Federal Court of Australia Milton Corporation Limited, in the matter of Milton Corporation Limited (Second Scheme Hearing) [2021] FCA 1178 File number: NSD 714 of 2021 Judgment of: LEE J Date of judgment: 20 September 2021 Date of publication of reasons: 29 September 2021 Catchwords: CORPORATIONS – scheme of arrangement – second Court hearing – whether scheme should be approved pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) – scheme approved Legislation: Corporations Act 2001 (Cth) Ch 6; ss 411, 411(1), 411(4), 411(17), 412(2), 412(6), 1319 Cases cited: APN Outdoor Group Limited, in the matter of APN Outdoor Group Limited (No 2) [2018] FCA 1633 Milton Corporation Limited, in the matter of Milton Corporation Limited (First Scheme Hearing) [2021] FCA 992 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 12 Date of hearing: 20 September 2021 Counsel for the Plaintiff: Mr I Jackman SC with Mr R Jameson Solicitor for the Plaintiff: Hamilton Locke Counsel for the Proposed Acquirer: Mr N Hutley SC with Mr B Hancock ORDERS NSD 714 of 2021 IN THE MATTER OF MILTON CORPORATION LIMITED ACN 000 041 421 MILTON CORPORATION LIMITED ACN 000 041 421 Plaintiff order made by: LEE J DATE OF ORDER: 20 September 2021 THE COURT ORDERS THAT: 1. Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act), the Scheme of Arrangement between the plaintiff and its members agreed to by the members at the meeting held on 13 September 2021 (the terms of which are set out in Annexure A to these Orders) (Scheme) is approved. 2. Pursuant to section 411(12) of the Corporations Act, the plaintiff be exempted from compliance with section 411(11) of the Corporations Act in relation to the Scheme. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (Delivered ex tempore, revised from the transcript) LEE J: A INTRODUCTION AND BACKGROUND 1 This is a straightforward matter that can be dealt with immediately and relatively briefly. 2 The background to this matter is set out comprehensively in Milton Corporation Limited, in the matter of Milton Corporation Limited (First Scheme Hearing) [2021] FCA 992 (initial judgment or J), where I made orders, inter alia, convening a meeting of Milton's shareholders to consider and agree upon a proposed scheme of arrangement pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act). These reasons assume a familiarity with the initial judgment and adopt its abbreviations. 3 Following the orders made in the initial judgment, the Scheme Meeting was held on 13 September 2021 at which resolutions approving the Scheme were passed by 93.22% of shareholders present and voting, and 82.7% of votes cast. Accordingly, by this application, Milton seeks orders pursuant to s 411(4)(b) of the Act approving the Scheme. B LEGAL PRINCIPLES 4 The Court's role in approving a scheme of arrangement is clear on the authorities, which were usefully summarised in APN Outdoor Group Limited, in the matter of APN Outdoor Group Limited (No 2) [2018] FCA 1633 (at [4]–[5] per Markovic J): 4. The role of the Court in approving a scheme of arrangement is supervisory. The Court has a discretion whether to approve a scheme pursuant to s 411(4)(b) of the Act. It is not bound to approve it merely because it previously made orders for the convening of a meeting or because the statutory majorities have been achieved. However, the Court will usually approach its task on the basis that members are better judges of what is in their own commercial interests than the Court: see Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583; [2010] FCA 400 (Re Seven Network) at [31]-[32] (per Jacobson J). 5. The matters of which the Court will need to be satisfied in deciding whether to approve a scheme relevantly include that: (1) there has been compliance with the orders of the Court convening the scheme meeting; (2) the resolution to approve the scheme was passed by the requisite majorities; (3) all other statutory requirements have been satisfied; (4) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it. In considering this issue, it is not the role of the Court to impose its own commercial judgment on the scheme or to consider whether a better scheme might have been proposed; (5) the plaintiff has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion; and (6) there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme. See Re Seven Network at [35]-[39]; Signature Capital Investments Limited, in the matter of Signature Capital Investments Limited (No 2) [2016] FCA 385 at [4]; Medical Australia Ltd, in the matter of Medical Australia Ltd (No 2) [2017] FCA 1429 at [5]. C CONSIDERATION 5 First, the evidence read on the application at today's hearing makes it plain that there has been compliance with the Court's orders in relation to the dispatch and publication of Scheme documents. Furthermore, as addressed in the initial judgment (at [11]), the requirements of s 412(1) of the Act have been satisfied. 6 Section 411(4) of the Act renders an arrangement binding on members or creditors (as the case may be) if and only if the arrangement is approved by more than 50% by number and 75% or more by votes or debts, of members or creditors present and voting, and by the Court. As stated above, the arrangement was approved by the statutory majorities required in s 411(4)(a)(ii) of the Act. 7 The evidence provided that the Scheme Booklet was registered with ASIC on 5 August 2021 in accordance with s 412(6) of the Act and that a signed copy of a statement in writing was received from ASIC on 20 September 2021, stating that ASIC has no objection to the compromise or arrangement. The effect of the receipt of such a letter is that s 411(17)(b) of the Act is operative so as to preclude the need for the Court to make a finding that it is satisfied that a compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of the provisions of Ch 6 of the Act. 8 It is evident that all statutory preconditions to the Court's approval have been satisfied. 9 Secondly, I accept the Scheme is fair and reasonable in the sense that an intelligent and honest person in the position of a Milton shareholder, properly informed and acting alone might approve the Scheme. In its written submissions, Milton sets out in some detail why it submits the Scheme is fair and reasonable, each of which I accept: (1) the Scheme was supported by a significant majority of shareholders present and voting, as seen above, and a comfortable majority of votes cast in favour of the Scheme; (2) as at the date of the Scheme Meeting, no superior proposal had been received and the independent directors of Milton continued to consider the Scheme to be in the best interests of Milton shareholders and recommended that Milton shareholders vote in favour of the Scheme: (see J [8]); (3) the Milton shareholders were provided with a full and fair disclosure of the advantages and disadvantages of the Scheme by way of the Scheme Booklet; (4) the independent expert concluded that the Scheme was fair and reasonable, and that conclusion remained unchanged as of 10 September 2021 (see J [9]); (5) there was no suggestion the Scheme was proposed other than bona fide or that any shareholder was oppressed (see J [11]); (6) at today's hearing, there was no opposition to the approval of the Scheme; further, the evidence disclosed that, although some requests and concerns were raised by some shareholders at the meeting, those requests and concerns were the subject of a response and no shareholders have proposed to intervene at today's hearing; (7) the Scheme contains measures to protect Milton shareholders against performance risk, including by WHSP having provided a Deed Poll binding WHSP to comply with its obligations under the Scheme, and that the transfer of Milton shares is conditional upon payment of the Scheme Consideration; and (8) ASIC has stated that it has no objection. 10 Finally, at the hearing, two matters were brought to the Court's attention, which have arisen since the first hearing. The first matter is an agreement to make three amendments to the scheme implementation agreement, which are set out in detail in the written submissions. I agree that these amendments are inconsequential and do not require further elaboration (as they do not impact in any material way upon the Court's discretion to approve the Scheme). 11 The second matter is that there was a minor typographical error identified in the Scheme Booklet that has been drawn to the attention of ASIC. Again, this is immaterial. D CONCLUSION 12 For the reasons comprehensively set out in the written submissions, which I have reviewed prior to the hearing today and which I accept, I am satisfied that the orders proposed in the short minutes of order provided to the Court should be approved. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee. Associate: Dated: 29 September 2021