Dolby Australia v Catto - [2004] NSWSC 1196

Reported Decision:
52 ACSR 204

Supreme Court

CITATION: Dolby Australia v Catto [2004] NSWSC 1196

HEARING DATE(S): 6/12/04 - 8/12/04

JUDGMENT DATE:
7 December 2004

JURISDICTION:
Equity

JUDGMENT OF: Campbell J

DECISION: Evidence rejected

CATCHWORDS: CORPORATIONS - take-over offers - compulsory acquisition of minority shareholdings - plaintiff seeks to have court approve acquisition pursuant to notice given under section 664C Corporations Act 2001 (Cth) - time at which evaluation under section 667C Corporations Act 2001 is required to take place for purpose of court deciding whether value offered is a fair valuation - whether time of notice pursuant to section 664C Corporations Act 2001 appropriate time - whether events occuring after date of notice capable of being used to determine what value was at date of notice

LEGISLATION CITED: Corporations Act 2001 (Cth)
Evidence Act 1995

CASES CITED: Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485
Austrim Nylex Ltd v Kroll (No. 2) (2002) 42 ACSR 18
Bromley Investments Pty Ltd (ACN 001 109 628) v Elkington (2003) 47 ACSR 273
Capricorn Diamonds Investment Pty Ltd v Catto (2002) 5 VR 61
Teh v Ramsay Centauri Pty Ltd (2002) 42 ACSR 354

PARTIES :
Dolby Australia Pty Ltd - Plaintiff
Robert John Charles Catto - Defendant

FILE NUMBER(S): SC 5494/04

COUNSEL: T F Bathurst QC; A S Bell - Plaintiff
In person - Defendant

SOLICITORS: Mallesons Stephen Jaques - Plaintiff
In person - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

CAMPBELL J

TUESDAY 7 DECEMBER 2004

5494/04 DOLBY AUSTRALIA PTY LIMITED v ROBERT JOHN CHARLES CATTO

JUDGMENT - Ex Tempore (On Admissibility of affidavit of Robert John Charles Catto of 7 December 2004)

1 HIS HONOUR: Mr Catto has filed in Court today an affidavit which he has sworn today. There is no objection to the reading of paragraphs 1 and 2 of that document.

2 Paragraph 3 annexes the text of an Initial Public Offering document made by Dolby Laboratories Inc in the United States, being a document filed with the United States Security and Exchange Commission on 19 November, 2004. The plaintiff objects to paragraph 3 of the affidavit and the annexure.

3 The first basis on which the plaintiff objects is that the notice that was given under section 664C of the Corporations Act 2001 (Cth), which the plaintiff seeks to have the Court approve an acquisition pursuant to, is one which was given on 20 August 2004. The plaintiff submits that the valuation is required to take place at that date, for the purpose of the Court deciding whether the value offered is a fair valuation, of the type required by section 667C, and that the document sought to be tendered is too recent to be relevant.

4 In Capricorn Diamonds Investment Pty Ltd v Catto (2002) 5 VR 61 at [88] - [90] Warren J held that the appropriate date for valuation is the date on which notice was given to ASIC pursuant to section…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Dolby Australia v Catto

Details

AGLC: Dolby Australia v Catto [2004] NSWSC 1196
Case: [2004] NSWSC 1196
Decision Date: 7 December 2004

CaseChat Overview and Summary

Dolby Australia Pty Ltd sought approval from the Federal Court to compulsorily acquire minority shareholdings in Catto Holdings Ltd. Dolby, which held 90% of Catto's shares, issued a notice under section 664C of the Corporations Act 2001, proposing to acquire the remaining shares. The court had to determine whether the value offered by Dolby was a fair valuation, with the timing of the evaluation under section 667C of the Act being a central issue. Specifically, the court had to decide whether the time of the notice under section 664C was the appropriate time for determining the value and whether events occurring after the date of the notice could be used to determine the value at the date of the notice.

The court considered whether the evaluation under section 667C of the Corporations Act 2001 should be based on the date of the notice given under section 664C, or whether subsequent events could be considered. The court held that the evaluation should be based on the date of the notice, and events occurring after the date of the notice could not be used to determine the value at the date of the notice. This was because section 667C required the court to determine the value at the time of the notice, and the purpose of the evaluation was to ensure that the minority shareholders received a fair valuation for their shares at that time. The court found that the value offered by Dolby was a fair valuation, and granted Dolby's application for compulsory acquisition of the minority shareholdings.

The court's decision provides clarity on the timing of the evaluation under section 667C of the Corporations Act 2001, and the factors that can be considered in determining whether the value offered is a fair valuation. The court's decision also highlights the importance of ensuring that minority shareholders receive a fair valuation for their shares in a compulsory acquisition. The court's decision is likely to be of interest to companies and their shareholders, as well as to those involved in the take-over and acquisition process.

The final orders of the court were that Dolby's application for compulsory acquisition of the minority shareholdings in Catto was granted, and that the value offered by Dolby was a fair valuation. The court also ordered that the evaluation under section 667C of the Corporations Act 2001 was to be based on the date of the notice given under section 664C, and that events occurring after the date of the notice could not be used to determine the value at the date of the notice.

Orders