URB Investments Limited, in the matter of URB Investments Limited (No 2) [2019] FCA 2160

MARKOVIC J: 1 On 4 November 2019 I made orders (November Orders) including orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act) convening a meeting of holders of fully paid ordinary shares in URB Investments Limited (URB) (Scheme Meeting) for the purposes of considering a proposed scheme of arrangement (Scheme), and approving a scheme booklet (Scheme Booklet) to be distributed to members in connection with the Scheme: see URB Investments Limited, in the matter of URB Investments Limited [2019] FCA 1977 (URB Investments (No 1)). 2 On 10 December 2019, after the second court hearing, I made orders pursuant to s 411(4)(b) of the Act approving the Scheme. These are my reasons for making those orders.

the Scheme 3 The details of the Scheme are set out in URB Investments (No 1) at [5]-[8]. 4 In summary, it involves the acquisition by 360 Capital FM Limited (360 Capital FM), as responsible entity of the 360 Capital Total Return Active Fund (TOT Active Fund), of 100% of URB's issued capital. The consideration for each URB share will be the issue of 0.9833 of a newly issued stapled security in the 360 Capital Total Return Fund (TOT) consisting of a fully paid unit in the TOT Active Fund and a fully paid ordinary unit in the 360 Capital Total Return Passive Fund (TOT Passive Fund) (Scrip Consideration). The Scrip Consideration merger ratio of 0.9833 was calculated by reference to the adjusted 30 September 2019 net tangible assets (NTA) of both URB and TOT and incorporates a 3% premium to URB's adjusted pre-tax NTA. 5 In addition, URB shareholders are expected to have an entitlement to the TOT December 2019 quarterly distribution if the "scheme implementation date" occurs prior to the record date for the TOT December distribution. If the "scheme implementation date" occurs after the record date for the TOT December distribution the Scheme Shareholders will, subject to URB granting a loan to TOT, receive additional cash consideration.

legal principles 6 In considering whether to approve a scheme the Court must be satisfied that the procedural requirements for approval have been met and must then consider the exercise of its discretion whether or not to approve the scheme: see Central Pacific Minerals NL [2002] FCA 239 at [12]. 7 In Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400 at [35]-[40] Jacobson J set out the considerations which his Honour considered were relevant to the exercise of the Court's discretion to approve a scheme: 35 … The first is whether the shareholders have voted in good faith and not for an improper purpose: Re Foundation Healthcare Ltd (No 2) (2002) 43 ACSR 680. 36 Second, whether the proposal is fair and reasonable so that an intelligent and honest man or woman who was a member of the relevant class, properly informed and acting alone might approve it: Fowler v Lindholm (2009) 178 FCR 563; 259 ALR 298; 74 ACSR 124; [2009] FCAFC 125 at [79] (Fowler). 37 The third is whether the plaintiff has brought to the attention of the court all maters [sic] that could be considered relevant to the exercise of the court's discretion: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [7] (Re Permanent). 38 The fourth, and related consideration, is whether there has been full and fair disclosure of all information material to the decision: Re NRMA (No 2) at [30]. 39 The fifth is whether minority shareholders would be oppressed by the scheme: Re Ranger Minerals Ltd; Ex parte Ranger Minerals Ltd (2002) 42 ACSR 582; [2002] WASC 207. 40 A further consideration has been said to be whether the scheme offends public policy. See, for example, Re CSR Ltd (2010) 265 ALR 703; [2010] FCAFC 34 at [51] - [56].

formal and procedural matters 8 The evidence relied on by URB established that: (1) the November Orders were lodged with Australian Securities and Investments Commission (ASIC) and the Scheme Booklet was registered by ASIC; (2) the Scheme Booklet, substantially in the form approved at the first court hearing, was dispatched to each Scheme shareholder in accordance with the November Orders; (3) the Scheme Meeting was held in accordance with the November Orders. It was chaired by Warwick Negus and held at the time and place specified in the Scheme Booklet; (4) the statutory majorities were obtained at the Scheme Meeting with 95.56% of votes cast in favour of the Scheme, representing 89.41% of members present; (5) the date of the second court hearing was advertised in The Australian newspaper on 29 November 2019; (6) each of URB on the one hand, and 360 Capital FM as responsible entity for the TOT Active Fund and for the TOT Passive Fund on the other, had certified, in relation to matters within their respective knowledge, that as at 8.00 am on the second court date, 10 December 2019, the conditions precedent in cl 3.2 of the scheme implementation deed, other than the condition precent in cl 3.2(d), had been satisfied or waived, in accordance with the terms of that deed; and (7) the solicitors for URB had not received any notices of intention to appear at the second court hearing and, upon the matter being called three times outside the courtroom, there was no appearance by any other party at the second court hearing. 9 By letter dated 9 December 2019 ASIC informed URB, pursuant to s 411(17)(b) of the Act, that it had no objection to the proposed Scheme.

Voter turnout 10 URB raised the issue of voter turnout. Relevantly 32.7% of eligible shares were voted representing 18.35% of eligible shareholders. As demonstrated by the evidence before me, those numbers would have been higher if the individual and companies who had undertaken not to vote at the scheme meeting had participated and voted. They were Thomas Millner, TOMCIL Pty Ltd and Culbert W&E Pty Ltd (as to which see URB Investments Limited at [17]) and 360 Capital Property Limited, an associate of 360 Capital FM. URB submitted that the voter turnout compares favourably with the turnout at its recent annual general meetings. 11 In MYOB Group Limited, in the matter of MYOB Group Limited (No 2) [2019] FCA 668 at [19(5)] I observed that: … In Avoca Resources Limited, in the matter of Avoca Resources Limited [2011] FCA 208 (Avoca) at [21] Gilmour J noted that since the decision in Lion Nathan Ltd, in the matter of Lion Nathan Ltd (No 2) [2009] FCA 1261, the Court had expressed an interest in knowing the turnout of eligible shares by percentage and, more recently, of shareholders. His Honour also noted that "[t]hese percentages have no statutory significance, but a low turnout percentage might suggest a flaw in the convening procedure". In Avoca, where there were voter turnout percentages of 72.38% by shares represented and 11.49% by shareholders participating, Gilmour J found that no inference to that effect ought to be drawn. Similarly, given the evidence about the mail out of the scheme documents, I would not infer that there was any flaw in the convening procedure for the Scheme Meeting; 12 Similarly in this case there is no basis for inferring that there was any flaw in the convening procedure for the Scheme Meeting. As Farrell J observed in Sundance Energy Australia Limited, in the matter of Sundance Energy Australia Limited [2019] FCA 1944 at [48] "it is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme" and that "apathy should not be presumed to be antagonism". 13 In the circumstances of this case, having regard to the evidence before me, including the usual turnout at annual general meetings, the voter turnout at the Scheme Meeting was not a basis upon which I would not approve the Scheme.

exercise of the Discretion 14 Having considered the matters relevant to the exercise of the Court's discretion to approve the Scheme, I was satisfied that orders approving the Scheme should be made. 15 First, there was nothing to suggest that shareholders voted other than in good faith, that they cast their votes for an improper purpose or that any member was treated in a way that could be characterised as oppressive. 16 Secondly, I was satisfied that the Scheme was fair and reasonable: at the first court hearing I made the orders sought by URB. In doing so I was satisfied, based on the matters brought to my attention at the time, that the Scheme is of such a nature and is cast in such terms that if it achieves the statutory majorities at the Scheme Meeting I would be likely to approve it: see URB Investments (No 1)at [49]; no one came forward to URB or the Court to oppose the Scheme and no issues were raised by any shareholders at the Scheme Meeting; the Scheme was supported by a significant majority of those members who attended the Scheme Meeting in person or by proxy; and the independent expert, Lonergan Edwards & Associates Limited, appointed by the directors of URB, was of the opinion that the Scheme is fair and reasonable and in the best interests of URB shareholders in the absence of a superior proposal. There was no evidence contrary to that opinion. 17 Thirdly, there was no criticism of the disclosure in the Scheme Booklet. 18 Fourthly, ASIC provided its statement pursuant to s 411(17)(b) of the Act and did not raise any public policy concerns. There is nothing on the face of the Scheme to suggest that any such concern arises. 19 Fifthly, I addressed the issue of whether a collateral benefit accrued to the shareholders of Contact Asset Management Pty Ltd who either have a direct or indirect interest in URB as a result of the Contact Transaction (as defined at [14] of URB Investments (No 1)) at [38]-[43] of URB Investments (No 1). The evidence before me established that: URB tagged the votes of Washington H Soul Pattinson and Company Ltd (WHSP), which voted in favour of the resolution agreeing to the Scheme; the result of the vote on the resolution would have been the same if WHSP's votes were excluded; and the entities controlled by Messrs Millner and Culbert and Mr Millner himself did not attend the Scheme Meeting to vote or submit a proxy form prior to the Scheme Meeting, consistent with the deed polls entered into by each of them. 20 Finally, I was satisfied that URB had brought all matters relevant to the exercise of the Court's discretion to my attention.

conclusion 21 For those reasons I made the orders sought by URB. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.