Investment company Perpetual Trustees is still considering whether to appeal against a NSW Supreme Court decision last week to dismiss a claim by HIH Holdings for the repayment of New Zealand noteholders for $NZ277.3 million ($214.8 million).

A Perpetual spokesman told insuranceNEWS.com.au the judgement is under internal review.

In 1998, HIH in Australia and New Zealand issued a prospectus to raise $155 million to help fund its takeover of FAI.

At the time of the liquidation of HIH NZ in July 2001, there were 42.6 million notes issued with $213.1 million face value.

The notes were convertible into HIH shares on June 12, 2003, but the Australian parent was already in liquidation by then and no notes were converted.

Perpetual argued that because the notes could not be converted, noteholders were entitled to have their money returned.

In his judgement last week Justice James Stevenson said HIH NZ’s failure to convert the notes due to its insolvency terminated all note contracts.

“Although HIH NZ acknowledged that it was ‘indebted’ to the noteholders, the true nature of the legal relationship between HIH NZ and the noteholders was not that of a conventional debtor and creditor,” he said.

“Noteholders could only recoup their investment if HIH NZ chose to return it to them.

“In my opinion, the noteholders were never entitled to assert that HIH NZ was indebted to them for the face value of the notes.”

Justice Stevenson says HIH NZ liquidators correctly rejected Perpetual’s claim on behalf of the noteholders.