Sydney Airport Holdings Limited as responsible entity of Sydney Airport Trust 2 [2013] NSWSC 2012

Judgment - ex tempore 1On 25 October 2013 I made orders giving judicial advice to Sydney Airport Holdings Limited ("SAHL") as responsible entity of Sydney Airport Trust 2 ("SAT2") that it was justified in convening a meeting of securityholders consider a proposed trust scheme; I delivered my reasons for judgment in that regard on 13 November [2013] NSWSC (1665). 2SAHL as responsible entity of SAT2 now seeks judicial advice, pursuant to s 63 of the Trustee Act 1925 (NSW) that it, as responsible entity of SAT2, would be justified in implementing the scheme, as that term is defined in the explanatory memorandum sent to securityholders, giving effect to the amendments to the SAT2 constitution set out in the Supplemental Deed annexed to the explanatory memorandum ("SAT2 Supplemental Deed"); and doing all things necessary to give effect to the scheme. 3The application for those further orders, at this second hearing is supported by affidavits of Mr Jamie Motum affirmed 22 November 2013, Ms Roopa Paresh affirmed 22 November 2013 and Mr Julian Donnan affirmed 25 November 2013. Mr Motum is Company Secretary of SAHL and he gives evidence of the provision of relevant documents in respect of the scheme, including the explanatory memorandum, to the registry services provider for the trust, for distribution to securityholders; of the conduct of the securityholders' meeting to consider the scheme and the concurrent general meetings of Sydney Airport Trust 1 and SAT2 on 22 November 2013; and refers to a report provided by the registry services providers confirming that the scheme resolutions and associated resolutions at the general meetings had been approved by the requisite majorities; and to the release of the results of the polls to Australian Securities Exchange Limited. He also gives evidence of the notice of this hearing in The Australian newspaper on 18 November 2013, and of the absence of advice that any person or entity seeks to appear to oppose the scheme. No person has in fact appeared to oppose the scheme today. 4One minor matter arises in respect of the published notice of this hearing, to which Mr Sheahan who appears for SAHL properly draws attention. Mr Sheahan notes that the form of draft advertisement of this hearing which was annexed to the orders which I made on 25 October 2013 referred to a meeting to be held at 11 am on 22 November 2013, in the course of drawing securityholders' attention to their ability to appear at this hearing on 25 November 2013 in respect of the approval of the scheme. Mr Sheahan notes that the reference to the meeting commencing at 11am was in error, because the meeting was proposed to commence at, and it commenced at, 10am as was made clear by the explanatory memorandum in respect of the scheme. Properly, that notice was corrected prior to its publication, so as to conform the description of the time at which the meeting commenced to the time at which it actually commenced. In that situation, securityholders will not have been misled by the notice, particularly where its role was primarily to draw attention to the time of this hearing which it accurately recorded; and the change made between the actual notice published and the draft of it attached to the orders promoted the provision of proper information to securityholders, rather than the reverse. For that reason, that minor discrepancy provides no obstacle to approval of the scheme. 5Ms Paresh, who is the relationship manager of the registry services provider, gives evidence as to the maintenance of the securityholder register, the mailing of documents to securityholders in a first, second and third mail out, the second and third of which were directed to securityholders who subsequently entered the register, the processing of proxy forms, and the voting at the scheme meeting and the outcome of the meeting. Ms Paresh's evidence annexes final proxy summary reports and final poll reports and evidences the outcome of the scheme meeting, namely, the passage of the relevant resolutions by substantial majorities. 6Mr Sheahan also draws attention to another matter arising from this evidence, in respect of the dispatch of explanatory memoranda to securityholders. The orders made by the Court had contemplated that the explanatory memorandum be dispatched to SAT2 securityholders registered at, in effect, close of business on 29 October 2013 with a second distribution of the explanatory memorandum to securityholders who had entered the register by close of business on 10 November 2013. Ms Paresh's affidavit indicates that what ultimately occurred was that the explanatory memorandum was dispatched in three tranches rather than two tranches, one to securityholders registered on 23 October, with a further dispatch to securityholders who had entered the register by 7 November and a final dispatch to securityholders who had entered the register by 10 November. It is proper that the Court's attention be drawn to this matter, where the implementation of the dispatch of the explanatory memoranda did not precisely coincide with that contemplated by the orders; however, I can see no reason why the discrepancy would adversely affect the level of information provided to securityholders, particularly where its ultimate outcome is coincident with that contemplated by the Court's orders, namely, that the explanatory memorandum would, in fact, have been dispatched to all securityholders on the register by 10 November 2013 as the Court's orders contemplated. The difference is, therefore, one of mechanism and not one of outcome and provides no reason not to provide the advice which is sought. 7Mr Julian Donnan, who is a partner of the firm of solicitors who represents SAHL as responsible entity of SAT2 and SAHL in respect of the scheme, gives evidence of satisfaction of conditions precedent to the scheme, with two exceptions to which I will refer, and of dealings with the Australian Securities and Investment Commission and Australian Securities Exchange in respect of the scheme including the grant of the necessary exemptions under the Corporations Act by ASIC of the necessary waivers and confirmations by ASX. Mr Donnan also confirms the absence of notice of opposition to the scheme. I referred above to two exceptions in respect of conditions precedent. The first is a usual exception, namely, that the condition precedent for the giving of judicial advice by the Court necessarily cannot be satisfied until after such advice is given at this second hearing. The second relates to the lodgement with ASIC, as distinct from the execution of, the SAT2 Supplemental Deed. That document has been executed but will not be lodged with ASIC until after the Court gives the necessary judicial advice. Strictly, that condition precedent has not yet been satisfied so far as lodgement with ASIC is concerned and it has also not been waived; however, that matter is properly addressed by an undertaking proffered by SAHL in its capacity as responsible entity that it will lodge a copy of the executed SAT2 Supplemental Deed with ASIC forthwith following the giving of any judicial advice at this hearing. 8The present application involved a trust scheme rather than a corporate scheme to which s 411 of the Corporations Act would apply. Nevertheless, principles such as those applicable to the approval of the scheme of arrangement at the second hearing, under s 411 of the Corporations Act provide assistance as to the exercise of the Court's discretion. First, the Courts have recognised that securityholders are usually the best judges of what is in their commercial interests although the Court will have regard to whether the proposal is fair and reasonable so that a properly informed securityholder might approve it, and also will have regard to whether there has been full and fair disclosure to security holders of information and material pursuant to it: Re NRMA Limited (No 2) [2000] NSWSC 401; (2000) 34 ACSR 261; Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 77 ACSR 701. In the present case there is no reason to think that securityholders were not able to reach a properly informed judgement as to their best interests, and it appears that they have done so by supporting the proposal by a significant majority of those voting; and there is no reason to doubt the adequacy of disclosure to securityholders which informed that vote. 9Having regard to the evidence to which I have referred and to the principles which I note above, and on the undertaking of SAHL as responsible entity of SAT2 to lodge the SAT2 Supplemental Deed with ASIC as noted above, I am satisfied that the opinion, advice and directions sought by SAHL in its capacity as responsible entity of SAT2 should be given. I make orders in accordance with the short minutes of order initialled by me and placed in the file which include an order that these orders be entered forthwith.