In the matter of Chapmans Ltd ACN 000 012 386 (No 3) [2015] NSWSC 2082

In the matter of Chapmans Ltd ACN 000 012 386 (No 3) [2015] NSWSC 2082

The additional injunctions sought in prayers 8 and 9 were refused because the deed made the directors' recommendation and voting matters conditions of the compromise, not personal covenants by the second and third defendants. Clause 2.3 imposed obligations on Chapmans, not on the directors, and cl 12.7 did not alter that construction. In any event, the directors had already made the recommendation in the explanatory memorandum. The voting order also failed because there was no personal covenant by the directors and, once the Chapman directors were accepted to be associates of the plaintiff estate, Corporations Act 2001, s 611, item 7(a), prevented them from voting on the relevant resolution.

Jurisdiction
Australia
Judgment Date
20 May 2015
Procedural Posture
Equity Corporations List / Final Hearing of Further Amended Originating Process Following Interlocutory Mandatory Injunctions
Outcome
Orders 1 and 2 made on 4 May 2015 continued permanently; claims for relief in paragraphs 8, 9, 9A, 10 and 11 of the further amended originating process filed 11 May 2015 dismissed; no order as to costs.
Legal Topics
['management and Administration of Corporations' 'annual General Meeting' "directors' Voting Recommendations" 'deed of Compromise and Release' 'conditions Precedent and Subsequent' "directors' Fiduciary Obligations" 'mandatory Injunctions' 'corporations Act 2001 S 611']
['corporations' 'contract' 'equity'] ['management and Administration of Corporations' 'annual General Meeting' "directors' Voting Recommendations" 'deed of Compromise and Release' 'conditions Precedent and Subsequent' "directors' Fiduciary Obligations" 'mandatory Injunctions' 'corporations Act 2001 S 611']

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Procedural Posture

Equity Corporations List / Final Hearing of Further Amended Originating Process Following Interlocutory Mandatory Injunctions

Legal Issues

  1. 1 ['Whether the deed of compromise and release imposed a contractual obligation on the second and third defendants to recommend that shareholders vote in favour of the resolution approving the convertible note and conversion shares.' 'Whether the second and third defendants personally covenanted to cause votes attaching to shares they or their associates controlled to be cast in favour of the resolution.' 'Whether the Corporations Act 2001, s 611, prevented the Chapman directors from voting on the relevant resolution because they were associates of the plaintiff estate.' 'Whether the interlocutory orders made on 4 May 2015 should continue permanently and whether additional final relief should be granted.']

Ratio Decidendi

The additional injunctions sought in prayers 8 and 9 were refused because the deed made the directors' recommendation and voting matters conditions of the compromise, not personal covenants by the second and third defendants. Clause 2.3 imposed obligations on Chapmans, not on the directors, and cl 12.7 did not alter that construction. In any event, the directors had already made the recommendation in the explanatory memorandum. The voting order also failed because there was no personal covenant by the directors and, once the Chapman directors were accepted to be associates of the plaintiff estate, Corporations Act 2001, s 611, item 7(a), prevented them from voting on the relevant resolution.

Court Disposition

Orders 1 and 2 made on 4 May 2015 continued permanently; claims for relief in paragraphs 8, 9, 9A, 10 and 11 of the further amended originating process filed 11 May 2015 dismissed; no order as to costs.

Orders

  • ['Orders 1 and 2 made on 4 May 2015 continue permanently.' 'The claims for relief in paragraphs 8, 9, 9A, 10 and 11 of the further amended originating process filed 11 May 2015 be dismissed.' 'No order as to costs, to the intent that each party bear its own costs.']