Supreme Court New South Wales Medium Neutral Citation: In the matter of Pulse Health Limited [2017] NSWSC 653 Hearing dates: 21 March 2017 Decision date: 21 March 2017 Jurisdiction: Equity - Corporations List Before: Black J Decision: Order that the meeting of members of the Plaintiff to be convened on 22 March 2017 be deferred to 1 May 2017. Catchwords: CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application to defer a meeting of members to consider and if it thought fit to agree to a proposed scheme of arrangement – where acquirer has, since the first court hearing, agreed to acquire another company associated with the company to be acquired under the scheme – where Plaintiff needs more time to address developments in the explanatory memorandum and independent expert's report – whether meeting should be deferred. Legislation Cited: - Corporations Act 2001 (Cth), s 1319 Cases Cited: - CMPS&F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366 - Re Amcon Telecommunications Ltd [No 2] (2015) FCA 410 - Re Aspen Group Pty Limited (2015) NSWSC 1718 - Re Australian Gaslight Company [2006] FCA 346; (2006) 57 ASCR 67 Category: Procedural and other rulings Parties: Pulse Health Limited (Plaintiff) Representation: Counsel: G Rich SC (Plaintiff) Solicitors: Norton Rose Fulbright (Plaintiff) File Number(s): 2017/12556 Judgment – ex tempore (revised 24 march 2017) 1. On 31 January 2017 I made orders providing for the despatch of an explanatory memorandum in respect of a proposed scheme of arrangement and providing for the plaintiff, Pulse Health Ltd ("PHL"), to convene a meeting of shareholders for the purposes of considering and, if thought fit, agreeing to a proposed scheme of arrangement between it and its members. I subsequently delivered reasons for my decision ([2017] NSWSC 140). PHL now seeks to vary those orders so as to defer a meeting of members which was to be convened on 22 March 2017 to 1 May 2017 when it would again consider whether to approve the proposed scheme of arrangement. It also seeks certain associated variations, including to defer a second court hearing from 24 March 2017, when it was presently scheduled to take place, to 3 May 2017, and to list a further court hearing to approve supplementary disclosure to Pulse shareholders at 2 pm on 10 April 2017. 2. The background to this application is set out in an affidavit of Mr Hays, the chief financial officer of PHL, dated 17 March 2017, and in an announcement made by Pulse to Australian Securities Exchange Limited ("ASX") on 20 March 2017. Mr Hays notes in his affidavit that PHL has sent notice of the scheme meeting and explanatory statement to its members as was contemplated following the first court hearing in the matter. Mr Hays refers to information provided by the chief financial officer of Healthe Care Australia Pty Ltd ("HCA"), which is the proponent of the scheme and would, by a subsidiary, acquire interests in Pulse under the scheme, that it was negotiating, and I should add has now signed, an agreement by which it intends to acquire another entity, Evolution Healthcare Pty Ltd ("Evolution"), in addition to its acquisition of PHL. That matter is relevant to the present scheme because, Mr Hays notes, there is a relationship or commonality between stakeholders or associates of Evolution and a significant shareholder in PHL. PHL has recognised that that relationship raises matters that may properly be brought to its shareholders' attention and may also raise questions for further consideration in the explanatory memorandum and at a final court hearing in respect of the scheme, which it is not presently necessary to address. 3. PHL is taking steps to address those issues by, amongst other things, obtaining an independent expert report to assess whether the further transaction between HCA and its substantial shareholder or interests associated with it will result in a net benefit to that substantial shareholder. PHL proposes to make that report available to the independent expert who has expressed a view as to whether the transaction between HCA and PHL is fair and reasonable and in the best interests of PHL's members, so that that view can be confirmed or updated as necessary. PHL also proposes to provide a proposed supplementary disclosure to the Australian Securities and Investments Commission ("ASIC") and will put that proposed supplementary disclosure before the Court before it is sent to members. PHL recognises, however, that these steps cannot be completed before the presently scheduled scheme meeting, which was to take place tomorrow, 22 March 2017, and on that basis seeks to adjourn the scheme meeting. 4. These matters have been brought to the attention of PHL shareholders by an announcement made by PHL to ASX on 20 March 2017 which relates to the transaction involving HCA and Evolution, identifies the commonality between stakeholders in Evolution and the substantial shareholder in PHL, and notes the steps that PHL is taking, including the fact that application would be made to the Court to postpone the scheme meeting from 22 March 2017 to 1 May 2017 to allow adequate time for PHL to provide, and shareholders to consider, information about these developments. 5. The court has a well-established power to vacate orders that are previously made in respect of a scheme of arrangement, where that order is interlocutory in nature and where there is a change of circumstance which justifies vacating the order and, alternatively, under s 1319 of the Corporations Act 2001 (Cth) which provides that: "Where, under this Act, the court orders a meeting to be convened, the court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting as it thinks fit." 1. The authorities indicate that the court may adjourn or cancel a meeting which it has already ordered under that section where events have developed such that that meeting will no longer be of utility, either at all or on the particular date: see CMPS&F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366; Re Australian Gaslight Company [2006] FCA 346, (2006) 57 ASCR 67; Re Amcon Telecommunications Ltd [No 2] [2015] FCA 410 at [10]; Re Aspen Group Pty Limited [2015] NSWSC 1718 at [33]. 2. It seems to me that, in the present circumstances, no useful purpose would be served by holding the scheme meeting as presently scheduled on 22 March 2017, when shareholders would not have been provided with information that PHL has recognised will assist in their deliberations and when ASIC will not have been provided with a draft of, and the Court will not have had the opportunity to approve, such further information as ought to be provided to shareholders in that regard. The matters that I have set out above, and the desirability of providing further information to shareholders to allow them to make a properly informed decision as to the relevant matters, support the making of orders which will vacate the presently scheduled scheme meeting, set down a new date for the Court to approve supplementary disclosure and permit a date for a second court hearing to be set. 3. Accordingly, I make orders in accordance with the short minutes of order initialled by me and placed in the file, which vary the orders previously made by the Court on 31 January 2017, stand over the proceedings to 10 April 2017 for the purpose of considering whether to approve a supplementary explanatory statement to send to the members of PHL, and vacate the date presently listed for a second court hearing on the basis that a further date will be allocated if the despatch of further supplementary material to shareholders is approved by the Court. These orders may be entered 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. Decision last updated: 25 May 2017