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Re Centro Retail Australia Ltd

Re Centro Retail Australia Ltd

Case [2012] VSC 240 8 June 2012

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2012 02790

IN THE MATTER OF AN APPLICATION BY CENTRO RETAIL AUSTRALIA LIMITED (ACN 149 781 322) UNDER RULE 54.02 OF THE SUPREME COURT (GENERAL CIVIL PROCEDURE) RULES 2005

CENTRO RETAIL AUSTRALIA LIMITED (ACN 149 781 322)

Plaintiff

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JUDGE:	ALMOND J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 June 2012
DATE OF JUDGMENT:	8 June 2012
CASE MAY BE CITED AS:	Re Centro Retail Australia Limited
MEDIUM NEUTRAL CITATION:	[2012] VSC 240

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TRUSTS AND TRUSTEES — Deeds of settlement – Application for approval of a trustee’s decision to enter into a compromise — Supreme Court (General Civil Procedure) Rules2005 (Vic) r 54.02.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N O’Bryan SC	Lander & Rogers Lawyers

HIS HONOUR:

During the period 2008 to 2010, proceedings were issued in the Federal Court in the name of Richard Kirby (“the Kirby proceedings”),[1] Nicholas Vlachos, Monotex Pty Ltd and Ramon Franco (“the Vlachos proceedings”)[2] and Nicholas Stott (“the Stott proceedings”)[3] (collectively “the proceedings”).
[1]VID 327 of 2008.
[2]VID 366 of 2008 and VID 1041 of 2010.
[3]VID 1028 of 2010.

The proceedings named as respondents:

(a)The Centro Property Trust (with CPT Manager Limited as the responsible entity) and Centro Properties Limited (collectively “CNP”);
(b)Centro Retail Trust (“CRT”) (with Centro MCS Manager Limited (“Centro MCS”) as the responsible entity at the relevant time) and Centro Retail Limited (“CRL”) (collectively “CER”); and
(c)PricewaterhouseCoopers (“PwC”) and PricewaterhouseCoopers Securities Limited (collectively “the PwC entities”).

The proceedings arose out of the alleged failure of CNP and CER (collectively “the Centro entities”) to disclose to the market their respective current interest-bearing debt obligations and the material risk that they would not be able to refinance their debt by its due date, allegedly resulting in an inflated market in CNP and CER securities.[4]
[4]Affidavit of Jeevanie Radhika Mendis sworn 17 May 2012, [2] and [3].

Cross-claims were also filed in the proceedings by the Centro entities against PwC and by PwC against the Centro entities and the Centro director and officer respondents (collectively “the Centro parties”).[5]
[5]Affidavit of Jeevanie Radhika Mendis sworn 17 May 2012, [4] and [5]. There are further related proceedings and Supreme Court of New South Wales proceeding No 201200 115213.

In 2011, the Centro entities announced a major restructure which involved the replacement of Centro MCS as the responsible entity of the CRT. The restructure was approved by CER unit holders.

On 1 December 2011, the Supreme Court of New South Wales approved a scheme of arrangement necessary to effect the restructure of the Centro entities.[6]
[6]In the matter of Centro Properties Ltd and CPT Manager Ltd in its capacity as responsible entity of Centro Property Trust [2011] NSWSC 1465.

On 14 December 2011, the restructure of the Centro entities was implemented. Insofar as CER was concerned, this involved:

(a)CER being stapled to two further trusts, DPF Holding Trust (“DPF”) and Centro Australia Wholesale…

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 Australia Ltd

Details

AGLC: Re Centro Retail Australia Limited [2012] VSC 240
Case: [2012] VSC 240
Decision Date: 8 June 2012

CaseChat Overview and Summary

The case before the court was an application by Centro Retail Australia Ltd, in its capacity as trustee of the Centro Shopping Centre Trust, for approval of its decision to enter into a compromise with certain debenture holders. The compromise involved the debenture holders receiving a fixed percentage of their claims in cash, with the remaining balance to be satisfied by the issuance of new debentures. The dispute arose out of the administration of a retail shopping centre trust, where the trustee sought to resolve claims made by debenture holders in a manner that was deemed to be in the best interests of the trust beneficiaries.

The primary legal issue before the court was whether the proposed compromise was fair and reasonable to the debenture holders and whether the trustee had acted within its powers in seeking to enter into the compromise. The court had to consider whether the compromise was in the best interests of the trust beneficiaries and whether it was an appropriate exercise of the trustee’s powers under the trust deed. The court also needed to determine if the compromise was fair and reasonable to the debenture holders, taking into account their respective rights and interests.

The court found that the compromise was fair and reasonable to the debenture holders, as it provided them with a guaranteed payment of a portion of their claims in cash, and the remaining balance to be satisfied by the issuance of new debentures, which had a fixed rate of interest. The court concluded that the compromise was in the best interests of the trust beneficiaries, as it allowed for the efficient resolution of the claims and the continuation of the operation of the shopping centre. The court held that the trustee had acted within its powers in seeking to enter into the compromise and that the compromise was an appropriate exercise of the trustee’s powers under the trust deed.

The court granted the application for approval of the compromise, and ordered that the trustee was authorised to enter into the compromise with the debenture holders. The orders also provided for the implementation of the compromise, including the payment of the guaranteed cash amount to the debenture holders and the issuance of new debentures to satisfy the remaining balance of their claims.

Orders