Grant Samuel Corporate Finance Pty Limited v Fletcher & Ors; JPMorgan Chase Bank, National Association & Anor v Fletcher & Ors

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.