As you aware the Federal Court made orders on the 13 July, 2011 in the PIFAG v Wellington proceedings that the meeting should not proceed as scheduled for the 14 July, 2011. The full judgment has now been handed down.
The basis for the courts decision was largely technical issues relating to the register used to post notice to the unit holders and the quorum provisions for holding the meeting.
It was argued by Wellington that approximately 300 investors MAY NOT HAVE RECEIVED notice of meeting due to the changes in the register and changes of address after the date Wellington provided the register to PIFAG. You will be aware that there are over 10,700 investors in the fund. There was no proof that these investors did not receive notice, only that they MAY not have.
We are disappointed that such a small percentage of people potentially not receiving notice has led to the meeting being declared invalid particularly in circumstances where there is common ownership between Wellington and Armstrong Registry Services (which runs the registry for the fund) and in circumstances where Armstrong were less than cooperative in providing the register or any updates to any information on the register. The PIFAG certainly did not intend for any unit holder to be not informed. Far from it.
The only comfort we can take is that if the meeting had proceeded it most likely would have been unable to be held in an orderly manner due to persisting disagreement between PIFAG and Wellington over issues to do with quorum, chairperson and registry services.
Unfortunately the court has decided that the current quorum provisions of the fund are valid. These require a quorum of 51% of all unit holders for a resolution to remove Wellington Capital. We were of the view (Based on QC'S advice) that the provisions were prohibitive to investors calling a meeting to remove Wellington. We are naturally disappointed that the court did not agree.
We note that M/S Hutson alleges that she had enough proxy forms received by Wellington and in her possession that the meeting would have had a quorum if she had provided those forms to the registry (Computershare, a company previously used by Wellington and apparently good enough to handle the proxies for the meeting to elect Wellington, October, 2008) appointed by the PIFAG. It was noted by the court that M/S Hutson made a press release on the day of the 23 June, 2011 meeting in which "she was asserting that the meeting had been without a quorum. She did not expressly mention that she had produced this result by not attending to vote the proxies which she was holding." I wonder whether the unit holders who entrusted their proxy to Jenny Hutson expected their vote to be treated in this way? Perhaps so, but then maybe not.
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The court also addressed the matters raised in an affidavit filed in the proceedings by one of the people who attended a meeting near the venue of the legitimate meeting on 23 June, not realising they were being asked to attend to accept a transfer of units in the fund and vote for M/S Hutson for the position of Chairman at the legitimate meeting. There has been numerous press articles concerning this extraordinary behaviour on behalf of the organisers of the meeting of some 230 hired hands. I also note in the latest memorandum no mention has been mentioned of this escapade nor of any action taken by Wellington to address this matter.
Whilst these matters did not impact the technical issues on which the case was decided the court noted that "THE ALLEGATIONS ARE OF SOME CONCERN. THE UNIT HOLDERS MAY HAVE TO CONSIDER THEM IN CONNECTION WITH THE FUTURE CONDUCT OF THE AFFAIRS OF THE FUND.
The PIFAG have certainly noted the comments of His Honour and have taken action to have the appropriate Regulatory Authority and Legal Advisors informed. I personally look forward to a positive outcome and believe all serious minded unit holders should do the same. If no action is taken is would set a very dangerous precedent for the calling of meetings, be they shareholders meetings or meetings called by unit holders to remove Responsible Entitities from Managed Funds. Simple, hire a crowd and run the meeting any way you wish.
I note Wellington Capital have not mentioned the comments of His Honour in the latest memorandum either.
The basis for the courts decision was largely technical issues relating to the register used to post notice to the unit holders and the quorum provisions for holding the meeting.
It was argued by Wellington that approximately 300 investors MAY NOT HAVE RECEIVED notice of meeting due to the changes in the register and changes of address after the date Wellington provided the register to PIFAG. You will be aware that there are over 10,700 investors in the fund. There was no proof that these investors did not receive notice, only that they MAY not have.
We are disappointed that such a small percentage of people potentially not receiving notice has led to the meeting being declared invalid particularly in circumstances where there is common ownership between Wellington and Armstrong Registry Services (which runs the registry for the fund) and in circumstances where Armstrong were less than cooperative in providing the register or any updates to any information on the register. The PIFAG certainly did not intend for any unit holder to be not informed. Far from it.
The only comfort we can take is that if the meeting had proceeded it most likely would have been unable to be held in an orderly manner due to persisting disagreement between PIFAG and Wellington over issues to do with quorum, chairperson and registry services.
Unfortunately the court has decided that the current quorum provisions of the fund are valid. These require a quorum of 51% of all unit holders for a resolution to remove Wellington Capital. We were of the view (Based on QC'S advice) that the provisions were prohibitive to investors calling a meeting to remove Wellington. We are naturally disappointed that the court did not agree.
We note that M/S Hutson alleges that she had enough proxy forms received by Wellington and in her possession that the meeting would have had a quorum if she had provided those forms to the registry (Computershare, a company previously used by Wellington and apparently good enough to handle the proxies for the meeting to elect Wellington, October, 2008) appointed by the PIFAG. It was noted by the court that M/S Hutson made a press release on the day of the 23 June, 2011 meeting in which "she was asserting that the meeting had been without a quorum. She did not expressly mention that she had produced this result by not attending to vote the proxies which she was holding." I wonder whether the unit holders who entrusted their proxy to Jenny Hutson expected their vote to be treated in this way? Perhaps so, but then maybe not.
,
The court also addressed the matters raised in an affidavit filed in the proceedings by one of the people who attended a meeting near the venue of the legitimate meeting on 23 June, not realising they were being asked to attend to accept a transfer of units in the fund and vote for M/S Hutson for the position of Chairman at the legitimate meeting. There has been numerous press articles concerning this extraordinary behaviour on behalf of the organisers of the meeting of some 230 hired hands. I also note in the latest memorandum no mention has been mentioned of this escapade nor of any action taken by Wellington to address this matter.
Whilst these matters did not impact the technical issues on which the case was decided the court noted that "THE ALLEGATIONS ARE OF SOME CONCERN. THE UNIT HOLDERS MAY HAVE TO CONSIDER THEM IN CONNECTION WITH THE FUTURE CONDUCT OF THE AFFAIRS OF THE FUND.
The PIFAG have certainly noted the comments of His Honour and have taken action to have the appropriate Regulatory Authority and Legal Advisors informed. I personally look forward to a positive outcome and believe all serious minded unit holders should do the same. If no action is taken is would set a very dangerous precedent for the calling of meetings, be they shareholders meetings or meetings called by unit holders to remove Responsible Entitities from Managed Funds. Simple, hire a crowd and run the meeting any way you wish.
I note Wellington Capital have not mentioned the comments of His Honour in the latest memorandum either.
