On 17 April 2023, at the second court hearing in Re OZ Minerals Limited, Beach J confirmed that he would, in respect of members’ scheme of arrangement applications that are brought before him, adopt the protocols for scheme hearings foreshadowed by Jackman J in Re Vita Group Limited. These protocols permit a more focussed and streamlined approach to the evidence and paperwork to be provided to the court when it considers approving schemes of arrangement.
Beach J’s intention in this regard had been earlier communicated to Gilbert + Tobin, the solicitors for the scheme company, OZ Minerals such that the evidence prepared, and relied upon, at the second Court hearing was refined and focussed, aligned to his Honour Jackman J’s observations. This is the first time orders approving a members’ scheme of arrangement have been made on the basis of the new regime.
The significant reforms proposed by Jackman J are summarised in our recent article ‘Federal Court reforms schemes of arrangement.’
In taking this course, Beach J engaged in a discussion with Senior Counsel for the target, OZ Minerals, Philip Crutchfield KC and Counsel for the acquirer, BHP Lonsdale Investments, Brad Holmes as to the utility of the Federal Court formulating a new Practice Note to apply to schemes of arrangement moving forward. This is in the context of the specialised area of law in which schemes of arrangement sit and the small number of professionals (including Counsel and members of the Court) who routinely operate within it.
In considering the potential benefit and downsides of a practice note to address the practice and procedure for schemes of arrangement following the approaches adopted in Re OZ Minerals Limited and to be adopted in Re Vita Group Limited, Beach J made the following observations:
- Schemes of arrangement are a boutique and specialised area of law often dealt with by a relatively limited pool of judges.
- A practice note can only deal with procedures and processes. The boutique nature of members’ schemes of arrangement means they often involve idiosyncratic matters which may be better dealt with by judges having regard to the substantive law determinations of other judges.
- There is a view that practice notes may develop into either a list of cookie-cutter type procedures or a statement which essentially contains value-laden objectives which can veer towards being less helpful than usual.
In agreeing with the observations expressed by his Honour Jackman J, Beach J also reaffirmed that the reforms will not be a substitute for the ex parte obligations imposed on the scheme company to bring important, fact-specific matters to the court’s attention.
Notwithstanding the above comments, a benefit of a practice note would be to bring certainty and clarity to the required steps including for stakeholders who do not undertake schemes of arrangement regularly.
Until such time as a practice note is announced (if one is to be forthcoming), whether the reforms will be adopted by other Courts and Judges remains to be seen noting Beach J was careful to indicate that his comments only applied to scheme of arrangement applications that are brought before him.
Beach J’s decision in Re OZ Minerals is the first step to progressing the application of the observations made by his Honour Jackman J in Re Vita Group. It is a positive step forward to embracing a refined and enhanced regime for schemes of arrangement that will improve the process and procedures for scheme transactions. For commercial participants, it is a welcome development.
Gilbert + Tobin acted for OZ Minerals on this transaction.