StateWest Credit Society Ltd will conduct a re-run of its demutualisation vote following another Federal Court win this morning for dissident members of the credit union opposed to its merger with Home Building Society Ltd.
StateWest Credit Society Ltd will conduct a re-run of its demutualisation vote following another Federal Court win this morning for dissident members of the credit union opposed to its merger with Home Building Society Ltd.
The Federal Court in Perth today dismissed StateWest's appeal against a decision by Justice Tony Siopis to decline to issue an order for the convening of a meeting of StateWest Members to consider a merger proposal with Home Building Society.
The dissidents, led by StateWest founding chairman Pat Kirwan and former StateWest foudning general manager executive Lewi Louthean, said the result vidicated their legal efforts to halt the merger process on grounds of inadequate disclosure to members.
Earlier this month, Justice Siopis found that StateWest had provided inadequate disclosure to members ahead of a favourable vote on demutualisation when it did not reveal StateWest head Greg Wall's remuneration as proposed managing director of the merged entity. Home shareholders were provided that information in documents two weeks later, ahead of their vote to merge with StateWest.
This afternoon, Home and StateWest issued a joint statement claiming that timing of the disclosure of Mr Wall's remuneration was the issue at stake. The merger partners said the salary details had now been in the public domain since October and would be fully disclosed in new documentation for members ahead of a second demutualisation poll.
Of the StateWest members that voted, 90 per cent were in favour of demutualisation. The court action has blocked a proposed second meeting to conclude the merger. Home shareholders have already approved the merger. Both Home and StateWest remain committed to the merger going ahead.
In an unusual twist, the dissident members have been provided with financial assistance by another mutual United Credit Union Ltd.
United had agreed to provide a form of limited recourse loans to fund the dissidents' legal fees in order to test the adequacy of new disclosure standards implemented across the industry a few years ago.
Home and StateWest have jointy condemned United's intervention and questioned its motivation.
Mr Louthean said "the decision fully justifies our belief and ongoing commitment to the rule of law ".
He said the court win showed the StateWest board had not acted in accordance with both its constitution and the relevant laws. He claimed this meant a breach of duty of care and responsibilities may have occurred.
He said the court result also raised very serious questions about the advice being presented to the board.
"The group of 'dissident ' members opposing the proposed merger, did so, in the full knowledge that proper procedures had not been followed by the Society in accordance with its constitution, democratic 'mutual' principles and the Act , " Mr Louthean said.
Mr Kirwan said he was pleased with the win but believes that Australia needed better laws to protect "co-operative capital" structures such as mutuals.
"I am proud to be in Australia where all citizens can petition the justice system without restrictions ," Mr Kirwan said .
"However, I lament that the federal governments in Australia have not followed the lead of the Canadian, English and Scottish Parliaments in bringing down very restrictive legalisation to protect co-operative capital.
"I dare say that legalisation will follow after the new international accounting standards are fully implemented in Australia."
"ASIC, no doubt will study these proceedings and take appropriate action."