Re Investa Listed Funds Management Ltd

[2016] NSWSC 344

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	In the matter of Investa Listed Funds Management Limited (as responsible entity of Armstrong Jones Office Fund: ARSN 090242229) [2016] NSWSC 344
Hearing dates:	Friday, 18 March 2016
Date of orders:	18 March 2016
Decision date:	18 March 2016
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Plaintiffs would be justified in publishing on the company announcements platform of the Australian Securities Exchange, and in distributing to all registered security holders of Armstrong Jones Office Fund and Prime Credit Property Trust, an announcement substantially in the form of annexure ARD 4 to the affidavit of Antony Robert Damian sworn on 18 March 2016, with certain amendments.
Catchwords:	CORPORATIONS – whether under (NSW) Trustee Act 1925, s 63, independent board committee justified in announcing to ASX published documents and distributing copies to unitholders – whether appropriate to seek judicial advice – document containing director or trustee’s recommendations – independent expert advice
Legislation Cited:	(CTH) Corporations Act 2001, s 411 (NSW) Trustee Act 1925, s 63
Cases Cited:	Centro Retail Limited [2011] NSWSC 1320 Re Coates Hire Ltd [2007] FCA 2105 Trust Company Limited [2013] NSWSC 1946
Category:	Consequential orders (other than Costs)
Parties:	Investa Listed Funds Management Limited (as responsible entity of Armstrong Jones Office Fund: ARSN 090242229)( first plaintiff) Investa Listed Funds Management Limited (as responsible entity of Prime Credit Property Trust ARSN 089849196) (second plaintiff)
Representation:	Counsel: P J Brereton SC (plaintiffs)   Solicitors: Herbert Smith Freehills (plaintiffs)
File Number(s):	2016/68063

Judgment (EX TEMPORE)

1. HIS HONOUR: On 8 March 2016, I made orders that the plaintiff Investa Listed Funds Management Limited, in its capacity as responsible entity of the Armstrong Jones Office Fund and of the Prime Credit Property Trust, would be justified in convening meetings of security holders in the Investa Office Fund (“IOF”), to consider a proposal in relation to securities in the fund, and in distributing to security holders an explanatory memorandum, which the Court considered in relation to the proposal. The explanatory memorandum has now been distributed to security holders.

2. On 15 March 2016, Investa Office Management Holdings Pty Limited (“IOM”), which owns the shares in the plaintiff company, and also owns the current manager of the IOF, published to unitholders a media release and an information memorandum, marked "Important information for IOF unitholders", headed "You have a choice", urging a "No" vote to the proposal to be submitted to the extraordinary general meeting. The document foreshadows a potential proposal.

3. The Independent Board Committee (“IBC”) of the plaintiff wishes to make an announcement to the ASX in relation to the documents that have been published by IOM, and to distribute a copy of that announcement to unitholders. By interlocutory process filed in Court today, it seeks a direction from the Court, pursuant to (NSW) Trustee Act 1925, s 63, that it would be justified in doing so.

4. The precaution of seeking judicial advice is taken because in In the matter of Centro Retail Limited [2011] NSWSC 1320, Barrett J observed that where the Court has ordered the convening of a meeting and has approved an explanatory statement, the company itself should not dispatch additional explanatory material without first obtaining court approval. His Honour explained that that was not limited to material accompanying the explanatory memorandum, such as had been referred to by Emmett J in Re Coates Hire Ltd [2007] FCA 2105, but applied with equal force to any proposal for later supplementation of the approved explanatory statement. See also Trust Company Limited [2013] NSWSC 1946 at [6] and [7]. Although those were decisions in the context of company schemes under (CTH) Corporations Act 2001, s 411, the analogous approach of the Court to trust schemes suggests that the same should apply in a case of a trust scheme. Accordingly, I am satisfied that it is appropriate to seek advice in the circumstances.

5. One matter that has caused me some concern is that the document proposed to be distributed has aspects that extend beyond mere information, to advocacy against the IOM case and for the IOF case. Despite this, advocacy is not impermissible in such circumstances, so long as it is fair and honest. The explanatory memorandum invariably contains a director's or trustee's recommendation and is indeed required to do so. Effectively, what this document does is to explain that the recommendation still stands, and to provide reasons for not acting on the contrary recommendation of IOM.

6. The independent board committee has submitted the IOM documents to the independent expert, KPMG, in light of the requirement that if an expert becomes aware of a material change in circumstances, then depending on the circumstances it may be appropriate for a commissioning party to send a supplementary report. The independent expert noted that the IOM document contained new information regarding the terms on which IOM was willing to offer IOF a 50% interest in the Investa platform, in a joint venture with ICPF, should the DEXUS proposal be rejected. Having considered that information, the independent expert remained of the view that the DEXUS proposal was fair and reasonable, and in the best interests of IOF unitholders, in the absence of a superior proposal.

7. That said, it is important that, while it is permissible and necessary to put forward the directors' opinions and recommendations, it be done in a manner which is as objective as possible, and I have proposed a number of minor amendments to the document with that in mind.

8. It is also important to appreciate that by directing that the trustee would be justified in taking the course proposed, that does not amount to the Court endorsing in any way the statements in the announcement. What the Court is doing is to endorse the IBC conveying to unitholders its genuine opinions as set out in the announcement. In doing so, the Court acts on the facts deposed to in the affidavit of Antony Robert Damian of 18 March 2016, including in particular, that the IBC wishes to make the announcement in question, that the Due Diligence Committee has considered the announcement and resolved that it was satisfied that its contents are true and accurate and not misleading, and that the independent expert holds the views set out in the Draft Confirmatory Opinion of the Independent Expert found at pages 43 and following of the above affidavit.

9. One matter of reassurance in this respect is that, if it turns out that the announcement is in any respect misleading or oversteps the mark – not that I am to be taken as suggesting that it might – then that may provide a ground for resisting the ultimate approval of the Court at the second hearing.

10. Accordingly, the Court orders that:

1. Pursuant to Trustee Act, s 63, the plaintiffs would be justified in publishing on the company announcements platform of the Australian Securities Exchange, and in distributing to all registered security holders of Armstrong Jones Office Fund and Prime Credit Property Trust, an announcement substantially in the form of annexure ARD 4 to the affidavit of Antony Robert Damian sworn on 18 March 2016, with the following amendments:

1. In paragraph numbered 1, first sub-paragraph, fourth line, delete "would" and substitute "is likely to". Sixth line, delete "significant"; second sub-paragraph, first line, after "would" and before "cease" insert "likely";

2. Paragraph numbered 2, delete “in whole”;

3. Paragraph numbered 3, renumber as 2; first sub-paragraph, fifth line, delete "seems clear" and substitute "appears"; sixth line delete "significant" and substitute "apparent";

4. Paragraph numbered 4, last line, delete "prevent", substitute "make it difficult for". Delete "being", substitute "to be". Delete "again", substitute "now";

5. Second last paragraph, last sentence, after "The IBC confirms that" insert, "in its view".

11. These orders are to be entered forthwith.

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Amendments

30 March 2016 - Typographical errors on coverpage