IN THE MATTER OF PROFESSIONAL GOLFERS’ ASSOCIATION OF AUSTRALIA LIMITED (ACN 002 829 058) AND PGA TOUR OF AUSTRALASIA LIMITED (ACN 002 539 433) v NEW GOLF LIMITED (ACN 127 641 829)

THE COURT ORDERS THAT:

1.         Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement proposed to be made between Professional Golfers' Association of Australia Limited ACN 002 829 058 (PGA) and the members of PGA (PGA Scheme), a copy of which is annexed to these orders, be approved.

2.         Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth), the scheme of arrangement proposed to be made between PGA Tour of Australasia Limited ACN 002 539 433 (PGA Tour) and the members of PGA Tour (PGA Tour Scheme), a copy of which is annexed to these orders, be approved.

3.         Pursuant to s 411(12) of the Corporations Act 2001 (Cth), PGA and PGA Tour be exempted from compliance with the requirements of s 411(11) of the Corporations Act 2001 (Cth).

4.         Pursuant to s 413(1) of the Corporations Act 2001 (Cth), and using the definitions in the PGA Scheme:

(a)       all of the Property and undertaking of PGA be transferred to and vested in New Golf Limited ACN 127 641 829 (New PGA) on and from 18 December 2007 without the need for any further act or deed; and

(b)      all of the Liabilities of PGA be transferred to and become Liabilities of New PGA on and from 18 December 2007 without the need for any further act or deed.

5.         Pursuant to s 413(1) of the Corporations Act 2001 (Cth), and using the definitions in the PGA Tour Scheme:

(a)       all of the Property and undertaking of PGA Tour be transferred to and vested in New PGA on and from 18 December 2007 without the need for any further act or deed; and

(b)      all of the Liabilities of PGA Tour be transferred to and become Liabilities of New PGA on and from 18 December 2007 without the need for any further act or deed.

6.         Pursuant to s 413(1)(g) of the Corporations Act 2001 (Cth), each of PGA and PGA Tour may disclose and transfer to New PGA all personal information held by each of them.

7.         Pursuant to s 413(1)(g) of the Corporations Act 2001 (Cth), New PGA may use, disclose and otherwise handle all information transferred and vested in it by each of PGA and PGA Tour provided always that New PGA shall receive the information upon the same terms on which PGA or PGA Tour (as the case may be) held the information and subject to the Liabilities of PGA and PGA Tour (as the case may be) in respect of that information.

8.         Pursuant to s 413(1)(d) of the Corporations Act 2001 (Cth), each of PGA and PGA Tour be deregistered without winding up on and from 21 December 2007.

9.         There be reserved liberty to any party to apply for further orders under s 413(1) of the Corporations Act 2001 (Cth).

10.     These orders be entered forthwith.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF PROFESSIONAL GOLFERS’ ASSOCIATION OF AUSTRALIA LIMITED (ACN 002 829 058) AND PGA TOUR OF AUSTRALASIA LIMITED (ACN 002 539 433) v NEW GOLF LIMITED (ACN 127 641 829)

REASONS FOR JUDGMENT

(second court hearing)

INTRODUCTION

1                     On 9 October 2007 I directed each plaintiff to convene a meeting of its members for the purpose of considering and, if thought fit, agreeing (with or without modification) to a proposed scheme of arrangement between that plaintiff and its members:  see In the matter of Professional Golfers Association of Australia Limited [2007] FCA 1571.

2                     On the second court hearing on 13 December 2007 I made orders approving the proposed schemes of arrangement and orders under s 413 of the Act (I will use in these reasons the same abbreviated forms of reference as were used in the reasons for judgment of the first court hearing).

3                     The evidence before the Court on the second court hearing incorporated the evidence that was before the Court on the first court hearing. I incorporate as part of my reasons for approving the Schemes the reasons that I gave for directing the convening of the Scheme meetings.

Additional evidence that was before the court on the second court hearing

4                     The additional evidence that was before the Court on the second court hearing shows that:

·        the PGA Scheme meeting was duly convened and held on 26 November 2007 and 97.6% of the PGA members present and voting, either in person or by proxy, voted in favour of agreeing to the PGA Scheme;

·        the PGA Tour Scheme meeting was duly convened and held on 4 December 2007 and 100% of the PGA Tour members present and voting, either in person or by proxy, voted in favour of agreeing to the PGA Tour Scheme;

·        the explanatory statements for the PGA Scheme and the PGA Tour Scheme, a copy of each of which formed part of the documents constituting the Scheme Book, were duly distributed to the members of PGA and PGA Tour respectively;

·        a copy of the Scheme Book, incorporating the explanatory statements, was lodged for registration with ASIC pursuant to s 412(6) of the Act on 10 October 2007;

·        the second court hearing was duly advertised;

·        no person gave notice of an intention to appear at the second court hearing and, upon the matter being called outside the court room, no person appeared;

·        ASIC has advised that it has no objection to either of the Schemes (see s411(17)(b) of the Act);

·        conditions precedent to the operation of the respective Schemes have been satisfied.

The orders under s 413 of the Act

5                     At the second court hearing I also made orders to the effect that:

·      All of the property and undertaking of PGA and of PGA Tour respectively be transferred to and vested in New PGA on and from 18 December 2007, without the need for any further act or deed;

·      All of the liabilities of PGA and PGA Tour respectively be transferred to and become liabilities of New PGA on and from 18 December 2007, without the need for any further act or deed;

·      Each of PGA and PGA Tour may disclose and transfer to New PGA all personal information held by each of them; and

·      New PGA may use, disclose and otherwise handle all such personal information, provided always that New PGA shall receive the information upon the same terms as those on which PGA or PGA Tour (as the case may be) had held it and subject to the liabilities of PGA and PGA Tour (as the case may be) in respect of that information.

6                     The supporting evidence included, in the case of PGA, an affidavit of Peter Donald Clayton Murray sworn 12 December 2007 and, in the case of PGA Tour, an affidavit of Adrian Michael Craig sworn 12 December 2007.

7                     I begin with PGA. Mr Murray’s affidavit showed that as at 30 June 2007, PGA’s liabilities amounted to $3.327 million, that its assets amounted to $14.749 million and that to the best of Mr Murray’s knowledge, after he had made due inquiry, there had been no material change in PGA’s financial position since 30 June 2007.  Mr Murray’s affidavit indicated the general nature of PGA’s liabilities and assets.  Mr Murray’s affidavit also showed that to the best of Mr Murray’s knowledge, after he had made due inquiry, no litigation had been commenced or was pending or threatened against or including PGA, and that no claim, whether in the nature of workers’ compensation or otherwise, against PGA was pending or threatened.

8                     Mr Murray’s inquiries revealed that only one claim had been brought against PGA within the preceding five years, and that that was a commercial dispute between PGA and PGA Tour which was settled.  However, there were two claims pending against PGA members. Mr Murray’s affidavit explained that PGA is insured under a public and product liability policy by Lloyds of London and ACE Insurance Limited and that coverage under that policy is extended to PGA members. The claims against the two members were being handled under that policy.

9                     Mr Murray’s affidavit addressed in detail the insurances held by PGA.  He instructed PGA’s insurance broker, Ms Watson at Gow-Gates, to make arrangements to ensure that New PGA would continue to have the benefit of coverage under PGA’s insurance policies in respect of pre-merger claims and events.  Ms Watson informed Mr Murray that all (six) of the insurers had agreed to arrangements taking effect from completion which would ensure that the existing cover for pre-merger liabilities would continue following the merger for the benefit of New PGA.

10                  Mr Murray’s affidavit also identified all material contracts to which PGA was a party. The affidavit showed that where a contract required the consent of the other contracting party’s to a transfer of PGA’s rights or obligations under the contract to New PGA, Mr Murray had sought that consent. Where a contract contained a provision to the effect that a merger might constitute an event of default or give rise to a right of termination, Mr Murray had sought the other contracting party’s waiver of any event of default or right of termination which might otherwise arise because of the merger or the PGA Scheme.  In all cases, consents and waivers as appropriate had been obtained in writing.

11                  I turn now to PGA Tour.  Mr Craig’s evidence in relation to PGA Tour was of a kind generally similar to that of Mr Murray in relation to PGA.

12                  Mr Craig’s affidavit showed that as at 30 June 2007 PGA Tour’s liabilities amounted to $371,000, that its assets amounted to $1.185 million and that to the best of Mr Craig’s knowledge there had been no material change in PGA Tour’s financial position since 30 June 2007.  Like Mr Murray’s affidavit, Mr Craig’s affidavit indicated the general nature of PGA Tour’s liabilities and assets.

13                  Mr Craig’s affidavit showed that to the best of Mr Craig’s knowledge, after he had made due inquiry, no litigation had been commenced or was pending or threatened against or including PGA Tour, and that no claim, whether in the nature of workers’ compensation or otherwise, against PGA Tour was pending or threatened.

14                  Mr Craig’s inquiries revealed that only one claim had been made against PGA Tour within the preceding five years, and that that was the commercial dispute between PGA and PGA Tour mentioned at [8] above.

15                  Like Mr Murray in the case of PGA, Mr Craig instructed Ms Watson of Gow-Gates to make arrangements to ensure that New PGA would continue to have the benefit of coverage under PGA Tour’s (six) insurance policies in respect of pre-merger claims and events. Ms Watson informed Mr Murray that five of the insurers had agreed to such arrangements. The exception was the Public and Product Liability Insurance Policy issued by Allianz Australia Insurance Ltd (Allianz).  Allianz’s response was merely to note that, in the event that New PGA seeks to make a claim under PGA Tour’s Allianz insurance policy following the merger, it would be a matter to determine at that time whether the relevant event was an insured claim.  The Allianz insurance policy had been in existence from 13 July 2004 and was current to 13 July 2008. No claims had been made on that insurance.  Mr Craig’s affidavit evidence was that in his belief it was unlikely that there would be any public or product liability claim asserted in the future in respect of events or circumstances involving PGA Tour which occurred or subsisted prior to the merger.

16                  In any event, Mr M B Oakes SC, who appeared for PGA Tour (and PGA), tendered a copy of the Allianz Public and Products Liability Policy document and pointed out that it does not contain any prohibition against assignment.  While I have not heard from Allianz on the point, it seems that if PGA Tour bears a liability in respect of pre-merger circumstances or events and has insurance cover with Allianz in respect of such a liability, it would be entitled to assign the benefit of that contract to New PGA so that New PGA would have the benefit of it where New PGA becomes subject to the same liability in respect of the same pre-merger circumstances.

17                  Finally, Mr Craig’s affidavit identified all material contracts to which PGA Tour was a party. The affidavit showed that where a contract required the consent of the other contracting party to a transfer of PGA Tour’s contractual rights or obligations, Mr Craig had sought that consent, and that where a contract provided that the merger might constitute an event of default or give rise to a right of determination, Mr Criag had sought the other contracting party’s waiver.  In all cases, consents and waivers as appropriate had been obtained in writing.

CONCLUSION

18                  For the above reasons, I made the orders on 13 December 2007.

Associate:

Dated:   20 December 2007