In the matter of Investa Listed Funds Management Limited as responsible entity for the Armstrong Jones Office Fund and the Prime Credit Property Trust [2018] NSWSC 1362
Solicitors:
Allens (Plaintiff)
Gilbert & Tobin (Investa Wholesale Funds Management Limited in its capacity as responsible entity of the Investor Commercial Property Fund and ICPF Holdings Limited)
Clayton Utz (Quartz Bidco Pty Ltd and Quartz Sub TC Pty Ltd)
File Number(s): 2018/223255
[2]
Judgment - ex tempore (revised 17 August 2018)
This Notice of Motion has been brought in circumstances of some commercial urgency arising from the timing of a meeting of unit holders to consider trust schemes in respect of the Armstrong Jones Office Fund and the Prime Credit Property Trust. It is convenient, first, to note the reason why the application has been brought, and the basis of the Court's jurisdiction to deal with the application, before turning to the evidence and submissions which have been made in respect of the application.
Broadly, the Plaintiff, Investa Listed Funds Management Ltd ("ILFM") as responsible entity for the Armstrong Jones Office Fund and the Prime Credit Property Trust, seeks orders under s 63 of the Trustee Act 1925 (NSW) that it would be justified in distributing a supplementary explanatory memorandum in a specified form to registered holders of units in the two funds; adjourning a meeting of unitholders that had previously been ordered to be held to 29 August 2018; and vacating the earlier date of the second court hearing, listed on 22 August 2018, and now listing that hearing on 30 August 2018.
The application arises from relatively complex transactions, which in turn have an impact on the relatively complex question whether another entity, Investa Wholesale Funds Management Ltd ("IWFM") in its capacity as the responsible entity of the Investa Commercial Property Fund, and its related company, ICPF Holdings Limited (together "ICPF"), are entitled to vote at the meeting to approve the relevant trust schemes. It has been made clear, in the course of submissions, that the Court is not asked to reach any determination of the question whether ICPF are in fact or in law entitled to vote at the relevant meetings, or to express any view as to whether ILFM is justified in forming the view that it has in fact formed that ICPF are entitled to vote at the meetings, on a basis that it outlines in some detail in the supplementary explanatory memorandum. Such a matter could not have been determined as a question of fact in an application of this kind, where any other interested parties have not been joined and have not had an opportunity to be heard. The question of justification of that view may have been open to determination, but it would have been impractical to determine that question today, where this application has been brought at short notice, the Court was first been provided with the voluminous underlying material this morning, when the hearing commenced, and orders need to be made urgently, given the timing constraints in respect of the relevant transactions.
The Plaintiff does, however, appropriately, seek judicial advice in respect of two questions as to which judicial advice is properly required and given, and it has provided a detailed factual basis for that application. First, the application for judicial advice that ILFM is justified in publishing and distributing a supplementary explanatory memorandum is properly sought, because the Courts have emphasised that a scheme proponent should seek approval for further material that is to be sent to security holders in respect of meetings ordered by the Court, before it is dispatched, and that principle has been extended beyond company schemes to trust schemes: see, for example, Re Investa Listed Funds Management Ltd (as responsible entity of Armstrong Jones Office Fund: ARSN 090242229) [2016] NSWSC 344; Investa Listed Funds Management Ltd (as responsible entity of Armstrong Jones Office Fund & Anor) [2016] NSWSC 369 at [9]. Second, an adjournment of a meeting of unitholders that had previously been ordered by the Court is sought. Notwithstanding that I have been taken to provisions of ILFM's constitution which give the power to the Chairman to adjourn such a meeting, it is appropriate that the Court be given the opportunity to consider the proposal to adjourn the meeting. This application provides an appropriate means for the Court to consider that question.
By way of background to the application, I have been provided with detailed affidavit evidence and detailed documentary evidence, a Supplementary Statement of Facts which sets out the relevant factual background, and submissions made by Mr Wood, who appeared with Mr Bender for the Plaintiff in respect of the application. The Supplementary Statement of Facts draws attention to the orders which had previously been made by the Court, and to statements which have been made in the explanatory memorandum then approved by the Court as to the application of, in particular, s 253E of the Corporations Act 2001 (Cth) to ILFM and its associates, and to the fact that it was then understood that IWFM was an associate of ILFM, so far as they were both controlled entities of the Investa Property Group, and that, as then understood, IWFM would not be permitted to vote on the relevant resolutions of the meeting. I interpolate that, at the time of that explanatory memorandum, IWFM alone held all of the units in IOF which are now held together with ICPF. Whether IWFM was permitted to vote was and is a matter of significance, at least to IWFM, the funds of which it is responsible entity and their unitholders, and likely also to be relevant to other unitholders in the relevant funds of which ILFM is the responsible entity, so far as IWFM has a significant interest in those relevant funds.
The explanatory memorandum previously approved by the Court fairly noted that there were other developments, then occurring but not complete, which had the potential to change the circumstances which led to the result that IWFM was not able to vote. In the event, those other developments or some of them have now come to fruition, and ILFM has now formed the view, by its directors and on advice and on the basis of facts that are set out in the Supplementary Statement of Facts, that ICPF would be entitled to vote at the relevant meetings.
The Supplementary Statement of Facts in turn sets out the transactions which have occurred since the first court hearing, the most significant of those transactions, for present purposes, being a transaction by which Macquarie Group Limited, by a wholly owned subsidiary, has acquired 50% of Investa Office Management Holdings Pty Ltd and thereby acquired a 50% interest in what is known as the "Platform". It appears that that transaction is the culmination of a relatively lengthy period of negotiation, and has brought about a change of view as to the question whether ICPF are entitled to vote at the relevant meetings, so far as it has the result that ILFM is no longer a controlled entity of the Investa Group. Consideration has also been given to other matters which might give rise to an association in fact, and a conclusion has been reached that such an association is also not established.
These matters have already been disclosed in the public domain. ILFM has released an announcement to the Australian Securities Exchange ("ASX") indicating the steps that it was taking to consider the question of ICPF's entitlement to vote, and has since released a further announcement to ASX which indicates that, based on its investigations and the evidence made available to it, and having received legal advice, the directors of ILFM have concluded that ICPF are not associates and are not restricted from voting on the relevant proposals by reason of s 253E of the Corporations Act. That announcement also drew attention to the fact that ILFM was preparing a supplementary explanatory memorandum setting out additional information in respect of those matters.
Evidence has been led in this application, by way of an affidavit of Mr Callaghan, dated 15 August 2018, of the relevant transactions, and of matters of fact which are relevant to the question of association between ICPF and ILFM. As I noted above, that is not a factual question that requires determination in this application. However, the evidence is plainly relevant, so far as it provides background to the views formed by ILFM and expressed in the supplementary explanatory memorandum which is proposed to be circulated to unitholders. An affidavit has also been read of Mr Vijay Cugati, a partner in the firm of solicitors that acts for ILFM in the application, which refers to the affidavit evidence and factual material which he has reviewed, refers to the statements made in the explanatory memorandum previously approved by the Court as to the previous position and to aspects of the transaction, and indicates the due diligence and verification process which has been adopted in respect of the proposed supplementary explanatory memorandum. I have also been taken to other factual information which would have primary relevance if the Court were required to determine, which it is not, the correctness or otherwise of the view which has been formed by ILFM as to those matters. I note that nothing in the material to which I have been taken has given rise to any reason to question the correctness of that view, or not to proceed on the basis that it has been genuinely formed.
Appropriately, notice of this application has been given to the Australian Securities and Investments Commission, which has confirmed that it had no comments on the supplementary explanatory memorandum on a specified basis.
I have had the benefit of detailed submissions of Mr Wood and Mr Bender which address the relevant issues, including the background to the transactions and the application, and outline those transactions in some detail. The proposed supplementary explanatory memorandum is structured in a well understood and appropriate form, so far as it contains a Chairman's Letter which provides a broad outline of relevant matters, a series of "frequently asked questions" which identify the key features of the transaction; and provide clear information as to the issues which need to be addressed, in respect of who is entitled to vote at the meeting and in respect of the adjournment of the meetings. That supplementary explanatory memorandum also sets out, in a clear way, the relatively complex issues which arise in respect of the analysis, following the implementation of the recent transactions, as to whether ICPF are is entitled to vote at the relevant meetings. That will allow any unitholder who wishes to assess the question of ICPF's entitlement to vote at the meetings to do so for itself, having regard to the facts that are disclosed.
In these circumstances, recognising as I have that it is neither practical for the Court to form a view as to the correctness of ILFM's analysis of whether ICPF are entitled to vote, nor have I been asked to do so, and assuming that ILFM holds the opinion set out in the supplementary explanatory memorandum and that it does so on reasonable grounds having regard to the detailed factual matters that have been drawn to the Court's attention, I am satisfied that it is appropriate for the supplementary explanatory memorandum to be circulated to unitholders so that they are fairly made aware of these matters and ILFM's analysis of them. I am also satisfied that the meeting should be adjourned as proposed, to allow unitholders the opportunity to consider these matters against the contingency that it may be relevant to how some unitholders might address the meeting.
For these reasons, I am satisfied that I should make, and I make, orders in accordance with paragraphs 1-5 (as renumbered) of the Short Minutes of Order initialled by me and placed in the file.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 12 September 2018