TFML Ltd v MacarthurCook Fund Management Ltd

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.