Centro Properties Ltd and Another v PricewaterhouseCoopers

MEMBER APPROVAL OF THE SCHEME 7 On 11 March 2013, a majority of the shareholders in each of Airtrain's three classes of shareholders attended and voted (whether by proxy or otherwise) to approve the Scheme. Specifically, 100% of shareholder votes cast in Class A and in Class B were in favour of the Scheme and 99.67% of shareholder votes cast in Class C were in favour of the Scheme. Two proxies in Class C (representing 0.76% of the total votes in that class) were disregarded as they were not validly executed. Both proxies were in favour of the Scheme. Even if they had not been, given those votes comprised such a small percentage of the total votes in that class, their exclusion did not have any material effect on the approval of the Scheme. 8 The Australian Securities and Investments Commission (ASIC) has written to Airtrain and advised that it has no objection to the implementation of the Scheme.

ISSUES TO BE DETERMINED 9 Taking into account those principles and the orders sought by Airtrain (see [1]-[2] above), the following issues fall to be determined: (a) whether s 411(4)(a) has been satisfied; (b) whether I should exercise my discretion to approve the Scheme under s 411(4)(b); (c) whether I should exercise my discretion under s 411(12) to exempt Airtrain from complying with s 411(11); and (d) whether s 411(17) has been satisfied.

WHETHER SECTION 411(4)(a) OF THE ACT HAS BEEN SATISFIED 10 I am satisfied that the Scheme has been approved by almost 100% of the members of Airtrain (see [7] above) and that this approval satisfies the requirements of s 411(4)(a) of the Act. I take this to be a strong indication of where the overwhelming majority of Airtrain's members considers their commercial interests lie.

WHETHER I SHOULD EXERCISE MY DISCRETION UNDER SECTION 411(4)(b) OF THE ACT 11 Having reviewed and considered the evidence presented by Airtrain, I consider that: (i) firstly, the members have voted in good faith to support the Scheme: Re NRMA Ltd No 5131 of 1999 (2000) 33 ACSR 595; [2000] NSWSC 82 (Re NRMA) at [41]; (ii) secondly, that the proposals contained in the Scheme are fair and reasonable: In re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213 at 247 per Fry LJ; Re NRMA at [41]; (iii) thirdly, that all relevant matters have been brought to my attention: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [7]; Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583; [2010] FCA 400 (Re Seven Network) at [37] per Jacobson J; (iv) fourthly, that there has been proper and comprehensive disclosure of the details of the Scheme to the members of Airtrain: Re Seven Network at [38]; (v) fifthly, that there is no suggestion of oppression of any minority within the members of Airtrain: Re NRMA at [41]; (vi) sixthly, there is no evidence that any third parties will be adversely affected by the operation of the Scheme: In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849 at [119]-[123] per Lindgren J; and (vii) seventhly, the Scheme does not offend against any aspect of public policy: Re Seven Network at [40]; Texon Petroleum Limited, in the matter of Texon Petroleum Limited (No 2) [2013] FCA 147 at [17] per Farrell J; see also reservations about this requirement in Centro Properties Ltd and Another v PricewaterhouseCoopers (2011) 86 ACSR 584; [2011] NSWSC 1465 at [41]-[44] per Barrett J; Re CSR Ltd (2010) 183 FCR 358; [2010] FCAFC 34 at [82]-[84] per Finkelstein J. 12 Finally, I note that ASIC has been provided with all materials relevant to the Scheme, including the various orders made in this proceeding and it has not, at any stage, sought to appear or to file any material opposition to the Scheme or any aspect of it.

WHETHER SECTION 411(17) OF THE ACT HAS BEEN SATISFIED 13 In my previous reasons (at [55]), I expressed the view that compliance with s 411(17) is a matter that should be addressed at the second and final hearing. Accordingly, I am required to consider that matter now. 14 Section 411(17) of the Act provides: The Court must not approve a compromise or arrangement under this section unless: (a) it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or (b) there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement; but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b). 15 As noted above (at [8]), ASIC has provided Airtrain with a letter stating that it does not object to the Scheme being approved. That letter was placed before the Court. 16 Section 411(17), is, in my view, disjunctive. In the absence of any other relevant consideration, I consider that ASIC's notice is sufficient for the purposes of that subsection. Even if that notice were not sufficient, there is not the slightest evidence in any of the materials before me that the Scheme has been proposed for the purpose of avoiding the operation of Ch 6 of the Act. 17 For these reasons, I consider that s 411(17) has been satisfied.

WHETHER I SHOULD EXERCISE MY DISCRETION UNDER SECTION 411(12) OF THE ACT 18 Section 411(11) provides: Subject to subsection (12), a copy of every order of the Court made for the purposes of paragraph (4)(b) must be annexed to every copy of the constitution of the body issued after the order has been made. 19 Section 411(12) provides: The Court may, by order, exempt a body from compliance with subsection (11) or determine the period during which the body must comply with that subsection. 20 Airtrain submitted that the Scheme does not modify any rights of shareholders, creditors or persons dealing with the company and, once implemented, will be of historical interest only. Therefore, it submitted, it is appropriate for the Court to exercise its discretion to relieve Airtrain of its obligations under s 411(11). 21 In Re Equinox Resources Ltd (ACN 060 581 777) (2004) 49 ACSR 692; [2004] WASC 143 (Re Equinox), EM Heenan J considered the purpose of s 411(11). His Honour stated (at [22]): I am satisfied that the purpose of that provision is to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved. 22 EM Heenan J proceeded to consider whether he should exercise his discretion under s 411(12) of the Act. The scheme of arrangement concerned was of a similar nature to the Scheme in this proceeding: if implemented, a third party company would acquire all of the issued share capital in Equinox Resources Ltd. The difference is that rather than receiving a payment in exchange for their share capital, the members of Equinox Resources Ltd would receive shares in the third party company. His Honour concluded that (at [23]): "this proposed scheme will not involve modification of any rights of shareholders or of creditors or of persons dealing with the company and, consequently, there is no need to insist on compliance with [s 411(11) of the Act]." 23 I accept Airtrain's submission that once the Scheme is implemented the orders relating to its approval will be of historical relevance only. Attaching those orders to Airtrain's constitution will therefore involve an anachronism. I also note that Airtrain proposes that I make an order that requires Airtrain to lodge any orders I make with ASIC. The orders will therefore remain accessible. 24 I consider that in these circumstances it is appropriate to exercise my discretion under s 411(12) and relieve Airtrain of its obligations under s 411(11).

CONCLUSION 25 For these reasons, I consider it is appropriate to make the orders sought by Airtrain approving the Scheme under s 411(4)(b), dispensing with the requirement contained in s 411(12) of the Act and requiring Airtrain to lodge that order with ASIC. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.