Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron

Evidence for the second court hearing 6 In addition to the affidavits on which it relied at the first court hearing, ASW relied on: (a) the second affidavit of Simon Cato sworn on 4 December 2023 (Second Cato Affidavit), as to the registration of the Scheme Booklet with ASIC, the dispatch of materials to ASW shareholders, and publication of an ASX announcement giving notice of the second court hearing; and (b) the third affidavit of Simon Cato sworn on 6 December 2023 (Third Cato Affidavit) as to, among other things, the operation of the Advanced Share Registry telephone line, the holding of the Scheme Meeting, the passing of the resolution approving the Scheme (attaching a copy of the poll report) and voter turnout, and addressing the directors' determination to pay a special dividend. 7 A copy of a letter from ASIC indicating that it had no objection to the Scheme was provided to the Court for the purpose of the hearing by way of a solicitor's affidavit of Mr Sek Han Jonathan Foo. 8 The Court also received a 'Certificate in Relation to Conditions Precedent' dated 7 December 2023, signed on behalf of each of ASW and Automic, confirming that each condition precedent of the scheme implementation deed and the Scheme had relevantly been waived or satisfied. 9 ASW's evidence was prepared consistently with the Court's Schemes of Arrangement Practice Note GPN-SOA.

Relevant considerations for second court hearing 10 The principles that apply to the role of the Court in approving a scheme of arrangement under s 411(4)(b) of the Corporations Act are well established. 11 Where a majority of members have approved a scheme, the Court is not bound to approve it. However, the Court should be slow to conclude that a scheme is unreasonable or unfair, provided that the members have been properly informed of matters relevant to the making of their decision, as that would otherwise involve the Court substituting its commercial judgment for that of the body of members: Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400 at [31]-[40] (Jacobson J); Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842 at [11] (Beach J); and Asaleo Care Limited, in the matter of Asaleo Care Limited (No 2) [2021] FCA 636 at [7]-[8]. The scheme shareholders' vote in favour of the scheme is evidence of its inherent fairness: Amcor at [11]. 12 The matters the Court must take into account in deciding whether to approve a scheme have been summarised in many cases (see, for example, Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron (TAPL) Pty Ltd (No 2) [2022] FCA 381, citing Seven Network; and David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753 (Farrell J)). They include whether: (a) the orders of the Court convening the scheme meeting were complied with; (b) the resolution to approve the scheme was passed by the requisite majority, and whether other statutory requirements have been satisfied; (c) all conditions to which the scheme is subject (other than court approval and lodgement of the Court's orders with ASIC) have been met or waived; (d) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it; (e) there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme; (f) the company has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; and (g) the Court is satisfied under s 411(17) that the scheme has not been proposed to avoid Chapter 6 of the Act, or that the company has a statement from ASIC that it has no objection to the scheme. 13 For the reasons that follow, having regard to the evidence, I was satisfied as to all of these matters.

Lodgement of orders and registration of Scheme Booklet 14 ASW's solicitors registered the Scheme Booklet with ASIC in substantially the form approved by the Court and provided ASIC with a sealed copy of the orders.

Dispatch of the Scheme Booklet 15 The Second Cato Affidavit provided evidence in an appropriate form of the dispatch of the Scheme Booklet in accordance with the orders of 1 November 2023.

Advertising of hearing 16 On 1 December 2023, ASW released an ASX announcement advertising the second court hearing in accordance with the orders.

Conduct of Scheme Meeting 17 The Third Cato Affidavit provided evidence of the conduct of the Scheme Meeting in accordance with the orders.

Scheme approved by the requisite majorities 18 The Scheme Resolution was supported by ASW shareholders at the Scheme Meeting. The requisite majorities for the purposes of s 411(4)(a)(ii) of the Corporations Act were satisfied as follows: (a) 161,116,527 votes (99.9% of all votes cast for or against) representing 62 ASW shareholders (87.3% of all ASW shareholders present and voting either for or against, in person or by proxy) were in favour of the resolution to approve the Scheme; and (b) 163,522 votes (0.1% of all votes cast for or against) representing nine ASW Shareholders (12.3% of all ASW shareholders present and voting either for or against, in person or by proxy) were against the resolution to approve the Scheme. 19 These figures vary slightly from those included in the Third Cato Affidavit. Counsel for ASW explained during the hearing that an issue had arisen with respect to the voter headcount, because there had been an inadvertent double counting of a nominee shareholder. That shareholder voted some shares in favour of the resolution, some shares against and some in accordance with discretionary votes which fell to be voted in accordance with the Chair's intentions. The issue of a member exercising some votes in favour and some votes against a resolution in the limited context of the headcount for the purposes of s 411(4)(a)(ii)(A) was addressed in Re Spark Infrastructure Holdings No 1 Ltd [2010] NSWSC 1497; (2010) 79 NSWLR 756 at [27] (Barrett J). In short, such shareholders are not to be counted as voting for the scheme for headcount purposes because they also voted against the scheme: at [27]-[29]. The corrected figures, adopting the approach addressed by Barrett J, were disclosed to the Court and the variation was so slight as to make no real difference to the outcome. 20 ASW released the results of the Scheme Meeting to the ASX on 5 December 2023. 21 As to voter turnout, in total, approximately 83.4% of the ASW shares on issue were voted at the Scheme Meeting by 18.1% of the total number of shareholders. 22 Having regard to the turnout at ASW's two most recent annual general meetings, and the turnouts considered in the authorities, I considered this to be a reasonable turnout and no concern arises in this regard: see generally Decimal Software Limited, in the matter of Decimal Software Limited (No 2) [2018] FCA 2040 at [20]-[21].

Satisfaction of conditions precedent 23 As noted, the Court received appropriate certification in this regard.

Good faith and proper purpose 24 I had no reason to doubt that ASW shareholders voted in good faith and not for an improper purpose. Transactions of the nature of this Scheme are ordinarily approved by courts and are of a kind which sensible business people might consider of benefit to members. I take into account that RSM Corporate Australia Pty Ltd, the independent expert, concluded that the Scheme was fair and reasonable and therefore in the best interests of ASW shareholders, in the absence of a superior proposal.

Fair and reasonable scheme 25 I accepted ASW's submission that the Scheme is fair and reasonable such that an intelligent and honest shareholder, properly informed and acting alone, might approve it. As observed in Amcor, approval by the requisite majorities is prima facie evidence that it is fair. RSM's opinion provides further support. The Scheme was recommended unanimously by the board of ASW in the absence of a superior proposal and the independent expert maintained its opinion. There is no evidence of a superior proposal.

Full and fair disclosure 26 I was satisfied to the necessary level on the evidence before me at the first court hearing that there would be full and fair disclosure to ASW shareholders regarding the Scheme, having regard to the content of the Scheme Booklet. There was nothing new before the Court that changed that view.

Satisfaction of s 411(17) 27 As noted, the Court received a copy of ASIC's standard 'no objection' statement before the hearing, satisfying the requirements of s 411(17)(b) of the Corporations Act. It is otherwise well established that the Court should not refuse approval of a scheme of arrangement merely because it could have been effected under Chapter 6 of the Corporations Act.

Public policy and oppression of minorities 28 There is no evidence before the Court that any minority ASW shareholders have been oppressed or that the Scheme offends any aspect of public policy.

Other relevant matters 29 ASW drew the Court's attention to the following matters. 30 First, at the first court hearing, evidence was adduced as to the fact and nature of proposed communications with ASW shareholders through a general Advanced Share Registry telephone line available for ASW shareholders to call. 31 By the Third Cato Affidavit, ASW provided evidence in summary form to the effect that, consistent with the evidence at the first court hearing, the scripts used for the telephone line were checked to ensure consistency with the Scheme Booklet and that appropriate instructions were given to Advanced Share Registry staff not to deviate from the approved scripts. I was satisfied that no issues as to the appropriateness of shareholder communications arose. 32 Second, under the terms of the Scheme, the consideration payable under the proposed Scheme is to be reduced by the amount of any special dividend paid by ASW before implementation of the Scheme, up to a maximum permitted amount per ASW Share of $0.0025. The evidence disclosed that on 5 December 2023, following the Scheme Meeting, ASW announced to the ASX that its directors had determined to pay a fully franked special dividend of $0.0025 per ASW Share conditional on the Scheme becoming effective. I was satisfied that this conduct was in line with and consistent with the disclosures in the Scheme Booklet. 33 Third, ASW, which is a share registry and meeting services provider, coordinated the Scheme Meeting itself. The evidence disclosed that the Chairperson appointed Ms Lily Wang of ASW as returning officer and also appointed Mr Michael Liprino of Pitcher Partners, ASW's auditors, as scrutineer. Mr Liprino was appointed for the purpose of providing additional and independent oversight of the voting process. Both Ms Wang and Mr Liprino signed the relevant deed poll. Counsel submitted that the extra layer of supervision by way of the presence of Mr Liprino counterbalances any concerns that might have otherwise arisen as to the fact that ASW was itself involved in the conduct of the Scheme Meeting. I accepted ASW's submission in this regard, and was satisfied that no real concern arises in the circumstances from ASW's role in the conduct of the Scheme Meeting.

Conclusion 34 For the above reasons, I made orders approving the Scheme. 35 I note that Automic was represented separately at the hearing before me and through counsel supported the application for approval of the Scheme. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.