Westpac Banking Corporation (ACN 007 457 141), in the matter of St George Bank Limited (ACN 055 513 070) [2010] FCA 148 (23 February 2010)

Last Updated: 2 March 2010

FEDERAL COURT OF AUSTRALIA

Westpac Banking Corporation (ACN 007 457 141), in the matter of St George Bank Limited (ACN 055 513 070) [2010] FCA 148

Citation:		Westpac Banking Corporation (ACN 007 457 141), in the matter of St George Bank Limited (ACN 055 513 070) [2010] FCA 148
Parties:		IN THE MATTER OF ST GEORGE BANK LIMITED (ACN 055 513 070); ST GEORGE BANK LTD (ACN 055 513 070) and WESTPAC BANKING CORPORATION (ACN 007 457 141)
File number(s):		NSD 1416 of 2008
Judges:		JACOBSON J
Date of judgment:		23 February 2010
Catchwords:		CORPORATIONS – schemes of arrangement – deregistration without winding up – doctrine of universal succession
Legislation:		Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth) ss 4, 18, 22. Corporations Act 2001 (Cth) s 413(1)(d) Bank Mergers Act 1996 (NSW) Financial Sector (Shareholdings) Act 1998 (Cth) s 14
Cases cited:		In the matter of St George Bank Limited [2008] FCA 1839 referred to In the matter of St George Bank Limited (No 2) [2008] FCA 1850 referred to National Bank of Greece and Athens SA v Metliss (1957) AC 509 referred to Re South African Supply and Cold Storage (1904) 2 Ch 268 referred to Psivida Limited v New Psivida Inc [2008] FCA 627 referred to
Date of hearing:	23 February 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	16
Solicitor for the First and Second Plaintiffs:	Allens Arthur Robinson
Counsel for the First and Second Plaintiffs:	T Bathurst QC

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1416 of 2008

IN THE MATTER OF ST GEORGE BANK LIMITED (ACN 055 513 070)

ST GEORGE BANK LTD (ACN 055 513 070) First Plaintiff WESTPAC BANKING CORPORATION (ACN 007 457 141) Second Plaintiff

JUDGE:	JACOBSON J
DATE OF ORDER:	23 FEBRUARY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Westpac Banking Corporation (‘Westpac’) be joined as a party to this proceeding.
2. As soon as practicable after being provided with a certificate of transfer issued by the Australian Prudential Regulation Authority (APRA) under section 18 of the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth) in respect of the transfer of the business of St George Bank Limited (ACN 055 513 070) (‘St George Bank’) to Westpac (and, in any event, at least 24 hours before that certificate comes into force), Westpac is to provide a copy of that certificate to the Australian Securities and Investments Commission (ASIC).
3. Subject to order 2 above, ASIC deregister St George Bank pursuant to section 413(1)(d) of the Corporations Act 2001 (Cth), without winding up, as soon as practicable after the coming into force of the certificate referred to in order 2 above and, in any event, on the same day as that certificate comes into force.
4. Westpac, on behalf of St George Bank, must lodge with ASIC a copy of these orders and any other document required to accompany it in accordance with regulation 1.0.21 of the Corporations Regulations 2001 (Cth) as soon as practicable and by no later than 4 pm AEST on 24 February 2010.
5. Liberty be reserved to any party to apply.
6. These orders be entered forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1416 of 2008

IN THE MATTER OF ST GEORGE BANK LIMITED (ACN 055 513 070)

ST GEORGE BANK LTD (ACN 055 513 070) First Plaintiff WESTPAC BANKING CORPORATION (ACN 007 457 141) Second Plaintiff

JUDGE:	JACOBSON J
DATE:	23 FEBRUARY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application by Westpac Banking Corporation (‘Westpac’) for an order pursuant to s 413(1)(d) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission (ASIC) deregister St George Bank Ltd (‘St George Bank’), without winding up, as soon as practicable after the coming into force of a certificate under section 18 of the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth) (‘Transfer Act’). The practical effect of this will be that the order will come into effect on 1 March 2010.
2. The application arises out of orders made by Lindgren J on 17 November 2008 approving three schemes of arrangement described as the Share scheme, the SAINTS scheme, and the Option scheme in respect of St George Bank. The details of the schemes were described in my judgment In the matter of St George Bank Limited [2008] FCA 1839 and expanded upon in the reasons of Lindgren J In the matter of St George Bank Limited (No 2) [2008] FCA 1850.
3. On 1 December 2008 pursuant to the schemes of arrangement, Westpac acquired all of the fully paid ordinary shares in the listed capital of St George Bank. The schemes of arrangement gave effect to a merger implementation agreement which was entered into between Westpac and St George Bank on 26 May 2008. During the hearing before Lindgren J on 17 November 2008 senior counsel for Westpac sought and obtained the leave of the Court to file an affidavit sworn by the Group Secretary and General Counsel of Westpac. That affidavit indicated that in the event that the schemes were approved, Westpac intended in the future (and subject to regulatory approvals and documentation) to transfer all or substantially all of the assets and liabilities of St George Bank to Westpac.
4. The affidavit also indicated that Westpac anticipated effecting the transfer by the statutory mechanisms under the Transfer Act, and certain complementary New South Wales legislation or alternatively, under the Bank Mergers Act 1996 (NSW). The affidavit also foreshadowed that if the regulatory approvals were obtained, Westpac intended to apply to the Court in the future for an order under section 413(1)(d) of the Corporations Act 2001 (Cth) (‘Corporations Act’) for deregistration of St George Bank by ASIC to take effect at the same time as the transfer of St George Bank’s assets and liabilities to Westpac.
5. This application was also foreshadowed during the hearing before Lindgren J on 17 November 2008. At that time senior counsel for Westpac foreshadowed that Westpac intended at a future time to apply to the Court for orders of the nature which are now sought.
6. In early 2009 Westpac commenced the process of seeking to transfer St George Bank’s business to Westpac pursuant to Part 3 Division 3 of the Transfer Act. Under that Act two regulated bodies of the same kind may apply in writing to the Australian Prudential Regulation Authority (APRA) for approval of a voluntary transfer of business from one of the bodies to the other body.
7. Two regulated bodies are of the same kind if they are both authorised deposit-taking institutions or both life insurers. The relevant provisions of the Transfer Act are section 4, which contains a definition of a regulated body, and sections 10, 11, 18 and 22.
8. Section 22 of the Transfer Act states that when APRA issues a certificate of transfer under section 18 of the Act, and the certificate of transfer comes into force, the receiving body, which is in this case Westpac, becomes the successor in law of the transferring body, in this case St George Bank, to the extent of the transfer.
9. The effect of a certificate under section 18 is to transfer all of the assets and liabilities of the transferring body, but it does not have the effect of dissolving the company. That is, in essence, the reason for the present application. In particular, there is a concern that unless an order is made under section 413(1)(d) of the Corporations Act, the doctrine of “universal succession” may apply. That doctrine was explained in National Bank of Greece and Athens SA v Metliss (1957) AC 509. Explanation of the doctrine may be found in the speeches of Viscount Simonds at page 524, Lord Tucker at 529, and Lord Keith at 530 - 531. As Lord Simonds pointed out at 524 the concept of universal succession is one of Roman law, which has found its way into many systems of law including the law of Scotland.
10. The basis of the doctrine is found in the familiar principle of succession law under which the heir was the universal successor of his or her testator, and regarded as eadem persona cum defuncto, and was asserting the identity of the new company with the old. As Mr T. F. Bathurst QC, senior counsel for Westpac pointed out, the doctrine is little used. However, if there is a delay between the transfer of the assets and liabilities and the deregistration of St George Bank, there may be a hiatus period which could, at least in theory, give rise to the doctrine. The application is therefore made in the interests of Westpac as well as in the interests of creditors.
11. During 2009 and 2010 Westpac and St George Bank submitted various letters and other documents to APRA. In addition APRA and Westpac have had extensive discussions in relation to the proposed transfer, and APRA has indicated to Westpac that it has consulted with the relevant regulatory bodies. On 12 February 2010 Westpac received a letter from the Commonwealth Treasurer in which he confirmed that he consented to a total transfer of the business of St George Bank to Westpac under the Transfer Act, and gave a notice of approval under section 14(1) of the Financial Sector (Shareholdings) Act 1998 (Cth) approving Westpac’s holding of a stake of 100 per cent in St George Bank.
12. On 18 February 2010, Westpac and St George bank received a letter from APRA attaching a certificate issued by APRA under section 18 of the Transfer Act, indicating that the total transfer of the business of St George Bank to Westpac shall take effect on 1 March 2010. That is the critical date and explains the reason why the order under section 413(1)(d) of the Corporations Act is sought, so as to take effect on the same day as the certificate under section 18 of the Transfer Act will come into force.
13. On 17 February 2010, Westpac received a copy of a letter from ASIC addressed to the Federal Court of Australia confirming that ASIC does not have any objection to the orders sought in the notice of motion.
14. The notice of today’s application has been advertised in the approved form in the Australian Newspaper. It was advertised on Monday 15 February 2010.
15. I am satisfied, for these reasons, that all of the necessary approvals have been sought, and that it is appropriate to make orders under section 413(1)(d) of the Corporations Act. That subsection applies in connection with a scheme of reconstruction or amalgamation. I do not think that the subject schemes are schemes of reconstruction: see Re South African Supply and Cold Storage (1904) 2 Ch 268 at 286; see also Psivida Limited v New Psivida Inc [2008] FCA 627 at [13]. However, it is clear that the schemes are in connection with an amalgamation of St George Bank and Westpac, and section 413(1) specifically provides that an order may be made by a later order after the approval of the scheme of arrangement.
16. I therefore propose to make orders in terms of the short minutes of order which I will sign and date.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Dated: 26 February 2010