Australian Securities Commission v Marlborough Gold Mines Ltd

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