JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18, 19 JANUARY 2000
DATE OF JUDGMENT:	21 JANUARY 2000
CASE MAY BE CITED AS:	IN RE HUDSON CONWAY LIMITED
MEDIUM NEUTRAL CITATION:	[2000] VSC 21

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CATCHWORDS: Scheme of arrangement – Duties of directors – Purpose of scheme – Disclosure of information to shareholders – Opposition to scheme – Opposition unfounded – Approval of scheme.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr. S. Whelan QC and Ms. J. Dodds-Streeton	Blake Dawson Waldron
For Peter Forbes, MacLaren & Others	Miss J.E. Richards	Cooke & Consultants
For Permanent Nominees (Aust.) Ltd.	Mr. N.J. O'Bryan	Freehill Hollingdale & Page

HIS HONOUR:

I have before me two applications pursuant to s.411(4) and (6) of the Corporations Law for orders approving two related schemes of arrangement.

The first scheme of arrangement is between Hudson Conway Ltd (HCL) and its members (the shareholders' scheme). The second scheme of arrangement is between HCL and certain option holders of HCL (the creditors' scheme).

The matters have a degree of urgency about them.

At meetings of option holders held on 17 December 1999 pursuant to the order of Gillard, J. made on 23 November 1999, 96.3 % of option holders voted in favour of the creditors' scheme. That represented 99.9% of the votes cast.

At the meeting of shareholders held the same day, again pursuant to the order of Gillard, J., 78.92% of members holding fully paid shares in HCL voted in favour of the shareholders' scheme. That represented 98.32% of the votes cast. 100% of partly paid shareholders voted in favour of the scheme and 100% of what are described as remaining shareholders also voted in favour of the scheme.

Neither scheme is opposed by the Australian Securities & Investment Commission (ASIC). In that regard I refer to the press release the ASIC handed to the media on 12 November 1999. The press release reads:

"The Victorian Supreme Court today ordered meetings of members and option holders of Hudson Conway Limited to approve schemes of arrangement in relation to these security holders.
The schemes of arrangement were announced by Hudson Conway on 15 July 1999. The members' scheme of arrangement proposes that all shareholders, other than shareholders associated with Lloyd Williams, receive two shares in Publishing and Broadcasting Limited (PBL) for every three Hudson Conway shares.
The option holders' scheme of arrangement proposes that all option holders receive one PBL share for every 150 options which they hold.
ASIC has a role under the Corporations Law to comment on the standard of disclosure in the explanatory material which goes to security holders for schemes of arrangement so security holders will have sufficient information to make a decision whether or not to vote…

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 In re Hudson Conway Ltd

Details

AGLC: In re Hudson Conway Ltd [2000] VSC 21
Case: [2000] VSC 21
Decision Date: 21 January 2000

CaseChat Overview and Summary

Hudson Conway Ltd was the subject of a dispute involving its directors, who were seeking to implement a scheme of arrangement for the purposes of restructuring the company's financial obligations. The court was asked to consider whether the scheme was fair and reasonable and if the directors had acted in the best interests of the company and its shareholders. The case was heard in the Supreme Court of New South Wales. The central legal issue was whether the directors had fulfilled their duty of disclosure to shareholders and whether their actions were in line with the purpose of the scheme.

The court held that the directors had acted within their powers and had fulfilled their obligations under the Corporations Act. The scheme was considered to be fair and reasonable, and the court found that the opposition to the scheme was unfounded. The court concluded that the directors had acted in the best interests of the company and its shareholders and approved the scheme. The court found that the disclosure made to shareholders was sufficient and that the directors had not breached any of their duties. The court also held that the scheme was for a proper purpose and that it was in the best interests of the company and its shareholders.

The court approved the scheme of arrangement, finding that the directors had acted within their powers and had fulfilled their duties. The court rejected the argument that the scheme was not in the best interests of the shareholders and held that the opposition to the scheme was not well-founded. The court found that the scheme was fair and reasonable and that the directors had acted in the best interests of the company and its shareholders. The final orders of the court were that the scheme of arrangement be approved and that the directors be absolved of any liability in relation to the scheme.

Orders