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Re Centro Retail

Re Centro Retail

Case [2011] NSWSC 1175 5 October 2011

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Centro Retail Limited and Centro MCS Manager Limited in its capacity as Responsible Entity of Centro Retail Trust [2011] NSWSC 1175
Hearing dates: 29, 30 September 2011
Decision date: 05 October 2011
Jurisdiction: Equity Division - Corporations List
Before: Barrett J
Decision:
Judicial advice that the applicant, as responsible entity of the Centro Retail Trust, would be justified in modifying the constitution of the Centro Retail Trust under s 601GC(1)(b) of the Corporations Act 2001 (Cth) in accordance with the proposed amending deed at tab 5 of exhibit MDB1 to the second affidavit of Michael Dean Benett sworn on 29 September 2011 and the proposed amended constitution at tab 4 of that exhibit

Catchwords: CORPORATIONS - managed investment schemes - modification of constitution of registered scheme under s 601GC(1) - whether in the particular case the responsible entity may effect modification under s 601GC(1)(b) - meaning of "members' rights" - whether members have a "right" to see new units issued for the price stated in the existing constitution and not otherwise unless some different basis is added by special resolution of members - held that "members' rights" do not extend to a "right" to have the scheme administered according to the existing constitution and not otherwise - "members' rights" to be construed by analogy with company law - need nevertheless for the responsible entity, as a trustee, to act for the benefit of beneficiaries - the possibility of dilution of existing members is a matter to be taken into account in assessing benefit to beneficiaries
Legislation Cited: Company Law Review Act 1998 (Cth)
Corporations Act 2001 (Cth), Part 5.1, ss 601FB(1), 601FC(2), 601GC(1)
Trustee Act 1925, s 63
Cases Cited: Armitage v Nurse [1998] Ch 241
Eagle Star Trustees Ltd v Heine Management Ltd (1990) 3 ACSR 232
ING Funds Management Ltd v ANZ Nominees Ltd [2009] NSW 243; (2009) 228 FLR 444
In the matter of Centro Properties Ltd and CPT Manager Ltd [2011] NSWSC 1171
Lowry (Inspector of Taxes) v Consolidated African Selection Trust Ltd [1940] AC 648
Re Mirvac Ltd [1999] NSWSC 457; (1999) 32 ACSR 107
Premium Income Fund Action Group Inc v Wellington Capital Ltd [2011] FCA 698
Re John Smith's Tadcaster Brewery Ltd [1953] Ch 308
Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146
Shearer (Inspector of Taxes) v Bercain Ltd [1980] 3 All ER 295
Smith v Permanent Trustee Australia Ltd (1992) 10 ACLC 906
White v Bristol Aeroplane Co Ltd [1953] Ch 65
Whitehouse v Carlton Hotel Pty Ltd [1987] HCA 11; (1987) 162 CLR
Category: Interlocutory applications
Parties: Centro Retail Limited - First Plaintiff
Centro MCS Manager Limited in its capacity as Responsible Entity of Centro Retail Trust - Second Plaintiff
Representation: Mr J G Santamaria QC/Mr P Zappia - Plaintiffs
Mr M A Izzo - Australian Securities and Investments Commission as amicus curiae
Clayton Utz - Plaintiffs

File Number(s): 2011/00285738

Judgment

Reasons just published (

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Centro Retail

Details

AGLC: Re Centro Retail [2011] NSWSC 1175
Case: [2011] NSWSC 1175
Decision Date: 05 October 2011

CaseChat Overview and Summary

In the matter of Re Centro Retail, the case was heard before the Federal Court of Australia. The dispute involved the management of a managed investment scheme, specifically the modification of its constitution. The primary issue was whether the responsible entity could modify the constitution under a particular section of the law and whether such modification would affect the members' rights. The responsible entity sought to alter the scheme's constitution to allow new units to be issued at a different price than specified in the original constitution.

The court had to determine the scope of "members' rights" under the law and whether these rights encompassed a guarantee that the scheme would be administered strictly according to the existing constitution. The court examined the concept of "members' rights" by drawing analogies with company law and considered the responsible entity's duty to act in the best interests of the beneficiaries. The court also needed to assess whether the proposed modification would dilute existing members' rights, which would be a critical factor in deciding the benefit to the beneficiaries.

In its reasoning, the court concluded that "members' rights" did not include a right for the scheme to be administered strictly according to the existing constitution unless modified by a special resolution of the members. The court held that the responsible entity, acting as a trustee, must consider the potential dilution of existing members' rights when assessing the benefits to beneficiaries. Ultimately, the court allowed the modification of the scheme's constitution, finding that it was in the best interests of the beneficiaries.

Orders