CGU Insurance Ltd v Zurich Australian Insurance Ltd

CGU Insurance Ltd and Zurich Australian Insurance Ltd were parties to an appeal before the New South Wales Court of Appeal concerning the interpretation of a company's articles of association. The dispute centred on the meaning of "fair value" in the context of an offer to other shareholders to purchase shares.

The central legal issue before the Court of Appeal was the proper construction of the company's articles of association, specifically whether the determination of "fair value" for shares was to be made solely by reference to the value of the company's net tangible assets, or if other factors could be taken into account.

The Court of Appeal held that the phrase "fair value" in the articles was not confined to a calculation based exclusively on net tangible assets. The Court reasoned that the ordinary meaning of "fair value" in a commercial context would generally encompass a broader assessment of a company's worth, and that the articles did not provide a sufficiently clear or restrictive definition to limit it solely to net tangible assets. The appeal was accordingly dismissed with costs.