and type 3 documentation, Healthcare Partners contends that all three types of documentation will have relevance on questions of quantum. Type 3 is directed solely to quantum. Healthcare Partners submits that types 1 and 2 are both relevant to quantum as well as to purpose. I will deal with the application by reference to each type of documentation.
Type 1: quantum
[56] Healthcare Partners submit that type 1 documentation – internal Abano correspondence – is relevant to “whether the amount claimed was reasonable”. I am unable to see how the type 1 documentation could be relevant to that issue. If I am wrong in that conclusion, any internal correspondence touching on the issue is likely to be of such marginal relevance as to disentitle Healthcare Partners from the orders sought on the grounds of proportionality. It could be that the statement of relevance for type 1 documentation flows from paragraph 1(b) of the summary in Canterbury Frozen Meat recorded above at [11]: “… it must be proved … that it was reasonable to incur expense by engaging in that kind of activity”. That principle, as I understand it, is directed to the primary issue as to whether the expense was incurred for a proper purpose. But that issue is to be determined by reference to the documents already ordered to be discovered and which evidence the nature of the service or services sought and which were in fact provided.
Type 2: quantum
[57] Type 2 documentation is said to be relevant to “whether the amount claimed was reasonable given the services provided”. Some type 2 documentation will be relevant to that quantum issue. However, the application for type 2 documentation is directed to all documentation, including correspondence, between Abano and the service provider. That description is too broad because it will capture many documents which have no relevance to the question whether the amount charged by the service provider was reasonable for the service provided. Better definition is required, and this is addressed below.
Type 3: quantum
[58] Type 3 documentation is, by definition, expressly directed to quantum – time spent by the service provider in the course of providing the service. Such documentation will be relevant for the reasons stated by Healthcare Partners: “whether the amount of expenditure claimed was reasonable given the tasks involved”. Mr Cooper stated that Abano does not have documents of this type, “except to the extent that the information is contained within the invoices provided” to Abano, and that all of those invoices have been provided. I fully accept that those are Mr Cooper’s instructions, and they are consistent with what would be expected, but any uncertainty, in the absence of an affidavit from Abano, can be met by an appropriate order on the quantum issue.
Quantum: order
[59] Given those considerations, on the quantum issue I will not make orders to discover documentation as described in types 1, 2 and 3, but make an order in the following terms:
Abano is to make discovery of all documentation in its control, and not already discovered, which records, for each service provider in categories 2 to 10, any of the following information:
(a) The time spent by the service provider in the course of providing the service to Abano and separately recording, where applicable and available, the time spent on each component of the service or services provided.
(b)The fee for or costs of the service or services provided and, where applicable and available, for each component of the service or services provided.
(c) Where applicable and available, the identity of each person engaged in providing the service or services of each service provider, the share of the total cost attributable to that person and that person’s hourly rate.
[60] In drafting that order I have taken account of Mr Cooper’s submission that the only documents that Abano has recording information of that sort are documents received by Abano from the service provider. However, the definition of “control” in r 1.3 of the High Court Rules is wide. It may be that some service providers have conventional time recording systems and have readily available information which has not been provided to Abano, but which does come within the definition of documents within Abano’s “control”.
Healthcare Partners’ application: categories 1, 11 and 12 and miscellaneous matters
Category 1: Harmos Horton Lusk
[61] The extent of the discovery sought by Healthcare Partners in respect of services provided by Harmos Horton Lusk is recorded in category 1 documents in schedule 1 to this judgment. Healthcare Partners contend that the specified documentation is relevant to the nature of the services provided and to questions of quantum. Abano contends that, on the questions of the nature of the work undertaken and quantum, the discovery already made fully meets Abano’s obligations.
[62] On quantum, I am satisfied that the discovery already provided does meet Abano’s discovery obligations. In particular, Harmos Horton Lusk produced, and Abano has discovered, detailed time narrations for services provided between 4
November 2016 and 31 January 2017. Those dates cover the period of services provided by Harmos Horton Lusk in respect of the proposed takeover. These time narrations cover 17 pages. They record: (1) the date; (2) the author or authors; (3) a narration of the type of work or types of work undertaken; (4) the time in hours or parts of an hour; and (5) the Canterbury Frozen Meat category to which the work relates – the categories identified in that case and recorded above at [10]. Given the identification of the Canterbury Frozen Meat category, this discovery also goes at least some way to discovery directed to the nature of the activity.
[63] Abano resists discovery beyond what has already been provided on the grounds that the documents sought are privileged under s 54 of the Evidence Act 2006. Healthcare Partners submits that Abano has waived privilege by claiming
reimbursement for the fees charged by Harmos Horton Lusk. Whether privilege has been waived is the issue for determination in respect of the category 1 application.
[64] Mr Crotty submitted that, because Abano seeks to claim the costs of work done by its solicitors, it has put the nature and content of the work at issue in this proceeding. He cited the following statement of Panckhurst J in AstraZeneca Ltd v Commerce Commissioner:13
Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence.
[65] I do not agree with Healthcare Partners’ argument. The starting point is s 65(3)(a) of the Evidence Act 2006, which is as follows:
65 Waiver
…
(3) A person who has a privilege waives the privilege if the person—
(a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; …
[66] In AstraZeneca, Panckhurst J considered the scope of paragraph (a), which is a codification of the common law. The statement from AstraZeneca cited by Mr Crotty is part only of the Judge’s summary of earlier decisions of the Court of Appeal on the scope of s 65(3)(a). The Judge’s full statement is as follows:
[39] To my mind the judgments in Ophthalmological Soc and Shannon indicate where the boundaries of s 65(3)(a) lie. While the former espouses a test based on the Court’s objective judgment as to the consistency of the claimant's conduct with maintaining the privilege, the discussion in Shannon elucidates the principles which underpin that test. The mere relevance of a privileged communication to an issue in the case provides no basis for waiver. Even a party’s asserted reliance upon a privileged communication is generally insufficient. Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give rise to unfairness in the required sense, in that the party's conduct would be offensive to the trial process.
13 AstraZeneca Ltd v Commerce Commissioner (2008) 12 TCLR 116 (HC) at [39].
(emphasis added)
[67] The words given emphasis put the words relied on by AstraZeneca into proper perspective. Panckhurst J’s full statement must, of course, be read by reference to the statutory provision. What Healthcare Partners is seeking, in substance is the documents containing the advice given by the solicitors to Abano. That advice has not been put in issue in this proceeding. Abano has not sought to “inject the substance of” the privileged communications between the solicitors and Abano into evidence.
[68] I am satisfied that Abano has not waived privilege pursuant to s 65(3) of the Evidence Act. Healthcare Partners did not contend that there was any other form of waiver. In that regard it may be noted that, when the detailed time narratives were supplied, this was expressly stated to be “on the basis that privilege is not waived in respect of any advice provided by Harmos Horton Lusk”. Heathcare Partners is entitled to argue that Abano’s decision not to waive privilege means that Abano has not adequately proved its claim for these costs. But that is not a ground for ordering discovery.
[69] For these reasons Healthcare Partners’ application for discovery of category 1 documentation is dismissed.
Category 11: director documents
[70] This part of the discovery application is directed to the claim for $80,640 paid to Abano directors for work undertaken by directors in response to the takeover offer.
[71] Healthcare Partners seek further discovery of three types of documentation. The three types are different from types 1, 2 and 3 for categories 2 to 10. Category
11, types 1 and 2, and the submission on relevance, are as follows:
Document type Description Relevance submission Type 1 All correspondence between an employee or contractor of Abano and at least one of Abano’s directors; and/or between two or more of This category is relevant to determining (1) whether the expenses incurred were necessary in order for Abano to comply with its legal obligations (and accordingly fell
Document type Description Relevance submission Abano’s directors, arising
out of, or in connection with, the proposed takeover.
within the categories of recovery
expenditure in Canterbury Frozen Meat), and (2) whether the amount of the expenditure claimed was reasonable.
Type 2 All documentation
(including meeting notes and
minutes) held by eachAbano director arising out of or in connection with the proposed takeover.
(As above.)
[72] Mr Cooper submitted that this discovery “is irrelevant, disproportionate, and goes well beyond the type of enquiry contemplated by Canterbury Frozen Meat”.
[73] I do not agree that the documents sought are irrelevant and I do not agree that the documents sought go beyond providing information contemplated in the Canterbury Frozen Meat approach. In my judgment the documents are plainly relevant to the questions whether the directors’ costs were expenses “properly incurred”, both in respect of the nature of the matters the directors were dealing with and the reasonableness of the time spent on the matters in terms of quantum. Given those conclusions, a discovery order would be justified, subject to the question of proportionality. In respect of director documents, no evidence was provided, and no submission advanced, which indicate that discovery of type 1 and type 2 documentation would be disproportionate.
[74] There is an order for discovery of type 1 and type 2 documentation for category
11.
[75] Category 11, type 3 documentation is described as follows:
All documentation in respect of the shareholder resolution that was passed at Abano’s Annual Meeting on 25 October 2016 regarding the additional director remuneration (including, but not limited to, any documentation in respect of the preparation of this resolution and records of discussion regarding the resolution).
[76] The relevance of this documentation is stated to be the same as that for types
1 and 2. I agree with Mr Cooper that these documents are irrelevant. The resolution by Abano shareholders authorised a “reserve pool” for directors’ remuneration where directors assumed additional responsibilities. This provides authority for reimbursing the directors (in addition to what is contained in r 49(1) of the Takeovers Code). But there is nothing to indicate how this resolution, passed well before Healthcare Partners’ takeover was received, could be relevant to any issue in respect of Abano’s claim.
[77] The application for discovery of category 11, type 3 documentation is therefore dismissed.
Category 12: expenses for a road show
[78] In respect of Abano’s claim to recover expenses for a road show, Healthcare Partners’ category 12 lists five separate types of documentation notwithstanding that the claim is for only $6,873.71. The description for each type of documentation is included in schedule 1 to this judgment. I do not intend to summarise it. The stated relevance for each type of documentation is broadly the same and also essentially the same as claimed relevance for other categories.
[79] As recorded in schedule 2 to this judgment, at paragraph 3, Abano has agreed to provide a range of documents as follows:
In relation to the shareholder roadshows undertaken by Abano in relation to the Proposed Takeover:
(a) documents regarding the services provided in connection with these roadshows;
(b) invoices for the costs incurred in connection with these roadshows;
and
(c) documents presented or provided to shareholders at the roadshows.
[80] On an assessment of relevance, including the degree of relevance, coupled with proportionality, I am satisfied that the further discovery Abano has agreed to provide is sufficient.
[81] Accordingly, in respect of category 12, there is an order that Abano make a discovery of documents in its control as described in [79] above.
[82] Healthcare Partners’ category 12 application is otherwise dismissed.
Category 4: Computershare Investor Services Ltd: $13,090.66: miscellaneous item
[83] This relates to a type of documentation sought in addition to the types of documentation I have described as type 1, type 2 and type 3.14 The description of this documentation is:
All documentation regarding Abano’s calculation of $13,090.66 in respect of its claimed expenses for services by Computershare.
[84] Healthcare Partners submits that this documentation is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. I do not agree. Abano’s calculation of the total invoiced by Computershare is not relevant to the reasonableness of the amount invoiced. It is irrelevant. This part of the application for category 4 documents is dismissed.
Category 7: Grant Samuel & Associates: $99,741: miscellaneous item
[85] A fourth type of documentation sought in respect of this category is:15
All documentation recording the specific tasks that were undertaken by Grant Samuel for the purposes of preparing the independent adviser’s report, including, for example, information gathering, analysis and advice provided.
…
[86] Healthcare Partners submit that this type of documentation is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved.
[87] I am not satisfied that this part of the application is justified. In respect of documents within Abano’s control, the order for further discovery recorded above at [47] is sufficient to secure proportionate discovery of documents which are relevant
to whether the amount of expenditure claimed was reasonable. There is no apparent
14 Recorded in paragraph 4(d) of schedule 2 to Healthcare Partners’ application.
15 Recorded in paragraph 7(c) of schedule 2 to Healthcare Partners’ application.
reason why this further type of documentation is necessary for the Grant Samuel expenses but not for the other categories.
[88] I agree with a submission for Abano. As Mr Cooper noted, the appointment of an independent adviser is compulsory under r 21 of the Takeovers Code. The Grant Samuel report has been disclosed to Healthcare Partners; it was disclosed to Healthcare Partners as a shareholder. Even if there were some documents of the type described, and within the control of Abano, they are irrelevant to the issue whether it was reasonable for Abano to incur an expense in respect of the provision of a report it was required to obtain.
[89] The order sought in paragraph 7(c) of schedule 2 to Healthcare Partners’
application is dismissed.
Category 10: Ansarada Pty Ltd (data room services): $3,656.74: miscellaneous item
[90] Healthcare Partners, in addition to types 1, 2 and 3 documentation, seeks discovery of:16
All documentation recording the volume and type of documents uploaded to the data room maintained by Ansarada, including information in respect of the size of the documents uploaded to the data room.
[91] Healthcare Partners contend that this documentation is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved.
[92] Abano has already provided not only the invoices from Ansarada but also a three page detailed index of the documents which were uploaded to the data room. The claim is for a very small sum. Even if this documentation could be said to have some relevance, it would be marginal at best. In any event, I agree with Mr Cooper’s submission that the discovery sought is plainly disproportionate. I also agree with the thrust of an observation in a letter from Abano’s solicitors to Healthcare Partners’ solicitors of 22 March 2017, when the detailed index was sent:
Both your firm and your client are familiar with the use of electronic data rooms, and the request for an explanation as to why the data room service was
16 Recorded in paragraph 10(d) of schedule 2 to Healthcare Partners’ application.
required is frankly ridiculous. It is a most cost effective and efficient way to provide information while retaining control of its availability in monitoring access and use.
[93] This part of Healthcare Partners’ application is dismissed.
Result
[94] On Abano’s application:
(a) There are orders for discovery as sought.
(b) Abano is entitled to costs of and incidental to this application on a 2B
basis, including reasonable disbursements.
[95] On Healthcare Partners’ application:
(a) There are orders as recorded in this judgment at [47], [53], [59] and
[74].
(b) Healthcare Partners’ application is otherwise dismissed.
(c) In respect of costs on this application my provisional view is that costs should lie where they fall. If either party nevertheless claims costs, a memorandum is to be filed and served within 10 working days of the date of issue of this judgment, with any reply to the other party to be filed and served within a further 10 working days. The matter will then be dealt with on the papers. For the avoidance of doubt, if there is no application made within 10 working days, costs are to lie where they
fall.
Woodhouse J
SCHEDULE 1
| Identity of service provider | Total expenses claimed | Description of documents | Relevance | Documents provided and comments |
| Category One – HHL Documents Harmos Horton (“HHL”) provided legal services to Abano. | $318,487.35 | All internal Abano correspondence regarding the retention of, and services sought from, HHL in relation to: (i) the first takeover notice; and/or (ii) the second takeover notice; and/or (iii) the third takeover notice; and/or (iv) the partial takeover offer (together, the “Proposed Takeover”) | Healthcare Partners cannot ascertain from the documentation provided the extent to which the expenses claimed fell within one of the categories in Canterbury Frozen Meat, or whether any such sums were reasonable in amount. Abano correspondence is likely to disclose the reasons why Abano sought certain services from HHL. | |
| All documentation (including correspondence) between Abano and HHL arising out of, or in connection with, the Proposed Takeover (including, but not limited to, any written advice and records of verbal advice from HHL, and any draft versions of that advice) | This category is relevant to whether the services provided by HHL fell within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable given the services provided. | HHL’s invoice dated 28 November 2016 ($183,527.35) [CB 74] HHL’s invoice dated 19 December HHL’s invoice dated 31 January HHL’s invoice dated 28 February Time narrations for period from 4 |
| November 2016 – 16 December 2016 (331.9 hours) [CB 129] Time narrations for period from Time narrations for period from 1 HHL provided its charge out rates for legal staff involved in the Proposed Takeover matter [CB 180] Without the work produced, Healthcare Partners cannot establish whether the time spent by HHL was reasonable. | |||
| All documentation regarding the time spent by HHL in the course of providing services to Abano in respect of the Proposed Takeover. | This category is relevant to whether the amount claimed was reasonable given the tasks involved. | Documents are the same as the category above. The time narrations do not show how much time was spent per task, as often a number of tasks are included per time entry. | |
| Category Two – O’Sullivan Mr O’Sullivan is | $24,633.01 | All internal Abano correspondence regarding the retention of, and services sought from, Mr O’Sullivan in relation to the Proposed Takeover | This category of documents may contain information regarding the reasons that Abano engaged Mr O’Sullivan and the scope of the services sought. This is relevant |
| an independent contractor. | (including, but not limited to, correspondence regarding why these services were considered necessary). | to both whether the expenditure was incurred for a purpose falling within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable. | |
| All documentation (including correspondence) between Abano and Mr O'Sullivan arising out of, or in connection with, the Proposed Takeover. | This category is relevant to whether the services provided fell within one of the categories in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable. | Mr O’Sullivan’s letter of engagement - Schedule of 124] Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Mr O’Sullivan [CB 30, 32]. | |
| All documentation regarding the time spent by Mr O’Sullivan in the course of providing services to Abano in respect of the Proposed Takeover. | This category is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Mr O’Sullivan’s invoices dated 11, 18 and 25 November 2016 (~$12,000) [CB 76-78] Invoices dated 2, 9 and 16 90, 92, 98] Invoice dated 29 December 2016 ($1,837.13) [CB 160] | |
| Category Three – | $77,207.56 | All internal Abano | This category of documents may |
| Ellis Documents Ellis & Co Consulting Limited acted as a communications adviser. | correspondence regarding the retention of, and services sought from, Ellis and Co in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | contain information regarding the reasons that Abano engaged Ellis And Co and the scope of the services sought. This is relevant to whether the expenditure was incurred for a purpose falling within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable. |
| All documentation (including correspondence) between Abano and Ellis and Co arising out of, or in connection with, the Proposed Takeover (including, but not limited to any written advice, or records of verbal advice, in respect of proposed communications to shareholders, the NZX and the media). | The descriptions of the tasks performed by Ellis and Co provided to date do not provide a sufficient basis on which Healthcare Partners can assess whether the tasks fell within the recoverable categories set out in Canterbury Frozen Meat. This category is relevant to whether the services provided fell within one of the recoverable categories, and whether the amount claimed was reasonable. | Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Ellis & Co Consulting [CB 30, 32]. |
| All documentation regarding the time spent by Ellis and Co in the course of providing services to Abano in relation to the Proposed Takeover. | This category is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Ellis & Co’s invoice dated 29 November 2016 ($29,508.29) [CB 79] Ellis & Co’s invoice dated 19 99] Ellis & Co’s invoice dated 31 |
| January 2017 ($12,775.35) [CB 163] Ellis & Co’s invoice dated 6 Without evidence of Ellis’ work, Healthcare Partners cannot assess whether the time spent was reasonable. | |||
| Category Four – Computershare Computershare Investor Services Limited provided services in relation to the share register. | $13,090.66 | All internal Abano correspondence regarding the retention of, and services sought from, Computershare in relation to the Proposed Takeover. | This category may contain information regarding the reasons that Abano engaged Computershare and the scope of the services sought. This is relevant to whether the expenses were incurred for a purpose falling within one of the categories in Canterbury Frozen Meat, and whether the amount claimed was reasonable |
| All documentation (including correspondence) between Abano and Computershare arising out of, or in connection with, the Proposed Takeover. | This category is relevant to both whether the expenses were incurred for a proper purpose and whether the amount of expenditure claimed was reasonable. | Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Computershare. | |
| All documentation regarding the time spent by Computershare in the course of providing services to Abano in respect of the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Three invoices dated November/December 2016, including per item breakdown [CB 86-88] |
| Two invoices dated December 2016/January 2017, including per item breakdown [CB 200-205] Healthcare Partners cannot ascertain what was actually involved and why it was necessary in relation to the Proposed Takeover, and whether amounts were reasonable. | ||||
| All documentation regarding Abano’s calculation of $13,090.66 in respect of its claimed expenses for services provided by Computershare. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | |||
| Category Five – Forsyth Barr Documents Forsyth Barr Limited is a financial advisor. | $432,873.36 | All internal Abano correspondence regarding the retention of, and services sought from, Forsyth Barr in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | This category of documents may contain information regarding the reasons that Abano engaged Forsyth Barr and the scope of the services sought. This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable. | Abano has agreed to provide in relation to the services provided by Forsyth Barr in relation to the Proposed Takeover [CB 30, 32]: (a) all internal Abano correspondence regarding the decision to enter into the contract between Abano and Forsyth Barr as set out in the engagement letter dated 4 November 2016; and (b) all documentation prior to entry into the engagement letter recording the services that Abano anticipated Forsyth Barr would provide, |
| and why Abano considered such services to be necessary. | |||
| All documentation (including correspondence) between Abano and Forsyth Barr arising out of, or in connection with, the Proposed Takeover. | This category of documents is relevant to whether the services sought from Forsyth Barr fell within the categories set out in Canterbury Frozen Meat, and whether the amount of expense claimed within such categories was reasonable. | Forsyth Barr’s engagement letter dated 4 November 2016 [CB 142- 152] Invoice dated 14 December 2016 for $100,000 + GST retainer [CB 89] Invoice dated 7 February 2017 for 166] Invoice dated 13 March 2017 for Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Forsyth Barr [CB 30, 32]. | |
| All documentation regarding the time spent by Forsyth Barr in the course of providing services to Abano in respect of the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Forsyth Barr was engaged on a retainer and bonus basis – no way for Healthcare Partners to ascertain whether the arrangement was reasonable as a whole, or what Forsyth Barr actually did. | |
| Category Six – Red Documents | $3,350.81 | All internal Abano correspondence regarding the retention of, and services sought | This category of documents may contain information regarding the reasons that Abano engaged Red |
| Red Consulting Group Limited is an independent contractor. | from, Red in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | Consulting Group and the scope of the services sought. This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat and whether the amount of expenditure claimed was reasonable. | |
| All documentation (including correspondence) between Abano and Red arising out of, or in connection with, the Proposed Takeover. | This is relevant to both whether the services sought from Red Consulting Group were within one of the Canterbury Frozen Meat categories, and whether the amount of expenditure claimed was reasonable given the tasks involved. | Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Red [CB 30, 32]. | |
| All documentation regarding the time spent by Red in the course of providing services to Abano in respect of the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Invoice dated 2 December 2016 for $2,626.31 specifying 21.75 hours at $105/hour [CB 96] Invoice dated 9 December 2016 for temporary recruitment services, specifying 6 hours at $105/hour [CB 96] No detail as to what Red did in 27.75 hours – cannot assess reasonableness/necessity. | |
| Category Seven – Grant Samuel | $99,741.31 | All internal Abano correspondence regarding the retention of, and services sought | This category may contain information regarding the reasons that Abano engaged Grant Samuel |
| Grant Samuel & Associates Limited acted as the Independent Adviser. | from, Grant Samuel in relation to the Proposed Takeover. | and the scope of the services sought. While Grant Samuel was engaged as the independent adviser, this does not mean that all services provided necessarily fell within the categories set out in Canterbury Frozen Meat, or that the amount of expenditure incurred were reasonable. |
| All documentation (including correspondence) between Abano and Grant Samuel arising out of, or in connection with, the Proposed Takeover (including, but not limited to drafts of the independent adviser's report). | This is relevant to whether the services provided by Grant Samuel fell within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable given the tasks involved. | Invoice dated 12 December 2016 for preparation of independent adviser’s report – flat fee of $97,750 [CB 93] Invoice dated 19 December 2016 for Takeover Panel's processing fee ($1,991.31) [CB 100] Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Grant Samuel. |
| All documentation recording the specific tasks that were undertaken by Grant Samuel for the purposes of preparing the independent adviser’s report, including, for example, information gathering, analysis, and advice provided. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Grant Samuel [CB 30, 32]. Healthcare Partners cannot assess |
| whether tasks were within scope of properly incurred expenses without knowing what tasks were performed. | |||
| All documentation regarding the time spent by Grant Samuel in the course of providing services to Abano in respect of the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Due to the arrangement being for a flat fee, Healthcare Partners cannot assess the reasonableness of the fee without details of work done. | |
| Category Eight – Merlin Merlin Consulting Limited is an independent contractor. | $3,133.75 | All internal Abano correspondence regarding the retention of, and services sought from, Merlin in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | This category may contain information regarding the reasons that Abano engaged Merlin Consulting and the scope of the services sought. This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat and whether the amount of expenditure claimed was reasonable. |
| All documentation (including correspondence) between Abano and Merlin arising out of, or in connection with, the Proposed Takeover (including, but not limited to, the ownership report prepared by Merlin). | This is relevant to whether the services provided by Merlin Consulting fell within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable given the tasks involved. | Invoice dated 30 November 2016 for “ownership report” ($2731.25) [CB 95] Invoice dated 23 December 2016 for “Amanda West consulting: takeover support” ($402.50) [CB 159] Abano has agreed to provide all documents recording the services |
| provided to Abano arising out of, or in connection with, the | |||
| All documentation regarding the time spent by Merlin in the course of providing services to Abano in respect of the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Healthcare Partners cannot assess reasonableness of expenditure without knowing what work was carried out. | |
| Category Nine – Cassette Cassette Limited is a printer. | $25,527.70 | All internal Abano correspondence regarding the retention of, and services sought from, Cassette in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | This category of documents may contain information regarding the reasons that Abano engaged Cassette and the scope of the services sought. This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat and whether the amount of expenditure claimed was reasonable. |
| All documentation (including correspondence) between Abano and Cassette arising out of, or in connection with, the Proposed Takeover. | This is relevant to whether the services provided by Cassette fell within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable given the tasks involved. | Invoice dated 16 December 2016 providing description of printing carried out – no details of numbers/amounts/pages ($22,527.70) [CB 97] Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Cassette |
| [CB 30, 32]. | |||
| A breakdown of the amount charged by Cassette in respect of each document prepared and printed by Abano, including the cost of preparation and printing per document. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Healthcare Partners cannot assess reasonableness without some ability to assess breakdown of cost per unit. | |
| Category Ten – Ansarada Ansarada Pty Limited is a data room service provider. | $3,656.74 | All internal Abano correspondence regarding the retention of, and services sought from, Ansarada in relation to the Proposed Takeover (including, but not limited to, correspondence regarding why these services were considered necessary). | This category may contain information regarding the reasons Abano engaged Ansarada and the scope of the services sought. This is relevant to whether the amount of expenditure claimed was reasonable. |
| All documentation (including correspondence) between Abano and Ansarada arising out of, or in connection with, the Proposed Takeover. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved. | Ansarada’s invoice dated 11 November 2016 for data room set- up plus usage ($AU575.40), invoice dated 11 December 2016 for usage (($AU2,880.20) [CB 162] Abano has agreed to provide all documents recording the services provided to Abano arising out of, or in connection with, the Proposed Takeover by Ansarada [CB 30, 32]. | |
| All documentation regarding the time spent by Ansarada in the course of providing services to | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks |
| Abano in respect of the Proposed Takeover. | involved provided. | |||
| All documentation recording the volume and type of documents uploaded to the dataroom maintained by Ansarada, including information in respect of the size of the documents uploaded to the dataroom. | This is relevant to whether the amount of expenditure claimed was reasonable given the tasks involved provided. | HHL provided an index of all documents uploaded to the dataroom [CBE 185-187] | ||
| Category 11 – Director documents Abano’s directors are: • Murray Boyte; • Danny Chan; Dunphy; • Trevor Janes; • Ginni Mansberg; and • Eduard Van Arkel. | $80,640.01 | All correspondence between an employee or contractor of Abano and at least one of Abano’s directors; and/or between two or more of Abano’s directors, arising out of, or in connection with, the Proposed Takeover. | This category is relevant to determining whether the expenses incurred were necessary in order for Abano to comply with its legal obligations (and accordingly fell within the categories of recoverable expenditure in Canterbury Frozen Meat), and whether the amount of the expenditure claimed was reasonable. | Abano has agreed to provide all documentation regarding the time spent by each Abano director in relation to the Proposed Takeover [CB 30, 33]. |
| All documentation (including meeting notes and minutes) held by each Abano director arising out of or in connection with the Proposed Takeover. | This category is relevant to determining whether the expenses incurred were necessary in order for Abano to comply with its legal obligations (and accordingly fell within the categories of recoverable expenditure in Canterbury Frozen Meat), and | Healthcare Partners has invoices for each director, but these give no detail except that additional remuneration was authorised at Annual Meeting on 25 October 2016 [CB 211-216] These provide no detail as to what |
| whether the amount of the expenditure claimed was reasonable. | additional work was required from Abano's directors, which makes it impossible for Healthcare Partners to assess reasonableness. | |||
| All documentation in respect of the shareholder resolution that was passed at Abano’s Annual Meeting on 25 October 2016 regarding the additional director remuneration (including, but not limited to, any documentation in respect of the preparation of this resolution and records of discussion regarding the resolution). | This category is relevant to determining whether the expenses incurred were necessary in order for Abano to comply with its legal obligations (and accordingly fell within the categories of recoverable expenditure in Canterbury Frozen Meat), and whether the amount of expenditure claimed was reasonable. | Healthcare Partners does not know what the additional authorised work was or why Abano considered it necessary – therefore Healthcare Partners cannot make its own assessment of whether additional remuneration was necessary and/or reasonable. | ||
| Category 12 – Roadshow Documents | $6,873.71 | All documentation relating to the amount claimed by Abano for Miscellaneous Roadshow Costs (being the amount claimed at paragraph (q) of the particulars provided alongside paragraph 17 of Abano’s statement of claim) including, but not limited to, any internal Abano correspondence regarding the roadshows. | This is relevant to both whether the expenses incurred for a purpose falling within the categories set out in Canterbury Frozen Meat and whether the amount of expenditure claimed was reasonable. | Abano has agreed to provide, in relation to the shareholder roadshows undertaken by Abano in relation to the Proposed Takeover [CB 30, 32-33]: (a) documents regarding the services provided in connection with these roadshows; (b) invoices for the costs incurred in connection with these roadshows; and (c) documents presented or provided to shareholders at the roadshows. |
| All internal Abano correspondence regarding each | This is relevant to both whether the expenses were incurred for a |
| roadshow (including, but not limited to, correspondence regarding why each roadshow was considered necessary). | purpose falling within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable. | |
| All documentation relating to the information provided to shareholders at each roadshow. | This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat, and whether the amount of expenditure claimed was reasonable. | |
| All documentation relating to the time spent presenting to shareholders at each roadshow. | This is relevant to whether the amount of expenditure claimed was reasonable given the information provided to shareholders. | |
| All documentation relating to each cost incurred in this expense, including invoices and bank statements reflecting charges for flights, accommodation, meals, taxis, car parking and car rental. | This is relevant to both whether the expenses were incurred for a purpose falling within the categories set out in Canterbury Frozen Meat and whether the amount of expenditure claimed was reasonable. | Invoice 20769 (apparently an Abano document) for miscellaneous expenses ($5,659.43) [CB 167] Bank statement showing miscellaneous expenses [CB 206] |
Abano has also agreed to provide Bank statements (or, if a bank statement is not available, other documentation) evidencing payment by Abano of the relevant expenses [CB 30, 33].
SCHEDULE 2: FURTHER DISCOVERY AGREED BY ABANO
0
0
1