Aston Resources Limited, in the matter of Aston Resources Limited (No 2) [2012] FCA 401

REASONS FOR JUDGMENT 1 This is the second court hearing of an application to approve a scheme of arrangement, the details of which I described in my earlier judgment, Aston Resources Limited, in the matter of Aston Resources Limited [2012] FCA 229. 2 The only issue which calls for consideration on this application is an issue which has arisen on other occasions in hearings such as the present. It is that Whitehaven intends to rely upon an exemption contained in section 3(a)(10) of the Securities Act 1933 (US). 3 The relevant authorities are dealt with comprehensively by Barrett J in Re Permanent Trustee Co Limited (2002) 43 ASCR 601 at [11]ff. His Honour referred in some detail to the decision of Emmett J in Re Central Pacific Minerals NL [2002] FCA 239 and a decision of Lander J, then of the Supreme Court of South Australia, in Re Simeon Wines Limited (2002) 42 ACSR 454. 4 There was perhaps a slight difference of expression as to the relevant principles stated in those two authorities but in Permanent Trustee, Barrett J agreed with and adopted what was said by both Emmett and Lander JJ although with a slight qualification to which I will refer shortly. 5 The effect of what is said in the authorities is that a number of requirements have to be satisfied for the purpose of obtaining the benefit of the exemption. 6 One of them is that the terms and conditions of the issue of shares has been approved by a court after a hearing on the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in exchange have the right to appear. 7 As Emmett J observed in Central Pacific, the exemption would be available if the court in question holds a hearing to determine whether the proposed terms and conditions are fair to all those who receive securities. 8 However, his Honour observed that it is not for the court to express any view as to whether the procedures or processes of this court are sufficient to satisfy the requirements of the exemption. He pointed out that the hearing of an application for an order approving a scheme arrangement under s 411(4)(b) of the Corporations Act 2001 (Cth) is one in which any security holder is entitled to be heard. The application takes place in open court after formal notification and advertisement in daily newspapers. 9 His Honour pointed out that there are some instances of approval being refused in the light of opposition and submissions advanced at the second court hearing. 10 The point of difference between Emmett J and Lander J appears to be that, on one view, Lander J stated that the court, in such a hearing, should have sufficient information before it to determine the value of the securities to be surrendered. 11 However, as Barrett J observed in Permanent Trustee, the observations of Lander J are to be understood in the context in which his Honour made this observation. In particular, Barrett J pointed out at [14] that in exercising the jurisdiction to consider the fairness and reasonableness of a scheme, it is not part of the court's function to enter into matters of valuation. The court does not act as a valuer. 12 Nevertheless, as Barrett J stated at [15], the court, in making its decision to approve the scheme, derives considerable assistance from the existence of a report of an independent expert. 13 The report which was before Barrett J in Permanent Trustee was that of well know experts, Messrs Lonergan Edwards & Associates Limited, who expressed an opinion that the proposed merger in that case was "in the best interest" of the shareholders. 14 In the present case, the scheme booklet, in particular at page 120, includes a report of the independent expert in the present matter, Messrs Pricewaterhouse Coopers. The report states at page 120: After consideration of all of the issues set out in this independent expert's report and the scheme booklet, in our opinion the scheme is in the best interest of Aston shareholders. 15 The author of that report, Mr Stewart, has sworn an affidavit in which he confirms that he holds the opinion stated in the report. The position in the present case is therefore identical to that which was before Barrett J in Permanent Trustee. 16 I am satisfied, essentially, for the reasons contained in the written submissions provided to me by counsel for Aston, which I will mark as MFI 2, that it is appropriate to grant the approval to the scheme envisaged by section 411(4)(b) of the Corporations Act. 17 Finally, I note that Whitehaven will rely on the Court's approval of the Scheme for the purpose of qualifying for exemption from the registration requirements of the U.S. Securities Act of 1933, provided for by section 3(a)(10) of that Act, in connection with the implementation of, and provision of consideration under, the Scheme. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.