Grant Samuel Corporate Finance Pty Limited v Fletcher & Ors; JPMorgan Chase Bank, National Association & Anor v Fletcher & Ors - [2014] HCATrans 167

[2014] HCATrans 167

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S64 of 2014

B e t w e e n -
GRANT SAMUEL CORPORATE FINANCE PTY LIMITED (ACN 076 176 657)
Applicant
and
WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) AND OCTAVIAR ADMINISTRATION PTY LIMITED (IN LIQUIDATION)
First Respondent
OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
Second Respondent
OCTAVIAR ADMINISTRATION PTY LIMITED (IN LIQUIDATION)
Third Respondent

Office of the Registry
Sydney No S69 of 2014

B e t w e e n -
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (ACN 074 112 011)
First Applicant
J.P. MORGAN SECURITIES AUSTRALIA LIMITED
Second Applicant
and
WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) AND OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION)
First Respondent
OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
Second Respondent
OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) (ACN 101 069 390)
Third Respondent
Applications for special leave to appeal

FRENCH CJ
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 AUGUST 2014, AT 10.03 AM

____________________

MR A.J.L. BANNON, SC: If it please the Court, I appear with my learned friend, MR P.M. KNOWLES, for Grant Samuel in S64. (instructed by Watson Mangioni Lawyers)

MR C.R.C. NEWLINDS, SC: If your Honours please, MR S.M. NIXON and I appear for the JPMorgan applicants in matter number S69. (instructed by Corrs Chambers Westgarth Lawyers)

MR B.A.J. COLES, QC: If your Honours please, I appear with my learned friends, MR P.J. DOWDY and MR A.K. FLECKNOE‑BROWN, for the liquidators and for the companies in each application. (instructed by Henry Davis York)

FRENCH CJ: Yes, Mr Bannon.

MR BANNON: Your Honours, this case gives rise to a very short but very important point. If the Court of Appeal’s endorsement of the use of the variation rule is correct, it may be expected to be capable of being used, and being used as a fairly standard procedure, in years to come to enable multiple extensions well beyond and after the three‑year period specified in section 588FF(3).

The issue, which we say is worthy of consideration of this Court, is whether the effect of the picking up of the variation rule is to produce a substantive inconsistency with the precondition to the existence of the right to bring proceedings. This Court has already considered in Gordon v Tolcher the issue as to whether or not – or at least in passing – the time limit forms part of the essence of the right, and confirmed that it does. That appears from the extract from this Court’s decision at 75 of the application book in paragraph 57 of her Honour the learned President’s reasons.

What we submit is that the majority in the Court of Appeal has misused or misinterpreted Gordon v Tolcher, and used it as a…

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.

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Details

AGLC: Grant Samuel Corporate Finance Pty Limited v Fletcher & Ors; JPMorgan Chase Bank, National Association & Anor v Fletcher & Ors [2014] HCATrans 167
Case: [2014] HCATrans 167
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered appeals in two related matters, Grant Samuel Corporate Finance Pty Limited v Fletcher & Ors and JPMorgan Chase Bank, National Association & Anor v Fletcher & Ors. The dispute concerned the proper interpretation of certain provisions within a scheme of arrangement approved under Chapter 5 of the Corporations Act 2001 (Cth) concerning the administration of the OAMPS Limited group. The primary issue revolved around the entitlement to certain distributions of surplus assets following the sale of OAMPS's business.

The central legal question before the High Court was whether the holders of certain preference shares in OAMPS were entitled to receive a distribution of surplus assets in priority to the holders of ordinary shares, or whether such surplus assets were to be distributed pro rata between all classes of shareholders after the preference shareholders had received their preferential entitlement. This required the Court to interpret the terms of the preference shares, the scheme of arrangement, and the relevant provisions of the Corporations Act.

The High Court, in a joint judgment, held that the language of the preference share terms and the scheme of arrangement clearly indicated that the preference shareholders were entitled to their preferential dividend and repayment of capital, but thereafter, any remaining surplus assets were to be distributed amongst all shareholders, including preference shareholders, on a pro rata basis according to their ordinary shareholdings. The Court emphasised that the right to a preferential dividend and capital repayment did not, in the absence of express wording to that effect, extend to a right to participate in surplus assets in priority to ordinary shareholders. The Court applied established principles of contractual interpretation and the construction of company constitutions and schemes of arrangement.

The appeals were dismissed.

Orders