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[2010] FCA 1012
Federal Court of Australia
2010-09-14
Stone J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 On 13 September 2010 I made orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) confirming a scheme of arrangement (Scheme) between the plaintiff, Wattyl Limited, and its shareholders. These are my reasons for those orders. 2 On 4 August 2010 I made orders (the earlier orders) under s 411(1) of the Act, for the convening of a meeting of the Wattyl shareholders on 8 September 2010, for the purpose of considering and, if thought fit, agreeing to the Scheme, with or without modification. I also made orders for the conduct of the meeting and for notice of the second court hearing on 13 September 2010 to be advertised. The Scheme is described in my reasons for the earlier orders; [2010] FCA 854. The earlier reasons should be read in conjunction with the present reasons.
The evidence 3 Evidence in support of the application includes evidence adduced at the hearing on 4 August as well as the following affidavits and the exhibits which were read in support of the application for approval: affidavit of Doris Christine Grave, Relationship Manager, Computershare Investor Services Pty Limited, sworn on 8 September 2101; affidavit of Adam John Rollinson, Account Executive, Computershare Communication Services, sworn on 8 September 2101; affidavit of John Weir Ingram, Chairman of Wattyl, sworn on 9 September 2010; affidavit of Mark Vanderneut, solicitor employed by the solictors for the plaintiff, sworn on 10 September 2010; affidavit of Julianne Lyall-Anderson, Group Company Secretary and Corporate Counsel of Wattyl, sworn on 9 September 2010; affidavit of Nicholas Mavrakis, partner, Clayton Utz, the solicitors for Wattyl, sworn on 13 September 2010; affidavit of Richard Victor Powell, Corporate Actions Manager, Computershare Investor Services Pty Limited, sworn on 9 September 2010. 4 Following the first Court hearing a copy of the Scheme Booklet together with the Australian Securities and Investments Commission Form CF10 and a letter from Wattyl's solicitors, both dated 4 August, were lodged with ASIC. By letter dated 10 September 2010, ASIC signified in the usual way that under s 411(17)(b) of the Act it has no objection to the Scheme proceeding. 5 On 6 August 2010, the Scheme Booklet together with personalised proxy forms for the Scheme Meeting and the general meeting of Wattyl shareholders on 8 September 2010 were sent by pre-paid post to Wattyl shareholders and Wattyl Group Superannuation Pty Ltd. In the case of 19 custodians who are registered holders of Wattyl shares the documents, in accordance with existing arrangements, were uploaded to the Intermediary Online website for custodians to access electronically. The evidence also established that the Scheme Booklet sent corresponded with that tendered at the first Court hearing save for certain minor and immaterial corrections and amendments. 6 The Scheme Meeting was held on 8 September 2010 in accordance with the orders made on 4 August 2010. Mr Ingram deposed to the fact that 32 members attended the meeting and that, by holding and with proxies, they represented 57,962,410 votes that could be cast on the resolution. The resolution to approve the Scheme was approved on a poll by 92.09% of the members present and voting in person or proxy, corporate representative or attorney. It was also approved by 99.19% of the votes cast. 7 No members holding partly-paid shares voted against the proposal and only 124 members holding 470,353 fully paid shares voted against it. Evidence was given concerning the receipt and collation of proxy forms for the Scheme meeting. Of the proxy forms received a total of 55 were rejected either because of their late receipt or because of being otherwise invalid. A total of 262,100 votes were not counted for this reason. Given the overwhelming approval of the resolution this number is immaterial. 8 On 6 September 2010 an advertisement in the form approved at the first Court hearing was published in The Sydney Morning Herald newspaper giving notice of the hearing of the application for approval of the Scheme and, inter alia, the time and place for the second Court hearing. The advertisement advised that any person wishing to oppose the Scheme should file and serve a notice of appearance on the plaintiff and gave the address of the plaintiff's solicitors as the address for service. 9 There was no appearance by any objector at the second Court hearing. As usual the matter was formally called. Mr Mavrakis deposed that as at 8.00 am on the morning of the hearing he had not received any notice of any appearance from any person and that he had not received any other communication in response to the advertisement to the effect that any person intended to appear at the hearing. 10 Finally, the plaintiff tendered evidence that the conditions precedent in the Scheme Implementation Deed of 28 June 2010 between The Valspar Corporation and Wattyl Limited have been satisfied.
Conclusion 11 The evidence outlined above, along with the evidence adduced at the first Court hearing, satisfied me that all necessary preliminaries for the approval of the Scheme under s 411(4)(b) had been attended to. The Scheme has been properly notified to Wattyl shareholders and approved by the statutory majority; see s 411(4)(a). Ample opportunity has been afforded to others to oppose the Scheme and no objection has been received. 12 The plaintiff has meticulously addressed all elements needed to establish that the requirements of procedural fairness and substantive fairness have been met. It has drawn the Court's attention to the matters necessary to be proved and to those aspects of the Scheme relevant to the exercise of the Court's discretion. 13 Substantive fairness is not code for commercial desirability or a determination that the Scheme is in the best interests of members. It is not for the Court to be concerned with the commerciality of the Scheme. That is a matter for the shareholders, properly advised of the details of the Scheme so that they are in the position, with the assistance of their own legal advisers if they wish, to make an informed decision. The Court's role was succinctly summarised in Re Challenge Bank Limited (1995) 19 ACSR 421 where Nicholson J observed at 422: [T]he court is required to consider and to be satisfied whether the proposals in the schemes are at least fair and reasonable from the viewpoint of an intelligent and honest person, that is, a person who might approve of it. 14 For these reasons I am satisfied that pursuant to s 411(4)(a) of the Corporations Act, the Scheme should be approved and the orders sought by the plaintiff should be made. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.