FEDERAL COURT OF AUSTRALIA

Trust Company (Nominees) Limited, in the matter of Angas Securities Limited v Angas Securities Limited (No 2) [2015] FCA 861

IN THE MATTER OF ANGAS SECURITIES LIMITED (ACN 000 154 441)

THE COURT ORDERS THAT:

1.    Pursuant to section 283HA of the Corporations Act 2001 (Cth) and section 63 of the Trustee Act 1925 (NSW), and for the purpose of giving effect to order 13 of the orders made in this proceeding on 9 June 2015 (Run-Off Orders), the plaintiff is directed that it is justified in proceeding on the basis that the making of the amendment to the Trust Deed approved by the Extraordinary Resolution of Debenture Holders (set out in the Explanatory Statement attached to the orders made in this proceeding on 24 July 2015 and marked “A”) and the implementation of the Court’s orders as contemplated by the Run-Off Orders, accords with the plaintiff’s duties under the Trust Deed, the Corporations Act and at law.

2.    The defendant’s interlocutory application dated 13 August 2015 be adjourned to a date to be fixed.

3.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF ANGAS SECURITIES LIMITED (ACN 000 154 441)

REASONS FOR JUDGMENT

1    On 9 June 2015, I made orders by the consent of the parties resolving this proceeding on an interim basis.

2    The 9 June orders facilitated Angas Securities Limited (Angas) convening a meeting of its debenture holders to seek approval for and to pass an extraordinary resolution to amend the Trust Deed and to implement a “run-off” of its debenture book.

3    The background to this proceeding and the making of the 9 June orders is set out in my reasons published on 28 July 2015. The present reasons should be read with those earlier reasons (see [2015] FCA 772).

4    As part of the 9 June orders, I directed that if the contemplated extraordinary resolution was passed, a further hearing would be held to consider and, if thought fit, provide judicial advice and directions to the plaintiff (the Trustee) under s 283HA of the Corporations Act 2001 (Cth) (the Act) and s 63 of the Trustee Act 1925 (NSW) to the effect that the Trustee would be justified in proceeding on the basis that the making of the amendment approved by the extraordinary resolution of debenture holders, and the implementation of my orders as contemplated by the 9 June orders, would accord with the Trustee’s duties under the Trust Deed, the Act, and at law.

5    The present hearing accordingly has required me to consider the exercise of the Court’s discretionary power under s 283HA of the Act.

6    Angas has contended that I am justified in exercising my discretion to provide the judicial advice and directions contemplated. I should also say that the Trustee’s position before me today is one of non-opposition to the proposed orders. Likewise, ASIC does not oppose the present orders. I should also say, for completeness, that in the present hearing before me today no one else has appeared to oppose the orders, except one individual, a Mr Andre Zaugg, who purported to represent debenture holders that were not present. I did not give leave to Mr Zaugg to represent those debenture holders, and accordingly, save for his presence, there was no one who appeared to oppose the orders.

7    In support of Angas’ position, which is not opposed, it has filed and has relied upon the affidavits of:

(a)    Andrew Luckhurst-Smith, the Executive Chairman of Angas, sworn on 25 May 2015, 3 June 2015 and 13 August 2015;

(b)    Danielle Elizabeth Hine, an employee of Computershare Investor Services Proprietary Limited and the returning officer for the debenture holders’ meeting, sworn on 13 August 2015; and

(c)    Steven Frederick Aspinall, Chief Operating Officer of Angas, sworn on 13 August 2015.

8    That evidence discloses the following matters.

9    On 24 July 2015, I ordered the convening on 10 August 2015 of a meeting of persons who were debenture holders of Angas as at 9.30 am (AEST) on 24 July 2015 for the purposes of those debenture holders voting on an extraordinary resolution contained in Angas’ notice of meeting and explanatory statement (a copy of which was attached to my orders of 24 July 2015 and marked “A” (explanatory statement)). I also gave Angas leave to issue the explanatory statement to Angas’ debenture holders and holders of redeemable preference shares by 27 July 2015.

10    In accordance with my orders of 24 July 2015:

(a)    the explanatory statement was dispatched by priority post to Angas’ debenture holders by 27 July 2015; and

(b)    the meeting of debenture holders was held on 10 August 2015.

11    The meeting was held at the Adelaide Convention Centre and at the Perth Convention and Exhibition Centre by video link. 491 debenture holders attended the meeting in person across the two locations. The meeting took approximately two hours, with the majority of the time being used to answer questions from debenture holders. Mr Luckhurst-Smith (on behalf of Angas) and Mr Christopher Green (on behalf of the Trustee) answered various questions put to them by debenture holders. The meeting was chaired by the Honourable Bruce Debelle AO QC, who I had appointed for this purpose. The Court is grateful for his assistance.

12    At the end of the meeting, a poll was taken on the extraordinary resolution. As to this poll:

(a)    13,384 votes were cast in favour of the extraordinary resolution, representing 89.93% of the votes of eligible debenture holders present or represented and voting; as is well apparent, this substantially exceeded the required threshold level of 75% under the relevant terms of the Trust Deed;

(b)    1,498 votes were cast against the extraordinary resolution, representing 10.07% of the votes of eligible debenture holders present or represented and voting;

(c)    21 votes were cast abstaining on the extraordinary resolution; and

(d)    101 votes were cast by invalid proxy and 1,371 votes were received after the proxy cut-off time. Such invalid and late proxies were not counted.

13    In summary, 14,903 votes of the total possible number of 21,949 votes were cast in respect of the extraordinary resolution. This represented a voter turnout of 67.9%. Angas has asserted that this could be considered to be a very high voter turnout for a resolution of this type. I should say that a report has been provided to me directly by the Chairman of the meeting, which had been, in turn, prepared by the returning officer, Ms Danielle Hine, who confirmed the figures that I have just indicated.

14    In summary, the evidence filed before me discloses that:

(a)    the extraordinary resolution was approved by a majority of some 89.93% of debenture holders of Angas present and voting, either in person or by proxy at the said meeting of debenture holders held on 10 August 2015;

(b)    the orders of the Court made on 24 July 2015 convening the meeting have been complied with; and

(c)    there is no basis on which the Court ought not give the judicial advice and directions sought.

Relevant Legal Principles

15    I am satisfied that I have adequate power under s 283HA of the Act to give the advice and directions sought. I have analysed in part the relevant provisions of the Act in my earlier reasons, and I do not need to repeat that analysis. I should say, if it is necessary to say so, that there is authority of this Court that clearly indicates that I am able, under s 283HA, to give the advice sought (see Trust Company (Nominees) Limited v Gippsland Secured Investments Ltd [2013] FCA 1393 at [276] per Farrell J and Australian Executor Trustees Limited v Provident Capital Limited (No 3) [2012] FCA 1253 at [30] per Rares J).

16    In deciding whether to give the Trustee the judicial directions and advice sought, the principles relevant to the approval of a scheme of arrangement provide a useful guide. A scheme under Pt 5.1 of the Act involves the following stages:

(a)    First, an application to the Court (pursuant to s 411(1) of the Act) for an order that the company convene meetings of its creditors or members. This is analogous to the orders I made on 24 July 2015;

(b)    Second, meetings of creditors or members to consider and vote on the scheme at which the requisite majority vote in favour. This is analogous to the meeting of Angas’ debenture holders held on 10 August 2015; and

(c)    Third, an application to the Court (pursuant to s 411(6) of the Act) for orders approving the scheme (as is required by s 411(4)(b) of the Act). This is analogous to the present application and hearing before me.

17    At the approval stage, the Court is concerned to be satisfied that:

(a)    the orders of the Court convening the meetings have been complied with;

(b)    the requisite majority of the members or creditors have voted in favour of the scheme (as required by s 411(4) of the Act); and

(c)    the proposal is at least sufficiently fair and reasonable that an intelligent and honest person who is voting in his own interest might approve it.

18    The Court’s role is supervisory in that the Court is concerned to be satisfied that there has been an absence of oppression. The Court is not a mere rubber stamp and will ensure that the arrangement is a reasonable one.

19    Finally, where there is no opposition to the scheme and the members or creditors have by the statutory majority approved the scheme, the Court should regard the shareholders or creditors (in this case debenture holders) as the best judges of what is in their commercial best interests.

20    Adopting, by analogy, the principles that I have set out in [17] to [19] above, I am satisfied that I should make the orders sought in the present case.

21    First, my orders convening the meeting have been complied with.

22    Second, the requisite majority of debenture holders have voted in favour of the extraordinarily resolution.

23    Third, the run-off proposal is reasonable and not oppressive. Indeed, it has the real prospect of resulting in a better return to Angas’ debenture holders than the other viable alternative suggested in some of the material of the potential appointment of receivers.

24    Fourth, it is appropriate, in my view, to exercise my powers under s 283HA of the Act to give the Trustee the judicial advice and directions sought, particularly where Angas’ debenture holders have passed the extraordinary resolution in circumstances where they have had the benefit of and been given all relevant material information as contained in:

(a)    Angas’ explanatory statement approved by the Court for issue to the debenture holders on 24 July 2015; and

(b)    The Trustee’s letter to debenture holders approved by the Court for issue to the debenture holders on 30 July 2015.

It seems to me that giving that advice is clearly consistent with the wishes of the debenture holders and is also consistent with their best interests.

25    Fifth, as I have said earlier, ASIC does not oppose the relevant orders and neither does the Trustee.

26    Sixth, on the present hearing before me, no one has appeared to oppose the orders except for Mr Andre Zaugg who was not a debenture holder.

27    In all the circumstances, I will make orders in the terms that I have previously indicated.

Associate:

Dated:    17 August 2015