New South Wales Supreme Court CITATION : Green's Foods Ltd [2007] NSWSC 133 HEARING DATE(S) : 26/02/07 JUDGMENT DATE : 26 February 2007 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 26 February 2007 DECISION : Order approving scheme of arrangement CATCHWORDS : CORPORATIONS - arrangements and reconstructions - Part 5.1 scheme of arrangement - application for court's approval - no matter of principle LEGISLATION CITED : Corporations Act 2001 (Cth), ss.411(4)(b), 411(11), 411(12), 411(17) Re Green's Foods Limited [2007] NSWSC 43 Re Promina Group Ltd [2006] FCA 1772 CASES CITED : Re Tempo Services Limited (2005) 53 ACSR 523 Re Tribeca Learning Ltd [2006] FCA 356 Re Webcentral Group Ltd [2006] FCA 937 PARTIES : Green's Foods Limited - Plaintiff FILE NUMBER(S) : SC 1011/07 COUNSEL : Mr K.L. Andronos - Plaintiff SOLICITORS : Baker & McKenzie - Plaintiff IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 26 FEBRUARY 2007 1011/07 – GREEN'S FOODS LIMITED JUDGMENT 1 The plaintiff seeks principally an order under s.411(4)(b) of the Corporations Act 2001 (Cth) approving a scheme of arrangement between itself and its members. 2 The objective of the scheme is to cause all shares making up the issued share capital of the plaintiff to become vested in Nestlé Australia Ltd. By force of the scheme, the plaintiff will become authorised by each of its members to transfer the member's shares to Nestlé. That company, in turn, has agreed with the plaintiff to make payment to the several transferors. This and related payment mechanisms and other necessary steps are provided for in an implementation agreement between the plaintiff and Nestlé. 3 On 19 January 2007, McDougall J made orders under s.411(1) for the convening of a meeting of the members of the plaintiff for the purpose of considering the proposed scheme of arrangement. His Honour subsequently delivered reasons for making those orders: Re Green's Foods Limited [2007] NSWSC 43. Those reasons touched upon the principal matters to be considered upon such an application. His Honour noted in particular the arrangements that had been made or were proposed to deal with the "credit risk" or "performance risk" issue which had been the subject of comment in a number of recent cases, in particular the decision of Gyles J in Re Tempo Services Limited (2005) 53 ACSR 523 (see also Re Tribeca Learning Ltd [2006] FCA 356 (Jacobson J); Re Webcentral Group Ltd [2006] FCA 937 (Lindgren J); Re Promina Group Ltd [2006] FCA 1772 (Gyles J)). McDougall J noted the joint trust account provision that had been adopted to ensure that members of the plaintiff were not at risk as to the unavailability of the funds that would become due to them for their shares. 4 Upon the application this morning, I have received evidence from Mr Rowell, appointed by the court to be the chairman of the meeting, that that meeting duly proceeded to business on 22 February 2007. Mr Rowell's evidence showed that the motion for the approval of the scheme of arrangement received strong support of the members who were present in person or by proxy. Of the 588 members so present, 564 voted in favour and 24 voted against. The majority in favour was thus 99.4 percent. According to the numbers of votes cast on the basis of one vote per share, the motion was approved by 95.9 percent of votes. The majorities envisaged by s.411(4)(a)(ii) were thus achieved. 5 Affidavits of Mr Scott, Mr Drew and Mr Sanderson show that the procedures to be implemented in advance of and at the meeting to comply with the legislation and the prior orders of the court were appropriately dealt with. In other words, the meeting was duly convened on the basis of documents duly dispatched and proceeded to its deliberations in the manner in which the court had envisaged when orders were made on 19 January 2007. 6 Ms O'Brien, the solicitor for the plaintiff, has given evidence that this present hearing was duly advertised and that neither the plaintiff nor her firm became aware of any intention on the part of a member to seek to be heard on this application. The matter was called outside the court and there was no appearance except, of course, for the plaintiff. The court may thus be satisfied that no member desires to raise any matter of objection so far as approval of the scheme is concerned. This, coupled with the expression of members' wishes through voting, is a powerful indicator of members' own views as to where their interests lie. 7 The implementation agreement contains provisions for a giving of certificates on each side as to the performance of conditions precedent and other necessary matters. The certificates of both the plaintiff and Nestlé Australia Limited have been tendered. 8 Finally, there has been tendered a letter from Australian Securities and Investments Commission stating that, on the basis that it is satisfied that the scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of chapter 6 of the Corporations Act, it has no objection to the scheme. Having regard to the provisions of s.411(17), the court accordingly need not pursue that question of avoidance. 9 The plaintiff has made out its case in support of the application for an approving order under s.411(4)(b), as well as the usual ancillary order under s.411(12) dispensing with compliance with s.411(11). 10 I therefore make the orders in the short minutes of order which I initial and date. Those orders may be taken out forthwith. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.