FEDERAL COURT OF AUSTRALIA
Aveo Group Limited v State Street Australia Ltd in its capacity as custodian for the Retail Employees Superannuation Pty Limited as trustee of the Retail Employees Superannuation Trust [2015] FCA 1019
Citation: Aveo Group Limited v State Street Australia Ltd in its capacity as custodian for the Retail Employees Superannuation Pty Limited as trustee of the Retail Employees Superannuation Trust [2015] FCA 1019 Parties: AVEO GROUP LIMITED (ACN 010 729 950) and RETIREMENT VILLAGES GROUP MANAGEMENT PTY LTD (ACN 119 974 819) v STATE STREET AUSTRALIA LTD (ACN 002 965 200) IN ITS CAPACITY AS CUSTODIAN FOR THE RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST, RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST, RETIREMENT VILLAGES GROUP RE LIMITED (ACN 119 974 597) IN ITS CAPACITY AS RESPONSIBLE ENTITY FOR THE RETIREMENT VILLAGES TRUST (ARSN 127 682 811), RETIREMENT VILLAGES AUSTRALIA LIMITED (ACN 119 264 872) and RVNZ INVESTMENTS LIMITED (ACN 604 453 545) File number: VID 500 of 2015 Judge: BEACH J Date of judgment: 9 September 2015 Catchwords: CORPORATIONS – stapled securities – convening of shareholders meetings – validity of notices convening meetings – validity of special resolutions – ss 249F and 252D of Corporations Act 2001 (Cth) – Constitutions – construction of constituent documents – construction of Securityholders Deed – termination of Advisory Services Deed – application dismissed Legislation: Corporations Act 2001 (Cth) ss 9, 136(2), 140(1), 162, 203D, 246B(2), 249F, 249N, 252D, 254H(1), 256B, 256C, 257D, 601GC(1)(a), 1322 Cases cited: Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia [2015] FCA 785
Australian Hydrocarbons NL v Green (1985) 10 ACLR 72
Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 55 ACSR 185
Donaldson v Natural Springs Australia Limited [2015] FCA 498
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640
Gramophone & Typewriter Ltd v Stanley [1908] 2 KB 89
HNA Irish Nominee Ltd v Kinghorn (2010) 78 ACSR 553; [2010] FCAFC 57
Hopkins Professional Services Pty Ltd v Foyster Holdings Pty Ltd (2001) 39 ACSR 519
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1
Molopo Energy Ltd v Keybridge Capital Ltd (2014) 104 ACSR 46
National Roads & Motorists’ Association v Parker (1986) 6 NSWLR 517
Oil Basins Ltd v Bass Strait Oil Company (2012) 297 ALR 261; [2012] FCA 1122
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Taiqi Investments (Aust) Pty Ltd v Winlyn Developments Pty Ltd (2011) 86 ACSR 197; [2011] NSWSC 1218
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165Date of hearing: 9 September 2015 Date of publication of reasons: 11 September 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 95 Counsel for the Applicants: Mr P D Crutchfield QC with Dr C G Button Solicitors for the Applicants: Minter Ellison Counsel for the First…
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Details
- Case
- [2015] FCA 1019
- Decision Date
CaseChat Overview and Summary
Aveo Group Ltd and RVGM, two significant securityholders in the Retirement Villages Group (RVG), sought an interlocutory injunction against State Street Australia Ltd and other respondents to restrain them from convening meetings of the Stapled Entities, which comprised three stapled securities. The applicants contested the validity of the notices convening the meetings and the potential resolutions to be voted on. The primary legal issues revolved around the validity of the notices convening the meetings, the interpretation of the constituent documents, and the applicability of sections 249F and 252D of the Corporations Act 2001 (Cth). The court also examined the conditions under which the Advisory Services Deed could be terminated, particularly focusing on Clause 13.3.
The court concluded that the notices convening the meetings were valid and that the applicants had not demonstrated a serious question to be tried regarding the validity of the special resolutions proposed. The interpretation of the Securityholders Deed and the Advisory Services Deed did not support the applicants’ contention that the meetings were invalid. The court found that the respondents had complied with the statutory requirements, and the applicants had not provided sufficient evidence to establish that the meetings were improperly convened or that the resolutions were invalid. Consequently, the application was dismissed with costs.
The court dismissed Aveo Group Ltd and RVGM's originating application and ordered that the applicants pay the respondents' costs of and incidental to the proceeding. The final orders were entered in accordance with Rule 39.32 of the Federal Court Rules 2011.
The court concluded that the notices convening the meetings were valid and that the applicants had not demonstrated a serious question to be tried regarding the validity of the special resolutions proposed. The interpretation of the Securityholders Deed and the Advisory Services Deed did not support the applicants’ contention that the meetings were invalid. The court found that the respondents had complied with the statutory requirements, and the applicants had not provided sufficient evidence to establish that the meetings were improperly convened or that the resolutions were invalid. Consequently, the application was dismissed with costs.
The court dismissed Aveo Group Ltd and RVGM's originating application and ordered that the applicants pay the respondents' costs of and incidental to the proceeding. The final orders were entered in accordance with Rule 39.32 of the Federal Court Rules 2011.
Orders
Orders of the court
1. The applicants’ originating application be dismissed.
2. The applicants pay the respondents’ costs of and incidental to this proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
This matter was listed before me on 7 September 2015 for directions and to deal with the applicants’ interlocutory injunction application given that the various securityholders’ meetings were to be held on 10 September 2015. I formed the view that the matter should proceed expeditiously to a final hearing, which I fixed for 9 September 2015. On 9 September 2015 the final hearing took place. The applicants and the first and second respondents were represented before me and took an active role in the proceeding. The third, fourth and fifth respondents filed submitting appearances indicating that they would abide any order of the Court; nevertheless the fifth respondent was represented before me. Several hours after the conclusion of the hearing, I announced my determination to the parties. I dismissed the applicants’ originating application with costs. These are my reasons for that dismissal.FACTUAL BACKGROUND Aveo is a securityholder in a stapled investment known as the Retirement Villages Group (RVG). RVG comprises three stapled entities:(a)Retirement Villages Australia Limited (RVAL), an Australian public company;(b)RVT, an Australian managed investment scheme registered under Chapter 5C of the Act whose responsible entity is Retirement Villages Group R.E. Limited (RVGRE), a wholly owned subsidiary of Aveo; and(c)RVNZ Investments Limited (RVNZI), another Australian public company,(collectively, the Stapled Entities).Aveo and its related entities hold 38.79% of the securities in RVG. The second applicant (RVGM) is a securityholder in RVG, and is also the manager of RVG pursuant to the terms of the ASD dated 28 September 2007 between it and the Stapled Entities. In January 2012, Aveo acquired 100% of the shares in RVGM. The first respondent is State Street Australia Ltd in its capacity as custodian for the second respondent, Retail Employees Superannuation Pty Limited, as trustee of the Retail Employees Superannuation Trust; I have earlier referred to this collectively as REST. REST is a securityholder in RVG. It has issued the notices calling meetings of the Stapled Entities which are the subject of the present proceeding. The third respondent is the responsible entity of RVT, one of the Stapled Entities. The fourth and fifth respondents are the other two Stapled Entities (RVAL and RVNZI). As I have said, RVG is managed by RVGM under the ASD. Clause 13 of the ASD (as amended) provides that the term of the appointment of RVGM as the advisor to RVG continues until RVGM is removed as the advisor, RVGM resigns as the advisor or RVG is wound up. Clause 13.3 sets out the circumstances in which the appointment of RVGM as the advisor may be terminated. Clause 13.3 provides: (a)The Advisor’s appointment may only be terminated by the Stapled Entities if (provided that in the case of clause 13.3(a)(vi) the Stapled Entities must terminate the appointment of the Advisor if the relevant resolution has been passed by the required majority):(i) the Advisor ceases to carry on business;(ii)the Advisor ceases to hold any licence or authorisation necessary to lawfully perform its obligations under this Deed;(iii)the Advisor is placed in Liquidation;(iv)the Advisor commits a material breach of this Deed which is not rectified 60 days after a Stapled Entity provides the Advisor with written notice of that breach;(v)the Advisor acts with gross negligence or wilful misconduct in carrying out its obligations under this Deed or engages in fraudulent or dishonest acts,(vi)a resolution to remove the Advisor is passed in respect of all the Stapled Entities by at least 75% of the total votes that may be cast by all Securityholders entitled to vote on each of those resolutions, including Securityholders who are not present in person or by proxy and, subject to the Law, the Excluded Securityholders.(vii) The Stapled Entities are not Listed and:(A) as at a Performance Test Calculation Date:(I)the Performance Test Return for the 3 consecutive Performance Test Periods prior to and including the Performance Test Period ending on the Performance Test Calculation Date is less than the Performance Test Benchmark Return; and(II) the Cumulative Benchmark Index exceeds the Cumulative Property Index; and(B)within 3 months after that Performance Test Calculation Date, a resolution to remove the Advisor is passed in respect of all the Stapled Entities by at least 75% of the total votes that may be cast by all Securityholders entitled to vote on each of those resolutions, including Securityholders who are not present in person or by proxy but excluding the Excluded Securityholders.Each variable for the purposes of this clause 13.3(a)(vii) is to be calculated by the Advisor at the Performance Test Calculation Date and is conclusive, in the absence of manifest error.(b)If the Advisor’s appointment is terminated pursuant to clause 13.3(a) or the Advisor resigns pursuant to clause 13.2, all directors, executives, employees, representatives, assignees and delegates of the Advisor, its Related Bodies Corporate and its Related Entities will cease work under this Deed at the date of the Advisor’s termination, unless the Board of a Stapled Entity has given a direction in accordance with clause 13.5.(c)If, at a Liquidity Review Date, the target equity internal rate of return for the Stapled Entities determined by the Stapled Entities (after the deduction of Base Fees, Performance Fees and expenses under clause 11.1) differs to a material extent from 12% per annum:(i)the Advisor must serve a written notice on the Stapled Entities proposing an amendment to the definition of “Performance Test Benchmark Return” in clause 1.1 (the “Benchmark Return Amendment”);(ii)the Stapled Entities must, as soon as practicable following receipt of such notice, requisition a meeting of Securityholders to vote on a resolution to approve the Benchmark Return Amendment;(iii)the Advisor shall have the right to speak at any meeting at which such resolution is to be considered and to send a circular to Securityholders prior to such meeting; and(iv)the Stapled Entities must use best endeavours to assist the Advisor to speak and send a circular.If a resolution to approve the Benchmark Return Amendment is passed in respect of all the Stapled Entities by at least 50% of the total votes that may be cast by all Securityholders entitled to vote on the resolution, including Securityholders who are not present in person or by proxy, but excluding the Excluded Securityholders, the Parties must do all things (including executing all necessary documents) to give effect to the Benchmark Return Amendment.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
In summary, the Notice is valid.CONCLUSION For the above reasons, I dismissed the applicants’ application with costs.
Ratio Decidendi
Legal Principle Established
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