Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand

CASES CITED : Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66

PARTIES : Applicant- AMP Captital Investors Ltd as Responsible Entity for the KSC Trust

COUNSEL : Applicant- T.F. Bathurst QC, K.H. Barrett

SOLICITORS : Applicant- Luke Buchanan, Clayton Utz

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

2010/356969 AMP CAPITAL INVESTORS LIMITED AS RESPONSIBLE ENTITY FOR THE KSC TRUST JUDGMENT

1 HIS HONOUR: The plaintiff, AMP Capital Investors Limited ("AMP CI") is the trustee of the responsible entity of a unit trust, the KSC Trust. The principal asset of this trust is the Karrinyup Shopping Centre in Perth, Western Australia. The KSC Trust was established by a trust deed dated 23 March 1994. AMPCI claims judical advice in these proceedings under Trustee Act 1925, s 63 as to whether it would be justified in defending certain proceedings brought against it by one of the beneficiaries of the KSC Trust.

2 It is a necessary consequence of the provisions of Trustee Act s 63 that a trustee should apply for the advice of the Court as to whether it is proper to defend proceedings brought against it in its role as trustee and should take no step in defending the proceedings until it does so: Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at [74] and such advice is given commonly where breaches of trust are alleged against the trustee, at [70].

3 The circumstances that call for giving of this advice may be shortly stated. The KSC Trust is also a registered managed investment scheme for the purposes of Part 5C of the Corporations Act 2001. The units in the KSC Trust are held as to one third by Westfield Management Ltd as trustee for the Weststart Trust ("Westfield") and as to two thirds by AMP Capital Property Nominees Ltd ("AMP CN") as trustee for UniSuper Limited ("UniSuper") in its capacity as trustee of a superannuation fund.

4 The occasion for the advice arises through Westfield suing AMPCI, AMPCN, UniSuper and David Jones Limited ("David Jones") in the commercial list of this Court on 6 October 2010. AMPCI wishes to know at the earliest opportunity whether it is entitled to defend these proceedings and whether it may utilize the resources of the trust so to do. It is obliged under commercial list procedures to file any defence upon which it proposes to rely on or before 3 November 2010.

5 The principal issue in the commercial proceedings is the validity of two agreements for lease entered into between David Jones and AMPCI in July 2010. Westfield challenges the validity of two resolutions of the Unit holders Committee of the KSC Trust passed by a simple majority (rather than 75%) pursuant to which the entering of the agreements for lease was approved. Westfield also challenges the entry into the agreements for lease.

6 The disputed resolutions were passed on 16 July 2010 upon the vote of the two-thirds unit holder UniSuper. The resolutions authorized the entry by the trustee into agreements for lease with David Jones as a long term anchor tenant for the Karrinyup Shopping Centre. One of the leases involved a partial alteration of the premises by the addition of a further retail shopping space for David Jones and the other a more major redevelopment. Westfield disputes the validity of these July 2010 resolutions.

7 It is not necessary to recite the allegations in the proceedings in detail. They have been set out in the Statement of Facts put before me on this application (Exhibit A). I have reviewed the contents of Westfield's commercial list Statement of Claim. Westfield alleges that AMPCI failed to keep Westfield informed about its negotiations with David Jones and deliberately entered into the agreements for lease with what is alleged to be little or no prior notice to Westfield. It is said that AMPCI did this by circumventing the Unit holders agreement and the procedures laid down in it and did so with the intention of preventing Westfield from being able to take steps to prevent AMPCI from entering into the agreements for lease. Furthermore it is said that AMPCI included a liquidated damages term in the agreements for lease, which would make it difficult to unwind the transactions later.

8 Westfield relies on several causes of action against AMPCI: the first is that by entering into the agreements for lease AMPCI breached its duty as responsible entity for the management investments scheme; the second that AMPCI breached the Unit Holders Agreement; and third Westfield alleges that by entering into the agreements for lease AMPCI acted in breach of trust by seeking to circumvent the Unit Holders Agreement and acting in concert with AMPCN and Uni Super to prevent Westfield from being able to exercise any right to oppose or block the entry into the agreements for lease.

9 Westfield seeks relief declaring the agreements for lease void, restraining AMPCI from carrying out the works contemplated by the leases, an order that AMPCI indemnify the KSC trust and unit holders against any loss or damage to the KSC trust or unit holders arising out of the entry into the agreements for lease, and damages. 10 The proceedings are already complex in pleading and are likely to take some time to prepare for hearing. The plaintiff comes at the earliest opportunity to seek judicial advice. 11 There is urgency to this application. It came before me in the duty list on Thursday, 28 October 2010. The principal proceedings were commenced on 6 October 2010. AMPCI is due to file any defence by 3 November 2010. When the matter was heard I indicated that I would give judgment in this matter on Tuesday, 2 November 2010 so that AMPCI would know where it stood before the obligation to file a defence fell due.

12 I have reached the view that AMPCI would be justified in defending the proceedings. I do so for several reasons.

13 First I have had tendered to me (Exhibit B) an opinion of Mr T.F. Bathurst QC, Mr A.J Payne SC and Ms K.H. Barrett which I have ordered to be kept confidential. This careful opinion which is as complete as might be expected at this stage of the principal proceedings concludes upon the assumptions made and the materials identified and the facts set out in the statement of facts that AMPCI would be justified in defending the claims made in the current proceedings. That opinion is based upon counsels' present view that AMPCI has reasonable prospects of defending the claims made by Westfield. Counsel also believes that AMPCI would be justified in opposing the relief claimed as a consequence of the various breaches alleged against it. This advice of counsel briefed on behalf of AMPCI and with knowledge of its instructions is an important factor inclining the Court to the conclusion that AMPCI would be justified in defednding the principal proceedings. 14 Second, looking at the materials it is apparent the plaintiff's case is not unarguable. On the correspondence already exchanged between the parties prior to and in the course of the principal proceedings and by reason of allegations already aired in previous proceedings between the same parties about the same KSC Trust before Hammerschlag J it can be anticipated that there are disputes of fact and law that will allow AMPCI to contend the relief sought by Westfield is not made out.

15 Third, AMPCI is the proper contradictor in the proceedings in respect of the allegations that it seeks to answer. I had at first thought that this might be a case where AMPCI as trustee may be able to rely on UniSuper to conduct the overall defence of the proceedings along with David Jones. As the majority unit holder voting for the disputed resolutions UniSuper does have an interest in pursuing the defence of the proceedings. David Jones may also have such an interest now that it has committed itself to being the anchor tenant at the Kurrinup Shopping Centre. Nevertheless there is a special role for AMPCI in the main proceedings. Given the nature of the allegations Westfield has made against AMPCI on the statement of claim, AMPCI is the proper contradictor. Westfield has alleged that AMPCI has acted in concert with UniSuper and AMPCN to bring about the execution of the agreements for lease without Westfield having an opportunity to exercise its legal rights to stop that outcome. I do not see how any party other than AMPCI could answer an allegation that AMPCI was involved in such joint action involving, as it seems to, an examination of the corporate state of mind of AMPCI. It can be anticipated that the main proceedings will also involve a close examination of AMPCI's own procedures in the administration of the KSC Trust. Given the nature of Westfield's allegations the conduct of the principal proceeding may well produce unfairness to some of the defendants if either AMPCN or UniSuper are required to defend AMPCI's position for it. Moreover the relief which Westfield seeks involves the setting aside of transaction to which AMPCI is a party. This factor is an important consideration in advising AMPCI that it would be justified in defending the principal proceedings.

16 Finally, there is the question of whether or not the plaintiff should be permitted to utilise the trust assets for its defence. The result on this question follows closely in my view from the last important consideration that AMPCI is the proper defender of its conduct in this case. There is no reason to believe on the material before me that AMPCI would not be in a position to reimburse the KSC Trust for its costs if it were ultimately unsuccessful in the main proceedings. And this is not a case where the plaintiff's costs of defending the proceedings is likely to impact remarkably on the assets of the trust. The total value of the trust assets as at 30 June 2010 is $541 million.

17 Should it appear that the costs of conducting this litigation are more expensive than previously anticipated or should it appear that the prospects of AMPCI's succeeding in the main proceedings are changed, the matter can be reviewed when evidence is closed. I will give the advice sought only up until the time when AMPCI in the main proceedings is in a better position to assess the merits of the proceedings, when evidence is closed but before the main proceedings have been set down for hearing.

18 Accordingly, the Court advises until the completion of the filing of evidence in the Proceedings (330642/2010) and before the setting of those proceedings down for trial:

(1) that AMPCI would be justified in defending the Proceedings; and,

(2) that AMPCI would be justified in using the resources of the trust to defend the Proceedings. (3) Costs of the application are payable out of the trust estate. (4) Liberty to apply.

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