RE EDGE MINERALS LTD; EX PARTE EDGE MINERALS LTD [2022] WASC 395 (28 November 2022)

1. Eleven affidavits were filed on behalf of Edge for the purpose of the first court hearing and a further two affidavits were filed on behalf of Trek, all of which were read by counsel for Edge in support of the application. The evidence relied upon at the first court hearing is summarised below.

1. The first affidavit was deposed by Rachel Elizabeth Barclay, a solicitor employed by the firm Steinepreis Paganin, and was sworn on 5 September 2022. Steinepreis Paganin act on behalf of Edge in relation to the scheme of arrangement. Ms Barclay attached to her affidavit documents marked REB-1 to REB-13.
2. In her first affidavit, Ms Barclay deposed to Edge and Trek entering into the scheme implementation agreement and to the release of an announcement to the ASX concerning the same; and to Edge and Trek entering into a deed of acknowledgement concerning the scheme implementation agreement on 26 July 2022. She also briefly described the corporate history of Edge.
3. The attachments to Ms Barclay's affidavit included copies of the scheme implementation agreement; the ASX announcement made by Trek on 6 June 2022; the proposed scheme timetable; the deed of acknowledgement dated 26 July 2022; and the proposed scheme of arrangement. Ms Barclay also attached to her affidavit a copy of the draft scheme booklet prepared by Edge with the assistance of Steinepreis Paganin for circulation to Edge shareholders, a copy of which had been lodged with ASIC. The draft scheme booklet was a 295 page document which included five annexures, being a draft of an independent expert's report prepared by RSM Corporate Australia Pty Ltd; the scheme of arrangement; a draft deed poll intended to be provided by Trek in favour of each Edge shareholder; a variation deed entered into by Edge and Trek on 9 August 2022 amending the scheme implementation agreement; and a draft notice of scheme meeting.
4. Also attached to Ms Barclay's first affidavit was correspondence as between ASIC and Steinepreis Paganin in relation to the draft scheme booklet and the proposed scheme of arrangement; a further copy of the draft scheme deed poll; a further copy of the variation deed dated 9 August 2022; a copy of Edge's constitution; and an ASIC search in relation to Edge conducted on 2 September 2022.

1. The second affidavit was the affidavit of Mr Boys deposed on 9 September 2022. Mr Boys deposed to Edge and Trek having entered into the scheme implementation agreement and to the release of an announcement to the ASX concerning the same. He also deposed to the implied value of the scheme consideration; to Edge's registration; to the constitution of Edge's board of directors; and to the number of Edge shares on issue as at the date of his first affidavit.
2. Mr Boys described in his affidavit the conditions precedent to the scheme of arrangement; the scheme consideration; the proposed treatment of Ineligible Foreign Shareholders and Unmarketable Parcel Shareholders; the proposed method by which shareholders would receive notice of the scheme meeting; the proposed time and place for the scheme meeting; the process by which the scheme booklet was drafted and verified; and the lodgement of the draft scheme booklet with ASIC.
3. As to the drafting and verification of the scheme booklet, Mr Boys deposed that other than the independent expert's report and the information concerning Trek, the drafting of the scheme booklet had been overseen by him and by Mr Hardwick on behalf of Edge, and Steinepreis Paganin in its capacity as legal advisor to Edge, having regard to the legislative requirements in respect of the content of the scheme booklet, and to the verification process undertaken. In his first affidavit, Mr Boys further commented upon material clauses of the scheme implementation agreement, including the break fee provision, the exclusivity provisions, and the matching right provision.
4. As to the negotiations with Trek in relation to the break fee, exclusivity and the matching right, Mr Boys deposed that the provisions were agreed by him on behalf of Edge based on legal advice received from Steinepreis Paganin and with regard to the Takeovers Panel's Guidance Note 7: Lock-up devices. He further deposed that Trek was separately represented by Blackwall Legal, and to his belief that neither the break fee, the exclusivity provisions nor the matching right would operate against the interests of Edge shareholders. He deposed to his belief that it was in their interests that the provisions be included in the scheme implementation agreement to secure Trek's execution of that and its obligation to implement the scheme of arrangement.
5. Mr Boys deposed as to his knowledge that there had been further communication between Steinepreis Paganin and ASIC in relation to the scheme of arrangement. Finally, he deposed to the steps which would be taken by Edge if the court were to approve the convening of a scheme meeting.
6. To his first affidavit Mr Boys attached copies of Edge's certificate of registration provided by ASIC; a list of all holders of Edge shares as at 7 September 2022; a list of the top 20 shareholders of Edge as at 7 September 2022; notices and forms proposed to be sent to Edge shareholders, including an opt‑in notice, notice of access, and proxy forms; a proposal from Georgeson Shareholder Communications executed by Mr Boys; the verification draft; the circular resolutions of the Edge directors dated 3 June 2022 and 22 August 2022; a document prepared by Steinepreis Paganin for Edge showing the value of the break fee as a percentage of the total equity value of Edge; and documents concerning previous scheme of arrangement approved by the court with respect to Brambles Industries Ltd and Northern Star (KLV) Pty Ltd.

Interests of Edge directors in the outcome of the scheme of arrangement

1. Mr Boys deposed to the board of Edge having unanimously approved entry into the scheme implementation agreement, having noted that three of the four directors had material personal interests in the matters resolved. As to the interests of the Edge directors in the outcome of the scheme, Mr Boys deposed as follows:

(a) Mr Tony Leibowitz indirectly holds and controls 465,346 Edge Shares, being an interest of 2.04%. Mr Leibowitz is also the non‑executive chairman of [Trek] and indirectly holds and controls in 14,966,953 [Trek] Shares (being an interest of 4.82%), 1,500,000 [Trek] Options (exercisable at $0.10 on or before 5 March 2023), 1,000,000 [Trek] Class A Performance Rights, 1,000,000 [Trek] Class B Performance Rights and 1,000,000 [Trek] Class C Performance Rights;

(b) Mr Neil Biddle indirectly holds and controls 516,701 Edge Shares, being an interest of 2.27%. Mr Biddle is also a non‑executive director of [Trek] and indirectly holds and controls 10,313,726 [Trek] Shares (being an interest of 3.32%), 500,000 [Trek] Options (exercisable at $0.10 on or before 5 March 2023), 1,000,000 [Trek] Class A Performance Rights, 1,000,000 [Trek] Class B Performance Rights and 1,000,000 [Trek] Class C Performance Rights;

(c) Mr John Young holds or controls 538,459 Edge Shares, being an interest of being an interest of 2.36%. Mr Young is also an executive director of [Trek] and holds or controls 6,551,738 [Trek] Shares (being an interest of 2.11%), 1,875,000 [Trek] Options (exercisable at $0.056 on or before 30 September 2023), 2,000,000 [Trek] Class A Performance Rights, 2,000,000 [Trek] Class B Performance Rights and 2,000,000 [Trek] Class C Performance Right; and

(d) I directly hold 769 Edge Shares and do not hold or control any [Trek] Shares or other [Trek] securities.

1. Mr Boys further deposed that on 3 June 2022, the board of Edge unanimously resolved to:

(a) enter into:

(i) the proposed [scheme implementation agreement] to give effect to the Scheme, which, among other things, will require Edge to obtain from each Edge Director:

(A) their recommendation that the Edge Shareholders vote in favour of the Scheme; and

(B) confirmation that they will vote their Shares in favour of the resolution to approve the Scheme, in each case, in the absence of a superior proposal and subject to the Independent Expert concluding the Scheme is in the best interests of shareholders; and

(b) approve the public release of the proposed ASX announcement by [Trek] as it relates to Edge.

1. Mr Boys deposed that, despite the various benefits that they will receive if the scheme of arrangement was implemented (being the aggregate scheme consideration by virtue of holding directly or indirectly Edge shares and each of Mr Leibowitz, Mr Biddle and Mr Young's directorships and interests in Trek), the board of Edge on 22 August 2022 unanimously resolved that each of the Edge directors can, and should, if they wish to do so, make a recommendation on the scheme of arrangement in light of the importance of the scheme. Mr Boys also described the considerations weighed by the board of Edge in resolving to recommend the scheme of arrangement.

1. The third affidavit relied upon was the second affidavit deposed by Mr Boys on 9 September 2022. Mr Boys deposed to having been nominated as chairperson for the scheme meeting and to having no previous relationship or dealing with Edge, Trek or any other person interested in the proposed scheme of arrangement, except as disclosed in his affidavit. In this regard, Mr Boys deposed that as at the date of his second affidavit, he held an interest in 769 Edge shares, representing an interest of 0.003%; that he did not have an interest in any other securities in Edge; and that he held no interest in any securities of Trek. (By the time the third affidavit of Ms Barclay was deposed, it was proposed that Ms Drummond would act as chairperson and Mr Boys would act as alternate chairperson, as discussed below).

1. The fourth affidavit relied upon was the second affidavit of Ms Barclay sworn on 9 September 2022. By her second affidavit, Ms Barclay deposed to the exchange of further correspondence as between Steinepreis Paganin and ASIC. Ms Barclay attached to her second affidavit this correspondence and a marked‑up version of the draft scheme booklet which had been lodged with ASIC on 23 August 2022, which draft incorporated changes intended to address comments received from ASIC. The amended scheme booklet attached to Ms Barclay's affidavit included only one of the five intended annexures, being the amended notice of scheme meeting.

1. The fifth affidavit was deposed to by Pia Melanie Drummond and sworn on 12 September 2022. Ms Drummond is a partner at Steinepreis Paganin. Ms Drummond deposed to having been nominated as chairperson for the scheme meeting and to having had no previous relationship or dealing with Edge, Trek or any other person interested in the proposed scheme of arrangement, except as disclosed in her affidavit. In this regard, Ms Drummond deposed that as at the date of her affidavit, she held no interest in any Edge shares nor other securities in Edge; and that she held no interest in any securities of Trek.
2. Ms Drummond deposed that Steinepreis Paganin had been engaged by Edge to provide legal services in respect of the scheme of arrangement. She further deposed that Steinepreis Paganin had been paid $37,190.54 by Edge for legal services provided in relation to the scheme of arrangement in the past 12 months on standard commercial rates and terms of engagement; that no other amounts had been paid to Steinepreis Paganin or to Ms Drummond for legal services provided in relation to the scheme of arrangement; that Steinepreis Paganin had provided other legal services to Edge in the past 12 months in addition to legal work concerning the scheme of arrangement for which fees of $71,724.04 had been received; and that Steinepreis Paganin expected to be paid additional fees under an existing retainer with Edge for legal services provided in relation to the proposal and implementation of the scheme of arrangement, estimated to be approximately $82,809.46.
3. As to legal services, Ms Drummond deposed that she has not been personally involved with nor had she provided legal services to Edge at any time. She also deposed that acting in her capacity as a partner at Steinepreis Paganin, she had provided general legal services to Trek, including in the past 12 months, but that she had not been personally involved with or provided legal services to Trek (or Edge) in relation to the scheme of arrangement.

1. The sixth affidavit was the third affidavit of Ms Barclay, sworn on 13 September 2022. Ms Barclay deposed that there had been further correspondence between Steinepreis Paganin and ASIC, and annexed copies of the same to her affidavit. Ms Barclay also annexed to her affidavit copies of the updated scheme documents, including an updated independent expert report, an updated and signed deed poll made on 13 September 2022, and a draft second variation deed in relation to the scheme implementation arrangement, which was proposed to be made to address concerns raised by ASIC in relation to the definition of material adverse change. Ms Barclay also confirmed that it was proposed that Ms Drummond would act as chairperson of the scheme meeting and Mr Boys would act as alternate chairperson.

1. The seventh affidavit was the fourth affidavit of Ms Barclay sworn on 14 September 2022 in which she deposed to further correspondence with ASIC with respect to the independent expert's proposed changes to the expert report in response to comments received from ASIC, and to further amendments to the second variation deed to the scheme implementation agreement. Ms Barclay attached copies of the correspondence with ASIC and the updated second variation deed to her fourth affidavit.

1. The eight affidavit upon which Edge relied was the third affidavit of Mr Boys deposed by him on 15 September 2022 in which he deposed to the process by which the scheme consideration value had been reached, and the process by which the scheme implementation agreement had been negotiated and reviewed by Edge and Trek. Mr Boys annexed to his third affidavit copies of the independent expert report prepared for the Bardoc scheme of arrangement in February 2022; email correspondence as between Steinepreis Paganin and Mr Hardwick on 2 June 2022; the initial draft of the scheme implementation agreement; a copy of the draft scheme implementation agreement with comments from Blackwall Legal; and the final draft of the scheme implementation agreement.

1. The ninth affidavit was the fifth affidavit of Ms Barclay sworn on 15 September 2022. In this affidavit, among other things, Ms Barclay deposed to her email communications with Matthew Bevins of ASIC. She also deposed to her belief that prior to execution of the scheme implementation agreement, Steinepreis Paganin had undertaken a final review of the same and had made minor amendments and inserted the agreed scheme consideration and timetable. To her fifth affidavit Ms Barclay attached copies of her further correspondence with ASIC; a marked‑up version of the draft scheme booklet; an extract of cl 16.5 of the updated scheme booklet (titled 'Common Director Risk'); the final draft of the scheme implementation agreement prior to it being executed; and the executed second variation deed (which varied the scheme implementation agreement).

1. The tenth affidavit was the sixth affidavit of Ms Barclay sworn on 16 September 2022. Ms Barclay deposed to and attached to her affidavit her further correspondence with ASIC in relation to the proposed scheme of arrangement. Further, Ms Barclay deposed to her receipt of the amended independent expert report (updated to ensure consistency with the amended scheme booklet), and she attached a copy of the same to her affidavit.

1. The eleventh affidavit was the seventh affidavit of Ms Barclay, which was sworn on 16 September 2022. By this affidavit Ms Barclay deposed to correspondence as between the independent expert and Mr Hardwick concerning to the engagement of RSM by Edge to prepare an independent expert report in relation to the proposed scheme of arrangement.

1. The first affidavit prepared on behalf of Trek was deposed to on 14 September 2022 by Jamie George Michael Ogilvie, a partner at Blackwall Legal who acts for Trek. By his first affidavit Mr Ogilvie deposed to the process by which Blackwall Legal and Trek verified the accuracy of the statements and information attributable to Trek in the draft scheme booklet. Mr Ogilvie further deposed to the board of Trek having resolved to approve the statements and information attributable to Trek in the draft scheme booklet.

1. The second affidavit prepared on behalf of Trek was the second affidavit of Mr Ogilvie sworn on 15 September 2022. By his second affidavit Mr Ogilvie deposed to Blackwall Legal's engagement by Trek, and involvement from May 2022 in the negotiation of the scheme implementation agreement.

1. I note for completeness that on 16 September 2022, after the conclusion of the first court hearing, Ms Barclay swore her eighth affidavit. Ms Barclay annexed to that affidavit a copy of the scheme booklet, amended so as to incorporate all changes made at the first court hearing.

1. In addition to the affidavits, at the first court hearing Edge relied upon a written outline of submissions filed on 13 September 2022, a minute of proposed orders filed on 14 September 2022, and a written outline of supplementary submissions filed on 16 September 2022.

1. On 3 June 2022, Edge and Trek entered into the scheme implementation agreement which was announced to the ASX the next business day (being 6 June 2022).[15] If the scheme of arrangement is implemented, Trek will acquire all of the Edge shares on issue as at the Record Date. (The term Record Date is defined in the proposed scheme of arrangement and the scheme implementation agreement to be 5 pm on the day which is three business days after the scheme comes into effect, or such other date as the parties agree in writing). Edge's shareholders will receive 2.12 fully paid ordinary Trek shares for each Edge share as consideration for the acquisition of their Edge shares under the scheme of arrangement. In simple terms, if the scheme of arrangement is implemented, the shares held in Edge by Edge shareholders will be transferred to Trek and Edge will become a wholly owned subsidiary of Trek.[16]

1. Mr Boys deposed in his first affidavit that as an independent non‑executive director of Edge, he assisted the company secretary (who I understood to be Mr Hardwick) with all material aspects of the scheme of arrangement from the time he commenced as a director of Edge.

1. In his first affidavit, Mr Boys deposed that during the period leading up to entry into the scheme implementation agreement, he had participated in a discussion with Trek's chief executive officer, Derek Marshall, and deposed that it was:[17]

noted that the proposed transaction (and its value) would be principally referenced to the value ascribed to the Edge assets in the independent valuation included in the recently completed transaction involving Bardoc and St Barbara Limited and the Demerger of Edge.

1. Mr Boys also deposed that he had attended discussions with the company secretary and had regularly been provided with advice and updates from Edge's legal adviser, Steinepreis Paganin, in relation to the scheme of arrangement. (The legal advice from Steinepreis Paganin was subject to legal professional privilege and was not waived.)[18]
2. In the course of the first court hearing on 14 September 2022, I raised with counsel that I was concerned as to the bona fides of the proposed scheme given the lack of independence of three of the four board members of Edge, which had also caused ASIC concern.[19] I was particularly concerned that by reason of Edge and Trek having common directors (save for Mr Boys) when the scheme implementation agreement was entered into, Edge may not have negotiated the best possible terms for its shareholders. I was cognisant that the directors of Edge had resolved unanimously, among other things, that the scheme implementation agreement had been negotiated on arm's length commercial terms,[20] but that there was little evidence before the court as to those negotiations.[21] I also expressed concern as to the adequacy of disclosure in the draft scheme booklet as to the potential conflicts of interest of the three Edge directors.[22]
3. The first court hearing was adjourned part heard on 14 December 2022, to allow instructions to be taken, among other things, as to whether further evidence might be filed to reveal with greater particularity how the terms of the proposed scheme of arrangement and scheme implementation agreement were struck (and by whom); whether all of the directors of Edge maintained an intention to recommend the proposed scheme of arrangement (as was contemplated by their unanimous resolution of 22 August 2022); and what additional disclosure might be included in the draft scheme booklet that might address the concerns expressed by ASIC and the court.
4. By his third affidavit filed on 15 September 2022, Mr Boys provided further information as to the process by which the scheme consideration value had been reached. He deposed that in the valuation report prepared by Valuation and Resource Management Pty Ltd dated 7 February 2022 (which was prepared for the purposes of the Bardoc scheme of arrangement), the fair value of the South Woodie Woodie project had been assessed to be in the range of $2.7 million to $4 million, with a preferred valuation of $3.3 million.[23]
5. Mr Boys deposed that having discussed the matter with Mr Marshall (Trek's chief executive officer), Mr Boys understood that $4 million was chosen for the proposed consideration, and that the amount included a premium for potential future exploration upside.[24] Mr Boys further deposed that the proposed total consideration for the share acquisition was thought to be reasonable and worthy of being put forward for consideration by Edge shareholders via a scheme of arrangement and shareholder approval.[25]
6. I understood from Mr Boys' third affidavit that on 3 June 2022, Mr Hardwick had sent to Steinepreis Paganin a proposed model for the scheme consideration ratio which included data provided by Argonaut Securities Pty Ltd (an independent advisory firm). The model revealed that based on the ascribed value of $4 million for the South Woodie Woodie project, the ratio for determining the scheme consideration equated to 2.12 shares in the capital of Trek for every 1 share in the capital of Edge.[26] Mr Boys further deposed that based on the scheme model, and after the directors of Edge had declared their interests on 3 June 2022, the directors of Edge agreed on behalf of Edge to set the consideration at 2.12 Trek shares for every 1 Edge share.[27]

Negotiation of the break fee, exclusivity provision and matching right

1. Edge and Trek had agreed to the inclusion of terms in the scheme implementation agreement which contemplated the payment of a break fee in certain circumstances, exclusivity obligations, and a matching right.
2. As to exclusivity, the scheme implementation agreement at cl 9 prescribed exclusivity obligations in respect of potential competing proposals in the form of 'no shop', 'no talk' and 'matching right' provisions.[28] The scheme implementation agreement also contained provisions with respect to the payment of a break fee at cl 10. Edge's obligation to pay a break fee to Trek in the amount of $200,000 was prescribed in cl 10.2, made subject to cl 10.4.
3. In his first affidavit, Mr Boys deposed to his belief that the break fee was reasonable and appropriate for the following reasons:[29]

(a) the Break Fee is not payable if the Scheme is not approved by Edge Shareholders or if any court or regulatory authority prohibit the Scheme;

(b) the Break Fee is not payable by Edge if the Edge Board withdraws its support or recommendation of the Scheme as a result of the Independent Expert opining that the Scheme is not in the best interests of the Edge Shareholders;

(c) the amount of the Break Fee represents a fair and reasonable pre-estimate of the minimum transaction costs [Trek] would likely incur should the Scheme not proceed, such costs being acknowledged by the parties at clause 10.6 of the [scheme implementation agreement] (Annexure 'REB-1' of the First Barclay Affidavit);

(d) pursuant to clause 10.3 a break fee equal to the Break Fee is also payable by [Trek] under similar circumstances;

(e) the amount of the Break Fee is in line with the Takeovers Panel Guidance Note 7. Annexed to this affidavit and marked Annexure 'CJB-11' is a copy of a document prepared by Steinepreis Paganin for Edge showing is in line with the Takeovers Panel Guidance Note 7.

1. Mr Boys also deposed to his belief that the exclusivity provisions and the matching right were reasonable and appropriate for the following reasons:[30]

(a) the Exclusivity Provisions and the Matching Right take into account part of the significant transaction costs of [Trek] which will be incurred in proposing the acquisition and putting the proposal before Edge Shareholders; and

(b) there is a fiduciary carve out from the Exclusivity Provisions at clause 9.6 of the [scheme implementation agreement] (Annexure 'REB-1' of the First Barclay Affidavit) the effect of which is that these provisions do not apply to the extent that the Edge Board determines that, where there is a competing proposal, the competing proposal is or may reasonably be expected to lead to a superior proposal.

1. Mr Boys in his first affidavit described the negotiations with Trek in relation to the break fee, exclusivity and matching right, as documented in the scheme implementation agreement.[31] In this regard, Mr Boys deposed that the terms had been agreed by him on behalf of Edge based on legal advice received from Steinepreis Paganin and with regard to the Takeovers Panel's Guidance Note 7: Lock-up devices. (The legal advice from Steinepreis Paganin was subject to legal professional privilege and was not waived.)[32] He deposed that Trek had been separately represented by Blackwall Legal.
2. After the first court hearing was adjourned part heard, in his third affidavit Mr Boys provided further information as to the process by which the scheme implementation agreement had been negotiated and reviewed by Edge and Trek.[33] Mr Boys deposed that Steinepreis Paganin on behalf of Edge had sent the initial draft of the scheme implementation agreement to Trek on 23 May 2022. Trek then provided comments and proposed amendments. At par 17 of his third affidavit, Mr Boys deposed that:

I know and believe from my discussions with Mr Hardwick and Steinepreis Paganin that the final terms of the [scheme implementation agreement] are derived from the process of Steinepreis Paganin (acting on behalf of Edge) and Blackwall Legal LLP (acting on behalf of Trek) each reviewing and making suggested amendments to the [scheme implementation agreement] until it was in final form.

1. The directors of Edge resolved unanimously on 3 June 2022 as follows:[34]

(a) that the [scheme implementation agreement] has been negotiated on arm's length commercial terms which are reasonable in all the circumstances, and are, in the Directors' opinion, in the best interests of the Company as a whole;

(b) that despite having identified the Interested Directors as each having a material personal interest (detailed at section 4.1 above) in the consideration they will receive pursuant to the [scheme implementation agreement] by virtue of their being shareholders in the Company, pursuant to section 191(2)(a)(i) of the Corporations Act, their interests should not disqualify them from voting in respect of execution of the [scheme implementation agreement];

(c) that despite having identified the Interested Directors as each having a material personal interest (detailed at section 4.1 above) in the consideration they will receive pursuant to the [scheme implementation agreement] by virtue of their being shareholders in the Company, pursuant to section 191(2)(a)(i) of the Corporations Act, their interests should not disqualify them from voting in respect of execution of the [scheme implementation agreement];

(d) to proceed with execution of the [scheme implementation agreement]; and

(e) to approve with the public release of the Announcement as it relates to Edge.

1. Part 4 of the circular resolution of the board of Edge addressed the material personal interests held by the directors of Edge, which I reproduce below:
   1. SECTION 195 CORPORATIONS ACT

It is noted that the Directors John Young, Neil Biddle and Anthony Leibowitz hold the following interests in the Company (Interested Directors):

Pursuant to section 195(1) of the Corporations Act, a director who has a material personal interest in a matter that is being considered must not vote on that matter. However pursuant to section 195(1A)(b), this prohibition does not apply if the interest does not need to be disclosed under section 191.

In accordance with section 191(2)(a)(i) of the Corporations Act a director does not need to give notice if the interest arises because the director is a member of the company and the interest is held in common with the other members of the company.

The interests held by the Interested Directors, with regards to entry into the [scheme implementation agreement] arises due to their being shareholders in the Company.

The Directors note that the interests of Interested Directors (resulting from the holding of Shares) are held in common with the other shareholders of the Company. Therefore, in accordance with sections 191(2)(a)(i) and 195(1A)(b) of the Corporations Act, the Interested Directors are permitted to vote on the resolution to enter into the [scheme implementation agreement].

It is noted that the Directors John Young, Neil Biddle and Anthony Leibowitz each have a material personal interest with regards to entry into the [scheme implementation agreement] due to each being a director of Trek and holding the following interests in Trek (Common Directors):

• 1,500,000 options (exercisable at $0.10 on or before 5 March 2023)

• 1,875,000 options (exercisable at $0.056 on or before 30 September 2023)

• 500,000 options (exercisable at $0.10 on or before 5 March 2023)

As set in section 4.1 above, a director of a public company may not vote or be present during meetings of directors when matters in which that director holds a 'material personal interest' are being considered, except in certain limited circumstances including where the interest does not need to be disclosed under section 191.

In accordance with section 191(2)(a)(iii) of the Corporations Act a director does not need to give notice if the interest relates to a contract the company is proposing to enter into that is subject to the approval of shareholders and will not impose any obligation on the company if it is not approved by shareholders.

The Directors note that pursuant to clause 3.1 and schedule 3 of the [scheme implementation agreement], the Scheme is conditional on it being approved by both the shareholders of Edge and the Federal Court of Australia. Therefore, in accordance with sections 191(2)(a)(iii) and 195(1A)(b) of the Corporations Act, the Common Directors are permitted to vote on the resolution to enter into the [scheme implementation agreement].

1. Mr Boys also deposed in his first affidavit that he was not aware of any basis to believe that any superior proposal concerning the ownership of Edge would be forthcoming from any other party at that time.[35]

1. Edge had engaged an independent expert to provide an opinion on the proposed scheme of arrangement. The independent expert had concluded that in the absence of a superior proposal, the proposed scheme of arrangement was fair and reasonable and therefore was in the best interests of Edge shareholders.[36]
2. As three of the four directors of Edge were not independent, I sought clarification as to how the independent expert came to be instructed and briefed. In response to that query, Ms Barclay in her seventh affidavit deposed to the process by which the independent expert had been engaged by Edge to consider the proposed scheme and to opine as to whether the proposal was fair and reasonable. I understood that the initial engagement of the independent expert was sought by Mr Hardwick, and Mr Boys signed the engagement letter on 9 June 2022 on behalf of Edge.[37]
3. The draft of the independent expert report annexed to the version of the draft scheme booklet first lodged with ASIC stated that:[38]

The Directors of Edge have requested RSM, being independent and qualified for the purpose, to express an opinion as to whether the Scheme is in the best interests of Edge Scheme Shareholders.

1. However, the independent expert report was amended to correct the error, and recorded as follows:[39]

The Independent Director of Edge has requested RSM, being independent and qualified for the purpose, to express an opinion as to whether the Scheme is in the best interests of Edge Scheme Shareholders.

1. The scheme of arrangement will not be effected unless and until a number of conditions precedent are satisfied or waived as set out in cl 3.1 of the scheme of arrangement and in cl 3.1 of the scheme implementation agreement. Among other things, the scheme of arrangement is conditional upon court approval in accordance with s 411(4)(b) of the Corporations Act, and such other conditions made or required by the court under s 411(4)(b) in relation to the scheme of arrangement as are acceptable to Trek and Edge being satisfied.[40]

1. Ineligible Foreign Shareholders (described in the scheme of arrangement as Foreign Scheme Participants) are scheme participants whose address as shown on the Edge register as at the Record Date is located outside of Australia, New Zealand or any other jurisdiction as may be agreed in writing by Edge and Trek.[41]
2. Under the proposed scheme of arrangement, Ineligible Foreign Shareholders will not be issued with Trek shares. Instead, the Trek shares that would otherwise have been issued to them will be issued to the Sale Agent (as that term is defined in the scheme of arrangement and draft scheme booklet) on their behalf and sold on the ASX.[42] The proceeds of sale (less brokerage, other costs, taxes and charges) will then be paid to the Ineligible Foreign Shareholders following implementation of the scheme of arrangement.
3. As at 14 September 2022, Edge did not have any Ineligible Foreign Shareholders.[43]

1. Edge shareholders (other than Ineligible Foreign Shareholders) who hold less than a marketable parcel of Edge shares on the Record Date are designated as Unmarketable Parcel Shareholders for the purpose of the scheme of arrangement.[44]
2. In accordance with the variation deed entered into by Edge and Trek on 9 August 2022,[45] by which the scheme implementation agreement was amended, Unmarketable Parcel Shareholders may elect to opt‑in to receive the scheme consideration. Unmarketable Parcel Shareholders who do not make a valid election will not be issued the scheme consideration. Instead, the Trek shares which would have been issued to such shareholders will be issued to the Sale Agent.[46] After the Sale Agent sells the shares, the shareholder will receive an amount equivalent to the average price per Trek share obtained (less brokerage, other costs, taxes and charges).
3. As at 14 September 2022, Edge had 4,055 shareholders holding less than a marketable parcel of shares, who held an aggregate of 9.754% of the total Edge shares on issue.[47]

1. The performance by Trek of its obligations under the scheme of arrangement are supported by the deed poll which was executed by Trek on 13 September 2022.[48] The form of deed poll that was attached to the scheme implementation agreement was varied to reflect the variation that was made to the terms of the scheme implementation agreement concerning Unmarketable Parcel Shareholders.[49]

1. The documents before the court at the first court hearing included the draft scheme booklet which was lodged with ASIC on 23 August 2022.[50] An amended scheme booklet was annexed to Ms Barclay's second affidavit which, among other things, incorporated changes intended to address concerns raised by ASIC, and included introductory documents which addressed the recommendation of all of the directors of Edge.[51] The scheme booklet also addressed:

(a) reasons to vote in favour of or against the scheme of arrangement;

(b) an overview of the scheme booklet;

(c) important dates and times;

(d) a letter from Edge;

(e) a letter from Trek;

(f) meeting details and how shareholders may vote on the scheme of arrangement;

(g) key reasons to vote in favour of the scheme of arrangement;

(h) reasons why a shareholder may choose to vote against the scheme of arrangement;

(i) implications if the scheme of arrangement is not implemented;

(j) 'frequently asked questions';

(k) an overview of the scheme of arrangement;

(l) a profile of Edge;

(m) a profile of Trek;

(n) a profile of the combined group;

(o) the intentions of Trek and the combined group;

(p) risk factors (which included specific risks associated with the combined group; risks to Edge shareholders if the scheme of arrangement does not proceed; general risks relating to an investment in Trek and the combined group; implementation specific risks;

(q) Australian taxation implications;

(r) the steps required to implement the scheme of arrangement;

(s) key terms of the scheme implementation agreement;

(t) additional information (which included, among other things, the relevant interests of Edge's directors in Edge, Trek's directors in Trek, and benefits they will receive if the scheme of arrangement is approved); and

(u) a glossary of terms used within the scheme booklet.

1. The following documents were intended to be annexed to the scheme booklet:

(a) the independent expert's report;

(b) the scheme of arrangement;

(c) the deed poll;

(d) the variation deeds; and

(e) notice to shareholders of the scheme meeting.

1. The version of the scheme booklet described above and promoted by Edge on 14 September 2022 was not in a form that addressed all of ASIC's concerns. The first court hearing was adjourned part heard on 14 September 2022, among other things, so as to allow counsel for Edge to take instructions as to concerns raised by the court (and maintained by ASIC) in relation to the recommendation proposed to be made by all Edge directors that Edge shareholders approve the scheme of arrangement, and in relation to the level of disclosure made in the scheme booklet. As to the scheme booklet, concern was raised as to the adequacy of disclosure of:

(a) Mr Leibowitz, Mr Biddle and Mr Young as directors of Edge having resolved to enter into the scheme implementation agreement in circumstances where they were also directors of Trek;

(b) the negotiation and agreement of scheme consideration by Edge and Trek in circumstances where three of the four directors of Edge constituted the whole of the board of Trek at the relevant time, and only one of the four Edge directors considered himself to be independent of Trek;

(c) the possibility that the common directors may not have negotiated the best possible terms of the scheme; and

(d) the existence and implications of two entities associated with two Edge directors having agreed to provide interim funding of up to $1 million to Edge to ensure that Edge had sufficient working capital to carry out its initial activities following completion of the demerger from Bardoc.

1. The court received a further updated scheme booklet on 15 September 2022, which was marked as attachment REB‑3 to Ms Barclay's fifth affidavit. However, the further revised draft again failed to address all of ASIC's concerns.[52]
2. Upon the relisting of the first court hearing on 16 September 2022, counsel for Edge informed the court that only Mr Boys, being the only independent Edge director, would recommend to Edge shareholders that in the absence of a superior proposal, they vote in favour of the scheme of arrangement.
3. At the hearing on 16 September 2022, counsel was heard as to the adequacy and accuracy of disclosure. The remaining concerns of ASIC were disclosed and the subject of submission by counsel. In the course of the hearing, Edge agreed to make further amendments to address the concerns of the court. After the hearing on 16 September 2022, Edge filed the final version of the scheme booklet which incorporated changes to address the court's remaining concerns and which was marked as attachment REB-1 to Ms Barclay's eighth affidavit. (In these reasons, references to sections of the scheme booklet refer to this version, unless the context otherwise requires.)
4. As to the final version of the scheme booklet, I note that the introductory part which had in earlier drafts addressed important information about the recommendation of the directors of Edge had been amended so as to address important information regarding the common directors.

Legal principles in respect of the scheme of arrangement

1. In Re Western Areas Ltd [2022] WASC 193, Hill J succinctly summarised the legal principles to be applied at a first court hearing, which I reproduce below and I applied in determining Edge's application:[53]

[26] Pursuant to s 411 of the Act, a scheme of arrangement can be used to re‑organise a company in a manner which will be binding on its members, provided that:

(a) the arrangement is agreed by the requisite majorities as prescribed by s 411(4)(a) of the Act, namely 75% of shareholders by value and 50% by number; and

(b) the court approves the arrangement pursuant to s 411(4)(b) of the Act.

[27] There are three stages to an application under s 411 of the Act. First, the court approves the convening of a scheme meeting and the draft explanatory statement to be sent to the scheme members. Second, the members vote on the proposed scheme at the scheme meeting. Third, assuming the first two stages have occurred, the court approves the proposed scheme.[54]

[28] There are well‑established principles which apply to the first stage of proceedings. The court will order the convening of the scheme meeting and approve the dispatch of the scheme booklet if it is satisfied that:[55]

(a) there is a pt 5.1 body;

(b) there is a compromise or arrangement within the meaning of s 411 of the Act;

(c) the proposed scheme booklet contains the prescribed information[56] and provides proper disclosure;[57]

(d) the scheme is bona fide and properly proposed;

(e) ASIC has had at least 14 days' notice of the proposed hearing date and a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions;[58]

(f) the procedural requirements of the Act and the Corporations Rules have been met;

(g) the scheme is of such a nature that, if it receives the necessary statutory majority at the scheme meeting, the court will be likely to approve it.

[29] Any issue about classes of members is usually determined at the first hearing.[59] This is so that costs and court time are not wasted which would otherwise occur if this issue was left to the second hearing.[60]

[30] The standard of review that is undertaken by the court at the first hearing is whether the proposed scheme is not inappropriate and is one that sensible businesspeople might consider is of benefit to its members.[61] If the proposed arrangement is one that appears fit for consideration by a meeting of members and is a commercial proposition likely to gain the court's approval if passed by the necessary majority, leave should be given to convene the meeting.[62]

Disposition Principal matters - s 411(1) members' scheme

1. The formal matters that Edge was required to prove were satisfied for the reasons stated in the written submissions filed on behalf of Edge. I address them briefly below.

1. The term 'Part 5.1 body' is defined in s 9 of the Corporations Act to mean, relevantly, a company. The term 'company' is defined in s 9 to mean, relevantly, a company registered under the Corporations Act. I accepted that Edge is a company registered under the Corporations Act.

1. The proposed participants in the scheme of arrangement are members of Edge. The term 'member' is defined in s 9 of the Corporations Act to mean, in relation to a company, a person who is a member under s 231. I accepted that the proposed scheme of arrangement if approved would be between Edge and its shareholders, as shown on its register of members.
2. The proposed scheme of arrangement is an 'arrangement' of a type that has been accepted by courts on numerous occasions. Further, for the reasons set out below, I was satisfied that the scheme meeting will be convened between members of the same class.

1. An arrangement to which s 411(1) of the Corporations Act applies is one between a company and its members or creditors or any class of them. The orders sought on behalf of Edge assumed that the Edge shareholders form only one class for purposes of voting on the proposed scheme of arrangement.
2. Section 411 does not define the term 'class'. In determining whether a new or separate class is required, the following threefold test is to be applied:[63]

(a) What are the rights which existing members have against the company and to what extent are they different?

(b) To what extent are those rights affected by the scheme?

(c) Does the different treatment of rights make it impossible for the members in question to consider the scheme as one class?

1. As all Edge shareholders have the right to receive the scheme consideration for their shares, it was submitted, and I accepted, that all Edge shareholders have the same rights in the scheme of arrangement.[64] Further, I was satisfied that the existence of mechanisms to deal with Ineligible Foreign Shareholders and Unmarketable Parcel Shareholders were not class‑creating, for the reasons outlined below.

1. As to Ineligible Foreign Shareholders, the court's attention was drawn to the fact that as at 8 September 2022, Edge did not have any shareholders falling within this category.[65] However, the proposed treatment of Ineligible Foreign Shareholders was appropriately drawn to the court's attention, and I accepted that mechanism proposed was commonplace and was not class creating.[66] There is a sensible commercial justification for these sale mechanisms in not requiring scheme companies to ascertain and comply (if possible) with numerous sets of foreign securities laws.[67]

1. Unmarketable Parcel Shareholders collectively hold 9.754% of the total Edge shares on issue.[68] Counsel submitted that provisions to address these types of shareholders are now common,[69] and that such shareholders have the ability to become shareholders of the merged group and will otherwise receive substantially the same scheme consideration (albeit in net cash consideration, instead of Trek shares).[70] Counsel further submitted that there is a sensible commercial justification for not burdening registers of public companies with small holdings and also enabling a small shareholder an efficient way in which to exit its investment.[71] I accepted this submission, and did not consider the treatment of Unmarketable Parcel Shareholders to be class‑creating.

Consideration by ASIC and issues raised with Edge prior to the first court hearing

1. Section 411(2) of the Corporations Act requires that before making an order, the court be satisfied of two matters. First, that ASIC has been given 14 days' notice of the hearing, or such lesser period of notice as the court or ASIC permits: s 411(2)(a). Secondly, that ASIC has had a reasonable opportunity to examine the terms of the scheme and the draft explanatory statement, and to make submissions to the court: s 411(2)(b).
2. ASIC considers that its role is to assist the court by reviewing the content of the scheme's documents; reviewing the nature and function of the scheme; representing the interests of investors and creditors; and bringing all relevant matters to the court's attention before it orders a scheme meeting or confirms a scheme.[72]
3. The role of ASIC has been referred to by the High Court, which observed that its predecessor, the Australian Securities Commission, had an obligation to assist the court by presenting argument if it deems that course necessary or desirable.[73] In an application such as this, the court relies on ASIC, as it is not for the court to fulfil the role of contradictor.[74]
4. The draft scheme booklet was lodged with ASIC on 23 August 2022.[75] A copy of the sealed originating process and notification of the hearing date was given to ASIC on 25 August 2022.[76] I was satisfied that ASIC had been give 14 days' notice of the first court hearing and a reasonable opportunity to examine the terms of the proposed scheme of arrangement and the draft scheme booklet. ASIC confirmed the same in a letter sent on 13 September 2022 to the directors of Edge.[77] The evidence also revealed that ASIC had asked questions, provided comments and requested amendments to the proposed scheme booklet.[78] The affidavit evidence made clear that there had been an active dialogue with ASIC, and changes had been made to the scheme booklet as a result.
5. ASIC raised with Edge a number of issues in the course of ASIC's review of the scheme materials, which included the following.
6. First, ASIC had raised as a concern that three of the four Edge directors are also directors of Trek; the common directors participated in the board of Edge's deliberations and decisions in relation to the proposed scheme of arrangement; and the common directors proposed to make recommendations in relation to the scheme of arrangement as set out in the draft scheme booklet.[79]
7. ASIC informed Edge prior to the first court hearing that it considered the potential conflicts existing by virtue of the common directors' involvement in relation to the scheme to be a matter relevant to ASIC's and the court's consideration of the scheme of arrangement and the draft explanatory statement.[80] Further, ASIC considered the potential conflicts relevant to the principles in s 602 of the Corporations Act and matters of public policy described in ASIC's Regulatory Guide 60: Schemes of arrangement. ASIC noted that the potential conflicts would likely also have relevance to the court's fairness discretion in s 411(17) of the Corporations Act, and the court's assessment of the scheme or arrangement generally by reference to, among other things, its bona fides and public policy.
8. Secondly, ASIC had raised as a concern the definition of material adverse change in cl 1.1 of the scheme implementation agreement.[81] ASIC's position was that there was no quantifiable or objective thresholds to be applied to determine when an occurrence would be 'materially adverse' to the business, financial condition, results, material licences, operations or prospects of the respective party, and suggested that Edge amend the scheme implementation agreement to address ASIC's concerns. In response, Trek and Edge executed a second deed of variation to the scheme implementation agreement to provide further certainty as to when the material adverse change clause might apply.[82] Counsel for Edge submitted that the provision (as amended) had a sufficiently objective quantitative operation.[83] I did not understand ASIC to have taken further issue with the definition of material adverse change in cl 1.1 after amendment.
9. Thirdly, ASIC had raised as a concern the inclusion of the words 'acting reasonably' in cl 6.4 of the scheme implementation agreement.[84] Clause 6 of the scheme implementation agreement concerns the implementation obligations of the parties. In summary, by the operation of cl 6.3, each Edge director is obliged to make a public statement that, in the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude that the scheme is in the best interests of Edge shareholders:

(a) each member of the Edge board recommends that Edge shareholders vote in favour of the resolution to approve the scheme; and

(b) confirms that each member of the Edge board will vote the Edge shares in which they have a relevant interest in favour of the resolution to approve the scheme of arrangement.

1. The obligation in cl 6.3 is subject to the exclusion in cl 6.4, which provided:

6.4 Exclusion from Recommendation

The obligation under clause 6.3 to ensure that each Edge Director provides and maintains the recommendation is qualified to the extent that any Edge Director considers, acting reasonably (including after having taken legal advice) and in good faith, that he or she should not provide or continue to maintain any recommendation (positive or adverse) because that Edge Director has an interest in the Scheme that is so materially different from Scheme Participants which would properly preclude or render it inappropriate for him or her to provide any such recommendation. (emphasis added)

1. In ASIC's view, the words 'acting reasonably' imposed an additional obligation on the Edge board in ascertaining its fiduciary or statutory duties, contrary to the market practice set by the Takeovers Panel and ASIC's policy position. In response to ASIC's expressed concern, Edge amended cl 6.4 by the second deed of variation executed on 15 September 2022, which removed the word 'acting reasonably'.[85]
2. Fourthly, ASIC had noted concern in relation to share trading in Trek by Mr Leibowitz and sought confirmation from Edge whether, in light of it not having a securities trading policy because it was not listed, Mr Leibowitz required or sought approval from the Edge board or chairman in respect of the relevant purchases.[86]
3. By letter dated 13 September 2022, ASIC gave an indication as to its then position in relation to the scheme of arrangement, noting that it had not reached a concluded position on the matters raised in that letter (some of which are summarised at [93] and [[[87]](2022_395.html#_Ref12 (a) to act in good faith in the best interests of the company;[91]

(b) not to improperly use their position or any information gained through their employment or directorship to gain an advantage for themselves or someone else or cause detriment to the company;[92]

(c) to avoid positions of conflict between personal interests and those of the company; and

(d) to maintain the confidentiality of the company's information.

1. ASIC noted that concerns may arise that the common directors may not have sought to obtain the best possible deal for each of the proposed acquirer and the scheme proponent respectively, because they were required to simultaneously act to obtain the highest consideration for the target, while also offering the lowest consideration from the bidder.
2. ASIC considered that the potential conflicts existing by virtue of the common directors' involvement in relation to the proposed scheme of arrangement was a matter relevant to ASIC's, and to the court's, consideration of the draft explanatory statement and the proposed scheme of arrangement.[93] I accepted and proceeded on this basis.
3. In relation to the court's consideration of the draft explanatory statement, the extent of the disclosure of the potential conflicts when read with the proposed director recommendations were particularly concerning. In relation to the court's consideration of the scheme of arrangement, I considered that the potential conflicts might inform the court's consideration of the bona fides of the proposed scheme; whether the scheme, if given effect, might involve an unfair or oppressive result; and considerations of public policy and morality.
4. The first court hearing was adjourned so as to allow Edge to reconsider the scheme booklet in consultation with ASIC.[94] In the short adjournment, it was also anticipated that Edge would consider whether it would file further evidence deposing how the terms of the proposed scheme had been negotiated and struck in light of the issues raised with Edge by ASIC,[95] and whether Edge continued to press for all directors to recommend the proposed scheme of arrangement to shareholders.[96]

1. I had regard to whether the scheme booklet contained the prescribed information and provided proper disclosure. While I was not satisfied that the early drafts of the scheme booklet provided proper disclosure, particularly in relation to the potential conflicts existing by virtue of the common directors' involvement and deliberations in relation to the scheme or arrangement, I approved dispatch of the further amended scheme booklet annexed to Ms Barclay's eighth affidavit.

1. It was submitted on behalf of Edge that the scheme booklet prepared by Edge had been drafted to satisfy the disclosure requirements prescribed in:[97]

(a) ASIC's Regulatory Guide 60: Schemes of arrangement and in relation to the independent expert report to be annexed to the scheme booklet, ASIC's Regulatory Guide 111: Content of expert reports and Regulatory Guide 112: Independence of experts;

(b) the takeover provisions and prospectus provisions of the Corporations Act, to the extent that these are applicable to the scheme booklet as required by ASIC's Regulatory Guide 60: Schemes of arrangement;

(c) s 441(3) and s 412 of the Corporations Act; and

(d) pt 3 of sch 8 of the Corporations Regulations 2001 (Cth).

1. Further, the court was informed that the explanatory statement would be registered with ASIC before it was dispatched in accordance with s 412(6) of the Corporations Act.[98]
2. Two versions of the scheme booklet were before the court on 14 September 2022.[99] Having considered the drafts, with the benefit of ASIC's observations made in various communications annexed to Ms Barclay's affidavits, and after hearing counsel for Edge on 14 September 2022, I formed the view that disclosure was inadequate.[100]
3. A marked-up version of the scheme booklet was attached to the fifth affidavit of Ms Barclay sworn on 15 September 2022. Also, by 16 September 2022, I understood that I had been provided with a copy of all correspondence as between ASIC and Edge's solicitors relating to ASIC's review of the draft scheme booklet.
4. At the hearing on 16 September 2022, counsel informed me that two further drafts of the scheme booklet had been shared with ASIC since 14 September 2022.[101] The only recommendation made in relation to the scheme of arrangement was that of Mr Boys, and the scheme booklet had been amended to reflect the same.[102] Among other things, the scheme booklet had also been updated to include further disclosure as to role of the common directors and associated risks.
5. On 16 September 2022, the court raised with counsel the need for additional amendments, which were, where appropriate, incorporated in the final version of the scheme booklet.[103] They included incorporation of the words underlined below on the cover of the scheme booklet:[104]

The Independent Edge Director recommends that, in the absence of a Superior Proposal, you VOTE IN FAVOUR of the Scheme of Arrangement

In considering this Scheme of Arrangement you should note that three of the four Edge Directors constituted the whole of the Board of Trek when the terms of the Scheme were negotiated and agreed and only one of the four Edge Directors considers himself to be independent of Trek.

The Independent Expert has concluded that, in the absence of a Superior Proposal, the Scheme is fair and reasonable and therefore in the best interests of Edge Scheme Shareholders.

(underline added; bold in original).

1. Further, amongst the possible disadvantages and risks relating to the scheme of arrangement disclosed in the scheme booklet, it was clearly and prominently disclosed that such possible disadvantages and risks included that the common directors may not have negotiated the best possible terms of the scheme of arrangement.[105]
2. ASIC had raised for consideration whether there was appropriate disclosure in certain parts of the scheme booklet.[106] On the basis of the amendments to the scheme booklet made by Edge in consultation with ASIC prior to the hearing on 16 September 2022, and those that counsel indicated during the course of that hearing would be made before the scheme booklet was dispatched, I was satisfied that there would be proper disclosure as to the effect of the proposed scheme of arrangement and the material considerations for shareholders of Edge.

1. As was noted by counsel, there was evidence before me as to the due diligence and verification process that was undertaken by both Edge and Trek.[107] There was evidence that:

(a) Edge had undertaken a process of due diligence and verification to verify the accuracy of statements of fact and opinion attributable to Edge in the scheme booklet;[108]

(b) the Edge board of directors had resolved to adopt each statement attributable to the directors, in the context in which those statements appeared, in the verification draft of the scheme booklet and had confirmed by resolution their satisfaction with the verification process;[109] and

(c) Trek had undertaken a similar process to verify the statements and information attributable to Trek.[110]

1. The directors of Edge had resolved to approve the scheme booklet. I was satisfied that appropriate steps had been taken to satisfy Edge that the scheme booklet (when considered with the amendments incorporated in the version annexed to Ms Barclay's eighth affidavit) did not omit any material information and was not misleading or deceptive.

1. Based on the information provided to the court on behalf of Edge, I was satisfied that the scheme booklet contained the prescribed information in accordance with s 412(1)(a)(ii) of the Corporations Act and sch 8 of the Corporations Regulations. The checklist annexed to the submissions filed on 13 September 2022 assisted in verification of the same.[111]

1. While I had formed the view on 14 September 2022 that disclosure was inadequate,[112] by the conclusion of the hearing on 16 September 2022, in light of the amendments made to the scheme booklet, I was satisfied that there was prima facie evidence that the scheme booklet would provide proper disclosure to shareholders of Edge.

1. I was satisfied that the procedural requirements of the Supreme Court (Corporations) (WA) Rules 2004 had been met. The requirements include compliance with r 3.2, which requires Edge to file an affidavit stating the names of the persons nominated to be the chairperson and alternate chairperson of the scheme meeting; and that each person nominated is willing to act as chairperson, has had no previous relationship or dealing with Edge or any other person interested in the scheme except as disclosed in the affidavit, and has no interest or obligation that may give rise to a conflict of interest or duty if the person were to act as chairperson of the scheme meeting, except as disclosed in the affidavit.[113] This requirement had been satisfied by the second affidavit of Mr Boys, the affidavit of Ms Drummond and the third affidavit of Ms Barclay. In the end, Ms Drummond was proposed to be the chairperson and Mr Boys to be the alternative chairperson.

1. While courts endeavour to carefully scrutinise the material provided, they are heavily reliant on counsel to expressly address those features of the scheme that require attention.[114] On this occasion, counsel through written and oral submissions drew my attention to a number of specific matters (some of which had also been brought to my attention by ASIC), which I weighed in the balance.

1. Counsel on behalf of Edge initially submitted that the intended recommendation by all Edge directors was within bounds.[115] (In the version of the scheme booklet that was first put before the court, all four directors recommended the proposed scheme of arrangement.) Having had regard to the version presented at the hearing on 14 September 2022, I did not consider the scheme booklet was in a form appropriate to be put to shareholders. After taking instructions, counsel advised the court that only Mr Boys would recommend the scheme.[116] The scheme booklet was amended and in its final form, only referred to the recommendation of Mr Boys. That was an appropriate concession in the circumstances.
2. Mr Boys recommends the scheme of arrangement and intends to maintain that recommendation in the absence of a superior proposal and subject to the independent expert continuing to hold the opinion that the scheme of arrangement is in the best interests of Edge shareholders.[117] Mr Boys directly holds 769 Edge shares and does not hold or control any Trek shares or other Trek securities.[118] The interest held by Mr Boys in the outcome of the proposed scheme was not such as to make his recommendation inappropriate.

Proper purpose (bona fides) and within power (intra vires)

The position advanced by Edge on 14 September 2022

1. In advance of the first court hearing, counsel for Edge filed written submissions in relation to the bona fides of the scheme of arrangement in circumstances where ASIC's concerns had not been addressed to ASIC's satisfaction.
2. In this context, counsel submitted that the court should be satisfied on the evidence that the proposed scheme of arrangement was properly proposed (bona fides and intra vires).[119] In this regard, counsel noted that Edge's constitution does not prevent the scheme of arrangement, and submitted that there is nothing in the material before the court that suggested the scheme of arrangement was not properly proposed.[120]
3. Counsel further submitted that:

(a) where there is no suggestion of an improper purpose on the material before the court, bona fides is a matter for consideration on any application to approve the scheme of arrangement at the second court hearing;[121] and

(b) concern as to whether there had been a potential breach of directors' duties by three of the Edge directors was not a reason not to convene the scheme meeting.[122]

1. I proceeded on the basis that before authorising the calling of a scheme meeting, it is appropriate for the court to concern itself, as far as it can, with the overall propriety of the scheme.[123] As at 14 September 2022, I considered there to be insufficient evidence before the court as to how the terms of the scheme were struck to proceed. I considered it most appropriate to adjourn the first court hearing part heard on 14 September 2022 to give Edge an opportunity to, among other things, file additional evidence or make submissions with respect to the lack of positive evidence that the scheme of arrangement was properly proposed.
2. By 16 September 2022, additional evidence was filed which addressed how the terms of the proposed scheme of arrangement were struck, which evidence is summarised at [42] to [55] above, and I had regard to the same. A supplementary outline of submissions was also filed on behalf of Edge on 16 September 2022, in which counsel addressed the approach the court should take on where there has been a potential breach of directors' duties. I found the submissions made by counsel to be persuasive.

The approach the court should take where there is a potential breach of directors' duties

1. Upon a review of additional authorities brought to ASIC and the court's attention by counsel for Edge, and having regard to the additional evidence then before me, on 16 September 2022 I was satisfied that there being concern as to whether there had been a breach of directors' duties by three of the Edge directors was not a reason not to convene the scheme meeting.
2. There was support for this approach in the decisions of Fryberg J in Re Mincom Ltd [2007] QSC 37; (2007) 61 ACSR 266, and Lindgren J in Re Bolnisi Gold NL [No 2] [2007] FCA 2078; (2007) 165 FCR 45.
3. In Re Mincom Ltd, when called to consider whether it was appropriate to convene a scheme meeting in circumstances where there had been potential breaches of fiduciary duty, Fryberg J held as follows:

[35] On balance I came to the conclusion that the possible breach of fiduciary duty did not negate the likelihood that the court would grant the application at the second hearing if it were unopposed. I did so on the basis that there was no evidence of any realistic likelihood of an alternative proposal during the period of the implementation agreement, ie from 18 January 2007. I was, unfortunately, not aware of the existence of the confidentiality and exclusivity agreement of 31 August 2006.

[36] In this regard there is in my view an important role for ASIC to play before any second hearing. In deciding whether it should make a statement that it has no objection to the arrangement under s 411(17), ASIC would no doubt wish to form a view about any possible breach of fiduciary duty underlying the proposal. Perhaps it could discover what efforts the board had made to procure alternative offers, by confidential discussions or otherwise. On this question also the court could be considerably assisted by ASIC at any second hearing. It has been said that the role of the court is to a degree inquisitorial in dealing with an application under s 411(1) (Re NRMA Ltd [2000] NSWSC 82; (2000) 33 ACSR 595 at p 601; [2000] NSWSC 82 at [12]); but as Gillard J has observed, procedures in our courts are not well adapted to such a role (Re United Energy Ltd [2003] VSC 266 at [17]). That applies equally to the position at any second hearing. ASIC has investigatory powers which the court lacks.

1. The later decisions of Fryberg J in relation to the scheme proposed by Mincom Ltd offer no further guidance as to this issue as the agreement under consideration had been terminated.[124]
2. I also had regard to the decision of Lindgren J in Re Bolnisi Gold NL [No 2], where his Honour stated:

[9] When deciding whether to order that a meeting be convened or that a scheme be approved, the Court is not in a position to decide whether a merger implementation agreement was entered into in breach of the duties owed by the target company's directors. The Court could do so only on a contested hearing in which it is alleged, and sought to be proved, that by committing the target company to the merger implementation agreement, the directors breached their statutory and general law duties: see eg, Idameneo (No 123) Pty Ltd v Symbion Health Ltd [2007] FCA 1832.

1. Having regard to these authorities, I proceeded on the basis that provided that there was appropriate disclosure to shareholders, concern as to whether there had been a breach of directors' duties by three of the Edge directors was not a reason not to convene the scheme meeting, as possible breach of fiduciary duty did not negate the likelihood that the court would grant the application at the second hearing if it were unopposed. In so concluding, in addition to the authorities referred to above, I had regard to the following.
2. First, as was noted by counsel for Edge, directors are under both statutory and fiduciary duties to exercise their powers and discharge their duties in good faith in the interests of the company.[125] Directors' duties are proscriptive in nature, and as stated by Gaudron and McHugh JJ in Breen v Williams [1996] HCA 57; (1996) 186 CLR 71, 113:

In this country, fiduciary obligations arise because a person has come under an obligation to act in another's interests. As a result, equity imposes on the fiduciary proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. If these obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach. But the law of this country does not otherwise impose positive legal duties on the fiduciary to act in the interests of the person to whom the duty is owed.

1. Secondly, the content of any fiduciary duty must be framed by reference to the particular factual circumstances. Absent special circumstances,[126] directors owe fiduciary duties to the company and not directly to shareholders.[127] Within Australia there is presently no accepted general duty that in the context of a change of control transaction the directors must attempt to achieve the highest price.[128] However, as was noted by counsel, there is a general reluctance for courts to review business judgments of boards.[129]
2. Thirdly, I accepted counsel's submission that in the absence of a party propounding an actual claim for breach of directors' duties, it is extremely difficult to consider exactly what duty is said to have been contravened, what defences may be available, and whether the breach would result in any claim for equitable compensation or other relief. Counsel submitted that convening the first scheme meeting would afford interested parties time to consider their position and intervene at the second court hearing if they wished to do so.[130]
3. Fourthly, a first court hearing under s 411 of the Corporations Act is not an appropriate forum for a final determination as to whether or not there was a breach of duty on the part of the directors of Edge. That is a matter for another forum.[131]
4. In the context of the remedies available under the Corporations Act and fiduciary duties at law, counsel submitted, and I accepted, that the implementation of the scheme of arrangement would not prevent any interested party from prosecuting a claim for breach of fiduciary duties in an appropriate forum;[132] and nor was it possible for the court to make any finding concerning any such breach in the context of proceedings for implementation of a scheme of arrangement under s 411.
5. Fifthly, the question at this first court hearing was whether the proposed scheme of arrangement was something which the Edge shareholders may approve. Counsel submitted that the question must be answered in the affirmative in the circumstances of this application. As to the circumstances, counsel noted that the proposed scheme of arrangement was negotiated in the following context:[133]

(a) the South Woodie Woodie project was an asset spun out from the Bardoc scheme;

(b) for the purposes of the Bardoc scheme, the South Woodie Woodie project had been valued by Valuation and Resource Management on 7 February 2022, and that value was in a range of $2.7 million to $4 million;

(c) Trek had been identified as a good fit for the South Woodie Woodie project because of its existing projects and its focus on battery metals exploration;

(d) Trek had obtained a report from Argonaut Securities to determine the consideration in Trek shares equivalent to the high end $4 million Valuation and Resource Management valuation; and

(e) implementation of the scheme of arrangement remained subject to an independent expert report and Edge shareholder approval.

1. I also had noted that the agreed consideration of $4 million was the high end of the range of fair value of the South Woodie Woodie project as assessed by Valuation and Resource Management on 7 February 2022, and was greater consideration than Valuation and Resource Management's preferred valuation of $3.3 million.
2. As to the circumstances, counsel further noted that Mr Boys was appointed as an independent director on 16 May 2022 and he deposed in his second and third affidavits to having formed the opinion that the South Woodie Woodie project required significant further exploration; a transaction with Trek would provide Edge shareholders with liquidity because they would hold securities capable of being traded on the ASX listed platform; and the terms of the scheme implementation agreement were fair based on legal advice received by Edge from Steinepreis Paganin.[134]
3. Sixthly, it was submitted that there was no reason for the scheme meeting to be deferred, and a failure to convene the meeting would see the Edge shareholders bear the not insignificant costs incurred to date in pursuing the scheme of arrangement.[135]
4. Seventhly, counsel submitted that the evidence before the court was that the statutory requirements of disclosure had been satisfied within the scheme booklet, and the Trek share consideration of 2.12 ordinary shares was fair and reasonable according to the independent expert report.[136]
5. In this regard, I note that by the conclusion of the hearing on 16 September 2022, I was satisfied that the scheme booklet provided proper disclosure, and I had regard to the fact that the independent expert continued to hold the view that the proposed scheme of arrangement was fair and reasonable and therefore was in the best interests of Edge shareholders.
6. Eighthly, counsel noted that if the Edge shareholders were to approve the scheme of arrangement and this matter proceeded to a second court hearing in a context where there had been a potential breach by the directors of their fiduciary duties, the scheme would not offend public policy. Counsel submitted that public policy in this context should be considered by reference to the objectives of ch 6 of the Corporations Act as it relates to the change of control transaction occurring in an open and informed market.[137]
7. In the end, I was satisfied that it was appropriate for shareholders to be given the opportunity to consider the proposed scheme at a scheme meeting, with the benefit of an independent expert's report and the amended scheme booklet.

1. Counsel instructed to appear at the first court hearing was not instructed to act for Mr Leibowitz in relation to the issue that had been raised by ASIC in relation to Mr Leibowitz having traded in shares.[138] Counsel submitted that while the trading of shares may have consequences for Mr Leibowitz, it was not an issue relevant to the court's consideration of the scheme of arrangement and whether it is appropriate for the proposed scheme to be put to shareholders.[139]
2. On 14 September 2022, I raised with counsel whether a recommendation by Mr Liebowitz was prudent in circumstances where there was an unresolved concern in relation to his share trading.[140] In the course of the hearing, counsel confirmed that Edge's board would remove Mr Leibowitz's recommendation from the scheme booklet. Further, the final version of the scheme booklet approved for distribution to shareholders disclosed that Mr Leibowitz had made multiple acquisitions of shares in Trek in the 12 months and four months before the date of the scheme booklet.[141]
3. In circumstances where the issue had been disclosed, I was satisfied that this was not an issue that made it inappropriate for the proposed scheme to be put to shareholders.

1. As I outlined above, the scheme implementation agreement at cl 9 contained exclusivity obligations in respect of potential competing proposals in the form of 'no shop', 'no talk' and 'matching right' provisions.[142] In considering whether an exclusivity provision may impact on the completion of the transaction and the duties of directors, the court has regard to:[143]

(a) the period of exclusivity, which should be no more than a reasonable period and capable of precise ascertainment;

(b) whether the provisions are subject to an overriding obligation that the directors not breach their fiduciary duties or be otherwise unlawful; and

(c) whether there is adequate prominence given to these provisions in the scheme booklet.

1. Counsel submitted on behalf of Edge that the exclusivity provisions satisfy these criteria in this case because:[144]

(a) the exclusivity period in cl 9 of the scheme implementation agreement is defined to mean the period from and including the date of the agreement to the termination of it in accordance with its terms. The scheme implementation agreement ends six months after its date (unless extended by agreement);

(b) the 'no-talk' and 'notification obligation' provisions in cl 9.3 contain directors' fiduciary and statutory duty qualifications, which allow Edge's board to undertake any action (or refuse to take any action) in respect of a bona fide Competing Transaction (as that term is defined in the scheme implementation agreement) that would otherwise be prohibited under those exclusivity provisions if, after consultation with its financial adviser, the board determines the Competing Transaction is a Superior Proposal (again, as that term is defined in the scheme implementation agreement), and have obtained written advice from its external legal advisers that undertaking (or not undertaking) the prohibited action would be reasonably likely to constitute a breach of the Edge's directors' fiduciary or statutory duties: see cl 9.6 of the scheme implementation agreement; and

(c) prominence had been given to the exclusivity provisions in the scheme booklet.

1. At [54] and [55] above I outlined in detail the evidence of Mr Boys as to how the provisions were negotiated by Edge, Edge's solicitors (Steinepreis Paganin), Trek and Trek's solicitors (Blackwall Legal).
2. Having regard to the terms of the scheme implementation agreement, how these terms were negotiated, and the submissions of counsel, I was satisfied that the exclusivity provision was within bounds and not a reason to refuse to convene the scheme meeting.

1. It was brought to the court's attention that Edge may become liable to pay Trek a break fee of $200,000 in certain circumstances, as contained within cl 10.2 of the scheme implementation agreement.[145] Counsel submitted that prominence had been given to the break fee provisions in the scheme booklet, for example, in the FAQs and at sections 9.4, 11.12, 16.5, 19.2, 19.3 and 19.4.[146]
2. The break fee represents more than 1% of the total equity value of Edge (calculated by reference to the scheme consideration). Consequently, the amount was not in line with the Takeovers Panel's Guidance Note 7: Lock-up devices, which provides that in absence of other factors, a break fee not exceeding 1% of the equity value of the target is generally not unacceptable.
3. In this respect, counsel submitted that the commentary in Guidance Note 7 is not proscriptive and represents guidance only.[147] It was further submitted that the break fee of $200,000 ought be considered appropriate in this case for the following reasons:

(a) the $200,000 break fee reasonably reflects the costs, effort and risk involved in preparing the scheme of arrangement as well as the actual expenses incurred by the parties in progressing the scheme of arrangement;

(b) both Trek and Edge are subject to the same break fee under the scheme implementation agreement and this consistency reflects the costs, effort or risk involved in implementing the scheme of arrangement as well as the actual expenses to be incurred (including the seeking of the necessary Trek approvals); and

(c) a break fee of 1% of the equity value of Edge (being approximately $40,000) was an amount which was commercially inappropriate in the circumstances.

1. Counsel further submitted that the break fee did not ground a basis for refusing the Edge shareholders the opportunity to consider and vote on the scheme of arrangement for the following five reasons:

(a) the break fee was payable by Edge in specific and prescribed circumstances, as set out in cl 10.2 of the scheme implementation agreement, and those circumstances would be disclosed to Edge shareholders;

(b) the circumstances in which the break fee would be payable by Edge under cl 10.2 of the scheme implementation agreement were the usual types of events that would trigger payment;

(c) importantly, the break fee was not payable by Edge if the scheme was not approved by Edge shareholders, meaning that the break fee was not 'coercive';

(d) the break fee was negotiated at arm's length with the benefit of legal and financial advice, and Trek was also liable to pay a break fee in the same amount to Edge (in this respect, I had regard to the evidence of Mr Boys as to why he believed that the break fee was reasonable and appropriate, as I reproduced at [[52
(e) Edge and Trek agreed that Trek would not have entered into the scheme implementation agreement without the break fee, that it was appropriate for both parties to agree to the break fee to secure Trek's involvement, and that each party's shareholders would derive significant benefits from the implementation of the scheme of arrangement.

1. I accepted that prominence had been given to the break fee provisions in the scheme booklet. Further, I was satisfied that although the break fee was above the commercially accepted 1% threshold, the amount was not unacceptable in the circumstances.
2. Having regard to the submissions made on behalf of Edge and the matters described above, I was satisfied that the break fee provision was within bounds and not a reason to refuse to convene the scheme meeting. In particular, the fact that the reimbursement fee was not payable if Edge's shareholders did not vote in favour of the scheme weighed favourably in the balance, as I considered that the reimbursement fee was unlikely to influence shareholders in their decision to vote on the scheme.

1. Counsel for Edge drew to the court's attention the fact that the scheme was subject to a number of conditions precedent, set out in cl 3.1 of the proposed scheme and in cl 3.1 of the scheme implementation agreement, as I discussed at [63[149]] above.149
2. Counsel informed the court that at the second court hearing, in accordance with cl 3.2 of the scheme of arrangement, Edge and Trek would each provide to the court a certificate confirming whether all of the conditions precedent had been satisfied or waived. For present purposes, I accepted the evidence of Mr Boys who deposed in his first affidavit that he was not aware of any reason why any of the conditions precedent to the scheme may not be satisfied or waived.[150]

1. Counsel also addressed the court on performance risk.[151] That is, the risk that after transferring their shares, shareholders in Edge could be left with no scheme consideration and no capacity to sue Trek to get back their shares or recover damages.[152]
2. The mechanism for implementation of the scheme is set out in cl 4 of the scheme of arrangement and the obligations of Trek to provide the scheme consideration are set out in cl 5. As counsel noted in the submissions, there is no obligation on Edge to transfer any shares to Trek until Trek has issued the scheme consideration to Edge shareholders.[153] In other words, beneficial title does not pass to Trek until it provides the scheme consideration.
3. The arrangements under the proposed scheme are also supported by the deed poll which was executed by Trek on 13 September 2022. By the deed poll, Trek agreed to comply with the obligations attributed to it under the scheme implementation agreement and to do all acts necessary or desirable on Trek's part to give full effect to the scheme. Counsel submitted that this would give each scheme participant individual rights against Trek in the event that Trek failed to provide the scheme consideration. Further, by cl 9.1, the deed poll is governed by the law of Western Australian and Trek and Edge submit irrevocably to the non-exclusive jurisdiction of courts of Western Australia.
4. Having regard to the above, I was satisfied that the nature and terms of the proposed scheme were such that the performance risk was minimal, and such performance risk was not a basis to refuse to convene the scheme meeting.

1. A further matter drawn to my attention by counsel was cl 7.5(a) of the scheme of arrangement, which concerns the 'Status of Scheme Shares'. By that provision, the Edge shareholders warrant to Edge in its own right and for the benefit of Trek that all of their shares transferred under the scheme (including any rights and entitlements attaching to those shares) are fully paid and unencumbered and free from restrictions at the date of transfer.
2. Having drawn this matter to the court's attention, counsel noted that existence of the provision is drawn to the attention of Edge shareholders in the scheme booklet,[154] and such warranties have been considered acceptable by the courts.[155] I agreed with these submissions.

1. Counsel also noted that the scheme of arrangement also contains a customary 'clear title' and 'no encumbrance' provision, expressed to be to 'the extent permitted by law': cl 7.5(a).[156]
2. So expressed, counsel submitted that the provision does not give rise to the concern, expressed by some courts that third parties may gain the impression that their interests would be extinguished by operation of the provision.[157] I accepted the same, and did not consider that the inclusion of this clause provided a basis to refuse to convene the scheme meeting.

1. I proceeded on the basis that it is now well-settled that the appropriate occasion on which the court is required to address the question posed by s 411(17) of the Corporations Act is on an application to approve a scheme at the second court hearing.[158] Consequently, it was not incumbent upon the court at the convening stage to canvass the question of avoidance of the operation of ch 6.

1. The final matter raised by counsel was that the scheme of arrangement contains a 'no liability when acting in good faith' provision at cl 7.9 in the following terms:

7.9 No liability

Neither Edge nor Trek, nor any of their respective officers, is liable to Scheme Participants for anything done or for anything omitted to be done in performance of this Scheme in good faith.

1. Counsel submitted that having regard to its proper construction, this clause does not deprive members of their intended benefits under the scheme because actions must be undertaken in good faith.[159] I concluded that inclusion of cl 7.9 did not ground a basis to refuse to convene the scheme meeting.

Electronic dispatch of the scheme booklet and proxy form

1. Edge sought orders pursuant to s 1319 of the Corporations Act for electronic dispatch of the notice of access and applicable proxy form to those Edge shareholders who had nominated an electronic address for the purpose of receiving shareholder communications from Edge. I accepted that such orders are now common.[160]
2. Details were provided as to the terms of the proposed electronic notification, namely that email notices would be provided to Edge shareholders who had approved to receiving electronic communications.[161]
3. I was satisfied, having read the terms of the proposed email communication to shareholders, that an order for electronic dispatch of the scheme booklet was appropriate.
4. In respect of the Edge shareholders who had elected to receive hard-copy correspondence, or for whom electronic delivery is notified as ineffective, Edge proposed the dispatch of a notice by post, including links to the scheme booklet.[162] I considered this to be appropriate.

Conclusion and orders of the first court hearing

1. Having given careful consideration to the materials filed; the conclusion of the independent expert; the involvement of ASIC; and the matters drawn to the court's attention by counsel for Edge and by ASIC, I was satisfied that there was no apparent reason why the proposed scheme of arrangement should not, in due course, receive the court's approval if the necessary majority of member's votes were to be achieved. I was satisfied that the substantive and procedural requirements of s 411(1) and s 1319 of the Corporations Act had been satisfied, that the scheme of arrangement was fit for consideration by Edge's shareholders, and that leave ought to be given.
2. I was satisfied that the potential director conflicts would be drawn to the attention of shareholders before the scheme meeting, and the shareholders would be given the opportunity consider and vote on the scheme with knowledge of the same. Of course, interested parties and ASIC would also be given an opportunity to be heard at the second court hearing.
3. I approved for distribution to Edge shareholders the amended scheme booklet containing the explanatory statement required by s 412(1)(a) of the Corporations Act. The orders made at the conclusion of the first court hearing are reproduced at sch A to these reasons.

1. By the evidence filed for the first court hearing, the court was informed that Edge had engaged Georgeson Shareholder Communications to provide institutional investor engagement, retail shareholder engagement and vote tracking for the scheme meeting.[163]
2. My orders of 16 September 2022 contemplated that Edge was to apply to the court for approval if it intended to undertake an outbound telephone information campaign, hold any investor meetings, poll shareholders or otherwise engage in conduct which solicited shareholders of Edge in connection with the proposed scheme of arrangement. As contemplated by the orders, Edge made an application for approval by way of letter filed on 21 September 2022. By the application, Edge sought approval pursuant to s 1319 of the Corporations Act to contact shareholders via telephone by Georgeson Shareholder Communications in execution of an outbound campaign.
3. Edge relied on one affidavit in relation to the application, being the affidavit of Ms Barclay sworn on 21 September 2022. By this affidavit, Ms Barclay deposed that Georgeson had provided Edge with a proposed call script (Script) (which Ms Barclay marked as attachment REB-1 to her affidavit), as well as question and answer sheet (Q&A Sheet) (which Ms Barclay marked as attachment REB-2 to her affidavit), which were intended to be used by Georgeson's employees in an outbound telephone information campaign concerning the Edge shareholders. Ms Barclay deposed to having reviewed the Script and Q&A Sheet and to having incorporated amendments to ensure that they accurately reflected the final scheme booklet, in particular, the additional disclosure concerning the common directors of Edge and Trek. Ms Barclay also deposed to having circulated the amended Script and Q&A Sheet to Mr Hardwick and Mr Boys for review and for their confirmation that the wording of each was acceptable to Edge. Ms Hardwick deposed that she subsequently received confirmation of the same from Mr Hardwick.
4. In Re Vimy Resources Ltd [No 2] [2022] WASC 257 [76] - [91], I summarised the principles that govern communications by a company with its members once a court has convened a scheme meeting. Recently Hill J in Re Big River Gold Pty Ltd [2022] WASC 296 confirmed at [106] that:

I consider that the views expressed by Black J and Strk J (which is also the position expressed by Farrell J in Re Wajema Ltd [2021] FCA 878 [22(o)]) accurately summarise the position. That is, if a company proposes to use a proxy solicitation agent (that is, an outbound telephone campaign), this should be drawn to the attention of the court at the first court hearing and approval sought as to the proposed script. The purpose of this is to ensure that the scripts are consistent with the Scheme booklet, are appropriately balanced and do not contain any information that is new or misleading.[164]

1. I rely on the principles outlined in Re Vimy Resources Ltd [No 2] as if set out here in full and I applied the same in the determination of this application. As was noted in Re Vimy Resources Ltd [No 2] at [96], there may be circumstances where the lack of court approval of a shareholder campaign script or campaign process may ground a basis to refuse to approve a proposed scheme. In this case, the application was properly made before any outbound calls were made.
2. I reviewed the proposed Script and Q&A Sheet and was satisfied that there was nothing in the content of the same that caused me concern. The Script included a clear and early reference to the lack of independence of three of the four Edge directors by inclusion of an appropriate disclosure immediately after the general greeting and confirmation of receipt of documents parts in the following terms:
   1. Provide Information

[Mr/Ms Surname], Edge shareholders are being asked to vote on a proposed acquisition by Trek Metals to combine the two companies.

The Scheme Meeting to consider the proposal will be held on Thursday, 20th of October 2022 and if approved and implemented, Edge shareholders will receive 2.12 New Trek Shares for each Edge share held. Trek Metals is an ASX listed battery metals focused minerals explorer with exploration projects in the Pilbara region of Western Australia.

Firstly, I bring to your attention that, in considering the proposed transaction you should note that three of the four directors of Edge constituted the whole of the Board of Trek when the terms of the proposed acquisition were negotiated and agreed.

You should also be aware that only one of the four directors of Edge consider themselves to be independent of Trek. For this reason, only the independent director makes a recommendation on the Scheme.

1. In the Q&A Sheet, the answer to 'Who is Edge Minerals?' included the following information:

At the time of the demerger from Bardoc, three of the four directors of Edge were directors of Trek. Those Edge directors remain directors of Trek.

1. The answer to 'Why would I vote against?' included the following information:

Although the Scheme is recommended by only the one Independent Edge Director and the Independent Expert has concluded that the Scheme is in the best interests of Edge Shareholders in the absence of a Superior Proposal, factors which may lead you to consider voting against the Scheme include the following:

...

(g) The common directors may not have negotiated the best possible terms of the Scheme.

1. The answer to 'What do Edge directors recommend and what will they do?' included the following disclosure at the outset:

You should also be aware that only one of the four directors of Edge consider themselves to be independent of Trek. For this reason, only the independent director makes a recommendation on the Scheme.

1. The Q&A Sheet also included an accurate answer to the question 'Are the Edge Directors Independent? What are their interests?', and 'Will Edge Directors benefit from the proposed Scheme?'
2. The Script encouraged shareholders to vote, which is a legitimate object of an outbound campaign when the approval of a scheme depends, in part, upon the number of shareholders voting as well as the way in which they vote.[165] The Script and Q&A Sheet were also otherwise consistent with the disclosure in the scheme booklet and did not contain new information or any information that was misleading.
3. On balance, I was satisfied that neither the information provided in the Script and Q&A Sheet, nor the nature of the campaign would adversely affect the integrity of the voting process at the scheme meeting. Accordingly, after considering the application on the papers, I made the orders now reproduced at sch B to these reasons.

Sch B - Orders made approving outbound telephone information campaign script

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] First affidavit of RE Barclay par 18, REB-13.

[3] First affidavit of RE Barclay, REB-13.

[4] Mr Leibowitz was appointed in February 2022, Mr Biddle was appointed in January 2018 and Mr Young was appointed in September 2017: first affidavit of RE Barclay, REB-13.

[5] First affidavit of CJ Boys par 1; first affidavit of RE Barclay, REB-13.

[6] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 13.5).

[7] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, corporate directory).

[8] First affidavit of RE Barclay par 6, REB-1.

[9] First affidavit of RE Barclay par 7, REB-2.

[10] First affidavit of RE Barclay, REB-1 (scheme implementation agreement, cl 4.2); eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.2).

[11] First affidavit of CJ Boys, CJB-7.

[12] First affidavit of CJ Boys pars 17 - 18.

[13] First affidavit of RE Barclay, REB-1 (scheme implementation agreement, annexure A), REB-2; first affidavit of CJ Boys par 10.

[14] First affidavit of CJ Boys par 11.

[15] First affidavit of RE Barclay pars 6 - 7; first affidavit of CJ Boys pars 7 - 8.

[17] First affidavit of CJ Boys pars 68 - 69.

[18] First affidavit of CJ Boys par 70.

[20] First affidavit of CJ Boys, CJB-12.

[21] ts 4, 8, 14, 15 (14 September 2022).

[22] ts 3 - 4, 16, 18 (14 September 2022).

[23] Third affidavit of CJ Boys par 8, CJB-1.

[24] Third affidavit of CJ Boys par 10.

[25] Third affidavit of CJ Boys par 10.

[26] Third affidavit of CJ Boys par 11, CJB-2.

[27] Third affidavit of CJ Boys par 12.

[28] First affidavit of CJ Boys pars 76 - 81.

[29] First affidavit of CJ Boys par 84.

[30] First affidavit of CJ Boys par 85.

[31] First affidavit of CJ Boys pars 82 - 85.

[32] First affidavit of CJ Boys par 82.

[33] Third affidavit of CJ Boys pars 13 - 18.

[34] First affidavit of CJ Boys, CJB-12.

[35] First affidavit of CJ Boys par 99.

[36] First affidavit of RE Barclay, REB-6 (draft scheme booklet, annexure A); third affidavit of RE Barclay, REB-3; sixth affidavit of RE Barclay, REB-4.

[37] Seventh affidavit of RE Barclay par 5, REB-1.

[38] First affidavit of RE Barclay, REB-6 (draft scheme booklet, annexure A, pars 1.5, 3.1).

[39] Sixth affidavit of RE Barclay, REB-4 (pars 1.5, 3.1).

[40] First affidavit of RE Barclay, REB-1 (scheme implementation agreement, cl 3.1 and sch 3, conditions 3 and 4).

[41] First affidavit of RE Barclay, REB-5 (scheme of arrangement, cl 1.1 (definitions and interpretation)).

[42] First affidavit of RE Barclay, REB-5 (scheme of arrangement, cl 4.9); eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.7, s 11.8); outline of submissions par 32.

[43] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.7).

[44] In the scheme of arrangement they are described as 'small shareholders': first affidavit of RE Barclay, REB-5 (scheme of arrangement, cl 4.10).

[45] First affidavit of RE Barclay par 16, REB-10.

[46] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.7, s 11.8); outline of submissions pars 34 - 37.

[47] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.7).

[48] Third affidavit of RE Barclay par 9, REB-5.

[49] First affidavit of RE Barclay par 16, REB-9 and REB-10.

[50] First affidavit of RE Barclay pars 11 and 12, REB-6 and REB-7.

[51] Second affidavit of RE Barclay par 14, REB-6.

[53] See also outline of submissions pars 17 - 19.

[54] Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 [7].

[55] Re SRG Ltd [2018] FCA 1092 [11]; Re Wesfarmers Ltd [2018] WASC 308 [60].

[56] Corporations Act s 412(1)(a)(ii); Corporations Regulations 2001 (Cth) reg 5.1.01, Sch 8 cl 8301 ‑ 8310.

[57] Corporations Act s 412(1)(a)(i).

[58] Corporations Act s 411(2)(b).

[60] Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20 [20].

[61] Re Amcom Telecommunications Ltd [2015] FCA 341 [10].

[62] Re SRG Ltd [12]; Re Wesfarmers Ltd [72] - [76].

[63] First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116; (2017) 320 FLR 78 [80]; Re Zenith Energy Ltd [2020] WASC 266 [36]; Re Vimy Resources Ltd [2022] WASC 233 [46].

[65] First affidavit of CJ Boys par 28.

[66] Outline of submissions par 33; Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101 [9] ‑ [13]; Re oOh!Media Group Ltd [2012] FCA 26 [30]; Re Firefly Resources Ltd [2021] WASC 376 [60]; Re Excelsior Gold Ltd [2018] FCA 2064 [37] - [43]; Re Doray Minerals Ltd [2019] WASC 57 [45]; Re Vimy Resources Ltd [45]; Re Wesfarmers Ltd [96]; Re Piedmont Lithium Ltd [2021] WASC 76 [41]; Re Ozgrowth Ltd [2022] WASC 107 [43].

[68] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.7).

[69] Outline of submissions par 39, citing Re Alinta Ltd [2007] FCA 938; Re Peak Coal Ltd [2010] FCA 6; Re Mosaic Oil NL [2010] FCA 985; Re Envestra Ltd [2014] FCA 395. See also Re Vimy Resources Ltd [53] and cases cited at footnote 52.

[72] ASIC, Regulatory Guide 60: Schemes of arrangement [60.4].

[73] Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485, 506; Re Advance Bank Australia Ltd [No 2] (1997) 136 FLR 281, 287, cited by Jacobson J in Re Seven Network Ltd [2010] FCA 220 [15].

[74] Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [43].

[75] First affidavit of RE Barclay pars 11 - 13, REB-7 and REB-8.

[76] Second affidavit of RC Barclay par 7, REB-1.

[77] Third affidavit of RE Barclay, REB-2.

[78] See the first affidavit of RE Barclay, REB-11; second affidavit of RE Barclay, REB-3 to REB-5; third affidavit of RE Barclay, REB-1 to REB-2; fourth affidavit of RE Barclay, REB-1.

[79] Third affidavit of RE Barclay, REB-2.

[80] Third affidavit of RE Barclay, REB-2.

[81] ts 21 - 22 (14 September 2022); see also first affidavit of RE Barclay, REB-11.

[82] Fifth affidavit of RE Barclay par 15, REB-7.

[84] First affidavit of RE Barclay, REB-11.

[85] Fifth affidavit of RE Barclay par 15, REB-7.

[86] Third affidavit of RE Barclay, REB-1.

[87] Third affidavit of RE Barclay, REB‑2.

[89] First affidavit of RE Barclay, REB-2.

[91] Third affidavit of RE Barclay, REB-2, ASIC referring to s 181 of the Corporations Act.

[92] Third affidavit of RE Barclay, REB-2, ASIC referring to ss 182 and 183 of the Corporations Act.

[93] Third affidavit of RE Barclay, REB-2.

[94] ts 18, 28, 29 (14 September 2022).

[95] ts 4, 8, 14, 15 (14 September 2022); which issues are summarised at [105] - [107] above.

[96] ts 7, 19 - 20, 27 - 28 (14 September 2022).

[99] First affidavit of RE Barclay, REB-6; second affidavit of RE Barclay, REB-6.

[104] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, cover page).

[105] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 16.5).

[106] Second affidavit of RE Barclay, REB-3, REB-5; third affidavit of RE Barclay, REB-2; fifth affidavit of RE Barclay, REB-1, REB-2, REB-4; sixth affidavit of RE Barclay, REB-1; ts 42 - 43, 53, 65 (16 September 2022).

[107] ts 21 (14 September 2022); outline of submissions pars 59 - 60.

[108] First affidavit of CJ Boys pars 51 - 65.

[109] First affidavit of CJ Boys pars 58 - 59, CJB-8, CJB-9.

[110] First affidavit of JGM Ogilvie pars 5 - 10.

[111] Outline of submissions, appendix B.

[114] Re Seven Network Ltd [No 3] [42].

[115] Outline of submissions pars 102 - 105.

[117] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 7.1).

[118] First affidavit of CJ Boys par 94(d).

[120] Outline of submissions par 71; first affidavit of RE Barclay par 19, REB-12.

[121] Outline of submissions par 70, citing Re NRMA Insurance [No 1] [2000] NSWSC 82; (2000) 156 FLR 349 [22] ‑ [24]; Re Firefly Resources Ltd [85]; see also ts 60 ‑ 61 (16 September 2022).

[123] Re Exploration Survey and Engineering Pty Ltd [1969] QWN 11; Alstom Signalling Solutions Pty Ltd v Alstom Transport Australia Pty Ltd [2016] FCA 838 [22], quoting Santow J in Re Archaean Gold NL (1997) 23 ACSR 143, 147.

[124] Re Mincom Ltd [No 3] [2007] QSC 207; (2007) 213 FLR 364; supplementary submissions par 7.

[125] Supplementary submissions par 9.

[126] Coleman v Myers [1976] NZHC 5; [1977] 2 NZLR 225; Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538.

[127] Perceival v Wright [1902] UKLawRpCh 125; [1902] 2 Ch 421.

[128] Counsel contrasted the Delaware position, as was outlined in Revlon Inc v MacAndrews & Forbes Holdings Inc, 506 A 2d 173 (Del, 1986).

[129] Supplementary submissions par 10; ICAL Ltd v County NatWest Securities Australia Ltd (1988) 39 NSWLR 214; Darvall v North Sydney Brick & Tile Co Ltd (1989) 16 NSWLR 260; Re Arthur Yates & Co Ltd [2001] NSWSC 40; (2001) 36 ACSR 758.

[130] Supplementary submissions par 20; ts 60 (16 September 2022).

[131] Re Bolnisi Gold NL [No 2] [9]; supplementary submissions par 13.

[132] Supplementary submissions par 19; ts 61 (16 September 2022).

[133] Supplementary submissions par 11.

[134] Supplementary submissions par 12.

[135] Supplementary submissions par 16.

[136] Supplementary submissions par 14.

[137] Supplementary submissions par 17, citing Gynch v Polish Club Ltd [2015] HCA 23; (2015) 255 CLR 414 [71] - [84].

[138] ts 37 (16 September 2022). See also third affidavit of RE Barclay, REB-1; ts 8 - 9 (14 September 2022).

[141] Eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 19.3).

[142] First affidavit of CJ Boys pars 76 - 81.

[143] Outline of submissions par 85; Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 [29] - [35]; Re Kangaroo Resources Ltd [2018] WASC 327 [57] ‑ [61].

[145] First affidavit of CJ Boys par 73.

[148] First affidavit of CJ Boys pars 82 - 84, CJB-11.

[149] Outline of submissions pars 72 - 75.

[150] First affidavit of CJ Boys par 25.

[151] Outline of submissions pars 76 - 83.

[152] Re APN News & Media Ltd [23]; Re Anatolia Energy Ltd [2015] FCA 1134 [34]; Re Kangaroo Resources Ltd [46] - [53].

[154] Outline of submissions par 94; eighth affidavit of RE Barclay, REB-1 (draft scheme booklet, s 11.11).

[155] Outline of submissions par 96, citing Re APN News & Media Ltd [57] - [63]; Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366 [13] - [14]; Re Doray Minerals Ltd [71]; Re Navitas Ltd [112].

[157] Re Tower Australia Group Ltd [2011] FCA 224 [13] - [15].

[158] Outline of submissions par 106; Re Macquarie Private Capital A Ltd [26] - [37].

[159] Outline of submissions par 109, citing Re Wesfarmers Ltd [No 2] [2018] WASC 357 [49(4)]; Re Firefly Resources [114] - [115].

[160] Outline of submissions par 101; MDA National Ltd v Medical Defence Australia Ltd [2014] FCA 954 [105]; Re Amcom Telecommunications Ltd [45]; Re SRG Ltd [48]; Re Doray Minerals Ltd [72]; Re NTM Gold Ltd [2021] WASC 22 [77]; Re Galaxy Resources Ltd [73].

[161] First affidavit of CJ Boys par 40, CJB-5, CJB-6.

[162] First affidavit of CJ Boys par 37.

[163] First affidavit of CJ Boys par 50, CJB-7.

[164] Re Galaxy Resources Ltd [31] - [33]; Re Western Areas Ltd [84] - [85].

[165] Re ResApp Health Ltd [2022] NSWSC 1014 [24].