mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Re Promentum Limited [2007] FCA 446
Outcome: referred to
Generally, there is no apparent reason, at this stage, and on the material now before me, to consider that the proposed scheme is improper. The independent expert's report has assessed the offer to be fair and reasonable and in the best interests of the shareholders of Hostworks in the absence of an alternative offer on better terms. The evidence indicates that the offer made by Broadcast Australia is at the upper range of the valuation of shares in Hostworks made by the independent expert, and is considerably in excess of any listed share price in the recent past. There is nothing to suggest that the scheme works unfairly as between members of Hostworks, or that in any other respect the directors of Hostworks or others associated with it, or with Broadcast Australia, will profit to the detriment of the members of Hostworks, or that they will profit differently from the other members of Hostworks. Consequently, if the proposed scheme is supported at the proposed meeting of shareholders of Hostworks, at present, there does not appear to be any reason why the scheme then would not be approved. That seems to be a test, perhaps even put at a slightly higher level than necessary, to determine whether the proposed scheme is a proper one: see e.g. Re Promentum Limited [2007] FCA 446 at [13] ; IOR Friendly Society Ltd v IOR Group Ltd (2007) FCA 970 at [28] ; Re CCI Holdings Limited [2007] FCA 832 at [21] ; and Re Gloucester Coal Ltd [2007] FCA 1017 at [28] . Later in these reasons, I refer to particular features of the arrangement as contained in the Implementation Deed and the Deed Poll which warrant specific comment.
Case: IOR Friendly Society Ltd v IOR Group Ltd (2007) FCA 970
Outcome: referred to
Generally, there is no apparent reason, at this stage, and on the material now before me, to consider that the proposed scheme is improper. The independent expert's report has assessed the offer to be fair and reasonable and in the best interests of the shareholders of Hostworks in the absence of an alternative offer on better terms. The evidence indicates that the offer made by Broadcast Australia is at the upper range of the valuation of shares in Hostworks made by the independent expert, and is considerably in excess of any listed share price in the recent past. There is nothing to suggest that the scheme works unfairly as between members of Hostworks, or that in any other respect the directors of Hostworks or others associated with it, or with Broadcast Australia, will profit to the detriment of the members of Hostworks, or that they will profit differently from the other members of Hostworks. Consequently, if the proposed scheme is supported at the proposed meeting of shareholders of Hostworks, at present, there does not appear to be any reason why the scheme then would not be approved. That seems to be a test, perhaps even put at a slightly higher level than necessary, to determine whether the proposed scheme is a proper one: see e.g. Re Promentum Limited [2007] FCA 446 at [13] ; IOR Friendly Society Ltd v IOR Group Ltd (2007) FCA 970 at [28] ; Re CCI Holdings Limited [2007] FCA 832 at [21] ; and Re Gloucester Coal Ltd [2007] FCA 1017 at [28] . Later in these reasons, I refer to particular features of the arrangement as contained in the Implementation Deed and the Deed Poll which warrant specific comment.
Case: Re CCI Holdings Limited [2007] FCA 832
Outcome: referred to
Generally, there is no apparent reason, at this stage, and on the material now before me, to consider that the proposed scheme is improper. The independent expert's report has assessed the offer to be fair and reasonable and in the best interests of the shareholders of Hostworks in the absence of an alternative offer on better terms. The evidence indicates that the offer made by Broadcast Australia is at the upper range of the valuation of shares in Hostworks made by the independent expert, and is considerably in excess of any listed share price in the recent past. There is nothing to suggest that the scheme works unfairly as between members of Hostworks, or that in any other respect the directors of Hostworks or others associated with it, or with Broadcast Australia, will profit to the detriment of the members of Hostworks, or that they will profit differently from the other members of Hostworks. Consequently, if the proposed scheme is supported at the proposed meeting of shareholders of Hostworks, at present, there does not appear to be any reason why the scheme then would not be approved. That seems to be a test, perhaps even put at a slightly higher level than necessary, to determine whether the proposed scheme is a proper one: see e.g. Re Promentum Limited [2007] FCA 446 at [13] ; IOR Friendly Society Ltd v IOR Group Ltd (2007) FCA 970 at [28] ; Re CCI Holdings Limited [2007] FCA 832 at [21] ; and Re Gloucester Coal Ltd [2007] FCA 1017 at [28] . Later in these reasons, I refer to particular features of the arrangement as contained in the Implementation Deed and the Deed Poll which warrant specific comment.
Case: Re Gloucester Coal Ltd [2007] FCA 1017
Outcome: referred to
Generally, there is no apparent reason, at this stage, and on the material now before me, to consider that the proposed scheme is improper. The independent expert's report has assessed the offer to be fair and reasonable and in the best interests of the shareholders of Hostworks in the absence of an alternative offer on better terms. The evidence indicates that the offer made by Broadcast Australia is at the upper range of the valuation of shares in Hostworks made by the independent expert, and is considerably in excess of any listed share price in the recent past. There is nothing to suggest that the scheme works unfairly as between members of Hostworks, or that in any other respect the directors of Hostworks or others associated with it, or with Broadcast Australia, will profit to the detriment of the members of Hostworks, or that they will profit differently from the other members of Hostworks. Consequently, if the proposed scheme is supported at the proposed meeting of shareholders of Hostworks, at present, there does not appear to be any reason why the scheme then would not be approved. That seems to be a test, perhaps even put at a slightly higher level than necessary, to determine whether the proposed scheme is a proper one: see e.g. Re Promentum Limited [2007] FCA 446 at [13] ; IOR Friendly Society Ltd v IOR Group Ltd (2007) FCA 970 at [28] ; Re CCI Holdings Limited [2007] FCA 832 at [21] ; and Re Gloucester Coal Ltd [2007] FCA 1017 at [28] . Later in these reasons, I refer to particular features of the arrangement as contained in the Implementation Deed and the Deed Poll which warrant specific comment.
Case: Re Mincom Ltd (2007) 61 ACSR 266
Outcome: discussed
There may be some difference of opinion, or perhaps only of emphasis, between the views of Robson J in Re Coles Group Ltd [2007] VSC 389 and Fryberg J in Re Mincom Ltd (2007) 61 ACSR 266 as to whether it is necessary to consider s 411(17) at the first stage of the two stage process for the Court to direct the meeting and then, after the scheme is voted upon, to approve it. If that consideration is relevant at this point, that is whether there is a likelihood (or prospect) of s 411(17) being satisfied at first stage, I have the necessary level of satisfaction at this point and on the material referred to. The provisional view of ASIC referred to above indicates that there is a prospect of it producing to the Court the form of statement referred to in s 411(17)(b), although of course the Court then clearly is not obliged to approve the proposed scheme. Alternatively, on the information presently available to me, as I have indicated, I do not see a reason why, if the members of Hostworks at the proposed meeting of the scheme support the proposed scheme, I would not be satisfied that the scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6. That must necessarily be only a tentative and provisional judgment. However, it is accepted, as is now commonplace, that in circumstances such as the present, an entity such as Hostworks has a choice between following the takeover procedure in Chapter 6 in conjunction with Broadcast Australia or following the scheme of arrangement procedure supported by inter partes documentary agreements as contemplated by Pt 5.1 of Chapter 5 of the Act. Consequently, the mere choice of the procedure now being adopted is not an indication that a purpose of this procedure is to enable any person to avoid the operation of any provisions of Chapter 6. There will thus need to be some identification of which provision or provisions of Chapter 6 might relevantly operate so as to produce potentially a different outcome to that which would follow from the present procedure and an exploration of why the Pt 5.1 procedure has been used having regard to that provision or those provisions if s 411(17)(a) is to be enlivened. Such consideration may also be relevant to the discretion of the Court under s 411(17) if ASIC has provided a statement under s 411(17)(b). No such provision has presently been identified.
Case: Bolnisi Gold NL in the matter of Bolnisi Gold NL (No 2) [2007] FCA 2078
Outcome: discussed
Clause 11 of the Implementation Agreement imposes a break fee provision. Break fees are also now a commonplace feature in proposed agreements for schemes of arrangements and in merger and takeover agreements, both in Australia and overseas. See per Lindgren J in APN News Ltd 62 ACSR 400 at [43]. As his Honour said at [44], break fees are justified by reference to the costs incurred by the offeror company; the benefit that that company confers on the members of the target company by increasing its value; and the desirability, from the viewpoint of those members, that takeover offers be made to them. His Honour then went on to consider contemporary practice in relation to break fees. There is a more lengthy discussion by his Honour of general considerations relating to break fees in Bolnisi Gold NL in the matter of Bolnisi Gold NL (No 2) [2007] FCA 2078 at [9] - [30] . It is a most helpful discussion. 39 There have been a number of orders made by the Court under s 411(1) of the Act in which the existence of provisions such as those in cl 11 of the Implementation Agreement concerning break fees have not been an obstacle to the making of orders for the convening of meetings. 40 In this case, the break fee is not payable if the members of Hostworks fail to support or approve the proposed scheme. A term to the contrary effect was removed from the Implementation Agreement by its amendment on 14 December 2007. There can therefore be no suggestion that the provision for the payment of the break fee will coerce shareholders to vote in favour of the proposed scheme. Those matters are fully explained in the draft explanatory statement. It is also fair to observe that, as reported in the Implementation Agreement, the break fee proposed is not of an inappropriate magnitude. It is identified as being $675,000, representing an estimate of Broadcast Australia's costs of and in relation to making the proposed offer. My general understanding is that that was not an unrealistic figure. It is a figure which the parties have agreed is a genuine and reasonable pre-estimate of the costs that Broadcast Australia will suffer if the proposed scheme does not proceed: cl 11.3. I note that the break fee is less than 1% of the equity value of Hostworks. To that extent, it accords with the Takeovers Panel Guidance Note 7: Lock Up Devices at [7.17]. I am not sure that it is appropriate to determine that an appropriate break fee may be fixed by reference to a percentage of the equity value of the takeover target as distinct from a genuine pre-estimate of the costs of the proposed offer. However, that is not of significance here because the break fee is less than 1% of the equity value of Hostworks. It is not necessary to take that further. There is in the circumstances no reason why that provision of the Implementation Agreement should have impeded the Court from making the order for the convening of the proposed meeting.
Case: Orion Telecommunications Ltd [2007] FCA 1389
Outcome: referred to
Under cl 7.3(a) of the Implementation Agreement, each scheme participant is deemed to have warranted that all of its shares in Hostworks which are transferred under the scheme will be free from all mortgages and encumbrances. Fryberg J in Re Mincom Ltd (No 3) (2007) 25 ACLC 207, regarded an almost identical deemed warranty clause as onerous and unreasonable and "calculated to catapult unsuspecting shareholders who have not read the small print of the arrangement in the schedule to the explanatory statement into a state of breach of warranty": at [21]. In Re APN News &amp; Media Ltd 62 ACSR 400, Lindgren J disagreed with the approach of Fryberg J: see at [59]-[62]. I respectfully agree with and adopt the views of Lindgren J. I share the understanding of his Honour that the purpose and effect of such a clause is simply to ensure that a scheme participant whose shares are subject to an encumbrance is not unfairly advantaged. The amount of the damages payable for breach of the warranty would be equal to the amount required to discharge the encumbrance. I note that the approach of Lindgren J has been preferred in subsequent cases, including by Robson J in Re Coles Group Limited [2007] VSC 389 at [45] ; by Lander J in Re Adelaide Bank Limited [2007] FCA 1582 at [33] ; and by Gyles J in Orion Telecommunications Ltd [2007] FCA 1389 at [9] .
Case: Sovereign Life Assurance Co v Dodd [1892] 2 QB 573
Outcome: referred to
In my view, neither of those matters is necessary. The relevant question is to determine whether either the option holders, or the three major shareholders who have granted an option over their shares in favour of Broadcast Australia, have rights which are so dissimilar as to make it impossible to consult together with a view to their common interest: see e.g. per Bowen LJ in Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 at 583. Whilst not foreclosing the possibility that a dissenting shareholder might persuade me in due course that there should have been separate meetings of one or other of those classes, as well as of the other members of Hostworks excluding those three shareholders, so that the Court would not approve the scheme if the members otherwise approve it under s 411(4)(b), at this point I do not see that such separate meetings are necessary. 44 I do not regard the shareholders and the option holders as having different interests to such an extent that they could not consult together with other shareholders. The consideration payable for the cancellation of options takes into account the strike price of options. Upon exercise of the options, the option holders will receive consideration equivalent to the scheme consideration. The scheme consideration exceeds the exercise price of all the options. The only impediment to the immediate exercise of some of the options is the approval of the proposed scheme, triggering the operation of r 6.2(p) of the ESOP Rules, but I do not think that consideration renders the interests of the option holders so dissimilar from those of the shareholders of Hostworks as to preclude them from having a general common interest with the shareholders. Ultimately, they are proposed to be treated the same. 45 As the price to be paid by Broadcast Australia, if it exercises its call options over some 19% of the issued capital of Hostworks, is equivalent to the scheme consideration, and because if the scheme is not approved, those call options will lapse, in my view there is no sufficient reason to consider that the present holders of those shares should constitute a separate class for the purposes of the scheme meeting. The options do not affect the rights and obligations of those shareholders in relation to Hostworks. Those option grantors will not be advantaged or disadvantaged depending upon the outcome of the scheme in relation to other members of Hostworks. Broadcast Australia does not have the ability to exercise or to control the exercise of the votes attached to those shares in Hostworks before the exercise of the options, and effectively in practice before the meeting.
Case: Vean of 2002 v Minister for Immigration &amp; Multicultural &amp; Indigenous Affairs [2003] FCAFC 311 ; (2003) 133 FCR 570
Outcome: considered
The principal submission of the Minister however is that, assuming a breach of the Act in that the invitation cannot be said to have been duly sent to the still authorised recipient, in the circumstances of this case such failure cannot possibly have made any difference to the decision and the Court should, in its discretion, withhold relief. The case is to be distinguished from others such as: SZFOH v Minister for Immigration and Citizenship ( 2007) 159 FCR 199 where there had been no appearance by the applicant at the Tribunal's hearing; Lee v Minister for Immigration and Citizenship (2007) 159 FCR 181 where the failure to reply to a notice of invitation to comment allowed the Tribunal to proceed to make a decision without further invitation to the applicant; and Vean of 2002 v Minister for Immigration &amp; Multicultural &amp; Indigenous Affairs [2003] FCAFC 311 ; (2003) 133 FCR 570 where the appellant did not receive the invitation until a considerable time after it had been sent to and received by the authorised recipient because it had been addressed to the applicant care of the authorised recipient. Because the appellant was in fact fully heard and the Tribunal rejected the veracity of his claims it is a case where the "decision-maker was bound by the governing statute to refuse the application": SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [29] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ and separately Kirby J and Hayne J.
Case: Giretti v Deputy Commissioner of Taxation (1996) 70 FCR 151
Outcome: applied
On the discretion point, the appellant chiefly relies on SZFOH 159 FCR 199 and Lee 159 FCR 181. In the latter case the Full Court considered discretionary relief and accepted a "forward looking" approach to the question of utility and futility. In SZFOH 159 FCR 199, Lee 159 FCR 181 was applied and the fact that the authorised recipient may have known of the notice, though the notification was irregular, was apparently held not sufficient to warrant a discretionary refusal of relief (cf Buchanan J at [60]). In Lee 159 FCR 181, as I understand it, the Court appeared to prefer the view given by Merkel J in a separate judgment in Giretti v Deputy Commissioner of Taxation (1996) 70 FCR 165, favouring a "forward-looking" view. 29 To set aside the Tribunal's decision and require reconsideration of the appellant's claims de novo would be, in my opinion, to allow the triumph of mere technicality over substance and would be, as Lindgren J observed in Giretti 70 FCR at 165, to put the appellant in a better position than if the technical error had not occurred. Bray CJ of the Supreme Court of South Australia was fond of saying that if the application of the law by courts, or its declaration, strayed too far from what reasonable and open-minded lay members of the community might see as correct, and sensible and just, then the application or declaration of the law is likely wrong. I do not suggest that lay notions of injustice should govern the exercise of discretion in this area, but I do feel that there are considerations in the public interest which justify not exalting technical errors to a tyrannical role where manifestly there is no question of substantial or practical injustice.
Case: Re Augold NL [1987] 2 Qd R 297
Outcome: followed
person applying for an order pursuant to s 247A bears the onus of establishing that he is acting in good faith and that the inspection is to be made for a proper purpose: Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344 at [29] . Merim must do more than demonstrate that it is dissatisfied with the management decisions: Re Augold NL [1987] 2 Qd R 297 at 308 Cescastle Pty Ltd v Renak Holdings Ltd (1991) 6 ACSR 115 at 117. Merim must satisfy me that it is entitled to inspect the books because the information sought relates to matters that it as a shareholder ought to be informed of by the company: see, for example, Czerwinski v Syrena Royal Pty Ltd (No 1) [2000] VSC 125 ; (2000) 34 ACSR 245 at 248.
Case: Cescastle Pty Ltd v Renak Holdings Ltd (1991) 6 ACSR 115
Outcome: followed
person applying for an order pursuant to s 247A bears the onus of establishing that he is acting in good faith and that the inspection is to be made for a proper purpose: Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344 at [29] . Merim must do more than demonstrate that it is dissatisfied with the management decisions: Re Augold NL [1987] 2 Qd R 297 at 308 Cescastle Pty Ltd v Renak Holdings Ltd (1991) 6 ACSR 115 at 117. Merim must satisfy me that it is entitled to inspect the books because the information sought relates to matters that it as a shareholder ought to be informed of by the company: see, for example, Czerwinski v Syrena Royal Pty Ltd (No 1) [2000] VSC 125 ; (2000) 34 ACSR 245 at 248.
Case: Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (1989) 15 ACLR 151
Outcome: followed
there is some evidence that Mr Yunghanns may be contemplating action to gain control of, or take over, Style, I do not consider that I should reject his evidence as to his purpose in seeking the order for inspection. In the absence of cross-examination of Mr Yunghanns there is no reason why I should reject his evidence as to his purpose having regard to the sequence of communications between Mr Yunghanns and Style to which I have referred. I am satisfied that even if the inspection sought may assist Mr Yunghanns or Merim in a proposal to gain control of, or take over, Style, Merim's primary or dominant purpose is as stated by Mr Yunghanns. In any event as Brooking J observed in Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (1989) 15 ACLR 151 at 158, the fact that a takeover offer for the defendant (in the position of Style) might be made by a company controlled by a person who controls the plaintiff which is seeking inspection of the books of the defendant and that information derived from inspection of the defendant's books might be used for the purposes of the takeover offer: "neither prevents the arising of the power to make the order sought, nor makes it appropriate to refuse the order sought as a matter of discretion." I am satisfied that Mr Yunghanns has not been given a satisfactory answer or information in relation to the financial issues concerning Style which he has raised. Section 247A requires me to be satisfied that Merim is acting in good faith and that the inspection is to be made for a proper purpose. I am so satisfied. Mr Yunghanns has raised a number of financial issues concerning Style which Style has not answered. In my view, those issues are substantive and not fanciful. Mr Yunghanns' queries raise specific matters that cause concern to Mr Yunghanns and, on the material placed before me, I do not consider those concerns are artificial, specious or contrived. To adopt the expression used by Brooking J in Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595 at 601-602 and in Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (supra) at 154, I consider there is a "case for investigation".
Case: Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595
Outcome: cited
Yunghanns' queries raise specific matters that cause concern to Mr Yunghanns and, on the material placed before me, I do not consider those concerns are artificial, specious or contrived. To adopt the expression used by Brooking J in Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595 at 601-602 and in Knightswood Nominees Pty Ltd v Sherwin Pastoral Company Ltd (supra) at 154, I consider there is a "case for investigation".