Androcles in Court

Press, 21 August 1979, Page 18

Androcles in Court

PA Wellington Half the shareholding in Androcles Corporation, Ltd, has been described in the Supreme Court, at Wellington as a trust for an extraordinary amorphous group of persons. Androcles is the company in which part of Lion Breweries, Ltd’s, shareholding was vested. Dr G. P- Barton, Q.C., was making submissions for Selwyn John Cushing, a chartered accountant, of Hastings, who is seeking an injunction to restrain the summoning or holding of meetings of Lion Breweries, and Androcles Corporation. Mr Justice White reserved his decision. Dr Barton said that during 1977-78 the directors of Lion put together a scheme for certain purposes that seemed to them to be desirable, which involved the incorporation of Androcles. It also involved the issuing of further share capital in Lion, and the allotting of that further issue of share capital to Androcles. Under the scheme, Ahdrocles, a private company, had in effect two shareholders — half Lion and the other half a trust for an extraordinary amorphous group of persons, the chief advantage being that it was difficult, if not impossifcje, to pinpoint the precise beneficiary who would be able to enforce the execution of the trusts. “One can only admire the

ingenuity' of those who saw fit to spend some of the vacation on the exercise,” Dr Barton said. “Shortly afterward, however, the Registrar of Companies declined to accept various documents that had been filed by .lion and by Androcles re faring to the allotment of shares’. “He took the view that the allotment was unconstitutional and invalid.” Dr Barton said that soon after this Mr Cushing, a shareholder in Lion Breweries, instituted an action in which he sought orders declaring the allotment of shares to be invalid, and for relocation of the share register of Lion. Subsequently* but before any defence was filed to that action — and no defence to date had been filed — an extraordinary general meeting of' the shareholders of Lion was convened and a resolution passed approved of the action of Lion’s directors. An application was made. to strike out — on the grounds that the action was frivolous, vexatious, and an abuse of the process of the court — Mr Cushing’s action challenging the validity of the share allotment. Mr B. McClelland, Q.C., for Lion Breweries, said that in the current action brought by Mr Cushing what was sought was to have a declaration that the share allotment be declared invalid and void and that orders be made setting aside the share allotment and rectifying the

register of members, and of a scheme of arrangement that would be submitted to the meeting. And, if the meeting approved, it would come before the court for final approval — and would have the effect of setting aside the allotment and rectifying the register, which was precisely what Mr Cushing sought in his writ. “The scheme has been drawn, in my submission, very carefully to avoid the question of whether the original allotment was illegal or not,” Mr McClelland said. “The mere fact that Mr Cushing has issued proceedtags which he has not gone on with and so on, doesn’t entitle him to be served with this ex parte motion . . . He is perfectly entitled and, no doubt will, attend the meeting and speak against the resolution and vote against it.”