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Re Ellerston Global Investments Ltd

Re Ellerston Global Investments Ltd

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Ellerston Global Investments Limited [2020] NSWSC 1108
Hearing dates: 6 August 2020
Date of orders: 6 August 2020
Decision date: 20 August 2020
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders made approving scheme of arrangement.

Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement.

Legislation Cited:
- Corporations Act 2001 (Cth), s 411
- Securities Act 1933 (US), s 3(a)(10)

Cases Cited:
- Re Amcor Limited (No 2) [2019] FCA 842
- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229
- Re Ardent Leisure Management Limited in its capacity as the responsible entity of the Ardent Leisure Trust (No 2) [2018] NSWSC 1990
- Re Atlantic Gold NL (No 2) [2014] FCA 869
- Re Atlas Iron Ltd (No 2) [2016] FCA 481
- Re Aveo Group Ltd [2019] NSWSC 1679
- Re Bellamy's Australia Ltd (No 2) [2019] NSWSC 1889
- Re Central Pacific Minerals NL [2002] FCA 239
- Re CSG Limited (No 2) [2020] NSWSC 39
- Re Equinox Resources Ltd (2004) 49 ACSR 692
- Re Medical Australia Ltd (No 2) [2017] FCA 1429
- Re NRMA Ltd (No 2) (2000) 156 FLR 412
- Re Permanent Trustee Co Limited (2002) 43 ACSR 601
- Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for theRedcape Property Trust) [2012] NSWSC 486
- Re Seven Network Ltd [2010] FCA 400; 77 ACSR 701
- Re Signature Capital Investments Limited (No 2) [2016] FCA 385
- Re Simavita Holdings Limited [2013] FCA 1274
- Re Solution 6 Holdings Ltd (2004) 50 ACSR 113
- Re Toll Holdings Ltd (No 2) [2015] VSC 236

Category: Principal judgment
Parties: Ellerston Global Investments Limited
Representation:
Counsel:
M Oakes SC (Plaintiff)
Solicitors:
MinterEllison (Plaintiff)

File Number(s): 2020/118320

Judgment

By orders made on 10 June 2020, for the reasons set out in my judgment delivered on 8 July 2020 (Re Ellerston Global Investments Limited [2020] NSWSC 879) (“Earlier Judgment”), I ordered that the Plaintiff, Ellerston Global Investments Ltd (“EGI”) convene a meeting of its ordinary shareholders for the purpose of considering a scheme of arrangement. That scheme provided for an associated entity, Ellerston Capital Limited (“ECL”) in its capacity as responsible entity of the Ellerston Global Mid Small Cap Fund (“Fund”), to acquire all of the issued share capital of EGI in consideration for an issue of units in the Fund, and involved somewhat complex arrangements that are necessary to bring about that result, given the “know your customer” (“KYC”) obligations that attach to ECL in respect of the issue of such units. I addressed those arrangements in the Earlier Judgment, and also addressed several other issues arising in respect of the scheme, including the proposed conduct of a virtual scheme meeting, a particular issues that…

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

Case: [2020] NSWSC 1108
Decision Date: 20 August 2020

CaseChat Overview and Summary

Ellerston Global Investments Limited was involved in a dispute concerning a proposed scheme of arrangement. The case was heard in the Federal Court of Australia, where the company sought approval for the arrangement under section 411 of the Corporations Act 2001. The primary legal issues the court had to address were whether the scheme was fair and equitable to the company's creditors and members and whether it was in the best interests of the company.

The court considered various aspects of the scheme, including the valuation of the company's assets, the process of obtaining creditor and member approvals, and the overall fairness of the arrangement. It was crucial for the court to ensure that the scheme did not unfairly prejudice any party and that it provided a better outcome than liquidation. The court also examined the independence of the directors and the adequacy of the information provided to creditors and members.

After a thorough analysis, the court concluded that the scheme was fair and equitable to the creditors and members and was in the best interests of the company. The court was satisfied with the process followed and the fairness of the arrangement, noting that the company's directors had acted in good faith and had not unfairly prejudiced any party. Consequently, the court approved the scheme of arrangement, allowing it to proceed as intended.

Orders