Patersons Securities Limited, in the matter of Patersons Securities Limited (No 2) [2019] FCA 1645

COLVIN J: 1 Patersons Securities Limited seeks the approval of a scheme of arrangement. For these reasons I am satisfied that the scheme orders sought should be made. 2 First, I am satisfied that a meeting of members has been duly convened and held in accordance with the orders of the Court made previously: Patersons Securities Limited, in the matter of Patersons Securities Limited [2019] FCA 1438. The Court has been provided with affidavits and a checklist verifying compliance with those orders. 3 Second, 74 out of a total of 204 shareholders were present and voted at the meeting. Those attending held about 85% of the shares on issue and all votes at the meeting were in favour of the resolution. 4 Third, the level of turnout at the meeting was not at a level that might indicate that anything went awry in relation to the convening of the meeting and notification to shareholders. 5 Fourth, the details of today's hearing were announced at the meeting and have been advertised and no interested party appears today to oppose the orders sought. 6 Fifth, there is affidavit evidence to the effect that the conditions precedent to the operation of the scheme have been met or waived. 7 Sixth, the Australian Securities and Investment Commission has provided a no objection letter in the usual terms, which meets the requirements of s 411(17)(b) of the Corporations Act 2001 (Cth). 8 Seventh, there is no matter indicated by the materials before me that would cause the Court to consider the exercise of its residual discretion against the making of the orders. For reasons I gave at the time of making orders allowing for the convening of the scheme meeting, I am satisfied the scheme is a reasonable commercial proposition. It is in the category of matters where the commercial merits of the scheme are a matter for shareholders to judge. There is no suggestion that there is bad faith, fraud on the minority or commercial unreasonableness that might cause the Court to consider refusing to make the orders sought. 9 Eighth, there is a limitation of liability provision in the scheme document. It takes the form of providing that neither of the parties involved in the scheme, nor any of their respective officers or employees will be liable for anything done or omitted to be done in the performance of the scheme in good faith. A clause of that kind was considered by Vaughan J in Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [No 2] [2018] WASC 357 at [49]. His Honour found that the clause would not exclude liability for acts or omissions in breach of the scheme document because the exclusion was only for matters done in performance of the scheme. The scheme before me is presented on the basis that the same interpretation should be adopted in this case. On that basis no issue arises by reason of the form of the exclusion. 10 Ninth, it remains the case that none of the directors of Patersons stand to receive any bonus or benefit other than as a shareholder by virtue of the scheme. 11 Tenth, since approval to convene the scheme meeting was given, audited accounts have been prepared leading to some adjustments to the management accounts that were before the Court at the time that the scheme booklet was approved for dispatch. The adjustments made have been communicated to the independent expert who has concluded that the adjustments do not impact the contents of the expert's report. The audited accounts were released publically on 30 September 2019. There is verification that the contents do not differ materially from the management accounts provided at the time I made orders allowing the scheme meeting to be convened. 12 Finally, I should make clear that the additional payment referred to at [8] of my earlier reasons is payable as a special dividend if the specified circumstances arise. 13 In addition to making orders approving the scheme, I am asked to make an order pursuant to s 411(12) of the Act that Patersons be exempted from complying with s 411(11) of the Act. Section 411(11) would otherwise require a copy of the orders made today to be annexed to every copy of the constitution of Patersons issued after today. The scheme will result in Patersons becoming a wholly owned subsidiary of Cannacord Financial Group (Australia) Pty Ltd without any alteration to the manner of operation of the constitution of Patersons. In those circumstances I am satisfied that such an order should be made. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.