FEDERAL COURT OF AUSTRALIA

Crown Resorts Limited, in the matter of Crown Resorts Limited (No 2) [2022] FCA 710

ORDERS

OTHER MATTERS:

A.    The Court notes that there has been produced to the Court a statement in writing by the Australian Securities and Investments Commission (ASIC) in accordance with section 411(17)(b) of the Corporations Act 2001 (Cth) (Act) stating that ASIC has no objection to the Scheme of Arrangement between the plaintiff and its members referred to in this order.

THE COURT ORDERS THAT:

1.    Pursuant to section 411(6) of the Act, the Scheme of Arrangement between the plaintiff and its members agreed to by the said members at the meeting held on 20 May 2022 (Scheme) be altered as shown in tracked changes in Annexure A to these orders, such that the Scheme as so altered is as set out in Annexure B to these orders

2.    Pursuant to section 411(4)(b) of the Act, the Scheme as so altered be and is hereby approved.

3.    Pursuant to section 411(12) of the Act, the plaintiff be exempted from compliance with section 411(11) of the Act in relation to the Scheme.

4.    Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these orders be entered forthwith.

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

REASONS FOR JUDGMENT

ANDERSON J:

INTRODUCTION

1    On 15 June 2022, I made orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act) approving the scheme of arrangement between the plaintiff (Crown) and its members agreed to by the said members at a meeting held on 20 May 2022 (Scheme) as altered and shown in tracked changes in Annexure A to the orders. That Scheme, as so altered, is set out in Annexure B to the orders. These are my reasons for approving the Scheme as altered.

BACKGROUND

2    On 29 March 2022, Justice O’Bryan made orders requiring Crown to convene and hold a meeting of its shareholders (Scheme Meeting) for the purposes of considering and, if thought fit, agreeing to a proposed Scheme to be made between Crown and its shareholders (Convening Orders) in Crown Resorts Limited, in the matter of Crown Resorts Limited [2022] FCA 367 (Reasons).

3    The Scheme provides for the acquisition by SS Silver II Pty Ltd (ACN 644 174 890) (Blackstone) of all of the Crown shares held as at the Scheme Record Date (excluding the 9.99% of shares already held by SS Silver III Pty Ltd (ACN 652 368 039), a related body corporate of Blackstone) (Scheme Shares). In particular, it provides that following provision of the Scheme Consideration to the Scheme Shareholders, all Scheme Shares will be transferred to Blackstone.

4    The Scheme Meeting was held on 20 May 2022. The resolution to agree to the Scheme was passed in accordance with the requirements of s 411(4) of the Act. In particular, the resolution was agreed to by 99.91% of the votes cast and 92.05% of shareholders present and voting (in person or by proxy).

5    Crown postponed the date of the meeting, originally ordered to be held on 29 April 2022, pursuant to paragraph 11 of the Convening Orders. The reason for the postponement was a delay in Blackstone obtaining the regulatory approvals required under the terms of the Scheme Implementation Deed. The same delay led to an adjournment of this approval hearing on 24 May 2022.

6    Crown and Blackstone have now obtained the regulatory approvals and each of the conditions precedent to the Scheme other than Court approval.

7    Crown seeks orders pursuant to s 411(4)(b) of the Act approving the Scheme in circumstances where the resolution has been passed by the requisite majority, and all other conditions precedent (save for Court approval) have been satisfied or waived.

8    Crown relies on the following affidavits in support of the orders sought to approve the Scheme:

(a)    affidavit of Zygmunt Edward Switkowski AO affirmed on 20 May 2022 (Second Switkowski Affidavit);

(b)    affidavit of Rodd Ashton Levy sworn on 23 May 2022 (Third Levy Affidavit);

(c)    affidavit of Scott Alexander Hudson affirmed on 23 May 2022 (Second Hudson Affidavit);

(d)    affidavit of Rodd Ashton Levy sworn on 14 June 2022 (Fifth Levy Affidavit);

(e)    affidavit of Rodd Ashton Levy sworn on 15 June 2022 (Sixth Levy Affidavit); and

(f)    affidavit of Frederick Michael Prickett sworn on 14 June 2022 (Second Prickett Affidavit).

9    The above mentioned affidavits were collectively tendered as exhibit P-1, save for the Sixth Levy Affidavit, which was tendered as exhibit P-2.

APPLICABLE PRINCIPLES

10    Section 411(4) of the Act provides that a scheme of arrangement is binding on members and the plaintiff company if:

(a)    at a meeting of members, it is passed by a majority of members present and voting (in person or by proxy) and by 75% of votes cast; and

(b)    it is approved by order of the Court.

11    In approving a scheme of arrangement the Court is exercising its supervisory jurisdiction. The Court is not bound to approve the proposed scheme merely because it previously made orders for the convening of a meeting or because the statutory majorities were achieved. That said, as Jacobson J said in Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at [32]:

… the court will usually approach the task upon the basis that the members are better judges of what is in their commercial interests than the court.

12    It follows that courts will therefore “be reluctant to make decisions contrary to the views of security holders expressed at meetings”: Re NRMA Ltd (No 2) (2000) 156 FLR 412; [2000] NSWSC 408 at [22]; Re Central Pacific Minerals NL [2002] FCA 239 at [13]; Re Seven Network Ltd (2010) [2010] FCA 400; 77 ACSR 701 at [31]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5].

13    In Re Huon Aquaculture Group Limited (No 2) [2021] FCA 1385 at [11], O’Callaghan J distilled the matters that the Court is to take into account on an application for approval under s 411(4) to the following:

(a)    the orders of the Court convening the scheme meeting were complied with;

(b)    the resolution to approve the scheme was passed by the requisite majority, and whether other statutory requirements have been satisfied;

(c)    all conditions to which the scheme is subject (other than Court approval and lodgement of the Court’s orders with ASIC) have been met or waived;

(d)    the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it;

(e)    there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme;

(f)    the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court’s discretion; and

(g)    the plaintiff has a statement from ASIC that it has no objection to the scheme.

14    The following matters may also be added to the list above:

(a)    whether the scheme members have voted in good faith and not for an improper purpose;

(b)    whether minority shareholders would be oppressed by the scheme;

(c)    whether the scheme offends public policy; and

(d)    whether the interests of other groups who are not parties, but are affected by the scheme are dealt with appropriately.

See: Permanent Trustee Company (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]–[10]; Re Solution 6 Holdings Ltd (2004) [2004] FCA 1049; 50 ACSR 113 at [18]–[24]; Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at [35]-[40]; Re Texon Petroleum Ltd (No 2) [2013] FCA 147 at [6]-[17]; Re David Jones Limited (No 3) [2014] FCA 753 (David Jones) at [3]; Re GBST Holdings Ltd [2019] NSWSC 1503 (GBST Holdings) at [11].

SHOULD THE SCHEME BE APPROVED?

15    Crown submits that it has satisfied all of the relevant statutory and procedural requirements, and that it is appropriate for the Court to exercise its discretion to approve the Scheme.

16    Crown submits that the Convening Orders have been complied with. Crown submits that the evidence discloses that:

(a)    the explanatory statement (which is included within the scheme booklet) was registered by ASIC on 30 March 2022 prior to it being sent to shareholders, as required by s 412(6) of the Act: Third Levy Affidavit at [5];

(b)    an office copy of the Convening Orders was lodged with ASIC on 30 March 2022, as required by r 3.5(b) of the Federal Court Rules 2011 (Cth): Third Levy Affidavit at [5];

(c)    the Convening Orders required that the Scheme Meeting be convened by providing various documents to Crown shareholders on or before 31 March 2022: Convening Orders at [2]. The principal document was the scheme booklet, which comprised the explanatory statement required by s 412(1) of the Act, and which annexed the Notice of Meeting and related documents;

(d)    the Convening Orders required that the scheme booklet provided to shareholders be substantially in the form of the draft scheme booklet at Annexure RAL-5 to the affidavit of Rodd Ashton Levy dated 28 March 2022 (Second Levy Affidavit) incorporating the amendments set out in Annexure RAL-8 to the Second Levy Affidavit (Scheme Booklet): Convening Orders at [2(a)].

17    The Convening Orders provided two methods for the provision of the Scheme Booklet to shareholders:

(a)    by email to shareholders who had nominated an electronic address for the purposes of receiving notices of meeting and proxy forms from Crown (Email Shareholders), such email to be substantially in the form of Annexure RAL-9 to the Second Levy Affidavit (Email Notification). The Email Notification was required to contain a link to an electronic copy of the Scheme Booklet, and a link to an online portal to enable the shareholder to complete and lodge their proxy for the Scheme Meeting and voting instructions online: Convening Orders at [2(a)] and [2(a)(i)].

(b)    by letter (postcard) to shareholders who were not Email Shareholders (Postal Shareholders). The letter was to be sent via post, airmail or courier, and it was required to set out the URL which provides access to an electronic copy of the Scheme Booklet: Convening Orders at [2(a)(ii)] and [3].

18    In addition, Postal Shareholders were required to be sent a hardcopy personalised voting/proxy form for the Scheme Meeting, substantially in the form of the final four pages of Annexure RAL-5 to the Second Levy Affidavit (Proxy Form): Convening Orders at [2(b)(ii)].

19    Crown submits that the evidence establishes that the requirements of the Convening Orders referred to above have been complied with.

20    I accept that the evidence establishes that Crown has complied with each of the Convening Orders.

21    Crown submits that in respect of Email Shareholders, the evidence establishes that the Email Notification:

(a)    was sent to each Email Shareholder on 31 March 2022 and was substantially in the form of Annexure RAL-9 to the Second Levy Affidavit: Second Hudson Affidavit at [9(i)];

(b)    contained a link to the Scheme Booklet, which was substantially in the form of the draft scheme booklet at Annexure RAL-5 to Second Levy Affidavit incorporating the amendments set out in Annexure RAL-8 to the Second Levy Affidavit, which was also the version registered by ASIC: Second Hudson Affidavit at [8(a)], [9(e)] and [9(i)]; and

(c)    contained links to an online portal or website that was accessible by the Email Shareholders to lodge any proxy for the Scheme Meeting and voting instructions online: Second Hudson Affidavit at [9(g)].

I accept this evidence.

22    Crown submits that of the 18,134 Email Notifications sent to Email Shareholders, 18,014 were successfully delivered to the intended email addresses, and only 120 emails ‘bounced-back’: Second Hudson Affidavit at [11]. A “bounce-back” indicates that the Email Notification could not be delivered to the intended email address. On 6 April 2022, a “Dispatch Pack” was sent to the registered address of those 120 shareholders whose Email Notifications had bounced back. This “Dispatch Pack” contained a postcard with links to the Scheme Booklet (among other material), a personalised proxy form and a pre-paid envelope for return of the completed proxy forms: Second Hudson Affidavit at [17]. I accept this evidence.

23    Crown submits that in respect of Postal Shareholders or “Hardcopy Recipients”, the evidence establishes that each Postal Shareholder was sent on 31 March 2021, an access postcard setting out the URL which provided access to a website from which the Postal Shareholder could, among other things, download a copy of the Scheme Booklet, which was substantially in the form of the draft scheme booklet at Annexure RAL-5 to the Second Levy Affidavit incorporating the amendments set out in Annexure RAL-8 to the Second Levy Affidavit: Second Hudson Affidavit at [12] and [14(b)]. I accept this evidence.

24    Crown submits that the Dispatch Pack sent to Postal Shareholders also included a hardcopy Proxy Form (that is, a personalised voting/proxy form substantially in the form of the final four pages of Annexure RAL-5 to the Second Levy Affidavit), and a reply-paid envelope for the return of completed Proxy Forms: Second Hudson Affidavit at [14](b). I accept this evidence.

25    Crown submits that the evidence establishes that on 31 March 2022, Computershare Investor Services Pty Ltd (Computershare) lodged 21,814 Dispatch Packs with its Australia Post representative, being one for dispatch to each Postal Recipient and to each Airmail Recipient who appeared on the Register at the time: Second Hudson Affidavit at [15] and [16]. The lodgement confirmations are annexed to the Second Hudson Affidavit. I accept this evidence.

26    Crown submits that the evidence establishes that a proxy for the Scheme Meeting was taken to be valid and effective if, and only if, it was completed and delivered in accordance with its terms and received by 10am (Melbourne time) on 18 May 2022 (the deadline being extended following postponement of the Scheme Meeting): Second Hudson Affidavit at [21]. I accept this evidence.

27    Crown submits that the evidence establishes that all proxy forms (that is, all hardcopy Proxy Forms and all proxies received via the online portal) received prior to this cut-off time were processed, with the voting instructions recorded in the proxy forms recorded against the relevant shareholder’s details in a database maintained by Computershare for the purposes of recording proxy directions: Second Hudson Affidavit at [20] – [36]. I accept this evidence,

28    Crown submits that the evidence establishes that on 19 May 2022, a notice advertising the Court hearing listed for 24 May 2022 was published in The Australian newspaper in accordance with paragraph 13 of the Convening Orders: Third Levy Affidavit at [10] and [11]. I accept this evidence.

29    Crown submits that the evidence establishes that on 10 June 2022, upon the receipt of the final gaming regulatory approvals, Crown:

(a)    announced to the ASX that all the gambling regulatory approvals had been received and that the date for the final Court hearing had been scheduled for 15 June 2022: Fifth Levy Affidavit at [7(a)]; Annexure RAL-19; and

(b)    updated Crown’s web page regarding the Scheme: namely, the Blackstone Transaction Link as defined at paragraph 13 of the First Hudson Affidavit, to refer to receipt of the gambling regulatory approvals and to state that the date for the final Court hearing was scheduled for 10.00am on 15 June 2022: Fifth Levy Affidavit at [7(b)]; Annexure RAL-20.

I accept this evidence.

30    Crown submits that the evidence establishes that it has not received any notice from any party indicating an intention to oppose the approval of the Scheme, or indicating any intention to appear at the approval hearing: Fifth Levy Affidavit at [8]. I accept this evidence.

31    Crown submits that the evidence establishes that the Scheme Meeting:

(a)    was held on 20 May 2022 commencing at 11:00am (postponed from 29 April 2022 pursuant to paragraph 11 of the Convening Orders): Second Switkowski Affidavit at [8]; Second Hudson Affidavit at [37];

(b)    was conducted electronically through an online platform, in accordance with the requirements of paragraph 1(b) of the Convening Orders: Second Switkowski Affidavit at [22]; Second Hudson Affidavit at [44] and following; and

(c)    was accessible through the online platform in accordance with the instructions included in the Notice of Meeting sent to shareholders: Second Hudson Affidavit at [39] – [43].

I accept this evidence.

32    Crown submits in accordance with paragraph 9 of the Convening Orders, the Scheme Meeting was chaired by Dr Switkowski: Second Switkowski Affidavit at [5], [11] and [12].

33    Crown submits that in accordance with paragraph 6 of the Convening Orders, voting on the resolution to approve the Scheme was conducted by way of poll: Second Switkowski Affidavit at [22]; Second Hudson Affidavit at [47].

34    Crown submits that the evidence establishes that after the Scheme Meeting, Mr Hudson of Computershare produced a Results Report, recording the results of the poll. A copy of that report is at Annexure SAH-13 to the Second Hudson Affidavit: the Results Report was also lodged with the ASX by Crown and included in an ASX announcement: see Annexure RAL-14 to the Third Levy Affidavit. I accept this evidence.

35    Crown submits that the evidence establishes that the Results Report discloses that the resolution to agree to the Scheme was passed by 99.91% of votes cast and 92.05 % of shareholders present and voting (in person or by proxy): Second Switkowski Affidavit at [25] – [26]; Annexure ZES-3; Second Hudson Affidavit at [58]; Annexure SAH-13. I accept this evidence.

36    It follows that, in Crown’s submission, in accordance with s 411(4)(a)(ii) of the Act, the resolution was passed by a majority in number of members present and voting (either in person or by proxy) at the Scheme Meeting, and by 75% of the votes cast on the resolution. I accept this submission.

37    Crown submits that these figures demonstrate that the Scheme was agreed to by an overwhelming proportion of Crown’s shareholders. The voter turnout number was also extremely high, which means that concerns that can arise regarding the efficacy of the notice or other procedural steps in cases of low voter turnout (i.e., less than 10% of shareholders voting), do not arise here: See Asaleo Care Limited, in the matter of Asaleo Care Limited (No 2) [2021] FCA 636 at [21] – [25]. Crown submits that on the contrary, the voter turnout percentage demonstrates that the procedural steps for convening the Scheme Meeting and notifying shareholders were effective, and that Crown’s shareholders were highly motivated to vote their shares in approval of the Scheme. I accept this submission.

38    Crown submits that save for the Court approving the Scheme, all conditions precedent in cl 3.1 of the Scheme Implementation Deed have been satisfied or waived and each of Crown and Blackstone have certified to that effect. I accept this submission.

39    Crown submits that the Scheme is fair and reasonable in the sense that an intelligent and honest person who was a shareholder of Crown, properly informed and acting alone, might approve the Scheme. Crown relies on the following matters in support of this contention:

(a)    the overwhelming support of the shareholders as reflected in the voting results of the Scheme Meeting;

(b)    the recommendation from all directors that shareholders vote in favour of the Scheme for the reasons given in the Scheme Booklet, and the fact that all directors stated their intention to vote their Crown shares in favour of the Scheme: Reasons at [16];

(c)    the opinion of the independent expert that the Scheme is fair and reasonable and in the best interests of Crown shareholders: Reasons at [15];

(d)    the detailed disclosures in the Scheme Booklet of the potential benefits and disadvantages of the Scheme: Reasons at [15];

(e)    the Scheme contains measures to protect shareholders against performance risk: Reasons at [52] – [54].

40    I find that the Scheme is fair and reasonable in the sense that an intelligent and honest person who was a shareholder of Crown, properly informed and acting alone, might approve the Scheme for the reasons submitted by Crown directly above.

41    Crown submits that there has been full and fair disclosure to shareholders on the basis that the content of the explanatory statement provided to members was considered by the Court at the first Court hearing. The explanatory statement contained in the Scheme Booklet was registered by ASIC prior to dispatch as required by s 412(6) of the Act. Crown submits that registration by ASIC is evidence of compliance with the disclosure obligations imposed by s 412 of the Act. I accept that there has been full and fair disclosure to shareholders on the basis of the explanatory statement contained in the Scheme Booklet.

42    In addition, Crown relies upon the evidence adduced of the conduct of the Scheme Meeting, including the address given by the chairman, Dr Switkowski: Second Switkowski Affidavit at [5] - [24]; Annexure ZES-2 and Second Hudson Affidavit at [37] – [55]. I accept that the evidence discloses that there has been full and fair disclosure to shareholders by reason of the information conveyed to shareholders at the Scheme Meeting.

43    Crown submits that through the Scheme Booklet and further consideration given to the Scheme at the Scheme Meeting, there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the Scheme. I accept this submission.

44    Crown also submits that registration of the Scheme Booklet by ASIC is evidence of compliance with the disclosure obligations imposed by s 412 of the Act. Crown submits that s 412(8) of the Act is of particular importance. Section 412(8) of the Act provides that ASIC must not register the explanatory statement unless the statement appears to comply with the Act and ASIC is of the opinion that the statement does not contain any matter that is false in a material particular or materially misleading in the form or context in which it appears. Accordingly, in light of ASIC’s registration of the Scheme Booklet on 30 March 2022, Crown submits that ASIC must be taken to have been satisfied that the requirements of s 412(1) of the Act were met. I accept this submission.

45    The prescribed information referred to in s 412(1)(a)(ii) of the Act is the information set out in reg 5.1.01 and Schedule 8 (part 3) of the Corporations Regulations 2001 (Cth). Crown submits that evidence was provided at the first Court hearing as to the satisfaction of these disclosure requirements: First Levy Affidavit; Reasons at [70(b)]. I accept this submission.

46    Crown submits that both it and Blackstone implemented verification procedures to ensure that the Scheme Booklet did not contain any misleading or deceptive statements and that its contents satisfied the applicable disclosure requirements. At the first Court hearing, the Court accepted that these procedure requirements were adequate: Reasons at [71] – [73]. I accept this submission.

47    The Court’s power to approve a scheme is restricted by s 411(17) of the Act. At the approval stage, the Court must be satisfied that there is no proscribed purpose as described in s 411(17)(a), or there must be provided to the Court a statement in writing by ASIC that it has no objection to the arrangement (see s 411(17)(b)): See Re Coles Group Ltd (No 2) (2007) 65 ACSR 494 at 497.

48    On the morning of the hearing on 15 June 2022, Crown tendered in evidence a letter from ASIC advising that it had no objection to the arrangement. A letter such as that provided by ASIC will satisfy the requirements of s 411(17)(b) and consequently the bar under s 411(17) to approval of the Scheme has been removed: Re Tatts Group Limited (No 2) [2017] VSC 770; Re Toll Holdings Limited (No 2) [2015] VSC 236; Re Coles (No 2) (2007) 65 ACSR 494.

49    Crown submits that where a no objections statement is received from ASIC, there is no need for the Court to further consider the requirements of s 411(17)(a) of the Act: Re Coles Group Ltd (No 2) (2007) 65 ACSR 494 per Robson J at [19]-[24]. I accept this submission.

50    Crown submits that there are other considerations which weigh in favour of approving this Scheme, which includes the following:

(a)    there is no reason to doubt that the overwhelming majority of scheme members who voted in favour of the Scheme did so in good faith and for a proper purpose. There is no element of oppression to minority shareholders in the Scheme and there is no other aspect as to which the Scheme might offend public policy, or adversely affect the interests of other groups who are not parties to the Scheme;

(b)    all relevant matters have been brought to the Court’s attention. At the first Court hearing, Crown notified the Court of several matters warranting the attention of the Court. These matters were considered by the Court at Reasons [30] – [68]. Crown submits that none of those matters presents any impediment to the approval of the Scheme.

I accept these submissions.

51    Crown has drawn to the Court’s attention the receipt by Crown of a letter from Maurice Blackburn dated 5 May 2022. Maurice Blackburn acts for Greg Lieberman, the representative plaintiff, in a shareholder class action proceeding against Crown in the Supreme Court of Victoria. In that proceeding, Mr Lieberman alleges, among other things, that Crown engaged in oppressive conduct. The letter from Maurice Blackburn, which is annexed to the Third Levy Affidavit, sought “confirmation” from Crown as follows:

[P]lease confirm that in the event that the proposed scheme between Crown and its members is approved and implemented, Crown will not contend in this proceeding that the resulting cessation of membership is such as to deprive the plaintiff and Relevant Group Members of their standing to continue to pursue a claim for relief under s 233 of the Act, nor the Court’s jurisdiction to grant such relief.

52    Crown has not provided the confirmation requested. Crown submits that the matter is not relevant to the Court’s evaluation of whether to approve the Scheme under s 411(4)(b) of the Act.

53    I agree with Crown’s submissions. The matter raised by Maurice Blackburn in its letter is not a relevant consideration as to whether the Scheme, in its present form or an amended form, should be approved or not.

ALTERATION TO THE TERMS OF THE SCHEME

54    On the morning of the hearing on 15 June 2022, Crown tendered in evidence the Sixth Levy Affidavit. Crown relies upon the matters deposed to in the Sixth Levy Affidavit to alter the terms of the Scheme pursuant to s 411(6) of the Act to make clear that a certain parcel of shares beneficially held by a related body corporate of Blackstone is excluded from the operation of the Scheme.

55    Crowns submits that the Sixth Levy Affidavit establishes this was always the intended position but, without the alterations sought, may not be how the Scheme operates. That is so because it transpired that, contrary to Crown’s understanding until very recently, the registered proprietor of the relevant shares will not, at the operative date, be a related body corporate of Blackstone.

ALTERING SCHEME – APPLICABLE PRINCIPLES

56    Crown submits that pursuant to s 411(6) of the Act, the Court may approve a scheme of arrangement subject to such alterations or conditions as it thinks just.

57    Crown submits that the following principles emerge from the decided cases concerning the application of the Court's discretion in relation to alterations or conditions under s 411(6): Re lnvestorinfo Ltd [2005] FCA 1848; (2006) 24 ACLC 44 at 45 [7] per Gyles J, Independent Practitioner Network Ltd, in the matter of Independent Practitioner Network Ltd (No 2)[2008] FCA 1593; (2006) 26 ACLC 1249 (Independent Practitioner Network Ltd (No 2)) at [16]; and Professional Investment Holdings Limited, in the matter of Professional Investment Holdings Limited (No 2) [2010] FCA 1336 at [38]-[39].

58    First, the discretion has to be exercised at the time the scheme is approved at the final court hearing and cannot be exercised after the approval order has been made: Re BTS Bearings and Transmission Supplies Pty Ltd (1983) 8 ACLR 287 at 287; Re Gasweld Pty Ltd (1986) 5 NSWLR 494; (1986) 4 ACLC 560 at 561; AGL Gas Networks Limited (Application of) [2001] NSWSC 165; (2001) 37 ACSR 441 at 448 [25]; Re Australian Co-operative Foods Ltd [2001] NSWSC 382; (2001) 38 ACSR 71 (Co-operative Foods Ltd) at 89 [85].

59    Second, the discretion may be exercised if the alteration is of a minor or technical kind which does not really affect the details of, or recast, the scheme : Re Adelaide Air Conditioning and Domestic Engineers Ltd (In Liq) [1972] 6 SASR 603 at 605 (Zelling J); Re H Craig Pty Ltd (1971–73) CLC 40-026 (Mitchell J) at 27, 233; Industrea Limited, in the matter of Industrea Limited (No 2) [2012] FCA 1287 at [5]; Billabong International Limited, in the matter of Billabong International Limited (No 2) [2018] FCA 496 at [13].

60    Third, the discretion may be exercised if the alteration is of a minor or technical kind which improves the smooth working of the scheme or which does not affect the substantive operation of the scheme: Permanent Trustee Company (2002) 43 ACSR 601; [2002] NSWSC 1177 at 608 [21]; Re Homemaker Retail Management Ltd (2001) 40 ACSR 116 at 122-123 [25].

61    Fourth, the Court will not make an alteration to a scheme unless it is satisfied that the scheme as proposed to be altered would still have been agreed to by the requisite majorities if the members or creditors (as the case may be) had considered and voted on the scheme as proposed to be altered: Independent Practitioner Network Ltd (No 2) at [17]; Co-operative Foods Ltd at [50].

62    Fifth, any alteration should not impinge upon or affect the “spirit and intendment of the scheme as a whole”: Permanent Trustee Company (2002) 43 ACSR 601; [2002] NSWSC 1177 at 608 [21]; In the matter of Aveo Group Limited and Aveo Funds Management Limited [2019] NSWSC 1679 at [13].

63    Crown submits that the discretion under s411(6) has been exercised in a number of cases to alter a scheme to more precisely and clearly identify shares and shareholders that are excluded from the operations of the scheme: See, e.g., Prime Infrastructure Holdings Ltd [2010] NSWSC 1337; Afterpay Holdings Limited, in the matter of Afterpay Holdings Limited (No 2) [2017] FCA 737; BigAir Group Limited, in the matter of BigAir Group Limited (No 2) [2016] FCA 1513; Drillsearch Energy Limited, in the matter of Drillsearch Energy Limited (No 2) [2016] FCA 126; iProperty Group Limited, in the matter of iProperty Group Limited (No 2) [2016] FCA 36; Talent2 International Limited, in the matter of Talent2 International Limited (No 2) [2012] FCA 926. See also In the matter of Aventus Holdings Limited and Aventus Capital Limited as responsible entity of the Aventus Retail Property Fund [2022] NSWSC 266; In the matter of Spark Infrastructure RE Limited [2021] NSWSC 1564; In the matter of Isentia Group Limited [2021] NSWSC 1069; In the matter of Coca-Cola Amatil Limited [2021] NSWSC 489.

64    I am satisfied that it is appropriate to exercise the Court’s discretion in relation to the alterations sought pursuant to s 411(6) of the Act. The proposed alterations to the Scheme, as shown in the tracked changes to Annexure A to the form of orders made, ensure the exclusion from the operation of the Scheme of certain Crown shares beneficially held by a related body corporate of Blackstone. That was the position which was expressly envisaged in the Scheme Booklet that these shares were excluded from the operation of the Scheme, on the basis that their registered proprietor was excluded from the Scheme’s definition of “Crown Shareholder”: Six Levy Affidavit at [8].

65    The Sixth Levy Affidavit provides evidence that Crown recently learnt that the registered proprietor of the shares, as at the operative date for participating in the Scheme, will in fact remain a nominal company that is not a related body corporate of Blackstone excluded from the definition of “Crown Shareholder”: Sixth Levy Affidavit at [16]-[17]. As such, absent the proposed alterations, on a precise reading of the terms of the Scheme it will operate to include these shares, albeit that the reverse was always the intention and anticipated operation of the Scheme: Sixth Levy Affidavit at [17]-[18].

66    I am satisfied on the evidence, that the proposed alterations are to ensure the proper working of the Scheme and are of a minor and technical nature and do not affect the Scheme’s substantive operation.

67    I am also satisfied that as the Scheme Booklet envisaged shares held by related bodies corporate of Blackstone being excluded from the operation of the Scheme, there is no basis to apprehend that the Scheme, as altered, would not have been agreed to by the requisite majority of members at the Scheme Meeting. That is especially the case, in my view, given the discrete nature of the alterations and the overwhelming level of shareholder agreement at the 20 May 2022 Scheme Meeting.

68    I am satisfied that the proposed alterations to the Scheme are consistent with its spirit and its intendment.

69    I am satisfied that the proposed alteration is consistent with the Scheme Resolution passed at the Scheme Meeting, the terms of which were as follows:

That, pursuant to and in accordance with section 411 of the Corporations Act 2001 (Cth), the Scheme (the terms of which are described in the Scheme Booklet of which the notice convening this meeting forms part) is agreed to (with or without modification or conditions as approved by the Federal Court of Australia to which Crown Resorts Limited and SS Silver II Pty Ltd agree).

(emphasis added)

70    Within the meaning of that resolution, and within the meaning of the defined term “Scheme” in the text of the Scheme itself, both Crown and Blackstone agree to the proposed alteration: Sixth Levy Affidavit at [21]-[22].

EXEMPTION FROM SECTION 411(11) OF THE ACT

71    Section 411(11) of the Act requires, subject to s 411(12), that a copy of the Court’s order approving a scheme of arrangement be annexed to every copy of the company's constitution issued after the order is made. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which it shall comply.

72    In Re Equinox Resources Ltd (2004) 49 ACSR 692, EM Heenan J at [22] indicated that the purpose of s 411(11) was:

… to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved.

73    The above passage has been quoted with approval in a number of subsequent decisions: See, eg, Re Amcor (No 2) [2019] FCA 842 at [40]; Re Hostworks Group Ltd (No 2) [2008] FCA 248 at [36] and Re AXA Asia Pacific Holdings Ltd (No 2) [2011] VSC 102 at [36].

74    Crown submits that, in the present case, exemption from compliance with s 411(11) is appropriate given that:

(a)    the Scheme will not alter the constitution of Crown or the rights of shareholders, creditors or other persons dealing with the company. Further, no ongoing purpose will be served by requiring the orders approving the Scheme to be annexed to Crown’s constitution;

(b)    current shareholders are fully informed of the Scheme and will be informed in the event that the Court approves the Scheme, and an order under s 411(12) is regularly made on this basis; and

(c)    the orders will be irrelevant once the Scheme is implemented and Crown becomes a wholly owned subsidiary of Blackstone.

75    I accept Crown’s submissions that, in the circumstances, it is appropriate to exempt Crown from compliance with s 411(11) of the Act.

DISPOSITION

76    I have reviewed and considered each of the affidavits relied upon by Crown and have the benefit of written submissions filed by Crown on 14 June 2022 and supplementary submissions filed on 15 June 2022. I have also had the benefit of the oral submissions of senior counsel for Crown, Mr Batt QC, and Mr Loxley of counsel. Having regard to that material and, in particular, the matters set out above, I am satisfied that:

(1)    each of the statutory and procedural requirements of s 411 of the Act have been complied with; and

(2)    it is appropriate, in the circumstances, to exercise the Court’s discretion and to approve the Scheme in the altered form sought by Crown.

Associate:

Dated:    22 June 2022