Empired Limited, in the matter of Empired Limited (No 2) [2021] FCA 1409 - FCA 2021 case summary — Zoe

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Empired Limited, in the matter of Empired Limited (No 2) [2021] FCA 1409

[2021] FCA 1409

Federal Court of Australia|2021-11-01|Before: Mr AJ, McKerracher J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2021-11-01

Before

Mr AJ, McKerracher J

Catchwords

CORPORATIONS - scheme of arrangement - second court hearing - application for approval - scheme approved

Source

Original judgment source is linked above.

Catchwords

CORPORATIONS - scheme of arrangement - second court hearing - application for approval - scheme approved

Judgment (20 paragraphs)

[1]

Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement between the plaintiff and its shareholders (Scheme), in the form which appears at Annexure C of the Scheme Booklet that was despatched to shareholders in accordance with the orders made by this Court on 20 September 2021, as amended by orders made by the Court on 22 September 2021, be approved.
Pursuant to s 411(12) of the Act, the plaintiff be exempted from complying with s 411(11) of the Act in relation to the Scheme.
A one-day abridgement of the notice period in r 3.4(3)(b) of the Federal Court (Corporations) Rules 2000 (Cth) be granted.
The plaintiff lodge an office copy of these orders with the Australian Securities and Investments Commission as soon as practicable. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

[2]

MCKERRACHER J: 1 On 25 October 2021, holders of ordinary shares (Shareholders) in the plaintiff (Empired) voted in favour of a scheme of arrangement between Empired and its Shareholders, under which Capgemini Australia Pty Ltd ACN 092 284 314 will acquire all of the issued ordinary shares in Empired for cash consideration (Scheme). 2 Empired seeks orders: (a) under s 411(4)(b) of the Corporations Act 2001 (Cth), approving the Scheme; (b) pursuant to s 411(12) of the Act, exempting Empired from compliance with s 411(11) of the Act; and (c) pursuant to r 3.4(2) of the Federal Court (Corporations) Rules 2000 (Cth), abridging the notice period in r 3.4(3)(b) by one day to allow Empired to apply to the Court for approval of the scheme on 1 November 2021. 3 Capitalised terms which are used (but not defined) in these reasons have the same meanings as they do in the reasons for orders made on 20 September 2021 at the First Court Hearing.

[3]

EVIDENCE 4 Empired relies on the affidavits of: (a) Mr Mark Paganin, sworn and filed on 28 October 2021, as to the registration of the Scheme Booklet by the Australian Securities and Investments Commission (ASIC) and the provision of notices to ASIC; (b) Ms Nicole Lewis, sworn and filed on 27 October 2021, as to the postal and electronic despatch of the 'Scheme Materials' (as defined in that affidavit) by Computershare Investor Services Pty Limited, Computershare's maintenance of the Register of Shareholders, and online proxy voting access for Shareholders (Second Lewis Affidavit); (c) Mr David Hinton sworn and filed in this proceeding on 28 October 2021, as to: (i) the advertising of the Second Court Hearing; and (ii) his supervision of Computershare, including the despatch of the Scheme Materials; (d) Mr Thomas Stianos sworn and filed on 28 October 2021, as to his role as chairperson, the treatment of proxies, and voting results of the Scheme Meeting held on 25 October 2021 (Second Stianos Affidavit); (e) a further affidavit of Mr Paganin (Fifth Paganin Affidavit) sworn and filed on the morning of 1 November 2021, regarding: (i) satisfaction or waiver of all conditions precedent to the implementation of the Scheme by Empired (other than the condition precedent requiring Court approval of the Scheme); (ii) confirmation that no notices of appearances, or appearances, have been filed in the present proceeding; and (iii) the provision by ASIC of a letter in relation to s 411(17)(b) of the Act; and (f) an affidavit of a solicitor of Capgemini, Mr Christopher Hicks sworn and filed on the morning of 1 November 2021, regarding satisfaction or waiver of all conditions precedent to the implementation of the Scheme by Capgemini (other than the condition precedent requiring Court approval of the Scheme). 5 Empired also relies on the affidavits previously filed, which contain details of the Scheme and the disclosures made. These affidavits include the first affidavit sworn by Ms Lewis on 22 September 2021 (First Lewis Affidavit).

[7]

Court's Discretion to Approve 11 In approving a scheme of arrangement, the role of the Court is supervisory in nature, requiring the Court to be satisfied that there has been no oppression, and that the arrangement is capable of being accepted. Although the Court is not bound to approve just because it made an order to convene a scheme meeting, or because the statutory majorities have been achieved, the Court will usually approach its task on the basis that the members are better judges of what is in their own commercial interests than the Court: Re Gindalbie Metals Ltd (No 2) [2019] FCA 1066 per Colvin J (at [19]) and Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583 per Jacobson J (at [31]-[34]). 12 Courts are generally reluctant to intervene against schemes in which the requisite majorities have been reached by fully-informed members, who have been made aware of all matters relevant to the making of their voting decisions, as I noted in Re Altona Mining Ltd [2018] FCA 614 (at [8]). 13 In exercising the discretion to approve the Scheme, the Court must consider whether: (a) the Scheme is fair and reasonable, such that an intelligent and honest person, properly informed and acting alone in respect of his or her interest as a shareholder, might approve it; (b) the Shareholders have voted in good faith and not for an improper purpose; (c) Empired has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion; (d) there has been full and fair disclosure of all information material to the decision as to whether to vote for or against the Scheme; (e) minority shareholders would be oppressed by the Scheme; (f) the Scheme offends public policy; (g) all conditions to which the Scheme is subject (other than Court approvals and lodgement of the Court's orders with ASIC) have been met or waived; and (h) statutory and procedural requirements in relation to s 411 of the Act have been duly observed. (see, for instance, Re Opus Group Ltd (No 2) [2018] FCA 1413 per Banks-Smith J (at [7])). 14 As detailed below, the evidence shows that all statutory, procedural and legal requirements are satisfied. 15 I am satisfied it is appropriate for the Court to exercise its discretion to order that: (a) the Scheme be approved, for the reasons set out below; and (b) Empired be exempted from compliance with s 411(11) of the Act, as approval of the Scheme will not result in any amendment to, or change in the construction of, Empired's Constitution and after the implementation of the Scheme, Capgemini will be the holder of all of shares in Empired: as to which, see Re Kumarina Resources Ltd [2013] FCA 549 per Gilmour J (at [60]-[61]).

[9]

Notice of Second Court Hearing 16 On 23 September 2021, and on 24 September and 1, 8 and 15 October 2021, in the case of Bounce Back Shareholders and New Shareholders (as defined in the Second Lewis Affidavit), the Scheme Booklet was despatched to Shareholders. 17 The Scheme Booklet despatched to Shareholders included statements that: (a) in order to become effective, the Scheme would need to be approved by an order of the Court; (b) Empired intended to apply to the Court on 1 November 2021 for approval of the Scheme; and (c) Shareholders who wished to oppose the approval of the Scheme could do so by filing with the Court, and serving on Empired, a notice of appearance. 18 At the Scheme Meeting on 25 October 2021, the chairperson, Mr Stianos, stated that Empired intended to apply to the Court for approval of the Scheme on 1 November 2021, and that Shareholders were entitled to appear at that hearing. 19 Order 10 of the First Orders stated that Empired would satisfy its notice obligation under r 3.4(3)(b) of the Corporations Rules so long as it caused a notice of the Second Court Hearing (substantially in the form of Annexure A to the First Orders) to be published in The Australian newspaper on or before 26 October 2021, and that Empired would otherwise be exempted from compliance with r 3.4 of the Corporations Rules. 20 On 26 October 2021, notice of the Second Court Hearing (substantially in the form of Annexure A to the First Orders) was published in The Australian newspaper. A copy of that notice, as published, is in evidence. The notice directed persons who wished to oppose the approval of the Scheme to file, and serve on Empired by no later than 31 October 2021, a notice of appearance and any supporting affidavit at Empired's address for service provided in the advertisement. Mr Cameron Belyea of Clayton Utz was named as the relevant contact. 21 ASIC has been made aware of the Second Court Hearing. 22 No person has provided any notice of an intention to oppose the grant of the orders approving the Scheme (whether during the Scheme Meeting or otherwise).

[11]

Despatch of Scheme Materials 25 As required under order 5 of the First Orders, the Scheme Booklet, substantially in the form approved by the Court under order 1(c) of the First Orders, was registered with ASIC on 22 September 2021. 26 Order 5 of the First Orders required the Scheme Booklet and other materials identified in that order to be despatched to each Shareholder recorded on the Register as at 5:00 pm (AWST) on 21 September 2021. Due to an oversight, those materials were instead initially despatched to each Shareholder recorded on the Register as at 5:00 pm (AWST) on 20 September 2021. 27 Only one Shareholder came onto the Register between 5:00 pm (AWST) on 20 September 2021 and 5:00 pm (AWST) on 21 September 2021, and that Shareholder voted in favour of the resolution which was put at the Scheme Meeting. 28 The Scheme Booklet and other materials identified in order 5 of the First Orders (Scheme Materials) (or electronic equivalents, as identified in orders 5(a) and 5(c)) were despatched on 23 September 2021 to each Shareholder recorded on the Register as at 5:00 pm (AWST) on 20 September 2021, by: (a) in the case of 659 Shareholders who had nominated an electronic address for the purpose of receiving Empired communications (including notices of any meeting) from Computershare (Email Shareholders), sending an email broadcast in the form of annexure NBL-4 to the First Lewis Affidavit (the Email Broadcast), containing links to websites at which recipients could access the Scheme Booklet, and lodge electronic proxy forms for the Scheme Meeting; (b) in the case of 18 Shareholders had who had expressly elected to receive physical copies of Empired communications (including notices of any meetings) (Postal Shareholders), mailing the Scheme Materials (by prepaid post, or prepaid international airmail or air courier, as applicable) to those Shareholders' registered postal addresses; and (c) in the case of 692 Shareholders who had neither nominated an electronic address nor expressly elected to receive physical copies of Empired communications (including notices of any meetings) (Default Shareholders) mailing a notice (by prepaid post, or prepaid international airmail or air courier, as applicable) to those Shareholders' registered postal addresses, such notice being in the form of annexure NBL-3 to the First Lewis Affidavit and containing links to websites at which recipients could access the Scheme Booklet and lodge electronic proxy forms for the Scheme Meeting. 29 In accordance with order 7 of the First Orders, on 24 October 2021 Computershare caused physical copies of the Scheme Materials to be despatched, by priority post, to the registered postal addresses (within Australia) of three Email Shareholders, whose email addresses had returned undeliverable notifications when Computershare despatched the Email Broadcast on 23 September 2021 (the Bounce Back Shareholders as defined in the Second Lewis Affidavit). 30 On 1, 8 and 15 October, Computershare caused physical copies of the Scheme Materials to be despatched, by priority post, to a total of 17 new Shareholders who had come onto the Register after 5:00 pm on 20 September 2021.

[17]

Limitation of Liability Clause 48 Clause 7.11 of the Scheme Document (forming Annexure C to the Scheme Booklet) states: 'Neither [Empired] nor [Capgemini], nor any of their respective officers, directors, secretaries or employees, will be liable for anything done or omitted to be done in the performance of this Scheme or the Deed Poll in good faith'. 49 In Re Wesfarmers Limited (No 2) (at [49(4)]), Vaughan J considered a materially identical clause to that identified in the preceding paragraph. His Honour observed as follows: Clause 7.4 provides Wesfarmers, Coles and their officers with an exclusion from liability to scheme participants for acts or omissions done in performance of the scheme or the deed poll in good faith. I questioned whether the clause was necessary or appropriate. Wesfarmers identified that a similar clause had been approved in at least 12 schemes approved since 2006. However, there has been no express curial consideration of the clause. On its proper construction the clause will not exclude liability for acts or omissions in breach of the scheme terms or in breach of the deed poll. Such acts or omissions could not be in performance of the scheme or the deed poll. Accordingly, the clause will not deprive members of their intended benefits under the scheme. To the extent that the clause offers some comfort to those who must implement the mechanics of the scheme it may be seen as facilitating the scheme. I was thus persuaded that cl 7.4 ought to remain as part of the scheme to be approved. 50 Vaughan J's decision has been followed by this Court, for example by Colvin J in Re Patersons Securities Ltd (No 2) [2019] FCA 1645 (at [9]). 51 Like the clause considered in Re Wesfarmers Limited (No 2), cl 7.11 of the Scheme Document will not exclude liability for any act or omission done in breach of the terms of the Scheme (as such acts or omissions could not be 'in performance of' the Scheme). Therefore, the clause will not operate to deprive Shareholders of their intended benefits under the Scheme.

[20]

The Scheme will be approved 57 I am satisfied as to the following matters: (a) full disclosure has been made to Shareholders, both as to the benefits and potential benefits of the Scheme, and as to its potential disadvantages. Relevantly, the Scheme Booklet contains: (i) a detailed summary of the advantages and disadvantages of the Scheme; (ii) details of the break fee payable by Empired in certain circumstances; (iii) an independent expert's report from Lonergan Edwards & Associates Limited as to whether the Scheme is in the best interests of Shareholders at Annexure B of the Scheme Booklet; (iv) the terms of the Scheme at Annexure C of the Scheme Booklet; and (v) a deed poll in favour of each of the 'Scheme Shareholders', executed by Capgemini, at Annexure E of the Scheme Booklet; (b) Empired has included detailed verified information in the Scheme Booklet to fully inform the Shareholders of the Scheme and decide on whether to approve it; (c) the Scheme Booklet sent to the Shareholders complies with the requirements of s 411 and s 412 of the Act; (d) any performance risk in respect of Empired and Capgemini's obligations under the SIA and the Scheme Document has been sufficiently protected against; (e) the Scheme is commercially viable and does not prejudice the interests of Shareholders, and in the opinion of the independent expert the Scheme is fair and reasonable and in the best interests of Shareholders in the absence of a superior offer; (f) Empired has not received any superior offer; (g) Empired has complied with the First Orders; (h) the Scheme has been proposed in good faith and is not commercially immoral in any respect; (i) votes in favour of the Scheme are in favour of the Scheme. There is nothing to suggest that Shareholders voted other than in good faith or that they cast their votes for an improper purpose. It is therefore apparent that Shareholders consider the Scheme to be to their commercial advantage; and (j) ASIC has been given notice of the Scheme, and has provided a statement of 'no objection' pursuant to s 411(17)(b) of the Act. 58 There is nothing proposed in the Scheme which is offensive to any substantive or procedural requirement under the Act or otherwise. Further, the evidence before the Court indicates that there is a sound commercial basis, in the interests of the Shareholders, for the Scheme to proceed. 59 The Court accordingly approved the Scheme pursuant to s 411(4)(b) of the Act. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McKerracher.

Empired Limited, in the matter of Empired Limited (No 2) [2021] FCA 1409

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Judgment (20 paragraphs)

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Cases Cited (13)