In the matter of Centro Properties Limited and CPT Manager Limited in its capacity as responsible entity of Centro Property Trust
Medium Neutral Citation:
[2011] NSWSC 1465
Hearing Date(s):
24, 25 November 2011
Decision Date:
01 December 2011
Jurisdiction:
Equity Division - Corporations List
Before:
Barrett J
Decision:
Approval under Corporations Act s 411(4)(b) to be given; ancillary orders to be made.
Catchwords:
CORPORATIONS - arrangements and reconstructions - Part 5.1 scheme of arrangement - approval of scheme by court - interests to be considered not confined to those of persons directly bound - matters beyond direct results to be considered - no basis for considering effect of possible but non-existent alternatives - only available comparison is between status quo and situation the particular scheme will produce - approach to be taken by the court - illegality and public policy considerations -CORPORATIONS - registered managed investment scheme - identification of scheme property - permitted methods of application of scheme property - payment to scheme members - whether distribution to members as members is the only permitted method - CORPORATIONS - directors - duties of directors where company faces insolvency - where money expended to obtain concurrence of members of managed investment scheme through a resolution passed at a meeting - where need for resolution arises from stock exchange listing rules - whether directors bound to seek waiver or de-listing by stock exchange to remove that need
Legislation Cited:
ASX Listing Rules, rule 11.2 Corporations Act 2001 (Cth), Part 5.1, Part 5.3A, ss 9, 254T, 411(4)(a)(i), 411(4)(b), 601FC(1)(k), 601FC(2), 601NE(1), s 601NF(1), s 601NF(2)
[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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AGLC
Centro Properties Ltd v PricewaterhouseCoopers [2011] NSWSC 1465
Case
[2011] NSWSC 1465
Decision Date
CaseChat Overview and Summary
The case of Re Centro Properties Ltd involved a dispute concerning a scheme of arrangement under Part 5.1 of the Corporations Act. The scheme sought to restructure the financial obligations of Centro Properties Ltd, a company facing significant financial difficulties. The dispute reached the Federal Court of Australia, which was tasked with determining whether the proposed scheme should be approved. This involved assessing the interests of all parties affected by the scheme, not just those directly bound by it.
The central legal issues before the court were whether the court should consider the potential effects of alternative schemes that were not proposed, and if the only relevant comparison was between the status quo and the situation that the particular scheme would produce. The court also had to consider whether the scheme complied with the provisions of a registered managed investment scheme, particularly in relation to the permitted methods of applying the scheme property. Furthermore, the court needed to address the directors' duties in a situation where the company was facing insolvency and whether they were bound to seek a waiver or de-listing by the stock exchange to avoid the need for a resolution from the members of the managed investment scheme.
The court concluded that the interests to be considered were not limited to those of persons directly bound by the scheme. However, the court could not consider the effect of possible but non-existent alternatives. The only relevant comparison was between the status quo and the situation the particular scheme would produce. The court found that the proposed scheme did not contravene any illegality or public policy considerations and was in the best interests of the company and its stakeholders. Additionally, the court determined that the directors were not bound to seek a waiver or de-listing by the stock exchange to avoid the need for a resolution, as this was not a requirement under the Corporations Act.
The final orders of the court were that the scheme of arrangement be approved, allowing Centro Properties Ltd to proceed with the proposed restructuring. The court's decision provided clarity on the scope of interests to be considered in such cases and reinforced the principle that only the proposed scheme and the status quo should be compared. This decision has significant implications for future restructurings under Part 5.1 of the Corporations Act, particularly in relation to managed investment schemes and the duties of directors in insolvent companies.