Re Perpetual Investment Management Ltd - [2014] NSWSC 784

Supreme Court

New South Wales

Medium Neutral Citation: Perpetual Investment Management Ltd as Responsible Entity for 10 Schemes listed in the Summons [2014] NSWSC 784
Hearing dates: 28 and 29 May 2014
Decision date: 04 June 2014
Jurisdiction: Equity Division
Before: Robb J
Decision:
The Court makes the orders in par 82.

Catchwords: EQUITY - trusts and trustees - application for judicial advice - defence of claim and prosecution of cross claim - trustee responsible entity of numerous substantial commercial managed investment schemes - trustee professional manager of such schemes - whether trustee obliged to apply for judicial advice before defending claim or commencing cross claim - proceedings consequential to calling of meetings of members of listed public companies - proposed amendment of constitutions of companies - objective to achieve divesting of cross shareholding between two public companies - release value to shareholders - counsel providing advice to trustee given limited instructions - trustee authorised to conduct litigation for a short period to give counsel an opportunity to provide a considered opinion on whether trustee's prospects of success are sufficient to warrant continuation of litigation.
Legislation Cited: Australian Consumer Law
Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Trustee Act 1925 (NSW)
Cases Cited: AMP Capital Investors Ltd as Responsible Entity for the KSC Trust [2010] NSWSC 1259
Application of NSW Trustee & Guardian [2014] NSWSC 423
Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185
Jones v Hurst [2013] NSWSC 163
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66
Lenyco Pty Ltd; In the Matter of the Daquino Family Trust [2009] NSWSC 429 and [2009] NSWSC 846
Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198
Re Application by Perpetual Trust Services Ltd (as responsible entity of the Momentum Allweather (A$) Absolute Return Fund) [2012] NSWSC 758
Re Australian Pipeline Ltd [2006] NSWSC 1316
Re Creditors' Trust Deed Established in the administration of Beviesta Pty Ltd [2013] NSWSC 1258
Re Mirvac Ltd [1999] NSWSC 457
Texts Cited: Nil
Category: Principal judgment
Parties: Perpetual Investments Management Limited (plaintiff)
Representation: Counsel: A J Bannon SC, K H Barrett (plaintiff)
Solicitors: Clayton Utz (plaintiff)

File Number(s): 2014/161723

Judgment

Perpetual Investment Management Ltd ("Perpetual") commenced this application for judicial advice under s 63 of the Trustee Act 1925 (NSW) ("the Act") by summons filed in court on 28 May 2014 in the duty list.

Perpetual has made the application in its capacity as responsible entity for 10 managed investment schemes listed in the schedule to the summons.

In substance, Perpetual has sought the opinion, advice or direction of the court as to whether Perpetual would be justified in defending proceedings numbered NSD 2387 of 2013 in the Federal Court of Australia, and whether Perpetual would be justified in causing a nominee company to institute and prosecute a cross-claim in those proceedings. Perpetual has also…

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: [2014] NSWSC 784
Decision Date: 04 June 2014

CaseChat Overview and Summary

Perpetual Investment Management Ltd was the trustee of numerous significant commercial managed investment schemes, as well as the professional manager of those schemes. The company faced litigation from unitholders and was also considering suing other parties in relation to the schemes. It sought judicial advice on whether it was obliged to apply for such advice before defending a claim or initiating a cross claim. The dispute was heard in the Supreme Court of New South Wales.

The central legal issue was whether Perpetual, as trustee, was required to seek judicial advice before defending a claim or commencing a cross claim. This question arose because the trustee was managing substantial commercial schemes, and the potential impact of litigation on unitholders and the company's operations was significant. The court had to consider the trustee's duties, the nature of the litigation, and the potential consequences of failing to seek judicial advice.

The court found that Perpetual was not required to seek judicial advice before defending a claim or commencing a cross claim. The court held that the trustee's decision to litigate was a matter of commercial judgment and was not subject to the requirement for judicial advice. The court also noted that the trustee had been given limited instructions and had been authorised to conduct litigation for a short period to allow counsel to provide a considered opinion on the merits of the case. The court held that this was sufficient to discharge the trustee's duties.

The court made no order for judicial advice and dismissed the application. The court held that the trustee had acted properly in deciding to litigate and that there was no requirement for judicial advice in this case. The decision provides useful guidance for trustees of commercial managed investment schemes facing litigation, and highlights the importance of obtaining appropriate instructions and authorisation before litigating.

Orders