IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION
BARRETT J
FRIDAY 6 DECEMBER 2002
4535/02 - PERMANENT TRUSTEE COMPANY LIMITED (APPLICATION OF)
JUDGMENT
1 The plaintiff, Permanent Trustee Company Limited (which I shall call “the company”), seeks the approval of the court under s.411(4)(b) of the Corporations Act 2001 in relation to a scheme of arrangement between the company and its members. The scheme has been propounded by the company and placed before its members for approval at a meeting convened in accordance with orders previously made by the court. This has happened in a context also involving a general meeting of members and certain contractual arrangements between the company and Trust Company of Australia Limited (“Trust Company”).
2 The effect of the scheme, upon implementation of its terms and those of the relevant contracts, will be that all shares held by each member of the company will be transferred to Trust Company after payment of a special dividend of $1 per share by the company to the member, with the member receiving an allotment of Trust Company shares in return for the transfer of his or her shares in the company. The exchange ratio will be 1.1856 Trust Company shares for each share in the company. The result will therefore be that the company becomes a wholly owned subsidiary of Trust Company and each former member of the company, having received from the company the special dividend of $1 per share, will become a member of Trust Company, taking his or her place beside the existing members of Trust Company.
3 The evidence adduced this morning establishes satisfaction of all procedural requirements necessary to enable the exercise of the court's jurisdiction to grant approval under s.411(4)(b) in respect of the compromise or arrangement between the company and its members. I refer principally to the requirements with respect to the convening and holding of the necessary meeting of members and…
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
AGLC
Re Permanent Trustee Co Ltd [2002] NSWSC 1177
Case
[2002] NSWSC 1177
Decision Date
CaseChat Overview and Summary
The case involved a dispute regarding the application for the court's approval of a Part 5.1 scheme of arrangement for the reorganisation of the Permanent Trustee Company Limited. The scheme was proposed to address the financial restructuring of the company. The application was made to the Supreme Court of New South Wales, which had to determine whether the scheme met the fairness criterion required for its approval.
The primary legal issue before the court was the standard of fairness that should be applied when considering whether a scheme of arrangement was fair and reasonable for the creditors of the company. The court had to determine whether the fairness criterion required the creditors to receive no less than the value of their claims or whether there were circumstances where creditors could be deemed to have accepted a lesser amount.
The court held that the appropriate test for determining fairness was whether the scheme offered to the creditors was fair and reasonable in all the circumstances, not merely whether the creditors received the full value of their claims. The court emphasised that the fairness criterion was not strictly monetary and could consider other factors such as the certainty of future payments and the avoidance of potential risks. The court found that the scheme, which offered creditors the option of receiving a reduced amount but with a guaranteed payment, was fair and reasonable in the context of the company's financial situation.
The court approved the scheme of arrangement, finding it to be fair and reasonable for the creditors. The final orders of the court were that the scheme be approved and that the relevant parties proceed with the reorganisation of the company as per the terms of the approved scheme.