Dawn Fraser and Richard James Talbot v Nrma Holdings Limited, Nrma Limited and Nrma Insurance Limited [1994] FCA 1397;

Dawn Fraser and Richard James Talbot v Nrma Holdings Limited, Nrma Limited and Nrma Insurance Limited [1994] FCA 1397; - FCA 1994 case summary — Zoe

[98]

"The legal elements of the approval by members of the

Association and members of NRMA Insurance are:

. changing the legal status of the Association and

NRMA Insurance from companies limited by

guarantee to companies limited by shares and

guarantee;

. adopting new Articles for each company, the

central element of which means that members

(other than NRMA Holdings) agree to give up

their membership of the Association and NRMA

Insurance on condition that Free Shares are

offered by NRMA Holdings. This leaves NRMA

Holdings as the only member of the Association,

and NRMA Holdings and the Association as the

only members of NRMA Insurance, and hence each

is under the control of NRMA Holdings. By

resolution of the Boards, NRMA Holdings was

admitted as a member of the Association on 4

August 1994 and as a member of NRMA Insurance on

16 August 1994. The special resolutions (if

passed) constitute an agreement which binds all

members of the Association and of NRMA

Insurance, even if they voted against the

proposal or did not vote at all;

. approving, first, the allocation of entitlements

to Free Shares as described earlier (people who

are being allocated entitlements to Free Shares

are referred to as 'those entitled' in this

paragraph), second, the allotment by NRMA

Holdings of the Free Shares to those entitled

who elect to take up the Free Shares and, third,

the allotment to the NRMA Offer Trust of shares

not so taken up. The Trust will sell the shares

and distribute the net proceeds of sale to both

those entitled who choose the cash alternative

and those entitled from whom we do not receive a

valid Acceptance of Free Shares form;

. in the case of the Association approving changes

to the Memorandum and Articles of NRMA Insurance

so that the Association ceases to control NRMA

Insurance with the result that NRMA Holdings

controls NRMA Insurance; and

. approving the overall changes in the structure

of the NRMA so that each of the Association and

NRMA Insurance is owned and controlled by NRMA

Holdings.

You will find the Notice of Meeting for the

Association and NRMA Insurance at the end of this

Section."

[153]

"As required by the Corporations Law the (Association)

has, in the preparation of the consolidated balance

sheet and consolidated profit and loss account for the

economic entity consolidated NRMA Insurance Limited

and the entities it controls in accordance with

Accounting Standard AASB1024, 'Consolidated Accounts'.

AASB1024 requires that the consolidated accounts for

the economic entity should include all entities which

are controlled by (the Association). (The

Association) controls (Insurance) and the entities it

controls by virtue of it appointing the Board of

Directors of (Insurance).

The Directors are of the opinion, however, that

application of AASB1024 has not resulted in the

financial statements giving a true and fair view of

the matters required by Part 3.6 of the Corporations

Law. The Directors have therefore provided additional

disclosures in the form of a consolidated profit and

loss account, balance sheet and certain notes in

respect of the NRMA Group, which is defined in Note

1(a). These additional disclosures exclude

(Insurance) and the entities it controls, and are, in

the Directors' opinion required in order that the

financial statements give a true and fair view. The

Directors believe that the resulting economic entity

is a reporting entity for which there exists users of

the accounts who may rely on them for financial

decision-making purposes.

Because the Board of (Insurance) has an overriding

fiduciary responsibility towards the members and

policyholders of that company and are not accountable

to the members of (the Association) it is

inappropriate for (Insurance) and its controlled

entities to be consolidated with (the Association) and

it is our opinion that:

(a) application of AASB1024 has, in this instance,

resulted in a consolidated balance sheet and

profit and loss account that could be

potentially misleading;

(b) the additional disclosures provided by the

Directors in respect of the consolidated profit

and loss account, balance sheet and notes for

the NRMA Group are necessary to ensure the

financial statements as a whole are true and

fair and in accordance with Statements of

Accounting Concepts, which require among other

things that all relevant and reliable

information be provided; and

(c) the information in respect of the NRMA Group is

true and fair and in accordance with Statements

of Accounting Concepts."

At a glance

Court

Decision date

Before

Source

Judgment (204 paragraphs)

Dawn Fraser and Richard James Talbot v Nrma Holdings Limited, Nrma Limited and Nrma Insurance Limited [1994] FCA 1397; (1994) 12 ACLC 855, (1994) Atpr 41-346 (1994) 14 ACSR 656, (1994) 1 (13 October 1994)

Parties

Legislation Cited (3)

Cases Cited (20)