Primary Securities Ltd (Trustee), in the matter of Baker Partners Founders Fund

The case before the court involved Primary Securities Ltd (PSL) acting as the trustee of the Baker Partners Founders Fund, which sought orders to wind up a class of investment scheme and a unit trust. The dispute arose due to substantial losses incurred by investors who had invested in shares of a specified fund, with the trustee alleging that the fund and its director were responsible for the losses. PSL commenced arbitral proceedings against the fund and its director but found no evidence that they had assets to satisfy any arbitral award. PSL sought judicial advice on whether it was justified in pursuing proceedings against the insurer and refraining from prosecuting the existing arbitral proceedings.

The legal issues before the court included whether it was appropriate to make orders for winding up part of the scheme, winding up the unit trust comprising the fund, appointing PSL to undertake any winding up, and providing advice on whether PSL was justified in pursuing the insurance claim and refraining from prosecuting the arbitral proceedings. The court considered the constitution of the scheme, which contemplated separate administration of the class of units and provided for the winding up of a class upon termination by the responsible entity. The court also considered the object and purpose of the class, whether it could be accomplished or achieved, and whether there were funds available to be administered.

The court found that there were no funds available to be administered in respect of Class S, and any winding up of the class would not be in accordance with the constitution. The court also found that it was not appropriate to make any order requiring the winding up of the scheme at that time. The court concluded that the provisions of the scheme would continue to apply to its administration. The court granted the application for judicial advice that PSL was justified in commencing and prosecuting proceedings against the insurer and refraining from prosecuting the existing arbitral proceedings. The court dismissed the application otherwise.

The court made orders that PSL as trustee of the Baker Partners Founders Fund would be justified in commencing and prosecuting proceedings against the insurer for indemnity under the insurance policy and refraining from prosecuting the existing arbitral proceedings. The court also ordered that the plaintiff's reasonable costs of the application for judicial advice be paid from the property of Baker Partners Founders Fund, and granted liberty to the plaintiff to apply within 14 days for any further orders as to costs.