In the matter of DUET Finance Limited; In the matter of DUET Company Limited; In the matter of DUET Investment Holdings Limited; In the matter of DUET Finance Limited as responsible entity of DUET Finance Trust [2017] NSWSC 912 (28 April 2017)

Last Updated: 18 July 2017

Supreme Court New South Wales

Case Name:	In the matter of DUET Finance Limited; In the matter of DUET Company Limited; In the matter of DUET Investment Holdings Limited; In the matter of DUET Finance Limited as responsible entity of DUET Finance Trust
Medium Neutral Citation:	[2017] NSWSC 912
Hearing Date(s):	28 April 2017
Decision Date:	28 April 2017
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	The Court approves the proposed company schemes of arrangement pursuant to s 411 of the Corporations Act 2001 (Cth) and advises that the responsible entity seeking judicial advice in respect of the proposed trust scheme would be justified in implementing that scheme.
Catchwords:	CORPORATIONS — Scheme of arrangement — Application for approval – where schemes of arrangement involve the Plaintiffs’ shareholders transferring their shares to a purchaser for cash consideration – where schemes approved by significant majorities of members – whether Court should approve schemes of arrangement CORPORATIONS — Scheme of arrangement — Managed investment scheme – Application for judicial advice by responsible entity under s 63 of the Trustee Act 1925 (NSW) – whether responsible entity would be justified in implementing trust scheme approved by a significant majority of unitholders
Legislation Cited:	- Corporations Act 2001 (Cth), s 411 - Trustee Act 1925 (NSW), s 63 - Unclaimed Money Act 1995 (NSW)
Cases Cited:	- Re Advance Bank Australia Ltd (No 2) (1997) 136 FLR 281; 22 ACSR 513 - Re DUET Finance Limited [2017] NSWSC 415 - Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349; 33 ACSR 595 - Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 77 ACSR 701
Category:	Principal judgment
Parties:	2017/63852 DUET Finance Limited (Plaintiff) 2017/63853 DUET Company Limited (Plaintiff) 2017/63854 DUET Investment Holdings Limited (Plaintiff) 2017/66399 DUET Finance Limited as responsible entity of DUET Finance Trust (Plaintiff)
Representation:	Counsel: I M Jackman SC (Plaintiff – in each proceeding) D F C Thomas (CK William Australia Bidco Pty Ltd – in each proceeding) Solicitors: Allens (Plaintiff – in each proceeding) King & Wood Mallesons (CK William Australia Bidco Pty Ltd – in each proceeding)
File Number(s):	2017/63852; 2017/63853; 2017/63854; 2017/66399

JUDGMENT – EX TEMPORE

1. On 8 March 2017 I delivered judgment ([2017] NSWSC 415) in respect of a first court hearing in relation to four inter-conditional schemes, being three company schemes under s 411 of the Corporations Act (Cth) and a trust scheme in respect of which judicial advice was sought under s 63 of the Trustee Act 1925 (NSW), which related to a proposed acquisition of all issued securities in the DUET Group by CK William Australia Bidco Pty Limited (“Bidco”) and indirectly by several entities which form part of a consortium. I set out the background to the proposed schemes in that judgment and do not need to repeat it.
2. The Court now has before it, at a second hearing in respect of the relevant schemes, evidence of the passage of a resolution approving the schemes at meetings ordered by the Court and held on 21 April 2017. There is evidence that resolutions agreeing to each company scheme were passed by the relevant statutory majorities, and indeed by significant majorities, involving approximately 89 percent of DUET securityholders present and voting either in person or proxy voting in favour of the schemes, and in excess of 99 percent of the votes cast on the resolutions at the scheme meetings were voted in favour of the schemes. Resolutions authorising the amendments to the constitution of the DUET Finance Trust which were necessary to give effect to the trust scheme were also passed by the requisite majorities, and by the same majority as in respect of votes at the scheme meetings.
3. The Plaintiffs rely on several affidavits to prove the formal elements necessary to establish these matters, including an affidavit of Ms Pickering, the Company Secretary and General Manager, Legal and Compliance, of the DUET Group dated 24 April 2017. Ms Pickering draws attention, fairly, to the fact that a minor amendment was made to the schemes of arrangement in the form to which they were put at the meeting, which involved a substitution of a reference to the Unclaimed Money Act 1995 (NSW) in the relevant schemes with a reference to the corresponding Victorian legislation. It seems to me that Mr Jackman, who appears for the Plaintiffs, is correct in characterising that amendment as one that does not affect the substance of the schemes, and in any event it was approved by securityholders at the relevant meetings by the majorities to which I have referred. Ms Pickering also refers to, and confirms, the passage of resolutions by the majority of number and votes of securityholders in respect of each of the meetings, and the steps which have been taken in respect of oversight of the accuracy of the explanatory memorandum and scheme booklet. Ms Pickering confirms that she is not aware of any fact, matter or circumstance that has arisen since the scheme booklet was prepared, so far as it concerns information relating to DUET, that renders that information false or incorrect, including by omission, or any new information that was otherwise not disclosed to securityholders that was material to their decision in respect of the scheme resolutions.
4. An affidavit of Mr Paresh, who is a senior relationship manager with Computershare Investor Services Pty Ltd, is read in respect of the dispatch of scheme documents. Mr Paresh fairly discloses an inadvertent deviation from the steps contemplated by the orders made by the Court on 8 March 2017, so far as scheme materials were dispatched to securityholders recorded in the security register as at 7pm on 7 March 2017, rather than the date referred to in the orders of 7pm on 8 March 2017. Mr Paresh draws attention to the fact that this matter affected 14 new securityholders who held 1,101,851 securities, and who were in any event provided with the explanatory material in a further dispatch of scheme materials to new securityholders who had come on to the register in the period after that date. Mr Jackman submits, and I accept, that this matter is also immaterial, not least because those persons who are affected by it were in fact provided with the relevant material, but also because the numbers involved would not have had any impact on the significant majorities by which the scheme resolutions were passed. Mr Paresh otherwise sets out the process for proxies and voting at the scheme meetings, which was consistent with the usual practice.
5. The application is also supported by an affidavit of Mr Kemp dated 27 April 2017 which confirms, among other matters, that the Australian Securities and Investments Commission has advised that it has no objection to the proposed schemes of arrangement for the purposes of s 411(17)(b) of the Corporations Act, having regard to the criteria which it applies to such statements under Regulatory Guide 60: Schemes of Arrangement. Where ASIC has indicated that it has no objection to the proposed schemes, the Court need not determine any question which might otherwise arise under s 411(17)(a) of the Corporations Act: Re Advance Bank Australia Ltd (No 2) (1997) 136 FLR 281; 22 ACSR 513.
6. Mr Jackman refers to well-established principles applicable to the Court's role in approving the scheme at a second hearing. He notes that the Court must consider whether the requirements of the Corporations Act have been complied with, the majority of securityholders have acted in good faith in voting to approve the schemes, and the proposal is fair and reasonable such that it is capable of being accepted by intelligent and honest securityholders looking to their own commercial advantage: Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349; 33 ACSR 595 at 607; Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583; 77 ACSR 701 at 706–707. Mr Jackman points to the well-established principle that the Court will give considerable weight to the commercial judgment of those who voted to approve the scheme: Re Seven Network above at 706–707. This application involves no controversial issue in respect of the application of those principles and, as Mr Jackman submits, the Court can readily be satisfied that the requirements of the Act have been complied with in respect of the dispatch of the scheme materials and the conduct of the meeting, and that the majority of securityholders have acted in good faith and in their own assessment of their commercial interests in voting to approve the scheme.
7. I am otherwise satisfied that, as I have noted above, the dispatch of materials was, with the minor and inadvertent difference as to the date of securityholders on the register which I noted above, in accordance with the orders made by the Court; that the second court hearing has been advertised, as the Court required, and I note that there was no appearance by anyone seeking to oppose either the company schemes or the trust scheme at the hearing today; and that the scheme meetings have otherwise been conducted in accordance with the orders made by the Court, again noting the minor variation in the schemes which were put to those meetings and approved by securityholders.
8. I note, for completeness, that Mr Jackman also draws attention to the fact that, as was contemplated by the explanatory material for the schemes and noted in my earlier judgment, two other members of the consortium which had been proposed to hold an interest in Bidco have come to take up that interest. That is a possibility that had been disclosed to securityholders, and in any event was ultimately of little significance for their interests, for the reasons I noted in my earlier judgment. I should also note, again for completeness, that the Court has been provided with deeds poll which confirm the satisfaction of relevant conditions precedent, other than those conditions related to Court approval of the schemes, which will be satisfied by the effect of this judgment.
9. Accordingly, in proceedings 2017/00063852 I make orders in accordance with the short minutes of order initialled by me and placed in the file. In proceedings 2017/00063853 I make orders in accordance with the short minutes of order initialled by me and placed in the file. In proceedings 2017/00063854 I make orders in accordance with the short minutes of order initialled by me and placed in the file. In proceedings 2017/00066399 I give the direction specified in paragraph 1 of the orders and make the orders specified in paragraphs 2 and 3 as initialled by me and placed in the file. In each of the proceedings I make orders that the exhibits be returned, such exhibits to be retained pending any appeal.

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