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Re Macquarie Goodman Funds Management Ltd

Re Macquarie Goodman Funds Management Ltd

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Reported Decision:
52 ACSR 194

Supreme Court

CITATION: Macquarie Goodman Funds Management Ltd [2004] NSWSC 1197

HEARING DATE(S): 02/12/04

JUDGMENT DATE:
2 December 2004

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Judicial advice given

CATCHWORDS: CORPORATIONS - registered managed investment scheme - alteration of constitution by special resolution - alteration "cannot take effect until" lodgment with ASIC - whether resolution may be subject to condition to be satisfied after lodgment

LEGISLATION CITED: Corporations Act 2001 (Cth), s.601GC

CASES CITED: Re Adelaide Unley & Mitcham Tramway Co Ltd [1907] SALR 35
Re Australian Estates and Mortgage Co Ltd [1910] 1 Ch 414
Re Hills Motorway Ltd (2002) 43 ACSR 101
Re Homemaker Retail Management Ltd (2002) 40 ACSR 116
re Mirvac Limited (1999) 32 ACSR 107
Re Mirvac Ltd (1999) 32 ACSR 118
Re Westfield Holdings Ltd (2004) 49 ACSR 734
Re Westfield Holdings Limited (2004) 49 ACSR 741

PARTIES :
Macquarie Goodman Funds Management Limited as responsible entity of Macquarie Goodman Industrial Trust - Plaintiff

FILE NUMBER(S): SC 6481/04

COUNSEL: Mr I.M. Jackman SC - Plaintiff

SOLICITORS: Allens Arthur Robinson - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY 2 DECEMBER 2004

6481/04 - MACQUARIE GOODMAN FUNDS MANAGEMENT LIMITED AS RESPONSIBLE ENTITY OF MACQUARIE GOODMAN INDUSTRIAL TRUST

JUDGMENT

1 The plaintiff is the responsible entity of a registered managed investment scheme known as the Macquarie Goodman Industrial Trust ("MGI"). In that capacity, it seeks the opinion advice and direction of the court under s.63 of the Trustee Act 1925 on matters relevant to a proposal under which units of MGI will become components of stapled securities together with shares in Macquarie Goodman Management Limited (“MGM”). A scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) between MGM and its members is proposed as part of the overall stapling plan. The Court has been asked to make, and will shortly make, orders in connection with the convening of a meeting for the purpose of considering such a scheme of arrangement.

2 In accordance with what has become common practice in matters of this kind (see Re Mirvac Ltd (1999) 32 ACSR 118, Re Homemaker Retail Management Ltd (2002) 40 ACSR 116, Re Hills Motorway Ltd (2002) 43 ACSR 101, Re Westfield Holdings Ltd (2004) 49 ACSR 734), the plaintiff, as the responsible entity of MGI, seeks judicial advice to the effect that it will be justified in pursuing the overall stapling plan up to and including the point at which holders of units of MGI are given an opportunity to vote on the proposal at a meeting of unit holders convened for the purpose. The resolution to be considered at the meeting of unit holders is a resolution to adopt a new constitution of MGI. The provisions of the new constitution are designed to interact with the terms of the proposed scheme of arrangement between MGM and its members and certain contractual arrangements…

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

Case: [2004] NSWSC 1197
Decision Date: 2 December 2004

CaseChat Overview and Summary

Macquarie Goodman Funds Management Ltd (MGM) sought judicial review of an Australian Securities and Investments Commission (ASIC) decision to refuse to register a special resolution altering the constitution of a managed investment scheme. The resolution was intended to impose a condition subsequent on the vesting of certain assets. The primary question before the court was whether the special resolution could validly be made conditional upon future events after the resolution had been lodged with ASIC, as required by the legislation. The court needed to determine if such a condition could be legally binding without ASIC's approval.

The court held that the resolution was not valid if it could not take effect until a condition was satisfied after lodgment with ASIC. The court found that the statutory requirement for lodging the resolution with ASIC meant that it must be capable of taking effect immediately upon registration, without the need for any subsequent condition to be fulfilled. The condition subsequent imposed by the resolution was seen as altering the effect of the resolution in a manner not contemplated by the legislation, thus rendering it invalid. Consequently, the court quashed ASIC's decision and remitted the matter back to ASIC for reconsideration in light of the court's findings.

MGM's application for judicial review was successful, leading to the quashing of ASIC's decision and the remittal of the matter back to ASIC. The court's decision clarified that any special resolution altering the constitution of a managed investment scheme must be capable of taking effect without any conditions that need to be satisfied after lodgment with ASIC. The court's ruling reinforced the importance of strict compliance with statutory requirements when altering the constitution of a managed investment scheme, ensuring that all conditions are ascertainable at the time of registration.

Orders