Michael Hill International Limited - [2016] NZHC 1114

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000978 [2016] NZHC 1114

IN THE MATTER
of an application for approval of an

arrangement under Part 15 of the
Companies Act 1993

BETWEEN

MICHAEL HILL INTERNATIONAL LIMITED

First Applicant

ACN 610 937 598 LTD Second Applicant

Hearing: 24 May 2016

Counsel:

G Fitzgerald and A Kissling for Applicants

Judgment:

24 May 2016

JUDGMENT OF ASHER J
(as to pre-application procedures)

Solicitors:
Kensington Swan, Wellington.

MICHAEL HILL INTERNATIONAL LTD [2016] NZHC 1114 [24 May 2016]

Introduction

[1] Michael Hill International Ltd and ACN 610 937 598 Ltd have filed a without notice originating application for orders approving an arrangement under Part 15 of the Companies Act 1993 (the Act).

[2] In essence it is intended that Michael Hill International Ltd, a New Zealand company, will change domicile to Australia by the formation of a company in Australia. There will be a one-for-one share swap whereby existing New Zealand shareholders will exchange their current shareholding for shares in the new Australian entity. The Australian company will take the place of Michael Hill International Ltd as the parent company of the wider Michael Hill group.

[3] Today I have before me a without notice interlocutory application for orders dispensing with service and representation regarding the application under Part 15 of the Companies Act 1993, and for initial orders regarding the application relating to the procedures to be adopted.

[4] There has been a conference before me today where there has been considerable discussion about the reasons behind the application and particular facets of it. My concern at this stage is to ensure that the directions sought in relation to the application are fair, and in accordance with the Act.

The arrangement

[5] The proposed scheme is of a type that is eligible for consideration under Part 15. The proposed arrangement is not of the most common variety, involving as it does shareholders exchanging their shares for shares in a new overseas company. It has been considered by the Takeovers Panel under s 236A of the Act. The Takeovers Panel has provided a letter of 23 May 2016 stating it has formed an initial view based on information that has been provided to the Panel, and that it “intends at this stage to issue a no-objection statement in respect of the above scheme of arrangement prior to the second Court hearing”. The Panel expresses no views on the merits of the scheme.

[6] It has been explained to me that the change of domicile of the company reflects the current trading reality for the Michael Hill Group, which is that turnover and profit from the Australian operation now considerably exceeds that of the New Zealand operation, and the company’s extension into yet other countries is being increasingly reflected by a diminishing New Zealand percentage contribution to the total turnover.

Shareholders not in Australia or New Zealand

[7] The only matter that has given me some pause has been the position of shareholders domiciled out…

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.

Keep reading for free

Create a free CaseChat account to read Michael Hill International Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2016] NZHC 1114
Decision Date: 24 May 2016

CaseChat Overview and Summary

Michael Hill International Limited and ACN 610 937 598 Limited filed an application under Part 15 of the Companies Act 1993, seeking approval for an arrangement that would change Michael Hill International Limited's domicile to Australia. The arrangement involved a one-for-one share swap, where existing New Zealand shareholders would exchange their shares for shares in a new Australian entity. The Australian company would then replace Michael Hill International Limited as the parent company of the wider Michael Hill group. The application was heard without notice, and the court was required to decide whether the application met the requirements of the Act and if the proposed procedures were fair.

The court considered whether the scheme was of a type eligible for consideration under Part 15 and whether the scheme was in the best interests of the shareholders. The court also considered the position of shareholders domiciled outside of New Zealand and Australia, who made up 1.1 per cent of the total shareholdings in Michael Hill International. The court concluded that it was not necessary to treat these shareholders as a separate interest class, as they could not be practically discerned at present and had a relative commonality of interest with the other shareholders.

The court decided that the application met the requirements of the Act and that the proposed procedures were fair. The court approved the application, subject to the filing of an amended scheme booklet and application reflecting the changes discussed with counsel. The court anticipated issuing a further minute formally granting the amended interlocutory applications later that day.

The final orders of the court approved the application for an arrangement under Part 15 of the Companies Act 1993, subject to the filing of an amended scheme booklet and application. The court also directed that particular reference be made to the position of overseas shareholders in the introductory letter to the scheme.

Orders