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FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) (No 3) [2013] FCA 1342
Citation: / Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) (No 3) [2013] FCA 1342Parties: / AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v AUSTRALIAN PROPERTY CUSTODIAN HOLDINGS LIMITED ACN 095 474 436 (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (CONTROLLERS APPOINTED), MR WILLIAM LIONEL LEWSKI, MR MARK FREDERICK BUTLER, MR KIM JAQUES, DR MICHAEL RICHARD LEWIS WOOLDRIDGE and MR PETER CLARKE
File number: / VID 594 of 2012
Judge: / MURPHY J
Date of judgment: / 12 December 2013
Catchwords: / CORPORATIONS – duties of responsible entity of managed investment scheme under s601FC – duties of officers of responsible entity under s601FD
STATUTORY DUTY TO ACT IN BEST INTERESTS OF MEMBERS – meaning of “best interests of members” – whether best interests of members is subjective or objective – duty of undivided loyalty to members of scheme – conflict of interests – conflict of interest and duty – duty to give priority to members’ interests –care and caution required where conflicts exist
STATUTORY DUTY TO EXERCISE CARE AND DILIGENCE – standard of care – standard of care for directors of a responsible entity acting as a professional trustee – failure to consider effects of amendment to scheme constitution – failure to consider whether legitimate reasons for amendment – failure to be satisfied as to power to make amendments – reliance on legal advice – reliance on unusual and uncertain legal advice – failure to comply with scheme constitution and Act – failure to properly consider effect of amendments on members’ rights and interests – failure to identify conflict of interests – failure to consider how to appropriately resolve conflicts – duty to prioritise members’ interests – obligation to revisit decisions previously made
STATUTORY DUTY NOT TO MAKE IMPROPER USE OF POSITION TO GAIN ADVANTAGE – meaning of “to gain” and advantage or “to cause” detriment – meaning of improper use
STATUTORY DUTY TO TAKE ALL REASONABLE STEPS TO COMPLY WITH SCHEME CONSTITUTION – scheme constitution contractually binding – scheme constitution not inconsistent with Act – scheme constitution qualifies statutory power to amend
MEMBERS’ RIGHTS – whether right to have scheme administered according to existing constitution is a “members right” under s601GC – failure to consider members’ right to have scheme administered according to existing constitution – amendment invalid as outside power – whether amendments made outside power become valid once lodged with ASIC
RELATED PARTY TRANSACTION IN MANAGED INVESTMENT SCHEME – breach of s208 (as modified) of responsible entity – involvement of officers of responsible entity in breach of s208 – essential elements of the prohibition in s208 – whether s208(3) is an exception to the prohibition – officers’ honest belief that constitution contain provision allowing payment
LODGEMENT OF AMENDMENTS TO SCHEME CONSTITUTION – whether lodgement of consolidated scheme constitution is sufficient under s601GC – whether lodgement of amendments themselves is required
COMPANY PROCEDURE – decision-making by meeting of directors – obligation to clearly express will in meeting of directors – obligation to ensure expression of will is clearly recorded – whether conduct amounts to or conveys assent to a resolution
DEEDS – when does an undated deed come into effect – intention of the parties to the deed – intention by reference to statutory framework
Legislation: / Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1995 (Cth)
Managed Investments Act 1998 (Cth)
Superannuation Industry (Supervision) Act 1993 (Cth)
Trade Practices Act 1974 (Cth)
Cases cited: / 360 Capital Re Ltd v Watts and Another (2012) 91 ACSR 328
Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 231 CLR 27
Alpha Wealth Financial Services Pty Ltd and Ors v Frankland River Olive Company Ltd [2005] WASC 189
Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588
ASEA Brown Boveri Superannuation Fund No 1 Pty Ltd v ASEA Brown Boveri Pty Ltd [1999] 1 VR 144
Attorney-General of NSW v Brewery Employees Union of NSW (1908) 6 CLR 469
Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd and Others (2000) 169 ALR 344
Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439
Australian Securities and Investments Commission v Adler and Others (2002) 168 FLR 253
Australian Securities and Investments Commission v Fortesque Metals Group Ltd and Another (No 5) (2009) 264 ALR 201
Australian Securities and Investments Commission v Healey and Others (2011) 196 FCR 291
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345
Australian Securities and Investments Commission v Macdonald and Others (No 11) (2009) 230 FLR 1
Australian Securities and Investments Commission v Macdonald and Others (No 12) (2009) 259 ALR 116
Australian Securities and Investments Commission v Maxwell and Others (2006) 59 ACSR 373
Australian Securities and Investments Commission v Rich (2009) 236 FLR 1; [2009] NSWSC 1229
Australian Securities and Investments Commission, In the Matter of QLS Superannuation Pty Ltd v Parker (2003) 21 ACLC 888
Australian Securities Commission v AS Nominees Limited (1995) 62 FCR 504
Australian Securities Commission v Gallagher (1993) 10 ACSR 43
Avel Proprietary Limited v Multicoin Amusements Proprietary Limited and Another (1990) 171 CLR 88
Boardman v Phipps [1967] 2 AC 46
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Bray v Ford [1896] AC 44
Briginshaw v Briginshaw (1938) 60 CLR 336
Charterbridge Corporation Limited v Lloyds Bank Limited and Another [1970] 1 Ch 62
Chew v The Queen (1992) 173 CLR 626
Claremont Petroleum NL v Cummings and Another (1992) 110 ALR 239
Connor v Blacktown District Hospital [1971] 1 NSWLR 713
Cowan v Scargill [1985] Ch 270
Curwen & Ors v Vanbreck Pty Ltd (2009) 26 VR 335
Daniels and Others (Formerly Practicing as Deloitte Haskins & Sells) v Anderson and Others (1995) 37 NSWLR 438
De Bruyne v Equitable Life Assurance Society of the US 920 F.2d 457 (7th Cir. 1990)
Doonan v Beacham (1953) 87 CLR 346
Edge v Pensions Ombudsman [2000] Ch 602
Galladin Pty Ltd v Aimnorth Pty Ltd (in liq) and Others (1993) 11 ACSR 23
Garcia v National Australia Bank Ltd (1993) 5 BPR 11,966
Gillfillan v Australian Securities and Investments Commission (2012) 92 ACSR 460
Gould v The Mount Oxide Mines Ltd (In Liq) and Others (1916) 22 CLR 490
Gra-Ham v Perpetual Trustees (1989)1 WAR 65
Harries and Others v The Church Commissioners for England and Another [1993] 1 WLR 1241
Hatt v Magro (2007) 34 WAR 256
Hillsdown Holdings Plc v Pensions Ombudsman [1997] 1 All ER 862
In Re Whiteley; Whiteley v Learoyd (1886) 33 Ch D 347
ING Funds Management Ltd v ANZ Nominees Ltd and Others (2009) 228 FLR 444
Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd and Others (2006) 15 VR 87
Keech v Sandford (1726) 25 ER 223
King v GIO Australia Holdings Ltd (2001) 184 ALR 98
King v Talbot (1869) 40 NY 76
Kingtson and Another v Ambrian Investments Co Ltd [1973] 1 All ER 120
Knudsen v Kara Kar Holdings Pty Ltd [2000] NSWSC 715
Luxton v Vines (1952) 85 CLR 352
Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167
Marchesi v Barnes and Keogh [1970] VR 43
Martin v The City of Edinburgh District Council [1989] PENS. L. R. 9
McGellin v Mount King Mining (1998) 144 FLR 288
Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310
Morley v Australian Securities and Investments Commission (2010) 274 ALR 205
Morrell v Studd and Millington [1913] 2 Ch 648
Nestle v National Westminster Bank Plc [1994] 1 WLR 1260
Nominal Defendant v Owens (1978) 22 ALR 128
Oakley v Insurance Manufacturers of Australia Pty Ltd [2008] VSC 68
Permanent Building Society (in Liq) v Wheeler and Others (1994) 11 WAR 187
Poole and Another v Neely and Others [1976] 1 NZLR 529
Premium Income Fund Action Group Incorporated and Another v Wellington Capital Limited and Others (2011) 84 ACSR 600
Quinlivan v Australian Competition & Consumer Commission (2004) 160 FCR 1
R v Byrnes (1995) 183 CLR 501
Raby v Ridehalgh (1855) 44 ER 41
Re Centro Retail (2011) 255 FLR 28
Re Chapman [1896] 2 Ch 763
Re Macquarie Goodman Funds Management Ltd (as responsible entity for Macquarie Goodman Industrial Trust) (2004) 52 ACSR 194
Re Property Force Consultants Pty Ltd (1995) 13ACLC 1051
Re Whitely (1886) 33 Ch D 347
Robins and Others v Incentive Dynamics Pty Ltd (in liq) and Another (2003) 175 FLR 286
Smith v Permanent Trustee Australia Ltd (1992) 10 ACLC 906
Speight v Gaunt (1883) 9 App Cas 1
Stone v Grubbam (1614) 1 Roll Rep 3
Target Holdings Ltd v Redferns [1996] 1 AC 421
The Registrar of the Accident Compensation Tribunal v Commissioner of Taxation of the Commonwealth of Australia (1993) 178 CLR 145
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125
Vines v Djordjevitch (1951) 91 CLR 512
Waters and Others v Mercedes Holdings Pty Ltd and Others (2012) 203 FCR 218
Weeden v Rambaldi (2013) 92 ACSR 661
Wilkinson and Others v Feldworth Financial Services Pty Ltd and Others (1998) 29 ACSR 642
Xenos v Wickham (1866) LR 2 HL 296
Yorke v Lucas (1985) 158 CLR 661
Date of hearing: / 1-3, 6-8, 14-17, 20, 23-24 and 27 May 2013
Place: / Melbourne
Division: / GENERAL DIVISION
Category: / Catchwords
Number of paragraphs: / 771
Counsel for the Plaintiff: / Mr I D Martindale SC, Mr R D Strong, Mr S J Maiden and Mr S Gifford
Solicitor for the Plaintiff: / Australian Securities and Investments Commission
Counsel for the First Defendant / The First Defendant did not appear
Counsel for the Second Defendant: / Mr P J Bick QC and Mr M Osborne
Solicitor for the Second Defendant: / SBA Law
Counsel for the Third Defendant: / Dr K P Hanscombe SC and Mr T McLean
Solicitor for the Third Defendant: / Millens
Counsel for the Fourth Defendant: / Mr P Riordan SC and Mr A Strahan
Solicitor for the Fourth Defendant: / DLA Piper Australia
Counsel for the Fifth Defendant: / Mr P Solomon SC and Mr R Craig
Solicitor for the Fifth Defendant: / Norton Gledhill
Counsel for the Sixth Defendant: / Mr D J Williams SC and Mr T Greenaway
Solicitor for the Sixth Defendant: / Maddocks Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION / VID 594 of 2012
BETWEEN: / AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: / AUSTRALIAN PROPERTY CUSTODIAN HOLDINGS LIMITED ACN 095 474 436 (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (CONTROLLERS APPOINTED)
First Defendant
MR WILLIAM LIONEL LEWSKI
Second Defendant
MR MARK FREDERICK BUTLER
Third Defendant
MR KIM JAQUES
Fourth Defendant
DR MICHAEL RICHARD LEWIS WOOLDRIDGE
Fifth Defendant
MR PETER CLARKE
Sixth Defendant
JUDGE: / MURPHY J
DATE OF ORDER: / 12 December 2013
WHERE MADE: / MELBOURNE
THE COURT ORDERS THAT:
- Within seven days the parties confer and:
(a) propose dates for the hearing of any application for relief from liability and/or in relation to penalty; and
(b) prepare draft minutes for the timetabling of any hearing for relief from liability and/or in relation to penalty, together with draft minutes of declarations to be made, to be filed by 31January 2014.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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INDEX
DESCRIPTION / PARA(S)1. Introduction / [1]-[12]
1.1 The first group of contraventions / [13]-[23]
1.2 Listing / [24]-[25]
1.3 The second group of contraventions / [26]-[29]
1.4 The third group of contraventions / [30]-[31]
1.5 Relief / [32]
2. The standard of proof / [33]-[36]
3. The facts / [37]
3.1 The ownership of APCHL / [38]
3.2 The ownership and control of other relevant companies / [39]
3.3 The Board of APCHL / [40]-[42]
3.4 The Prime Trust / [43]-[50]
3.5 The members’ understanding that listing of the Trust was contemplated / [51]-[53]
3.6 APCHL moves towards listing the Trust on the AS / [54]-[61]
3.7 The Options Advice / [62]-[64]
3.8 APCHL’s fee entitlements under the Constitution / [65]
3.9 The proposal to introduce new fees, including the Listing Fee / [66]-[69]
3.10 Mr Lewski seeks legal advice from Madgwicks / [70]-[76]
3.11 Mr Lewski’s evidence as to confidence in unitholder approval / [77]-[78]
3.12 The Madgwicks file note by MsKovacs on 12July 2006 / [79]-[81]
3.13 The prohibition on amendments in favour of APCHL / [82]-[85]
3.14 The Madgwicks file note by MrGoldberg on 12July 2006 / [86]-[90]
3.15 The Madgwicks file note and draft advice of 13 July 2006 / [91]-[95]
3.16 The Madgwicks file note and draft advice of 14 July 2006 / [96]-[99]
3.17 Provision of the final Madgwicks Advice and draft Deed of Variation No 7 / [100]-[104]
3.18 The 19 July 2006 meeting – the resolution to approve the Amendments / [105]-[110]
3.18.1 The Listing Fee / [111]
3.18.2 The Removal Fee / [112]
3.18.3 The Takeover Fee / [113]-[114]
3.18.4 Multiple fees were possible / [115]-[116]
3.18.5 The additional fees were substantial / [117]-[123]
3.18.6 The additional fees were gratuitous / [124]
3.19 The signature of Deed of Variation No 7 / [125]-[127]
3.20 The 31 July 2006 meeting / [128]-[129]
3.21 The 22 August 2006 meeting – the Lodgement Resolution / [130]-[137]
3.22 Announcement of intention to list / [138]-[139]
3.23 The 26 June 2007 meeting – the resolution to pay the Listing Fee in tranches / [140]-[146]
3.24 The 27 July 2007 meeting – the resolution that APCHL take the Listing Fee partially as units in the Trust / [147]-[149]
3.25 The 3 August 2007 meeting – the resolution to grant options to the Directors / [150]-[151]
3.26 The variation to Mr Butler’s Service Agreement / [152]-[154]
3.27 The proposal to restructure and sell Mr Lewski’s interests in APCHL / [155]-[158]