Australian Co-operative Foods Limited v Dairy Farmers Milk Co-operative Limited [2007] NSWSC 1311

Australian Co-operative Foods Limited v Dairy Farmers Milk Co-operative Limited [2007] NSWSC 1311

Resolution 1 only approved a Scheme under which the defendant would momentarily hold 100% of ACF as a mechanical step before an integral immediate reduction to approximately 20%, and did not authorise any holding above 20% after the Implementation Date. Resolution 2 merely amended ACF's rules for purposes including tax and removal of a stricter 5% or $2,000,000 rule restriction on the Supply Co-operative; it was not directed to increasing the statutory maximum under s 289(3) in respect of a particular person. The explanatory material did not notify members that the resolutions would permit the defendant to exceed 20% after implementation. Accordingly the defendant held the excess interest...

Jurisdiction
Australia
Judgment Date
23 November 2007
Procedural Posture
Supreme Court of New South Wales Equity Division Commercial List Proceeding for Declarations Concerning Contravention of the Co Operatives Act 1992 (nsw) and Cross Claim for Declaratory, Injunctive and Statutory Relief / Judgment After Hearing
Outcome
Declarations made for the plaintiff; cross-claims dismissed; relief under s 1322 of the Corporations Act 2001 (Cth) refused; defendant ordered to pay the plaintiff's costs.
Legal Topics
['maximum Permissible Level of Share Interest in a Co Operative' 'special Resolution by Special Postal Ballot' 'scheme of Arrangement' 'forfeiture of Shares' 'relief Against Civil Liability Under S 1322 of the Corporations Act 2001 (cth)']
['co Operatives' 'corporations' 'statutory Construction'] ['maximum Permissible Level of Share Interest in a Co Operative' 'special Resolution by Special Postal Ballot' 'scheme of Arrangement' 'forfeiture of Shares' 'relief Against Civil Liability Under S 1322 of the Corporations Act 2001 (cth)']

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Procedural Posture

Supreme Court of New South Wales Equity Division Commercial List Proceeding for Declarations Concerning Contravention of the Co Operatives Act 1992 (nsw) and Cross Claim for Declaratory, Injunctive and Statutory Relief / Judgment After Hearing

Legal Issues

  1. 1 ["Whether resolutions passed as part of ACF's scheme of arrangement increased the 20% maximum permissible level of share interest under s 289(3) of the Co-operatives Act 1992 (NSW) in respect of the defendant." 'Whether Resolution 1 approving the Scheme, alone or with Resolution 2, authorised the defendant to hold a relevant interest exceeding 20% after the Implementation Date.' "Whether Resolution 2 amending ACF's rules was effective to increase the statutory maximum, and whether any difference between postal ballot and special postal ballot was merely a procedural irregularity." "Whether the defendant's excess interest was liable to forfeiture under s 290(1) of the Co-operatives Act 1992 (NSW)." 'Whether relief should be granted under s 1322 of the Corporations Act 2001 (Cth) against civil liability arising out of the contravention.']

Ratio Decidendi

Resolution 1 only approved a Scheme under which the defendant would momentarily hold 100% of ACF as a mechanical step before an integral immediate reduction to approximately 20%, and did not authorise any holding above 20% after the Implementation Date. Resolution 2 merely amended ACF's rules for purposes including tax and removal of a stricter 5% or $2,000,000 rule restriction on the Supply Co-operative; it was not directed to increasing the statutory maximum under s 289(3) in respect of a particular person. The explanatory material did not notify members that the resolutions would permit the defendant to exceed 20% after implementation. Accordingly the defendant held the excess interest...

Court Disposition

Declarations made for the plaintiff; cross-claims dismissed; relief under s 1322 of the Corporations Act 2001 (Cth) refused; defendant ordered to pay the plaintiff's costs.

Orders

  • ['The defendant holds the excess interest in contravention of s 289(1) of the Co-operatives Act 1992 (NSW).' 'There shall be declarations as prayed in the summons.' 'The cross-claims are dismissed.' "The defendant is to pay the plaintiff's costs of the proceedings."]