Australian Co-operative Foods Limited v Dairy Farmers Milk Co-operative Limited

Australian Co-operative Foods Limited sought judicial review of a decision made by Dairy Farmers Milk Co-operative Limited, seeking clarification on the maximum permissible level of interest in shares under section 289(1) of the Cooperatives Act 1992 (NSW). The dispute centred on whether Dairy Farmers had exceeded the statutory limit by means of a special postal ballot, and if so, whether any excess interest was subject to forfeiture under section 290(1) of the Act. The matter also considered whether the resolutions, passed as part of a scheme of arrangement under section 344(1) of the Act, had the effect of increasing the maximum permissible level of interest.

The court was required to determine the proper construction of sections 289(1) and 289(3) of the Act, and whether the resolutions passed in the context of a scheme of arrangement could increase the maximum level of interest in shares. Additionally, the court examined the applicability of section 1322 of the Corporations Act 2001 (Cth), which provides for relief against civil liability arising from contravention of the Cooperatives Act.

The court held that the maximum permissible level of interest in shares was not increased by the special postal ballot, as permitted by section 289(3) of the Act. It was found that the resolutions passed as part of the scheme of arrangement did not have the effect of increasing the maximum level of interest. Consequently, the excess interest was subject to forfeiture under section 290(1) of the Act. The court also ruled that relief under section 1322 of the Corporations Act 2001 (Cth) was not appropriate in this instance.

As a result, the court found in favour of Australian Co-operative Foods Limited, affirming that Dairy Farmers had indeed exceeded the maximum permissible level of interest in shares and that the excess interest was subject to forfeiture. The court's decision provides clarity on the interpretation of the Cooperatives Act 1992 (NSW) and its interaction with the Corporations Act 2001 (Cth).