//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2002] FCA 1139
plaintiff. The Court ordered that: (1) the scheme of arrangement (Hibernian Scheme) be approved; (2) Hibernian be exempted from compliance with s 411(11) of the Corporations Act 2001 (Cth) in relation to the...
Hibernian Friendly Society applied for Court approval of a demutualisation scheme. The Court found that the required class meetings were properly held and their votes could be aggregated under s 411(5), that the second stage of the statutory process was complete, and that the scheme was fair and equitable between members. ASIC had provided a no-objection letter under s 411(17)(b). Conti J approved the scheme and granted an exemption from s 411(11), ordering implementation steps.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
1 cited instrument linked from this judgment.
1,884 words · generated 05/09/2026
Hibernian Friendly Society (NSW) Ltd (the applicant) sought the Federal Court's approval for a scheme of arrangement to demutualise the society, converting it from a company limited by guarantee to a company limited by shares, and to implement share allocation rules contained in the scheme. The Court (Conti J) had previously made interlocutory orders on 22 July 2002 under s 411(1) of the Corporations Act 2001 (Cth) to convene the necessary meetings (Reasons [1]). A meeting of branch delegates on 30 August 2002 passed conditional special resolutions to implement the conversion and adopt a new constitution and share issue, but those resolutions were expressly conditional on the scheme becoming effective (Reasons [2]).
On 2 September 2002, class meetings were convened under s 411(5) for Hibernian and for two member companies (Demutualisation Nominee Pty Ltd and Income Beneficiary Pty Ltd). The class meeting resolution passed in these meetings read: "That the Scheme proposed to be entered into between Hibernian and its Members, as contained in and more particularly set out in the Explanatory Memorandum accompanying this Notice, is agreed to (with or without modification as approved by the Federal Court of Australia)." (Reasons [3]). A poll at the Hibernian meeting returned 2,949 votes for (97%) and 91 against (3%) (Reasons [4]). Proxy tallies were produced and set out in the Reasons (Reasons [6]).
Prior to the final approval hearing, ASIC wrote a letter dated 10 September 2002 stating that under s 411(17)(b) it had no objection to the scheme because ASIC was satisfied the scheme was not proposed to enable avoidance of Chapter 6 of the Act (Reasons [7]). The final approval hearing occurred on 11 September 2002. No person notified an intention to appear opposing the application; no evidence or submissions opposed approval (Reasons [7], [9]). Conti J reviewed the procedural steps, expert reports (actuarial and corporate finance reports referred to in the earlier reasons), the poll result, and the ASIC letter, and concluded that the statutory second-stage requirements were satisfied, and that the scheme was fair and equitable between members. The Court approved the scheme and ordered an exemption from compliance with s 411(11) of the Act (Order; Reasons [11]).
The Court's decision follows from a twofold approach to applications for approval of schemes under s 411. First, the Court must be satisfied that the statutory procedures leading to the meeting approvals have been properly followed. Second, the Court must exercise a discretion to approve or refuse the scheme, informed by whether the proposed arrangement is fair and equitable between classes of security holders and between security holders and those who will benefit (Reasons [10]).
Conti J explicitly adopted Emmett J's statement in Central Pacific Minerals that, at the approval (third) stage, the Court's primary task is to ensure the second-stage procedure has been properly completed, and then to consider substantive fairness (Reasons [10]). The Court was satisfied on procedural grounds: the s 411(1) convening order was made, the separate class meetings occurred under s 411(5), and the poll results and proxy details demonstrated the required approval (Reasons [1], [4], [6], [11(i)]).
On substantive fairness, the Court relied on the absence of any evidence or submissions opposing the scheme, and on contemporaneous expert reports verifying valuation-related issues (Reasons [9], referring back to earlier reasons). Conti J concluded the scheme was fair and equitable between all members regardless of the nature of their policies (Reasons [11(ii)]).
The ASIC no-objection letter played a specific role. Conti J treated the ASIC letter under s 411(17)(b) as removing the necessity for the Court to separately express satisfaction under s 411(17)(a) concerning avoidance of Chapter 6, in light of prior authority (Santow J in Re Advance Bank) (Reasons [7]). This narrowed the matters the Court needed to determine.
Finally, the Court exercised its ancillary powers to make implementation orders, including an exemption from s 411(11) (Orders).
Before this judgment, the relevant legal landscape comprised the statutory framework of s 411 of the Corporations Act and a body of authority on the Court's role in scheme approvals. Conti J cites and applies several authorities:
After this judgment, Conti J's decision does not create new law but applies and confirms the established principles: (1) separate class meetings under s 411(5) can be aggregated so that no additional combined meeting is needed (Reasons [1]); (2) courts should treat an ASIC no-objection under s 411(17)(b) as conclusive for the purpose described unless something in the case requires further inquiry (Reasons [7]); and (3) the two-stage procedural/ substantive inquiry at the approval stage remains the governing approach (Reasons [10]). The judgment therefore situates itself as an application and confirmation of established doctrine rather than a doctrinal shift.
Quoted passages are taken verbatim from the Reasons; the translations explain their practical effect.
Reasons [1]: "Whilst the jurisdiction of the Court requires that approval be confirmed by meetings of appropriate or relevant classes (see Re Montana Frocks Pty Ltd [1967] 2 NSWR 584), nevertheless by the operation of subs 411(5), the votes of the classes may be aggregated, and in those circumstances it became unnecessary to additionally convene a combined meeting..."
Reasons [3]: The resolution wording approving the scheme.
Reasons [4]: Poll result: "For the resolution: 2949 votes representing 97%... Against: 91 votes representing 3% ..."
Reasons [7]: ASIC letter quoted: no objection under s 411(17)(b) because the scheme was not proposed to avoid Chapter 6.
Reasons [10]: Emmett J in Central Pacific Minerals: two-stage test, check procedure then assess fairness and equity.
This judgment is a direct application of principles governing third-stage approvals under s 411 and is therefore triggered when:
Practically, any scheme approval application that mirrors these procedural facts, class meetings properly convened; substantial majority in favour; relevant expert reports; and an ASIC no-objection on the Chapter 6 avoidance point, will fit the factual template addressed by Conti J.
This judgment itself refers to prior authorities (Central Pacific Minerals, Re Advance Bank, Marlborough Gold Mines, Re Montana Frocks and Re Challenge Bank). The Reasons indicate that the construction of s 411(4)(b) relied upon in Marlborough Gold Mines has been "subsequently confirmed" in a series of judgments ending with Emmett J in Central Pacific Minerals (Reasons [8]). Conti J applied those authorities to the facts at hand and did not purport to modify or overrule them (Reasons [8]-[10]).
The Reasons do not record any later judicial treatment of this Conti J decision. The judgment should therefore be read as an application and restatement of established principles rather than as a new statement that later courts have developed further within this text.
The Reasons resolve the issues necessary for approving this particular demutualisation, but several points remain identified in the judgment as not fully determined or as hypothetical:
Conclusion note This deep dive summarises and analyses Conti J's Reasons for approving the Hibernian demutualisation scheme on 11 September 2002. It aims to extract the critical holdings, procedural steps, and open questions strictly from the judgment text cited (paragraph numbers indicated), without introducing external materials or new legal conclusions. This is general legal information and not legal advice. I can make mistakes. Before acting on, relying on, or using this analysis or any draft based on it, get a qualified Australian lawyer to check it.
REASONS FOR JUDGMENT 1 In conformity with the orders of this Court made on 22 July 2002 and reproduced in my reasons for judgment of that day, being orders made pursuant to s 411(1) of the Corporations Act 2001 (Cth) ("the Act"), meetings of members of Hibernian Friendly Society (NSW) Limited ("Hibernian"), being a company limited by guarantee, and separately of Demutualisation Nominee Pty Limited ("Demutualisation Nominee") and Income Beneficiary Pty Limited ("Income Beneficiary") (the latter two companies being members of Hibernian), duly resolved in favour of the scheme of arrangement for the demutualisation of Hibernian. Each of those respective meetings took place consecutively on 2 September 2002 as class meetings, pursuant to subs 411(5) of the Act. As Senior Counsel for Hibernian rightly submitted, whilst the jurisdiction of the Court requires that approval be confirmed by meetings of appropriate or relevant classes (see Re Montana Frocks Pty Ltd [1967] 2 NSWR 584), nevertheless by the operation of subs 411(5), the votes of the classes may be aggregated, and in those circumstances it became unnecessary to additionally convene a combined meeting of the members of Hibernian inclusive of Demutualisation Nominee and Income Beneficiary. 2 Prior to the meetings of 2 September 2002, a general meeting of members of Hibernian comprising certain branch delegates had taken place on 30 August 2002, at which the following special resolutions were unanimously passed, subject to the scheme of arrangement becoming subsequently effective: (i) That Hibernian change from a company limited by guarantee to a company limited by shares; (ii) That the new constitution of Hibernian be adopted; and (iii) That the issue of shares in Hibernian in accordance with the Share Allocation Rules be approved. The Share Allocation Rules were stipulated in the scheme of arrangement. At the time of passing the resolutions referred to below, no members of Hibernian had been allotted or issued with any shares, whether pursuant to the Share Allocation Rules of the scheme of arrangement, or otherwise. The purpose of the resolution was to conditionally put in place the proposed demutualised Hibernian share structure, subject to and in anticipation of a subsequent favourable response from the majority of members of Hibernian at the meeting subsequently to be convened. Had no such favourable response been achieved, the condition precedent for the taking effect of the resolution would not have been fulfilled, and the resolution would not have taken ultimate effect. 3 The text of the resolution for demutualisation passed on 2 September 2002 by each of Hibernian, Demutualisation and Income Beneficiary was in the following terms: "That the Scheme proposed to be entered into between Hibernian and its Members, as contained in and more particularly set out in the Explanatory Memorandum accompanying this Notice, is agreed to (with or without modification as approved by the Federal Court of Australia)." 4 After the commencement of the meeting of Hibernian members convened by the Court's earlier order of 22 July 2002, the Chairman of Hibernian announced that he was by then holding 2923 proxy votes, and pursuant to a preliminary resolution of Hibernian members present at the meeting which authorised him so to do, the Chairman further announced to that meeting that 2573 proxy votes had been cast in favour of the resolution to approve the scheme of arrangement, and 78 proxy votes had been against the same, and that in addition there were 248 open proxies exercisable by the Chairman, which he proposed to use by voting in favour of the resolution, and there were in addition 24 open proxies in favour of other persons. Thereafter a number of members spoke from the floor, whereof five spoke in favour of the resolution to demutualise and one spoke against the resolution. After certain questions were subsequently asked from the floor, the motion was duly put, and the Chairman called for a poll to be taken. The meeting closed on the basis that the poll result was to be expected within 20 to 30 minutes. Subsequently the result of the poll was ascertained as follows: For the resolution: 2949 votes representing 97% of votes cast. Against the resolution: 91 votes representing 3% of votes cast Abstain the resolution: nil. 5 Senior Counsel for Hibernian has pointed out incidentally that since no shares were then held in Hibernian, it still retaining the status of a company limited by guarantee (notwithstanding what appears in [2-3] above), the resolution may have been effective if supported by less than 75% of the members present by person or by proxy at the meeting, whilst being still in compliance with s 411(4)(a)(ii) of the Act. There is some substance in that submission, in the light of segment A of that sub-paragraph and its contrast with segment B thereof, and the then status of Hibernian as a company limited only by guarantee, though any resolution of that hypothetical question might have had to confront the implications of the conditional resolution referred to in [3] above. That is a hypothesis which did not of course arise in the voting events which happened, and is therefore unnecessary to determine. 6 Of those votes cast by proxy, totalling 2573 out of 3040, the following categories appeared as at 10:00am on 31 August 2002: Appointed as Proxy For Against Open Total
Chairman 2358 75 248 2681 Others 215 3 24 242 Total 2573 78 272 2923
7 No notification from any person of intention to appear in the proceedings before me on 11 September 2002 was given to Hibernian or filed in Court. Moreover a favourable letter bearing date 10 September 2002, written to Hibernian's solicitors from Australian Securities and Investments Commission, was furnished in the following terms: "I advise that, under s 411(17)(b) of the Corporations Act 2001 ("Act"), the Australian Securities and Investments Commission ("ASIC") has no objection to the scheme of arrangement between Hibernian and its members the subject of meetings on 2 September 2002, on the basis that ASIC is satisfied that the scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act." I agree with the submission of Senior Counsel for Hibernian that the production of the above letter from ASIC removed the necessity for me to express the Court's satisfaction pursuant to s 411(17)(a) of the Act, particularly in the light of the dictum of Santow J in Re Advance Bank Australia Ltd (1996-1997) 22 ACSR 513 at 519. Were that not the case, I would have readily expressed my satisfaction pursuant to that statutory provision. 8 Senior Counsel has also made submissions concerning the operation of s 411(4)(b) of the Act, relating to the approval of the Court to a scheme of compromise or arrangement such as the present, in the light of subs 411(6) thereof. Those submissions were to the effect that the approval power is conferred by s 411(4)(b), a submission made by the company involved in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 as recorded at 504, and not criticised in the unanimous reasons for judgment of the High Court. That construction has been subsequently confirmed in a series of single judgments concluding with that of Emmett J in Central Pacific Minerals NL [2002] FCA 239 at [5] and [31], and is I think with respect clearly correct. 9 In addition to the expert testimony provided at the earlier hearing of the present proceedings on 22 July 2002, when I made orders inter alia for convening the meeting of members of Hibernian, there was provided to me at the subsequent hearing on 11 September 2002 contemporaneous affidavits verifying the report of 25 June 2002 made by a consulting actuary from Ernst & Young, and the report of the same date by Deloitte Corporate Finance Pty Limited, being the reports referred to in [13] of my earlier reasons for judgment herein. There has been no evidence placed before me, nor submission made to me, in opposition to the granting of approval of the scheme of arrangement, and in particular as to any lack of fairness inherent in the same. In those circumstances there is authority to the effect that I need not make any definitive statement concerning the Court's function on a second hearing such as this (Re Challenge Bank Ltd (1995) 19 ACSR 421 at 422 per Nicholson J). 10 Nevertheless in the light of what was stated by Emmett J in Central Pacific Minerals at [12], which reads as follows: "12. In considering whether to approve an arrangement at the third stage, the Court must first be satisfied that the second stage has been fully completed. It must be satisfied that the resolutions have been passed in accordance with the statutory requirements. Secondly, however, the Court must then consider the exercise of its discretion whether to approve the arrangement. While the primary task of the Court is to see that the procedure whereby the arrangement has been approved by security holders is formally correct, it has the further duty of satisfying itself that the arrangement is fair and equitable between different classes of security holders, and as between security holders and those who will benefit from it." 11 I would express the following conclusions which I have reached in the light of what was produced to me by way of evidence in the approval stage of the present proceedings: (i) the second stage of the process culminating in the meetings of September 2002 has been fully completed to my satisfaction, including the passing of the required resolutions in accordance with the statutory requirements; (ii) I continue to be satisfied that the scheme of arrangement is fair and equitable between all members of Hibernian, irrespective of the type, number, size, and duration of the policies respectively held by them, and otherwise. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.
Australian Securities Commission
Marlborough Gold Mines Ltd
(1993) 177 CLR 485
The Court ordered that: (1) the scheme of arrangement (Hibernian Scheme) be approved; (2) Hibernian be exempted from compliance with s 411(11) of the Corporations Act 2001 (Cth) in relation to the Hibernian Scheme; (3) a copy of the Orders be lodged with ASIC within 7 days; (4) Orders be entered forthwith (Orders; Reasons).