Assessment
84PwC's contentions regarding listing rule 11.2 play a central part under each of the arguments 1 and 3 at paragraph [46] above.
85If, as PwC says, the operation of listing rule 11.2 could have been be side stepped by obtaining a waiver or de-listing, CNP's characterisation of $48,925,082 as a payment to induce an approving resolution of equity holders would not be valid and the architects of the aggregation plan would be seen to have responded to what is, in reality, a non-existent need to pay $48,925,082 for that purpose.
86The starting point on this aspect is the reality that a listed entity must obey the listing rules. This is not just a matter of contract, it is also a statutory matter. As the listing rules themselves say:
"The Listing Rules are not just binding contractually. They are enforceable against listed entities and their associates under the Corporations Act. See sections 793C and 1101B of the Corporations Act. The Listing Rules create obligations that are additional, and complementary, to common law obligations and statutory obligations."
87In the ordinary course of events, therefore, a listed entity is expected to comply, not to seek to extricate itself from compliance.
88Mr Lewis, ASX's chief compliance officer, gave evidence. He confirmed that CNP had discussed with ASX the applicability of listing rule 11.2 to the transfer of CNP's assets to the issuers of the Centro Retail Australia securities and that ASX had confirmed its view that the rule would apply and that an approving resolution of equity holders would be necessary. Mr Lewis further gave evidence that ASX had informed CNP that, on ASX's current policy, any request by CNP to de-list would be conditional on the de-listing being approved by ordinary resolution of members. He confirmed that, to the best of his knowledge, CNP had not sought from ASX either dispensation from listing rule 11.2 or de-listing.
89I do not accept that CNP and its directors were under any duty to do either of those things. A meeting to obtain an approving resolution of equity holders had been, since 6 May 2011, a publicised element of the developing aggregation plan. Some equity holders believed that an earlier element of the aggregation plan (the sale of United States assets that yielded the proceeds referred to at paragraph [48.1] above) should have been put to equity holders for approval under listing rule 11.2: see Smartec Capital Pty Ltd v Centro Properties Ltd [2011] NSWSC 495; (2011) 83 ACSR 461; Smartec Capital Pty Ltd v Centro Properties Ltd [2011] FCA 716. Those holders' efforts to force a meeting of unit holders in that connection were unsuccessful. There is every reason to think that they would have redoubled their efforts had CNP, contrary to its announced intention of calling a meeting in connection with the transfer of the vast bulk of the Australian assets as part of the aggregation, taken steps calculated to prevent such a meeting.
90In short, the equity holders (or some of them) were vocal proponents of the view that they should be given a vote on the aggregation proposal. Listing rule 11.2 is accepted on all hands as a rule that required such a vote. In the face of the expressed attitude of vocal equity holders and the clear provisions of the rule, on what basis, one asks rhetorically, might ASX have granted a waiver or effected de-listing?
91The holding of the meeting of equity holders and the payment of the $48,925,082 to them by way of inducement was an integral part of the plan to which CNP and the senior lenders became parties. The Junior Stakeholder Amount was, in a very real sense, made available by the senior lenders. I say this because the senior lenders permitted both the Junior Stakeholder Amount and the associated $70 million to be kept apart from the balance of the proceeds of the United States assets sale paid to them in reduction of their loans. Had they demanded that those two sums also pass to them, CNP could not, in any realistic sense, have resisted the demand and the aggregation plan of which the schemes of arrangement are components would never have come into being.
92In agreeing to the excision and retention of the Junior Stakeholder Amount and the $70 million, the senior lenders must be taken to have been acting in what they saw to be their own best interests. They were obviously not inclined to be kind or generous to CNP or to any of the potential recipients of the Junior Stakeholder Amount and the $70 million except to the extent that what might have seemed to be kindness or generosity served their own commercial purposes.
93The signing senior lenders who became parties to the Junior Stakeholder Allowance Agreement, the implementation agreement and the amending agreement of 17 November 2011 (as well as the senior lenders' agent by which the escrow deed was executed) subjected CNP to contractual restraints in respect of the Junior Stakeholder Amount. The money cannot b e outlaid unless and until aggregation is achieved; and the only permitted application, at that point, is payment in the specified amounts to the hybrid lenders, the convertible bondholders and the equity holders, with the balance remaining with CNP against the possibility that claims of contingent creditors may mature into liabilities. Since execution of the Junior Stakeholder Allowance Agreement and the implementation agreement, CNP has had no ability of its own to vary this regime so as to reduce amounts earmarked for the hybrid lenders, the convertible bondholders and the equity holders.
94Given, in particular, the earlier agitation by equity holders for a say, by way of voting, on steps in CNP's overall restructure and CNP's assurances to the market as early as May 2011 that an opportunity to vote would be extended to equity holders in connection with the transfer of the Australian assets, the senior lenders must be taken to have decided that foregoing of the Junior Stakeholder Amount and the associated $70 million and application of those sums in the ways contemplated were to their own advantage. They were prepared to allow those sums to perform particular functions of a facilitating kind in order to assure the outcome they sought.
95Let it be assumed that CNP had sought and obtained either dispensation from listing rule 11.2 or de-listing and had become free from the listing rule 11.2 constraint. Let it be further assumed that there was accordingly no resolution of equity holders approving the relevant disposal. In those circumstances, one of the essential elements of the documented plan would be lacking and aggregation simply would not take place, with the result that the Junior Stakeholder Amount would not be released from the escrow account for the benefit of, among others, the equity holders and the whole of the $100 million would pass to the senior lenders in the same way as the balance of the proceeds of sale from which it was, for a special and limited purpose, separated.
96It is an incorrect assessment of the position to regard the directors of CPTRE as having possessed any free-ranging discretion in relation to the Junior Stakeholder Amount and its application. The money is technically the property of CPTRE and "scheme property" of the managed investment schemes but it is predominantly, as I have said, money made available by the senior lenders for purposes serving the interests of the senior lenders, including the purpose of facilitating compliance with the ASX listing rules in a manner judged necessary to the achieving of the aggregation accepted by the senior lenders as a resolution of their financial interest in CNP.
97Payment of the $48,925,082 to the equity holders will not be an unlawful or improper application of "scheme property" by CPTRE. The provisions of the managed investment scheme's constitution dealing with distributions (see paragraph [65]) are not an exclusive code concerning the passing of scheme property to members. This is made clear by clause 10.5(c) of the constitution which empowers the responsible entity to "enter into a contract or transaction with any Holder". The responsible entity could therefore, for example, expend money forming part of the "scheme property" as the purchase price of land purchased from a member for the purposes of the managed investment scheme.
98There are also, as CNP points out, the comprehensive powers of the responsible entity under clause 9.1 (see paragraph [74] above). Those powers are fiduciary in nature but there can be no doubt that action by the responsible entity calculated to free the trust estate from otherwise crippling debt was a proper exercise of those powers.
99I accept CNP's characterisation of the overall aggregation plan as a legitimate compromise. I also accept that there can be no objection to a compromise under which payments are made (or other value is transferred) to both the creditor and a third party. If a trustee's creditor agreed to take a leasehold estate in satisfaction of the debt, the debtor, as trustee, could properly apply trust assets in making a payment to the lessor in return for the lessor's consent to assignment.