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Re Macquarie Capital Alliance Ltd

Re Macquarie Capital Alliance Ltd

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CITATION: In the matter of Macquarie Capital Alliance Ltd & anor [2008] NSWSC 745

HEARING DATE(S): 16 and 17 July 2008

JUDGMENT DATE :
22 July 2008

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Orders made for convening scheme meeting and providing judicial advice to the trustee

CATCHWORDS: CORPORATIONS - scheme of arrangement - TRUSTS - judicial advice - proposal for interlinked scheme of arrangement and amendment of managed investment scheme constitution so that "stapled securities" would be acquired for cash or new stapled securities - applications for orders under Corporations Act, s 411(1) and for judicial advice under Trustee Act 1925, s 63 - Macquarie Capital interested as investor and manager in existing structure and proposed new ownership structure - concurrent scheme for Bermudan company - part of consideration from trust distribution - arrangements for meetings of shareholders and unitholders - credit or performance risk - no-shop and reimbursement fee provisions

LEGISLATION CITED: Corporations Act, s 411
Trustee Act 1925 (NSW), s 63

CASES CITED: FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
Furs Ltd v Tomkies (1936) 54 CLR 583
Macquarie Private Capital A Ltd [2008] NSWSC 323
Mincom Ltd v EAM Software Finance Pty Ltd (2007) 61 ACSR 266
Orion Telecommunications Ltd [2007] FCA 1389
Re APN News & Media Ltd (2007) 62 ACSR 400
Re Bolnisi Gold NL (No 2) (2007) 65 ACSR 510
Re Mirvac Ltd (1999) 32 ACSR 107
Re Permanent Trustee Company Ltd (2002) 43 ACSR 601
Re Tempo Services Ltd (2005) 53 ACSR 526

PARTIES: Macquarie Capital Alliance Ltd (P1)
Macquarie Capital Alliance Management Ltd as the Responsible Entity for Macquarie Capital Alliance Trust (P2)
Macquarie Advanced Investment Company Pty Ltd (by leave)

FILE NUMBER(S): SC 3597/08

COUNSEL: M Oakes SC (P1 & P2)
T Bathurst QC (Macquarie Advanced Investment Company Pty Ltd)

SOLICITORS: Minter Ellison (P1 & P2)
Allens Arthur Robinson (Macquarie Advanced Investment Company Pty Ltd

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

AUSTIN J

TUESDAY 22 JULY 2008

3597/08 IN THE MATTER OF MACQUARIE CAPITAL ALLIANCE LTD AND MACQUARIE CAPITAL ALLIANCE MANAGEMENT LTD

JUDGMENT

1 HIS HONOUR: The plaintiffs have made an application for orders under s 411(1) of the Corporations Act 2001 (Cth) for the convening of a meeting of shareholders to consider a proposed members' scheme of arrangement, and for orders in respect of a proposal for a "trust scheme". I heard the application on 16 and 17 July 2008, and made the orders sought. I now set out my reasons for judgment.

2 Macquarie Capital Alliance Group (MCAG) is the name used to identify a triple stapled security structure quoted for trading on the Australian Stock Exchange. The stapled securities are made up of shares in Macquarie Capital Alliance Ltd (MCAL), an Australian public company, shares in Macquarie Capital Alliance International Ltd (MCAIL), a company registered in Bermuda, and units in the Macquarie Capital Alliance Trust (MCAT), an Australian registered managed…

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: [2008] NSWSC 745
Decision Date: 22 July 2008

CaseChat Overview and Summary

Macquarie Capital Alliance Limited was involved in a legal dispute concerning a proposed scheme of arrangement and amendment of the constitution of a managed investment scheme. The scheme intended to allow for the acquisition of "stapled securities" in exchange for cash or new stapled securities. The court was required to determine whether the proposed scheme and constitutional amendments were in the best interests of the unitholders and to provide judicial advice on the matter. The court also had to consider the implications of the scheme on the company's Bermudan subsidiary, the arrangements for meetings of shareholders and unitholders, and the provisions related to credit or performance risk, no-shop periods, and reimbursement fees.

The legal issues before the court were whether the proposed scheme and constitutional amendments were fair and reasonable to the unitholders and whether they complied with the requirements of the Corporations Act and the Trustee Act 1925. The court had to consider the interests of Macquarie Capital, which was both an investor and manager in the existing and proposed structures, and whether the scheme was in the best interests of the unitholders. The court also had to consider the implications of the scheme on the company's Bermudan subsidiary and the arrangements for meetings of shareholders and unitholders.

The court found that the proposed scheme and constitutional amendments were in the best interests of the unitholders and granted the orders sought under the Corporations Act and the Trustee Act 1925. The court considered the interests of Macquarie Capital and determined that the scheme was fair and reasonable to the unitholders. The court also found that the scheme complied with the requirements of the Corporations Act and the Trustee Act 1925, and that the arrangements for meetings of shareholders and unitholders were appropriate. The court further found that the provisions related to credit or performance risk, no-shop periods, and reimbursement fees were reasonable and did not unfairly disadvantage the unitholders.

The court made orders under the Corporations Act and the Trustee Act 1925 approving the proposed scheme of arrangement and constitutional amendments. The court also provided judicial advice under the Trustee Act 1925, confirming that the scheme was in the best interests of the unitholders and did not unfairly prejudice their rights. The orders and advice allowed the company to proceed with the proposed scheme and constitutional amendments, subject to the terms and conditions set out in the court's orders.

Orders