Crawford v Australia and New Zealand Banking Group Limited

Judgment (ex tempore) 1HIS HONOUR: The Court has previously given advice that the plaintiffs, RE1 Limited as responsible entity for Westfield Retail Trust 1 and RE2 Limited as responsible entity for Westfield Retail Trust 2, would be justified in convening meetings of the securityholders and putting certain resolutions to those meetings, and also in distributing a securityholders' booklet and subsequently a supplementary securityholders' booklet, explaining the proposals to be put to the meeting. Before the Court today is an application for further advice, to the effect that the plaintiffs would be justified in distributing a second supplementary securityholders' booklet; publishing an advertisement giving notice of an adjourned date, time and place of the meeting; resuming the meeting adjourned from 29 May 2014; and as to certain provisions in respect of the conduct of such resumed meeting. 2It is worth reiterating, though shortly, certain considerations that inform the Court's approach to an application of this kind. Fundamentally, it is not the Court's role to pronounce a judgment on the commercial desirability or benefit of the proposed transaction. That is peculiarly a matter for the securityholders to judge for themselves. It must be they, and not the Court, who decide whether their interests will best be served by acceding to or rejecting the proposed resolutions. Accordingly, the Court's judgment in respect of the advice sought does not pertain to the commercial wisdom or benefit or desirability of the proposed transaction. 3Thus, what the Court is concerned with is first, whether what is proposed will be lawful and compliant with the relevant provisions of the Corporations Act and such other laws as may be applicable; secondly, whether there is any apparent impediment to the proposal that would make it improbable that the Court would approve it at the second hearing, which will take place after the securityholder meeting; and thirdly, whether the matters are being put to securityholders in an atmosphere and with information that ensures that they are properly and fairly informed of the relevant matters which will inform their decision and their vote. 4On that last point, in the circumstances of controversy which have now arisen in this particular case that, if the responsible entities are to be afforded the protection and immunisation from personal liability of judicial advice, the Court will be jealous to ensure that material put to securityholders is not overstated, nor calculated to overbear securityholders in favour of one view against another. It is important that securityholders know the relevant facts and the advice of the responsible entity, but that the material be put forward in a manner that is not unduly or unfairly calculated to persuade the securityholders in one direction rather than another. 5The background to the present application is that the securityholders' meeting was, as had been contemplated when advice was previously given by the Court, held on 29 May 2014. Shortly before the meeting of the securityholders the shareholders in the Westfield Group met, as also previously authorised by the Court, to consider the counterpart proposal. In connection with that meeting, the chairman of the Westfield Group made an announcement to the ASX and also addressed the meeting of Westfield Group shareholders, relevantly in the following terms: If the WRT meeting this afternoon does not approve the proposal it will not diminish our determination to proceed with WDC's strategic objective of separating the two businesses. We will pursue that separation but without WRT. However, the existing relationship with WRT will continue. 6Subsequently, at the meeting of WRT securityholders, the chair of WRT, Mr Warburton, said: I would also like to advise the meeting that the chairman of Westfield Group stated at that meeting that if the WRT securityholders do not approve the proposal it does not diminish Westfield Group's determination to proceed with Westfield Group's strategic objective of separating its two businesses. The chairman stated that the Westfield Group will pursue that separation but without WRT, however the existing relation with WRT will continue. 7Subsequently, in the course of the meeting, Mr Steven Lowy, who is a director both of the Westfield Group and of WRT, said, in response to some questions that had been asked and comments made by securityholders in the course of the meeting: The Chairman of WDC this morning made a statement that if this deal was not to reach the hurdle, by the WRT shareholders, that WDC would pursue the de-merger of its international business from its Australian/New Zealand business without WRT. I want to be clear about that, so everybody understands that ...The board of WDC met yesterday, late in the day, and made that decision, and that was conveyed to the investment community this morning. So there is no opportunity for WRT to, as you say, recut the transaction with WDC. So the shareholders will be asked to vote with the full knowledge of the statement made by the Chairman of WDC this morning. 8In the light of those statements, the representative of a securityholder suggested that the meeting be adjourned, to allow participants to consider this new information as to Westfield Group's intentions if the proposal were not approved by the WRT securityholders. After some discussion, and after taking a non-binding vote of the participants in the meeting, Mr Warburton, as chair, adjourned the meeting to a date to be fixed following further disclosure. 9It seems to me that the announcement on which so much has turned was not entirely new. The Westfield Group Securityholder Booklet had included a statement to the effect that, while the proposal was the preferred option to create long-term value for Westfield Group's securityholders, alternatives that had been considered included maintaining the existing structure, demerging Westfield Group's Australian and New Zealand business from Westfield Group without merging with Westfield Retail Trust (which is precisely what has now been, apparently, announced), and a number of other possibilities. That booklet contained a statement that if the proposal did not succeed, Westfield Group would reconsider other alternatives that deliver similar benefits to the proposal. 10The WRT Securityholder Booklet conveyed to securityholders that in the event that the proposal did not proceed, Westfield Group had indicated that it may consider alternative strategies in relation to its Australian and New Zealand business. Nonetheless, it is fair to say that the announcement by Westfield Group on 29 May rather had the effect of focusing attention on one particular alternative in the event that the proposal was not approved. As it appeared that there was a significant possibility that the proposal would not be approved by WRT securityholders, and that this information might affect how some of them would wish to vote, it seems to me that if there was power to do so, it was not inappropriate to adjourn the meeting, to enable that recently received information to be properly considered by securityholders, in particular so that those who had already cast proxy votes before that information became available, might be in a position to reconsider their position in the light of the new information. 11I am also satisfied that, by clause 17.11 of the constitution of the Westfield Retail Trusts - which provides "The Chair has power to adjourn the meeting for any reason to such place and time as the chair thinks fit" - that there was power in the chair to adjourn the meeting as he did. That is not irrelevant to the present application, because if there were doubt as to the legality of the adjournment, there might not be utility in giving further advice about what might happen at the adjourned meeting. But it seems to me that there is no such doubt. 12Originally it was proposed that the adjourned meeting be held on Thursday, 12 June 2014. For reasons to which I adverted during the course of argument, it seemed to me at first sight that that would probably allow insufficient time for securityholders to receive notice, consider the additional information, seek professional advice if they desired to do so, and lodge a proxy or a new proxy by the then proposed closing date of 10 June 2014. Those concerns, however, which appear to have been shared by ASIC, have been accommodated by the acceptance of 20 June as the date for the adjourned meeting, with a closing date for proxies of 18 June. I am satisfied that that additional week will allow sufficient time for securityholders to be appropriately notified, obtain advice if they wish, and lodge a new proxy form if so desired. ASIC also is content with the revised date. The Draft Second Securityholder Booklet will require amendment to substitute those dates for those that presently appear in it. 13In line with my concern that information be fairly presented to securityholders, I have raised in the course of discussion a number of concerns with aspects of the proposed Second Supplementary Securityholders Book. I am prepared to advise that the trustees would be justified in distributing a Second Supplementary Securityholders Book in the form of the draft, subject to a number of amendments to which I shall now come. Some of these have already been at least provisionally accepted in the course of argument, but I shall, for the sake of consistency, deal with each of them. I will indicate the effect of the amendments I propose, not intending necessarily to confine the authors to those precise words, and allowing that their effect may be achieved by some modification to the precise words I indicate. These observations are made by reference to the draft that is comprised in exhibit SX16 and the pagination of that draft. 14In the Chairman's letter, page 2, third paragraph, commencing, "Whilst the Westfield Group security booklet", in the third line, delete "it is now clear that Westfield Group will" and substitute "it now appears that Westfield Group would". In the fifth line delete Westfield Group expects to" and substitute "Westfield Group says that it would". In the fourth paragraph, in the second line, delete "definitive". In the sixth paragraph, at the end of the paragraph, insert ", albeit falling short of the requisite 75 per cent." 15Under the heading, "What Are the Possible Implications of the Material New Information?", delete the first bullet point "notwithstanding ...", and insert it on page 4, after the paragraph commencing, "Further explanation of the disadvantages", in the amended terms, "Notwithstanding ongoing commentary to the contrary, the independent board committee believes that there is no prospect of an amended or enhanced deal being negotiated with Westfield Group". I interpose to explain that while it seems to me that that is, from a commercial perspective, a very pessimistic view, it might be justified by reason of the circumstance that the Westfield Group meetings have been completed and have approved the proposal, and it may be considered that there is very little prospect that those meetings would be reconvened to consider any further amended proposal. 16In the second last bullet point, commencing "As Westfield Trust", in the second-last line delete "will" and substitute "may". On page 3, the fourth paragraph, commencing "In addition to this we remind securityholders", delete "In addition to this we remind securityholders of". In the third line, delete "those advantages", so that the introduction to that paragraph will read, "The advantages of the revised proposal which was sent out in the security booklet dated 14 April 2014 include". Move the paragraph, presently underlined, commencing "After careful consideration" to page 4, immediately before the paragraph commencing "the independent expert". 17Page 10, paragraph 1.2, the third paragraph, commencing "This statement was clearly different", delete "Westfield Group has now stated clearly that if the proposal does not proceed, Westfield Group will", and substitute "Westfield Group has now indicated that if the proposal does not proceed, Westfield Group would". 18Paragraph 1.3, second paragraph commencing, "The existing relationships", third line, delete "members" and substitute "wholly owned subsidiaries". Move subparagraph (a) and the text that follows it to page 14, immediately preceding the first full paragraphs commencing, "Westfield Group has clearly outlined", in the amended form, "Notwithstanding ongoing commentary to the contrary, the independent board committee believes that there is no prospect ...". 19Page 14, the first complete paragraph commencing "Westfield Group has clearly outlined", delete "Westfield Group has clearly outlined that its determination to proceed with its strategic objective of separating the two businesses has not diminished and that it will pursue this proposal without Westfield Retail Trust", and substitute, "Westfield Group has stated that its determination to proceed with its strategic objective of separating the two businesses has not diminished and that it would pursue this proposal without Westfield Retail Trust." 20Advice is also sought as to certain provisions relating to who will be entitled to vote at the adjourned meeting. Those matters appear to be uncontroversial. In particular, as the adjourned meeting is not a new meeting, but a continuation of the meeting of 29 May [see Crawford v Australia and New Zealand Banking Group Limited (1994) 14 ACSR 310, 312], the same qualifications for eligibility to vote must apply as applied at the earlier meeting and, accordingly, the registration date of 27 May 2014 as the entitlement cut-off date remains appropriate. 21Accordingly the Court orders that: (1)RE1 and RE2 would be justified in distributing to Securityholders the Second Supplementary Securityholder Booklet, substantially in the form of the document which is Exhibit SX16, subject to the incorporation of amendments to the following effect: (a)In the Chairman's letter, page 2, third paragraph, third line, delete "it is now clear that Westfield Group will" and substitute "it now appears that Westfield Group would"; (b)Fifth line, delete "Westfield Group expects to" and substitute "Westfield Group says that it would"; (c)Fourth paragraph, second line, delete "definitive"; (d)Sixth paragraph, at end of paragraph insert ", albeit falling short of the requisite 75%."; (e)Under the heading "What are the possible implications of the Material New Information", delete first bullet point "notwithstanding ..." and insert it on page 4 after the paragraph commencing "Further explanation of the disadvantages" in the amended terms "The Independent Board Committee believes that, notwithstanding ongoing commentary to the contrary, there is no prospect of an amended or enhanced deal with Westfield Group."; (f)In the second last bullet point, in the second last line delete "will" and substitute "may"; (g)Page 3, fourth paragraph, delete "In addition to this, we remind security holders of". Delete "that was sent to Securityholders. Those advantages" and substitute ", which"; (h)Move paragraph presently underlined and commencing "After careful consideration ..." to page 4 before paragraph commencing "The independent expert"; (i)Page 10, paragraph 1.2, third paragraph commencing "This statement was clearly different ...", delete "Westfield Group has now stated clearly ... Westfield Group will" and substitute: "Westfield Group has now indicated that if the proposal does not proceed, Westfield Group would"; (j)Paragraph 1.3 second paragraph, third line, delete "members" and substitute "wholly owned subsidiaries"; (k)Delete subparagraph (a) heading and text that follows it, and move it to page 14 immediately preceding the first full paragraph commencing "Westfield Group has clearly outlined ..." in the amended form: "The Independent Board Committee believes that notwithstanding ongoing commentary to the contrary, there is no prospect ..." etc; (l)Page 14, first complete paragraph, delete "Westfield Group has clearly outlined that its determination ... without Westfield Retail Trust" and substitute: "Westfield Group has stated that its determination that its determination to proceed with its strategic objective of separating the two businesses has not diminished and that it would pursue this proposal without Westfield Retail Trust". (2)RE1 and RE2 would be justified in publishing an advertisement substantially in the terms of the document at tab 9 of Exhibit SX14. (3)RE1 and RE2 would be justified in resuming on 20 June 2013 the Securityholder Meeting (which was adjourned on 29 May 2014) for the purpose of considering and if thought fit voting on the Proposal Resolutions. (4)RE1 and RE2 would be justified in conducting the resumed meeting as follows: (a)the only persons who are entitled to attend and vote at the resumed meeting will be the Securityholders whose interests were recorded on the register of Westfield Retail Trust as at 7:00 pm on Tuesday, 27 May 2014 (the Entitlement Cut-Off) as being entitled to vote such interests; (b)Securityholders (as at the Entitlement Cut-Off) will be able to change their votes by submitting revised proxy forms should they wish to do so, provided they are received by no later than 10.00 am (AEST) on Wednesday, 18 June 2014 (Revised Proxy Deadline); (c)Securityholders (as at the Entitlement Cut-Off) who did not vote by the original Proxy Deadline of 2.00 pm (AEST) on Tuesday, 27 May 2014 will be entitled to submit proxy forms; (d)if a Securityholder submitted a valid proxy form by the original Proxy Deadline and he or she does not submit a revised proxy form by the Revised Proxy Deadline, then his or her vote will be cast in accordance with the directions of his or her previously submitted proxy form. (5)The costs of each of the plaintiffs be paid out of the assets of Westfield Retail Trust 1 and Westfield Retail Trust 2 respectively on the trustee basis pursuant to section 93 of the Trustee Act 1925 (NSW).