are not coercing the minority in order to promote
interests adverse to those of the class they purport to
represent; and (4) that the scheme is such that an
intelligent and honest man of business, a member
of the class concerned and acting in respect of his
interest, might reasonably approve.”
The second issue concerned the powers of the Court to
vary ex parte interlocutory orders. Stevens J cited r 259
of the High Court Rules. His Honour said that this was a
review power which should be exercised first, rather than
taking an appeal. The judgment noted that the approach of
the Court in such a case was summarised in the case
D B Baverstock Ltd v Haycock [1986] NZLR 342 where
Henry J said at 344:
“It is common ground that the purpose of an
application under r 264 [equivalent of current r 259]
to rescind an ex parte order is to establish a hearing de
novo in the presence of the defendant ... The purpose
of that is to enable a Judge to consider whether, on the
basis of all the evidence and the arguments advanced,
the interlocutory orders should stand. Ex parte orders
are provisional by nature, being made on the basis of
evidence and submissions from only one side, and for
that reason are subject to review without inhibition.”
The third issue was whether the Court should amend or
vary the initial orders.
Stevens J said there were a number of factors to be taken
into account.
The first factor was the dispensation with the shareholder
quorum, which His Honour said did not seem to have been
considered in any depth (if at all) at the first hearing.
The second factor was the makeup of the shareholding
in the Dominion companies. Stevens J noted that the
widespread nature of the shareholding meant there
was a real possibility that the amalgamation could come
into effect through the votes of only a small number of
shareholders in each company. His Honour said that his
concern was exacerbated by the fact that the proposal was
being advanced by the managers, with no significant or
focussed shareholder interest monitoring the amalgamation.
A further factor was the change of control of the three
amalgamating companies. His Honour said [74]:
“The applicant companies submitted that there would
not be a change of control with this amalgamation.
However, I consider that, viewed as a matter of
substance, there will be a change of control of voting
rights in outcome following amalgamation. The
shareholders in one of the applicant companies will
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plainly have diminished rights in respect of particular
investments they originally had, as compared with
their new (amalgamated) investments. Mr Dobson
cited as an example a body of shareholders in one of
the applicant companies who may have control now
by virtue of a voting pact. Post amalgamation, such
control could have disappeared, thus demonstrating
the change in voting control which would result from
the amalgamation. Accordingly, I consider (as did
the Panel) that in a substantive sense the proposal to
amalgamate would involve a change of voting control.”
His Honour went on to say [75] that he considered a
procedure setting a majority of voting shareholders was
appropriate in all the circumstances of the case. He added
[76] that it would be unsatisfactory to not amend the initial
orders but rather wait until the shareholders had voted.
Stevens J said he considered that shareholders should
receive notice of any additional orders at the same time, or
as close as possible, to the distribution of the shareholders'
information package.
A further order made by Stevens J required the Dominion
Group to notify the Panel forthwith with the results of the
votes in each company and whether the Group intended
to pursue their application for final orders. The Panel
was then given 3 working days of such notification, or
by 17 November 2006, whichever was the latest, to file
an application for leave to appear and be heard on the
application for final orders.
COURT OF APPEAL DECISION
Dominion Group appealed the decision and a Court of
Appeal fixture was obtained on an urgent basis for
26 October 2006. The one-day hearing was before William
Young P, Chambers and Ellen France JJ on that day.
The Court of Appeal allowed the appeal.2 The original High
Court order providing that there would be no quorum of
voters required for the postal ballot was reinstated and the
requirement for approval by the holders of the majority of
voting rights in each company removed. Minor changes
were made to the timetabling orders to accommodate
the delay caused by the Court process. The order made
by Stevens J requiring that the Panel be notified of the
outcome of the shareholder voting was left in place.
However, the reference to 17 November 2006 was removed
giving the Panel only two working days from receipt of the
voting results in which to file an application for leave to
appear and be heard in relation to the final orders.
A number of the comments by the Court are relevant.
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