MURRAY DAVID WEATHERSTON & ORS v WALTUS PROPERTY INVESTMENTS LIMITED & ORS [2000] NZCA 364 (4 December 2000)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca251/00

	between	MURRAY DAVID WEATHERSTON & ors
		Appellants

	AND	waltus property investments limited & ors
		Respondents

Hearing:	4 December 2000
Coram:	Richardson P Blanchard J McGrath J
Appearances:	J S Kós and H McIntosh for Appellants C R Carruthers QC and N MacFarlane for Respondents
Judgment:	4 December 2000
Reasons for Judgment:	14 December 2000

reasons for judgment of THE COURT DELIVERED BY McGRATH j

Table of Contents
	Para Number
Introduction	[1]
The syndicate companies	[3]
The amalgamation proposal	[6]
Application to the Court	[8]
The statutory scheme	[11]
Legislative history	[18]
High Court hearing	[21]
High Court decision	[24]
Events since judgment	[27]
The discretion under s236	[31]
The present case	[38]

Introduction

[1] This appeal was brought against the judgment of Master Thomson, delivered in the High Court on 6 November 2000, in which he made orders, pursuant to s236 of the Companies Act 1993 (the Act), approving an arrangement for the reconstruction of thirty applicant companies.The object of the reconstruction was to bring twenty-nine property syndicates, each respectively undertaken by a separate applicant company, into the ownership of a single holding company whose shareholders would be the former shareholders in the twenty-nine syndicate owning companies.

[2] The arrangement required the High Court's sanction in order to be binding on all interests involved.A group of dissenting shareholders opposed the giving of approval but, following the passing of special resolutions of support by twenty-seven of the twenty-nine syndicate companies, the Master approved the arrangement subject to the exclusion of the two companies and to a condition in relation to management fees which is not in issue before us.The objectors then appealed to this Court against the Master's decision.At the conclusion of the argument on the appeal in this Court on 4 December 2000 we delivered judgment dismissing the appeal.We now outline the reasons for our decision.

The syndicate companies

[3] Between November 1989 and December 1996 Waltus Investments Ltd (Waltus Investments), or companies associated with it, formed twenty-nine companies as vehicles for syndicate investment in specified commercial properties.The companies were promoted as opportunities for small to medium investors to invest directly in commercial property.Investors' interests in the syndicate companies comprised units issued by the company consisting of shares and debt securities.The units were "stapled" in the sense that unit holders could not trade their shares separately from their debt securities.

[4] In addition Waltus Investments held a number of promoter's shares in each syndicate company which entitled the holder to appoint one director to the board and to receive a percentage of surplus assets if the company were liquidated.A subsidiary also undertook the management of the properties for the syndicate companies on terms specified in a management contract.In each case a one-off management fee of 3% of the purchase price of the syndicate company's property or properties was paid at the outset and a management company also paid an annual fee for continuing management services based on a percentage of the market value of each property.Any single shareholder could require the sale of the company's property after 10 years.If the property or properties of the syndicate were sold the syndicate had to be liquidated.

[5] At the time of application to the High Court each of the twenty-nine syndicate companies had the same board of directors.There was evidence that the directors had identified concerns over the corporate structure of the syndicates.The structure gave small investors the opportunity of direct investment in particular commercial property with some ability to influence decision making over a focused portfolio.However, the structure carried exposure to risks associated with a particular property, particularly in relation to lease expiry and the need for renewal.The small and relatively inflexible nature of the syndicate company structure was at the heart of the problem.In addition the stapled nature of debt and equity investment limited its marketability.Compliance costs for each company were high and economies of scale were generally unavailable to the companies.

The amalgamation proposal

[6] The directors decided that the best way of addressing these structural problems was to bring all of the syndicates under the ownership of a single new company.They decided to proceed by way of application to the High Court for approval of a scheme of amalgamation under Part XV of the Act.This avoided difficulties that the directors considered would be associated with the Part XIII procedure which is highly prescriptive first, in terms of the manner shareholders are informed of a proposal and their endorsement obtained, and secondly, as to the rights of dissentient shareholders.The requirements of the Part XV procedure are more generally expressed but unlike those of Part XIII require both initial and final approval of the High Court.

[7] The amalgamation proposal prepared by Waltus Investments provided for the syndicate companies to be brought under the ownership of a single new holding company, Waltus Property Investments Limited (Waltus Property).The new company would be owned by the existing shareholders of the syndicate companies in direct proportion to the relative value of each shareholders investment. Under the arrangement shareholders would surrender their existing stapled units and receive instead a separate allocation of shares and mandatory convertible notes issued by the new holding company.The shares and notes could be traded on the secondary market.The existing property management contracts between the syndicate companies and Waltus would be cancelled and replaced by a fresh contract between the new holding company and a subsidiary of Waltus.

Application to the Court

[8] Under s236 of the Act, Waltus Property and the twenty-nine syndicate companies (the applicants) applied to the High Court for initial orders as to informing shareholders of the proposal and their rights and as to arrangements for shareholder meetings.The applicants sought orders that the shareholders receive notice of the meeting of each syndicate company, a copy of the resolution to be put to the meeting, information of their right to vote in person or by proxy and in the case of those who voted against the resolution to file a notice of opposition in the High Court.Notice of shareholder meetings was also to be given in the major daily newspapers and shareholders were to be informed of their entitlements to shares and mandatory convertible notes under the arrangement.The initial orders also set out the manner in which the proposed resolution should be passed, requiring a 75% majority vote at the shareholders' meeting.

[9] In these respects the applicants sought to reflect in their proposal and their application for initial orders the procedures prescribed by the Act for amalgamations pursuant to Part XIII.Where, however, they departed from the terms of Part XIII was in relation to the position of shareholders who dissented.There was no provision made in the proposal for the buy-out of that group, it being put to the Court that those who wished to leave the company would be able to do so by selling their shares and mandatory convertible notes on the secondary market.

[10] Initial orders were made in the High Court in the terms sought by the applicants and the shareholders' meetings were held on 5 September 2000.Apart from the syndicates of Ascot Properties Ltd and Colonel Properties Ltd, each company passed the proposed resolution by the 75% majority required.The support for the arrangement across the syndicates was 86.3% approval and 13.64% dissent.Under the terms of the arrangement this level of support was sufficient for the amalgamation proposal to proceed to a hearing in the High Court in respect of the twenty-seven syndicate companies which passed the resolution.

The statutory scheme

[11] Part XV of the Act provides a mechanism for application to the High Court for orders giving effect to company reconstructions.The Court is empowered to make orders binding on a company and other persons and classes specified on such terms and conditions as the Court thinks fit.It may also make initial procedural orders including that notice of and information concerning the application and proposed reconstruction be given to specified persons and that meetings of shareholders be held to consider and, if thought fit, approve the reconstruction proposal.To give effect to what is approved the Court may make various orders and in particular make provision for persons voting against the arrangement.

[12] The cornerstone of Part XV is s236 which reads:

236APPROVAL OF ARRANGEMENTS, AMALGAMATIONS, AND COMPROMISES -

(1)Notwithstanding the provisions of this Act or the constitution of a company, the Court may, on the application of a company or any shareholder or creditor of a company, order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the Court may specify and any such order may be made on such terms and conditions as the Court thinks fit.

(2)Before making an order under subsection (1) of this section, the Court may, on the application of the company or any shareholder or creditor or other person who appears to the Court to be interested, or of its own motion, make any one or more of the following orders:

(a)An order that notice of the application, together with such information relating to it as the Court thinks fit, be given in such form and in such manner and to such persons or classes of persons as the Court may specify:

(b)An order directing the holding of a meeting or meetings of shareholders or any class of shareholders or creditors or any class of creditors of a company to consider and, if thought fit, to approve, in such manner as the Court may specify, the proposed arrangement or amalgamation or compromise and, for that purpose, may determine the shareholders or creditors that constitute a class of shareholders or creditors of a company:

(c)An order requiring that a report on the proposed arrangement or amalgamation or compromise be prepared for the Court by a person specified by the Court and, if the Court thinks fit, be supplied to the shareholders or any class of shareholders or creditors or any class of creditors of a company or to any other person who appears to the Court to be interested:

(d)An order as to the payment of the costs incurred in the preparation of any such report:

(e)An order specifying the persons who shall be entitled to appear and be heard on the application to approve the arrangement or amalgamation or compromise.

(3)An order made under this section has effect on and from the date specified in the order.

(4)Within 10 working days of an order being made by the Court, the board of the company must ensure that a copy of the order is delivered to the Registrar for registration.

(5)If the board of a company fails to comply with subsection (4) of this section, every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2) of this Act.

[13] Under s237(1) additional orders that may be made for the purpose of giving effect to any arrangement or amalgamation or compromise approved under s236 include:

(e) The provisions to be made for persons who voted against the arrangement or amalgamation or compromise at any meeting called in accordance with any order made under subsection (2)(b) of that section or who appeared before the Court in opposition to the application to approve the arrangement or amalgamation or compromise:

[14] In contrast to the procedure under Part XV of the Act, amalgamation can be effected under Part XIII by the informed vote of those affected without recourse to the Court for approval.An amalgamation proposal under Part XIII must set out the terms of the amalgamation, to be put before the shareholders of each amalgamating company, supported by resolutions of the board as to matters such as their opinion that amalgamation is in the best interests of the company (ss 220 and 221).Shareholders, who must be fully informed, may approve the amalgamation proposal by special resolution under s106 of the Act. That requires a majority of 75% of those entitled to vote and voting, or a higher majority if so specified by the constitution of the company.

[15] Under ss111 and 112, if the resolution is carried, a shareholder casting votes against the amalgamation proposal is entitled to require the company to purchase all shares held at a fair and reasonable price which ultimately may be determined by arbitration.The company may apply to the Court for exemption from the obligation to purchase on stated grounds including that it would not be just and equitable to require it to purchase the shares (ss 114 and 115). In addition there is a further provision by which the Court, on application, may preclude effect being given to the amalgamation proposal or require its modification or reconsideration if the Court is satisfied that to give it effect would unfairly prejudice a shareholder or creditor of the amalgamating company.

[16] In broad terms Part XIII accordingly provides a scheme whereby a majority is enabled to reconstruct a company by the informed vote of those affected, with dissenting minorities having the right to require that their shareholding be bought out at a fair and reasonable price, and with both parties having the right to seek the intervention of the Court where their position would be unfairly affected.

[17] Parts XIII and XIV of the Act apply to amalgamations and compromises respectively whereas Part XV applies to arrangements, amalgamations and compromises.Section 238 makes plain that the Court has the discretion to give approval under Part XV even if an amalgamation or a compromise could be effected, often without court intervention, under the other Parts.In other words resort to Part XV is not confined to situations where it is impracticable to effect the reconstruction under the more prescriptive procedures of Part XIII and XIV.Importantly, in the context of this appeal, before voting on any amalgamation proposal under Part XIII, all shareholders must be fully informed of their rights including the right, subject to the provisions of the Act, to be bought out if the proposal is carried by special resolution over their dissent (ss 110 to 112 and 221(3)(e)).

Legislative history

[18] Under s205 of the Companies Act 1955 (the 1955 Act) an amalgamation of companies could proceed if approved by a special resolution of each class of members and creditors and sanctioned by the High Court.The requirement of Court approval gave a dissenting minority the opportunity to persuade the Court that the amalgamation should not proceed.If that failed, under s209, the minority could seek that the Court require the company or other shareholders to purchase the minority's shares but only if it were shown that the minority shareholder was unfairly prejudiced by the conduct of the company.

[19] In its report Company Law Reform and Restatement (1989 NZLC R 9), the Law Commission proposed that a dissentient shareholder should have the right to be bought out where there was an alteration of class rights of the shareholder or a fundamental change to the company whether or not the shareholder was unfairly prejudiced (paras 202-203).Specifically, it proposed a new procedure for company amalgamations to be effected through a tightly prescribed process of informed consent of a special majority of shareholders. Where the special resolution was carried over the dissent of a minority, a buy-out right at a fair and reasonable valuation would be triggered.These provisions appear in clauses 187 to 194 of the draft Bill included in the Law Commission report.The procedure did not include any supervision by the Court but clause 195 provided that where it was impracticable to effect a reconstruction or amalgamation under the prescribed procedures, application could be made to the Court for approval of an amalgamation proposal, which the Court could approve on such terms and subject to such conditions as it thought fit.

[20] Parliament enacted the substance of clauses 188 to 194 in Part XIII of the Act, closely following the Law Commission's draft.However changes were made to what the Law Commission had proposed in relation to the role of the Court. First the Act gave the Court the power, conditional on it being satisfied that giving effect to an amalgamation proposal would unfairly prejudice a shareholder or creditor, to modify, require reconsideration of, or direct that effect not be given to the proposal (s226); and secondly, in Part XV of the Act, Parliament provided an alternative mechanism for giving effect to arrangements, amalgamations and compromises by order of the Court.In Part XV the language of s236 resembles that of clause 195 of the Law Commission's draft but with some important differences.It applies to compromises, not just reconstruction and amalgamations.The Court is given wider powers to bind persons or classes other than the company.Most notably under s236 the Court's power is not subject to the threshold requirement that it is not practicable to effect the amalgamation under the Part XIII.

High Court hearing

[21] In the High Court the applicants supported the proposals by pointing to the perceived benefits of the arrangement in terms of added flexibility and liquidity of all investments, the more secure income stream and the spread of risk through a greater number of properties in the portfolio.The applicants distributed a considerable amount of information to shareholders on the arrangement proposal and conducted briefing sessions around the country to discuss its merits.

[22] The objectors' position was that approval of the arrangement would fundamentally alter the business concept as Waltus Investments had originally represented it, and on the basis of which shareholders had invested.In particular the right of each shareholder to compel the sale of the syndicate company's property after 10 years, and thereby realise the investment, was extinguished by the new arrangement.That right was said to have allowed the smaller investor to maintain an element of control over, and a secure exit from, the investment.Under the new arrangement, realising the investment will be dependent on being able to trade the shares in the new company on the secondary market and subject to the forces of that market rather than the property market.Finally, the original structure allowed for an investment in a particular asset according to the perceived investment potential of the property purchased.By contrast, under the new arrangement, an investor would invest in all the properties held by the new company.The concept would become that of a managed fund.

[23] The objectors opposed approval in the High Court but, in the alternative, sought an order that if the arrangement were approved it include the option of a minority buy-out for those who had voted against the arrangement at the shareholder meetings.They submitted that the buy-out be of both the dissenters' shares and their debt securities in the syndicate companies, the consideration to be the same value as that assessed by Waltus Investments for the conversion of the investment units into shares and mandatory convertible notes.

High Court decision

[24] In the High Court, Master Thomson approved the arrangement conditional on shareholders approval of a double payment of management fees or an appropriate accounting.The request for the minority buy-out was rejected.In coming to his decision on the arrangement the Master concluded that the appropriate test to be applied under s236 was that which was previously applied under s205 of the 1955 Act, which in particular required the arrangement be sanctioned if such that an intelligent and honest man of business, a member of the class interested and acting in his interests, would approve it.The Master reviewed the tests applied in other jurisdictions, in particular Canada, upon which the scheme of the Act was based.

[25] The Master then weighed the arguments of both parties.He observed that the vast majority of the shareholders were in favour of the arrangement. The views of the objectors had been well aired prior to the shareholder meetings, as had the proposed management agreement with which the objectors took issue at the hearing and yet the shareholders had been persuaded of the advantages of the arrangement. In seeking a buy-out at the conversion value calculated for the arrangement, the objectors, in the Master's opinion, were trying to take advantage of the very arrangement that they opposed.He accepted that the stapled investmentunits in the syndicates were difficult to value on a basis that separated the shares from the debt securities.The objectors would be able to trade their shares and mandatory convertible notes in the new holding company, once converted, on the stock exchange secondary index giving them an opportunity to exit if they wished. The Master concluded:

It has to be borne in mind that it is inherent in the membership of a company that a shareholder may be bound by the decision of the majority and here the majority approved the arrangement without a buy-out.

[26] As indicated, the Master's approval of the arrangement was conditional on the applicants either obtaining shareholder approval of the double payment or accounting for it in an appropriate manner.That question was not however in issue before us.

Events since judgment

[27] On delivery of the Master's judgment on 6 November 2000, the appellants did not immediately seek a stay of the High Court judgment pending appeal.On instructions, a stay was sought by their solicitors when notice of this appeal was filed.That application for a stay was not granted by the High Court and no attempt was made by the appellants to secure the status quo pending a decision on whether to appeal and the hearing of an appeal in this Court.That course was open to them.

[28] Waltus Investments at the time of the hearing in this Court on 4 December 2000 had taken a number of steps to implement the arrangement to the extent that implementation was largely complete. The share and mandatory convertible note entitlements had been calculated, and distributed.Interest on the notes had been paid.The shares in Waltus Property had been listed and some trading had occurred.The re-financing of the mortgages on property, formerly that owned by syndicate companies, had been completed.Some unconditional contracts for leasing or for the sale and purchase of property had been entered into or are in progress and the registering of the holding company for tax purposes had been completed.

[29] Neither the applicants, nor Waltus Investments, had sought shareholders' approval of the management fee payment and correspondence between the parties suggests that instead there may be an accounting for the sum although that accounting had not at the time of the hearing occurred.

[30] Importantly the appellants accepted that it was no longer possible to rescind the High Court's approval, the commercial reality being that at the time of the hearing in this Court the arrangement had largely been implemented. The appeal proceeded only against the decision of the Master not to impose a condition requiring the dissenting minority be bought out.

The discretion under s236

[31] When read in conjunction with s238, which expressly indicates that the Court may approve an amalgamation under Part XV even though it could be effected under Part XIII, it is plain that the legislature intended that under the Part XV procedure the Court should have a broad discretion, limited only by the policy and purposes of the Act.The scope of the power of the Court under s236 is to be considered in that light.

[32] The principles that the Court applied in deciding whether or not to sanction an arrangement pursuant to s205 of the 1955 Act were stated by Smith J in Re C M Banks Ltd [1944] NZLR 248, 253 as follows:

The duty of the Court is to see

(1) that there has been compliance with the statutory provisions as to meetings, resolutions, the application to the Court, and the like;

(2) that the scheme has been fairly put before the class or classes concerned; and that if a circular or circulars have been sent out, as is usual, whether before or after the making of the application to the Court, they give all the information reasonably necessary to enable the recipients to judge and vote upon the proposals;

(3) that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and

(4) that the scheme is such that an intelligent and honest man of business, a member of the class concerned and acting in respect of his interest, might reasonably approve.

Of these, the first test, that the statutory requirements have been met, is now to be read in light of the very broad procedural powers given to the Court by Part XV.The Court is of course likely to continue to follow the practice suggested by the Act of directing that meetings be held of shareholders or creditors to consider and approve the proposal.In that context the second and third tests in Re C M Banks will continue to apply.

[33] The fourth test was the subject of comment in Suspended Ceilings (Wellington) Ltd v Commissioner of Inland Revenue (1997) 8 NZCLC 261,318 CA, both in the majority judgment of Henry and Keith JJ and the minority judgment of Thomas J.The case concerned an appeal against the refusal of approval of a unilateral proposal by a debtor company seeking to have a single unwilling creditor bound to the 'compromise' of a debt.In that context the majority doubted that its duty was to see that the scheme was such that an intelligent and honest person of business, acting in his or her own interest, might reasonably approve in terms of the fourth test in C M Banks Ltd. The majority in Suspended Ceilings said:

We are inclined to the view that an applicant under s.236 should at least satisfy the Court that it would be unreasonable not to make the order sought. There is no statutory threshold which an applicant needs to overcome before approval can be sought, and it seems to us that to enquire merely whether an intelligent and honest business person might reasonably approve is, or may be, an inadequate safeguard for interests which oppose the application.The present case is an example.The compromise is between the company and the Commissioner, and involves no other person or class of persons.Even if the compromise was one which an intelligent and honest business person could reasonably approve, it may also be one which could reasonably be rejected by that hypothetical person.If opposition is based on reasonable grounds, it is difficult to see why the compromise should nevertheless be forced on an opponent.It is unnecessary however to reach a final decision on this issue ... (at p261,321)

[34] The present decision concerned a corporate restructuring, involving application for approval of an amalgamation under s236 rather than for orders binding a creditor to a company's unilateral proposal to compromise a debt for a sum less than the amount.The higher test of commercial reasonableness suggested by the majority in Suspended Ceilings may not be pertinent beyond its particular context.

[35] In Canada, in the context of legislation also giving the Court broad power in respect of procedure and practice to approve a proposed arrangement, the test of the intelligent and honest business person is supplemented by consideration of whether the arrangement is fair and equitable.(In re Canadian Pacific Ltd (1990) 73 OR (2d) 212 which draws on dicta of Bowen LJ in Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 231.See also Fraser and Stewart, Company Law of Canada (6 ed: 1993 at p586)).Indeed the latter element can be seen as implicit in the former.(In re Milne and Choyce Limited [1953] NZLR 724, 745 CA).The combination of both tests is clearly apt in the context of the Act where competing interests are involved which must be balanced by the Court in deciding whether and, if so, on what basis to approve an amalgamation proposal.

[36] In the exercise of its discretion to approve in that context the Court should weigh the interests of the applicants, and any special majority supporting them, against the interests of any dissentient minority.The policy of the Act is not only that an appropriate majority should be able to reconstruct and give fresh direction to the activities of a company, but also that a minority should be protected from that degree of change to which it is unreasonable to require all shareholders to submit.In particular the Court should guard against any perception that the size of majority support for a proposal of itself should dictate the outcome of an application under s236 as the Court is as much the guardian of the minority's interest as it is that of the majority.Both must receive the fullest consideration.

[37] The broad power to approve a proposal, subject to terms and conditions, under s236(1) is supplemented by the particular power in giving it effect to prescribe terms and conditions relating to provision for dissenting shareholders or other interests under s237(1)(e).Those powers will in appropriate cases enable the Court to reflect the policy of the Act that at some point the dissentient minority should be able to exit the company on fair and reasonable terms (ss 110 to 112).But equally there may be circumstances in which to impose a buy-out would be unfair to the majority and the Court should be vigilant to recognise any such situation.

The present case

[38] Mr Kós was critical of the reasoning of the Master in the judgment under appeal.He pointed to passages which, in isolation, can be read as indicating that the support of a special majority of shareholders was a sufficient answer to the criticism that the arrangement represented a fundamental departure from the original investment scheme.An overall consideration of the judgment, however, indicates that the Master had a sound appreciation of the dissentient minority's position and its significance in the context of the scheme of the Act.However, it is not necessary for us to reach a final decision on this point because of the combination of two circumstances to which we now refer.

[39] The first, already touched on, was that in framing the terms of the amalgamation proposal at the time they sought initial orders, no provision was made by the applicants in the nature of that in ss110 and 111 to buy-out dissenting shareholders.The meeting of shareholders held at the Court's direction to consider and vote on the proposal accordingly did not have that option before it.It is unnecessary for us to outline the reasons given in evidence on behalf of the applicants to justify that approach, or to comment on their validity.What is important for present purposes is that shareholders in each syndicate company were presented with a simple choice of either supporting or opposing the proposal - without in the latter instance the option of a buy-out right.

[40] The second circumstance is that, unlike the Master, we were faced with a situation in which the proposal had been largely implemented; the course of dismissing the application was no longer available to this Court.It was therefore impracticable by that, or any other means, to require an amended proposal be put before shareholders if the application is to proceed.

[41] The appellants' position was that the Court could direct that the dissentient minority, or such of them as remained active in the litigation, be bought out by the new company, and it is true that the breadth of the powers of the Court would give us that jurisdiction.To exercise it however would indirectly impose the burden of the buy-out on the majority who voted in favour of the merger, as well as those who refrained from voting on the proposal at all.Neither group would have known that a buy-out would be imposed or that by dissenting individual members might have secured buy-out rights.All such persons would feel justly aggrieved especially if the terms of the buy-out were at conversion values, which was what the appellants sought.

[42] In summary, in light of the way that the proposal was originally presented to shareholders in the amalgamating companies, in combination with its partial implementation since the High Court decision, we were satisfied that it would be unfair to the majority to direct that the dissentient minority should be bought out, even had it been our view that the balancing of the competing interests warranted that course.

[43] For these reasons at the conclusion of the hearing we dismissed the appeal.Costs are reserved.Memoranda may be filed if the matter cannot be resolved between counsel.

Solicitors

Russell McVeagh, Wellington, for Appellants

Chapman Tripp Sheffield Young, Wellington, for Respondents