Re Challenger Managed Investments Limited as responsible entity for Challenger Howard Mortgage Fund - [2011] NSWSC 213

Supreme Court

New South Wales

Medium Neutral Citation: Re Challenger Managed Investments Limited as responsible entity for Challenger Howard Mortgage Fund [2011] NSWSC 213
Hearing dates: 10 March 2011
Decision date: 29 March 2011
Jurisdiction: Equity Division
Before: White J
Decision:
Refer to para [50] of judgment

Catchwords: TRUSTS - judicial advice - s 63 Trustee Act 1925 - application for judicial advice by trustee whether justified in refusing to register transfer of units pursuant to transfer documentation executed under powers of attorney granted by unitholders - reasoning in Re Perpetual Investment Management Limited as responsible entity for Perpetual's Monthly Income Fund and Perpetual's Wholesale Monthly Income Fund [2011] NSWSC 133 applied - jurisdiction to give advice - advice as to registration of transfers is advice respecting administration of trust property - no statutory obligation to register transfers - trustee justified in acting on basis that no presumption contracts are binding - judicial advice that trustee justified in refusing to register transfer in respect of unitholders who have not indicated to the trustee they wish transfers to be registered - judicial advice on distribution of income and proceeds of redemption
Legislation Cited: Trustee Act 1925
Corporations Act 2001 (Cth)
Cases Cited: Re Perpetual Investment Management Limited [2011] NSWSC 133
Category: Principal judgment
Parties: Challenger Managed Investments Ltd
Representation: R Dick SC with D Mackay (Plaintiff)
L V Gyles SC (DSPC)
Minter Ellison (Plaintiff)

File Number(s): 2011/58065

Judgment

HIS HONOUR : The plaintiff ("Challenger") is the responsible entity of a registered managed investment scheme called the Challenger Howard Mortgage Fund ("the Fund"). The Fund is an express trust. It seeks advice under s 63 of the Trustee Act 1925 as follows:

"1. A direction pursuant to section 63 of the Trustee Act 1925 (NSW) or the Court's inherent jurisdiction that the plaintiff is justified, in relation to unitholders and units in the Challenger Howard Mortgage Fund ARSN 090 464 074 ( CHMF ) referred to in the letters from Direct Share Purchasing Corporation Pty Limited ( DSPC ) to the Plaintiff dated 19 January 2011 and 26 January 2011, in refusing to:

(a) Register the transfer of those units in CHMF to DSPC or to any third party;

(b) Make any distributions to DSPC or to those unitholders;

(c) Pay any redemption proceeds to DSPC or to those unitholders,

until further direction or order of the Court.

2. A direction pursuant to section 63 of the Trustee Act or the Court's inherent jurisdiction that the plaintiff is justified in holding any distributions with respect to unitholders in paragraph 1 above in a separate bank account, until further direction or order of the Court.

3. A direction pursuant to section 63 of the Trustee Act or the Court's inherent jurisdiction that the plaintiff is justified in treating the entry of the unitholders in paragraph 1 above in the Register of CHMF as being conclusive evidence of those unitholders' title to units notwithstanding the request for transfer of units made by DSPC pursuant…

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.

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Details

AGLC: Re Challenger Managed Investments Limited as responsible entity for Challenger Howard Mortgage Fund [2011] NSWSC 213
Case: [2011] NSWSC 213
Decision Date: 29 March 2011

CaseChat Overview and Summary

The case involved an application for judicial advice by the trustee of the Challenger Howard Mortgage Fund, Challenger Managed Investments Limited, concerning the refusal to register transfers of units. The dispute centred around whether the trustee was justified in refusing to register the transfer of units based on the transfer documentation executed under powers of attorney granted by the unitholders. The application was heard in the Supreme Court of New South Wales.

The legal issues before the court were whether the trustee was justified in refusing to register the transfer of units and whether the court had jurisdiction to give advice on the distribution of income and proceeds of redemption. The court examined the reasoning in a similar case, Re Perpetual Investment Management Limited, to determine the appropriate approach to these issues. The court also considered whether the advice sought by the trustee was respecting the administration of trust property and whether there was a statutory obligation to register the transfers.

The court found that it had jurisdiction to give advice on the administration of trust property and that the advice sought by the trustee was indeed respecting the administration of trust property. The court determined that there was no statutory obligation to register the transfers and that the trustee was justified in acting on the basis that no presumption contracts are binding. The court further advised that the trustee was justified in refusing to register transfers in respect of unitholders who had not indicated to the trustee that they wished the transfers to be registered. In relation to the distribution of income and proceeds of redemption, the court provided guidance on how the trustee should proceed.

The court concluded that the trustee was justified in refusing to register the transfer of units and provided advice on the distribution of income and proceeds of redemption. The final orders included the court's advice that the trustee was justified in refusing to register the transfers and provided guidance on the distribution of income and proceeds of redemption.

Orders