Wellington Capital to take PIF case to High Court Friday, 31 May 2013 11:55am
By Laura Millan
Wellington Capital has said it will take the Premium Income Fund (PIF) case to the High Court after the Federal Court ruled that distribution of PIF shares to Asset Resolution Limited (ARL) was invalid.
The rule overturns an early decision of the same court, which dismissed an application by the Australian Securities and Investments Commission (ASIC).
ASIC started legal proceedings in September 2012, after Wellington announced that ARL had acquired $90.75 million in PIF assets in return for which the PIF acquired shares in ARL.
As a result, each unit holder of PIF became a shareholder in ARL, but Wellington did not consult nor obtained the consent of PIF unit holders to do the transaction.
"We will take the appeal decision to the High Court of Australia," Wellington Capital managing director Jenny Hutson told Financial Standard.
"We are very disappointed by the court's decision, we think they did the right thing on the first place," she said.
"The distribution of shares was in our power to do and that's what the court said on the first place."
In its last ruling, the court rejected Wellington's arguments as being "fundamentally flawed" and determined that it didn't have the power to make the distribution of shares, as opposed to cash, to PIF unit holders.
"Unit holders who now hold shares in an unlisted company and shares in a company are an entirely different species of property from units in a managed investment scheme," the court said.
At the same time, the PIF Action Group, which represents the disgruntled members of the fund, welcomed the court's decision.
"The appeal is unusual because there is no guarantee that the High Court will hear the appeal and if they do, there is no guarantee that Wellington will win it," PIF Action Group media representative Charles Hodges said.
http://www.financialstandard.com.au/news/view/33121244
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