Australian Public Trustees Limited (ACN 095 572 482) (Receivers Appointed) (in its capacity as trustee and/or responsible entity of the Government Property Trust No 5 (ARSN 112 705 629) v Australian Public Trustees..
[2012] VSC 364
•28 August 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST D
No. 06274 of 2011
| AUSTRALIAN PUBLIC TRUSTEES LIMITED (ACN 095 572 482) (RECEIVERS APPOINTED) (in its capacity as trustee and/or responsible entity of the Government Property Trust No 5 (ARSN 112 705 629) | Plaintiff |
| v | |
| AUSTRALIAN PUBLIC TRUSTEES LIMITED (ACN 095 572 482) (RECEIVERS APPOINTED) (in its capacity as trustee of the Government Property Trust No 3 (and also known as GPT Vicroads Class C Trust) (ABN 51 025 743 733) | Defendant |
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JUDGE: | Sifris J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 July 2012 | |
DATE OF JUDGMENT: | 28 August 2012 | |
CASE MAY BE CITED AS: | AUSTRALIAN PUBLIC TRUSTEES LIMITED (ACN 095 572 482) (RECEIVERS APPOINTED) (in its capacity as trustee and/or responsible entity of the Government Property Trust No 5 (ARSN 112 705 629) v AUSTRALIAN PUBLIC TRUSTEES LIMITED (ACN 095 572 482) (RECEIVERS APPOINTED) (in its capacity as trustee of the Government Property Trust No 3 (and also known as GPT Vicroads Class C Trust) (ABN 51 025 743 733) | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 364 | |
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CORPORATIONS LAW – Construction and interpretation of debenture charge – Secured assets – Whether Preference Units and associated right to redeem are located solely in Victoria.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J.J Gleeson SC Mr H.N.G Austin | Freehills |
| For the Defendant | Dr J. D Wilson SC Ms A. Fogarty | Piper Alderman |
HIS HONOUR:
Introduction
Australian Property Trustees Limited (ACN 095 572 482) (“APTL”) is the responsible entity of various registered managed investment schemes and is trustee of various trusts with investment in properties to be leased or sold for public purposes.
APTL as responsible entity of a registered managed investment scheme called the Government Property Trust No 5 (ARSN 112 705 629) (“GPT5”) (formerly known as the Class E Trust), holds 2,022,512 preference units in another trust of which APTL is trustee, called the Government Property Trust No 3 (formerly known as GPT Vicroads Class C Trust) (ABN 51 025 743 733) (“GPT3”).
GPT5 was established pursuant to the APT Master Trust Deed dated 5 May 2003 and is regulated by a constitution dated 27 January 2005 (“GPT5 Constitution”), which was amended on 28 March 2006, 23 May 2008 and 9 August 2010.
On or about 21 February 2011, Matthew Caddy, Peter McKenzie Anderson and Joseph David Hayes (“Receivers”) were appointed joint and several receivers of certain property held by APTL pursuant to securities including a charge granted by APTL to Capital Finance Australia Ltd dated 22 April 2005 over its Victorian assets (“CFAL Charge”).
APTL, at the instigation of the Receivers, brings this proceeding as responsible entity of GPT5 against APTL as trustee of GPT3 for the purpose of realising its assets subject to the CFAL Charge.
From on or about 24 July 2008, APTL was the holder of 2,322,512 preference units in GPT3 issued at $1 per unit.
On or about 3 December 2010, 300,000 of the preference units were redeemed by APTL and from that date, it was the holder of 2,022,512 preference units (“Preference Units”).
It was a term of issue of the Preference Units that they would be redeemed by the defendant by 31 August 2011 at a redemption price of $1 per unit.
The defendant has not redeemed the remaining Preference Units.
The defendant’s obligation to redeem at $1 per unit is not contested. The parties agree that the pleadings give rise to a single issue, whether the Preference Units and the rights associated with them are “Secured Assets” under the CFAL Charge.
If they are, the Receivers are entitled to cause APTL to bring this proceeding to enforce the right to recover payment of $2,022,512 (“Redemption Amount”) and the APTL is entitled to judgment for that amount. The Receivers are entitled to initiate and prosecute proceedings pursuant to the terms of charges that are valid and registered with ASIC against APTL and otherwise pursuant to the Corporations Act 2001 (Cth) (“Corporations Act”).
Provisions of the CFAL Charge
The definition of “Secured Assets” in the CFAL Charge concerning Victoria is as follows:
Secured Assets means the whole of the undertaking property and assets of the Chargor both present and future held by the Trust in respect of the Property, and includes any part of the Secured Assets and any property held at any time by the Chargor in respect of the Trust and located solely in Victoria.
The following definitions are contained in the CFAL charge:
“Chargor” is the trustee and Responsible Entity of the Government Property Trust established by the Deed dated 27 January 2005.[1]
“Trust” is defined in clause 1.1 to mean the trust of which the Chargor is the trustee specified in Item 3, which states that [t]he Chargor is trustee and Responsible Entity of the Government Property Trust established by Deed dated 27 January 2005.
“Property” is defined in clause 1.1 to mean the property specified in Item 6 of the CFAL Charge, which is 101-107 Corio Street, Geelong Victoria 3220 and 92-100 Brougham Street Geelong Victoria 3220.
[1]Item 1(b) of the Schedule.
Construction of “Secured Assets”
APTL contends that there are three separate limbs to the definition of ‘Secured Assets”:
a)“undertaking property and assets of APTL held by [GPT5] in respect of the [Geelong Property];
b) “any part of the Secured Assets”; and
c)“any property held at any time by APTL in respect of [GPT5] and located solely in Victoria”.
It is contended that the terms of the third limb, namely, any property held at any time by APTL in respect of GPT5 and located solely in Victoria, are of wider ambit than the distinct content of the first limb namely undertaking property and assets of the APTL held by GPT5 in respect of the Geelong Property. Consequently, the ordinary meaning of the third limb is not, unlike the first limb, confined to property with a direct connection to the Geelong Property. The only subject matter limit is “in respect of” GPT5 and the only geographical limit specified is Victoria.
According to APTL, it is more logical to interpret the third limb as an expression which extends the meaning of “Secured Assets” beyond the scope of the first limb. The defendant properly accepted this construction and it is based on sound authority.[2]
[2]Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310; Visa International Service Association v Reserve Bank of Australia [2003] FCA 977, O’Grady v Northern Queensland Co Ltd (1990) 92 ALR 213; YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395; Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation (1979) 24 ALR 658; Hepples v Commissioner of Taxation (1990) 22 FCR 1; Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201; Giles v Woodward [1985] 2 Qd R 91.
The CFAL Charge, it was contended, was granted by APTL as responsible entity of GPT5. GPT5 did and does more than simply hold the Geelong Property. The CFAL Charge is not to be read narrowly, as if it were a real property mortgage over the Geelong Property. CFAL had a separate real property mortgage over the Geelong Property. The CFAL Charge was intended to do more. The GPT5 Constitution contemplated, as was the fact, that APTL would hold other assets as part of its role as trustee of GPT5. The intention of the CFAL Charge was to grant security over all such assets in Victoria. In that context, the inclusion of the third limb is readily understandable and covers the Preference Units and the rights associated with them.
Finally, APTL submitted that property (small p), should not be narrowly construed and that it was a word of wide import[3] that included the Preference Units or chose in action to recover payment of the Redemption Amount. Further, it was submitted by reference to authority[4] that there was no difficulty in concluding that the chose in action was property located in Victoria. Both the debtor and creditor were located in Victoria.
[3]Reference was made to Gough’s Garages Ltd v Pugsley 91930] 1 KB 615; South Australian management Corporation v Sheahan and Ors (1995) 16 ACSR 45; Australian Property Custodian Holdings Ltd v Capital Finance Australia Ltd [2012] VSC 124.
[4]Reference was made to Assetinsure Pty Limited v New Cap Reinsurance Corporation Limited (in liquidation) and Others [2006] 225 CLR 331 at 340; Jabbour v Custodian of Israeli Absentee’s Property [1954] 1 WLR 139 at 145.
The main contention of the defendant is that the Preference Units or the chose in action in relation to the Redemption Amount could and should not be considered property solely located in Victoria.
Senior counsel for the defendant submitted that the clause defining “Secured Assets” should be separated into two parts:
a)“the whole of the undertaking property and assets of the Chargor both present and future held by the Trust in respect of the Property”,
b)“and includes any part of the Secured Assets and any property held at any time by the Chargor in respect of the Trust and located solely in Victoria”.
It was contended that the first part of the clause relates to the whole of the property assets and undertaking of the chargor in reference to the Property, that is, the two Geelong parcels of real estate.
It was submitted further that the words “any part” in the second part of the clause should be construed as covering the situation of for example, a partial release of the security so that what remains is still caught by the clause. It was also contended and indeed properly conceded that the second part of the clause should be construed as relating to all personal property that is located in Victoria and any real property, not being the Geelong properties, located in Victoria.
Accordingly, the defendants argued that the Preference Units are not caught by the first part of the clause because, while they are an asset, they are not an asset in respect of the “Property”, that is, the Geelong real estate. Further, the Preference Units are not located in Victoria and indeed have no situs because a chose in action is ambulatory in nature. It was also submitted that reliance could not be placed on the authorities relied upon by APTL in relation to the situs of a chose in action because those authorities related to mortgages, debts and shares, whereas preference units in a unit trust are entirely different. Dr Wilson SC who appeared with Ms Fogarty for the defendant urged me not to engage in an esoteric construction of the clause and that there was no need to resort – as a matter of construction – to complex conflict of law cases. Consequently, whilst accepting an expanded definition of property the defendant contended that the geographic limitation was significant and sufficient to exclude the Preference Units, and associated right to redeem, given their nature and characteristics.
Decision
It is clear that both the Preference Units and the right to redeem them are property within the definition and in particular APTL’s third limb and the defendant’s second limb. The question is whether their property is located “solely in Victoria”.
The evident intention of the parties, from the language they have used is to capture within the CFAL Charge all property of whatever kind. The only restriction, as agreed, is that such property must be located in Victoria. I am not sure what the word “solely” is intended to add. However, it may not be of any relevance in this case.
The word located seems to suggest that tangible property was perhaps intended. It is easy to determine precisely where it is situated. Given the wide definition of property this limiting factor is not warranted and it is not surprising that the argument was not put in this way.
Ignoring the words “located solely” we are left with “property … in Victoria”. Are the Preference Units and the chose in action comprising the right to redeem property in Victoria? They are clearly property but is this property in Victoria? In my opinion the answer is yes.
It was never intended to exclude non-tangible assets or choses in action. They are clearly included in and embraced by the word property. APTL had the power to invest in such property[5] and clause 3.2 of the CFAL Charge in referring to a fixed charge over the Secured Assets specifically referred to securities.[6] It is therefore necessary to determine whether this species of property, in this case the Preference Units and the chose in action comprising the right to redeem them, are in Victoria.
[5]Clause 19.3 of Constitution dated 27 January 2005.
[6]Clause 3.2(k) of CFAL Charge.
The Preference Units were issued in Victoria. The subscriber and issuer are in Victoria. The creditor and debtor are in Victoria. The register of Unitholders and holders of Preference Units is, I assume, in Victoria. The connection with Victoria is overwhelming. In addition, the following facts are relevant:
(a)The APT Master Trust Deed, the GPT5 Constitution and all amendments were made and executed in Victoria.
(b)The registered office of APTL and all of the relevant trusts and schemes are in Victoria. Further, the address on the letterhead of APTL in each of its relevant capacities has from time to time been and remains in Victoria.
(c)Board meetings of APTL in its relevant capacities were all held in Melbourne.
From a commonsense and practical point of view the conclusion is inescapable. The Preference Units and chose in action comprising the right to redeem them are located in Victoria. It is difficult to see how they are located in Western Australia. I am not prepared to accept that they have no location at all. It is in this regard that the conflict of law cases are of some assistance.
In Assetinsure Pty Ltd and New Cap Reinsurance Corporation Limited (In Liquidation) and Others[7], the High Court accepted the reasoning of the primary judge (Windeyer J) to the effect that “[l]iability in respect of a chose in action is normally situated where the debtor resides”.
[7][2006] CLR 331, [13].
In F & K Jabbour v Custodian of Israeli Absentee’s Property[8], Pearson J considered that in relation to the location of a chose in action the position was that “ … choses in action are for legal purposes localized and are situated where they are properly recoverable and are properly recoverable where the debtor resides.”[9] His Lordship referred to significant and high authority for the proposition enunciated.
[8][1954] 1 WLR 139.
[9]At page 145.
Although the authorities referred to relate to claims for damages and payment under insurance policies, the principles that inform these decisions apply in relation to negotiable instruments and more relevantly, shares in companies. In relation to shares, it is not the physical location of any share certificate that is relevant but rather the place of incorporation of the company or the place where the share register is kept.[10] In this case, the place of incorporation of all entities is in Victoria and all relevant registers it may be assumed are located in Victoria. Finally, in my opinion there is no basis for drawing any distinction between the Preference Units and shares in a company for the purpose with which we are concerned.
[10]See Nygh’s Conflict of Laws in Australia at [32.30]-[32.42] and especially [32.41] and the cases referred to which support the proposition.
Conclusion
For the reasons given I am satisfied that the Preference Units and the chose in action to redeem them are Secured Assets for the purpose of the CFAL Charge.
I will hear from the parties as to the appropriate form of order and costs.
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