Re Perpetual Investment Management Ltd

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.