Leadenhall Australia Ltd v Digicall Group Ltd [1996] FCA 76

CATCHWORDS CORPORATIONS - MISCELLANEOUS MATTERS - options to subscribe for ordinary shares - options issued subject to terms and conditions - special resolution passed by company reducing its share capital - reduction effected under s.195 of the Corporations Law - nature and effect of special resolution - principal object of special resolution was reduction of capital - proper construction of option contract's terms and conditions - object of option contract was to limit power of company to reorganise capital in order to provide protection to option holders INTERPRETATION OF INSTRUMENTS - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - court should try to place reasonable meaning on language used unless utterly impossible - distinction between difficulty of interpretation and absence of meaning - commercial contracts should be construed fairly and broadly Corporations Law ss193, 195 Australian Stock Exchange Listing Rule 3G

Cases Considered Forsayth Oil & Gas NL v Livia Pty Ltd (No.2) (1985) 59 ALJR 746 Re Southern Acceptance Corporation Ltd [1954] SASR 124 Hillas & Co. Ltd. v Arcos Ltd. (1932) 147 LT 503 LEADENHALL AUSTRALIA LIMITED v DIGICALL GROUP LIMITED No. SG 115 of 1995 BEAUMONT, HILL AND TAMBERLIN JJ. SYDNEY 22 FEBRUARY 1996

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. SG 115 of 1995 ) GENERAL DIVISION ) ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: LEADENHALL AUSTRALIA LIMITED Appellant AND: DIGICALL GROUP LIMITED Respondent CORAM: BEAUMONT, HILL AND TAMBERLIN JJ. WHERE MADE: SYDNEY DATE: 22 FEBRUARY 1996 MINUTES OF ORDER THE COURT ORDERS THAT: 1. Appeal allowed. 2. Set aside the orders made at first instance; in lieu thereof order that the separate question be answered as follows: "On the assumption stated, the appellant is entitled to options to subscribe for 616,500 shares of 20 cents each in the capital of the respondent at an issue price of 20 cents per share." 3. Make no order for costs at first instance or on the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.