Anzon Energy Limited, in the matter of Anzon Energy Limited (No 2) [2008] FCA 672

REASONS FOR JUDGMENT (No 2) 1 On 5 March 2008, I made an order pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) on the application of the plaintiff, Anzon Energy Limited (Anzon Energy), that Anzon Energy convene a meeting of its ordinary shareholders, other than the holders of Excluded Shares (as defined), for the purpose of their considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement between Anzon Energy and its shareholders. The expression "Excluded Share" was defined to be a fully paid ordinary share in Anzon Energy held by Nexus Energy Limited (Nexus) or its related bodies corporate (as defined in s 50 of the Act). 2 On 11 March 2008 I published my reasons for the making of those orders: see Anzon Energy Limited, in the matter of Anzon Energy Limited [2008] FCA 310. I will use in these reasons the abbreviations that I used in those reasons. 3 For reasons that appear below, the Scheme is not to proceed. Accordingly, on 7 May 2008, I ordered that the Scheme Meeting convened by Anzon Energy pursuant to the Court's order be dissolved and not be resumed, and that an associated extraordinary general meeting convened by Anzon Energy also be dissolved and not resumed. I also made associated orders. These reasons are my reasons for the making of the orders on 7 May 2008. 4 The orders of 5 March 2008 were for the holding of the Scheme Meeting on 18 April 2008. The Scheme Booklet was dispatched to the Shareholders on 13 March 2008. However, following the dispatch of the Scheme Booklet, a difficulty arose as to the proper assessment of the results of the Basker 6 and Basker 6 ST1 drilling programs of Anzon Australia Limited (Anzon Australia), a 53.1% owned subsidiary of Anzon Energy, in the BMG fields in the Gippsland Basin off the coast of South Eastern Victoria. In consequence, on 11 April 2008, I ordered that the Scheme Meeting be adjourned to a date to be fixed by the Chairperson. 5 At the Scheme Meeting on 18 April 2008, the Chairperson, Andrew Alexander Young, informed Shareholders that he had decided to exercise his power to adjourn the Scheme Meeting to a date to be fixed by him to allow Anzon Energy and Nexus to assess the results of the drilling programs. 6 It has now transpired that Anzon Energy and Anzon Australia on the one hand and Nexus on the other have not been able to resolve the question of the proper assessment of the impact of the drilling results. On 5 May 2008, Anzon Energy and Nexus terminated the obligations created by the MID and agreed not to proceed with the Scheme. 7 It would now be possible for Mr Young, as Chairperson of the adjourned Scheme Meeting, to appoint a date for the resumption of the Scheme Meeting; for the Shareholders to be notified of that date; and for Mr Young, after opening the resumed Scheme Meeting, to adjourn it sine die. However, I accept that this might be confusing to the Shareholders in circumstances in which the Scheme Meeting no longer has any utility. In addition, there would also be the associated wastage of costs. 8 Anzon Energy asks that I dissolve the Scheme Meeting. Section 1319 of the Act provides: Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit. 9 In CMPS&F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366 (CMPS&F), this Court made an order revoking the orders for the convening of a scheme meeting. The order for the convening of the meeting had been made; the meeting had not been held; and the company had entered into a different transaction with the approval of its shareholders given in general meeting. The new transaction deprived the existing scheme of all utility. 10 The case is similar to but different from the present one. Inutility and associated wastage of costs characterise both. On the other hand, in CMPS&F the scheme meeting had not yet commenced to be held, whereas in the present case it had. 11 In Australian Gas Light Company [2006] FCA 346, the order for the convening of the meeting had been made and the company had dispatched the relevant materials to its members and advertised the proposed meeting, but again the scheme meeting had not yet commenced to be held. 12 Before the scheme meeting was held, another company had acquired 19.9% of the issued share capital of the company in question. The board of directors had subsequently resolved to withdraw its support for the existing scheme and had also announced an offer to merge with the new company. 13 The company sought orders that the meeting not be held. Emmett J held that s 1319 of the Act empowered the Court to make the orders. His Honour noted that the resolution approving the scheme was highly unlikely to be passed; that considerable confusion would be generated if the meeting were to proceed; that some further costs would be saved if it did not; and that there would be no utility in holding the meeting. Accordingly, his Honour made an order that the scheme meeting not be held. 14 In the present case, the Scheme Meeting commenced to be held on 18 April 2008. However, I think that the reference in s 1319 to "directions with respect to the convening, holding or conduct of the meeting" is wide enough to include a direction that the meeting commenced on 18 April 2008 be dissolved and not be resumed. 15 Since any further holding of the Scheme Meeting in the present case would lack utility, I made the order sought. 16 There is an associated Extraordinary General Meeting (EGM) of Anzon Energy which was also convened, by notice dated 11 March 2008, to be held on 18 April 2008. On that date, the EGM was opened and the members resolved to adjourn the EGM to a date to be fixed by Anzon Energy. 17 Anthony James Strasser, the Company Secretary and Chief Financial Officer of Anzon Energy and a shareholder in that company applied under O 6 r 4(2) of the Federal Court Rules (Cth) to be joined as a second plaintiff to the proceeding for the purpose of seeking an order pursuant to s 233 of the Act that the EGM also be dissolved and not be resumed. An order under s 233 of the Act may be sought by a member of the company: see s 234(a) of the Act. He was joined as second plaintiff. 18 The purpose of the EGM was to obtain the Shareholders' approval for Anzon Energy and its subsidiary Anzon Investments Pty Limited to vote their shareholdings in Anzon Australia in favour of the Anzon Australia scheme of arrangement (Anzon Australia Scheme), and to elect to receive Nexus shares as consideration for the Anzon Australia shares should the Anzon Australia Scheme be approved. 19 On 5 May 2008, Anzon Australia and Nexus also terminated their respective obligations under the merger implementation deed relating to the Anzon Australia Scheme. As a result, the resolutions which were to be considered at the EGM and which related to the Anzon Australia Scheme are now also deprived of utility. 20 In order to cancel the EGM, it would be necessary for Anzon Energy to follow a procedure similar to that referred to earlier in relation to the Scheme Meeting. However, under Anzon Energy's constitution, the motion to adjourn the EGM sine die could be carried only if the members present with the majority of votes at the meeting agreed or directed to the chairperson to do so: see rule 82.4 of Anzon Energy's constitution. 21 For similar reasons to those given at [7] above, it is not in the interests of the Shareholders for the EGM to be resumed, and, indeed, I am satisfied that it is in their interests for it not to be. 22 Section 233 of the Act empowers the Court to make any order under s 233(1) that the Court "considers appropriate in relation to the company". In Turnbull v National Roads and Motorists' Association Ltd (2004) 50 ACSR 44, Campbell J made an order under s 233(1) that a special general meeting of a company that had been requisitioned by members to consider resolutions to amend the company's constitution not be held, in circumstances in which the purpose of the resolutions had been achieved in a different way. 23 In my opinion, s 233 extends to empower the Court to order that an EGM that has commenced to be held be dissolved and not resumed in circumstances where the EGM has lost its utility. 24 In the present case, the inutility of the EGM and the expenditure that would be wasted if it were to be held, provided sufficient reason for the making of the orders that I made on 7 May 2008. I note that ASIC was aware of the present application and had advised that it did not intend to appear. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.