Public Trustee of Queensland, Re [2012] QSC 281 (20 September 2012)

The applicant submits that the question of whether it is able to assert a lien, and if so its extent, assumes greater significance given the evidence tending to suggest that Opus Capital and certain of the Schemes may not be solvent.

[23] The merits of the argument concerning the applicant's entitlement to exercise a lien over Scheme assets are considered at length in its submissions. Opus Capital's view is that no such lien exists.

[24] The present application is not the occasion to resolve the merits of those competing contentions. It is sufficient to observe that Opus Capital concedes that the applicant is entitled, at the least, to be indemnified for legal costs reasonably incurred. It is arguable that the applicant is entitled to be indemnified for all legal costs. It is also at least arguable that the applicant is entitled to assert a lien over Scheme assets sufficient to meet the claims for which it seeks to be indemnified. Those are issues that should be determined in appropriate proceedings in the event those proceedings do not resolve.

[25] It is not the Court's function to investigate the evidence and make a finding whether or not the trustee will be successful in the litigation.[3] The Court has merely to determine whether the proceedings should be taken in the best interests of the trust estate.[4] It is in the best interests of the Schemes and their beneficiaries that any claim to indemnification by the applicant against Opus Capital be resolved.

[26] Accordingly, I declare that it is appropriate for the applicant to commence proceedings seeking the orders contained in the draft originating application attached to the application filed in these proceedings on 5 July 2012.

[27] For the reasons that appear below, on 27 July 2012 I directed that the applicant transfer the Scheme assets in accordance with the instructions received by it on 29 June 2012. The question of whether the applicant may exercise a lien over those Scheme assets is also one for final determination in appropriate proceedings. Accordingly, I directed that the scheme assets be transferred to the new custodian but that the applicant retain and not transfer an amount sufficient to meet its claim for indemnification until such time as its rights to indemnification and lien are finalised by this Court or agreement between the parties.

[28] The applicant's second question concerns whether it ought to follow Opus Capital's instructions of 29 June 2012 to transfer the Scheme assets to a new custodian trustee. Issues arise as to:

(a) whether The Trust Company (Australia) Limited ("the Trust Company") has been regularly appointed as custodian of the Scheme assets; and

(b) whether transferring the Scheme assets to the Trust Company may contravene s 601FC(1)(i) of the Corporations Act 2001 (Cth).

[29] The applicant has sought but been denied access to the custody deed said to appoint the Trust Company as custodian of the Schemes. The applicant points out that it is not obvious how the Trust Company can be appointed as custodian of 11 different Schemes pursuant to a single custody deed. The applicant also notes that the letter from the Trust Company dated 3 July 2012 does not identify the Schemes as Managed Investment Schemes registered pursuant to Part 5C of the Corporations Act 2001 (Cth), referring to them simply as "trusts", and that the names of 5 of the trusts set out in the letter do not match the names of the Schemes.

[30] The applicant identified these concerns in a letter to the solicitors for Opus Capital on 5 July 2012, however it received no response.

[31] Opus Capital disputes that it is proper for the applicant to review the Trust Company custody deed. It says that the custody deed is confidential.

[32] The applicant also has concerns regarding the mechanics of transferring the Scheme assets to the Trust Company. Each of the Notices of Proper Instruction direct the applicant to transfer money held by it in different Scheme bank accounts to a single bank account in the name of the Trust Company.

[33] Section 601FC(1) of the Corporations Act 2001 (Cth) states:

"In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:

(ii) held separately from property of the responsible entity and property of any other scheme; ...".

[34] Section 601FC(5) provides:

"A responsible entity who contravenes subsection (1), and any person who is involved in a responsible entity's contravention of that subsection, contravenes this subsection."

[35] Section 601FC(6) further provides:

"A person must not intentionally or recklessly be involved in a responsible entity's contravention of subsection (1)."

[36] The applicant submits that there is at least a doubt as to whether it is permissible for the monies belonging to different Schemes to be held in a single bank account, consistently with the terms of s 601FC(1)(i)(ii). The relevant property is said to be the chose in action represented by the account holder's claim against the bank, and that property would not be "held separately from" like property if it were transferred to a single bank account, regardless of what journal entries may be made in respect of cash held in the single bank account.

[37] The applicant is concerned that by paying the money as directed it will be "involved in" any contravention of s 601FC(1)(i) by virtue of s 601FC(5).

[38] At the hearing on 27 July 2012 the applicant did not press for orders that it should not follow Opus Capital's instructions of 29 June 2012. Rather, it proposed orders permitting it to follow those instructions, subject to retaining a lien over Scheme assets.

[39] In their letter dated 27 July 2012 the solicitors for Opus Capital invited the applicant to contact representatives of the Trust Company to satisfy itself that the Trust Company's appointment was valid.

[40] I suggested at the hearing on 27 July 2012 that I would be more satisfied making the orders contended for if the applicant put the Trust Company on notice of its possible contravention of s 601FC(1)(i) of the Corporations Act 2001 (Cth). Queen's Counsel for the applicant indicated that his instructing solicitors would correspond with the Trust Company, and it is on this basis that I directed the applicant to transfer the Scheme assets in accordance with Opus Capital's instructions.

[41] The application was properly brought because the trustee had a reasonable doubt as to the proper course of action.[5] The Court has not been asked to finally determine the parties' rights, but has been asked to provide directions and an opinion to guide future conduct. The matters about which the Court's guidance was sought concern legal rights and obligations, and not matters of commercial judgment.

[42] It is for these reasons that I made the directions sought on 27 July 2012.

[1] [2012] QSC 15 at [14]- [15].

[2] Re Beddoe [1893] 1 Ch 457 at 558.

[3] Glassock v The Trust Company (Australia) Pty Ltd (supra) at [14], citing Salmiv v Sinivuori [2008] QSC 321.

[4] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Austalia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 at 102-103 [104]- [107].

[5] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Austalia and New Zealand (supra) at 83 [36].