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

The appeal concerned a dispute between Dairy Farmers Milk Co-operative Ltd (the appellant) and Australian Co-operative Foods Ltd (the respondent) regarding the appellant's shareholding in the respondent. The core of the dispute was whether two resolutions passed by the respondent had the effect of increasing the proportion of shares the appellant could hold, beyond the statutory cap stipulated by section 289(1) of the *Co-operatives Act 1992* (NSW). The matter was heard in the Court of Appeal of New South Wales, with McColl JA, Basten JA, and Young CJ in Eq presiding.

The legal issues before the court were whether two specific resolutions, passed during a restructuring of the respondent, effectively varied the statutory cap on share ownership as contemplated by section 289(3) of the *Co-operatives Act 1992*. A related issue was whether these resolutions were ambiguous, and if so, whether any procedural irregularities in their passing could be cured under section 1322 of the *Corporations Act 2001* (Cth).

The Court of Appeal affirmed the primary judge's conclusion that the appellant's shareholding was in contravention of the statutory cap and that no valid resolution had been passed to increase this proportion. The court found no ambiguity in the resolutions and therefore no need to consider the application of section 1322 of the *Corporations Act 2001*. The reasoning of the primary judge, which found that the resolutions did not comply with the requirements of section 289(3) for varying the statutory proportion, was upheld.

The appeal was dismissed, and the appellant was ordered to pay the costs of the appeal.