Campbell Finance Ltd v Vivstan Packaging

18 IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HIS HONOUR Background 1 These proceedings concern the affairs of a registered managed investment scheme now known as the Investa Property Trust. I shall refer to it as "the Trust". The Trust was formed in 1977 as a property trust according to the then traditional unit trust model under which one entity acting as trustee held all relevant assets, another designated the management company played a management role and investors acquiring units of the Trust thereby became beneficiaries. The trustee and the management company together operated in the context of a system of trust deed provisions and, afterwards, statutory provisions designed to safeguard the interests of those beneficiaries. 2 With the advent of changes to the Corporations Law effected by the Managed Investments Act 1998 (Cth) as of 1 July 1998, it became necessary for the Trust to obtain registration under the new Part 5C.1 as a registered managed investment scheme. Registration occurred on 16 August 1999. As part of that process, the then management company, Westpac Property Funds Management Limited ("Westpac"), became the "responsible entity" of the Trust and the then trustee, Permanent Nominees (Aust) Limited ("Permanent"), ceased to play any role. The emergence of Westpac as responsible entity and the withdrawal of Permanent were no doubt effected under the transitional regime provided for in ss.1455, 1456 and 1457 of the Corporations Law, as added by the Act of 1998. 3 When the Trust attained registration as a registered managed investment scheme, s.1462 of the Corporations Law then in force caused Division 3 of Part 5C.2 to operate in relation to the trust as if references in that part to the new responsible entity were references to Westpac and references in it to the former responsible entity were references to Permanent (and, as necessary, references to both Permanent and Westpac). The relevant provisions of Division 3 of Part 5C.2 thus brought into operation were ss.601FS(1) and 601FT(1). The former had the effect that, subject to exceptions not presently relevant, "the rights, obligations and liabilities" of Permanent "in relation to the scheme" became "rights, obligations and liabilities" of Westpac. The latter caused every "document" to which Permanent was a party or in which a reference to it was made (or under which it had acquired or incurred a right, obligation or liability), being a document capable of having effect after the registration, to have effect as if Westpac, instead of Permanent, was the party or was referred to. Section 601FT(1) is not expressly restricted to documents concerning the scheme but such a limitation must be implied. 4 Another consequence of Westpac's becoming the responsible entity and the Trust's becoming a registered managed investment scheme (being a consequence not arising from any transitional provision) was produced by s.601FC(2): "The responsible entity holds scheme property on trust for scheme members." 5 Before the Trust became a registered managed investment scheme, Permanent, as trustee of the Trust, had granted a charge over all the present and future assets of the Trust to Perpetual Trustees Australia Ltd ("Perpetual"). The charge was created in 1994. It was a charge to which Chapter 2K of the Corporations Law as then in force applied. Permanent therefore complied with the lodgment requirement in s.263(1) and the relevant particulars were entered in the Australian Register of Company Charges pursuant to s.265(2). 6 In the period immediately after registration of the Trust as a registered managed scheme in August 1999, no steps were taken under Chapter 2K in relation to that charge. Just over a year later, on 11 September 2000, however, Westpac lodged a Form 309 "Notification of details of a charge". Form 309 as then in use (and as apparently still in use) is a form designed to be used either where a company creates a charge (that being a circumstance giving rise to a lodgment requirement under s.263) or where a company acquires property which is already subject to a charge (that being a circumstance giving rise to a lodgment requirement under s.264). It contains, as alternatives, a space for the date of the creation of the charge (no doubt intended for use in the first case) and a space for the date property was acquired (no doubt intended for use in the second case). The Form 309 lodged by Westpac contained the date "16/08/1999" in the space for "Date charge was created". The form thus represented that the charge to which the form related was a newly created charge (that is, a charge other than the one created in 1994) and failed to show that it related to circumstances within s.264 rather than s.263. 7 The next stage in the relevant chronology occurred on 30 November 2000 when Investa Properties Ltd ("Investa") replaced Westpac as responsible entity of the Trust. On that occasion, ss.601FS and 601FT of the then Corporations Law operated of their own force, rather than by virtue of s.1462 as in 1999. Investa was, by direct operation of those sections, substituted for Westpac in the ways the sections prescribe. Furthermore, Investa came, by operation of s.601FC(2), to hold scheme property on trust. On this occasion, no action was taken to make any lodgment under s.264 of the Corporations Law.

The present application 8 It is against this background that I approach the application of Investa and Westpac for relief. They seek: (a) an order under s.266(4) of the Corporations Act that the time for lodgment of the Form 309 in fact lodged on 11 September 2000 be extended to 12 September 2000; (b) an order under s.266(4) of the Corporations Act that the time for the lodging of a notice in consequence of Investa having acquired property subject to a charge be extended to a suitable time after the order is made; (c) an order under s.274 of the Corporations Act that the Australian Register of Company Charges in relation to charge numbered 766466 be rectified by changing "Date Created" from "16 August 1999" to "21 September 1994" and by recording "16 August 1999" as the "Date property was acquired"; and (d) orders pursuant to s.85 of the Trustee Act 1925 relieving Westpac and Investa respectively from personal liability for any breach of trust arising from failure to lodge the relevant notice under s.264 of the Corporations Law within the time required by that section. 9 Before turning to the substantive issues raised, I should note that the transitional provisions in Chapter 10 of the Corporations Act 2001 cause ss.266(4) and 274 of that Act to be available to do the work the plaintiffs require, even though all relevant circumstances arose at a time when the Corporations Law was in force. I should add that the provisions in Chapter 5C (ss.601EA to 601QB) of the Corporations Act are identical with those of the Corporations Law, so that, unless there is a particular need to refer to some aspect of time, I shall refer to the Corporations Law provisions as if still operative.

Did the incoming entity acquire property subject to the charge ? 10 The first substantive issue is whether the effect of ss.601FS and 601FT, coupled with the effect of s.601FC(2), at, respectively, the time Westpac became the original responsible entity of the registered managed investment scheme and the time Investa replaced Westpac as such responsible entity, was to cause the incoming responsible entity to "acquire property that is subject to a charge" as referred to in s.264(1), the charge being, in each case, the charge which was created by Permanent in favour of Perpetual in 1994 and was the subject of Permanent's s.263 lodgment at that time. 11 Sections 601FS(1) and 601FT(1) are drafted in a particularly economical way. They appear intended to cause an incoming responsible entity to step into the shoes of its predecessor (or, in a case in which the sections are activated by s.1462, those of the combination of trustee and management company). Yet nowhere does one find in those two sections any reference to property. There is a reference to "rights", being rights "in relation to the scheme", and there can be no doubt that certain "rights" (although not all) are property. The sections do not seem to effect a form of statutory vesting or assignment of property generally in such a way that the incoming responsible entity "acquires property that is subject to a charge" (as mentioned in s.264) except, perhaps, to the extent that the subject matter of the charge is a species of property which clearly involves no more than a "right". An example might be the kind of property involved in a charge made registrable by s.262(1)(f) referring to "a charge on a book debt". A debt as a chose in action falls quite comfortably within the concept of "right". But even then, there is a question whether a chose in action forming part of the assets of a scheme is a right "in relation to the scheme". These last words are perhaps intended to cover only rights vis à vis parties such as members of the scheme, being rights arising from or forming part of the matrix of legal relationships making up the scheme, including rights derived from the scheme's constitutional documents. 12 But these doubts about ss.601FS(1) and 601FT(1) are, in the present context, largely overshadowed by the effect of s.601FC(2). That section declares in unequivocal terms that the responsible entity of a registered management investment scheme "holds scheme property on trust for scheme members". The term "scheme property", as it relates to a registered scheme, is defined by s.9. It means contributions in money or money's worth to the scheme, certain other money, "property acquired, directly or indirectly, with, or with the proceeds of" such contributions and money and income and property derived directly or indirectly from any of the foregoing. It is reasonably clear, I think, that that definition operates upon and in relation to pre-existing money and property at the point at which a particular scheme becomes a registered managed investment scheme. That being so, it can be said that s.601FC(2) produced the result, both on 16 August 1998 and on 30 November 2000, that the incoming responsible entity, by attaining that status, began to hold property because it began to hold the scheme property on trust. And because it began to hold property, it must follow that it acquired property. Vesting by operation of law in a person who has played an active and willing part in the process resulting in the vesting is a species of acquisition. 13 Implicit in what I have just said is the proposition that s.601FC(2) does not just specify the manner or capacity in which the responsible entity holds property independently vested in it but is, rather, a provision which establishes and maintains the connection between all property within the definition of "scheme property" and the responsible entity. This seems to follow from the definition of "managed investment scheme" (which contemplates a relationship between participants and a "scheme"), read in conjunction with provisions such as ss.601FB(1), 601FB(4)(a), 601FC(1)(i) and (j) and 601HA(a) and (c) which envisage for the responsible entity functions which could not be performed unless it was the owner of scheme property. In particular, the responsible entity could not appoint an agent to hold scheme property on its behalf unless it was, in a real sense, the legal owner of the property. Section 601FC(2) produces a legal result when two circumstances coincide. One is that a particular entity is the "responsible entity" of a particular registered managed investment scheme. The other is that particular property is "scheme property" of that scheme. The legal result of the coincidence of circumstances is that the entity holds the property and does so as trustee. 14 The section could have said that if scheme property is held by the responsible entity, that entity holds it on trust for scheme members; or that such scheme property as is held by the responsible entity is held on trust for scheme members. It says neither of these things. It expresses itself to apply indiscriminately to property having such a connection with the scheme of which the entity is responsible entity as to make the property scheme property of that scheme. It declares in unequivocal terms that that property is held by the responsible entity and that it is held on trust for scheme members. This is not merely a case of the appointment of a new trustee. It is a case where attainment of the office of responsible entity is made by ststute to bring about consequences in terms of the holding of property. 15 One possible ground for questioning this analysis comes from s.1463 of the Corporations Law (not replicated in the Corporations Act), a transitional provision dealing with the case where the initial responsible entity was not the trustee or representative of the undertaking which became registered as a managed investment scheme. That section provided for the trustee or representative to be indemnified out of scheme property "for reasonable expenses incurred in transferring the scheme property to the responsible entity". I do not read this as indicating that the responsible entity did not, in such a case, come to hold scheme property unless it was actively transferred to it. Rather, the provision seems to me to deal with the case where the responsible entity's title has been confirmed or made more perfect, perhaps on a register, by some form of assurance. As is demonstrated by, for example, s.24 of the Bank Integration Act 1991 (Cth), a vesting by operation of statute may not be sufficient to perfect a registered title. 16 The next question is whether the property the incoming responsible entity came, on each occasion, to hold on trust by operation of the Corporations Law was property which was at the time "subject to a charge". On the footing already stated that the definition of "scheme property" catches property within the definition of that term to which the initial responsible entity succeeds upon the scheme becoming a registered scheme, the effect of s.601FC(2) at the point at which Westpac became the responsible entity was to cause Westpac to hold on trust all the then existing money and property held by Permanent which was within the s.9 definition of "scheme property" plus, perhaps, further property, being "rights" referred to in s.601FS(1) and possibly items of property which, by some nebulous means, passed upon substitution of Westpac's name in documents by operation of s.601FS(1). At all events, property which had previously been held by Permanent as trustee of the Trust and which was within the definition of "scheme property" became property which Westpac held on trust by operation of s.601FC(2). 17 The property which Westpac thus came to hold was property which was at that time subject to the charge created by Permanent in 1994, since the charge, by its terms, extended to "all the present and future assets and undertaking of the Trust". Furthermore, s.601FT(1) had the effect that the references to Permanent as mortgagor in the charge given to Perpetual in 1994 became references to Westpac, while s.601FS(1) caused the obligations and liabilities of Permanent in relation to the scheme to devolve upon Westpac. It may be that these obligations and liabilities included those arising from or in relation to the charge, although again the words "in relation to the scheme" are the product of some doubt about this. 18 When Investa replaced Westpac as responsible entity in 2000, ss.601FC(2), 601FS(1) and 601FT(1) produced the same results upon and in relation to Investa as Westpac's appointment as the founding responsible entity had caused to be produced upon and in relation to it as just described. 19 The conclusion is that s.601FC(2) alone was sufficient, on each occasion, to cause the incoming responsible entity to acquire property subject to the charge in favour of Perpetual, so that that incoming entity was required to comply with s.264(1) within the following 45 days. In saying this, I accept that the charge concerned was within the s.264(1) description. A perusal of the charge shows that it was within several of the paragraphs of s.262(1) as in force at the time of its creation in 1994. Those paragraphs have not changed in any relevant respect since then.

Section 266(4) 20 This conclusion that there was a failure to lodge in accordance with s.264(1) on the part of Westpac in 1999 and on the part of Investa in 2000 leads to the question whether the court should grant relief under s.266(4) extending the time for lodgment. Section 266(4) reads as follows: "The Court, if it is satisfied that the failure to lodge a notice in respect of a charge, or in respect of a variation in the terms of a charge, as required by any provision of this Part: (a) was accidental or due to inadvertence or some other sufficient cause; or (b) is not of a nature to prejudice the position of creditors or shareholders; or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedient, by order, extend the period for such further period as is specified in the order." 21 The ground relied upon in relation to both the 1999 failure and the 2000 failure is accident or inadvertence within paragraph (a). I therefore turn to the facts. Accident or inadvertence ? 22 The events of 1999 and 2000 are deposed to by Mr Robertson, a solicitor who is a member of the firm which acted for both Westpac and Investa in relation to the Trust. In July 1999, Westpac instructed that firm to act for it in relation to the registration of the Trust as a registered managed investment scheme, with Westpac as the responsible entity. In a memorandum to Westpac dated 2 August 1999, Mr Robertson drew attention to the following: "A Form 309 should be lodged with the ASIC (under section 264 of the Corporations Law) to record the transfer of assets subject to the existing fixed charge and real property transfers with the LTO." 23 Mr Robertson was thus aware in August 1999 of the need to effect a lodgment under s.266(4) following Westpac's becoming the responsible entity. Registration of the Trust occurred and the relevant 45 day period began on 12 August 1999. I readily infer that Westpac relied upon him to follow through with the process set out in his memorandum of 2 August. He says that it is not apparent to him why the lodgment was not effected within the required 45 days. His conclusion is that it was simply overlooked until, in late 1999, his firm was instructed to confirm that all security given by Westpac had been duly stamped. It was in the course of work done in that connection that it became apparent to him that no lodgment under s.266(4) had been made. 24 At that point, however, Mr Robertson began to be unsure whether s.264 had been activated when Westpac became the responsible entity. He had an assistant make an inquiry of ASIC and then wrote to Westpac as follows: "1.2 Registration The Charge has not yet been registered with ASIC in the name of Westpac Property Funds Management Limited (WPFML). Because of the way in which WPFML has become the chargor under the Charge, that is, because it became a party to the charge by operation of the Corporations Law, it is not clear how this is to be carried out. We have made inquiries with ASIC and are waiting for them to advise us of the correct procedure." 25 The information which, according to the evidence, was given by ASIC was that four steps should be taken: 1. Lodge a Form 309 specifying the date of creation of the charge as the date on which Westpac inherited the charge by becoming the responsible entity of Investa; 2. Lodge a Form 350 certifying compliance with stamp duties law; 3. Lodge a Form 312 to remove the charge from the register against Permanent; 4. On lodgment of those forms with ASIC, attach a covering letter explaining the transition from Permanent as trustee to Westpac as responsible entity of the Trust. These steps were eventually completed in September 2000. 26 In relation to the second change, involving replacement of Westpac by Investa as responsible entity, Mr Robertson deposes that his firm was instructed by both parties to act generally on the change and to take all necessary steps. He also deposes that the need to comply with s.264 on that occasion was overlooked by him as it had been on the earlier occasion. The matter was brought to his firm's attention by another firm familiar with the circumstances (because its clients were the parties on whose behalf the charge was held by Perpetual) after a search of ASIC records conducted by them had not shown any record of s.264 notification following replacement of Westpac by Investa. In fact, it was those parties who insisted that the plaintiffs pursue these present applications. 27 It is made clear by the decision of Batt J (as he then was) in Campbell Finance Ltd v Vivstan Packaging (Aust) Pty Ltd (1996) 22 ACSR 109 that the failure with which s.266(4) is concerned and in relation to which it may be invoked is the failure to act during the 45 day period. On that basis, the relevant question becomes, in relation to each occasion, why Mr Robertson did not act within that period, he being the person to whom the party charged with the lodgment obligation (Westpac on the first occasion and Investa on the second) had entrusted the task of complying, in the sense of having given him instructions to do everything necessary in connection with the particular transaction. 28 Mr Robinson was not ignorant of the lodgment requirement. The memorandum of 2 August 1999 to Westpac shows that it was in his mind at the time relevant to Westpac's becoming the responsible entity, even though he developed doubts about the applicability of s.264 later in that year. And having ascertained late in 1999 what ASIC saw as necessary to be done when Westpac became the responsible entity, he must be presumed to have known that a lodgment requirement would apply when Investa later became the responsible entity. Even if the precise detail of what he learned from ASIC may have been faulty, he knew that it would be necessary to effect a lodgment. I may therefore leave to one side the cases which deal with failure arising from ignorance of the law. 29 The fact is that Mr Robertson, according to his own evidence, simply overlooked the matter. He did this not once, but twice. In Rynmarc Pty Ltd v Classic Ergonomic Chairs Pty Ltd (1994) 12 ACLC 1038, Underwood J saw "inadvertence" as referring to "failure to observe or pay attention", being failure to "advert". In Hamilton v Property Investments Pty Ltd [1983] WAR 317, the Full Court of the Supreme Court of Western Australia favoured the formulation "not properly attentive", something to be distinguished from a positive intention to refrain from action. On these tests, Mr Robertson's failure to act through forgetfulness or oversight, being the source of the failure to lodge within 45 days on each occasion, must be regarded as "due to inadvertence". It was probably also "accidental". The basis for exercise of the s.266(4) jurisdiction exists. It is not necessary to consider any of the other threshold issues (including the one encompassed by the words "or that on any other grounds it is just and equitable to grant relief").

The court's discretion 30 The next question is whether the discretion placed at the disposal of the court by the finding of accident or inadvertence should be exercised in the way the plaintiffs seek. The general nature of the discretion was referred to by Wheeler J in Morris v Woodings (1997) 25 ACSR 636. Her Honour noted that the discretion should be approached against the background of the statutory scheme in which it appears "which is concerned with protection of those who deal with companies by, inter alia, the provision of adequate notice of charges". The central issue, therefore, is whether the exercise of the discretion may cause prejudice to any person within the purview of that protection. This is borne out by a number of other cases. It is sufficient to mention Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (1990) 2 ACSR 692, Citibank Ltd v Linput Pty Ltd (1991) 5 ACSR 361 and Tamone v How Fast Pty Ltd [1999] NSWSC 570. 31 The system of registration of charges in the present Corporations Act and the predecessor Corporations Law follows the model introduced in 1982 as part of the Companies Act 1981 and corresponding State and Territory Codes. It is concerned with two issues: the effectiveness of a charge in the event of winding up or administration (s.266) and the priorities, in relation to each other, of registrable charges affecting the company's property (Part 2K.3). Registration or lack thereof affects those questions. The prospects of winding up or administration or stress which might lead to winding up or administration and the existence of other registrable charges are therefore the central factors. If there is no hint of any possibility of winding up or administration and it is shown that there exists no other chargee occupying a position actually or potentially adversely affected by the system of priorities under Part 2K.3, it is open to the court to conclude that late lodgment (that is, lodgment outside the 45 days) will not disturb or affect accrued or accruing rights meriting consideration. And that, in such a case, will normally be the end of the matter. 32 The relevant considerations, as they relate to the Trust and Investa, are the subject of comprehensive evidence in the affidavit of Mr Martin, chief financial officer of Investa. I shall not go into all the details. It is sufficient to note that both Investa and, insofar as it may be viewed for commercial purposes as an entity, the Trust are clearly solvent with a very substantial excess of current assets over current liabilities. Each is well able to pay its debts as they fall due. There is not the slightest indication of financial stress. Both are in a very healthy financial position. As far as potentially competing charges are concerned, Mr Martin deposes that, in addition to the charge the subject of these proceedings, there is the subsequent charge over the whole of the assets and undertaking of the Trust in favour of Perpetual to which reference has already been made. That other charge affects the same property and was created at the request of the beneficiaries just mentioned, presumably as a further protection for them should the irregularities affecting the charge with which these proceedings are concerned produce any outcomes adverse to them. There are also specific mortgages of land which have been granted to Perpetual but these are, for present purposes, irrelevant since those securities are not "registrable charges" with which the system of priorities in Part 2K.3 is concerned. This follows from the definition of "registrable charge" in s.261 and the fact that s.262 does not extend to a charge over land. 33 In these circumstances, where, first, there is no hint whatsoever of possible winding up or administration, second, the only charge relevant to the operation of the priority provisions is a later charge held by the same chargee in the same interests and affecting the same property and, third, the parties for whose benefit that later charge is held have required these proceedings to be brought, there is no issue of prejudice which would cause the court to decline to exercise the s.266(4) jurisdiction. The case for appropriate orders under that section has therefore been made out and I am prepared to make them without the safeguards which might be considered appropriate where there is doubt about the financial strength of the party subject to the charge: see, for example, Re Guardian Securities Ltd [1984] 1 NSWLR 95, Re Drum Reconditioners (NSW) Pty Ltd (1992) 7 ACSR 82. As Long Innes J pointed out in Re a Limited Company (1928) 28 SR(NSW) 364, such special terms should be imposed only where there is a demonstrated need for them.

Rectification of the register 34 There is sought, in relation to the first non-compliance with s.264 (that is, the non-compliance by Westpac), an order extending the time for lodgment to 12 September 2000, being the day after that on which Form 309 was actually lodged. This is obviously on the basis that that lodgment is otherwise assumed to have remedied the non-compliance. As I have noted, the Form 309 was cast in terms stating that a new charge had been created on 16 August 1999, whereas what had actually happened on that day was that Westpac had become the holder of property subject to a pre-existing charge. The plaintiffs seek to overcome that by obtaining an order under s.274 for the rectification of the Australian Register of Registered Charges. That caused ASIC to proceed on the basis that the form had nothing to do with any pre-existing charge. Acting under s.265(2)(a), it therefore no doubt made in the register an entry of a date of creation of charge, not an entry of date of acquisition of property. 35 An affidavit sworn by a solicitor in Mr Robertson's firm recounts a conversation with an officer of ASIC about how that register is assembled and maintained. In short, the indications are that the register does not have any existence, in a physical sense, apart from a collection in electronic form of the Forms 309 and other forms lodged. It appears that it is from those electronic records that material provided to persons searching the register is provided. If this is right, the entry made under s.265(2)(a) consists of what appeared on the Form 309 as lodged. But even if the register is kept in some other way, the s.265(2)(a) entry cannot, in view of the provisions of that section, reflect more than was included in the form. The misstatement in the Form 309 as lodged can therefore be remedied by an order to the effect that the date recorded as a date of creation following lodgment of the relevant form be recorded instead as the date on which property subject to a charge was acquired. 36 Section 274 can be activated only if one of the grounds specified in the section exists. It seems to me that because the Form 309 was deliberately prepared in the form in which it was lodged, the case cannot be said to be one of accident or inadvertence. It was, rather, a case of error in understanding the operation of the statutory provisions, whether or not an error compounded by having obtained information from an officer of ASIC. Outright error is, I suppose, "some other sufficient cause" and, as I am also of the view that the particular alteration to the register will not prejudice the position of creditors or shareholders, being only a change in the reason for the appearance of the notified particulars on the register, I am prepared to conclude that the power to make a rectifying order has been activated. 37 As to the form of order, the appropriate course is to track the words of ss.274 and 265(2)(a) so that the order is as follows: "Order, pursuant to s.274 of the Corporations Act , that the misstatement in the Australian Register of Company Charges consisting of the recording of '16/08/1999' as the date of creation of a charge, being a recording in consequence of lodgment of Form 309 lodged on 11 September 2000 by Freehill Hollingdale & Page (barcode 015795680) in respect of Westpac Property Funds Management Limited, be rectified by instead recording '16/08/1999' as the date on which property subject to a charge was acquired." 38 There is in evidence a letter from Mr Robinson's firm informing ASIC of Westpac's intention to seek an order rectifying the register and informing it of the date and time of the hearing. Although ASIC did not appear, I do not think that, in this particular case, there is any need for it to be given further notice. The order for rectification is straightforward.

Relief under the Trustee Act 39 I come now to the applications for relief under the Trustee Act. Both Westpac and Investa seek under s.85 relief from personal liability for any breach of trust arising from failure to lodge notice under s.264 within the required time. Section 85(2) says that such relief may not be given unless it appears that the trustee has acted honestly and reasonably and ought fairly to be excused. It thus focuses attention on the actions of the trustee. 40 The threshold question whether s.85 applies to the responsible entity of a registered managed investment scheme must be answered in the affirmative. The circumstance that scheme property is, as already noticed, held on trust by the responsible entity means that that entity is a "trustee" for the purposes of the Trustee Act: see Re Mirvac Ltd (1999) 32 ACSR 107, MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) 45 ACSR 440, Re Homemaker Retail Management Ltd [2001] NSWSC 1058. 41 As for the substance of this application, it is clear that the non-compliance was, in each case, a result of inattentiveness by the solicitors for the party charged with the lodgment obligation. It is also clear that the party concerned entrusted to the solicitors the due completion of all necessary steps. Furthermore, that was an entirely reasonable and appropriate course, given that, as I think I am probably entitled to know without evidence, the particular firm was one with skill, expertise and experience in the relevant field of law and practice. While the responsible entities are professional trustees or custodians and therefore to be distinguished from (and probably subjected to more stringent expectations than) lay persons who undertake trusts, the particular subject matter involved technical and not altogether easy areas of the law. 42 The relevant principle seems to me to be that underlying the following observation of Harvey CJ in Eq in Perpetual Trustee Co v Watson (No 2) (1927) 28 SR(NSW) 43: "It was not a case in which, having a discretion, they [ie, the trustees] referred that discretion to counsel for advice as to how they should exercise the discretion; what they referred to him was a question of law, and he apparently advised them as a matter of law that they were not entitled to do what the beneficiary had asked them to do, and they so informed the beneficiary. … It cannot be said that they wilfully were guilty of neglect or default when they acted on the advice of responsible counsel who advised them on a matter of law." 43 In this case, the responsible entities both refrained from acting to effect the necessary lodgment because they relied on the firm of solicitors to guide them in taking the necessary steps and no guidance was forthcoming. To my mind, it is clear that each responsible entity acted honestly and reasonably and ought fairly be excused for any breach of trust. I shall therefore make the orders sought in that regard.

Orders 44 The orders of the court are as follows: 1. Order, pursuant to s.266(4) of the Corporation Act , that the time for lodgment of notice pursuant to s.264(1) in consequence of acquisition by the second plaintiff on or about 16 August 1999 of property subject to a charge (being a charge originally created by Permanent Nominees (Aust) Limited in 1994 in favour of Perpetual Trustees Australia Limited and in respect of property of the Westpac Property Trust) is extended to 12 September 2000. 2. Order, pursuant to s.274 of the Corporations Act , that the misstatement in the Australian Register of Company Charges consisting of the recording of "16/08/1999" as the date of creation of a charge, being a recording in consequence of lodgment of Form 309 lodged on 11 September 2000 by Freehill Hollingdale & Page (barcode 015795680) in respect of Westpac Property Funds Management Limited, be rectified by instead recording "16/08/1999" as the date on which property subject to a charge was acquired. 3. Order, pursuant to s.85 of the Trustee Act , that the second plaintiff is relieved from personal liability for any breach of trust arising from failure to lodge the notice referred to in Order 1 within 45 days after the acquisition referred to in Order 1. 4. Order, pursuant to s.266(4) of the Corporations Act , that the time for lodgment of notice pursuant to s.264(1) in consequence of acquisition by the first plaintiff on or about 30 November 2000 of property subject to a charge (being the charge referred to in Order 1) be extended to 5 pm on the second business day (as defined in the Corporations Act ) after the making of this order. 5. Order, pursuant to s.85 of the Trustee Act , that the first plaintiff is relieved from personal liability for any breach of trust arising from failure to lodge the notice referred to in Order 4 within 45 days after the acquisition referred to in Order 4. ******

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