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[2018] FCA 743
Federal Court of Australia
2018-05-10
Markovic J
Original judgment source is linked above.
MARKOVIC J: 1 On 29 March 2018 the Court made orders, among other things, to convene a meeting of LifeHealthcare's shareholders (Scheme Shareholders) for the purpose of considering a scheme of arrangement (Scheme) between the plaintiff, LifeHealthcare Group Limited (LifeHealthcare) and its shareholders (Scheme Meeting): see Lifehealthcare Group Limited, in the matter of Lifehealthcare Group Limited [2018] FCA 586 (Lifehealthcare (No 1)). 2 On 10 May 2018 I made orders, including an order pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), approving the Scheme. These are my reasons for making those orders. 3 The details of the Scheme are set out in Lifehealthcare (No 1).
Legal principles 4 The role of the Court in approving a scheme of arrangement is supervisory. The Court has a discretion whether to approve a scheme and is not bound to approve it merely because it has previously made orders for the convening of a meeting or because the statutory majorities have been achieved: Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583; [2010] FCA 400 (Re Seven Network) at [31] citing Re NRMA Ltd (No 2) (2000) 156 FLR 412; [2000] NSWSC 408 at [22]. However, the Court will usually approach the task on the basis that a company's members are better judges of what is in their commercial interests than the Court: Re Seven Network at [32]-[33]. 5 The relevant matters to be taken into account in deciding whether to approve a scheme of arrangement are: (1) whether the orders of the Court convening the scheme meeting were complied with; (2) whether the resolution to approve the scheme was passed by the requisite majority and whether other statutory requirements have been satisfied; (3) whether all conditions to which the scheme is subject (other than Court approval and lodgement of the Court's orders with the Australian Securities and Investments Commission (ASIC)) have been met or waived; (4) whether the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it. In considering this question, it is not the role of the Court to impose its own commercial judgment on the scheme or to consider whether a better scheme might have been proposed; (5) 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 (6) whether there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme, see Signature Capital Investments Limited, in the matter of Signature Capital Investments Limited (No 2) [2016] FCA 385 at [4] and the cases cited therein.
consideration 6 Having regard to the matters set out at [5] above and the evidence relied on by LifeHealthcare, I was satisfied that the Scheme should be approved. 7 First, the evidence established that there had been compliance with the orders made by the Court on 29 March 2018. In particular: (1) copies of the explanatory statement were distributed to Scheme Shareholders on 4 April 2018, either in hard copy by prepaid post or by email, depending upon the nominated preference of particular shareholders; (2) a notice of hearing in the form of Annexure A to the orders made on 29 March 2018 was published in The Australian newspaper on 4 May 2018, a date which was not less than five days prior to the date of the second Court hearing; and (3) the Scheme Meeting was held at 10.00 am (Sydney time) on 3 May 2018 at Computershare, Level 4, 60 Carrington Street, Sydney NSW 2000, was chaired by William Best and was conducted in accordance with the terms of the Court's orders. Mr Best gave evidence that a quorum was present at the meeting. 8 Secondly, Mr Best gave evidence that at the Scheme Meeting: (1) 429 Scheme Shareholders who were present in person or by proxy voted in favour of the Scheme and eight Scheme Shareholders who were present in person or by proxy voted against it; (2) the 429 Scheme Shareholders who voted in favour of the Scheme cast an aggregate of approximately 25 million votes representing 99.88% of the total eligible votes cast on the resolution. The eight Scheme Shareholders who voted against the resolution cast an aggregate of 31,595 votes representing 0.12% of the total eligible votes cast on the resolution; and (3) six Scheme Shareholders, holding an aggregate of 18,996 votes, abstained from voting. 9 Mr Best also gave evidence that, and as is evident from the matters set out in the preceding paragraph, the resolution proposing the Scheme was passed by a majority in number of Scheme Shareholders present at the Scheme Meeting and voting, whether in person or by proxy, and by more than 99.88% of the votes cast on the resolution. 10 Accordingly, I am satisfied that the statutory majorities in favour of the Scheme have been obtained. 11 Thirdly, all conditions to which the Scheme is subject have been satisfied. Two certificates of satisfaction of conditions precedent were tendered in evidence by which LifeHealthcare and Pacific Health Supplies BidCo Pty Limited respectively certified that the conditions precedent to the Scheme, other than Court approval, had been satisfied. 12 Fourthly, I am satisfied that all statutory requirements have otherwise been satisfied. ASIC has provided LifeHealthcare with a letter pursuant to s 411(17)(b) of the Act stating that it has no objection to the Scheme which is sufficient to satisfy the requirements of s 411(17) of the Act. 13 Fifthly, I was satisfied that the Scheme is fair and reasonable. The independent expert's report, described in Lifehealthcare (No 1) at [11]-[15], concluded that the Scheme is fair and reasonable based on its assessment that the Scheme Consideration (as defined at [6] of Lifehealthcare (No 1)) falls within the assessed valuation range for a LifeHealthcare share having regard to the guidelines set out in ASIC Regulatory Guide 111 - Content of Expert Reports. Further, the Scheme was supported by the requisite majorities of shareholders at the Scheme Meeting and no one appeared at the second Court hearing to oppose the Scheme. 14 Sixthly, I am satisfied that all necessary matters have been brought to the Court's attention. At the first Court hearing certain matters were brought to the Court's attention and were addressed: see Lifehealthcare (No 1) at [34]-[47]. Those matters did not justify the Court refusing to convene the Scheme Meeting and would not justify the Court refusing to approve the Scheme. I am also satisfied that LifeHealthcare has brought to the Court's attention all matters relevant to its consideration of whether it should approve the Scheme. 15 Finally, I was satisfied that there has been full and fair disclosure to Scheme Shareholders of all information material to the decision whether to vote for or against the Scheme. At the first Court hearing, evidence was adduced that the information contained in the Scheme booklet had been verified: see Lifehealthcare (No 1) at [26]-[29]. Further, there is no evidence of any criticism of the disclosure made by any Scheme Shareholder or by ASIC.
conclusion 16 For those reasons I was satisfied that the Scheme should be approved and made the orders sought by LifeHealthcare. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.