Federal Court of Australia

86 400 Holdings Ltd, in the matter of 86 400 Holdings Ltd [2021] FCA 311

ORDERS

OTHER MATTERS:

A.    The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days’ notice of the hearing of this application.

B.    The Court is satisfied that ASIC has had a reasonable opportunity to:

(i)    examine the terms of the proposed scheme of arrangement to which the application relates and a draft explanatory statement relating to that arrangement; and

(ii)    make submissions to the Court in relation to the proposed scheme of arrangement and the draft explanatory statement.

C.    The Court notes the letter from ASIC to the Directors of 86 400 Limited (86 400) dated 26 March 2021 produced at the hearing.

THE COURT ORDERS THAT:

1.    Pursuant to Rule 2.12(1) of the Federal Court (Corporations) Rules 2000 (Cth) (Rules), National Australia Bank Limited (NAB) has leave to be heard in the proceeding without becoming a party to it.

2.    Pursuant to section 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting of its shareholders (Scheme Meeting) for the purpose of considering, and, if thought fit, agreeing (with or without modification), to the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and its shareholders other than NAB, the terms of which are set out in Annexure A to these orders.

3.    Pursuant to sections 411(1) and 1319 of the Act, the Scheme Meeting is to be held on Thursday 6 May 2021 immediately after the General Meeting of 86 400, but not before 10:20am (AEST, being Melbourne time), and is to be conducted electronically through an online platform without members being physically present, such online platform to be accessed in accordance with the instructions included in the Notice of Scheme Meeting to be sent to shareholders in accordance with order 2 below.

4.    The Scheme Meeting be convened by sending on or before Tuesday 6 April 2021 an email to each 86 400 shareholder who has nominated an electronic address for the purposes of receiving communications from 86 400 (or, in the case of joint holders, to the holder whose name appears first in the Plaintiff’s register), such email to be substantially in the form of pages 441-443 of Annexure PAL-1 to the Affidavit of Paul Alan Lahiff affirmed on 25 March 2021 which contains links to:

(a)    an electronic copy of a document substantially in the form of the Scheme Booklet a draft of which is at Annexure JDL-12 to the third affidavit of James David Lonie sworn on 26 March 2021 (which contains among other things the proposed Scheme of Arrangement at Annexure B and Notice of Scheme Meeting at Annexure E) (Scheme Booklet); and

(b)    an online portal or website that is accessible by the shareholder and which enables the shareholder to lodge their proxy and voting instructions for the Scheme Meeting online.

5.    Compliance with r 2.15 of the Rules be dispensed with.

6.    Voting on the resolution to approve the Scheme is to be conducted by way of a poll.

7.    A proxy in respect of the Scheme Meeting will be valid and effective if, and only if, a proxy is lodged via the online portal or website in accordance with the instructions appearing on the portal or website by 10:20 am (AEST, being Melbourne time) on Tuesday 4 May 2021.

8.    Mr Paul Lahiff or failing him Ms Belinda Cooney, be Chair of the Scheme Meeting.

9.    The Chair of the Scheme Meeting shall have the power to adjourn the meeting to such time, date and place as s/he considers appropriate.

10.    Compliance with rule 3.4 and Form 6 of the Rules is dispensed with.

11.    86 400 publish a Notice of Hearing in The Australian newspaper, in substantially the form that appears at Annexure B hereto, not later than 5 days prior to the date fixed for the hearing of any application to approve the Scheme.

12.    The further hearing of the Originating Process is adjourned to the Honourable Justice Anderson on 11 May 2021 at 9:30 am (AEST, being Melbourne time) or as soon as possible thereafter.

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

ANNEXURE A

Scheme of Arrangement

ANNEXURE B

Notice of Second Court Hearing

Notice of hearing to approve compromise or arrangement

TO all the members of 86 400 Holdings Limited (ACN 621 802 097)

TAKE NOTICE that at 9:30am on Tuesday 11 May 2020, the Federal Court of Australia at Melbourne will hear an application by 86 400 Holdings Limited seeking the approval of a compromise or arrangement between the above-named company and its members (other than National Australia Bank Limited if agreed to by a resolution to be considered, and, if thought fit, passed at a meeting of such members to be held electronically through an online platform that can be accessed at https://agmlive.link/86400schememeeting on 6 May 2021, commencing immediately after the General Meeting of 86 400, but not before 10:20am (AEST).

If you wish to oppose the approval of the compromise or arrangement, you must file and serve on the plaintiff a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on the plaintiff at its address for service at least 1 day before the date fixed for the hearing of the application.

The address for service of the plaintiff is -

Attn: Jonathan Kramersh/Neil Perl

C/- HWL Ebsworth Lawyers

Level 8, 447 Collins Street

Melbourne VIC 3000

Service via email will be accepted: nperl@hwle.com.au

REASONS FOR JUDGMENT

(Revised from the transcript)

ANDERSON J:

INTRODUCTION

1    In this proceeding, the Plaintiff applies for orders under s 411(1) of the Corporations Act 2001 (Cth) (Act) for a meeting of the Plaintiff’s shareholders to consider a proposed scheme of arrangement.

2    The commercial purpose of the scheme is to provide for the acquisition of all the shares in the Plaintiff by National Australia Bank Limited (NAB), save for the shares in the Plaintiff that are already owned by NAB.

3    This application concerns the first step of obtaining orders to convene a scheme meeting.

EVIDENCE

4    The orders sought in the Originating Process are supported by the following affidavits:

(a)    affidavits of James David Lonie sworn on 10 March 2021 (First Lonie Affidavit) and 24 March 2021 (Second Lonie Affidavit). Mr Lonie is a partner at HWL Ebsworth, the solicitors for the Plaintiff;

(b)    affidavit of Paul Adam Lahiff affirmed on 25 March 2021 (Lahiff Affidavit). Mr Lahiff is a non-executive director of the Plaintiff and Chairman of the Independent Board Committee established by the Board of the Plaintiff in relation to the scheme;

(c)    affidavit of Andrea De Cian sworn on 23 March 2021 (De Cian Affidavit). Mr De Cian is a Director of Grant Thornton Corporate Finance Pty Ltd, which was retained by the Independent Board Committee of the Plaintiff to provide an Independent Expert Report in relation to the scheme;

(d)    affidavit of John Andrew Donaldson, affirmed on 24 March 2021 (Donaldson Affidavit). Mr Donaldson is the General Counsel – Corporate of NAB; and

(e)    a third affidavit of Mr Lonie sworn 26 March 2021 (Third Lonie Affidavit) which relevantly annexed a letter from ASIC dated 26 March 2021 (26 March 2021 ASIC Letter). The 26 March 2021 ASIC Letter relevantly stated:

Section 411(2)(a) of the Corporations Act requires ASIC to be given at least 14 days’ notice of the hearing of an application under s411(1) unless ASIC or the court permits a shorter period. This requirement has been satisfied in relation to the Application.

Section 411(2)(b) of the Corporations Act requires the court to be satisfied that ASIC has also had a reasonable opportunity to examine the terms of the Scheme and the draft explanatory statement, and to make submissions to the court in relation to the Scheme and the draft explanatory statement. ASIC is of the view that it has had a reasonable opportunity.

…

ASIC does not currently propose to appear to make submissions or intervene to oppose the Scheme at the first hearing under s411(1) of the Corporations Act …

PRINCIPLES

5    Sections 411 and 412 of the Act confer a discretion on the Court to make orders to convene a scheme meeting if certain requirements are satisfied.

6    The relevant principles emerging from the authorities are generally well-known. For example, in Wellcom Group Limited, in the matter of Wellcom Group Limited [2019] FCA 1655, O’Bryan J recently stated at [31]-[32]:

The function of the Court in an application to convene a meeting is supervisory. In Re Amcor Ltd [2019] FCA 346 (Re Amcor), Beach J described the Court’s role at the first court hearing as follows (at [47]):

My function on an application to order the convening of a meeting is supervisory. At this stage I should generally confine myself to ensuring that certain procedural and substantive requirements have been met including dealing with adequate disclosure, with limited consideration of issues of fairness. But having said that, it is appropriate to consider the merits or fairness of a proposed scheme at the convening hearing if the issue is such as would unquestionably lead to a refusal to approve a proposed scheme at the approval hearing, that is the proposed scheme appears now to be on its face ‘so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further’ (Re Foundation Healthcare Ltd (2002) 42 ACSR 252 at [44] per French J).

Before ordering a meeting, the Court needs to be satisfied of two matters:

(a)    first, that the scheme is fit for consideration by the proposed meeting in the sense that it is “of such a nature and cast in such terms that, if it achieves the statutory majority at the […] meeting the court would be likely to approve it on the hearing of a petition which is unopposed”: FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72 per Street CJ; ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 504; Re Coles Group Ltd (2007) 25 ACLC 1380 at [29]-[36] per Robson J; and

(b)    second, that “the members [are to be] properly informed as to the nature of the scheme before the Scheme meeting”: Re NRMA Insurance Ltd (No 1) (2000) 156 FLR 349 at [30]; 33 ACSR 595 (Re NRMA Insurance (No 1)); Re Foundation Healthcare at [38].

DISPOSITION

7    Having reviewed the affidavit material filed by the Plaintiff and the Plaintiff’s submissions, and in light of the submissions made by Mr Holmes of Counsel at the hearing of this matter (with which Mr De Young QC on behalf of NAB concurred):

(a)    I am satisfied that the requirements of ss 411 and 412 of the Act have been met in relation to this application, and that the Court’s power to make the convening orders is enlivened.

(b)    I am satisfied that ASIC was given notice of the first court hearing date on 11 March 2021, satisfying the requirement of 14 days’ notice of the hearing of the application. In light of the 26 March 2021 ASIC Letter, I am satisfied that ASIC has had the “reasonable opportunity” referred to in s 411(2)(b) of the Act and s 411(2)(b) has been satisfied.

(c)    I am satisfied that the scheme is fit for consideration by the Plaintiff’s shareholders at the proposed meeting.

(d)    I am satisfied that the scheme is of such a nature and cast in such terms that, if it achieves the statutory majorities at the scheme meeting, the Court would be likely to approve it.

(e)    I am satisfied that the relevant members are to be properly informed as to the nature of the scheme before the scheme meeting.

(f)    In addition, on the evidence, it cannot be said that the scheme appears on its face to be so blatantly unfair or otherwise inappropriate that it should be stopped at this juncture.

8    In these circumstances, on the basis of the affidavits filed by the Plaintiff and the Plaintiff’s submissions, it is appropriate to make the Orders sought by the Plaintiff convening a meeting of the Plaintiff’s shareholders to enable the scheme to be considered.

9    I will make Orders to that effect.

Associate:

Dated:    29 March 2021