Boart Longyear Limited, in the matter of Boart Longyear Limited [2019] FCA 62

Introduction 3 On 6 December 2018, a meeting of the members of BLY was held (scheme meeting). It was convened in accordance with orders made by the Court under s 411(1) on 26 October 2018. The following majorities were achieved on the resolution whether to approve the scheme: For Against Number of votes 23,136,814,652 565,656,317 % of votes 97.61% 2.39% % of voting shareholders 31.12% 68.88%

While the number of votes cast in favour of the scheme clearly exceeded the 75% required by s 411(4)(a)(ii)(B) of the Corporations Act, these results will not pass the "headcount test" set out in s 411(4)(a)(ii)(A). The required headcount is a majority in number of members present and voting unless the Court "orders otherwise". 4 BLY sought orders dispensing with the headcount test and approving the scheme. 5 Although the majority required by s 411(4)(a)(ii) to approve a scheme of arrangement between a company and its members is of long standing, the power of the Court to dispense with the headcount test was introduced in 2007. The power to "order otherwise" is not subject to any express limitation. The Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth) at [4.177]-[4.181] explained the rationale for the amendment as follows: Schemes of compromise or arrangement - court discretion to approve Background 4.177 Approval of a members' scheme requires a resolution to be passed by: • a majority of members present and voting (sub-subparagraph 411(4)(a)(ii)(A) of the Corporations Act); and • a special majority (75 per cent) according to the voting rights attaching to share capital (sub-subparagraph 411(4)(a)(ii)(B) of the Corporations Act). 4.178 The court has no discretion to approve a members' scheme if the resolution fails to attain both required majorities. 4.179 A members' scheme could be defeated by parties opposed to the scheme engaging in 'share splitting', which involves one or more members transferring small parcels of shares to a large number of other persons who are willing to attend the meeting and vote in accordance with the wishes of the transferor. By splitting shares to increase the number of members voting against the scheme, an individual or small group opposed to the scheme may cause the scheme to be defeated. This may occur even though a special majority is achieved in terms of voting rights attaching to share capital, and if the share split had not occurred, the majority of members were in favour of the scheme. Key changes 4.180 The Bill will amend Part 5.1 of the Corporations Act to confer a discretion on a court to approve a members' scheme where a resolution in favour of a compromise or arrangement: • is passed under sub-subparagraph 411(4)(a)(ii)(B) of the Corporations Act (special majority pursuant to share capital voting rights); but • is not passed under sub-subparagraph 411(4)(a)(ii)(A) of the Corporations Act (majority of members present). Notes on items 4.181 Item 52 will amend sub-subparagraph 411(4)(a)(ii)(A) of the Corporations Act to give the court a discretion to make an order that the requirement for a majority of members present and voting may be dispensed with. It is intended that the court would only exercise the discretion to disregard the majority vote under sub-subparagraph 411(4)(a)(ii)(A) in circumstances where there is evidence that the result of the vote has been unfairly influenced by activities such as share splitting, however the court's discretion has not been limited to allow for unforeseen extraordinary circumstances. 6 BLY claims that the integrity of the vote was interfered with by reason of a letter dated 14 November 2018 issued by Snowside Pty Limited, a shareholder of BLY (which I refer to below as the Snowside letter). BLY says that Snowside letter was misleading and the fact that it influenced the vote is demonstrated by the flow of proxies on the form which accompanied the Snowside letter on and from 20 November 2018. 7 The Snowside parties (described below) oppose the re-domiciliation of BLY to British Columbia, Canada, which is the purpose of the scheme and accordingly oppose the Court making the orders for which BLY has applied. 8 The Australian Securities & Investments Commission (ASIC) intervened in the proceedings by a notice of intervention dated 21 December 2018 because ASIC regards the issue of the circumstances in which the Court will make orders dispensing with the headcount test as being of significant public importance in the role that it undertakes in respect of schemes. Had the headcount been achieved, ASIC would not have intervened and would most likely have issued the "usual letter" under s 411(17)(b) of the Corporations Act indicating that it did not oppose orders being made approving the scheme under s 411(4)(b). 9 Although the Court was satisfied that it would have been appropriate to approve the scheme had the headcount been achieved (including for the purposes of s 411(17)(a) in the absence of a letter from ASIC under s 411(17)(b)), the Court was not satisfied that orders dispensing with the headcount test should be made without a further vote of BLY's members at which both of the statutory majorities are achieved.

Proposed Scheme 10 BLY's capital structure at the time of the first court hearing was as follows: BLY Shares 26,289,795,231 Quoted ordinary warrants 602,739,409 Unquoted BLY options 27,828,976 Unquoted Class A 7% Warrants 84,832,619 Unquoted Class B 7% Warrants 43,509,750

Purpose of scheme 11 The purpose of the proposed scheme is to "re-domicile" BLY to British Columbia, Canada. If the scheme is implemented, a new holding company incorporated in British Columbia, Boart Longyear Incorporated (BLY Canada), will acquire all of the issued shares in BLY and: (1) BLY Canada will apply to be listed on the ASX and will be registered as a foreign company; eligible BLY shareholders will receive ordinary shares in BLY Canada which will be held in the form of a CHESS Depositary Interest (CDI) for each BLY share held by the shareholder. CDIs represent beneficial interests in shares in BLY Canada and will be able to be traded on the ASX using CHESS; (2) BLY will be de-listed from the ASX and will continue to operate as a wholly-owned subsidiary of BLY Canada; (3) Ineligible foreign shareholders will not be entitled to receive CDIs. This is because of restrictions in certain countries which make it impractical or unlawful to offer or receive securities. Instead, CDIs which would otherwise be issued to the ineligible foreign shareholders will be transferred to a sale agent, who will sell the CDIs on the ASX and remit the proceeds to each ineligible foreign shareholder (after deducting applicable fees, brokerage, taxes and charges); (4) Ordinary warrants, Class A 7% warrants and Class B 7% warrants issued by BLY will remain in existence. If a warrant holder seeks to exercise the warrant after the implementation date of the scheme, BLY Canada will issue BLY Canada shares which may be held in the form of CDIs in satisfaction of the holder's right to receive BLY shares in accordance with the terms of issue of the warrants and an Assumption Deed Poll dated 19 October 2018; and (5) Options issued by BLY will be cancelled on the effective date of the scheme and consideration will only be payable if the closing price of a BLY share on the effective date of the scheme exceeds the exercise price of the relevant option. (6) Units issued under the Long Term Management Incentive Plan (of which 8,500 of 10,000 units are on issue) will remain in existence and BLY Canada has assumed the obligations of BLY under the Assumption Deed Poll with the result that, if the scheme becomes effective, BLY Canada will satisfy the obligation to grant securities by the issue of BLY Canada shares.

Background 12 The proposal comes about in the following circumstances described by the independent expert, Grant Thornton Corporate Finance Pty Ltd, in its report dated 26 October 2018 as follows: Boart Longyear Limited ("Boart", "the Company") is a global mining services company specialising in the provision of drilling services and equipment. It operates in North America, Latin America, Europe, Asia-Pacific and Africa. Boart is an Australian incorporated company which has been … listed on the Australian Securities Exchange ("ASX") since April 2007. As at 23 October 2018, Boart had a market capitalisation of c. A$105.16 million. In spite of the global nature of its operations, c. 44% of its revenue is primarily generated in U.S.A and Canada. Over the last three years, as a result of the downturn in the mining sector, the Company has been facing challenging trading conditions which has caused the write-down and impairment of tangible and intangible assets and resulted in an unsustainable level of debt. For the 6-month period ended on 30 June 2018 ("1HY18"), the Company reported a net loss of US$16.3 million and negative net assets of circa US$279 million. This has led to the implementation of a number of restructuring initiatives (collectively known as the 'Restructure Program'). In particular, on 3 April 2017 the Company announced that it had agreed a recapitalisation program with the key creditors of the Company which was completed in September 2017 ("Recapitalisation"). Some of the key outcomes were as follows: • Reduction of debt by c. US$93 million in exchange for the issue of c. 11.3 billion shares of Boart. • Improvement in the liquidity through the option to pay interest-in-kind (rather than cash) on all debt facilities (until December 2018). Further, the maturities of some debt instruments were extended by a period of 4 years. As part of the Recapitalisation, the Company agreed to take all requisite steps to re-domicile the headquarters of its business to the United States (state of Delaware), the United Kingdom or Canada (or such other jurisdiction as the parties agreed) as soon as possible after the implementation of the Recapitalisation, unless Boart and the Major Shareholders jointly determined in their reasonable discretion that the re-domiciliation and would not be in the best interests of the Group. 13 The "key creditors" were defined by the independent expert as comprising affiliates of Ares Management L.P., Ascribe II Investments LLC and affiliates of Centrebridge Partners L.P., who collectively represent over 75% of BLY's secured creditors and 90% of its unsecured creditors. They were also described as the "Major Shareholders". Section 6.6 of the scheme booklet (in the form of exhibit A) indicates that the relevant interests of Centrebridge (defined in the scheme booklet as Centrebridge Special Credit Partners although I do not understand anything to turn on this difference), Ascribe and Ares in BLY shares is respectively 50.85%, 21.4% and 9.74%, based on filed substantial holding notices lodged with the ASX.

Recommendations by independent expert and directors 14 The independent expert's opinion was that the benefits of the scheme outweigh its disadvantages and the scheme is in the best interests of members. 15 In the report, which is set out in annexure A of the scheme booklet, the independent expert notes that in this scheme the benefits and disadvantages are primarily those that relate to re-domiciliation. As part of the analysis, the independent expert primarily relied on the information included in the scheme booklet and other information made available by the Company. The benefits and disadvantages are described in the "Summary of Opinion" which is set out below. Footnotes are generally deleted, although some have been incorporated into the text; they are in square brackets and italics. Advantages of the Scheme Well-defined legal system As at 30 June 2018, the Company had c. US$688 million external debt, negative net assets of US$279.3 million and a statutory loss from continuing operations of US$16.3 million. Accordingly, the Company is considered in financial distress. Given the Company's financial position, we are of the opinion that a legal regime that is well defined in relation to restructuring, insolvency matters and minority shareholders protection is important. Based on information included in the Scheme Booklet, the Canadian legal regime is well defined in relation to regulatory matters of insolvency and minority shareholder protection. This is evidenced by the World Bank Ease of Doing Business ranking. In relation to the Protection of Minority Investors, Canada is ranked 5, whilst Australia is ranked 57. In relation to Resolving Insolvency, Canada is ranked 11, whilst Australia is ranked 18. Further, given that Canada and the U.S.A, where the Company is headquartered fall in reasonably similar time zones, access to legal resources such as courts, securities regulators and counsel is likely to enhance responsiveness and expedite decision-making. Potentially greater access to capital from local institutional investors Given that Boart is in a situation of financial distress [As at 30 June 2018, the Company had US$688 million external debt, a negative net assets of US$279.3 million and a statutory loss from continuing operations of US$16.3 million], the Company may need to raise additional capital in order to continue trading as a going concern. Based on the information included in the Scheme Booklet, a change in domicile is likely to make Boart more attractive to Canadian institutional investors and pooled funds who tend to limit the foreign issuers in their Canadian equity portfolios to comply with their international market risk requirements. Retention of the ASX listing The listing of Boart Canada's CDI on the ASX is a condition precedent to the implementation of the Scheme and accordingly, Scheme Shareholders (other than Ineligible Scheme Shareholders) will continue to be able to trade their shares through Boart Canada CDIs and Boart Canada will be required to comply with the ASX listing rules. There are no significant disadvantages holding Boart CDIs relative to direct ownership of Boart Shares. Based on the disclosure in the Scheme Booklet, the rights of Scheme Shareholders will not be impacted due to their inability to have a direct ownership in Boart Canada. A detailed description of the rights of CDI holders and the differences between holding shares and CDIs is set out in Appendix E of the Scheme Booklet. Comparable shareholder protection The Scheme Booklet sets out the comparative provisions between the British Columbia Business Corporations Act ("BCBCA") on the one hand and the Corporations Act, ASX listing rules and the Australian common law on the other. In our opinion, the Scheme Shareholders (other than Ineligible Scheme Shareholders) will not be prejudiced due to the Re-domiciliation as the regulations in Canada are not dissimilar to those observed in Australia. Potential for increased allowance for tax deductibility of the interest expense Boart has reported significant losses over the last 3 years primarily due to a downturn in the mining industry which has impacted the market demand for its products and services. As at 30 June 2018, the Company had c. US$688 million external debt, comprising US$277.68 million of Term Loans and US$410.4 million of other debt across various other debt instruments. Given that all the creditors of the Company are domiciled outside Australia, the Company is required to make periodic interest payments on the debt to the creditors. Given the outstanding debt, the Group has a large interest expense, which can potentially be used to reduce the tax expense [The Company paid c. US$4.4 million of taxes for the half-year ended 30 June 2017 and US$6.3 million for the half-year ended 30 June 2018.] being incurred by the Company. Due to the poor alignment of the debt (most of which is held by the Australian entity where the operations are loss making due to the mining downturn) and the profit making operations of the group (most of which are concentrated in North America), the Group cannot take full advantage of the tax deductibility on the interest expense. As a result, the Company intends to transfer a portion [Refers to all the debt excluding the Term Loans, which have been transferred to Boart entities in the USA, prior to the Re-domiciliation] of the debt to Canada. This could potentially reduce the tax expense for the Group, reducing the existing burden on the Company's finances. Whilst the transfer of the debt to take advantage of the tax deductibility on the interest expense can be effected without the Re-domiciliation, in the absence of the Re-domiciliation, this transfer of the debt is likely to create inefficiencies that may be detrimental to shareholders. Potential reduction in costs Given the Group's global operations, it incurs significant administrative costs. The Re-domiciliation is likely to facilitate a simplification of the group structure under which redundant entities will be closed. This will reduce the legal and administrative costs associated with operating these entities. Whilst the closure of entities could be done without undertaking the Re-domiciliation, in our opinion, it is likely to result in reduced benefits to the Scheme Shareholders due to the associated inefficiencies of such a group simplification. Disadvantages of the Scheme Change of jurisdiction Following the Re-domiciliation, Boart Canada will be governed by the BCBCA. Any future action brought by Australian investors will be regulated by the Canadian legal system. Whilst Boart Canada can submit to the jurisdiction of an Australian court. However, based on the Scheme Booklet we understand that Australian courts can refuse to admit the matter. In these instances, the matter will be within the ambit of the Canadian legal system. Despite the above, an Australian shareholder will be able seek enforcement of the laws in the same manner as a Canadian shareholder. In our opinion, given the relative similarity between the Australian and Canadian legal regime as per the Scheme Booklet, Australian shareholders are unlikely to be prejudiced due to the Re-domiciliation. Franking credits If the Scheme is implemented, Australia-based shareholders may not be able to benefit from franking credits going forward, however Scheme Shareholders may be able to obtain a non-refundable tax offset and use it to reduce their tax liabilities in the relevant year (subject to certain conditions.). Given the Company's situation of financial distress discussed earlier with large debt outstanding and significant losses, the Company is unlikely to be able to pay a dividend until the debt level is significantly reduced and the financial performance improves significantly. In addition, any accumulated tax losses that can be used to offset against taxable income will further delay the creation of franking credits. In our opinion, the disadvantage due to lack of franking credits is mitigated due to the Company's inability to pay dividends in the medium term. 16 The independent expert noted a range of other factors: (1) Adviser fees in connection with the restructure: they were mostly one-off and disadvantages associated with incurring the expense would be offset by the recurring benefit of reduction in the overall costs of BLY and its subsidiaries (Group). (2) Tax implications: based on the scheme booklet, the re-domiciliation may have adverse tax implications for individual BLY shareholders who may be impacted by their individual circumstances and suggests that shareholders seek advice on that issue. (3) Availability of tax losses: BLY intends to implement the re-domiciliation in a manner so as to make use of available tax losses where possible and to limit the impact on the availability of remaining Australian tax losses. (4) Intentions of Major Shareholders: the independent expert notes that Centrebridge, Ascribe and Ares, then representing approximately 85% of the issued capital, had informed the directors of their intention to vote in favour of the scheme. (5) No impact on the holders of warrants and LTIP units: this is on the basis that BLY Canada had agreed to assume BLY's obligations in relation to the issue of securities. (6) Ineligible foreign shareholders would not be unfairly prejudiced: those shareholders would receive a cash equivalent of the value of BLY Canada CDIs on the ASX (after deducting fees) so that they would not be disadvantaged relative to other BLY shareholders. 17 BLY's directors unanimously recommended voting to approve the scheme. The Chairman's letter included in the scheme booklet states that this recommendation took into account what the Board considered to be the advantages, disadvantages and risks associated with the scheme. These were explained in detail in section 5 of the scheme booklet (and cross-referenced to other parts of the booklet, eg to section 9 for tax implications) although not in exactly the same terms as used by the independent expert. Notably, some of the advantages were expressed as follows: (a) Potential for improved access to capital The future growth of Boart Longyear may require access to capital markets which are able to provide competitive funds in the form of equity and debt. A change in domicile to Canada potentially increases the attractiveness of Boart Longyear to a more diverse financial market which has a strong interest in mining across the world. It also potentially makes Boart Longyear more attractive to those Canadian institutional investors and pooled funds who limit the foreign issuers in their "Canadian equity" portfolios to manage their international market risk. As a Canadian incorporated company Boart Longyear 'Canada' should have broader access to the capital pools of Canadian institutional investors. Greater access to capital and debt markets could also allow Boart Longyear 'Canada' to limit some of its exposure to financial risk. (b) Improved liquidity Boart Longyear's operations are heavily concentrated in North America. In 2017, operations in North America accounted for approximately 50% of total global revenue. Conversely, Australian operations accounted for approximately 15% of total global revenue. Currently, Boart Longyear's capital structure does not align its external debt to the jurisdictions where the majority of its revenue is earned. The business is expected to have its most significant profits in the U.S. and Canada so it is preferable to, as much as possible, have the debt allocated to those jurisdictions which have the ability to repay it. The Re-domiciliation will allow for the efficient reallocation of some of the Company's existing debt which will permit the Company to service the debt in a more efficient manner. (c) Reduced cost of insurance The market for insurance in Australia has proven very expensive to Boart Longyear and the cost to maintain its current levels of insurance is expected to increase in the coming years. The Re-domiciliation would allow the Company to take advantage of more competitive and cost effective insurance markets in North America. (d) Streamlined company structure The Company is planning to restructure the Boart Longyear group to be more efficient and cost effective and to enhance cash management flexibility. The restructure would involve: (i) Reducing complexity - Unnecessary and burdensome intercompany debt obligations and instruments may be eliminated and where appropriate legal entities may be realigned into consolidated tax groups; and (ii) Eliminating unneeded legal entities - Superfluous legal entities may be eliminated to reduce administrative and entity maintenance expense. As noted in Section 5.2(b) above, the Re-domiciliation will allow for the efficient reallocation of certain debt. Boart Longyear may be able to reduce the need to duplicate certain additional legal consents and agreements necessary to facilitate aspects of this corporate restructure by obtaining such consents and agreements concurrently with the consents and agreements necessary for the reallocation of the debt. (e) Retention of ASX listing and familiarity with local exchange … (f) Comparable shareholder protections … (g) Familiar jurisdiction The common law legal system in Canada, both federally and provincially, is considered to be a relatively predictable one and is comparable to Australia. It is however more familiar to the management team and the majority of the Company's shareholder base. The Company believes those regimes will provide the most suitable framework for stabilising and rebuilding the Company over the medium to long term. A not insignificant advantage in this regard is that the re-domicile will mean that senior management will have ready access to legal, accounting and other resources in time zones where they are located. Boart Longyear anticipates that this will over time result in reductions in its overhead costs.

Snowside parties' intervention 18 At the first court hearing, on 25 October 2018, Snowside (as trustee of the Snowside Trust) and Maurici Nominees Pty Ltd (as trustee for the A.P. Maurici & Associates Pty Ltd Superannuation Fund) (Snowside parties) sought and were granted leave to appear in the proceedings under r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth). 19 The Snowside parties opposed the Court making orders convening the scheme meeting or final orders approving the scheme. They sought an adjournment of the first court hearing on the basis that the nature of the scheme did not require that it be given urgent attention. In their submission, the Snowside parties should be given sufficient time to prepare their case and that orders convening the scheme meeting and final orders should be refused. They claimed that orders should be refused because implementation of the scheme would unfairly prejudice them by causing them to lose standing or limiting the relief that they may obtain in the Oppression Proceedings (see below). They also needed time to raise issues concerning the content of the draft scheme booklet to which they had had access since 4.59 pm on Friday, 19 October 2018.

Oppression Proceedings 20 The Snowside parties commenced proceedings in the Supreme Court of New South Wales on 7 June 2017 against BLY and its directors (being the directors in office between 2 April 2017 and 31 August 2017) (Oppression Proceedings). 21 The Oppression Proceedings relate to BLY's agreement to the restructuring program by entering into a Restructuring Support Agreement with its creditors on 2 April 2017. The restructuring program involved schemes of arrangement between BLY and its secured and unsecured creditors which were ultimately approved by the Supreme Court of New South Wales (with amendments) on 22 August 2017: see In the matter of Boart Longyear Limited (No 2) [2017] NSWSC 1105 (Boart Longyear (No 2)). Under agreements reached around the same time as the Restructuring Support Agreement, Centrebridge, Ascribe and Ares also obtained rights to nominate directors to BLY's Board. 22 The Snowside parties appeared at the second court hearing in the Supreme Court to oppose orders approving the two creditors' schemes being made. Justice Black explained part of the background to the Oppression Proceedings in Boart Longyar (No 2) at [21]-[22]: 22 … The Snowside companies together hold 26,773,181 shares in BLY, comprising approximately 2.82% of its shares, and are together the third largest shareholding group in BLY, after Centerbridge and another entity (McKenzie 3.7.17 [8]; Ex FR-3, 461). The effect of implementation of the schemes of arrangement would be to reduce their collective shareholding in BLY to approximately 0.1%. The Snowside companies oppose the schemes both in their original form and with the alterations proposed by the Plaintiffs. 23 In June 2017, the Snowside companies commenced separate proceedings against BLY and its directors alleging, inter alia, misleading and deceptive conduct in contravention of the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) in respect of the distribution of the explanatory statement for a notice of meeting of BLY to approve shares issues to Centerbridge, Ares and Ascribe and involvement of the directors in the alleged breach, breaches of an equitable duty of disclosure owed by the directors of BLY to shareholders including the Snowside companies and oppressive conduct within the scope of Ch 2F of the Corporations Act. An application for interlocutory relief to restrain BLY from bringing resolutions before its annual general meeting to approve that issue of shares was dismissed on 13 June 2017 by Brereton J ([2017] NSWSC 756). As I will note below, the interests of the Snowside companies were also potentially affected by the Unsecured Creditor Scheme, so far as it may have an effect upon those claims. 23 The nub of the Snowside parties' claim in the Oppression Proceedings is that, in negotiating and agreeing the terms of the Restructuring Support Agreement and associated transactions with the key creditors and by implementing them, BLY and its directors "unnecessarily sacrificed the interests of" shareholders who were not associated with the key creditors. They say that BLY and its directors gave preferential treatment to Centrebridge by acceding to Centrebridge's demand to maintain a shareholding in excess of 50% of BLY shares without adequate commercial justification or consideration and without taking any or adequate steps to avoid or substantially limit the dilution of their shareholdings by a factor of 27. It appears that the Snowside parties do not take issue with the allotment of shares to Ascribe and Ares in consideration of the cancellation of debt which BLY owed to them. They do take issue with the fact that Centrebridge did not cancel any principal debt as part of the arrangement but rather only extended the term of loans and varied interest charged to BLY. 24 The Snowside parties also raised a number of disclosure issues at the first court hearing. Those issues, except for disclosure concerning the Oppression Proceedings, were addressed during the hearing and the Court refused the application to adjourn that hearing. The Court was not satisfied that the Snowside parties had not had sufficient time to review the draft scheme booklet and any material issues which they might subsequently find could be dealt with at the second court hearing. 25 The Snowside parties submitted that the draft scheme booklet should disclose the Oppression Proceedings and the possible impact of the scheme on those proceedings. After oral submissions, the parties accepted that it would be appropriate for the Court to determine the issue of whether any prejudice to the Snowside parties arising from the impact of the implementation of the scheme on the Oppression Proceedings would be a reason to refuse to make final orders approving the scheme after the parties had had the opportunity to file evidence. The Court would then determine what, if any, supplemental disclosure should be made. The Court was not satisfied that it was appropriate to delay making orders convening the scheme meeting and approving the scheme booklet for distribution by reason of this issue. It was agreed that there should be a hearing on this question in sufficient time before the scheme meeting for adequate supplementary disclosure to be made should the Court determine that it was necessary. It was ultimately agreed that the Court would hear argument on 26 November 2018 and timetabling orders were made for the filing of further submissions and evidence. 26 The principles relevant to when a Court will convene a scheme meeting are well settled. In Capilano Honey Limited, in the matter of Capilano Honey Limited [2018] FCA 1568 at [32]-[34], I noted the following: 32 The Court will order that a scheme meeting be convened and approve a draft explanatory statement to be sent to shareholders if it is satisfied that: (1) The plaintiff is a Pt 5.1 body; (2) The proposed scheme is a compromise or (relevantly) an "arrangement" within the meaning of s 411. That issue is in contention in relation to the HoldCo Share Offer; (3) The scheme booklet will provide proper disclosure to shareholders; (4) The scheme is bona fide and properly proposed; (5) ASIC has had a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions and it has had at least 14 days' notice of the proposed hearing date; (6) The procedural requirements of the Federal Court (Corporations) Rules 2000 (Cth) have been met; and (7) The scheme is of such a nature and cast in such terms that, if it receives a statutory majority at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed. 33 The application for leave to summon a scheme meeting is in the nature of an interlocutory proceeding and is a preliminary to the final determination which is to be made when the matter comes back to the Court for approval after the holding of the meetings which have been directed: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 504-05. By granting leave, the Court does not give its imprimatur to the proposed scheme. At the stage of ordering a scheme meeting, the Court does not ordinarily go very far into the question of whether the arrangement is one that warrants the approval of the Court; that question is to be answered when the scheme returns to the Court for final approval. That is not to exclude the possibility that a scheme may appear on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further: see Re Foundation Healthcare Limited (2002) 42 ACSR 252; [2002] FCA 742 at [36] and [44] per French J, cited with approval in Re CSR Limited (2010) 183 FCR 358; [2010] FCAFC 34 at [58] per Keane CJ and Jacobson J. Chief Justice Keane and Jacobson J went on to say (at [59] and [61]) that the adverb "blatantly" and the term "contrary to public policy" emphasise that the enquiry under s 411(1) is not intended to resolve difficult questions on which reasonable minds may differ, although it has long been recognised that a clear want of utility in putting in train the process of s 411(1) is a good reason to decline to order the convening of the first meeting. 34 At the first court hearing, the Court is concerned with whether the proposed scheme is one which is adequately explained to those who have a financial interest in it and whether there is any obvious flaw in the scheme, such that it would be inappropriate even for it to be submitted for consideration: see Re Abacus Funds Management Ltd (2006) 24 ACLC 211; [2005] NSWSC 1309 at [23]. The Court is not required to be satisfied that no better scheme could have been proposed. The question is whether it is reasonable to suppose that sensible business people might consider the arrangement proposed to be of benefit to members: see Centrebet International Limited [2011] FCA 870 at [29] per Emmett J. 27 Based on the evidence read at the hearing, the Court was satisfied of the matters referred to in Capilano Honey Limited at [32]. Further, there was evidence that: (1) Marcus Randolph had consented to chair the scheme meeting and Jason Ireland had consented to act as chair in Mr Randolph's absence. (2) ASIC had, by letter dated 24 October 2018, advised the directors of the Company that it had received notice of the hearing of that application and had "examined the terms of the Scheme and the draft explanatory statement in accordance with [its] policy in Regulatory Guide 60 Schemes of arrangement" and that it "does not currently propose to appear to make submissions, or intervene to oppose the Scheme at the first hearing under s 411(1) of the Corporations Act". 28 Following amendments to the draft scheme booklet discussed in the course of the hearing being made, on 26 October 2018, the Court made orders in relation to the scheme meeting to be held on 6 December 2018 and approving for despatch a scheme booklet (in the form of Exhibit A), an email to shareholders who had elected to receive notices electronically and a proxy form. The second court hearing was listed for 19 December 2018.

Snowside letter 29 By a letter dated 14 November 2018 signed by Anthony Maurici in his capacity as a director of Snowside to some BLY shareholders (Snowside letter), Snowside urged BLY shareholders to vote against the scheme. The text of the letter was as follows (footnotes have been incorporated into the text in italics and square brackets, emphasis in the original). Dear Fellow Shareholder VOTE AGAINST REDOMICILIATION TO CANADA Like you, Snowside is a shareholder in Boart Longyear ('Company'). In 2017, the Company undertook a major restructure ('Restructure') which the Independent Directors told you to support, and which we attempted to oppose by Court action. On implementation of this Restructure, three stakeholders [Centerbridge, Ares and Ascribe and their associated entities] ('Controlling Stakeholders') effectively controlled almost 90% [Substantial shareholder notices lodged with ASX in early September 2017] of the issued shares, (not taking into account warrants). Immediately before announcement of the Restructure your shares were each worth about $0.067 [Last ASX Sale price on 31 March 2017]. They are now worth $0.004 [Last ASX Sale price on 1 November 2018] each or less than one sixteenth of their pre-announcement value. Plan to Redomicile to Canada You will have received documents from the Company to redomicile to Canada. The Board agreed with the Controlling Stakeholders in April 2017 to take steps to redomicile as soon as possible after the Restructure. If approved, instead of holding shares in an Australian company, you will hold securities in a Canadian company (although still listed on the ASX). We think there is no material benefit to you as a small shareholder in this change, only disadvantages as stated below. The Board is now telling you to support the redomiciliation. We consider that the stated benefits of this change set out in the documentation, are far from compelling. Even though the Controlling Stakeholders have overwhelming voting power, this re-domiciliation can be stopped if at least half in number of the shareholders voting at the meeting (including by proxy), VOTE AGAINST the proposal DOING NOTHING MAY ASSIST THE PROPOSAL BEING IMPLEMENTED. YOU NEED TO TAKE ACTION AND VOTE AGAINST IT. Our Court Action in 2017 Snowside tried to stop the Restructure by taking Court action, including appealing to the New South Wales Court of Appeal. This was done at our sole expense potentially to benefit all minority shareholders. Unfortunately, this action failed despite the substantial funds we alone allocated to it. Oppression Claim likely to be Defeated Snowside has commenced legal proceedings against the Company and the Board claiming that the actions of the Company and the Board in events leading up to the Restructure treated the minority shareholders unfairly and oppressively, including in failing to adequately consider ways to preserve more value for the minority shareholders, preferring instead the interests of the Controlling Stakeholders. It may be that the same arguments could be used to support a class action on behalf of the wider class of minority shareholders. Our claim and any potential class action claims based on oppressive conduct will likely be defeated by the redomiciliation because existing shareholders of the Company will cease to be Company shareholders. Disadvantages of Redomiciliation The disadvantages to you are: • Likely loss of the ability to bring or join an oppression claim against the Company because you will cease to be a shareholder of the Company. • Becoming a security holder of a Canadian company subject to unfamiliar Canadian law which may have different outcomes to a shareholder than Australian law. • If you are an Australian resident taxpayer any franking credits from Australian income of the Company cannot be utilised by the new Canadian holding company or passed through to its shareholders. Additional tax complications arise such as Canadian withholding tax and potentially limited tax offsets (with no credit for franking credits or Australian withholding tax) on dividend payments to Australian shareholders. • Costs and practical difficulty of seeking local Canadian advice concerning the rights of minority shareholders in a Canadian company, and should circumstances necessitate it, commencing action in Canadian courts. I SEEK YOUR SUPPORT TO OPPOSE REDOMICILIATION OF THE COMPANY BY APPOINTING ME AS YOUR PROXY TO ATTEND THE MEETING TO VOTE AGAINST THE PROPOSAL. WHAT I AM ASKING YOU TO DO: 1. SIGN THE ENCLOSED COMPLETED PROXY FORM NOW AND POST IT BACK IN THE REPLY PAID ENVELOPE PROVIDED. It must be received by 11:00 am (ACST) on Tuesday 4 December 2018. BE CAREFUL TO SIGN IN THE MANNER SET OUT IN THE SIGNING INSTRUCTIONS ON THE BACK PAGE OF THE ENCLOSED PROXY. 2. WHEN YOU POST THE ENCLOSED PROXY FORM, PLEASE ALSO POST SEPARATELY THE ENCLOSED REPLY PAID CARD. THE PURPOSE OF THE CARD IS TO LET ME KNOW HOW MANY SUPPORTERS I HAVE. THIS CARD SHOULD BE POSTED SEPARATELY AND NOT INCLUDED IN THE ENVELOPE PROVIDED FOR THE PROXY FORM. If you have any questions, please contact me on the mobile phone number below. Yours sincerely Snowside Pty Limited 30 The form of proxy approved by the Court was sent with the letter; it had been completed with Mr Maurici's name as the proxy holder and the "against" box had been marked with an "X" (Snowside proxy form).

Would prejudice to the Snowside parties arising from the impact of the implementation of the scheme on the Oppression Proceedings be a reason to refuse to make final orders? 31 Following argument concerning that question on 26 November 2018, the hearing was adjourned to allow the parties time to negotiate the terms of a possible undertaking to be given by BLY to avoid possible prejudice to the Snowside parties on this basis. Ultimately, on 3 December 2018, the Court indicated that, in light of the form of undertaking that BLY was prepared to make, it was not satisfied that any prejudice to the Snowside parties arising from the impact of the implementation of the scheme on the Oppression Proceedings would be a reason to refuse to make final orders. 32 The form of undertaking given by BLY to the Court on 21 December 2018 is to the effect that, if: (1) The Court makes an order under s 411(4)(b) (with or without an order being made under s 411(6)) of the Corporations Act; (2) Following the implementation of the scheme the Oppression Proceedings are listed for hearing or trial and it becomes necessary to avoid a Snowside party not having standing under s 234 of the Corporations Act or the standing is challenged by a party to the proceedings (other than Snowside party); (3) Each Snowside party has consented to its registration as a member of BLY in respect of a non-voting share in BLY (having terms set out in schedule 1 to the undertaking) and agreed that it will not transfer that share other than in accordance with a deed poll in the form of the schedule to the undertaking; and (4) Each Snowside party has executed and delivered to BLY Canada a deed poll in that form, then BLY will issue one non-voting share in BLY to each of the Snowside Parties. BLY also undertakes to the Court that it will not raise any objection arising from the scheme to the Snowside parties' standing to maintain the Oppression Proceedings or seek to obtain judgment, and BLY will not make any submission in the Oppression Proceedings to that effect. BLY also undertakes that it will not seek to cancel or buy back those non-voting shares without the consent of the Snowside parties before the Oppression Proceedings are finalised. 33 The deed poll attached to the undertaking allows BLY Canada to call for the transfer to it of the non-voting shares for $0.01 at any time after the latter of the discontinuance, dismissal, entry of final orders or other final disposition of the Oppression Proceedings or any appeal from them. 34 Both the Snowside parties and BLY considered it useful for the Court to address in reasons its views on their arguments concerning the Snowside parties' concerns on this issue. 35 Part 2F.1 of the Corporations Act relevantly provides as follows: Part 2F.1 - Oppressive conduct of affairs 232 Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. 233 Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property; (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. Order that the company be wound up (2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply: (a) as if the order were made under section 461; and (b) with such changes as are necessary. Order altering constitution (3) If an order made under this section repeals or modifies a company's constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless: (a) the order states that the company does have the power to make such a change or repeal; or (b) the company first obtains the leave of the Court. 234 Who can apply for order An application for an order under section 233 in relation to a company may be made by: (a) a member of the company, even if the application relates to an act or omission that is against: (i) the member in a capacity other than as a member; or (ii) another member in their capacity as a member; or (b) a person who has been removed from the register of members because of a selective reduction; or (c) a person who has ceased to be a member of the company if the application relates to the circumstances in which they ceased to be a member; or (d) a person to whom a share in the company has been transmitted by will or by operation of law; or (e) a person whom ASIC thinks appropriate having regard to investigations it is conducting or has conducted into: (i) the company's affairs; or (ii) matters connected with the company's affairs. 36 It is uncontested that the Snowside parties had standing to commence the Oppression Proceedings on 7 June 2017 under s 234(a) of the Corporations Act as they were then shareholders of BLY.

Superior Lawns decisions 37 At the hearing on 26 November 2018, the Snowside parties submitted that to prosecute the Oppression Proceedings and obtain relief they must be members of BLY not only when they commenced the proceedings but also when the Oppression Proceedings are heard and judgment delivered. They relied on a series of decisions of Kenneth Martin J which I will refer to as the (Superior Lawns decisions): see Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) [2012] WASC 169 at [37]-[40], [53]-[60] and [63], Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) (2013) 94 ACSR 151; [2013] WASC 143 at [28]-[31] and Jebb v Superior Lawns Australia Pty Ltd (2017) 123 ACSR 388; [2017] WASC 335; at [151]-[152]. Without disrespect and for brevity I will refer to his Honour in these reasons as Justice Martin or Martin J. 38 The background to the Superior Lawns decisions is that Trafalgar West Investments Pty Ltd commenced oppression proceedings against Superior Lawns Australia Pty Ltd (and others) at a time when Trafalgar held shares in Superior Lawns as trustee of a trust. Mr Jebb was the sole director of Trafalgar and a 50% shareholder. A qualified lawyer, Mr Jebb sought to appear for Trafalgar but Martin J considered that he was conflicted. Mr Jebb then sought to address that issue by replacing Trafalgar as trustee of the trust and transferring the Superior Lawns shares from Trafalgar to him. He then sought to be substituted as plaintiff. Trafalgar ceased to be a member of Superior Lawns on 9 January 2012. 39 In [2012] WASC 169 at [32]-[35], Martin J summarised the defendant's submissions as follows: The opposition to Mr Jebb's applications 32 The defendants object to Mr Jebb's proposal that he replace Trafalgar as plaintiff, or even that he be joined as a co-plaintiff. They assert, by written submissions of 8 February 2012, that: 10. In accordance with Justice Murray's decision in Re Spargos Mining … it is a person's status as a member at the time of bringing the application that confers standing to bring proceedings. Mr Jebb does not have standing to maintain these actions as he was not a member of the First Defendant at the time the various actions were commenced. 11. Whilst Mr Jebb may have standing to apply under s 234(a) in respect of conduct that occurred before he became a member of the First Defendant (see Re Spargos at 7), this would need to be considered in the light of proceedings brought by Mr Jebb. This would raise issues (to be considered then) as to whether a subsequent member of a proprietary company can complain about the prior conduct of all of the shareholders. 33 In Re Spargos, Murray J assessed the then applicable statutory oppression provision, namely s 320(2)(a) of the Companies Code. A component of that former provision read: [T]hat affairs of a company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (in this section referred to as the 'oppressed member or members') or in a manner that is contrary to the interests of the members as a whole. (my emphasis in bold) 34 Connoting the relevant criterion of a present shareholding, Murray J drew attention to use of the word 'are', in the context of the court's powers to address statutory oppression. The context of those observations 22 years ago was an argument as to whether a member of Spargos Mining NL, Mr Jenkins, who was a member at the commencement of proceedings and when the matter came to trial, had standing. Mr Jenkins was found to have standing, notwithstanding that the allegedly oppressive conduct he complained of occurred before he had become a member of Spargos. Mr Jenkins had remained a member of the company to the time of trial, and that was enough. His application for statutory relief by reason of oppression was ultimately successful. 35 The defendants invoke Re Spargos to contend that Trafalgar's 9 January 2012 cessation as a member of Superior Lawns (upon the transfer of its shares to Mr Jebb) has terminally undermined Trafalgar's viable pursuit of the three actions. Trafalgar is now only a former member of Superior Lawns. The defendants make the further argument that the oppression action does not fall within any of the bases in s 234 upon which a former member may legitimately bring or continue an action for oppression. 36 The wording of the oppression provisions in Part 2F.1 of the Corporations Act have evolved from that of s 320(2)(a) of the Companies Code. The word 'are', which was very significant to Murray J's affirmative conclusion as to standing, is no longer relevantly used in s 234. 40 In [2012] WASC 169 at [37], Martin J noted that Trafalgar's ceasing to be a member "presents a problem for it in terms of it viably maintaining this action as from 9 January 2012", a "prejudicial outcome for Trafalgar". His Honour had warned Mr Jebb that this was a "possible consequence" when he had previously unsuccessfully sought to be substituted as plaintiff. The Snowside parties relied on [37]-[43] and the second sentence of [53] in relation to the issue of standing and noted Martin J's comments on the possible impact of Trafalgar ceasing to be a member on the exercise of the Court's discretion to make orders under s 233 at [54]-[60]. At [52]-[60], Martin J found as follows (underlining added): Trafalgar's position 52 Trafalgar held its rights of action against Superior Lawns. Mr Jebb, I have found, has a conflict of interest which prevents him from representing the interests of Trafalgar as its legal representative. 53 I am of the view that it would be inappropriate to unilaterally remove Trafalgar as plaintiff and substitute Mr Jebb as plaintiff in the three actions. Trafalgar may well have undermined its standing in the oppression action from the time it transferred its shares in Superior Lawns to Mr Jebb. 54 The relief a court may grant under s 233 of the Corporations Act is discretionary. So the ramifications of Trafalgar's cessation as a member of Superior Lawns may prove to be wider than just a loss of standing. 55 Discretion in the relief granted under s 232 and s 233 is an important consideration. It is one thing to afford redress where an existing member's interests have been and remain affected by oppressive conduct. It is another thing to grant redress to a former shareholder that has disposed of their shareholding. Redressing the position of a current shareholder that has acquired shares from another party, knowing that the transferor of those shares has claimed to have been oppressed and had issued proceedings, is a distinct, third scenario. 56 These three distinct scenarios each involve unique considerations as to the appropriate relief, even assuming oppression affecting a shareholder is established at a trial. 57 Discretionary considerations as to relief reinforce the problems Trafalgar now looks to face, given its position since 9 January 2012 as a former member of Superior Lawns. 58 I am of the view that the defendants' objections against Trafalgar's further pursuit of the oppression action must be accepted. Trafalgar is not a viable plaintiff at present. This difficulty has been brought about by Mr Jebb's tactical manoeuvres. They are a stark manifestation of the clear underlying conflict he faces, as between his own interests and Trafalgar's interests. 59 Mr Jebb's tactical manoeuvres to circumvent an inconvenient outcome as regards the legal representation of Trafalgar have led to these problems. It is possible (the point has not yet been argued) that Trafalgar's present difficulty could be alleviated by a re-transfer back to it of the shares it once held in Superior Lawns. 60 But until that occurs, I am of the view that Trafalgar has been disenfranchised. As a consequence there must be at least a temporary stay of the oppression proceedings. 41 In considering whether Mr Jebb should be substituted as the plaintiff, his Honour said the following at [63]-[65]; the Snowside parties relied in particular on [63]: 63 The proper plaintiff is the party who was the member at the time proceedings were commenced. If that party divests its shareholding in the period after commencement of proceedings and before trial, it cannot legitimately maintain the oppression action, unless it brings itself within the former member provisions set out in s 234 of the Corporations Act. 64 It may also be recalled that in the present case, in previous reasons, I observed that notwithstanding the breadth and magnitude of the oppression allegations raised by Trafalgar, the likely remedy, were Trafalgar to be successful, would be a buyout order of its shares at a value to be assessed. But what is the point of a buyout order in circumstances where a former member no longer holds its minority shareholding? There is nothing to be bought from that departed former member. An acquirer or holder of the shares, after the action was commenced by someone else, does not have standing to continue the proceedings. 65 As a result, a substitution of Mr Jebb as plaintiff in lieu of Trafalgar would be pointless and so, I refuse that application. 42 The Snowside parties rely on (2013) 94 ACSR 151 at [28]-[31], for the proposition that Trafalgar's standing was lost by the transfer of shares in Superior Lawns to Mr Jebb, but it was restored when the shares were transferred back to it. Those paragraphs of the reasons are as follows, and the Snowside parties rely on the underlined passages in particular: 28 As I mentioned, there is no prior case dealing directly with the futility argument, which arises in factual circumstances which are unique and (hopefully) unlikely to ever arise again. To the extent Spargos Mining is of some peripheral assistance, its emphasis was upon the criterion of membership in the corporation against which relief is sought, at the time the relevant application is brought by the member but also, implicitly as well, in the case of Mr Jenkins, his continuing membership in the corporation up to the point of trial and judgment. 29 Following a re-registration of Trafalgar's ownership of shares in Superior Lawns, in the aftermath of Trafalgar (No 3) the position now is that Trafalgar has recovered the shares it had held when it commenced the action. Does the hiatus period in terms of its cessation of membership, which occurred after the action was otherwise validly commenced, deliver any terminal blow to the action? 30 The fact Trafalgar lost legal ownership of those shares for a period of time, occasioned the temporary stay order I thought appropriate, as explained in Trafalgar (No 2). But I am not [sic] now of the view the temporary stay should now be lifted, in light of Trafalgar recovering the same shares, and again becoming a member of Superior Lawns, for the purpose of meeting s 234(a). 31 In my view, Trafalgar was only temporarily disenfranchised by that loss of membership, arising out of its voluntary transfer of its Superior Lawns shares to Mr Jebb. The underlying cause of that disenfranchisement has been redressed. In my assessment, there is no convincing basis shown to dismiss this action, thereby forcing Trafalgar to commence fresh proceedings in pursuit of relief against oppression. Such a course may occasion forensic disadvantages in terms of limitation of the action considerations and affect overall discretion the court exercises to grant relief, framed by reference to considerations appropriate to the time when the relief is sought. 43 In (2017) 123 ACSR 388, the defendants contended that, although Mr Jebb had transferred the shares in Superior Lawns back to Trafalgar, when Trafalgar transferred its shares to Mr Jebb, it lost "then and for all time", any right to continue the statutory oppression action which it had commenced in 2011, before the transfer to Mr Jebb, although they accepted that a fresh statutory oppression action against the same defendants would be available on the basis of the decision in Re Spargos Mining NL (1990) 3 WAR 166. At [150], Martin J noted that two core propositions emerged from his Honour's previous decisions concerning these parties. Only the first is presently relevant and it is discussed at [151]-[152]. The Snowside parties rely in particular on the underlined words as follows: 151 The first proposition is an assessment I rendered in a number of those decisions - to the effect that in order to viably prosecute a statutory oppression action under Pt 2F.1 of the Corporations Act to a trial, a plaintiff needs, as a matter of necessary standing, to fall within one or other of the specified categories under s 234 of the Corporations Act and then to remain so until completion of the action. The most straightforward of the s 234 categories for that standing is that of the plaintiff being a 'member' (ie, shareholder) at the commencement of a statutory oppression action. The requirement is uncontroversial and is now well established. 152 In a number of my decisions concerning these same parties, I discussed a pivotal decision of Murray J made in Re Spargos Mining NL (1990) 3 WAR 166, 171 172, and discussed how his Honour had distinguished Panfida Ltd v Hartogen Energy Ltd (1988) 51 SASR 404. More importantly, however, and underlying the rationale for a temporary stay that I issued in COR 59 of 2011 on 29 May 2012, was the allied requirement that the commencing plaintiff in a statutory oppression action should remain as the plaintiff up to any trial and, indeed, up to a point of that party seeking to move for judgment. 44 The Snowside parties claimed to have already spent in excess of $400,000 in pursuing the Oppression Proceedings and they say that that would be wasted. They say that even if they are wrong and they will continue to have standing in those proceedings, the Supreme Court may withhold or limit the relief the Snowside parties seek for discretionary reasons. They say that the Court should not approve the scheme unless it is satisfied that the Snowside parties would be no worse off if that order is made than they would otherwise be, relying on Re Stork ICM Australia Pty Ltd (2006) 25 ACLC 208; [2006] FCA 1849 at [111] per Lindgren J. 45 BLY submitted that the Superior Lawns decisions are not authority for the proposition for which the Snowside parties contend and that they would not be prejudiced if the scheme is implemented and the Snowside parties cease to be members. BLY says this is because s 234(a) unambiguously refers to the position at the time the application for orders under s 233 is made, that is, when the originating process is filed. Otherwise the involuntary disposition of a member's shares would work injustice, for instance where shares are compulsorily acquired as part of a takeover. 46 BLY submitted that in [2012] WASC 169 at [63], Martin J was not ruling that a plaintiff who ceases to be a member after proceedings have been commenced relying on s 234(a) necessarily lost its standing when he queried whether a matter may be "legitimately" maintained where shares are transferred after an action has been commenced. BLY says that that language does not suggest a jurisdictional bar. Similarly, in that case at [57], Martin J noted the discretionary issues that "Trafalgar now looks to face … as a former member", which also does not suggest a jurisdictional bar. 47 BLY notes that the Snowside parties would not be transferring their shares voluntarily and it says that is relevant having regard to (2013) 94 ACSR 151 at [14] which is as follows: 14 Bearing in mind then the nature of the underlying corporate oppression mischief addressed by s 233 of the Corporations Act, as well as the character of the relief span to be afforded by Pt 2F.1 to alleviate such a mischief, on a discretionary basis, I have difficulty accepting the proposition that a member of a corporation (shareholder) can merely, as a member, commence an action contending for relief against statutory oppression by the relevant corporation, but then voluntarily dispose of the shares and nevertheless validly press on with the action for personal relief against oppression. 48 BLY also says that Martin J's reasons in (2017) 123 ACSR 388 at [151]-[152] need to be understood in the context of those proceedings in which Mr Jebb sought to be substituted as a plaintiff: in contrast, the Snowside parties commenced the Oppression Proceedings and it would be they who conducted the proceedings as plaintiffs through to final judgment. 49 BLY says that even if the Snowside parties are right and they did lose standing as a result of implementation of the scheme, that does not go to jurisdiction. BLY relied on the High Court's decision in Emanuele v Australian Securities Commission (1997) 188 CLR 114; [1997] HCA 20, a decision that relates to s 459P of the Corporations Act which relevantly provided that the Australian Securities Commission could only seek winding up orders with the leave of the Court. BLY notes that Toohey J (with whom Dawson J substantially agreed) found at [35] as follows: Not only is s 459P(2) not a jurisdiction conferring provision, it does not create a cause of action or go to the relief that may be granted. It is s 459A that empowers the Court to order that an insolvent company be wound up in insolvency. That provision, read with s 42(3) of the Corporations (South Australia) Act is, relevantly, the source of the Federal Court's jurisdiction. I understand this argument to be that, by analogy, s 233 is the provision which confers jurisdiction on a Court to make orders where a ground in s 232 has been made out on an application commenced by a person who has standing under s 234(a) and maintained by that person to judgment, whether or not the person continues to be a member. 50 BLY submitted that because the Supreme Court of New South Wales is seised of the Oppression Proceedings (as the Snowside parties commenced them at a time when they were members of BLY), that Court has jurisdiction to deal with the Snowside parties' application and it will do so unless objection is taken to those parties' standing to maintain the proceedings. BLY was willing to proffer an undertaking that, if the scheme is implemented, it would not advance an argument in the Oppression Proceedings that the Snowside parties are unable to maintain those proceedings on the basis that they are no longer members of BLY. BLY says that in the absence of a contest as to its jurisdiction, it would be improbable that the Supreme Court would enquire into it, but if it did, it would find that it had jurisdiction. 51 BLY says that the Oppression Proceedings have weak prospects of success for reasons set out at [30] to [44] of BLY's submissions filed on 22 November 2018. 52 BLY submitted that as the claim made in the Oppression Proceedings - that the value of the Snowside parties' shareholding in a listed public company has been unfairly diluted - is essentially financial, compensatory orders would be an adequate remedy since BLY is plainly not a quasi-partnership and BLY will continue in existence if the scheme is implemented. 53 The Snowside parties submitted that this would not be an appropriate case for the Court to make final orders approving the scheme because: (1) It would be inappropriate for this Court to form a view about the prospects of success of the Oppression Proceedings. In November 2018, an amended statement of claim was filed (and is in evidence in these proceedings) and the Court does not have evidence before it sufficient to form a view; (2) This is not a case where the scheme is proposed as an alternate to insolvency, it is merely proposed pursuant to a contractual obligation; (3) There is no clear and quantified benefit to BLY; the claimed benefits are merely speculative and the Snowside parties' rights should not be prejudiced without it being clear that a benefit would be derived by BLY; (4) No satisfactory endeavour was made by BLY to ameliorate the impact of the implementation of the scheme on the Oppression Proceedings. While BLY may be prepared to proffer an undertaking not to raise the standing issue, there are other parties who would not be bound by the undertaking; (5) The implementation of the scheme would undermine the policy objectives of Part 2F.1 of the Corporations Act; it would be a curious outcome if a claim of oppression made by a minority shareholder could be defeated by virtue of a scheme approved by the majority; and (6) A court whose jurisdiction is regularly invoked should not summarily decide issues except in the clearest of cases, relying on Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41.

Consideration 54 I accept BLY's submission that the Superior Lawns decisions need to be considered in the context in which they occurred: Trafalgar was a shareholder in Superior Lawns at the time the proceedings were commenced; Mr Jebb wished to be substituted as plaintiff; Although it might be questioned whether Trafalgar itself voluntarily transferred the shares in Superior Lawns to Mr Jebb as the transfer followed a change of trustees, it is plain that Martin J viewed the transfer as voluntary and as part of a scheme by Trafalgar's guiding mind (Mr Jebb) to allow Mr Jebb to appear in the proceedings. Justice Martin considered that the likely most appropriate remedy if Trafalgar were to be successful was a buyout of its Superior Lawns shares, a remedy which would be meaningless if Trafalgar was not the registered holder of the shares. 55 In (2017) 123 ACSR 388 at [151]-[152], Martin J summarised the "assessment" he rendered in a number of the Superior Lawns decisions. His Honour's finding at [151] that "in order to viably prosecute a statutory oppression action under Pt 2F.1 of the Corporations Act to a trial, a plaintiff needs, as a matter of necessary standing, to fall within one or other of the specified categories under s 234 of the Corporations Act and then to remain so until completion of the action" (emphasis added) reflects an ambiguity which I find in much of the language used in the Superior Lawns decisions. It is not clear whether by using the term "viable" (or similar words such as "legitimate" used elsewhere in the Superior Lawns decisions) his Honour is indicating that where a shareholder commences proceedings and then voluntarily disposes of the shares there is a resulting loss of standing (which is what is suggested by the words "as a matter of necessary standing") to bring the action or that it is unlikely that a court would make the order sought under s 233 as a matter of discretion. 56 His Honour was, with respect, plainly right that it is uncontroversial and well established that a plaintiff relying on s 234(a) for standing must be a member (that is, a shareholder) at the commencement of the action for orders under s 233. In my view, it was unnecessary for his Honour to make a finding in the terms contended for by the Snowside parties, that the commencing plaintiff must also retain his or her shares throughout the proceeding to judgment. If (2017) 123 ACSR 388 at [151] is to be interpreted as going to the issue of standing, with respect, I do not agree with such a finding and it should not be followed. I accept BLY's submission that s 234(a) unambiguously refers to the position at the time the application for orders under s 233 is made, that is, when the originating process is filed. While it may be that disposal of shares after the commencement of an action would render inappropriate the grant of orders under s 233, that is not a matter of standing or lack of jurisdiction; it is a discretionary matter in which all of the circumstances must be taken into account, such as whether the transfer was voluntary or not and the exact nature of the orders sought. 57 It was only necessary for his Honour to make the finding that, where the plaintiff relies on s 234(a) for standing, "the commencing plaintiff in a statutory oppression action should remain as the plaintiff up to any trial and, indeed, up to a point of that party seeking to move for judgment" (emphasis added), as his Honour did in (2017) 123 ACSR 388 at [152]. In my view, that is an accurate statement of the law whether or not the plaintiff disposes of all of his or her shares after the action commenced. On that basis the Snowside parties would not lose standing to prosecute the Oppression Proceedings to judgment if the scheme is implemented. 58 In my respectful view, Martin J's reasoning in (2017) 123 ACSR 388 at [152] is consistent with the High Court's reasoning in Emanuele v Australian Securities Commission, albeit that that decision related to s 459P of the Corporations Act, not s 234. The scheme of s 233 and 234 is squarely comparable to s 459A (under which winding up orders may be made) and s 459P (which states who may apply for those orders). It is well established that whether a person has standing to seek a winding-up order as a creditor is determined at the time the application is filed and that standing is not lost if the company subsequently pays the debt that was the subject of the statutory demand: see Deputy Commissioner of Taxation v Complete Liquid Transport Pty Ltd [2010] FCA 1067 at [29] and the cases there cited. By parity of reasoning, a person who has standing under s 234(a) at the time they file an application for orders under s 233 does not lose the standing if they cease to be a shareholder. 59 If a person voluntarily disposes of their shares in a company after the originating process for orders under s 233 has been filed, it may well affect the exercise of the Court's discretion as to whether and what relief they might obtain but it does not affect its jurisdiction to do so. Like Martin J, I find it difficult to see why a Court would order a person's shares to be bought out if they no longer hold them. However, where shares are disposed of involuntarily after an oppression action has commenced, it is difficult to see why a Court would refuse to make an appropriate compensation order where oppressive conduct has been made out. 60 I accept BLY's submission that it is highly likely that compensatory orders, rather than the issue of shares in BLY, is the most likely appropriate remedy in the Oppression Proceedings, if the Snowside parties claims can be made out. Given that BLY was a listed company at the time the proceedings commenced, that was always the most likely remedy (if any). 61 Notwithstanding the view I have formed, the impact of the implementation of the scheme on the Snowside parties' standing and the Court's jurisdiction in the Oppression Proceedings can only be bindingly determined by the judge of the Supreme Court of New South Wales presiding in those proceedings. On the matters that have been drawn to my attention to date, I am not persuaded that the Snowside parties' claims have strong prospects of success given BLY's financial position at 2 April 2017 and Centrebridge's position at that time as a secured creditor, but argument on the merit of the Oppression Proceedings has (properly) been limited so it would be inappropriate for me to express a concluded view. It is, however, appropriate to mitigate the risk of the Snowside parties' loss of standing where that is possible. I was not satisfied that BLY's undertaking not to raise the standing point in the Oppression Proceedings was sufficient for that purpose; BLY was not the only defendant in those proceedings and a Court's first duty is to be satisfied of its jurisdiction. BLY has offered an undertaking to the Court which is designed to ensure that, if necessary, the Snowside parties can resume membership of BLY so as to bring them within the decision made by Martin J in (2013) 94 ACSR 151 at [28]-[31]. In all of the circumstances, I am satisfied that the Snowside parties would not be unfairly prejudiced if final orders were made. 62 For completeness, I note that if the scheme is implemented, shareholders who have not yet commenced oppression proceedings against BLY would not have standing to make an application for orders against it under s 234(a). I do not consider that that is a fairness issue which would prevent final orders being made.

Court approved communications by BLY to its shareholders concerning the Snowside letter and the court's decision related to the Oppression Proceedings 63 During the hearing on 26 November 2018, BLY drew the Court's attention to the Snowside letter and indicated that it would seek the Court's approval to a communication to its shareholders concerning the letter. 64 On 28 November 2018, after the Snowside parties had had an opportunity to comment on it, orders were made in Chambers authorising BLY to issue a letter to shareholders. The letter as sent was as follows: 28 November 2018 VOTE FOR REDOMICILIATION LETTER FROM BOART LONGYEAR SHAREHOLDER Dear Boart Longyear Shareholder, Shareholder Letter from Snowside Pty Limited A Boart Longyear shareholder, Snowside Pty Limited (Snowside), has recently written to shareholders and provided them with a proxy form asking them to give their proxy to Anthony Maurici to vote against the proposal to re-domicile Boart Longyear to Canada (the Re-domiciliation). As set out in Snowside's letter, Snowside failed in its court actions to stop the restructure agreed to with the Company's major creditors, which Boart Longyear shareholders overwhelmingly supported and which was completed on 25 September 2017. As a result of the restructure the Company's debt was reduced, its liquidity improved and its debt maturities were extended. Snowside has filed in the Supreme Court of New South Wales an application alleging oppression based on the restructure and is opposing the Re-domiciliation in part on the basis of an allegation that the Re-domiciliation could have a negative impact on its oppression proceedings against the Company. The Snowside letter states that the Snowside Parties' oppression proceedings will likely be defeated by the redomiciliation. The Federal Court of Australia heard arguments on this issue on 26 November 2018, and the matter is listed again on 29 November 2018. Your Board does not agree with the Snowside Parties' proposition. The Company submitted to the Court that this is not correct and is not a reason for the Court not to approve the scheme of arrangement effecting the Re-domiciliation (Scheme). The Court has not yet determined this issue. After careful consideration of the advantages, disadvantages and risks, your Board concluded that the advantages of the Re-domiciliation significantly outweighed the disadvantages. Your Board encourages you to read the Explanatory Memorandum (EM) provided to Boart Longyear shareholders which contains disclosure of both the advantages and disadvantages. Your Board points you to the detailed comparison of Australian and Canadian company rules (set out in Section 8.4 of the EM (on pages 47-48) and the taxation report summarising the Australian tax implications (set out in Section 9 of the EM on pages 53-56). What you should do Your Board recommends that you read the EM in full and encourages you to vote at the scheme meeting to be held on 6 December 2018 (Scheme Meeting) (in person or by proxy). Directors' Recommendation - VOTE FOR The Boart Longyear Board unanimously recommends that you approve the Re-domiciliation and VOTE IN FAVOUR of the Scheme at the Scheme Meeting. Independent Expert Opinion The Boart Longyear Board commissioned Grant Thornton to prepare the Independent Expert's Report. The Independent Expert considered the advantages and disadvantages of the Redomiciliation and concluded in its opinion that the Re-domiciliation is in the best interests of Boart Longyear shareholders. The Report is contained in Appendix A of the Scheme Booklet. Overview of the Re-domiciliation You are being asked to consider and vote on the proposal to change Boart Longyear's domicile from Australia to Canada. Under the Re-domiciliation, eligible Boart Longyear shareholders will acquire the same proportionate interests they presently hold in Boart Longyear in a new holding company incorporated in British Columbia, Canada, Boart Longyear Incorporated (Boart Longyear 'Canada'). Those interests will be held in the form of Chess Depository Instruments (representing a beneficial interest in a share in Boart Longyear 'Canada') (CDIs). The Re-domiciliation will not result in any changes to Boart Longyear's management, operations or strategy and Boart Longyear will continue to be listed on ASX and Boart Longyear shareholders will be able to trade their CDIs on ASX. The Re-domiciliation is consistent with the Company's broader strategy to minimise overhead costs and to streamline and make its group structure more efficient. It is expected that the Re-domiciliation will assist in achieving these objectives. To effect the Re-domiciliation, it must be approved by: (a) a majority in number of Boart Longyear shareholders (more than 50%) of those Boart Longyear shareholders present and voting at the Scheme Meeting (in person, by proxy, attorney or corporate representative); (b) at least 75% of the total number of votes cast on the Scheme resolution at the Scheme Meeting by Boart Longyear shareholders. The Scheme must then also be approved by the Court. Your vote is important Even if you have already lodged a proxy vote, you are able to change your proxy vote at any time up until the proxy voting deadline by lodging a fresh proxy vote online or by completing and returning your proxy form. If voting by proxy then your valid vote must be received no later than 11.00am (Adelaide time) on 4 December 2018. For your convenience, you can lodge a proxy vote online here. Further Information If you require assistance with voting or have any questions about the Re-domiciliation, please call the Shareholder Information Line on 1800 781 633 (within Australia) or +61 1800 781 633 (from outside Australia). The Board thanks you for your support and looks forward to your continuing involvement with the Boart Group. Marcus Randolph Chairman Boart Longyear Limited 65 At the hearing on 3 December 2018, the Court authorised a further notification to BLY shareholders which would be released to the ASX and published on its website, recognising that the time for return or change of proxies was 11 am on the following day. That disclosure was as follows: UPDATE IN RELATION TO RE-DOMICILIATION As announced by Boart Longyear Limited (ASX: BLY) (the Company or Boart Longyear) on 28 November 2018, a Boart Longyear shareholder, Snowside Pty Limited (Snowside), had written to shareholders advising of its oppression proceedings against the Company in relation to the restructure agreed to with the major creditors which Boart Longyear shareholders overwhelmingly supported and which was completed on 25 September 2017. Snowside asserted in its letter, amongst other reasons it suggested for opposing the scheme, that its oppression proceedings will likely be defeated by the proposed re-domiciliation of the Company to Canada (the Re-domiciliation). As notified to shareholders, the Company did not agree with Snowside's assertions and submitted to the Federal Court of Australia (Court) that this was not correct. The Company also submitted this was not a reason for the Court not to approve the Re-domiciliation. The Court has heard argument on this issue and has today indicated, on the basis of the Company agreeing to give undertakings acceptable to the Court, that it considers Snowside's oppression proceedings is not a reason for the Court not to approve the scheme of arrangement giving effect to the Re-domiciliation. At the second court hearing on 19 December 2018, the Court will consider the outcome of the scheme meeting and whether to approve the scheme of arrangement. Your Board strongly encourages any shareholder who has already lodged a proxy vote on the basis of what was stated about the oppression proceedings in the Snowside letter to carefully consider the statements in light of the Court's indication. If you have already lodged a proxy vote, you may change your proxy vote at any time up until the proxy voting deadline by lodging a fresh proxy vote online or by completing and returning your proxy forms. If voting by proxy then your valid vote must be received no later than 11.00am (Adelaide time) on 4 December 2018. As previously stated, after careful consideration of the advantages, disadvantages and risks, your Board concluded the advantages of the Re-Domiciliation significantly outweigh the disadvantages. Your Board encourages you to read the Explanatory Memorandum, which sets out the advantages and disadvantages of the Re-domiciliation. Your Board unanimously recommends that you approve the Re-domiciliation and VOTE IN FAVOUR of it. Shareholders can lodge a proxy vote online here. You may also attend the Scheme meeting in person to vote. About Boart Longyear Established in 1890, Boart Longyear is the world's leading provider of drilling services, drilling equipment and performance tooling for mining and drilling companies. It also has a substantial presence in aftermarket parts and service, energy, mine de-watering, oil sands exploration, production drilling, and down-hole instrumentation. The Global Drilling Services division operates for a diverse mining customer base spanning a wide range of commodities, including copper, gold, nickel, zinc, uranium, and other metals and minerals. The Global Products division designs, manufactures and sells drilling equipment, performance tooling, down-hole instrumentation and parts and services. Boart Longyear is headquartered in Salt Lake City, Utah, USA, and listed on the Australian Securities Exchange in Sydney, Australia (ASX:BLY). More information about Boart Longyear can be found at www.boartlongyear.com. To get Boart Longyear news direct, follow us on Twitter, LinkedIn and Facebook.

Scheme meeting and Proxies 66 Robert Mark Closner, BLY's vice-president, company secretary and general counsel gave evidence that the scheme meeting was held on 6 December 2018 at the place designated in the Court's orders. It was attended by Marcus Randolph (who was Chairman of the meeting), Jeffrey Olsen (President and Chief Executive Officer of BLY), Robert Smith (a director), Mr Closner and four voting shareholders, six non-voting shareholders, two nominated persons and seven visitors. Mr Maurici was in attendance. 67 Lucy Chiu affirmed an affidavit on 18 December 2018. Ms Chiu is a client relationship manager for Link Market Services Limited. Link maintains BLY's share register. It was engaged to process proxy forms. She gave evidence as follows. 68 At the time of the scheme meeting, there was a total of 26,296,232,031 BLY shares on issue (up from the 26,289,795,231 at the time the scheme booklet was despatched). They were held by 4,783 members. 1,359 members (or 28.4% of members) voted in relation to 23,702,842,566 (or 90.1%) of the issued shares. As noted previously, the resolution to approve the scheme achieved the following majorities: For Against Number of votes 23,136,814,652 565,656,317 % of votes 97.61% 2.39% % of voting shareholders 31.12% 68.88%

69 The cumulative tally of valid proxy forms received was as set out below. The numbers in brackets are the number of cumulative tally of valid Maurici proxy forms. Date For Against Undirected proxies 6 November 2018 37(0) 7(0) 8(0) 7 November 2018 65 (0) 11 (0) 10 (0) 8 November 2018 75 (0) 11 (0) 11 (0) 9 November 2018 81 (0) 12 (0) 12 (0) 10 November 2018 86 (0) 12 (0) 12 (0) 11 November 2018 88 (0) 12 (0) 12 (0) 12 November 2018 98 (0) 13 (0) 13 (0) 13 November 2018 104 (0) 16 (0) 16 (0) 14 November 2018 110 (0) 16 (0) 16 (0) 15 November 2018 118 (0) 20 (0) 17 (0) 16 November 2018 138 (0) 25 (0) 19 (0) 17 November 2018 143 (0) 26 (0) 19 (0) 18 November 2018 146 (0) 28 (0) 19 (0) 19 November 2018 157 (0) 33 (0) 20 (0) 20 November 2018 157 (0) 35 (0) 21 (0) 21 November 2018 173 (0) 41 (0) 22 (0) 22 November 2018 180 (0) 51 (0) 24 (0) 23 November 2018 188 (0) 52 (0) 24 (0) 24 November 2018 188 (0) 54 (0) 24 (0) 25 November 2018 190 (0) 57 (0) 24 (0) 26 November 2018 192 (1) 249 (175) 27 (1) 27 November 2018 192 (1) 327 (251) 27 (1) 28 November 2018 234 (1) 436 (345) 36 (1) 29 November 2018 284 (2) 670 (566) 40 (1) 30 November 2018 312 (2) 819 (698) 47 (1) 1 December 2018 321 (2) 821 (698) 47 (1) 2 December 2018 328 (2) 828 (703) 47 (1) 3 December 2018 340 (2) 838 (704) 50 (1) 4 December 2018 361 (2) 930 (788) 53 (1)

70 Ms Chiu says that on 5 December 2018, Link generated a report which indicated that: (1) Of the shareholders who appointed the Chairman as their proxy, 365 directed their proxies to vote "for" and 118 directed their proxies to vote "against" the scheme resolution; 48 did not direct their proxies; and (2) Of the shareholders who completed the Maurici proxy form, two directed that their proxy to vote "for" and 788 directed their proxy to vote "against" the scheme resolution. 71 Further, 25 invalid proxy forms were received, representing a voting entitlement of 4,421,442 BLY shares held by 25 shareholders. Of these, 23 invalid proxy forms contained "against" voting instructions, one invalid proxy form contained a "for" instruction and one form contained no instructions. There were 39 "late" proxy forms, representing a voting entitlement of 30,793,109, all of which were against. 72 Between the date of despatch of the scheme booklet and the proxy deadline (11 am on 4 December 2018, ACST) eight shareholders changed their votes from "for" to "against" and eight changed their votes from "against" to "for".

Case management hearing 73 On Thursday, 13 December 2018, BLY's lawyers advised the Court that it would seek orders dispensing with the requirement to meet the headcount test and for approval of the scheme at the second court hearing. 74 At the request of the Snowside parties, a case management hearing was held in the afternoon of Monday, 17 December 2018. At that hearing, senior counsel for BLY advised the Court that it would be relying on the impact of statements in the Snowside letter which it contends are misleading, as evidenced by the flow of proxies following the issue of the Snowside letter, as a basis for seeking the order dispensing with the headcount test. 75 The Snowside parties sought to have vacated the second court hearing due to be held on 19 December 2018. They submitted that there was no urgency attached to the matter and: (1) They have not yet received BLY's final submissions (albeit that they had seen a draft) supporting its application for dispensation from the headcount test and accordingly they have not yet seen the final formulation of how they say that the Snowside letter influenced the vote nor what outcome of the vote there would have been absent that letter. They have not seen the evidence that BLY would rely on to support those contentions. (2) It would be appropriate for the Snowside parties to have an opportunity to formulate submissions in relation to the amendment made to s 411(4)(a)(ii)(A) which conferred discretion on the Court to dispense with the headcount test because there is a dearth of authority about it since it was made in 2007. (3) The Snowside parties should have an adequate opportunity to examine evidence to be provided by Ms Chiu. At the time of the case management hearing, they only had an outline provided to them by email at 7.30 pm on 14 December 2018. (4) They sought leave to issue to BLY a notice to produce documents including a list of the identities of shareholders voting in person or by proxy for, and those voting against, the resolution to approve the scheme or the proxy forms, a record of when the proxy forms were received, copies of the proxy forms which were determined to be invalid, any document recording the substance of what was said at the meeting and any document which predated 26 November 2018 and which refers to the Snowside letter. (5) The Snowside parties understood that BLY will, in seeking to counter statements in the Snowside letter that the re-domiciliation provided no meaningful benefit to small shareholders, seek to rely on the stated advantages of the re-domiciliation and the positive recommendations of the directors and independent expert. Senior counsel for the Snowside parties wished to have the opportunity to cross-examine the independent expert concerning whether there was any foundation in fact for the conclusions that it had reached. 76 Senior counsel for BLY confirmed that BLY would rely on the timing of the flow of proxies and the fact that they were directed in favour of Mr Maurici in support of its contention that the Snowside letter had an impact on the outcome of the vote. It would not be calling evidence from individual shareholders so that the identities of those who voted for or against approving the scheme could not matter. Senior counsel submitted that there should be no need to obtain the material sought by the Snowside parties in their proposed notice to produce because it is difficult to see how there would be any significant factual controversy in light of evidence given by Ms Chiu, an employee of Link, and there is no reason to think that her evidence would not be truthful. He submitted that there is prejudice from delaying the second court hearing because of uncertainty created in the market concerning a matter which is of importance to BLY. Obviously, the shorter the period, the less prejudice. Further, having regard to the fact that, in accordance with the Court's orders, BLY has placed advertisements of the time and place of the second court hearing it will be necessary for the hearing to be convened on 19 December 2018 in any event, even if it is then adjourned for a brief period. Senior counsel submitted that the matters which BLY says are misleading in the Snowside letter are of a narrow compass factually. There was no need to cross examine the independent expert; his opinion is as he stated it. BLY would assert that the opinion stated in the Snowside letter that re-domiciliation had no meaningful benefit for small shareholders was plainly wrong based on the independent expert's opinion. The statement of opinion in the Snowside letter was essentially representing to shareholders that Snowside has given some thought and analysis to this scheme and has properly considered that there are no advantages to the scheme. 77 ASIC appeared by counsel as amicus curiae. By a letter dated 13 December 2018, ASIC advised BLY's directors as follows: We understand that, at the scheme meeting held on 6 December 2018, the requirement in s 411(4)(a)(ii)(A) has not been met as: • only 31.12% of members present and voting (either in person or by proxy) voted in favour of the resolution; and • 97.61% of the votes cast on the resolution were cast in favour of the resolution. ASIC notes that the Explanatory Memorandum (EM) to the Corporations Amendment (Insolvency) Bill 2007 (CAIB) - which introduced the court's discretion to waive the headcount requirement in s 411(4)(a)(ii)(A) - stated that: "It was intended that the Court would only exercise the discretion to disregard the majority vote … in circumstances where there is evidence that the result of the vote has been unfairly influenced by activities such as share splitting, however the court's discretion has not been limited to allow for unforeseen extraordinary circumstances." ASIC is of the view that: • the headcount test is designed to protect the interests of minority shareholders; • the legislative intention behind the introduction of the headcount test is clear; and • a large 'no' vote by minority shareholders would not, without other extenuating circumstances, give rise to "extraordinary circumstances". Accordingly, we wish to put BLY on notice that, if BLY proceeds to the second court hearing and, in the absence of evidence of share splitting or other extenuating circumstances, seeks a court approval of the scheme notwithstanding the failure to obtain the required majority under s 411(4)(a)(ii)(A), ASIC is likely to refrain from providing a no objection letter to the Court under section 411(17)(b) of the Act, and may formally object at the Court hearing. 78 Counsel for ASIC advised the Court that ASIC had received from BLY a draft outline of the evidence on which it would rely and draft submissions. Counsel indicated that ASIC takes a different view of the discretion conferred on the Court under s 411(4)(a)(ii)(A) from that propounded by BLY. ASIC would have less to say about factual matters but would wish to be heard concerning the appropriate interpretation of s 411(4)(a)(ii)(A). 79 ASIC supported the proposition that, other than the evidence of matters usually dealt with at a second court hearing, there was little need for additional evidence beyond the scope of that to be provided by Ms Chiu. 80 The Court accepted that there was little need for additional evidence beyond the scope of that to be provided by Ms Chiu in relation to proxy forms. The issue of when BLY became aware of the Snowside letter could be dealt with by evidence presented on affidavit. Evidence of what occurred at the scheme meeting would normally be provided at the second court hearing. Accordingly, leave to issue the notice to produce was refused. The Court determined that: (1) It would not vacate the second court hearing on 19 December 2018 as it had been advertised to shareholders; (2) It was in the interest of BLY and its members that the adjourned second court hearing should proceed as soon after that as possible. Accordingly, the second court hearing would be adjourned to noon on 21 December 2018 at which time the Court would hear evidence and argument in relation to whether it should make the orders under ss 411(4)(a)(ii)(A) and 411(4)(b) for which BLY had applied; (3) By the afternoon of 18 December 2018, BLY should file evidence and submissions of the usual nature in relation to the matters normally addressed at the second court hearing, and in relation to the question of whether compliance with the headcount test should be dispensed with; and (4) ASIC and the Snowside parties must file and serve their submissions and any evidence on which they wished to rely by the afternoon of 19 December 2018 and BLY be required to file and serve any reply evidence and submissions by the afternoon of 20 December 2018.

Second court hearing - 19 December 2018 81 At the hearing on 19 December 2018, the Snowside parties requested that Andrea de Cian (a signatory to the independent expert's report) be made available for brief cross examination on 21 December 2018 on the issue of the advantages that the independent expert said that BLY would enjoy as a result of changing domicile to Canada. The Snowside parties indicated that they would rely on an affidavit of Mr Maurici to be filed later that day. 82 Other than the Snowside parties, no BLY shareholder gave notice of intention to appear at the second court hearing and no other shareholder did appear, on either of 19 or 21 December 2018. 83 On 19 December 2018, senior counsel for BLY read affidavits establishing to the Court's satisfaction that: (1) The Court's orders made on 26 October 2018 had been complied with; (2) A copy of those orders and the scheme booklet in the form of exhibit A had been provided to ASIC on that day; and (3) No notice had been given by any shareholder (other than the Snowside parties) of intention to appear at the second court hearing. 84 Included in BLY's evidence was: (1) Ms Chiu's affidavit affirmed on 18 December 2018 in relation to printing and despatch of the scheme booklet, the receipt and processing of proxies and voting at this scheme meeting. (2) Robert Closner's affidavit sworn on 17 December 2018. He gave evidence about the conduct of the scheme meeting and the fact that he first became aware of the Snowside letter from the "Hot Copper" internet chat site shortly after 14 November 2018. He says that, he was not then aware of the Snowside letter's precise content so that he and others at BLY made attempts to obtain a copy of it. BLY first obtained a copy on 20 November 2018. (3) An affidavit by Michael Urbani, a partner in Stikeman Elliott LLP. Mr Urbani deposes to the fact that he is a solicitor qualified to practice in British Columbia, Canada. He gives evidence as to the enforceability under that law of the Scheme Implementation Deed executed by BLY Canada and BLY dated 23 August 2018 and the Scheme Deed Poll and the Assumption Deed Poll which were each executed by BLY Canada on 19 October 2018. (4) An affidavit affirmed by Srishi Natesh on 18 December 2018 in relation to an attempt to identify the number of votes cast on behalf of Centrebridge, Ascribe and Ares and their associates at the scheme meeting. 85 Tendered at the hearing was a copy of a Scheme Implementation Certification Deed dated 19 December 2018 between BLY Canada and BLY which indicated that most of the conditions to which the scheme was subject had been satisfied or waived. The deed extended the date for the satisfaction of the condition relating to obtaining shareholder approval to the scheme until such time as the Court has determined whether to dispense with the headcount test. 86 Subject to hearing argument on whether the Court should dispense with the headcount test, receipt of ASIC's "usual letter" indicating no objections to the scheme under s 411(17)(b), and receipt of BLY's undertaking in relation to the Oppression Proceedings, all important matters, this evidence supported the making of orders under s 411(4)(b) approving the scheme.

Evidence and submissions concerning whether the Snowside letter was misleading and unfairly influenced the vote at the scheme meeting 87 These matters were addressed at the adjourned second court hearing held on 21 December 2018. At the commencement of the hearing, counsel for ASIC tendered a notice of intervention in the proceedings. As ASIC's submissions lodged on 19 December 2018 advocated for a particular position, thus exceeding the role of an amicus curiae, it was thought appropriate that it formally intervene in the proceedings.

BLY's submissions 88 BLY submitted that the vote at the scheme meeting was unfairly influenced by the misleading nature of the Snowside letter (which is set out in full at [30] above) in the following respects:

Statements in Snowside letter concerning BLY share prices 89 BLY says that the statement that: Immediately before announcement of the Restructure your shares were each worth about $0.067. They are now worth $0.004 each or less than one sixteenth of their pre-announcement value. implies that the creditors' schemes approved by the Supreme Court of New South Wales in August 2017 caused that reduction in the value of members' shares. That is a misleading representation because it is contrary to the findings of Black J in Boart Longyear (No 2) at [286] that the equity in BLY before the implementation of the creditors' schemes was nil.

Statement in Snowside letter concerning no material benefits to small shareholders 90 BLY says that the statement that: We think there is no material benefit to you as a small shareholder in this change, only disadvantages as stated below. represents that Snowside has considered the scheme in some detail and concluded that there are no benefits to shareholders not aligned with the major creditors. 91 BLY says that that must be wrong because any reasonable person reviewing the scheme booklet, including the independent expert's report, would not form that view. All shareholders benefit from the potential for improved access to capital upon the change of domicile to Canada as it increases the attractiveness of BLY to a more diverse financial market, improves liquidity as a result of more efficient reallocation of some of the existing debt will permit BLY to service the debt in a more efficient manner, because BLY will have access to a more competitive and cost-effective insurance market in North America, its costs of insurance will decrease and a more streamlined company structure upon the change of domicile will reduce complexity and illuminate unneeded entities. BLY concedes that it is conceivable that a member may decide that the benefits of the scheme are outweighed by the detriments, but that is not what Snowside said; Snowside had no reasonable basis for the representation that the scheme would have no benefits to members.

Statement concerning likely loss of standing in the Oppression Proceedings and potential class action 92 This refers to the following passages of the Snowside letter (emphasis in the Snowside letter): Snowside has commenced legal proceedings against the Company and the Board claiming that the actions of the Company and the Board in events leading up to the Restructure treated the minority shareholders unfairly and oppressively, including in failing to adequately consider ways to preserve more value for the minority shareholders, preferring instead the interests of the Controlling Stakeholders. It may be that the same arguments could be used to support a class action on behalf of the wider class of minority shareholders. Our claim and any potential class action claims based on oppressive conduct will likely be defeated by the redomiciliation because existing shareholders of the Company will cease to be Company shareholders. 93 BLY says that statement that the scheme is "likely" to cause Snowside to lose standing to maintain the Oppression Proceedings was false and therefore misleading as the prospect of the Snowside parties losing standing was remote. 94 BLY says that that statement is wrong in law for the reasons advanced by BLY at the hearing on 26 November 2018. Properly advised, that was readily apparent at the time the Snowside letter was sent, especially in light of the offer made on 25 October 2018 that BLY would undertake not to raise any standing point in the Oppression Proceedings. At best, there was a remote possibility of standing being lost. Moreover, there was no reference in the Snowside letter to the fact that the issue was to be considered by the Court (on 26 November 2018) as Snowside knew full-well. 95 Further, the reference to the likely defeat of any class action based on the 2017 reconstruction was misleading because it conveys the impression that the alternative to the scheme was a viable class action. The prospects of there being any shareholder class action are speculative at best.

Statement regarding loss of franking credits 96 This refers to the following passage of the Snowside letter: The disadvantages to you are: … • If you are an Australian resident taxpayer any franking credits from Australian income of the Company cannot be utilised by the new Canadian holding company or passed through to its shareholders. Additional tax complications arise such as Canadian withholding tax and potentially limited tax offsets (with no credit for franking credits or Australian withholding tax) on dividend payments to Australian shareholders. 97 BLY says that, while this statement may be technically correct, it implies that there is a material disadvantage to members from the loss of the potential to receive franking credits which will be experienced in the near future. That is misleading as BLY is unlikely to be in a position to pay dividends in the medium term, as noted by the independent expert. BLY points out that as at 30 June 2018, BLY had US$688 million in external debt, negative net assets of US$279.3 million and a statutory loss from continuing operations of US$16.3 million.

Influence on the vote 98 BLY submitted that while each of the representations and implications outlined above are misleading, taken together they had the ability to unfairly influence the vote and the Snowside letter did in fact influence the vote as demonstrated by the proxy flows as follows: (1) As at 14 November 2018, the date of the Snowside letter, 87.3% of members who had returned directed proxies had directed votes in favour of the scheme; (2) From 15 November to 28 November 2018, when BLY dispatched a Court approved communication in response to the Snowside letter, only 21.8% of members who returned directed proxies directed votes in favour of the scheme; and (3) Of the total number of members who had directed votes against the scheme, 86.98% did so using the proxy form provided by Snowside. 99 BLY says that the course of receipt of directed proxies can be demonstrated by the following graph: 100 BLY says that in light of the unfair and determinative influence of the Snowside letter on the vote, the Court should dispense with the headcount test and that conclusion is supported by: (1) Over 97% of votes cast were in favour of the scheme. That reflects the overwhelming support for the scheme by those who hold a substantial economic interest in the company. Even when the votes of creditor shareholders are ignored, over 75 % of votes were cast in favour of the scheme; (2) The scheme is supported by those members who are also creditors, in circumstances where BLY's current outstanding debt is approximately AU$950 million and its current market capitalisation is AU$100 million. BLY remains highly indebted and will likely need to restructure its debt or raise additional capital so that the ongoing support of its creditors is crucial to its survival; and (3) The scheme has the unanimous support of BLY's directors and independent expert.

Robert Closner's evidence 101 BLY sought to rely on an affidavit of Robert Closner sworn on 23 November 2018 in relation to the tax benefit that might be achieved as a result of the re-domiciliation. The Snowside parties objected to its admission on a number of bases. The Court accepted that Mr Closner was in a position to give evidence of BLY's intentions and that the source of his evidence as to tax impacts of the transfer of debt with and without the change of domicile to Canada was sufficiently disclosed in it. Mr Closner made it clear that no decision had yet been made about the amount of debt which might be transferred. Accordingly, his evidence carries little weight as to the amount of tax benefit that will be achieved if the scheme is implemented. However, it is evidence that BLY perceives that benefit may be achieved by the re-domiciliation. 102 Mr Closner's evidence was: 9. I understand, based on my discussions with KPMG LLP (Canada), BLY's Canadian tax advisers, that: (a) transferring debt held in Australia to Canada without undertaking the re-domiciliation is likely to result in a dividend withholding tax being payable by BLY or one of more of its subsidiaries (the BLY Group); (b) the withholding tax obligation potentially arises under a number of provisions under the Canadian Income Tax Act, R.S.C. 1985, C.1 (5th Supplement) as a result of an actual or deemed dividend becoming payable; and (c) based on KPMG's initial analysis, if the re-domiciliation does not occur and the external debt is transferred to Canada by the BLY Group, then the withholding tax cost of moving the debt is estimated to be between 5% to 15% of the principal balance of the external debt. If there is an aggregate principal balance of debt of $450 million, then the withholding tax payable would be approximately US$22 million to US$67 million (although I do not suggest that that the whole amount will be transferred). 10. While the transfer of debt can theoretically take place if the re-domiciliation does not occur (as stated in the IER to which I refer in paragraph 7 above), given the quantum of the estimated tax consequences referred to in paragraph 9 above, and the liquidity requirements of the company, it is my expectation that in the absence of the redomiciliation, the BLY Group would be unlikely to proceed with transferring its debt to Canada. 11. I also understand from my discussions with KPMG that if the entire debt of approximately US$450 million is transferred to Canada, then on the basis of there being an annual interest expense of $34 million and a corporate tax rate of 26%, then the annual tax saving available for the BLY Group is estimated to be approximately US$9 million (subject to their being sufficient net operating profits in Canada for which such expenses can be set off against). 12. If this Honourable Court approves the scheme of arrangement, then the approach to the transfer of debt would be finalised and it would be implemented promptly on the basis decided. It is not proposed that the debt would be transferred immediately upon implementation of the re-domiciliation given the need to finalise the approach, but it could potentially occur fairly soon after implementation. Delay in effecting the transfer of debt will lead to the BLY Group forgoing a portion, potentially a significant portion of the annual tax saving of up to US$9 million, in circumstances in which total net assets of the BLY Group as reported for the year ended December 31, 2017 were approximately US$90.6 million. 103 I note that Mr Closner's evidence at [9] and [11] was admitted on the basis that it was limited to his understanding. Further, the evidence given by Mr Closner as to the likely quantum of the annual benefit from debt being moved to Canada if the re-domiciliation is approved should not be accorded great weight because it is hypothetical in nature since he cannot be definitive about the amount or timing of the transfer of debt to Canada.

Andrea de Cian's evidence 104 Mr de Cian, a signatory to the independent expert's report was made available for cross-examination by the Snowside parties' senior counsel. He gave the following evidence in relation to the material under the heading "Advantages of the scheme" in the independent expert's report (see [16] above) and section 5.2 of the scheme booklet (see [18] above). 105 In relation to the material under the heading "Potentially greater access to capital from local institutional investors" and section 5.2(a) of the scheme booklet: Mr de Cian accepted that BLY was, at the time he wrote his report, paying its creditors within normal terms of trade, however, it was his opinion that BLY could continue as a going concern only with the continued support of its creditors on the basis that its gearing ratio was ten times earnings. He clarified that he was not saying that BLY was insolvent, but rather that it is financially stressed. When he made the statement "the Company may need to raise additional capital in order to continue trading as a going concern" he was not aware of its need to raise capital "at that point in time", but having regard to the fact that about US$700 million in debt falls due on 31 December 2022, BLY will need to extend that debt, refinance it or raise capital to repay it. He did not form an opinion about BLY's capacity to refinance the debt. I note that Mr de Cian summarised BLY's current financial position under the heading "Well defined legal system" in the extract of his report at [16] above. Although the words "A change in domicile is likely to make Boart more attractive to Canadian institutional investors and pooled funds who tend to limit the foreign issuers in their Canadian equity portfolios to comply with their international market risk requirements" are largely a reproduction of words used in the scheme booklet at section 5.2(a), Mr de Cian said that he formed his own views and did not simply reproduce those words although he expressly refers back to what is said in the scheme booklet. Mr de Cian accepted that section 5.2(a) of the scheme booklet was discussing a benefit of access to capital markets to fund future growth and the material under "Potentially greater access to capital from local institutional investors" in his report was discussing access to fund a distressed company and said that he and the directors were starting from different perspectives. Mr de Cian says that he performed an analysis of capital raising activity undertaken in the mining and mining services sector on Canadian capital markets, and in particular the Toronto Stock Exchange, compared to the ASX. That led him to believe that there was a greater propensity in the Canadian market, and in particular on the Toronto Stock Exchange, to support investment in mining and mining services companies. Taking into account that some asset managers have limitations on the amount of money that they can invest in foreign jurisdictions, he concluded that there was a net benefit to being domiciled in the Canadian market. Mr de Cian accepted that he had not done an analysis of the availability of capital from Canadian investors for companies listed on the ASX, the position which would apply if the scheme were implemented. While Mr de Cian accepted that, at the time he wrote his report, the highest he could put it was that BLY may or may not receive a benefit in the form of potentially greater access to capital markets because it was not known whether capital was required, he stressed that, based on his expert opinion and experience, a business in BLY's financially stressed position would be more likely than other businesses to require access to capital. He acknowledged that it would be harder for a financially distressed company to raise capital then it would be for a company which required capital to fund future growth. 106 In relation to the material under the heading "Potential for increased allowance for tax deductibility of the interest expense", Mr de Cian did not accept the proposition put by senior counsel for the Snowside parties that this should be interpreted as saying that debt could be transferred without re-domiciliation to Canada, but rather, in the absence of re-domiciliation, the transfer of debt was unaffordable and unlikely to occur because of "upfront cost". Mr de Cian said that he had seen a quantification of the "prohibitive upfront cost" (which he understood to be Canadian withholding tax in an amount of about US$10 million) and of "inefficiencies" which are likely to be created in the absence of re-domiciliation "which may be detrimental to shareholders". Mr de Cian explained that the amount of the "upfront cost" was not included in the independent expert's report because BLY's desire to maintain legal privilege attached to the calculation of the amount of the tax savings. 107 In relation to the material under the heading "Potential reduction in costs" which relates to the simplification of the group structure which was "likely" to be facilitated if re-domiciliation occurred, Mr de Cian accepted that he had not quantified the reduction in costs and has also not quantified the reduction in the benefit that might accrue to shareholders if entities were closed without re-domiciliation. 108 In relation to the conclusion that the advantages of the scheme outweighed the disadvantages and that the scheme was, accordingly, in the best interests of members, it was put to Mr de Cian that he was not in a position to form that opinion based on the material available to him and the best he could say was that it may, or may not, be in the best interests of members. Mr de Cian stood by his opinion, based on the materials that he has reviewed and critically analysed, albeit that there is no quantification of the benefits. Mr de Cian has had 21 years of experience in the world of corporate finance. 109 I found Mr de Cian to be a convincing witness and accept that he applied an independent mind in assessing the advantages and disadvantages of the scheme. The only issue which seemed open to further clarification was the attractiveness of BLY Canada CDIs traded on the ASX (as opposed to BLY Canada shares traded on a stock exchange in Canada) to Canadian investors with limitations on those companies in which they can invest since it appears that Mr de Cian did not consider that issue in detail.

Anthony Maurici's evidence and the Snowside parties' submissions

Mr Maurici's evidence 110 In his affidavit sworn on 20 November 2018, Mr Maurici explained that he is the sole director of each of the Snowside parties. He has a Bachelor of Science in civil engineering and geology. He says that across four entities (including himself), during 2013 and 2014, an amount of $19,529,746.63 (before costs and GST) was invested in BLY shares. There was one further transaction in 2015 in which the entities acquired 6,244,349 shares at a price of $0.115. He discusses the debt reconstructions undertaken by BLY in 2014 and 2017 and the matters which led to the Oppression Proceedings. 111 In his affidavit sworn on 19 December 2018, Mr Maurici says that, after reviewing the scheme booklet, he had a number of concerns: (1) In his view, although the proposed scheme was put to shareholders on the basis that it had the unanimous support of BLY's directors, in fact, all but one was nominated by Centrebridge, Ares or Ascribe and those three creditors are based in the United States of America. He relies for that information on an extract from the explanatory statement for the 2017 schemes. (2) As he understood things, the reason for the re-domiciliation was that it had been requested by one of those three creditors. He states that he does not believe that those creditors care about the interests of small shareholders. (3) None of the matters put forward as advantages for the re-domiciliation appeared to him to be compelling. (4) The scheme booklet said nothing about the potential or likely impact of the re-domiciliation on the Oppression Proceedings. (5) It is of particular concern to him that paragraph 5.4(c)(i) of the scheme booklet states that one of the disadvantages of the scheme is the potential loss of demand for BLY Canada CDIs, leading to a loss of liquidity for the CDIs on the ASX. This was in light of BLY conducting an unmarketable parcel share facility sale (announced on 18 April 2018) under which the shares of 3,465 shareholders were sold. He was concerned that further loss of liquidity could lead to further programs of that kind. 112 Mr Maurici understands that the Snowside letter was sent to around 4,200 Australian and New Zealand shareholders. A similar letter dated 23 November 2018 was sent to 180 foreign shareholders. 113 Mr Maurici states that he attended the scheme meeting and he did not respond to the Chairman's invitation to ask questions because, after he had announced the result of the return of proxies, Mr Maurici knew that the vote did not pass the headcount test. He says that no-one at the meeting referred to the Snowside letter or any statement in it which BLY now alleges was misleading. 114 Mr Maurici states that BLY has provided him with an electronic copy of its shareholder register as at the close of business on 4 December 2018 and notes that it contains a listing of 174 new shareholders with the share class code BLYAST, all of whom appear to be foreign, and states that he is not aware of a class of shareholders with that designation. 115 Mr Maurici was cross examined in relation to that part of the independent expert's report under the heading "Potential for increased tax allowance for tax deductibility of the interest expense". For convenience, that states as follows: Potential for increased allowance for tax deductibility of the interest expense Boart has reported significant losses over the last 3 years primarily due to a downturn in the mining industry which has impacted the market demand for its products and services. As at 30 June 2018, the Company had c. US$688 million external debt, comprising US$277.68 million of Term Loans and US$410.4 million of other debt across various other debt instruments. Given that all the creditors of the Company are domiciled outside Australia, the Company is required to make periodic interest payments on the debt to the creditors. Given the outstanding debt, the Group has a large interest expense, which can potentially be used to reduce the tax expense [The Company paid c. US$4.4 million of taxes for the half-year ended 30 June 2017 and US$6.3 million for the half-year ended 30 June 2018.] being incurred by the Company. Due to the poor alignment of the debt (most of which is held by the Australian entity where the operations are loss making due to the mining downturn) and the profit making operations of the group (most of which are concentrated in North America), the Group cannot take full advantage of the tax deductibility on the interest expense. As a result, the Company intends to transfer a portion [Refers to all the debt excluding the Term Loans, which have been transferred to Boart entities in the USA, prior to the Re-domiciliation] of the debt to Canada. This could potentially reduce the tax expense for the Group, reducing the existing burden on the Company's finances. Whilst the transfer of the debt to take advantage of the tax deductibility on the interest expense can be effected without the Re-domiciliation, in the absence of the Re-domiciliation, this transfer of the debt is likely to create inefficiencies that may be detrimental to shareholders. 116 Mr Maurici gave the following evidence: (1) In reading the independent expert's report, he assumed that all interest that was being paid by the BLY group was being deducted as an expense so that he could not see how re-domiciliation would lead to greater tax-deductibility of interest expenses. In forming that view he did not seek any Canadian or Australian tax advice but rather relied on his own business experience over many years. (2) He understood that BLY had claimed interest expenses to reduce its tax liability and, based on his calculation having looked at the interest expense reflected in the profit and loss and balance sheet, BLY does deduct all of its interest. He did not accept that there was a "poor alignment of the debt" and does not believe that there would be any better alignment with debt and operations by the transfer of debt to Canada having regard to his own experience in operating an international company. (3) There was no evidence in the disclosures made by BLY and the independent expert to support the claim that due to poor alignment of debt, the group could not take full advantage of tax deductibility. (4) Mr Maurici accepted that he is not a qualified tax accountant and has no idea about Canadian tax law. (5) He noted that, although based in Australia, BLY had been able to borrow in the United States and he could not see why that was a poor alignment of debt. He stated that he could not see why BLY would not be able to deduct interest expense in any of the countries in which it operates. (6) He noted that language used that BLY would "potentially reduce tax expense", saying that he regarded that as speculative and did not place any weight on it. He said that the "benefit that they're claiming hasn't been demonstrated and it doesn't make sense to me" and that he found it "unbelievable". (7) With respect to the advice that debt could be transferred without re-domiciliation but that it would create inefficiencies that may be detrimental to shareholders, Mr Maurici said that he could not understand why you would want to transfer the debt in the first place. (8) He referred to statements he says were made when the recapitalisation took place indicating that the Board is not independent. He claims that they stated that the directors may not act in the best interest of minority shareholders, so that "I have no reason to trust the current board". He said that he does not "think it works in the best interests of minority shareholders or in my interest". He regards the statements made on this issue as misleading. (9) He regards BLY as "a puppet held in the hands of the … three major creditors and [he doesn't] believe the directors are acting in the interest of all shareholders". He noted that the re-domiciliation was agreed by BLY as part of the Restructuring Support Agreement, there was "no declaration when that was done as to the reason why there would be a re-domiciliation, and now they're coming up with quite lengthy excuses, I think, or reasons, to justify the re-domiciliation and I can just see more disadvantages than advantages for shareholders - minority shareholders to approve that move". He said that "So if anything, I would suggest that the benefit of moving the debt overseas is for the benefit of the creditors, not necessarily for the members or the shareholders and particularly the minority shareholder. That's my opinion". (10) On more than one occasion, Mr Maurici said that there was "no proof" of the claimed advantage. He said that directors should get the tax advice, not him. He said that that advice is not in the documents sent to shareholders and the independent expert says that he got the information from BLY. Mr Maurici says that he was not persuaded. He noted that there was no numerical calculation or document that explained the "before" and "after". He ultimately said that he was not accusing BLY of lying but he did not think the information presented was persuasive enough. (11) In relation to Mr Maurici's observation in his affidavit that BLY did not have creditors in Canada, he accepted that he had not considered that it might be the location of the debtor which was relevant on the question of deductibility. 117 Similarly, Mr Maurici was not persuaded that a benefit of re-domiciliation to Canada would be reduced cost of insurance. He said that he was not persuaded by anything in the scheme booklet and his own experience was that there are international underwriters for large insurance portfolios. He did not accept that BLY would be in a better position than him to understand its insurance needs. 118 While Mr Maurici did not deny that a benefit to BLY's bottom line would be a benefit to all shareholders, he said that the small shareholders represent two percent of all issued shares, so the benefit would be very small. 119 In relation to the claimed advantage of re-domiciliation of increasing BLY's attractiveness to a more diverse financial market which has a strong interest in mining, Mr Maurici repeated the point that he made on many occasions that there is no pro-forma balance sheet and profit and loss statement which demonstrates the effectiveness of the claimed advantages. He said that all that he has is history, and that history is that BLY has been effective in raising finance. He pointed out that BLY is not in a position to borrow more (including under its current financing arrangements) so that he did not concede the benefit of access to capital markets which provide competitive funds in the form of debt and equity. He saw improving revenue in an improved mining cycle as the most effective way of paying debts which would be the most effective way of it being in a position to raise further finance. That did not rely on BLY's domicile so he did not see that "advantage" as persuasive. 120 Last, Mr Maurici makes a number of submissions in his affidavit sworn on 19 December 2018, many of which are repeated in the Snowside parties' written and oral submissions at the adjourned second court hearing. Accordingly, they are summarised together below.

Shareholder's right to communicate views to other shareholders does not have to meet the same disclosure standard as directors/scheme company 121 Mr Maurici says that it is his understanding that he is entitled to communicate his view about proposals made by BLY to other shareholders. The Snowside parties submitted that: (1) The scheme company and its directors bear a duty of full disclosure of all material facts to allow shareholders to make an informed and critical assessment of the proposal, and the extent of the required disclosure depends on the nature of the scheme and the context in which it occurs, relying on Re PR Finance Group Limited (No 2) [2013] FCA 633 at [27]-[31] per Jacobson J and Re Centro Retail Limited [2011] NSWSC 1321 at [7] per Barrett J. (2) There is no equivalent duty imposed on shareholders communicating their opinions regarding the resolutions to be put to the scheme meeting. No authorities were cited for this proposition. They say that a representation made by a shareholder should not be found to be misleading by virtue that it does not meeting the higher "full and fair" disclosure requirements imposed on a company and its directors. That higher standard is a function of the particular role that the company and its directors have in relation to shareholders.

Statements in Snowside letter concerning BLY share prices 122 He says that the statements made in the Snowside letter concerning BLY share prices (set out at [90] above) are not misleading because they are based on the closing price of BLY shares at the respective dates. The Snowside parties note that BLY's submission omits the footnotes referencing the ASX share price on the respective dates which appear in the Snowside letter. Further, the sentence does not say that the restructure caused the fall in price of BLY shares, those words have been read in by BLY. A reasonable shareholder would have considered that the discussion was about the ASX sale price and would not have been thinking about what Black J said in Boart Longyer (No 2) at [286] in relation to opinion evidence given by KordaMentha and KPMG about the value of BLY shares as at August 2017. Last, this information is not material, it is at the commencement of the Snowside letter and it is not advanced as a reason to vote against the scheme.

Statement in Snowside letter concerning no material benefits to small shareholders 123 In relation to the statement made in the Snowside letter that "we think there is no material benefit to you as a small shareholder in this change, only disadvantages as stated below", Mr Maurici comments on the statements concerning advantages of the scheme in the scheme booklet and the independent expert's report. 124 In relation to the potential for improved access to capital, Mr Maurici understands the principal points to be that BLY may need to raise capital in the future, to change domicile to Canada may give BLY better access to capital, and a change in domicile to Canada may make BLY more attractive to Canadian investors and pooled funds. In his view that was not a material benefit to small shareholders because: (1) None of the reasons put forward by the Board or the independent expert was certain - they were just possibilities; (2) The reasons gave no express consideration to the impact of listing BLY Canada CDIs on the ASX (as opposed listing on a Canadian stock exchange) on the appetite of Canadian investors or lenders; that is, a Canadian company listed on ASX may be no more attractive to Canadian investors than an Australian company listed on the ASX; (3) Their reasons "gave no consideration" to the fact that BLY had been able to obtain access to foreign capital for many years and not from Australian and Canadian entities; as Mr Maurici understands it, all of BLY's major borrowings are from USA entities (or their affiliates); (4) The reasons "gave no consideration" to the loss of interest from Australian institutional investors and funds. 125 In relation to the advantage of geographic alignment of debt (stated at section 5.2(b) of the scheme booklet) leading to the potential for increased allowance for tax deductibility of interest expense discussed by the independent expert, Mr Maurici said that this was not a material benefit to small shareholders in his view because: (1) As the independent conceded, geographic transfers of debt could be effected without re-domiciliation; (2) The asserted inefficiencies which would result if re-domiciliation did not occur are unexplained; (3) The emphasis on profits in "North America" as opposed to Australia was unfair because "North America" includes the USA, Canada and maybe Mexico. Annual reports for calendar years 2016 and 2017 show that revenue in Canada was less than in the Asia-Pacific; and (4) To Mr Maurici's knowledge, none of BLY's major debt is from Canadian lenders. 126 In relation to the claimed advantage of the reduced cost of insurance (at section 5.2(c) of the scheme booklet), Mr Maurici notes that this matter was not addressed by the independent expert. He also says that, while the scheme booklet suggests that insurance markets in North America are "more competitive and cost effective", it does not identify what insurance is necessary in Australia (given BLY's head office is in the USA and its operations are worldwide) or what insurances would no longer be necessary in Australia or the likely cost savings in Canada. 127 In relation to the claimed advantage of a simplified company structure (at section 5.2(d) of the scheme booklet and dealt with by the independent expert under the heading "Potential reduction in costs"), the independent expert conceded that changes in company structure could occur without re-domiciliation. The addition of BLY Canada and the CDIs required to allow them to be traded on the ASX seems, in Mr Maurici's view, to add an additional layer of complexity, rather than simplifying the structure. 128 Mr Maurici observes that the retention of ASX listing, comparable shareholder protection and a familiar jurisdiction are not advantages; they are merely something similar to the current situation and, in his view, the Canadian jurisdiction is "far less familiar to Australian shareholders than the Australian jurisdiction". 129 In relation to the claim that Canada has a "well defined legal system" and the ease of doing business in Canada referred to by the independent expert, based on his research, Mr Maurici disputes these claims. Mr Maurici did not put into evidence the Index to which he said he referred before sending the Snowside letter which form the basis of this statements which would indicate that Australia performs better than Canada on some items. 130 Mr Maurici observes that none of the advantages put forward by BLY was quantified, even in a rough sense, but he states that even if the advantages were quantified, they would (in his view) be unlikely to be of material benefit to small shareholders because of the very significant dilution in the shareholding following the reconstruction in 2017 which meant that the quantifiable benefit to any particular small shareholder would be very small. He also notes that the identified disadvantages and "other factors" referred to by the independent expert included potential adverse tax implications. 131 The Snowside parties submit that: (1) It is clearly a statement of belief as it begins with the words "We think". It can only be misleading if it can be demonstrated that Mr Maurici did not in fact hold such a belief but the evidence demonstrates that he did genuinely hold that belief. There is therefore no reason why a shareholder, exercising his democratic right to participate, is not entitled to set out that belief and communicate it to other shareholders. (2) Contrary to BLY's submission, the statement is not that there are "no benefits" to non-aligned shareholders. It is a statement of belief that there are no material benefits to small shareholders and a reasonable reader would understand that to be a statement of subjective evaluation of the advantages of the scheme to small shareholders. (3) Mr Maurici's view was reasonably open. It appears that BLY's position is that re-domiciliation is so overwhelmingly of benefit to BLY that any shareholder who was not misled would conclude that the scheme was in their best interest. Whether or not BLY agrees with his reasoning process, there was a reasonable basis for Mr Maurici's view. (4) Further the scheme booklet itself, on a fair reading, does not suggest that the benefits of the scheme are indisputable. Much of the language is tentative, referring to the "potential" for improved access to capital, by making BLY "potentially" more attractive to a more diverse financial market, and BLY "should have" broader access to Canadian capital pools. The claimed benefits of "improved liquidity", "reduced costs of insurance" and a streamlined structure are all use language at a high level and it cannot be said that those benefits are so great that they would be thought material to small shareholders. The independent expert's report couches all of the claimed advantages (with the exception of the "neutral" factors) as "potential". (5) Many factors are neutral, not benefits at all - for example, retaining ASX listing, "comparable shareholder protection" and a "familiar jurisdiction". (6) On BLY's own disclosure at section 5.4(a)(i) of the scheme booklet, the re-domiciliation may "fail to realise all of the anticipated advantages … either in a timely manner or at all". (7) Section 5.4(c)(i) of the scheme booklet recognises that there may be a loss of liquidity on the ASX because of loss of demand for CDIs. Small shareholders would be more directly affected by that and would regard it is more material than any of the claimed advantages of improved access to capital and debt markets. (8) In light of the disclosure in the scheme booklet, including the chairman's letter and the independent expert's report, it is unreal to suggest that the "no material benefits" sentence in the Snowside letter could have suborned the shareholders' ability to weigh up and form their view of what was said in the Snowside letter and the scheme booklet. There is no proper basis on which the Court could infer that the sentence was sufficiently material to affect the outcome. Shareholders formed their own view. (9) The shareholders also received letters from BYL dated 28 November 2018 and 3 December 2018 both of which recommended the advantages of the scheme based on the views of the directors and the independent expert. It is apparent that the shareholders had the information they required to make an informed view. There were 494 "against" proxies received between 28 November 2018 and the "cut off" at 11 am (Adelaide) time on 4 December 2018, and a further 39 late "against" proxies.

Statement concerning likely loss of standing in the Oppression Proceedings and potential class action 132 In relation to the statements concerning the Oppression Proceedings in the Snowside letter, Mr Maurici states the he was aware of the Superior Lawns decisions and on his reading of s 234 it would be necessary for the Snowside parties to be shareholders throughout the proceedings, a requirement which would not be satisfied if shares were compulsorily acquired under the scheme. Mr Maurici notes statements made in the explanatory statement for the 2017 schemes which noted that the Corporations Act affords minority shareholders the protection of being able to seek relief for "oppressive conduct". He says that he considered it important for shareholders to be made aware that they were likely to lose existing oppression rights against BLY as a result of the proposed re-domiciliation. 133 The Snowside parties submitted that: (1) The Superior Lawns decisions were the only authorities expressly dealing with s 234 of the Corporations Act and they are consistent with the view that the Snowside parties would lose standing to continue the Oppression Proceedings if the scheme was implemented. It cannot be seriously suggested that it should have been readily apparent to the Snowside parties that this Court or the Supreme Court of New South Wales would not follow those authorities because they are plainly wrong. (2) The suggestion that the bare undertaking not to take the standing point was sufficient to deal with the issue is contrary to the Superior Lawns decisions. One could even suggest that parties conducting themselves properly had a duty to draw the issue to the Supreme Court's attention in the Oppression Proceedings. (3) The issue has only been resolved to this Court's satisfaction by the proffering of an undertaking in terms which were not offered before the Snowside letter was issued. This demonstrates that the expression of concern about that issue in the Snowside letter was not misleading. (4) There is no proper basis on which the Court could infer that that the statement concerning the standing issue in relation to the Oppression Proceedings could have affected the vote because of the additional disclosures made by BLY on 28 November and 3 December 2018. 134 In relation to the statements concerning a possible class action based on the same claims as those raised in the Oppression Proceedings, the Snowside parties say that: (1) The Snowside letter does not convey the impression that the alternative to the scheme would leave members with a viable class action, as opposed to that prospect being speculative. They note that the paragraph starts "It may be" that the same argument "could be used" to support a class action. The third paragraph in the material quoted at [93] above then refers to "any potential" class action. They submit that a sensible reading of those sentences does not convey, with any certainty, the viability of a class action. (2) There is no proper basis on which the Court could infer that if shareholders formed the view, based on the Snowside letter, that there was a viable class action had a material effect on the shareholder vote particularly in circumstances where no action has been commenced and there is no evidence that any shareholder is contemplating bringing an action.

Statement regarding loss of franking credits 135 The Snowside parties note first that BLY concedes that the statement set out at [97] above does correctly state the position. They say that the statement does not indicate that any dividend would, or was likely to, be paid. It simply refers to "any" franking credits. Third, the Snowside parties note that it paraphrases language used in section 9.3 of the scheme booklet as follows: Taxation of dividends received on the Boart Longyear 'Canada' CDIs Where a resident Scheme Shareholder receives a dividend on the Boart Longyear 'Canada' CDIs, they will generally have to include the gross amount received in their assessable income for the relevant year. Franking credits will not be available in respect of these dividends. Where foreign withholding tax is paid on dividends, the resident Scheme Shareholder may be able to obtain a non-refundable tax offset and use it to reduce their tax liabilities in the relevant year (subject to certain conditions). and say that it cannot be misleading for the Snowside letter to identify the disadvantage in similar terms. 136 Further, the Snowside parties say that there is no proper basis for the Court to infer that, had the letter also stated that, in the medium term there would not likely be any dividend payable, it would have had a material effect on the shareholder vote or to the extent that the outcome of the vote was affected. They say that shareholders are capable of coming to their own views about the likelihood and timing of a dividend being paid.

Influence on the vote 137 The Snowside parties submit that the discretion to dispense with the headcount test should only be exercised for the purpose of ensuring that the true intention of the shareholders are implemented, as opposed to substituting the commercial judgment of the Court. They say that the Court would need to find not only that the alleged misleading statements in the Snowside letter were capable of misleading a BLY shareholder but also that: (1) The shareholders were in fact mislead by one or more of those statements; and (2) It so affected the vote that the shareholders would otherwise have approved the scheme. 138 They say that there is no evidence that shareholders were in fact misled as BLY did not adduce evidence from any shareholder that he, she or it was misled by any statement in the Snowside letter. They say that Ms Chiu's evidence does not establish that shareholders were induced to act in reliance on one or more of the allegedly misleading statements. Accordingly, BLY has not discharged its onus. Even if BLY had demonstrated that some shareholders were misled, there is no evidence that they were misled to the extent of influencing the outcome of the vote. They say it is not open to the Court to conclude that the commercial decision of the shareholders, uninfluenced by the allegedly misleading representations, would have been to approve the scheme. Again, they say, the Court would be substituting its own commercial judgment for that of the shareholders. They say that the Court could not be satisfied that shareholders who gave Mr Maurici their proxy would not have voted against the scheme anyway, nor could it be satisfied that the shareholders who voted against the scheme were not simply persuaded by legitimate advocacy. In that regard, it is important that a high number of proxies were received after the BLY 28 November 2018 letter was sent and that would suggest that shareholders would, nevertheless, have voted against the scheme.

174 BLYAST shareholders 139 It was submitted that the registration of 174 new shareholders on 4 December 2018 requires explanation. The fact of the registration is derived from a copy of the register as at the close of business on that day provided by BLY. That date was not only the last day for returning proxies, it was also the record date for the scheme. The designation BLYAST would suggest an association between those shareholders and BLY. Identified among the 174 are five directors or officers of BLY (the chairman, the CEO, the company secretary and two directors). Further, it may be that the admission of these new shareholders had an effect on the headcount, although the Snowside parties are not in a position to establish that without access to the proxies.

ASIC's position 140 Counsel tendered a copy of a letter dated 20 December 2018 to BLY's directors to which attached ASIC's written submissions accepted for filing on the same day. In the letter, ASIC stated that s 411(2)(a) had been satisfied because it had received at least 14 days' notice of the hearing of the application under s 411(1) and it had had a reasonable opportunity to consider the explanatory statement (the scheme booklet) as required by s 411(2)(b). The letter went on to explain why it would not issue a "no objection" letter under s 411(17)(b) in this case: ASIC's policy regarding statements under paragraph 411(17)(b) of the Act The Company has applied to ASIC for a written statement under paragraph 411(17)(b) of the Act that ASIC has no objection to the Scheme. ASIC's policy is that it will not provide a statement under paragraph 411(17)(b) of the Act until the second, or confirmation, Court hearing in relation to a scheme of arrangement. This is because ASIC will not be in a position to advise the Court properly until it has had an opportunity to observe the entire scheme process. It is also consistent with the wording of the section which relates the statement to the Court's approval of the scheme. Further, ASIC's policy is that we will state in writing that we have no objection to a scheme of arrangement if an applicant satisfies us that: (a) all material information relating to the proposed scheme has been disclosed to us; (b) the standard of disclosure to all members fulfils the requirements under reg 5.1.01 and Sch 8 of the Corporations Regulations; (c) the standard of disclosure to, and treatment of, all members is equivalent to the standard that would be required by the disclosure requirements and the principles in s 602 relating to the target securities in a takeover bid; and (d) there are no other reasons to oppose the scheme (e.g. public policy grounds) and the other matters referred to in [ASIC's policy in Regulatory Guide 60 Schemes of arrangement (RG 60)] have been complied with. ASIC's current intention in relation to the provision of a statement under paragraph 411(17)(b) of the Act and the Scheme ASIC's current intention is based on ASIC's examination of: (a) the terms of the Scheme, and the draft explanatory statement; and (b) the scheme process, in accordance with our policy in RG 60. It is also based on information available to ASIC, as at the date of this letter, on the matters to which ASIC will have regard before stating that it has no objection to a scheme under paragraph 411(17)(b) of the Act. These matters are set out in RG 60 and include that there are no public policy concerns or other reasons to oppose the scheme (RG 60, paragraph 104(d)). We understand that the voting majority required by paragraph 411(4)(a)(ii)(A) (the Headcount Test) has not been satisfied in this instance. We further understand that the Company is asking the Court to dispense with the Headcount Test and approve the Scheme. ASIC considers that it would be inappropriate for the Headcount Test to be disregarded for the reasons set out in its submissions filed with the Court on 19 December 2018 (see Annexure A). Given the concerns that ASIC has referred to above, ASIC does not consider it appropriate to provide a no-objection statement under paragraph 411(17)(b) of the Act at this time. ASIC notes that, in the absence of the failure to obtain the voting majority required under the Headcount Test, ASIC would have likely provided a statement that it has no objection to the proposed Scheme and would not have proposed to appear and to make submissions, or intervene to oppose the Scheme, at the second Court hearing. 141 ASIC submitted that the Court should not proceed on the assumption that members of BLY were unable to make an informed and independent decision on how to cast their vote after weighing up all information provided to them by BLY and in the Snowside letter. ASIC notes that the ASX announcement dated 28 November 2018 was issued by BLY after it had full knowledge of the Snowside letter and having made an informed decision as to the matters that needed to be corrected and the views that needed to be expressed in response to it. ASIC says that to make the assumption that members of BLY were unable to make an informed decision would be speculative (since there is no evidence from those shareholders), undermine the purpose of the Court having approved and BLY provided the supplementary disclosure and it would be contrary to public policy. 142 ASIC submitted that the evidence that the Snowside letter was misleading and unfairly influenced the vote is circumstantial (relying on the form and timing of the proxies directing votes against the scheme) and does not demonstrate: (1) Which parts of the Snowside letter influenced shareholders' decisions to vote against the scheme or to appoint Mr Maurici as proxy; (2) That shareholders did not make an independent decision to vote against the scheme after weighing up the disclosures provided by BLY and in the Snowside letter; (3) That but for the statements in the Snowside letter which BLY says are misleading shareholders would have either voted for the scheme or would have abstained from voting; (4) That shareholders were so misled that their votes should be disregarded. 143 ASIC submitted that the fact that BLY continued to receive proxies for as well as against the scheme after 14 November 2018 indicates that it would be unsafe for the Court to draw the positive inference as to the effect of the Snowside letter. 144 ASIC submitted that Mr Maurici's evidence reinforced its contentions. He is a paradigm example of a small shareholder who considered the information provided by BLY and formed his opinions as such. BLY's corrective statements made on 28 November 2018 simply referred shareholders back to the scheme booklet and recommendations already before them. The materials in the scheme booklet were at a high level of generality and the 28 November 2018 letter did not add any detail.

BLY's submissions 145 BLY submitted that the discretion conferred on the Court to "order otherwise" in s 411(4)(a)(ii)(A) of the Corporations Act is in its terms unconfined and the statutory language must be given primacy. It says that the correct approach to the exercise of a discretion in such broad terms is as explained by French CJ in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [23]-[24], that is, that the discretion is left broad so that the Court can give effect to its view of the justice of the case, in a reasoned way, and in accordance with the scope and purpose of the statutory scheme. 146 Noting that there had been no discretion to dispense with the headcount test before 2007, BLY says that in considering the mischief to which the discretion is addressed, the Court is entitled to take into account the Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (see [6] above). BLY notes that the Explanatory Memorandum explains that it was intended that the discretion would be used "in circumstances where there is evidence that the result of the vote has been unfairly influenced by activities such as share splitting, however the court's discretion has not been limited to allow for unforeseen extraordinary circumstances". 147 While the power to dispense with the headcount has been referred to in pSivida Ltd v New pSivida, Inc in the matter of pSivida Ltd [2008] FCA 627 at [12] and Re Plantic Technologies Ltd [2010] VSC 484 at [16], neither of those decisions provide any guidance as to the application of the discretion in this matter. Given the broad nature of the discretion and the mischief that it was designed to address, if the Court is satisfied that the vote has been unfairly influenced in a material respect, it should dispense with the headcount test. 148 BLY says that the Court should not accept submissions made by ASIC or the Snowside parties to the following effect: (1) That the discretion to dispense with the headcount test is confined to matters affecting the calculation of the vote, as there is nothing in the Corporations Act which supports that limitation; (2) That members have other remedies for misleading conduct which should be utilised rather than exercising the discretion; (3) That public policy considerations are opposed to the exercise of the discretion; (4) That if the Court exercised its discretion to dispense with the headcount test it would be substituting its view of the merit of the scheme for the commercial judgment of shareholders; (5) That alleged delay by BLY in making its announcement only on 28 November 2018 concerning the Snowside letter is a reason to refuse to exercise the discretion. It would be inappropriate to deprive BLY's member of the benefits of the scheme for that reason.

ASIC's submissions 149 ASIC says that: (1) In interpreting the discretion in s 411(4)(a)(ii)(A), one does not divine "subject matter, scope and purpose" from the text alone. (2) Where a narrowly focussed amendment is made to a legislative scheme, it is appropriate to enquire whether there was some mischief which Parliament was seeking to remedy. That approach is supported by s 15AA of the Acts Interpretation Act 1901 (Cth). It is therefore appropriate to look to the Explanatory Memorandum for that purpose without the requirement to find ambiguity as is the case where it is necessary to rely on s 15AB of the Acts Interpretation Act: see Chief Executive Officer of Customs v Adelaide Brighton Cement (2004) 139 FCR 147; [2004] FCAFC 183 at [10]-[14] per Black CJ. (3) Parliament did not expressly limit the discretion but it did that, according to [4.181] of the Explanatory Memorandum, only so as to allow the discretion to be exercised in "unforeseen extraordinary circumstances". What Parliament was concerned with was particular arrangements (like share splitting) that would affect the integrity of the vote in the sense of matters that would go to the calculation of the vote or the (lawful) manipulation of the calculation. (4) Those "unforeseen extraordinary circumstances" do not include conduct, disclosure or circumstances that influence how members or creditors vote on a proposed scheme of arrangement or that affect the quality of the reasons for their votes. (5) The exercise of the discretion outside cases involving unduly influencing or manipulating the calculation of votes would be contrary to public policy and could be perceived as depriving minority shareholders of their voting rights by overruling the outcome of the resolution. (6) The approach contended for by ASIC is consistent with the objective purpose of the Court's role in approving schemes under s 411 of the Corporations Act and the limited circumstances in which the Court may intervene on fairness grounds or otherwise change the result of the commercial judgment expressed by members in their votes: see Re NRMA Ltd (No 2) (2000) 34 ACSR 261; [2000] NSWSC 408 at [29] per Santow J; Re Seven Network Ltd (ACN 052 816 789)(No 3)(2010) 267 ALR 583; [2010] FCA 400 at [44] per Jacobson J. 150 ASIC submitted that the Court ought not dispense with the headcount test in this case. Alternatively, where conduct, disclosure or circumstances influence how members vote on a proposed scheme or affect the integrity of their votes, it is appropriate that the Court order that: (1) Supplementary disclosure be distributed, to ensure that members are adequately and accurately information in accordance with the Corporations Act; (2) The first result on the voting on the scheme should be set aside, and (3) A further meeting be convened at which members will vote again on the scheme resolution. 151 ASIC noted that it would likely be necessary for BLY and BLY Canada to extend the end date of the Scheme Implementation Agreement to accommodate any such meeting.

Snowside parties 152 The Snowside parties supported ASIC's submissions. They note that the requirement to achieve two forms of majority in s 411(4)(a)(ii) takes account of both number of shares (or the amount invested) and the number of shareholders voting on a resolution. That is designed to strike a fair and sensible balance and prevents either majority from dominating the other. They, too, point out that the supervisory role of the Court does not extend to usurping the commercial judgment of shareholders about whether the scheme should be approved.

Consideration of submissions at adjourned second court hearing on 21 december 2018 153 I have taken all of the submissions referred to above into account. I do not accept that the discretion conferred on the Court to dispense with the headcount test in s 411(4)(a)(ii)(A) of the Corporations Act is limited to cases where the headcount has been unfairly influenced in relation to the calculation of the vote. In my view that is not warranted by the unlimited language of the discretion "unless the Court orders otherwise" nor do I consider it warranted by the language of [4.181] of the Explanatory Memorandum. 154 In determining the scope of the discretion conferred on the Court these things are, in my view, relevant: (1) Although the discretion to dispense with the headcount test has no stated limits, it must be exercised judicially. That is, the Court must give effect to its view of the justice of the case, in a reasoned way, and in accordance with the scope and purpose of the legislation in which it occurs, in this case, s 411 of the Corporations Act: see Minister for Immigration and Citizenship v Li at [23]-[24]. (2) The Court is entitled, but not required, to take into account the Parliament's stated intentions having regard to the circumstances in which the amendment to s 411(4)(a)(ii)(A) was made. (3) It is, nonetheless, important not to read into the words of the statute limitations which are not there. 155 The introduction of the discretion to dispense with the headcount test occurred in the context of instances of share splitting, a tactic which could be used for "greenmail" to elicit higher consideration or to block or ensure achieving the required headcount by minorities opposed to or in support of a scheme designed to effect a takeover. See the discussion in Re MIM Holdings Limited (2003) 45 ACSR 559; [2003] QSC 181. It is plain from the Explanatory Memorandum at [4.177] to [4.181] that it was Parliament's primary intention in introducing the dispensation discretion to address this issue. Although there have been some in Australia and the United Kingdom who have suggested that the headcount test gives unwarranted weight to the views of those with small economic interests in a company and that the headcount test should be abolished, at least in the case of member schemes (see Damian T and Rich A, Schemes, Takeovers and Himalayan Peaks (3rd ed, University of Sydney Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2013) at [4.3.4] and [12.16.1]), it is plain that the Parliament had no such intention. Instead of abolishing the test, Parliament introduced the discretion to dispense with the headcount test. As can be seen from the Explanatory Memorandum at [4.181] Parliament intended that the headcount test should only be dispensed with where the vote had been unfairly influenced and rarely so as not to undermine the existence of the test that remains in the legislation and serves the purpose of protecting the interests of minority shareholders. 156 Having said that, I do not accept that the language of the last sentence of [4.181] warrants the limitation to issues of calculation as suggested by ASIC. It is true that the commencement of the sentence "[i]t is intended that the court would only exercise the discretion … in circumstances where there is evidence that the result of the vote has been unfairly influenced by activities such as share splitting" gives some credence to that submission. Nonetheless, share splitting is only an example (albeit one then with currency) and the following words "however the court's discretion has not been limited to allow for unforeseen extraordinary circumstances" do not contain a similar limitation. Parliament is clearly leaving open the prospect that circumstances, not yet contemplated, may warrant the making of a dispensation order. 157 I do not agree that Parliament intended that the Court should not exercise the dispensing power (and deny shareholders the benefits of a scheme) where the outcome of a vote has been unfairly influenced by conduct, disclosure or circumstances affecting how members or creditors voted. In my view, it is open to the Court to make an order dispensing with the headcount test where there is evidence that the integrity of the vote at the scheme meeting has been impugned due to activities which unfairly influenced it. In my view Parliament left open that the Court might exercise its discretion in an appropriate case which is consistent with the purpose of requiring the majorities set out in s 411(4). 158 It is important not to lose sight of the fact that, whatever Parliament's intent was in amending s 411(4)(a)(ii)(A), what it did was confer on the Court a discretion to "order otherwise" which is not constrained. Section 15AA of the Acts Interpretation Act provides that, in interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation. That is not an endorsement of seeking to achieve the object of Parliament in introducing the provision: it is an invitation to consider s 411(4)(a)(ii)(A) (as amended) in the context of the whole of s 411 and s 411(4) in particular. 159 In Re Norfolk Island & Byron Bay Whaling Co [1970] 1 NSWR 221 at 223, Street J noted that s 181 of the Companies Act 1961 (NSW) (a statutory predecessor of s 411 of the Corporations Act) was "intended to provide machinery (i) for overcoming the impossibility or impracticality of obtaining the individual consent of every member of the class intended to be bound thereby, and (ii) for preventing, in appropriate circumstances, a minority of class members frustrating a beneficial scheme." I accept that, in that context, the headcount test is designed to protect the interests of minorities by providing a check on the ability of creditors with large claims or members with large shareholdings to carry the day. Accordingly, it is appropriate that the Court's discretion to dispense with it should be rarely used. 160 It had long been the case that even where the number of votes and headcount tests of s 411(4)(a)(ii) had been met, the Court had a discretion to refuse to approve the scheme. That might occur where share splitting has been used to ensure that the headcount test is met. In effect, the discretion to dispense with the headcount test gave the Court a mirror power where that was required because a vote achieved at a scheme meeting lacked integrity by reason of its manipulation. Share splitting is a mechanical means of manipulation, however Parliament deliberately cast the Court's discretion without constraint so that the Court is entitled to take into account any form of manipulation in determining whether the headcount achieved at a scheme meeting accurately reflects the will of shareholders unaffected by the influence of that manipulation. 161 It is appropriate to comment on the evidence and submissions. 162 The advantages which BLY claim might "potentially" be achieved by the re-domiciliation are all benefits for BLY and they are unquantified in the scheme booklet. As a result, Mr Maurici did not find them compelling. I do not find that surprising. Unlike many member schemes, there is no payment to be made to shareholders. It appears that the majority of members are residents of Australia and New Zealand (Ms Chiu says that there were 4,783 members of BLY at the time of the scheme meeting and Mr Maurici says that he sent the Snowside letter to approximately 4,200 members in Australia and New Zealand). They are likely to be generally small shareholders faced with the prospect of becoming shareholders in a company regulated by laws and regulations with which they are unfamiliar. While they will retain a capacity to trade on the ASX, it will be through CDIs and that may affect the liquidity of their shareholding, and there is no prospect of receiving dividends in the immediate term. 163 BLY is financially distressed and relies on the support of its creditors for its solvency. It is a requirement of the Restructuring Support Agreement that BLY attempt to domicile its business to the USA, UK or Canada as soon as possible after the implementation of the 2017 recapitalisation. It is likely that the Major Shareholders will benefit from change of domicile. To the extent that BLY makes tax savings or any of the other potential claimed savings (such as on insurance), its capacity to service debt is improved. It is certainly true that it is a benefit to all shareholders that a distressed company's ability to service debt is improved since it enhances the likelihood that the company will survive. The question of how material the benefit is to any individual shareholder, though, is clearly correlative to the size of a shareholding and shareholders with smaller holdings will not benefit directly in the same way as the Major Shareholders. 164 It is a stated benefit of the re-domiciliation that BLY's management, which is largely located in North America, and "the majority of the Company's shareholder base" is more familiar with the Canadian legal system. Management will therefore have access to more timely legal, accounting and other resources than currently, resulting in lower overheads. It is not entirely clear what "the majority of the Company's shareholder base" means: I infer it means by number of shares given that at least 4,200 of the 4,783 members are Australian or New Zealand residents and there is no basis for the belief that they are "more familiar" with the Canadian legal system. It is therefore not surprising that management may be more convinced of the unquantified asserted benefits than the body of small shareholders. 165 There is some evidence (through Mr Closner) that BLY would benefit to an amount of about US$9 million yearly if the scheme is implemented and debts (in an amount of approximately US$450 million) are moved to the Canada. Mr Closner's evidence is hypothetical as to the amount of tax benefit that might be achieved by better alignment of debt and the place where income is generated because he was not definitive as to the amount which would be transferred. 166 At least in relation to tax deductibility, Mr Maurici's views are highly likely misplaced in light of the advice that Mr Closner has received from a reputable accounting firm which appears to do business in Canada. Mr Maurici has taken no steps to obtain similar advice. Having said that, it is not unreasonable for him to have concerns about the magnitude of the benefits to be obtained from re-domiciliation where they are not quantified in the scheme booklet and where there is no report from a relevantly qualified tax expert in it. 167 Mr Maurici plainly does not trust BLY's board or believe in the claimed advantages of the scheme. However, there is no evidence before the Court on the basis of which a finding might be made that the Board's recommendation was not honestly made. Further, the Board's recommendation is supported by the independent expert and, based on his evidence, there is no reason to believe that Mr de Cian did not form his views honestly. 168 In light of Mr Maurici's concerns that there is no disclosure in the scheme booklet about the fact that members of the board were nominated by the Major Shareholders, I have considered whether it was misleading for the scheme booklet not to address that issue. In my view it would have been appropriate disclosure, given the matters referred to above. However, members have been advised of those arrangements previously (in the context of the 2017 schemes) and BLY is a company subject to continuous disclosure obligations in Australia. Accordingly, the failure to discuss that issue would not, alone, have been a reason for the Court to refuse the scheme if it had been approved by the statutory majorities. It would be appropriate for there to be better supplementary disclosure on this issue. In light of Mr Maurici's concerns about the issue of 174 shares with the BLYAST tag around the time of the scheme meeting, it may also be appropriate for that issue to be addressed. 169 In relation to the Snowside letter, I do not regard the statements about BLY's share prices as misleading; the basis for the statements is clearly share prices at disclosed dates. It is true that the first three paragraphs of the letter set a scene of disenchantment with the restructure but in my view the statement concerning share prices is more open to the interpretation that things have not improved, rather than saying that the loss of value was caused by the 2017 restructure. 170 The opinion that there "is no material benefit to you as a small shareholder" is plainly held by Mr Maurici. For the reasons set out above, in my view it was open to him to form the view that small shareholders would derive little direct or immediate benefit from the re-domiciliation, even though it may also be true (as BLY asserts) that BLY itself would derive material benefit from it and that would be to all shareholders' longer term advantage. The Snowside letter did not state that there were no benefits to shareholders who are not aligned with the Major Shareholders. I do not find that statement of belief to be misleading. 171 In my view the statement concerning loss of franking credits has the capacity to mislead because it does not accurately reflect all of the relevant information in the scheme booklet. While the language used in the Snowside letter concerning the loss of franking credits is both literally true and tracks some language used in the scheme booklet, it is stated in terms which suggest immediate disadvantage. However, it may have the tendency to mislead because it does not acknowledge the qualifications in the independent expert's report as follows: Given the Company's situation of financial distress discussed earlier with large debt outstanding and significant losses, the Company is unlikely to be able to pay a dividend until the debt level is significantly reduced and the financial performance improves significantly. In addition, any accumulated tax losses that can be used to offset against taxable income will further delay the creation of franking credits. In our opinion, the disadvantage due to lack of franking credits is mitigated due to the Company's inability to pay dividends in the medium term. 172 The primary matters of concern in the Snowside letter are its discussion of the Oppression Proceedings and the possibility of a class action on the basis of similar claims. 173 For reasons previously given, the statement that the Snowside parties' claims in the Oppression Proceedings were "likely to be defeated" by the re-domiciliation are wrong. Moreover, as at 14 November 2018, the Snowside parties knew that that very question was to be the subject of argument in this Court on 26 November 2018, a fact not mentioned. 174 Further, in my view it was misleading to suggest that the "same arguments" as raised in the Oppression Proceedings might be used as a basis for a class action when Mr Maurici had made no enquiries as to whether any such class action existed and he is not aware of any such proceedings or that anyone (including Snowside) has them in prospect. The fact that the Snowside parties were bringing their own proceedings added weight to the mention of a class action. In the context of a distressed company where the share price had fallen in the manner suggested by Mr Maurici over the period since the reconstruction (as he noted in the opening paragraphs of the Snowside letter), the suggestion that there might be a class action to which a shareholder might be joined is likely to be attractive. The statement that it was likely to be defeated by the re-domiciliation was therefore likely to have an impact. The Snowside parties now say that that statement could not have influenced the vote. I do not accept that: if they thought that, there was no point in putting this issue in the letter at all. 175 BLY ask the Court to infer from the flow of proxies that the Snowside letter unfairly influenced the vote. In the absence of evidence from members who received and relied on the letter, I cannot make that finding and I am not minded to exercise the power to dispense with the headcount at this time. However, impact on the integrity of the vote cannot be discounted because of the statements in the Snowside letter concerning the availability of franking credits, the Oppression Proceedings, the possibility of a class action on a similar basis and the flow of proxies after the Snowside letter was sent, compared to the flow before that time. 176 At the hearing, I canvassed with the parties the possibility of taking up ASIC's suggestion of the despatch of supplementary material and a further shareholder vote. 177 In my view, it is not possible to re-convene the scheme meeting held on 6 December 2018 - it has been held without adjournment and concluded. I am doubtful that s 1319 would authorise such a course and in my view the power to convene a further scheme meeting or meetings under s 411(1) is designed for meetings of classes, not a new shareholders meeting. 178 In my view, it would be possible for the second court hearing to be adjourned. A meeting of shareholders to consider again whether they wished to approve the scheme with the benefit of supplementary information which ASIC has had the opportunity to consider could be convened. In Re PR Finance Group Limited (No 3) [2013] FCA 704, I found that the Court did have power to order that a ratification meeting be held. In PR Finance Group Limited (No 2) Jacobson J found that where the Court was not satisfied that the shareholders had been fully informed when they approved the scheme by the statutory majorities at the scheme meeting, the Court was not prepared to make orders under s 411(4)(b) without the benefit of a further test of the shareholders' will on a fully informed basis. The Court subsequently made orders under s 411(4)(b) when the required majorities were achieved at the further meeting: see Re PR Finance Group Limited (No 4) [2013] FCA 1009. Given the unconfined discretion in s 411(4)(a)(ii)(A), it is my view that it is possible to adopt an analogous approach in this case. 179 In my view, if proceeding with the scheme were to be approved by the majorities required by s 411(4)(a)(ii), the Court could then consider whether to exercise its discretion to dispense with the headcount test in relation to the vote at the scheme meeting on 6 December 2018 and, if the headcount test were dispensed with, then decide whether to approve the scheme under s 411(4)(b). Contrary to an argument put by Mr Henry SC in opposition to such a course being taken, the vote at any new meeting would not be a substitute for the vote taken at the scheme meeting, it would be a means of assessing the integrity of that vote and informing the Court's discretion to dispense with the headcount test. 180 Such a course may be appropriate for the following reasons. 181 First, while the headcount achieved on 6 December 2018 might be the expression of small shareholder judgment of the scheme, there is reason for concern that the vote lacked integrity because of the statements in the Snowside letter concerning the possibility of a class action having regard to the circumstances of BLY over the last two years. While shareholders are entitled to communicate with each other freely, they are not entitled to trail suggestions of that kind in a letter to 4,200 shareholders when the Snowside parties have not said that they intend to instigate such a class action (and it appears that they have no such intention) and they have no knowledge that anyone else is or intends to do so. They are also not entitled to make statements which are misleading by omission, as, in my view, the Snowside letter does in relation to franking credits. 182 While shareholders are generally not subject to the same constraints as the scheme company, so that it is not necessary to receive Court approval to their communications, they are not without responsibility for ensuring that communications with other shareholders do not affect the integrity of the vote at the scheme meeting; that means that they must have a reasonable basis for the things they say or there may be consequences affecting the exercise of the Court's discretion under ss 411(4)(a)(ii)(A) and 411(4)(b). 183 Second, there is some truth to the Snowside parties' submission BLY has had the opportunity to correct many of the statements in the Snowside letter which it says are misleading in BLY's 28 November 2018 communication (which was approved by the Court) or at the scheme meeting. However, there was effectively no meaningful time before the deadline for returning proxies at 11 am on 4 December 2018 in which to advise shareholders of the Court's decision made on 3 December 2018 (in light of the undertaking which BLY had then agreed to give) that prejudice to the Snowside parties in the Oppression Proceedings would not be a reason for the Court to refuse to make final orders. 184 Third, if the benefits of the scheme can be better substantiated to the satisfaction of shareholders, there is no downside to shareholders being given an opportunity to consider whether, in their commercial judgment, the scheme should proceed. Although it would be open to BLY to commence a scheme process again if the Court refused to make orders under s 411(4)(b) now, BLY is a distressed company and it may be in the interests of efficiency and cost to allow the despatch of supplemental information to shareholders and to seek a confirmatory vote at a further meeting of shareholders. 185 A further shareholder vote would ensure that it was the commercial judgment of the shareholders which would be honoured, not that of the Court, if the majorities required by s 411(4)(a)(ii) are achieved at the further shareholders meeting and the Court subsequently exercised its discretion to dispense with the headcount test and granted approval to the scheme. 186 The Snowside parties objected to that course on the basis that it lacked utility because there was no evidence that there would be a different outcome. However, the Court has concerns about whether the Snowside letter inappropriately influenced the vote on 6 December 2018 and so impugned its integrity. 187 BLY's senior counsel indicated that it would like the opportunity to consider whether it wished to adopt that course in light of the Court's published reasons. ASIC did not raise an objection.

Conclusion 188 Accordingly, on 21 December 2018, the Court adjourned the second court hearing and listed a case management hearing for Thursday, 7 February 2019. I certify that the preceding one hundred and eighty-eight (188) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.