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Re Cromwell Property Securities Ltd

Re Cromwell Property Securities Ltd

Case [2006] NSWSC 1449 8 December 2006

Schemes of Arrangement

Trusts & Equity

Constitutional Validity

Statutory Interpretation

Corporate Law & Governance

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CITATION: In the Application of Cromwell Property Securities Ltd (ACN 079 147 809)In the application of Cromwell Corporation Ltd (ACN 001 056 980) [2006] NSWSC 1449

HEARING DATE(S): 08/12/06

JUDGMENT DATE :
8 December 2006

JURISDICTION: Equity Division
Corporations List
Corporations List

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 12/08/2006

DECISION: See paras 24-26 of judgment.

CATCHWORDS: CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application for order pursuant to s 411(4)(b) Corporations Act 2001 (Cth) approving scheme of arrangement between applicant and shareholders – Where scheme of arrangement approved by shareholders by special resolution – Application granted - CORPORATIONS – Managed investments – Trust deed or constitution – Members of trusts which are managed investment schemes passed resolutions approving, inter alia, merger of trusts with another trust – Resolutions required amendments to constitutions of trusts – Application by trustee of trusts for orders that is justified in acting upon resolutions passed by members of trusts – Whether amendments to constitutions of trusts were within powers of alteration contained in constitutions of trusts and in s 601G Corporations Act – Where resolutions of members of trusts commanded overwhelming support – Application granted.

LEGISLATION CITED: Corporations Act 2001 (Cth)
Trustee Act 1925 (NSW)

CASES CITED: Re Australand Holdings Limited (2005) 219 ALR 728
Abacus Funds Management (2005) 24 ACLC 211
Permanent Trustee Co Limited v National Australia Managers Ltd (McLelland CJ in Eq, 8 August 1994, unreported, BC9402940)
Re Mirvac Limited (1999) 32 ACSR 107
Kearns & anor v Hill (1990) 21 NSWLR 107
Cachia v Westpac Financial Services (2000) 33 ACSR 572
Re Challenge Bank Ltd (1995) 19 ACSR 421

PARTIES: In the Application of Cromwell Property Securities Ltd (ACN 079 147 809)
In the Application of Cromwell Corporation Ltd (ACN 001 056 980)

FILE NUMBER(S): SC 5481/06; 5438/06

COUNSEL: Applicants: M B Oakes SC

SOLICITORS: Applicants: Minter Ellison

LOWER COURT JURISDICTION: Compensation Court

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

WHITE J

Friday, 8 December 2006

5481/06 In the applicaton of Cromwell Property Securities Ltd (ACN 079 147 809)

5438/06 In the application of Cromwell Corporation Ltd (ACN 001 056 980)

JUDGMENT

1 HIS HONOUR: There are currently two applications before me. The first is an application by Cromwell Corporation Ltd (“CCL”) for an order pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) approving a scheme of arrangement between CCL and its shareholders, approved by the shareholders by special resolution on 6 December 2006. Other incidental relief is sought in relation to that application.

2 The second application is by Cromwell Property Securities Ltd (“CPS”) for orders that it is justified in proceeding on the basis that amendments made to the constitutions of certain trusts of which it is trustee are within the powers of alteration contained in those constitutions and in s 601GC of the Corporations Act. Judicial advice is sought to the effect that CPS is justified in acting upon special resolutions of…

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 Re Cromwell Property Securities Ltd

Details

AGLC: Re Cromwell Property Securities Ltd [2006] NSWSC 1449
Case: [2006] NSWSC 1449
Decision Date: 08/12/2006

CaseChat Overview and Summary

Re Cromwell Property Securities Ltd is a case that involved a scheme of arrangement application under the Corporations Act 2001 (Cth). The applicant, Cromwell Property Securities Ltd, sought approval for a scheme of arrangement involving its shareholders. The scheme had already been approved by the shareholders through a special resolution. The central legal issues in this case were whether the resolutions passed by the shareholders were valid, and if the proposed amendments to the trust constitutions, necessitated by the scheme, were within the powers of alteration provided in the trust constitutions and the Corporations Act.

The court examined whether the resolutions passed by the shareholders to approve the scheme of arrangement were valid and binding. It found that the shareholders had overwhelmingly supported the scheme, thus satisfying the requirements for a special resolution. Additionally, the court assessed whether the proposed amendments to the trust constitutions were within the powers of alteration contained in the constitutions themselves and under the Corporations Act. Given the substantial support for the resolutions from the trust members, the court concluded that the amendments were justified and within the permissible scope.

In light of the above, the court granted the application for orders approving the scheme of arrangement. The court found that the resolutions passed by the shareholders and the amendments to the trust constitutions were valid and within the legal framework. Consequently, the scheme of arrangement was approved, allowing for the proposed changes to proceed as intended. The final orders of the court reflected this decision, providing the necessary legal approval for the applicant to implement the scheme of arrangement.

Orders