FEDERAL COURT OF AUSTRALIA
Independent Practitioner Network Ltd, in the matter of Independent Practitioner Network Ltd (No 2)
[2008] FCA 1593
Corporations Act 2001 (Cth) s 411(6)
Re Evandale Estates Ltd (Supreme Court of Victoria, June 1962, unreported) cited
Re H Craig Pty Ltd (1971-1976) CLC 40-026 cited
Re Investorinfo Limited [2005] FCA 1848 cited
Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 cited
INDEPENDENT PRACTITIONER NETWORK LTD (ABN 13 083 519 377) IN THE MATTER OF INDEPENDENT PRACTITIONER NETWORK LTD
(ABN 13 083 519 377)
NSD 1142 OF 2008
LINDGREN J
23 october 2008
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
NSD 1142 OF 2008 |
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IN THE MATTER OF INDEPENDENT PRACTITIONER NETWORK LTD (ABN 13 083 519 377) |
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INDEPENDENT PRACTITIONER NETWORK LTD (ABN 13 083 519 377) Plaintiff
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LINDGREN J |
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DATE OF ORDER: |
15 SEPTEMBER 2008 |
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WHERE MADE: |
SYDNEY |
THE COURT ORDERS THAT:
1. Pursuant to clause 7.1(b) of the deed poll (Deed Poll) executed by Sonic Healthcare Limited (ABN 24 004 196 909) (Sonic) in favour of the holders of ordinary shares in IPN on 6 August 2008, the amendments to the Deed Poll set out in Annexure A to these Orders do not preclude approval of the scheme of arrangement between Independent Practitioner Network Ltd (ABN 13 083 519 377) (IPN) and the holders of ordinary shares in IPN excluding Sonic, as set out in the following Orders.
THE COURT ORDERS THAT:
2. Pursuant to s 411(4)(b) and (6) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between IPN and the holders of ordinary shares in IPN excluding Sonic, being in the form of the scheme of arrangement contained in Annexure A of the Scheme Booklet be approved subject to the following alterations to the scheme of arrangement:
(a) inserting the word ‘Purchaser’ immediately after the word ‘Sonic’, except where otherwise indicated, wherever it appears in the following clauses of the Scheme; clause 2.3 (however, not including the second occurrence in clause 2.3(b)), clause 4.3, clause 4.4, clause 4.5, clause 5.1, clause 6.6, clause 6.7, clause 6.10, clause 6.11, clause 6.12, clause 7.2 and clause 7.6.
(b) inserting the following two definitions in clause 1.1 of the Scheme after the definition of ‘Sonic’:
‘Sonic Purchaser means Sonic, or, if nominated by Sonic prior to 8.00am on the Implementation Date, Sonic Healthcare (New Zealand) Limited.
Supplementary Deed Poll means a deed poll made by Sonic in favour of the Scheme Participants subsequent to the date of the Deed Poll’; and
(c) replacing clause 2.5 of the Scheme with the following:
‘2.5 Deed Poll
(a) Sonic has executed a Deed Poll under which it covenants to carry out its obligations under the Scheme including to pay the Scheme Consideration in accordance with the terms of this Scheme.
(b) In accordance with clause 7.1 of the Deed Poll executed by Sonic, Sonic has executed the Supplementary Deed Poll to give effect to the amendment of the Deed Poll executed by Sonic.’
so that the scheme of arrangement as altered and approved is in the form of Annexure B to these Orders.
3. Pursuant to section 411(12) of the Act, IPN be exempted from compliance with section 411(11) of the Act.
4. These Orders be entered forthwith.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
ANNEXURE ‘A’
The Deed Poll is amended as follows:
1. Replace the words ‘to provide’ in Recital C of the Deed Poll with the words ‘to procure that Sonic Purchaser provides’.
2. Insert new clause 3.1A of the Deed Poll after the existing clause 3.1 as follows:
‘3.1A Performance of obligations by Sonic Purchaser
‘Sonic must procure that Sonic Purchaser complies with its obligations under the Scheme, and will do all things necessary or expedient on its part to implement the Scheme.’
3. Replace the words ‘Sonic must provide’ in clause 3.2 of the Deed Poll with the words ‘Sonic must procure that Sonic Purchaser provides’.
ANNEXURE ‘B’
Scheme of Arrangement
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Scheme Of Arrangement
Independent Practitioner Network Ltd ABN 13 083 519 377
Scheme Participants |
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Level 36, Grosvenor Place Reference WJK 02 1431 8965 ©Blake Dawson 2008 |
Contents
1. INTERPRETATION......................................................................................................... 1
1.1 Definitions............................................................................................................. 1
1.2 Rules for interpreting this document....................................................................... 3
2. BACKGROUND TO SCHEME....................................................................................... 4
2.1 IPN...................................................................................................................... 4
2.2 Sonic.................................................................................................................... 4
2.3 What happens if Scheme becomes Effective.......................................................... 4
2.4 Scheme Implementation Agreement....................................................................... 5
2.5 Deed Poll............................................................................................................. 5
3. CONDITIONS PRECEDENT.......................................................................................... 5
3.1 Conditions precedent to the Scheme...................................................................... 5
3.2 Satisfaction of Conditions...................................................................................... 5
3.3 Parties to provide certificate to Court.................................................................... 5
3.4 End Date.............................................................................................................. 6
4. THE SCHEME.................................................................................................................. 6
4.1 IPN to lodge orders with ASIC............................................................................. 6
4.2 Scheme Effective on Effective Date....................................................................... 6
4.3 Implementation steps............................................................................................. 6
4.4 Sonic Purchaser to execute transfer forms.............................................................. 6
4.5 IPN to enter Sonic Purchaser's details in Register.................................................. 6
4.6 Reconstitution of IPN Board................................................................................. 6
5. SCHEME CONSIDERATION......................................................................................... 7
5.1 How Scheme Consideration is to be paid.............................................................. 7
6. DEALINGS IN IPN SHARES.......................................................................................... 8
6.1 What IPN Share dealings are recognised?............................................................. 8
6.2 IPN to register transfer and transmission applications............................................. 8
6.3 Transfers received after Record Date not recognised............................................. 8
6.4 IPN to maintain Register to determine entitlements................................................. 8
6.5 Holding statements no effect from Record Date..................................................... 8
6.6 No dealings after Record Date.............................................................................. 8
6.7 IPN to provide contact information for Scheme Participants................................... 8
6.8 Suspension of trading............................................................................................ 9
6.9 IPN to apply for termination of quotation of IPN Shares........................................ 9
6.10 Warranties by Scheme Participants........................................................................ 9
6.11 Transfer free of encumbrances............................................................................... 9
6.12 Sonic Purchaser beneficially entitled to Scheme Shares.......................................... 9
7. GENERAL PROVISIONS................................................................................................ 9
7.1 IPN giving effect to the Scheme............................................................................. 9
7.2 Scheme Participants.............................................................................................. 9
7.3 Alteration or conditions to the Scheme................................................................. 10
7.4 Scheme is binding............................................................................................... 10
7.5 Notices............................................................................................................... 10
7.6 Costs and stamp duty.......................................................................................... 10
7.7 Governing law..................................................................................................... 10
Scheme of Arrangement
pursuant to section 411 of the Corporations Act
between
Independent Practitioner Network Ltd ABN 13 083 519 377 (IPN)
and
each Scheme Participant
OPERATIVE PROVISIONS
The following definitions apply in this document:
Aggregate Scheme Consideration means the aggregate of all Scheme Consideration payable to Scheme Participants under this Scheme.
ASIC means the Australian Securities and Investments Commission.
ASX means the Australian Securities Exchange or ASX Limited (ABN 98 008 624 691), as the context requires.
ASX Listing Rules means the listing rules of ASX.
Business Day means a day (other than a Saturday, Sunday or public holiday) on which banks are open for general banking business in Sydney.
CHESS means the clearing house electronic subregister system for the electronic transfer of securities operated by ASX Settlement and Transfer Corporation Limited ABN 49 008 504 532.
Condition means a condition precedent set out in clause 3.1 of the Scheme Implementation Agreement.
Corporations Act means the Corporations Act 2001 (Cth).
Court means the Federal Court of Australia.
Court Order means the order of the Court approving this Scheme under section 411(4)(b) of the Corporations Act.
Deed Poll meansthedeed poll under which Sonic covenants in favour of the Scheme Participants substantially in the form of Annexure 2 of the Scheme Implementation Agreement (or in such other form as agreed between IPN and Sonic).
Effective means, when used in relation to this Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the Court Order.
Effective Date means the date on which the Scheme becomes Effective.
End Date means 31 October 2008.
Excluded Share means an IPN Share held by any person on behalf of, or for the benefit of Sonic or any related body corporate of Sonic.
Explanatory Statement means the statement pursuant to section 412 of the Corporations Act which has been, or will be, registered by ASIC in relation to the Scheme, copies of which will be included in the Scheme Booklet.
First Court Date means the first day of the hearing of the Court of an application for an order under section 411(1) convening the Scheme Meeting.
GST Act means the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Implementation means the implementation of the Scheme, on it becoming Effective.
Implementation Date meansthe fifthBusiness Day after the Record Date.
IPN Share means each fully paid ordinary share in the capital of IPN.
IPN Share Registry means Computershare Investor Services Pty Limited.
IPN Shareholder means each person who is registered in the Register as a holder of IPN Shares.
IPN Shareholder Approval means a resolution in favour of the Scheme passed by the required majority of IPN Shareholders(excluding Sonic) under section 411(4)(a)(ii).
Meeting Date means the date on which the Scheme Meeting is to be held.
Record Date means 5.00pm on the day which is 5 Business Days after the Effective Date or such other date as IPN and Sonic may agree in writing.
Register means the register of IPN Shareholders maintained under sections 168 and 169of the Act.
Registered Address means, in relation to an IPN Shareholder, the address of the shareholder shown in the Register.
Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between IPN and the Scheme Participants, set out in this document, subject to any alterations or conditions made or required by the Court under section 411(6).
Scheme Booklet means the information to be despatched to all IPN Shareholders and approved by the Court in connection with the Scheme, including the Scheme, the Explanatory Statement in respect of the Scheme, an independent expert's report and the notice of Scheme Meeting.
Scheme Consideration means:
(a) subject to paragraph (b), $0.27 for each Scheme Share held by a Scheme Participant; or
(b) if the record date for any entitlement to be paid or participate in a dividend, distribution or return of capital occurs after the date of the Scheme Implementation Agreement but on or before the Implementation Date, $0.27 for each Scheme Share held by a Scheme Participant less the amount per Scheme Share of any such dividend, distribution or return of capital.
Scheme Implementation Agreement means the scheme implementation agreement between Sonic and IPN dated 11 June 2008 relating to the implementation of the Scheme.
Scheme Meeting means the IPN Shareholders' meeting ordered by the Court to be convened under section 411(1) in relation to the Scheme.
Scheme Participant means each IPN Shareholder, other than Sonic, as at 5.00pm on the Record Date.
Scheme Share means each IPN Share on issue as at the Record Date other than the Excluded Shares.
Second Court Date means the first day on which an application made to the Court for the Court Order is heard,or, if the application is adjourned or subject to appeal for any reason, the day on which the adjourned or appealed application is heard and Second Court Hearing means the hearing of that application.
Sonic means Sonic Healthcare Limited (ABN 24 004 196 909).
Sonic Purchaser means Sonic, or, if nominated by Sonic prior to 8.00am on the Implementation Date, Sonic Healthcare (New Zealand) Limited.
Supplementary Deed Poll means a deed poll made by Sonic in favour of the Scheme Participants subsequent to the date of the Deed Poll.
Takeovers Panel means the Takeovers Panel constituted under the Australian Securities and Investments Commission Act 2001 (Cth).
1.2 Rules for interpreting this document
Headings and catchwords are for convenience only, and do not affect interpretation. The following rules also apply in interpreting this document, except where the context makes it clear that a rule is not intended to apply.
(a) A reference to:
(i) a legislative provision or legislation (including subordinate legislation) is to that provision or legislation as amended, re–enacted or replaced, and includes any subordinate legislation issued under it;
(ii) a document (including this document) or agreement, or a provision of a document (including this document) or agreement, is to that document, agreement or provision as amended, supplemented, replaced or novated;
(iii) a party to this document or to any other document or agreement includes a permitted substitute or a permitted assign of that party;
(iv) a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity, and any executor, administrator or successor in law of the person; and
(v) anything (including a right, obligation or concept) includes each part of it.
(b) A singular word includes the plural, and vice versa.
(c) A word which suggests one gender includes the other genders.
(d) If a word or phrase is defined, any other grammatical form of that word or phrase has a corresponding meaning.
(e) If an example is given of anything (including a right, obligation or concept), such as by saying it includes something else, the example does not limit the scope of that thing.
(g) The words related body corporate have the same meaning as in section 50 of the Corporations Act.
(h) The expression this document includes the agreement, arrangement, understanding or transaction recorded in this document.
(i) Words defined in the GST Act have the same meaning in clauses concerning GST.
(j) If a person is a member of a GST group, references to GST for which the person is liable and to input tax credits to which the person is entitled include GST for which the representative member of the GST group is liable and input tax credits to which the representative member is entitled.
(l) All references to time in this document are references to Australian Eastern Standard Time.
(m) A reference to $ or dollar is to Australian currency.
(a) IPN is a public company incorporated in Australia. It is registered in Western Australia and is a company limited by shares. It has its registered office at Level 29, 60 Margaret Street, Sydney, NSW, 2000.
(b) IPN is admitted to the official list of ASX and IPN Shares are quoted on the stock market conducted by ASX.
(c) As at 11 June 2008, 980,865,474 IPN Shares were on issue.
(a) Sonic is a public company incorporated in Australia. It is registered in Victoria and is a company limited by shares. It has its registered office at 14 Giffnock Avenue, Macquarie Park, NSW, 2113.
(b) Sonic is admitted to the official list of ASX and its fully paid ordinary shares are quoted on the stock market conducted by ASX.
2.3 What happens if the Scheme becomes Effective
If the Scheme becomes Effective then:
(a) in consideration of the transfer of each Scheme Share held by Scheme Participants, Sonic Purchaser will pay the Aggregate Scheme Consideration to IPN in accordance with the terms of this Scheme;
(b) all the Scheme Shares will be transferred to Sonic Purchaser and IPN will become a wholly owned subsidiary of Sonic; and
(c) IPN will enter Sonic Purchaser's name in the Register as the holder of all Scheme Shares.
2.4 Scheme Implementation Agreement
Sonic and IPN have entered into the Scheme Implementation Agreement, to facilitate the implementation of the Scheme. In particular, IPN and Sonic have agreed that each of them will do all acts and things within their power as may be necessary or desirable for the implementation and performance of the Scheme.
(b) In accordance with clause 7.1 of the Deed Poll executed by Sonic, Sonic has executed the Supplementary Deed Poll to give effect to the amendment of the Deed Poll executed by Sonic.
3. CONDITIONS PRECEDENT
3.1 Conditions precedent to the Scheme
The Scheme is conditional on the following:
(a) all the Conditions having been satisfied or waived in accordance with the terms of the Scheme Implementation Agreement, on or prior to the Second Court Date (or such other date as specified in the relevant Condition);
(b) as at 8.00am on the Second Court Date the Scheme Implementation Agreement having not been terminated;
(c) the approval of the Scheme by the requisite majority of IPN Shareholders at the Scheme Meeting;
3.2 Satisfaction of Conditions
The satisfaction or waiver of each condition in clause 3.1 is a condition precedent to the binding effect of the Scheme.
3.3 Parties to provide certificate to Court
IPN on behalf of both IPN and Sonic will provide to the Court before or at the Second Court Hearing, a certificate or such other evidence as the Court requests, confirming whether or not all the Conditions, other than the conditions in clauses 3.1(d) and 3.1(e), have been satisfied or waived in accordance with the terms of this Scheme.
The Scheme will lapse and be of no further effect if the Effective Date has not occurred on or before the End Date or such later date as may be agreed by Sonic and IPN and/or as may be ordered by the Court.
4.1 IPN to lodge orders with ASIC
IPN will lodge with ASIC office copies of the Court Order as soon as practicable and by no later than 10.00am on the first Business Day after the date on which the Court Order is made.
4.2 Scheme Effective on Effective Date
The Scheme becomes Effective on the Effective Date.
On or before 12.00pm (Sydney time) on the Implementation Date:
(b) all the Scheme Shares, together with all rights and entitlements attaching to those shares as at the Implementation Date, will be transferred to Sonic Purchaser without the need for any further act by any Scheme Participant (other than acts performed by IPN or its directors and officers as attorney and agent for the Scheme Participants under clause 7.2); and
4.4 Sonic Purchaser to execute transfer forms
Sonic Purchaser will immediately execute the share transfer forms referred to in clause 4.3(c) as transferred and deliver the share transfer forms to IPN for registration.
4.5 IPN to enter Sonic Purchaser's details in Register
IPN will, immediately following receipt of the share transfer forms in respect of the Scheme Shares referred to in clause 4.4, subject to Sonic Purchaser complying with its obligations under clause 4.3(a), enter the name and address of Sonic Purchaser in the Register in respect of the Scheme Shares.
4.6 Reconstitution of IPN Board
As soon as practicable after the payment of the Scheme Consideration to the Scheme Participants in accordance with clause 4.3(a), all directors of the IPN board of directors other than Sonic’s nominees will resign (provided that a proper board is constituted at all times).
5.1 How Scheme Consideration is to be paid
(a) Sonic Purchaser satisfies its obligations to pay the Aggregate Scheme Consideration under clause 4.3(a) by depositing into an account nominated by IPN for that purpose, an amount equal to the Aggregate Scheme Consideration in cleared and available funds.
(b) IPN will hold the amount referred to in clause 5.1(a) on trust for the Scheme Participants (except that any interest on the amount will be for the account of Sonic Purchaser) for the purpose of payment of the Aggregate Scheme Consideration to the Scheme Participants within five Business Days of the Implementation Date by either:
(i) dispatching or procuring the dispatch to each Scheme Participant by prepaid post to their Registered Address a cheque in Australian currency drawn on an Australian bank in the name of that Scheme Participant for an amount equal to the number of IPN Shares held by the Scheme Participant multiplied by the Scheme Consideration; or
(ii) where the Scheme Participant has nominated (by written notice to IPN on or before the Record Date) a bank account with an Australian financial institution for any purpose (including for the purpose of payment of the Scheme Consideration), then by depositing directly to that bank account, an amount equal to the number of IPN Shares held by the Scheme Participant multiplied by the Scheme Consideration.
(c) In the case of joint holders of IPN Shares:
(i) a cheque shall be payable and forwarded to the holder whose name appears first in the Register at the Record Date; or
(ii) where the joint holders have nominated a bank account under clause 5.1(b)(ii) above, the amount shall be deposited directly to the nominated bank account of the joint holders.
(d) In the case of a notice having been given to IPN (or the IPN Share Registry) of an order made by a court of competent jurisdiction:
(i) which requires payment to a third party of a sum in respect of IPN Shares held by a particular Scheme Participant, which would otherwise be payable to the particular Scheme Participant in accordance with paragraph (b) above, then IPN shall procure that payment is made in accordance with that order; or
(ii) which would prevent IPN from making payment to any particular Scheme Participant in accordance with paragraph (b) above, IPN shall procure that IPN (or the IPN Share Registry) retains an amount, in Australian dollars, equal to the number of Scheme Shares held by that Scheme Participant multiplied by the Scheme Consideration until such time as payment in accordance with paragraph (b) above is permitted by law.
6.1 What IPN Share dealings are recognised?
To establish the persons who are Scheme Participants, dealings in IPN Shares will only be recognised if:
(a) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Register as the holder of the IPN Shares as at the Record Date; and
6.2 IPN to register transfer and transmission applications
IPN will register registrable transfers or transmission applications of the kind referred to in clause 6.1(b) by, or as soon as practicable after, the Record Date. The persons shown in the Register, and the number of IPN Shares shown as being held by them, after registration of those transfers and transmission applications, will be taken to be the IPN Shareholders, and the number of IPN Shares held by them, on the Record Date.
6.3 Transfers received after Record Date not recognised
IPN will not accept for registration, nor recognise for any purpose, any transfer or transmission application in respect of Scheme Shares received after the Record Date (or received prior to the Record Date not in registrable form).
6.4 IPN to maintain Register to determine entitlements
In order to determine entitlements to the Scheme Consideration, IPN will maintain, or procure the maintenance of, the Register in accordance with this clause 6 until the Scheme Consideration has been paid to Scheme Participants and the Register in this form will solely determine entitlements to the Scheme Consideration.
6.5 Holding statements no effect from Record Date
From the Record Date, all holding statements for Scheme Shares will cease to have effect as documents of title and, as from the Record Date and prior to the Implementation Date, each entry on the Register will cease to have any effect other than as evidence of the entitlements of Scheme Participants to the Scheme Consideration.
6.6 No dealings after Record Date
From the Record Date and until registration of Sonic Purchaser in respect of all Scheme Shares under clause 4.5, no IPN Shareholder may deal with IPN Shares in any way except as set out in this Scheme and any attempt to do so will have no effect.
6.7 IPN to provide contact information for Scheme Participants
As soon as practicable after the Record Date but no later than 9.00am on the Implementation Date, IPN will give to Sonic Purchaser or procure that Sonic Purchaser be given details of the name, Registered Address and the number of Scheme Shares held by each Scheme Participant, as shown in the Register at the Record Date, in whatever form Sonic Purchaser reasonably requires.
It is expected that the suspension of trading in IPN Shares on the stock market conducted by ASX will occur from the commencement of trading on the Business Day immediately following the Effective Date.
6.9 IPN to apply for termination of quotation of IPN Shares
On a date after the Implementation Date to be determined by Sonic, IPN will apply for termination of the official quotation on the stock market conducted by ASX of IPN Shares and must apply to have itself removed from the official list of ASX.
6.10 Warranties by Scheme Participants
Each Scheme Participant is deemed to have warranted to IPN in its own right and on behalf of Sonic Purchaser that:
(a) all of his or her IPN Shares (including any rights and entitlements attaching to those IPN Shares) transferred to Sonic Purchaser under the Scheme will, on the date they are transferred to Sonic Purchaser, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, whether legal or otherwise; and
(b) he or she has full power and capacity to sell and to transfer his or her IPN Shares (including any rights and entitlements attaching to those Shares) to Sonic Purchaser under the Scheme.
6.11 Transfer free of encumbrances
To the extent permitted by law, all IPN Shares (including any rights and entitlements attaching to those shares) which are transferred to Sonic Purchaser under this Scheme will, at the date of the transfer of them to Sonic Purchaser, vest in Sonic Purchaser free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and free from any restrictions on transfer of any kind not referred to in this Scheme.
6.12 Sonic Purchaser beneficially entitled to Scheme Shares
Sonic Purchaser will be beneficially entitled to the Scheme Shares transferred to it under the Scheme pending registration by IPN of the name and address of Sonic Purchaser in the Register as the holder of the Scheme Shares.
7.1 IPN giving effect to the Scheme
IPN must do anything (including execute any document) that is necessary, expedient or incidental to give full effect to the Scheme and the transactions contemplated by it.
Each Scheme Participant:
(a) agrees to the transfer of their IPN Shares, together with all rights and entitlements attaching to those shares, to Sonic Purchaser in accordance with the Scheme;
(b) acknowledges that the Scheme binds IPN and all IPN Shareholders from time to time, including those who do not attend the Scheme Meeting, do not vote at that meeting or vote against the Scheme;
(d) without the need for any further act, irrevocably appoints IPN and each of its directors and officers, jointly and severally, on and from the Effective Date, as the Scheme Participant's attorney and agent, to execute any document or do any other act necessary, expedient or incidental to give full effect to the Scheme and the transactions contemplated by it, including the provision of a proper instrument of transfer of that Scheme Participant's Scheme Shares for the purposes of section 1071B of the Corporations Act (which may be a master transfer of all or part of the Scheme Shares).
7.3 Alteration or conditions to the Scheme
If the Court proposes to approve the Scheme subject to any alteration or condition, IPN may, by its counsel or solicitors, but subject to the prior approval of Sonic (which may not be unreasonably withheld or delayed), consent on behalf of all persons concerned, including each Scheme Participant, to those alterations or conditions.
The Scheme binds IPN and all IPN Shareholders and, to the extent of any inconsistency, overrides the constitution of IPN.
Where a notice, transfer, transmission application, direction or other communication referred to in the Scheme is sent by post to IPN, it will be deemed to be received on the date (if any) on which it is actually received at IPN's registered office and on no other date.
(a) Subject to clause 7.6(b), IPN will pay all the costs of the Scheme.
This document is governed by the law in force in New South Wales.
Each party submits to the non–exclusive jurisdiction of the courts exercising jurisdiction in New South Wales, and any court that may hear appeals from any of those courts, for any proceedings in connection with this document, and waives any right it might have to claim that those courts are an inconvenient forum.
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
NSD 1142 OF 2008 |
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IN THE MATTER OF INDEPENDENT PRACTITIONER NETWORK LTD (ABN 13 083 519 377) |
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INDEPENDENT PRACTITIONER NETWORK LTD (ABN 13 083 519 377) Plaintiff
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JUDGE: |
LINDGREN J |
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DATE: |
23 october 2008 |
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PLACE: |
SYDNEY |
REASONS FOR JUDGMENT (No 2)
(second court hearing)
1 These reasons are the reasons why I made an order on 15 September 2008 approving a scheme of arrangement under s 411 of the Corporations Act 2001 (Cth) (the Act), and a declaration associated with that order.
2 On 7 August 2008 I had ordered under s 411(1) of the Act that the plaintiff, Independent Practitioner Network Ltd (IPN), convene a meeting of the holders of ordinary shares in IPN excluding Sonic Healthcare Ltd (Sonic) (IPN Shareholders) to be held on 11 September 2008 for the purpose of their considering and, if thought fit, agreeing to a scheme of arrangement (with or without modification) between IPN and the IPN Shareholders (Scheme). As well, I approved the draft explanatory statement to be given by IPN to the IPN Shareholders.
3 My reasons for the making of those orders of 7 August are found in Re Independent Practitioner Network Ltd [2008] FCA 1229. I will take those earlier reasons as read. They form part of my present reasons. I will use the forms of abbreviation that I used in them.
4 The Scheme Meeting was held on 11 September 2008. By statutory majorities satisfying the requirements of s 411(4)(a) of the Act, the IPN Shareholders agreed to the Scheme.
5 Section 411(6) of the Act provides, relevantly, that the Court may grant its approval to an arrangement subject to such alterations as it thinks just. At the second court hearing IPN asked that I approve the Scheme subject to certain alterations. The purpose of the alterations was to substitute for Sonic a wholly owned subsidiary of Sonic as the entity that would take title to the IPN shares and pay the Scheme Consideration.
6 I was told that Sonic had come to the view that it would be preferable for taxation reasons that the acquisition be by the subsidiary, which is incorporated in New Zealand, Sonic Healthcare (New Zealand) Limited. The substitution was to be effected by alterations to the Scheme which would introduce “Sonic Purchaser” as a new defined term, and change the reference from “Sonic” to “Sonic Purchaser” in respect of certain clauses in the Scheme . The term “Sonic Purchaser” would be defined as Sonic or the New Zealand subsidiary if Sonic should nominate it prior to 8.00 am on the “Implementation Date” identified in the Scheme (in the events that happened, the Implementation Date was 30 September 2008).
7 The proposed change of transferee had implications for a Deed Poll dated 6 August 2008 that Sonic had executed in favour of each “Scheme Participant” (being each IPN Shareholder as at the “Record Date” other than Sonic). By the Deed Poll, Sonic had undertaken to each Scheme Participant to comply with Sonic’s obligations under the Scheme, and, in particular, to provide the consideration due to the Scheme Participant. Clause 7.1 of the Deed Poll provided that the Deed Poll might be varied by Sonic only if (a) the variation was agreed to by IPN, and (b) the Court indicated the amendment would not, of itself, preclude approval of the Scheme. By cl 7.1, Sonic also undertook, in order to give effect to any such amendment, to enter into a further deed poll in favour of the Scheme Participant giving effect to the amendment.
8 On 15 September 2008, IPN and Sonic entered into an “amendment agreement” by which it was agreed that the Scheme and the Deed Poll be amended. This satisfied condition (a) in cl 7.1 of the Deed Poll. There was included in the orders that IPN sought at the second court hearing a declaration (which, in the event, I made) satisfying condition (b) in cl 7.1 of the Deed Poll.
9 By a Supplementary Deed Poll dated 15 September 2008 executed by Sonic, the Deed Poll was amended, subject to (a) the Court’s having indicated that the amendments would not of themselves preclude approval of the Scheme, and (b) the Court’s granting approval of the Scheme as altered. By the Deed Poll as amended, Sonic undertook to each Scheme Participant to procure that the Sonic Purchaser would comply with its obligations under the Scheme and provide the Scheme Consideration. It will be noted that the Deed Poll as so amended still expressed obligations undertaken by Sonic itself in favour of each Scheme Participant.
10 The power to approve subject to alterations was introduced in the form of s 181(3) of the Uniform Companies Acts of 1961-1962. The provision was retained in s 315(6) of the Companies Code and in s 411(6) of the Act.
11 The authorities contain little discussion of the provision. Properly, they do not purport to limit the circumstances in which it would be appropriate for the Court to exercise the power.
12 In Re Evandale Estates Ltd (Supreme Court of Victoria, June 1962, unreported), Adam J directed an amendment as follows:
The adoption and coming into operation of this Scheme of Arrangement shall for the purpose of any Statute of Limitations be an acknowledgement.
13 In Re H Craig Pty Ltd (1971-1976) CLC 40-026, Mitchell J approved of a scheme subject to several minor alterations.
14 In Re Permanent Trustee Co Ltd (2002) 43 ACSR 601, Barrett J approved a scheme subject to alterations which his Honour described as “peripheral” (at [21]). His Honour stated that the scheme in respect of which approval was sought differed in certain respects from the form of scheme that had been sent to members in accordance with the orders of the court previously made. Barrett J added (at [21]):
It is clear, however, that the changes or differences are of a minor and technical kind and that their effect is to improve the smooth working of the scheme.
15 In Re Investorinfo Limited [2005] FCA 1848, Gyles J approved a scheme subject to an alteration that was designed to overcome what his Honour described as “a technicality arising from the drafting of the scheme” (at [8]).
16 I do not purport to define or circumscribe the circumstances in which the Court may properly exercise the discretion to approve subject to alterations. The circumstances in which the Court may be asked to exercise the power vary. For example, the purpose may be to overcome minor technical errors or oversights present in the scheme as agreed to by the shareholders (see, for example, Re H Craig Pty Ltd); to bring the scheme as agreed to by them into line with the explanatory statement that was sent to them (see, for example, Re Permanent Trustee Co Ltd); or to protect creditors (see, for example, Re Evandale Estates Ltd). The alterations may be suggested by the plaintiff or by the Court. Apparently, however, the plaintiff would be entitled, if faced with alterations on which the Court insisted but to which it did not agree, to withdraw its application for approval.
17 At least one thing is clear: the Court will not approve subject to alterations unless it is satisfied that the scheme as proposed to be altered would still have been agreed to by the requisite statutory majorities.
18 I turn now to the alterations sought in the present case. In one sense it may be suggested that the change in the identity of the acquiring entity is fundamental. In the circumstances of the present case, however, I do not think it is.
19 The acquiring entity was not, of course, a party to the Scheme. The parties to the Scheme were IPN and the Scheme Participants. IPN requested approval subject to alterations which IPN advanced in the interests of Sonic.
20 I could see no disadvantage to Scheme Participants in the substitution of the wholly owned Sonic subsidiary as the recipient of their shares in IPN. It was not as if the original consideration was or included the issue of shares in Sonic which was to be changed to the issue of shares in the Sonic subsidiary. On the contrary, the consideration was and remained wholly cash.
21 In relation to the performance risk to the Scheme Participants, it should be noted that:
(a) under the Deed Poll as amended Sonic remains liable in personam to them to ensure that the Sonic Purchaser performed its payment obligations;
(b) the evidence showed that the New Zealand subsidiary was a party to the borrowing facility intended to fund the acquisition; and
(c) the Scheme contained a Quistclose trust mechanism (see Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567) pursuant to which the aggregate Scheme Consideration was to be deposited into an account nominated by IPN to be held by IPN as trustee for, and distributed by it to, the Scheme Participants according to their respective entitlements, and title to the shares was not to pass until the aggregate Scheme consideration was so deposited (cll 4.3 – 4.5 and 5.1 of the Scheme).
22 The substance of the Scheme, namely a transfer of IPN shares to or at the direction of Sonic immediately following payment by the acquirer of the aggregate Scheme Consideration remained unchanged.
23 If the IPN Shareholders had been asked at the Scheme Meeting whether they had any objection, in the above circumstances, to title to the IPN shares being transferred to the Sonic subsidiary rather than to Sonic itself, they would certainly have said “no”.
24 The Australian Securities and Investments Commission (ASIC) had issued a letter providing evidence of the kind contemplated by s 411(17) of the Act. ASIC’s letter took the alterations into account.
25 It seemed to me that the Scheme should be approved subject to the alterations.
26 For the above reasons I made the orders on 15 September 2008.
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I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. |
Associate:
Dated: 23 October 2008
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Counsel for the Plaintiff: |
Mr I M Jackman SC |
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Solicitor for the Plaintiff: |
Blake Dawson |
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Counsel for Sonic Healthcare Ltd: |
Mr M B Oakes SC |
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Solicitor for Sonic Healthcare Ltd: |
Minter Ellison |
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Date of Hearing: |
15 September 2008 |
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Date of Publication of Reasons: |
23 October 2008 |
