In the Matter of HIH Insurance Limited (In Liquidation) ACN 008 636 575; McGrath and Honey as the joint liquidators of HIH Insurance Limited (In Liquidation) ACN 008 636 575 v Perpetual Trustee Company Limited ACN 000 001 007 [2008] FCA 623

In the Matter of HIH Insurance Limited (In Liquidation) ACN 008 636 575; McGrath and Honey as the joint liquidators of HIH Insurance Limited (In Liquidation) ACN 008 636 575 v Perpetual Trustee Company Limited ACN 000 001 007 [2008] FCA 623

On the proper construction of the Trust Deed and Conditions of Issue, conversion of the notes required HIH Holdings (N.Z.) Limited to redeem the notes by paying them off for an amount equal to their face value and then to apply the whole of the moneys payable on redemption in subscription for ordinary shares in HIH Insurance Limited. Condition 12.3 did not telescope those steps or permit conversion by a mere assignment of a promise to pay. Because redemption required payment off and HIH Holdings (N.Z.) Limited did not and could not perform that obligation, the notes were not converted in the manner contended for by the plaintiffs; on the assumption the contracts remained on foot, HIH...

Jurisdiction
Australia
Judgment Date
08 May 2008
Procedural Posture
Corporations and Contract Proceeding Concerning Declarations and Directions About HIH NZ Converting Notes and a Cross Claim for Termination of Notes Contracts / Reasons for Judgment After Hearing; Matter Stood Over for Draft Short Minutes of Order
Outcome
The matter was stood over to 15 May 2008 at 9.30 am and the parties were directed to bring in draft Short Minutes of Order; reasons rejected the plaintiffs' construction that the notes had converted without payment off and indicated that termination on 15 November 2007 was open on the stated assumption.
Legal Topics
['frustration' 'repudiation and Termination' 'construction of Trust Deed' 'redemption of Notes' 'conversion of Notes' 'liquidation']
['contract' 'corporations'] ['frustration' 'repudiation and Termination' 'construction of Trust Deed' 'redemption of Notes' 'conversion of Notes' 'liquidation']

Case Brief

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Procedural Posture

Corporations and Contract Proceeding Concerning Declarations and Directions About HIH NZ Converting Notes and a Cross Claim for Termination of Notes Contracts / Reasons for Judgment After Hearing; Matter Stood Over for Draft Short Minutes of Order

Legal Issues

  1. 1 ['Whether the converting notes issued by HIH Holdings (N.Z.) Limited had converted into ordinary shares in HIH Insurance Limited.' 'Whether redemption of the notes under the Trust Deed could be effected otherwise than by payment of cash or payment off of the face value.' 'Whether conversion under the Trust Deed required a two step process of redemption and application of redemption monies to subscribe for shares in HIH Insurance Limited.' "Whether condition 6.5(b) operated as an assignment to HIH Insurance Limited of the noteholders' rights against HIH Holdings (N.Z.) Limited." "Whether the notes contracts were frustrated by HIH Insurance Limited's removal from the ASX official list." 'Whether Perpetual and the noteholders were entitled to terminate the notes contracts on 15 November 2007 for repudiation by HIH Holdings (N.Z.) Limited.']

Ratio Decidendi

On the proper construction of the Trust Deed and Conditions of Issue, conversion of the notes required HIH Holdings (N.Z.) Limited to redeem the notes by paying them off for an amount equal to their face value and then to apply the whole of the moneys payable on redemption in subscription for ordinary shares in HIH Insurance Limited. Condition 12.3 did not telescope those steps or permit conversion by a mere assignment of a promise to pay. Because redemption required payment off and HIH Holdings (N.Z.) Limited did not and could not perform that obligation, the notes were not converted in the manner contended for by the plaintiffs; on the assumption the contracts remained on foot, HIH...

Court Disposition

The matter was stood over to 15 May 2008 at 9.30 am and the parties were directed to bring in draft Short Minutes of Order; reasons rejected the plaintiffs' construction that the notes had converted without payment off and indicated that termination on 15 November 2007 was open on the stated assumption.

Orders

  • ['Orders that the matter be stood over to 15 May 2008 at 9.30 am.' 'Directs that the parties bring in draft Short Minutes of Order.']