TFML Ltd v MacarthurCook Fund Management Ltd - [2013] NSWCA 291

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291
Hearing dates: 4 and 5 April 2013; Written submissions 16 April 2013
Decision date: 03 September 2013
Before: McColl JA at [1];
Macfarlan JA at [2];
Meagher JA at [3]
Decision:
(1) Appeal allowed.
(2) Orders 1, 2 and 3 made by the Court below on 17 August 2012 set aside.
(3) Claims of the first and second respondents against the appellant dismissed.
(4) First and second respondents pay the appellant's costs of the proceedings in the Court below and of the appeal.
(5) Cross-appeal allowed.
(6) Judgment for the cross-appellants against the second cross-respondent in the sum of $17,332,229, that judgment to take effect on 17 August 2012.
(7) No order between the second cross-respondent and the cross-appellants as to the costs of the proceedings in the Court below and of the appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
CORPORATIONS - managed investment schemes - unlisted unit trust - terms on which units subscribed for provided for redemption after 12 months - whether that redemption a withdrawal from scheme to which Pt 5C.6 of the Corporations Act 2001 (Cth) applied - whether subscription agreement itself satisfied those requirements - whether s 601KB(3) requires that before making any withdrawal offer responsible entity must identify existing assets of scheme available to meet withdrawal requests

CORPORATIONS - managed investment schemes - obligations undertaken by responsible entity "in its personal capacity" as distinct from "in its capacity as responsible entity" - whether liabilities arising from those obligations become liabilities of new responsible entity by s 601FS(1) - whether responsible entity entitled to indemnity from assets of scheme in respect of such liabilities
CONTRACTS - construction - underwriting agreement by which units in an unlisted unit trust subscribed for -units to be redeemed after 12 months - whether issuer required to redeem as and when funds received from acceptances of public offer
Legislation Cited: Corporations Act 2001 (Cth), Pt 5C.6, ss 9, 601FC, 601FG, 601FS, 601GA
Managed Investment Act 1998 (Cth)
Cases Cited: Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; 139 CLR 54
Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410
Chief Commissioner of Stamp Duties (NSW) v Buckle [1998] HCA 4; 192 CLR 226
Ex parte Garland (1803) 10 Ves Jun 111; 32 ER 786
Glennon v Federal Commissioner of Taxation [1972] HCA 52; 127 CLR 503
Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773
Hurst v Vestcorp Ltd (1988) 12 NSWLR 394
MacarthurCook…

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: [2013] NSWCA 291
Decision Date: 03 September 2013

CaseChat Overview and Summary

The appeal concerned a dispute between TFML Ltd (the appellant) and MacarthurCook Fund Management Ltd (the first respondent) and others regarding an unlisted unit trust. The core of the dispute involved whether redemptions of units after 12 months constituted withdrawals from a managed investment scheme to which Part 5C.6 of the *Corporations Act 2001* (Cth) applied, and whether the subscription agreement met the requirements of that Part. Further issues arose concerning liabilities undertaken by a responsible entity in its personal capacity and whether these became liabilities of a new responsible entity under s 601FS(1) of the Act, and whether the responsible entity was entitled to an indemnity from the scheme's assets for such liabilities. The construction of an underwriting agreement, which provided for unit redemptions after 12 months, was also in question, specifically whether the issuer was obliged to redeem units as funds were received from public offer acceptances. The case was heard by McColl, Macfarlan and Meagher JJA.

The Court was required to determine whether the redemption provisions in the subscription agreement meant that the scheme was not a managed investment scheme for the purposes of Chapter 5C of the *Corporations Act 2001* (Cth). It also had to consider whether s 601KB(3) of the Act imposed a requirement on the responsible entity to identify existing assets of the scheme available to meet withdrawal requests before making any withdrawal offer. Furthermore, the Court had to ascertain whether liabilities incurred by a responsible entity in its personal capacity, as distinct from its capacity as responsible entity, were transferred to a new responsible entity under s 601FS(1) and whether the responsible entity was entitled to an indemnity from the scheme's assets in respect of those liabilities. Finally, the Court had to interpret the underwriting agreement to determine if the issuer was obligated to redeem units as and when funds were received from acceptances of the public offer.

The Court allowed the appeal, setting aside the orders made by the Court below and dismissing the claims of the first and second respondents against the appellant. The Court ordered the first and second respondents to pay the appellant's costs. In addition, the Court allowed a cross-appeal, entering judgment for the cross-appellants against the second cross-respondent for $17,332,229, with that judgment taking effect on 17 August 2012. No order was made regarding costs between the second cross-respondent and the cross-appellants.

Orders

Orders of the court

(1) Appeal allowed.

(2) Orders 1, 2 and 3 made by the Court below on 17 August 2012 set aside.

(3) Claims of the first and second respondents against the appellant dismissed.

(4) First and second respondents pay the appellant's costs of the proceedings in the Court below and of the appeal.

(5) Cross-appeal allowed.

(6) Judgment for the cross-appellants against the second cross-respondent in the sum of $17,332,229, that judgment to take effect on 17 August 2012.

(7) No order between the second cross-respondent and the cross-appellants as to the costs of the proceedings in the Court below and of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291
Hearing dates:	4 and 5 April 2013; Written submissions 16 April 2013
Decision date:	03 September 2013
Before:	McColl JA at [1]; Macfarlan JA at [2]; Meagher JA at [3]
Decision:	(1) Appeal allowed. (2) Orders 1, 2 and 3 made by the Court below on 17 August 2012 set aside. (3) Claims of the first and second respondents against the appellant dismissed. (4) First and second respondents pay the appellant's costs of the proceedings in the Court below and of the appeal. (5) Cross-appeal allowed. (6) Judgment for the cross-appellants against the second cross-respondent in the sum of $17,332,229, that judgment to take effect on 17 August 2012. (7) No order between the second cross-respondent and the cross-appellants as to the costs of the proceedings in the Court below and of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	CORPORATIONS - managed investment schemes - unlisted unit trust - terms on which units subscribed for provided for redemption after 12 months - whether that redemption a withdrawal from scheme to which Pt 5C.6 of the Corporations Act 2001 (Cth) applied - whether subscription agreement itself satisfied those requirements - whether s 601KB(3) requires that before making any withdrawal offer responsible entity must identify existing assets of scheme available to meet withdrawal requests CORPORATIONS - managed investment schemes - obligations undertaken by responsible entity "in its personal capacity" as distinct from "in its capacity as responsible entity" - whether liabilities arising from those obligations become liabilities of new responsible entity by s 601FS(1) - whether responsible entity entitled to indemnity from assets of scheme in respect of such liabilities CONTRACTS - construction - underwriting agreement by which units in an unlisted unit trust subscribed for -units to be redeemed after 12 months - whether issuer required to redeem as and when funds received from acceptances of public offer
Legislation Cited:	Corporations Act 2001 (Cth), Pt 5C.6, ss 9, 601FC, 601FG, 601FS, 601GA Managed Investment Act 1998 (Cth)
Cases Cited:	Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [1977] HCA 71; 139 CLR 54 Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410 Chief Commissioner of Stamp Duties (NSW) v Buckle [1998] HCA 4; 192 CLR 226 Ex parte Garland (1803) 10 Ves Jun 111; 32 ER 786 Glennon v Federal Commissioner of Taxation [1972] HCA 52; 127 CLR 503 Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773 Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 MacarthurCook…