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Re Homemaker Retail Management Ltd

Re Homemaker Retail Management Ltd

Case [2001] NSWSC 1058 19 November 2001

Corporate Governance

Trusts & Equity

Corporate Law & Governance

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Reported Decision:
40 ACSR 116

New South Wales

Supreme Court

CITATION: HOMEMAKER RETAIL MANAGEMENT [2001] NSWSC 1058

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 4789/01; 4790/01

HEARING DATE(S): 19/11/01

JUDGMENT DATE:
19 November 2001

PARTIES :

Homemaker Retail Management Ltd - Plaintiff

JUDGMENT OF: Barrett J

COUNSEL : Mr M.B. Oakes SC - Plaintiff
Mr L.B. Hastings, Solicitor - GPT Management Ltd

SOLICITORS: Mallesons Stephen Jaques - Plaintiff
Freehills - GPT Management Ltd

CATCHWORDS: CORPORATIONS - arrangements and reconstructions - "stapled securities" - Part 5.1 scheme of arrangement between company and members - provision allowing company to vary scheme after approval by court - attempt to confer jurisdiction on ASIC in relation to variation procedure - provision allows any variation whatsoever which does not adversely affect rights of security holders - provision undesirable - provision omitted - EQUITY - trustees - judicial advice - advice may be given to responsible entity of managed investment scheme - advice concerning implementation of plan requiring approval by votes of unitholders is appropriately given after voting completed.

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Trustee Act 1925
Trustees Act 1962 (WA)
Jurisdiction of Courts (Cross-Vesting) Act 1987
Co-operatives Act 1992

CASES CITED: Smith v Permanent Trustee Australia Ltd (1992) 10 ACLC 906
Re Buka Minerals NL (1983) 8 ACLR 507
Re Leamon Consolidated (Vic) Pty Ltd (1985) 10 ACLR 263
Re R M Eastmond Pty Ltd (1972) 14 ACLR 801
Eagle Star Trustees Ltd v Heine Management Ltd (1990) 3 ACSR 232
Re Mirvac Ltd (1999) 32 ACSR 107
Re NRMA Ltd (2000) 33 ACSR 595
Re NRMA Ltd (2000) 34 ACSR 261
MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) 35 ASCR 440
Re AGL Gas Networks Ltd (2001) 37 ACSR 441
Re Australian Co-operative Foods Ltd (2001) 38 ACSR 71
Minister for Health v Ancient Order of Foresters Friendly Society (No 2) (1985) 61 ALR 302
Re Price Mitchell Pty Ltd [1984] 2 NSWLR 273
Re Slade Constructions Pty Ltd [1970] SASR 561
Re Adelaide Air Conditioning and Domestic Engineers Ltd (1972) 6 SASR 603
Re Gresham Partners Management Ltd (WASC No CIV 1175 of 2001, 11 April 2001)

DECISION: Refer paragraphs 26 and 27

IN THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

MONDAY, 19 NOVEMBER 2001

4789/01 – RE HOMEMAKER RETAIL MANAGEMENT LTD
4790/01 – APPLICATION OF HOMEMAKER RETAIL MANAGEMENT LTD

JUDGMENT
HIS HONOUR:

1 Before the court are two applications in relation to an overall proposal or plan under which all securities issued by Homemaker Retail Management Ltd (“the Company”) will become vested in GPT Management Ltd. Under the proposal or plan, the former holders of those securities will receive from that corporation cash at the rate of $1.59 per security.

2 The securities concerned are “stapled securities” which means that each security holder holds both shares in the capital of the Company and units of a managed investment scheme known as the Homemaker Retail Property…

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 Homemaker Retail Management Ltd

Details

AGLC: Re Homemaker Retail Management Ltd [2001] NSWSC 1058
Case: [2001] NSWSC 1058
Decision Date: 19 November 2001

CaseChat Overview and Summary

In the matter of Homemaker Retail Management Ltd, the Australian courts were called upon to address issues concerning corporate restructuring and the role of the Australian Securities and Investments Commission (ASIC) in such arrangements. The dispute involved the interpretation and application of provisions in a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth), which governs corporate reconstructions. Specifically, the case examined a clause within the scheme that sought to confer a role on ASIC in the variation of the scheme after its approval by the court.

The primary legal issues before the court were the validity and enforceability of a provision in the scheme of arrangement that purported to grant ASIC a role in the variation procedure and the appropriateness of judicial advice to the responsible entity of a managed investment scheme concerning the implementation of a plan. The court had to determine whether such provisions were permissible under the Act and whether the advice given by the court was appropriate in the circumstances.

In its reasoning, the court found that the provision allowing ASIC to have a role in the variation of the scheme was undesirable and, therefore, omitted it from the scheme. The court held that the provision was overly broad, as it allowed for any variation of the scheme that did not adversely affect the rights of security holders, which was inconsistent with the purpose of the statutory scheme. Regarding the judicial advice, the court determined that it was appropriate for the court to give advice to the responsible entity concerning the implementation of the plan, provided that such advice was given after the voting by unitholders was completed, thereby ensuring the integrity of the voting process.

The final orders of the court involved the omission of the ASIC-related provision from the scheme of arrangement and the affirmation of the appropriateness of the judicial advice given to the responsible entity, subject to the condition that it was provided post-voting. This decision underscores the importance of carefully drafting corporate restructuring provisions to ensure they align with legislative intent and the principles of corporate law.

Orders