Westfield Management Limited as Trustee for the Westart Trust v AMP Capital Property Nominees Limited as Nominee of Unisuper Limited in its Capacity as Trustee of the Complying Superannuation Fund Known as Unisuper

[2012] HCATrans 166

[2012] HCATrans 166

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S15 of 2012

B e t w e e n -

WESTFIELD MANAGEMENT LIMITED AS TRUSTEE FOR THE WESTART TRUST

Applicant

and

AMP CAPITAL PROPERTY NOMINEES LIMITED AS NOMINEE OF UNISUPER LIMITED IN ITS CAPACITY AS TRUSTEE OF THE COMPLYING SUPERANNUATION FUND KNOWN AS UNISUPER

First Respondent

UNISUPER LIMITED IN ITS CAPACITY AS TRUSTEE OF THE COMPLYING SUPERANNUATION FUND KNOWN AS UNISUPER

Second Respondent

Application for special leave to appeal

GUMMOW J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 JUNE 2012, AT 12.12 PM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR J.C. HEWITT, for the applicant.  (instructed by Speed and Stracey Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friends, MR M.I. BORSKY and MR W.A.D. EDWARDS, for the respondents.  (instructed by Allens Lawyers)

GUMMOW J:   Yes, Mr Walker.

MR WALKER:   Your Honours, a self‑described unit trust and joint venture was entered into in the nature of a single purpose venture for the exploitation of a major shopping centre, the Karrinyup Regional Shopping Centre, with an agreed paramountcy of the unitholders’ agreement over the trust deed; the trust deed provided in a manner that is unremarkable for the realisation of the trust assets in the event of a determination of the trust. 

That, in turn, in a manner which is unremarkable, dovetails with the statutory provisions in question in this case, whereby upon a termination – a winding‑up I should say – the realisation and distribution is to proceed, so far as possible, in accordance with the constitution of the trust.  By that frame, sale was inevitable of the shopping centre upon a statutorily determined determination of the trust.  As was common ground and brought the parties into conflict, the statutory route in question was by request for a ballot. 

Curiously, Parliament provides for 50 per cent or more of the units voting sufficient to bring about the commencement of a winding‑up and the inevitability of a sale.  All of that is pregnant in the framework in which these parties’ agreement is to be seen.  The paramount unitholders’ agreement attended to the question of voting and specifically attended to the question of voting in relation to sale of the asset by the combination of the two provisions that your Honours have seen are at the heart of the dispute between the parties.  At first instance Justice Ward decided that the combination of the two provisions, 10.1(a) and 16.2, spoke loudly about what the parties themselves had called the need to:

give effect to the intent and effect of the provisions of this deed.

I was there quoting from clause 16.2.  Now, clause 10.1(a) speaks about voting in the negative or ‑ ‑ ‑

GUMMOW J:   Where can we see 10.1(a)?  Several places, I think.

MR WALKER:   In our submissions it is page 85.  In its form in the provision you will see it at page 104.

GUMMOW J:   Yes, I have it.

MR WALKER:   Now, it speaks loudly in relation to voting by precluding the notion of disagreement between the parties, nonetheless producing a decision in favour of sale by a preponderance or 50 per cent vote because it required unanimity, that is, consent of the unitholders.  Therefore, it having been held and, as we understand it, not proposed to be in contest, that clause 16 could speak to the right of voting given by the statute, the simple question was whether or not a provision expressed as clause 16 has been expressed adds anything to what was construed to be the effect of clause 10.1(a) in the Court of Appeal.  In our submission, when one looks at the terms of clause 16.2, it bespeaks an intent – and I mean by that the objective intent that Taylor v Johnson admonishes to be looked for – on the part of the parties ‑ ‑ ‑

GUMMOW J:   That being what?

MR WALKER:   The intent is that there be – first of all let me quote the words because we should not go too far from them:

most fully and completely give effect to the intent and effect of the provisions of this deed –

by the manner in which you exercise voting.  Now, it is an expression that is not unfamiliar, even if it has not gained precision over the centuries of use, “most fully and completely give effect”.  In our submission, it certainly bespeaks the need to ensure that what might be called the policy or intent to be gathered from the provisions of this deed must inform decisions as to voting and the policy or intent of the provisions of the deed, taken as a whole and therefore of each one of them in their context, can be seen spelled out from those to which we have drawn attention on pages 82 and following of our written submissions.  I will summarise them thus. 

The decisions concerning important financial expenditures, but nowhere near so important as sale of the shopping centre, required at least 75 per cent; see clause 8 to which we have referred in paragraph 10.  That decision, that is, the commercial intent to realise the investment in the shopping centre, was to be achieved by sale of units which in turn was to be achieved under a pre‑emption provision.  We refer to that as clause 6 in paragraph 11.  So the parties had provided that financial decisions about the shopping centre would not be done by mere 50 per cent requirement and they had decided that in order to realise value from the investment they had bound themselves, in a manner paramount to the trust deed regulated by the statute, they bound themselves to a pre‑emption regime. 

Now, there were issues not live in this Court about whether section 601NB, in effect, subverted that distribution between the parties of their possible future difference of desires in relation to exploitation of this asset.  It was held ‑ ‑ ‑

GUMMOW J:   Justice Ward dealt with that at paragraph 8 of her ‑ ‑ ‑

MR WALKER:   Yes.  That is why we are able to say that there is a short sharp issue presented by our application for special leave as to whether, when parties go to the trouble of expressing themselves as they have in clause 16, they have added anything at all, anything at all to the other provisions of the deed to which that is an ostensible addition and, furthermore, an addition which, by hitherto well understood language, was intended to convey a support rather than a subversion of the investment scheme set up by the provisions of the deed. 

Now, it is clear impliedly, if not in terms and almost in terms, that the reasoning in the Court of Appeal answers that question by saying, no, nothing is added.  We get that in particular at pages 72 and 73 of the application book and, in particular, in paragraphs 49 and 50.  In particular, in paragraph 49 about line 31 you see the sentence:

Clause 16.2, by use of the expression “to most fully and completely give effect to” does not require any more than that full and complete effect be given to cl 10.1(a).

It is our submission that 10.1(a) is simply one of the provisions which says that this is a joint venture under which the joint venturers can realise other than by their unanimous consent for sale ‑ ‑ ‑

GUMMOW J:   Your complaint, I think, is, looking at paragraph 49, the second sentence, the effect of your submission is the second sentence puts it back to front.

MR WALKER:   Yes, quite so, and, in our submission, this ‑ ‑ ‑

GUMMOW J:   That is to say, you do not go to 16.2 and then say, well, you cannot get any more out of 10.1.

MR WALKER:   No, exactly.  When one sees the whole of the agreement between these unitholders, there could not be a plainer demonstration of how unanimity or otherwise, or majority vote was to be deployed in the continued exploitation until the end of the term, as it might variously conclude, of this shopping centre and the fact that realisation where there is not consent, that is, where there is a difference of desire or commercial projects, the realisation was to be governed by a very important pre‑emption provision, really shows how completely there is what I will call a step around plainly intended by this device of calling for a ballot under the statute which inevitably carries in its train that which the parties had agreed should occur only by consent.

So, in our submission, this case really does raise not merely a one‑off peculiar question of interpretation between two parties of a kind that the Court might well think are well able to look after themselves, rather, it raises an important matter of contractual interpretation, in effect, a subset of a general notion that in a seriously negotiated and recorded written instrument some function, some role to play should be given to all its constituent parts.  In our submission, it also raises it in the context where the alternative to this approach that we have touched on in paragraph 35 on page 87 would appear to be dependent upon perhaps inchoate, certainly not fully formed notions of good faith or the familiar common law terms implied by law, all of which involved, of course, after the event, adjudication by the standard of reasonableness.

When parties have gone to the trouble as they have in clause 16.2, in our submission, there is raised a general question going above and beyond the interests of these particular parties and the fact that in a well‑reasoned first instance judgment, with respect, Justice Ward came to a contrary conclusion from that reached in the Court of Appeal, demonstrates the importantly arguable nature of a matter that does involve some questions of general principle.

KIEFEL J:   Just looking at your paragraph 35, you are not relying upon any implied obligation of good faith?

MR WALKER:   No.  What we say is, if the Court were – I think I was about to threaten the sky is falling, your Honour.  I will back off.  I will say this provides an opportunity to examine whether there are express terms, such as clause 16, which can provide the joint venture adherence to rather than subversion of the overall project other than the quite difficult to apply after the event standards of good faith or the implied term.  We do not rely on them here at all. 

KIEFEL J:   Well, you say you do not need a good faith because it takes the path of ‑ ‑ ‑

MR WALKER:   We say it would be a pity if a decision such as this, deprived terms of this, of the capacity expressly to allow parties to regulate that aspect of their co‑operative dealings into the future and leave them

simply to rely upon the rather more problematic qualities of the implied term or the good faith.

KIEFEL J:   Was the approach of the Court of Appeal in paragraph 49 raised in argument before her Honour the primary judge?  That is, clause 16.2 does not require any more than that full and complete effect be given to ‑ ‑ ‑

MR WALKER:   On my understanding, the battle lines have been consistently drawn in that regard.

KIEFEL J:   In those terms?

MR WALKER:   Yes.  Or at least in terms sufficiently similar for me not to be able to distinguish.

GUMMOW J:   Is there any significance of the circumstance that 16.2 is being engaged where there is also engagement of statutory procedures?

MR WALKER:   There once was significance.  There is not now.  It is not suggested that 16.2 can have no work to do or is unenforceable or has been in some way trumped by 601NB, no.  May it please the Court.

GUMMOW J:   Yes, Mr Jackson.

MR JACKSON:   I should say, your Honours, that the question your Honour just raised is one that would be the subject of a notice of contention if the matter were the subject of a grant of special leave.  Could we also, your Honours, just invite the Court to look at the provisions of the unitholders’ agreement for just a moment and, in particular, page 110.  I will come back to it in a moment, but your Honours will see that in clause 18, which was the subject of argument in the Court of Appeal from our side, the Court of Appeal did not find it necessary to place reliance on that in arriving at its conclusion, but the right, power or remedy provided by section 601NB would, in our submission, plainly enough be a right, power or remedy provided by law independently of the deed.

Could I say this, your Honours, that, as the Court will have seen, we submit two things essentially.  The first is that the case is, in a sense, to use my learned friend’s expression, a one‑off.  The contractual provisions on which it turns are not provisions of general application, but, importantly, we would submit, the decision of the Court of Appeal on the provisions is correct.  Your Honours, one starts with section 601NB.  Your Honours will see that in the bundle of materials we have given the Court and it provides that if members of – or it gives members of a managed investment scheme which is registered, that is, a scheme like this, an entitlement to call for a meeting of members to consider and vote on an extraordinary resolution directing the scheme’s responsible entity to wind up the scheme and if that resolution is carried, there has to be a winding‑up pursuant to section 601NE. 

Now, your Honours, the position is, as your Honours have heard, that we were restrained by the primary judge from voting at a meeting that we had sought to call and the basis of their restraint, as your Honours can see from paragraph 7 of the Court of Appeal’s reasons at page 55, the basis of it was because of the operation of clause 10.1 of the unitholders’ agreement read with clause 16.2 and, your Honours, it was not, one should notice, because of clause 10.1 itself.  Your Honours will see clause 10.1 at page 104, if I can come to that, and what your Honours will see is that clause 10.1(a), in terms, is simply a restraint upon the powers on which the responsible entity would otherwise have pursuant to the terms of the trust deed and the powers that the responsible entity would otherwise have would be the powers of an individual unrestrained by the terms of the trust.  Your Honours will see that referred to by the Court of Appeal at page 71, about lines 15 to 20 on that page, and that is the response:

Clause 18.1 of the Trust Deed gives the responsible entity/Manager all the powers in respect of the assets and investments of the Trust which it could exercise if it were absolute and beneficial owner of those assets and investments.

So that clause 10.1(a), your Honours, is effecting a restraint upon the exercise by the responsible entity of powers that it otherwise has and it is not dealing with the exercise of powers following a resolution under section 601NB and, your Honours, both courts below have held that.  Your Honours will see the Court of Appeal, at page 70 in paragraph 44, saying that:

The primary judge held that as a matter of construction cl 10.1(a) does not –

and your Honours will see the remainder of that quoted paragraph and then the last sentence of paragraph 44.  Your Honours will see in the judgment of the primary judge to that effect, your Honours, not just paragraph 57, but could I also give your Honours the paragraph numbers without going to them one by one.  It is paragraphs 47, 54, 56, 57 and 127 which can be found at pages 17 to 20 and 42 of the application book.  So that, your Honours, both courts below have held that clause 10.1(a) was not a relevant provision.

It was thus necessary, so far as the applicant’s case is concerned, for reliance to be placed on some other provision in order to justify a restraint on the exercise of voting power at a 601NB meeting, and the provision relied on and the only provision relied on is clause 16.2.  Your Honours will see that clause 16.2 at page 110 simply says that it requires voting rights under the trust deed to be exercised “so as to most fully and completely”, and your Honours see the remainder of the provision there set out.  Your Honours, the provision of the deed, that is the provision of the deed which is the one to which the last words of clause 16.2 apply, is clause 10.1(a). 

You can see that, your Honours, in the judgment of the Court of Appeal commencing at page – three passages I will give your Honours – commencing at page 59.  Your Honours will see paragraph 18 and your Honours will see the argument there set out or there recorded, as I referred your Honours to a moment ago.  You will see it also in paragraph 19 on the same page.  You will see it in paragraph 43 at page 70 and, your Honours, also in paragraph 51 at page 73. 

So what one sees is that the case that has been conducted below is a case that says you apply clause 16.2 to clause 10.1(a) and that is how it all works, but if you do that, your Honours, one does not really get beyond clause 10.1(a) which deals with a case where the responsible entity seeks to bring about a sale of the property.  Not a case arising under 601NB at all, but a case where the responsible entity seeks to exercise a power to bring the venture to an end.  In our submission, your Honours, the Court of Appeal was correct, in paragraphs 49 to 52, in this discussion of the relationship between the provisions.

Could I go to those paragraphs, your Honours, page 72, paragraph 49.  Now, your Honours will see that the correct position, in our submission, is summarised and, your Honours, if I could go particularly to the second sentence of that, to which your Honour Justice Gummow referred.  The whole case for the applicant is that clause 16.2 had to be applied to clause 10.1(a).  Now, if you look at 10.1(a), it does not have a life of its own greater than its terms and, your Honours, as the court said, it does not require any more than that full and complete effect be given to clause 10.1(a).  Your Honours will see the last sentence of paragraph 49 which we would submit is perfectly correct.

If one goes to paragraphs 50 and 51, you will see that the arguments by the present applicant are rejected and, in particular, your Honours, your Honours will see that in paragraph 50 the argument that is put was rejected and your Honours will see, in particular, the last sentence of paragraph 50:

What is achieved by a resolution that the responsible entity determine the Trust is not something which –

to put it shortly, clause 10.1(a) has any application.  Then, your Honours, if one goes to paragraph 51 at the top of page 73, you will see that it rejects the kind of broad sweep argument my learned friends have been putting to the Court, how could this have been contemplated and so on, but, your Honours, the fact of the matter, of course, is that the current ownership of the joint venture was not an ownership that was the case at the time when the joint venture – I am sorry – the current ownership of the scheme was not one that was the same as at the time when it was formed and, indeed, your Honours, what one can simply say, we would say, is that the Court of Appeal at the last sentence of paragraph 51 is correct in saying that that argument does not really address the question as to the construction of the two provisions in the light of section 601NB.

Your Honours, we would submit, the conclusion at paragraph 52 is a conclusion which is the better result of the provisions.  Your Honours, I omitted to mention paragraph 43 on page 70 where the meaning and effect of the provisions is considered and, your Honours, we would submit in an entirely orthodox legal manner.  Your Honours, could we also say that without unduly entering into the matters that might be the subject of a notice of contention, I mentioned one before, but a second if necessary would be a reference to clause 18 on page 110 which, your Honours, we would submit does create a difficulty in any event for the applicants.

A unitholder’s right under 601NB would plainly enough seem to be, to use the words of clause 18, a right “provided by law independently of this deed” and the provision seems fairly clearly to be intending to convey that rights under the deed are in addition to but do not exclude statutory rights such as those under 601NB.  Your Honours, may I summarise what we seek to say is this.  We would say the approach taken by the Court of Appeal was one that was entirely orthodox.  The actual decision, we would submit, appears clearly enough correct.  The case is one turning very much on its own facts.  The size of the matter should not, we would submit, with respect, influence the parties and special leave should be refused.

GUMMOW J:   Mr Walker, what do you say as to the importance Mr Jackson places upon the presence of the necessary entity as the actor, the injunction restrained his two clients?

MR WALKER:   Because that was the negative covenant.  They are the only ones who owed that obligation.  If we are successful, that is of no business of the entity.  If we are unsuccessful, then the entity must act in accordance with the law unrestrained by the injunction we will have failed to have.  There is no constitution of suit point.  Your Honours, could I, as to the clause 18 point raised by my learned friend at page 110, it, of course, says nothing about there being a right to vote untrammelled by contractual

obligations and, in truth, that is not really different from the first of the threatened contentioned points that my learned friend raised, which was ground 4 in the Court of Appeal.

Justice Meagher refers to that at page 61 of the application book in paragraph 24 and, having described the point, deals with it on pages 73 and 74 and in a way accepting the correctness and cogency of the reasoning of the learned trial judge.  The point has been argued before four judges.  We have succeeded before them on that point.  It would be peculiar, with respect, for a threatened contention point to challenge that success before four judges as a reason not to grant special leave on the point we have lost on.  Rather, if the contention point threatened is thought to have substance, contrary to what four judges below have thought, then it magnifies the importance of the case as transcending the peculiar and individual circumstances, makes it a better candidate for special leave because it raises the question of whether on its true interpretation section 601NB has the effect that prior bargains concerning the exercise of votes on committees and the like will be ineffectual or, indeed, illegal contrary to statute. 

At page 74 of the application book, in summary, giving his Honour’s reasons for agreement with Justice Ward in dismissing that contention, Justice Meagher makes points which, in our respectful submission, are self‑evidently powerful and show that the question is one of general statutory interpretation, clearly of importance bearing in mind the way in which very large commercial undertakings of indefinite or very long‑term can be agreed to be disposed of by a distribution of voting power among the parties and now by this contention raised from the Bar table, it is said that there is a question whether the statute permits such private bargains to endure.  In our submission, all that rather indicates a propriety of a grant of special leave rather than its inappropriateness.  May it please the Court.

AT 12.43 PM SHORT ADJOURNMENT

UPON RESUMING AT 12.48 PM:

GUMMOW J:   There will be a grant of special leave in this matter.  It is certainly no more than a one‑day case, I would think, allowing for the notice of contention.  The solicitors should note the directions that will be given by the Registrar as to the preparation of the appeal.  We will take a short adjournment to reconstitute.

AT 12.49 PM THE MATTER WAS CONCLUDED