Fiducian Portfolio Services Ltd v Fiducian Investment Management Services Ltd

Federal Court of Australia|2024-02-05|Before: Mr J, Shariff J

Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between the plaintiff and holders of fully paid ordinary shares in the plaintiff, in the form set out within Appendix D of the Scheme Booklet (which is contained in Exhibit 'AWT-3' to the second affidavit of Andrew William Travis affirmed on 11 December 2023) (Scheme), be approved.
Pursuant to s 411(12) of the Act, SCC be exempted from compliance with s 411(11) of the Act.
These orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 On 12 December 2023, I made orders under ss 411(1) and 1319 of the Corporations Act 2001 (Cth) (the Act) that the plaintiff, Suncoast Cabs Ltd (Suncoast Cabs), convene and hold a meeting of its members (Scheme Shareholders) for the purpose of them considering and voting on the approval of a scheme of arrangement proposed to be made between Suncoast Cabs and the Scheme Shareholders (Scheme). 2 Following the holding of the meeting of the Scheme Shareholders (Scheme Meeting), Suncoast Cabs applied for orders under s 411(4)(b) of the Act for approval of the Scheme. In support of that application, Suncoast Cabs read the affidavit of Mr Clark Chappel affirmed on 31 January 2024. Mr Chappel is the Chairman of Suncoast Cabs and his evidence accorded with the Court's expectations as to the type of evidence that is to be adduced at the second Court hearing as set out in the Court's Scheme of Arrangement Practice Note (GPN-SOA). 3 On 5 February 2023, I made an order under s 411(4)(b) of the Act approving the Scheme and also made an order under s 411(12) of the Act that Suncoast Cabs be exempted from compliance with s 411(11) in relation to the Scheme. These are my reasons for making those orders and they should be read together with my reasons in Re Suncoast Cabs Ltd [2023] FCA 1605 (First Decision).

THE ROLE OF THE COURT 4 The Court's task is to ensure that the approval of the Scheme under s 411 of the Act complies with the law, including the relevant procedural and other requirements prescribed by the Act, the Corporations Regulations 2001 (Cth) and the Federal Court (Corporations) Rules 2000 (Cth), and that the requirements for a valid resolution of the shareholders have been satisfied: see Central Pacific Minerals NL [2002] FCA 239 at [12] per Emmett J; Re Tronox Ltd (No 2) [2019] FCA 681 at [13]-[14] per O'Callaghan J; Re Amcor Ltd (No 2) [2019] FCA 842 at [8]-[10] per Beach J; Re SILK Laser Australia Limited (No 2) [2023] FCA 1418 at [9] per Halley J. 5 In exercising its discretion whether to approve the Scheme, the Court takes into account, amongst other factors, whether the Scheme is fair and reasonable which, in turn, involves consideration of whether "an intelligent and honest [shareholder], properly informed, acting alone, might approve [the scheme]": Amcor at [11] citing Fowler v Lindholm [2009] FCAFC 125; (2009) 178 FCR 563 at [79] per Emmett, Gordon and Jagot JJ. 6 Without being exhaustive, the factors the Court needs to be satisfied about include: (a) whether there has been compliance with the orders made by the Court at the first hearing; (b) whether there has been compliance with s 412 of the Act; (c) whether there has been an accurate and comprehensive disclosure of the details of the Scheme and its effect to those voting on it; (d) whether there is any suggestion of oppression of any minority shareholder and whether any third parties will be disproportionately adversely affected by the operation of the Scheme; (e) whether the Scheme offends any aspect of public policy; (f) whether the Scheme has been approved by the requisite majorities required by s 411(4)(a)(ii) of the Act; (g) whether s 411(17) of the Act has been satisfied, including whether the Australian Securities and Investments Commission (ASIC) opposes the Scheme; (h) whether the conditions precedent to the Scheme have been satisfied or waived; (i) whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class of members, properly informed and acting alone, might approve it; (j) whether the plaintiff has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion; and (k) other factors that may be relevant to the exercise of the Court's discretion. 7 It is also relevant to note that, in deciding whether to approve the Scheme, the Court is not bound to approve it merely because it has previously made orders for the convening of meetings or because the statutory majorities have been achieved: SILK at [11]. However, the Court will usually approach the task on the basis that the members are better judges of what is in their commercial interests than the Court: SILK at [12].

Reasons for granting approval 8 As to the formal procedural requirements, I was satisfied on the evidence of Mr Chappel that the orders I made on 12 December 2023 had been complied with. Specifically: (a) a copy of the Court's orders dated 12 December 2023, a completed ASIC Form No 105 and the scheme booklet (Scheme Booklet) were lodged with ASIC shortly after the orders were made; and (b) the Scheme Booklet and materials for the Scheme Meeting were despatched to Scheme Shareholders in accordance with the orders I made on 12 December 2023. 9 On 27 December 2023, before the Scheme Meeting was held, Suncoast Cabs declared a fully franked dividend in the amount of $1,162.34 per share in Suncoast Cabs, which will be payable subject to the Scheme becoming effective. The fact and quantum of the declared dividend was in line with the intention set out in the Scheme Booklet: see First Decision at [13], [41]-[47]. 10 The bidder, BWHL Pty Ltd (BWHL), which is seeking to acquire the entire shareholding in Suncoast Cabs, provided information to Suncoast Cabs and Scheme Shareholders contained in an Information Memorandum and also invited them to attend one of four scheduled meetings held on 9 January 2024. The latter briefings allowed an opportunity for the Scheme Shareholders to further understand the Scheme. The material presented by BWHL was consistent with that contained in the Scheme Booklet. 11 The Scheme Meeting was held on 14 January 2024. I was satisfied that the requisite statutory majorities for approval for the purposes of s 411(4)(a) of the Act had been achieved at the Scheme Meeting. The evidence established that: (a) 79 of the 80 shareholders of Suncoast Cabs voted at the Scheme Meeting (either in person or by proxy, attorney or corporate representative), meaning the shareholder participation rate was equal to 98.75%; (b) 96.20% of shareholders present and voting (in person or by proxy, attorney or corporate representative) voted in favour of the Scheme; and (c) 95.79% of the votes cast by shareholders present and voting (in person or by proxy, attorney or corporate representative) were in favour of the Scheme. 12 I was satisfied that the condition precedent certificates tendered into evidence established that there was no impediment to implementation of the Scheme so as to stand in the way of approval. I was satisfied that the tender of such certificates in this case was adequate proof of satisfaction that those conditions had been met: see In the matter of Investa Listed Funds Management Limited as responsible entity for the Armstrong Jones Office Fund and the Prime Credit Property Trust (No 2) [2018] NSWSC 1995 at [13] per Black J; Fiducian Portfolio Services Ltd v Fiducian Investment Management Services Ltd (No 2) [2015] FCA 95; (2015) 228 FCR 587 at [48] per Yates J. 13 There was no evidence as to any defect in the procedures taken in advance of or during the Scheme Meeting, or the information relating to it. The Scheme's potential advantages and disadvantages were set out in the Scheme Booklet and were a matter for shareholders to judge. In making their assessments to approve the Scheme, the Scheme Shareholders had the benefit of the opinion of the independent expert as set out in the Scheme Booklet. The Scheme was also supported by the directors of Suncoast Cabs. 14 I was satisfied that Scheme Shareholders had had the opportunity to make and had made an informed decision in their interests. There was nothing before me to suggest that the Scheme Shareholders voted other than in good faith, that they cast their votes for an improper purpose, or that any member had been treated in a way that may be characterised as oppressive. 15 No notice had been received of any opposition to the Scheme, no shareholders appeared to oppose the Scheme being approved at the second Court hearing and ASIC had provided a statement pursuant to s 411(17)(b) of the Act stating that it had no objections to the Scheme. 16 As a result of the above, I was satisfied that all of the procedural and other requirements of the Act had been satisfied. 17 I was satisfied that I should exercise my discretion to approve the Scheme. As noted in the First Decision at [4]-[6], Suncoast Cabs operates as a form of members' co-operative by which those persons holding "taxi services licences" in the Sunshine Coast area have formed a company to provide them and each other with services for the benefit of all of them. The Scheme involves the transfer of all the issued ordinary shares in Suncoast Cabs to BWHL. BWHL is a privately held company, which is a part of a broader group of companies that provide taxi management service more broadly in Queensland and elsewhere under the brand "Black & White Cabs". If implemented, the Scheme does not involve any of the Scheme Shareholders, or other persons, surrendering or transferring their respective licences. The Scheme Shareholders will, however, receive cash consideration of $1,812.50 per share and a dividend in the amount of $1,162.34 per share. I had no reason to doubt that in these circumstances the Scheme Shareholders are the best judges of their commercial interests. 18 In all the circumstances, including the obtaining of the statutory majorities in the Scheme Meeting, I was satisfied that the Scheme was one that an intelligent, honest and properly informed shareholder, acting alone, might approve.

Exemption under s 411(12) 19 Section 411(12) confers a discretion on the Court to exempt Suncoast Cabs from compliance with s 411(11). Section 411(11) requires that a copy of the Court's order approving a scheme of arrangement be annexed to every copy of Suncoast Cabs' Constitution issued after the order is made. 20 I was satisfied that it was appropriate to make an order pursuant to s 411(12) of the Act exempting Suncoast Cabs from compliance with s 411(11). No ongoing purpose would be served by requiring that these orders be annexed to Suncoast Cabs' Constitution.

Conclusion 21 For the foregoing reasons, I was satisfied that the orders that were sought should be made and, accordingly, exercised my discretion to make those orders. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Shariff.

Act, the Corporations Regulations 2001(Cth)

Corporations Act 2001(Cth)ss 411, 411(1), 411(4)(a), 411(4)(a)(ii), 411(4)(b), 411(11), 411(12), 411(17), 411(17)(b), 1319

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