Westfield QLD No. 1 Pty Limited & Anor v Lend Lease Real Estate Investments Limited & Ors

Court of Chancery Procedure Act 1852 (Eng) English Rules of Supreme Court, 1883 Equity Act 1901 (NSW), Supreme Court Act 1970 (NSW) LEGISLATION CITED : Supreme Court Rules 1970 (NSW) Trustee Act 1925 (Eng) Trustee Act 1958 (Vic) Trustee Act 1925 (NSW) Uniform Civil Procedure Rules 2005 (NSW)

Arakella v Paton (2004) 60 NSWLR 334 City of Burnside v Attorney-General of South Australia (1993) 61 SASR 107 Craven's Estate, In re; Lloyds Bank Ltd v Cockburn (No 2) [1937] Ch 431 David v Frowd (1833) 1 My & K 200 Davies, In re; Davies v Davies (1888) 38 Ch D 210 Downshire's Settled Estates, In re; Marquess of Downshire v Royal Bank of Scotland [1953] Ch 218 Dutton (decd), In Re [1968] SASR 295 Fitzpatrick v Waring (1882) 11 LR Ir 35 Gaydon, Re [2001] NSWSC 473 Gonzales v Claridades (2003) 58 NSWLR 211 Hazeldine's Trusts, Re [1908] 1 Ch 34 Hudson v Gray (1927) 39 CLR 473 King, In re; Mellor v South Australian Land Mortgage & Agency Company [1907] 1 Ch 72 CASES CITED : Kornblums Furnishings Ltd, Re (1981) 6 ACLR 456 Ku-Ring-Gai Municipal Council v The Attorney-General (1954) 55 SR (NSW) 65 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 McNaughton, Re (Supreme Court of New South Wales, Young J, 8 December 1994, unreported, BC 9403436) NM Superannuation Pty Ltd v Hughes (Supreme Court of New South Wales, McLelland CJ in Eq, 5 March 1996 unreported, BC 9600423) Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785 Riddle v Riddle (1952) 85 CLR 202 Royal Melbourne Hospital v Equity Trustees Limited [2007] VSCA 162 Royle, Re; Royle v Hayes (1889) 43 Ch D 18 Shipwrecked Fishermen and Mariners' Royal Benevolent Society, In re [1959] Ch 220 Stein v Sybmore Holdings Pty Ltd [2006] NSWSC 1004 Suffolk v Lawrence (1884) 32 WR 899 Sykes (dec'd). Re and the Trustee Act [1974] 1 NSWLR 597 Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 Trustees of the Kean Memorial Trust Fund v Attorney-General of South Australia (2003) 86 SASR 449

Atkins J R A and Evershed F R E, Atkin's encyclopedia of court forms in civil proceedings, 2nd ed (1961). vol 41, Butterworths TEXTS CITED : Daniell E R et al, Daniell's Practice of the High Court of Chancery, 5th ed (1871), vol 2, Stevens and Sons Hayden J D and Leeming B M J, Jacob's Law of Trusts in Australia, 7th ed (2006), LexisNexis Butterworths

Westfield QLD No. 1 Pty Limited (First Plaintiff) Westfield QLD No. 2 Pty Limited (Second Plaintiff) Lend Lease Real Estate Investments Limited (First Defendant) PARTIES : Cairns Central Limited (Second Defendant) Perpetual Limited (Third Defendant) Perpetual Trustees Victoria Limited (Fourth Defendant)

Mr I Jackman SC, Mr T Marskell (Plaintiffs) COUNSEL : Mr T Bathurst QC, Mr H Insall SC, Mr D Thomas (First Defendant) Mr M Cessario (solicitor) (Third and Fourth Defendants)

Speed & Stracey Lawyers Pty Limited (Plaintiffs) SOLICITORS : Freehills (First Defendant) Corrs Chambers Westgarth (Third and Fourth Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50103/07 Westfield QLD No. 1 Pty Ltd & Anor v Lend Lease Real Estate Investments Limited & Ors

JUDGMENT The proceedings 1 The proceedings before the court concern the ownership and management structures in relation to the Cairns Central Shopping Centre which consists of real property and other assets. 2 The market value of the Shopping Centre as at 31 December 2007 was $407,000,000. 3 The plaintiffs and the relevant defendants own and manage the Shopping Centre through a network of trust arrangements, set out below. They appear for quite some time to have reached a stalemate concerning the way in which the Shopping Centre is to be managed. At the core of the dispute is a disagreement between the directors of Cairns Central Limited (CCL), the manager of Trusts which own the Cairns Central Shopping Centre (Shopping Centre), with respect to the appointment of a property manager for the Shopping Centre. The ownership and management structure of the relevant trusts 4 It is convenient to first set out a short overview of the various business structures involved in the ownership and management of the Shopping Centre:

i. the assets comprising the Centre are owned by the Fourth Defendant, Perpetual Trustees Victoria Limited as trustee for the CMS Property Trust;

ii. CMS Property Trust is a unit trust in which 99% of the issued units are held by the Third Defendant, Perpetual Trustees Australia as trustee for the CMS General Trust. The remaining 1% of the issued units in the CMS Property Trust are held by the Second Defendant, Cairns Central Limited ( " CCL");

a) 50% are held by the First Plaintiff, Westfield QLD No. 1 Pty Limited ("Westfield No. 1") as trustee for the Cairns Investment Trust - Units Trust; and

b) 50% are held by the First Defendant, Lend Lease Real Estate Investments Limited ( " LLREI " ) as trustee for the SGIL Trust. These units are held for the benefit of Australian Prime Property Funds Retail ("APPF Retail"), a fund which specialises in investment in prime retail properties (shopping centres) in Australia;

iv. CCL is the manager of the CMS Property Trust and CMS General Trust (collectively " the Trusts " ) under the respective trust deeds dated 21 December 1994 (collectively " the Trust Deeds " );

v. CCL has on issue 100 "A" class ordinary shares and 100 "B" class ordinary shares. Notwithstanding the existence of "A" and "B" class shares, the rights of shareholders in these classes under the Articles of Association are identical for current purposes;

vi. all of the 100 "A" class shares in CCL are held by the Second Plaintiff, Westfield QLD No. 2 Pty Limited ( " Westfield No. 2 " );

vii. all of the 100 "B" class shares in CCL are held by LLREI;

viii. the Articles of Association of CCL permit the holder of the "A" class ordinary shares to appoint half of the directors of CCL with the holder of the "B" class shares permitted to appoint the other half;

ix. the directors of CCL appointed by Westfield No. 2 are Mr Tim Walsh and Mr Greg Miles;

x. the directors of CCL appointed by LLREI are Mr Tarun Gupta and Mr Robert Hattersley. Mr Eric Wells is an alternate director to Mr Hattersley, having been appointed 23 April 2007 by LLREI. Mr Wells was also appointed a company secretary of LLREI on the same date;

xi. the management of the Centre (as opposed to the Trusts) was performed by Lend Lease Property Management Australia Pty Limited ("LLPMA") until 30 September 2006 pursuant to a Property Management Agreement dated 3 February 2005 between CCL and LLPMA ("the PMA");

xii. the current dispute arises as a property manager of the Centre has not been appointed on a final basis for a fixed term following the expiry of the PMA;

xiii. LLPMA has continued to manage the Centre since that date by reason of a number of interim arrangements agreed to by Westfield No. 2 and LLREI with a view to ensuring that the Centre was not left unmanaged whilst the dispute was litigated. Diagrammatic depiction of material structures 5 The following diagram serves to assist:

6 The effect of the above structure is that the plaintiffs and LLREI, as trustee for APPF, each have a 50% interest in the Trusts holding the Shopping Centre, and in the Trust Manager, CCL. The claims to relief 7 The plaintiffs seek:

i. An order pursuant to Part 54 rule 3 of the Uniform Civil Procedure Rules 2005 or, in the alternative, the inherent jurisdiction of the Court, that the Fourth Defendant as trustee of the CMS Property Trust, in exercise of its powers under Part 23 of the CMS Property Trust Deed, effect the sale of such Authorised Investments that comprise the Cairns Central Shopping Centre including, without limitation:

b) any or all Authorised Investments listed in sub-paragraph (b) of Schedule 1 to the CMS Property Trust Deed, notwithstanding the absence of any proposal, direction or request to do so by the Second Defendant as manager. ii. In the alternative, an order pursuant to section 67 of the Supreme Court Act 1970 or, in the alternative, under its inherent jurisdiction, by the Court appointing Max Christopher Donnelly and Robyn Louise Duggan jointly of Ferrier Hodgson or some other fit and proper person, without security, as receivers of the Authorised Investments referred to in order 1 with:

a) such investments be vested in the receiver, subject to any encumbrances, to be held on trust for sale; and

b) the receiver to effect the sale of such investments and pay the net proceeds to the Fourth Defendant as trustee of the CMS Property Trust.

iii. An order that the sale referred to in orders 1 and 2 be effected only by way of public auction at such time and place to be determined by the Fourth Defendant or the receiver (as the case may be) and provided that such auction [follow certain steps which are set out].

iv. Upon completion of the sale under orders 1 or 2, an order pursuant to Part 54 rule 3 of the Uniform Civil Procedure Rules 2005 that:

a) the CMS Property Trust be terminated and wound up in accordance with Part 7.3 of its terms; and

b) the CMS General Trust be terminated and wound up in accordance with Part 7.3 of its terms, notwithstanding the absence of any consent by the Unit Holders of these trusts. v. [A series of essentially administrative orders concerning the receivership]

vi. In addition or in the alternative to orders 1 to 5, an order pursuant to section 81 of the Trustee Act 1925 (NSW) or, in the alternative, section 63 of the Trustee Act 1958 (Vic) conferring power: a) on the Third Defendant to wind up the CMS General Trust in accordance with clause 7.3 of the CMS General Trust Deed;

b) on the Fourth Defendant to wind up the CMS Property Trust in accordance with clause 7.3 of the CMS Property Trust Deed; and

c) in the alternative to sub-paragraphs (a) and (b), on the Fourth Defendant to effect the sale of such Authorised Investments of the CMS Property Trust that comprise the Cairns Central Shopping Centre in the manner set out in order 3 above or in such other manner as the Court considers appropriate. The issues 8 Without being exhaustive the real issues for determination appear to me to be as follows:

1. Whether there is a basis for intervention by the Court given the express provisions in the CMS Property Trust Deed and the CMS General Trust Deed;

2. Whether the jurisdiction relied upon by the plaintiffs [Part 54 rule 3 of the Uniform Civil Procedure Rules 2005 or section 67 of the Supreme Court Act 1970 or pursuant to the inherent jurisdiction of the Court or pursuant to section 81 of the Trustee Act 1925 (NSW) or section 63 of the Trustee Act 1958 (VIC)] can be invoked to obtain the relief sought, which is in effect, the winding up and termination of the CMS Property Trust and the CMS General Trust (the Trusts); 3. In any event, whether the Court should grant the relief sought given the defendant's contentions that:

3.1 there is no actual deadlock in the operations of CCL;

3.2 there is no actual detriment or likely detriment to the beneficiaries of the Trusts by reason of the disagreement as to which property manager ought to be appointed;

3.3 there will be detriment to Unit Holders if relief is granted;

3.4 the Court would not order the drastic remedy of winding up, when there is an alternative exit for Westfield No. 1, in that Westfield No. 1 and Westfield No. 2 are entitled to sell their interests; and

4. Whether the Court can appoint a Receiver, in effect, to facilitate the winding up and termination of the Trusts. Relevant provisions of Trust Deed 9 The plaintiffs seek relief in relation to both the CMS Property Trust and the CMS General Trust (Westfield No. 1 is a beneficiary under the latter Trust only; Westfield No. 2 is not a beneficiary under either Trust). 10 The terms of the Trusts are relevantly the same. For convenience, the trusts will be referred to in these submissions as "the Trust" and the Trust Deed of each trust will be referred to collectively as the "the Trust Deed". The Trust Deed Objects, term of Trust and rights to wind up 11 The object of the Trust is outlined in clause 2.3 of the Trust Deed:

The object of creating the Trust and raising capital by means of the creation and issue of Units is to benefit the Unit Holders by investing in certain lands for the purpose of deriving rental income and in connection therewith to undertake developmental capital works in the form of improvements to those lands so as to achieve the significant rental potential that will flow from those lands and that development and to carry out such other purposes as the Trustee and the Manager from time to time determine. 12 Clause 7 is headed "Term of Trust and termination of Trust". Clause 7.1 provides that the Trust begins on the date of this deed and terminates on the earlier to occur of:

a) The date which is 80 years from the date of this deed;

b) Any earlier date which the Trustee, with the consent of the Unit Holders by Special Resolution or Special Resolutions, appoints as the vesting date for the purposes of this deed; and

c) Any earlier date determined in accordance with this deed. 13 Clause 7.2 provides for two specific events in which the Manager or Trustee may summon a meeting of the Unit Holders to consider the winding up of the Trust, and then if by Special Resolution that meeting so decides, the Trust must be wound up. Those two specific events are income tax or capital gains tax events, neither of which is applicable in the present case.

Pertinent obligations of Manager and Trustee 14 Clause 6.1 provides:

a) The Manager must manage the Trust (which includes but is not limited to the Fund and all borrowings and liabilities of the Trust) for the benefit of the Unit Holders.

b) The Manager has full and complete powers of management and subject to this deed, the Trustee must not exercise any powers of management except as directed or requested by the Manager.

c) The Manager or its agents must manage and supervise all investments of the Fund and must endeavour to ensure that all investments are dealt with to the best advantage of the Trust

15 "Fund" is defined in clause 1 of the Trust Deed as including all the property held by or on behalf of the Trustee. "Fund" would include the Shopping Centre under the CMS Property Deed. 16 Under clause 6.2, the Trustee must act in accordance with a direction or request of the Manager unless the Trustee reasonably believes that acting in accordance with that request or direction is not in the interests of the Unit Holders or is in breach of the Trust Deed or any statute. 17 Clause 8.2 reads as follows:

Subject to any restrictions imposed by the Corporations Law, Listing Rules or under this deed to the contrary:

(a) the Manager has absolute discretion as to the investment of any cash forming part of the Fund and as to the purchase, sale, lease, transfer, exchange, alteration, refurbishment, redevelopment or other dealing with or in respect of any asset or liability in relation to the Trust from time to time; and

(b) the Trustee, to the extent of the funds in its hands in respect of the Trust, must effect and pay for those investments or purchases, sales, leases, transfers, exchanges, alterations, refurbishments, redevelopments or other dealings with or in respect of any asset or liability in relation to the Trust required in writing by the Manager provided that no investment is to be made except in Authorised Investments. 18 Clause 8.5 is in the following terms:

(a) If the Manager has a proposal for the development, extension, addition or alteration to an existing Authorised Investment or for the redevelopment or erection of a new improvement the Trustee must award the contract for the carrying out of the works to a person designated by the Manager (which, in accordance with clause 6.4, may include an Associate of the Manager) unless the Trustee is of the view that the appointment of the nominated person is not in the best interests of Unit Holders, and (subject to that same qualification) must:

(1) engage any person recommended by the Manager to plan, control, co-ordinate or direct the carrying out of the works; or (2) appoint any person recommended by the Manager to report to the Manager and Trustee on the progress and completion of the works. 19 Clause 17.2 of the Deed provides that the Trustee is obliged to act continuously as trustee. Clause 17.3 provides that the Trustee is obliged to exercise "all due diligence and vigilance in carrying out its functions and duties and in protecting the rights and interests of the Unit Holders". 20 Clause 19.2 is headed "Manager must operate in proper and efficient manner" and provides as follows:

The Manager must strive to carry on and conduct its business in a proper and efficient manner and must ensure that any undertaking, scheme or enterprise under this deed is carried on and conducted in a proper and efficient manner 21 Clause 20.1 provides that the Manager must retire from the management of the Trust, when required to do so by the Trustee in writing in certain circumstances. These circumstances include:

a) (sub para (4)) where the Manager fails or neglects to carry out or satisfy or has contravened any obligation imposed on the Manager by this deed that in the reasonable opinion of the Trustee adversely affects the interests of Unit Holders and fails to remedy the contravention within such period as is specified by the trustee in a written notice to the manager;

b) (sub para (5)) where the Trustee reasonably believes that it is in the best interests of the Unit Holders for the Manager to retire. 22 Clause 20.2 dealing with removal of a manager is in the following terms:

If the Manager refuses to retire as required by clause 20.1 (a), the Trustee may by written notice remove the Manager with immediate effect. 23 Clause 20.3 dealing with "Appointment of new Manager" provides:

(a) On the removal or retirement of the Manager under this part 20 and subject to section 1074 of the Corporations Law, the appointment of any new Manager must be approved by a Special Resolution passed at a meeting of Unit Holders of the Trust duly convened and held in accordance with the terms of this deed.

(b) Until the appointment under clause 20.3 (a) is complete the Trustee must act as Manager but the Trustee may not: (1) issue any Units or

(2) offer for subscription or purchase or invite any person to subscribe for or purchase any Units 24 Clause 20.8 entitled "Trust terminated if new Manager not appointed" provides:

If the office of Manager becomes vacant and a new Manager is not appointed within six months of the vacancy, the Trustee may resolve, effective immediately, to terminate the Trust.

25 Clause 21.1 provides that the Trustee is obliged to perform its functions and exercise its powers under the deed "in the best interests of the Unit Holders". 26 Clause 20.9 is headed "Appointment of a receiver of Manager" and provides:

The Trustee is authorised to appoint a receiver or receiver and manager of the Manager where it considers that the Manager has failed to carry out or perform any of its obligations under this Deed so that the rights and interests of the Unit Holders have in the opinion of the Trustee been materially prejudiced or will be so prejudiced unless the receiver is appointed. 27 Clause 23.1 provides that the Trustee has the same powers in respect of the property and assets of the Fund as if it were the absolute and beneficial owner of the property and assets. Clause 23.2(a), 23.2(o) and 23.2(p) provide for specific powers of sale by the Trustee of the Shopping Centre. In particular Clause 23.3 provides:

(a) The Trustee must execute any proxy, power of attorney or other instrument necessary or desirable for the Manager or an Officer or agent of the Manager to perform the Manager's obligations under this deed. 28 Clause 23 does not mandate when the Trustee must exercise such a power of sale. Responsibilities of CCL 29 Before dealing with the acquisition of interests in the trust by Westfield it is pertinent to stand back from the general situation and to note some of the powers which CCL holds as trust manager of the two trusts. These powers include:

a) the power to appoint the shopping centre's property manager - ie the manager who leases tenancies, collects the rent, opens the centre, takes care of the common areas and amenities etc.

[Notably as CCL has no employees and no premises, it is a practical imperative that it appoints a property manager pursuant to clause 6.3 of the trust deeds as it has done to date rather than itself seek to undertake that role.]

b) the power to appoint the shopping centre's development manager - ie the manager who is responsible for designing and implementing the continuing upgrade and development of the centre;

c) the power to budget for, review and authorise capital and general expenditure at the shopping centre and authorise payment of distributions to unit holders of income and receipts. The other constituent documents 30 The other constituent documents by which the centre is owned and operated as implemented in 1994 were:

ii. Unitholders Agreement between CMTI Pty Limited, CCL and LLREI dated 3 November 1994;

iii. Unitholders Agreement Cairns Centre Amending Agreement between CMTI Pty Limited, LLREI and CCL dated 19 December 2004; and

iv. Deed Polls executed by the each of the Plaintiffs on 20 September 2006 and 5 October 2006.

Summary of the facts Property manager of the Shopping Centre and acquisition of interest in trusts by Westfield 31 The material facts may be summarised as follows:

i. Prior to 5 October 2006, the Shopping Centre was beneficially owned by Coles Myer and LLREI, in equal shares.

ii. On 6 September 2001, Lend Lease Property Management (Australia) Pty Limited (LLPMA) was appointed by CCL as the property manager of the Shopping Centre for a term of 2 years. CCL reappointed LLPMA as the property manager of the Shopping Centre effective from 1 October 2003 for a period of 3 years, ie expiring at the end of September 2006.

iii. In March 2006, the Westfield Group commenced negotiations with Coles Myer regarding the acquisition of the latter's interests in the Trusts. One of the first inquiries made by Westfield related to whether it could acquire the rights to manage the Centre: Letter Coles Myer to Jordan at Westfield 7 March 2006, Court Book Tab 4.

iv. Westfield Group met to approve the acquisition on 28 April 2006. The relevant board paper noted that the Shopping Centre was currently managed by Lend Lease and that the acquisition would not "deliver management or development rights over the centre" and "it is likely that an attempt to appoint Westfield as ongoing property manager/developer would be disputed with APPF": Westfield Group Board paper 28 April 2006, Court Book Tab 16.

v. From approximately August 2006, Tarun Gupta of LLREI attempted to progress CCL's appointment of the property manager for the period after the expiry of the property management agreement (paragraphs 74 to 85 First Gupta affidavit).

vi. On 30 September 2006, the property management agreement between CCL and LLPMA expired. LLPMA continued to manage the Centre; First Walsh affidavit Para 68, Ex TGW-1 Tab 56, First Walsh affidavit Para 111, Ex TGW-1 Tab 95.

vii. On 5 October 2006, CCL passed resolutions registering Coles Myer's transfer of relevant units to Westfield No. 1 and shares to Westfield No. 2; Ex TGW-1 Tab 39. Disagreement regarding appointment of property manager

viii. At the same meeting, the Westfield nominated CCL directors tabled a document entitled "Project Film" in which they put forward a proposal that would have permitted the Plaintiffs to require LLPMA to vacate the Shopping Centre if it was not reappointed as property manager within 6 months; Ex TGW-1 Tab 40.

ix. At a CCL Board meeting on 2 November 2006, the Westfield CCL directors said that Westfield wanted to manage the property and Westfield wished to present a capability statement for consideration by the CCL Board; Ex TDG-1 Tab 37.

x. On 4 December 2006, Mr Walsh, one of the Westfield CCL directors, proposed a dispute resolution procedure which would have resulted in the Centre being sold in the event that no agreement could be reached on property management.

xi. On 15 December 2006 the CCL Board ratified the appointment of LLPMA as property manager of Cairns Central for a term commencing on 3 November 2006 and expiring on 30 June 2007 on the same terms as the previous property management save as to the term. The directors of CCL resolved to invite LLPMA and Westfield to put forward property management proposals; Ex TDG-1 Tab 38 page 3.

xii. In March 2007, CCL received proposals from both LLMPA and Westfield Shopping Centre Management Limited (WSCM) to be appointed as the property manager for the Shopping Centre.

xiii. The 4 directors of CCL (2 each appointed by LLREI and Westfield) were unable to agree on which proposal to accept.

xiv. On 7 May 2007, Greg Miles (Westfield CCL director) stated that legal proceedings would be commenced; Wells Affidavit paragraph 14, Ex TGW-1 Tab 89.

xv. On 6 July 2007, Westfield No. 1 and Westfield No. 2 filed the summons in this matter.

xvi. On 6 July 2007, Westfield agreed to LLPMA remaining as property manager until 31 October 2007: Ex TGW-1 Tab 95.

xvii. Negotiations between the parties have continued and revised offers have been put forward by both LLPMA and WSCM. The appointment of LLPMA as property manager has been extended on an interim basis. LLPMA's appointment is currently due to expire on the earlier of determination of these proceedings or 30 June 2008: Third Miles affidavit paragraph 11.

The Evidence of Mr Walsh 32 The evidence of Mr Walsh as to the situation from 1 July 2008 onwards was as follows:

"Q. With his Honour's leave, I would like to ask you one question. I want you to assume, Mr Walsh, that as at 30 June 2008 either there is no judgment that has been given in these proceedings or a judgment has been given but it is adverse to the Westfield interests and will you assume further that LLPMA indicates that it proposes to continue acting as property manager after 30 June 2008. Could you please tell his Honour what position you will adopt in those circumstances?

A. In that circumstance there are currently two competing offers before the board of CCL in relation to the future management after 30 June. The Westfield directors that are appointed to that board consider that the Westfield proposal is superior and that the other proposal is not one that they are prepared to make an appointment on. In those circumstances, if the situation remains, and we believe it will remain, I have no reason to believe that there will be any change of view between now and 30 June, we would at that point reserve our rights and consider our legal options , but we certainly wouldn't agree to the continuation without authority of Lend Lease in the management role after 30 June." [Transcript 44.39 to 45.7] [Emphasis added] 33 Under cross-examination he gave the following evidence:

Q. You said in answer to a question from my learned friend that there were two proposals currently before the board. The fact is, is it not, that the board hasn't considered in a collective sense the most recent proposals tendered by either Westfield or Lend Lease, and I will call them that to use that shorthand?

A. Not in a collective sense. [Transcript 45.12]

The Evidence of Mr Miles 34 The evidence of Mr Miles on the same issue was:

"Q. With his Honour's leave I will ask you an additional question. I want to ask you to assume that as at 30 June this year either no judgment has been given in these proceedings or a judgment has been given which is adverse to the Westfield interests and would you assume also that LLPMA indicates that it proposes to continue after 30 June 2008 as the property manager for Cairns Central shopping centre. The question I want you to address is: What will be your position in those circumstances in relation to LLPMA saying that it proposes to continue to act as property manager?

A. My position would be that it not be renewed given the length of time and amount of cost that has taken place to date and in fact these proceedings." [Transcript 66.12 to 66.25] 35 Under cross-examination he accepted that any decision he took [as to the situation as it may be on 30 June] would be taken having regard to his fiduciary responsibilities as a director of Cairns Central. Dealing with the sundry questions of the Court's powers Whether Part 54 Rule 3 of the UCPR [formerly Part 68 of the Supreme Court Rules] provides a jurisdiction to wind up trusts 36 The defendants contend that statutory jurisdiction relied upon by the plaintiffs is a jurisdiction to enforce the execution of trusts and is not a jurisdiction to supplement the powers in the Trust Deed so as to permit the trusts to be wound up. 37 The plaintiffs contend to the contrary.

Dealing with the Part 54 Rule 3 issue 38 Part 54 of the UCPR prescribes the manner in which the court may exercise its jurisdiction to compel the administration of estates or trusts. As many of the authorities deal with the former Supreme Court Rules [and as there are no material difference as in terms of the UCPR], I shall refer to either regime interchangeably. 39 I accept as correct the defendants' submission that the rules do not provide a source of jurisdiction for an order in terms of the termination and winding up of the trusts. As the defendants have contended:

i. These Rules deal with administration of estates and execution of trusts. They derive from a statutory reform to the general administration procedure. The first embodiment of the reform was contained in the Court of Chancery Procedure Act 1852 (Imp) 15 & 16 Vic, c 86, sections 45 to 47 and 51. These provisions were subsequently embodied in the English Rules of Supreme Court, 1883, Order 55. Order 55 of the 1883 Rules was reproduced in the Equity Act 1901 (NSW), s 11 and Schedule 4 and also in Order 85 of the 1962 English RSC, upon which Part 68 of the New South Wales Supreme Court Rules was based;

ii. Prior to these statutory provisions, a claim for specific relief in connection with the administration of estates or trusts (for example, an application for directions) could not be obtained without commencing proceedings for general administration, a time consuming and costly exercise (see In re Davies (1888) 38 Ch D 210 at 212; McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 634).;

iii. The provisions now reflected in Part 54 r 3 did away with the requirement to seek general administration. They simplified the procedure for applications relating to the administration of estates and execution of trusts, but did not enlarge the jurisdiction of the court: In r e King [1907] 1 Ch 72 at 75. They permit the court to do all things which it could previously have done in a general adminstration, without the need for an order for general administration;

iv. The court's powers under these provisions only extend to doing what the trustee itself could do, consistently with the provisions of the trust deed. 40 The powers conferred by Part 54 are broad and extend, literally, as far as directing a trustee "to do or abstain from doing any act" (r 2(3)(d)). Nonetheless, the words are not to be read literally. The Court of Appeal, in Gonzales v Claridades (2003) 58 NSWLR 211 at 218 has observed as follows:

"[30] But like all language, these words must be read in context and that context relates to acts in the administration of the estate that fall within the scope of an administration suit.

[31] Fundamentally, the purpose of an administration suit is to give assistance or protection to the personal representatives as well as protecting creditors or beneficiaries of the estate ( David v Frowd (1833) 1 My & K 200 at 208; 39 ER 657 at 660). Administration proceedings (and proceedings under Pt 68, r 2 and its counterparts) are designed to deal with problems arising within the administration of the estate. Rule 2 does not confer jurisdiction to decide questions which could not have been decided in an administration suit ( Re Royle (1889) 43 Ch D 18; Hudson v Gray (1927) 39 CLR 473 at 502).

[33] In administration suits, the general rule was stated by Farwell LJ in Re Hazeldine's Trusts [1908] 1 Ch 34 at 40-41 (emphasis in original): "… if the trustees cannot do it, neither can the Court, for, as Lord Chancellor Law says in Fitzpatrick v Waring [(1882) 11 LR Ir 35, 44]:

'In the exercise of its jurisdiction for the administration of trusts this Court, I apprehend, has no power to make or authorize any leases or other dispositions of the trust property which the trustee could not have made himself. The Court, in such a case, whether it assumes the place of the trustee, or guides him in the discharge of his duties, is still confined within the limits of the trust as constituted by its author, and has no authority to go beyond those limits. Its business is to execute the trusts, not to alter them.' " [34] This passage was cited with approval by the High Court in Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 at 56, 65, 73. It shows that there is a general principle to the effect that administration proceedings are designed to enforce administration according to legal and equitable principle, not to authorise or direct departures from it." 41 To similar effect is Suffolk v Lawrence (1884) 32 WR 899, in which Pearson J held that "rule 3(e) of Order 55 only authorises a direction to trustees to do or abstain from doing some act within the scope of their trust"[cf Hudson v Gray (1927) 39 CLR 473 per Higgins J at 501-502 emphasising that the rule related to administration]. 42 There is of course the requirement by way of a necessary precondition for an administration order, that the matter in question be shown to relate to the administration of the trust, the distinction for present purposes being between administration and termination. It is still the law in New South Wales that the Court cannot in an administration suit [and I would add in the exercise of its inherent jurisdiction] abrogate to itself powers that the trustee does not have.

43 I further accept as correct the proposition that if support for this construction of Part 54 r 3 were necessary, it can be found in the fact that, in 1925, the legislature introduced a new and limited statutory jurisdiction to permit transactions which were not authorised under the trust deed (see English Trustee Act 1925 s 57, Trustee Act 1958 (Vic) s 63 and Trustee Act 1925 (NSW) s 81). If, under Part 54 r 3 and its predecessors, the court already possessed a general discretion to direct trustees to do or abstain from doing things, whether permitted by the trust deed or not, there would have been no need for the legislature to introduce these statutory provisions. 44 Orders for general administration and execution of a trust did not involve the termination or winding up of the trust. The order for general administration involved the execution of the trusts in accordance with the terms of the trust deed. (see generally Daniell's Chancery Practice 5th Edn (1871) Vol II, page 1071ff and 1140ff). The usual form of order commences: "It is ordered that the Trusts [identified] be performed and carried into execution" (emphasis added - see Atkins Court Forms 2nd Edn Vol 41, "Trusts and Settlements", Form 212, page 265). It is not a jurisdiction to make any such order in relation to a trust as the court thinks fit; a fortiori it is not a jurisdiction to terminate a trust when the court sees fit. 45 As a more general proposition, the role of the Court is to uphold and enforce trusts; the court does not have jurisdiction [save in circumstances similar to those referred to in Re Gaydon [2001] NSWSC 473] to "terminate" or "wind up" a trust. In Re Gaydon, Barrett J at [29] said:

…the Court cannot dissolve a trust in the same way that it would dissolve, for example, a partnership. It is the duty of the Court to uphold and protect trusts, not to destroy them, although where the terms of the trust envisage, in certain circumstances, realisation of property, winding up of the trust's affairs and final payments to beneficiaries, the Court will, naturally enough, give effect to those "winding-up" provisions. 46 In the circumstances, Part 54 r 3 does not provide Westfield No. 1 with a basis for seeking an order winding up the trusts. The CMS Property Trust Deed provides expressly for the winding up of the trust in specific circumstances (see e.g. clauses 7.1 to 7.3). Those circumstances do not presently exist in the instance circumstances. Therefore, there is no occasion for the court, whether pursuant to Part 54 r 3 or otherwise, to order that the trusts be carried into execution by winding them up. 47 Essentially Mr Jackman submitted that the reasoning in Re Hazeldine's Trusts, Gonzales, Mclean v Burns Philp and the High Court in Templeton v Leviathan is presently seen to be anachronistic by reason of the Court's power under section 81 to confer additional power on the trustee where it is expedient to do so. The proposition was that the Westfield parties sought the conferral of a power on the trustee pursuant to section 81 as a step towards the order under administration proceedings which those parties sought. 48 This matter is dealt with below. The plaintiffs' reliance upon section 81 of the Trustee Act and its analogue, section 63 of the Trustee Act 1958 (Vic) to source the jurisdiction to wind up the Trusts 49 Section 81 of the Trustee Act 1925 (NSW) provides:

(1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or disposition, or any purchase, investment, acquisition, expenditure, or transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the instrument, if any, creating the trust, or by law, the Court: (a) may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, including adjustment of the respective rights of the beneficiaries, as the Court may think fit, and

(b) may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income." [Section 63 of the Trustee Act 1958 (Vic) is in relevantly identical terms. These sections were modelled on s 57 of the Trustee Act 1925 (Eng). ] 50 Section 81 is concerned with conferring powers which are expedient in the "management and administration" of property vested in trustees. 51 In Stein v Sybmore Holdings [2006] NSWSC 1004 Campbell J at [37] to [50] identified the following elements of section 81:

i. it must be shown that a question has arisen in the management or administration of property vested in a trustee and that the making of an order such as the section authorises is expedient - that is, expedient in the management or administration of the property ( Ku-Ring-Gai Municipal Council v The Attorney-General (1954) 55 SR (NSW) 65 at 74 per Roper CJ in Eq, Brereton and Maguire JJ);

ii. the ordinary natural grammatical meaning of "expedient" is "advantageous", "desirable", "suitable to the circumstances of the case" (Riddle per Williams J at 221-2); and

iii. expediency means expediency in the interest of the beneficiaries ( Riddle per Dixon J at 214). 52 The section is concerned with the ongoing management of the trust. Its object is to ensure that a trust is managed as advantageously as possible in the interests of the beneficiaries: In re Downshire's Settled Estates; Marquess of Downshire v Royal Bank of Scotland [1953] Ch 218 (CA) at 248. 53 The aim of the jurisdiction is not to permit the substantive alteration of the trust or its termination, but to give the trustees power to administer the trust in a more satisfactory and effective way: In re Shipwrecked Fishermen and Mariners' Royal Benevolent Society [1959] Ch 220 at 228; Re McNaughton (Supreme Court of NSW, Young J, 8 December 1994, unreported). 54 In NM Superannuation Pty Ltd v Hughes (Supreme Court of NSW, McLelland CJ in Eq, 5 March 1996 unreported) at 8-9 his Honour expressed the position thus:

Under section 81 the Court is empowered to alter the terms of the trust, but only for the purpose of conferring on a trustee power to effect a dealing or transaction of the kinds described in that section in the management or administration of the assets of the trust, which in the opinion of the Court is "expedient". The conferring on a trustee under section 81 of a power to the effect a dealing or transaction in the management or administration of the trust on the ground of expediency may, in some cases, involve or require some incidental or consequential adjustment of the respective rights of beneficiaries , as is recognized in the terms of section 81 itself. But it is difficult, if not impossible, to conceive of circumstances where a variation in the amount payable to different beneficiaries in the distribution of a trust fund from those required by the terms of the trust, could substantively and independently be considered as "expedient" within the meaning of section 81. [emphasis added] 55 Hence whilst the section can effect an adjustment of the rights of beneficiaries, such adjustment may only be incidental or consequential. 56 These principles derive from the terms of the section itself. In order to come within the section, the court must form the opinion that a transaction is expedient "in the management or administration of property vested in trustees" see Riddle v Riddle (1952) 85 CLR 202 at 214 (per Dixon J). See also, to like effect, the decision of the Full Court of the Supreme Court of New South Wales in Ku-Ring-Gai Municipal Council v The Attorney-General (1954) 55 SR (NSW) 65 at 74: Stein v Sybmore Holdings (supra) at [61]. 57 In Ku-Ring-Gai Municipal Council v The Attorney-General the Full Court (Roper CJ in Eq, Brereton and Maguire JJ) said:

"In order to invoke the provisions of s 81 it must be shown that a question has arisen in the management or administration of property vested in a trustee and that the making of an order such as the section authorises is expedient - that is, expedient in the management or administration of the property ." (emphasis added). 58 Further, the Court must be satisfied that the transaction is expedient, not for the benefit of one beneficiary only, but for the benefit of the whole trust: In re Craven's Estate; Lloyds Bank Ltd v Cockburn (No 2) [1937] Ch 431 at 436; Riddle v Riddle at 214.5 (per Dixon J), 222 (per Williams J); Re Sykes (dec'd) [1974] 1 NSWLR 597 at 600 per Helsham J; Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785 at 790; Royal Melbourne Hospital v Equity Trustees Limited [2007] VSCA 162 at [156]; (cf: Stein v Sybmore Holdings Pty Ltd at [50]). 59 And as the defendant has further submitted, nor can the section be used as a substitute for what is, in truth, an application to apply the trust property cy-près: Trustees of the Kean Memorial Trust Fundv Attorney-General for South Australia (2003) 86 SASR 449 at 461; City of Burnside v Attorney-General of South Australia (1993) 61 SASR 107 at 129 and 141; (1992) 76 LGRA 226 per Debelle J at 228; In Re Dutton (decd) [1968] SASR 295 per Mitchell J at 296 - 297. 60 The plaintiff drew the Court's attention to Arakella v Paton (2004) 60 NSWLR 334, in which Austin J recognised that s 81 could be used to "authorise a fundamental reorganisation of the trust", including giving effect to a proposal which would "involve divesting the present unitholders of their units, and vesting all units in a corporate entity in which the present unitholders will be the shareholders". 61 Austin J's decision must be seen in context, including his honour's finding [at 117] that:

The Trustee's manifest purpose in making the application, consistently with the purposes for which the Trading Trust was formed, is to conduct the stationery and office supply business, effectively as a co-operative business, for the benefit of the "members" of the "co-operative", who will retain that commercial status after they are transformed from unitholders to shareholders. This is not a case where the sole or principal purpose of the application is to alter beneficial interests or in any way subvert the beneficial dispositions in the trust instrument. It is therefore a proper case for the making of an order under s 81 giving the Trustee the power to implement the transaction. 62 Hence the Court found it necessary to affect a 'fundamental reorganisation of the trust' in order to better achieve its objectives. This is quite different to what is being sought here, which is an order which would bring the trust to an end and permanently dissolve the relationships between the parties. 63 As is apparent from the observations made by the learned authors of Jacobs' Law of Trusts in Australia [7th edition by J D Hayden and M J Leeming at 1706], the statutory jurisdiction is far more expansive than the court's inherent jurisdiction, the prescribed test being one of expediency resulting in orders being made approving a wide variety of transactions. As the authors point out, usually the court is not inclined to confer on trustees generally, rather than in a particular instance, the power to carry out some purpose otherwise in breach of trust, although there is jurisdiction under the section to do so, and this jurisdiction will be exercised in a proper case. The authors also emphasise that the provision does not authorise the court to do that which would alter the substantive nature of the trust or determine the trust; nor can it be used as a substitute for an application to apply the property cy-pres. 64 Clearly enough the jurisdiction of the Court under s 81 depends upon there being an absence of power in the instrument, if any, creating the trust. Here, the Trust Deed contains specific provisions giving the Trustee power to wind-up the Trust. It also contains provisions permitting the sale of the Shopping Centre and any other trust property. As the defendants contend, in reality the plaintiffs are seeking to alter those provisions of the Trust to effect the sale of the Shopping Centre, and subsequent winding up of the Trust, in circumstances wholly contrary to the provisions of the Trust Deed and in circumstances sans a benefit to the whole of the trust.

65 Even if s 81 permitted the Court to authorize the winding up of the Trust, the jurisdiction is discretionary. As the defendant has contended, it would be an inappropriate exercise of the Court's discretion to amend the powers of the Trustee to wind up the Trust where the first plaintiff voluntarily acquired its units knowing of the provisions of the Trust Deed and where it is free to dispose of its units on the same basis upon which it acquired them. 66 Even given the widest ambit of the Court's jurisdiction under section 81 to confer additional power, it would not be expedient, at least in the present state of the position which obtains between these parties, to order such a winding up to take place: to do so would amount to achieving a fundamental alteration to the trust, that is to say, to in effect, furnish the Trustee with power to do something which it otherwise would not have been permitted to do. 67 The power sought by the plaintiffs is simply, in the current circumstances, not one which could be said to be expedient in the sense referred to in Ku-Ring-Gai Municipal Council v The Attorney-General (supra). 68 There is nothing in the inherent powers of the Court which further assists the Westfield contentions. Whether the Court should exercise its discretion to make orders in the instant circumstances 69 Ultimately, even if the Court had jurisdiction to grant the relief sought by the plaintiff, this is not an appropriate case for the exercise of the Court's discretion. 70 This conclusion is based on a number of considerations, including: i. The fact that the 'dead-lock' suggested by the plaintiff has not yet, and may not ever, come to pass. ii. The fact that, should such a dead-lock exist, there are mechanisms under the trust by which it may be resolved without the intervention of the Court. iii. The likely detriment to the interests of the Unit Holders if the relief sought is granted. iv. The fact there is an alternative exit for the plaintiffs which does not require the drastic intervention of the Court. The alleged 'dead-lock' between the parties 71 The plaintiffs maintain that there is simply no question but that as at 30 June 2008 a deadlock will have occurred, as the management board of CCL will be unable to reach the consensus required to appoint a property manager. . However in my view and notwithstanding the past inability of the parties to reach an accord, that expectation may not come to pass. Both groups of parties are involved in a commercial endeavour and it is surprising what the pressure of an ultimatum can achieve at the last minute. Notwithstanding the evidence given by Mr Walsh and by Mr Miles as to their current expectations of the positions which they will take as at 30 June 2008 concerning the continuance of the current property manager, the overriding imperative for both the litigating groups will always sound in what they regard at the time as their commercial imperative [that is to say in terms of their best commercial interests]. Mechanisms for the resolution of such a dead lock pursuant to the Trust Deed 72 More importantly, even if the Court were to accept that such an impass is likely to result on 30 June 2008, the finding is that there are mechanisms available under the Trust Deed by which such a deadlock between the parties may be resolved. 73 The role of Perpetual and its powers as Trustee must be taken into account. Significantly, Perpetual has authority under the Trust Deed to require the Manager to retire from the management of the Trust in certain circumstances. These include [as set out above in clause 20.1]: i) where the Manager fails or neglects to carry out or satisfy or has contravened any obligation imposed on the Manager by this deed that in the reasonable opinion of the Trustee adversely affects the interests of Unit Holders and fails to remedy the contravention within such period as is specified by the trustee in a written notice to the manager (sub para (4)); or

ii) where the Trustee reasonably believes that it is in the best interests of the Unit Holders for the Manager to retire (sub para (5)). 74 I accept that the relevant powers of the Trustee may be categorised as fiduciary powers which require to be exercised in the best interests of the Unit Holders. 75 In consequence the Trust Deed in fact provides a mechanism for the circumstance where the manager proves either unable or unwilling to perform its obligations. If the Trust Manager fails to fulfill its obligation to manage the Trust in the interests of Unit Holders, then the Trustee is entitled to exercise its powers as set out in the Trust Deed. These powers include the power to appoint a receiver or receiver and manager of the [Trust] Manager [cf: clause 20.9]. 76 Alternatively, if the Trustee requires CCL to stand aside as Trust Manager without appointing a receiver or manager of the Trust Manager, then the Trustee itself will be required, under s 20.3 (b), to act as manager of the Trust until a new manager can be appointed. As Trust Manager, the Trustee will have the power to appoint a new property manager, or renew the arrangement with LLPMA, thus ensuring that the centre continues to be managed in the best interests of the Unit Holders [cf: Trust Deed clause 20.3 (b)]. 77 If the Trustee is unable to secure the necessary special resolution of the Unit Holders to appoint a new Trust Manager to replace CCL, and the position of Trust Manager remains vacant for more than 6 months, then the Trustee may resolve to terminate the Trust [cf: Trust Deed clause 20.8]. 78 Nor do I accept that, by its position taken in this litigation, Perpetual has evinced an intention not to become involved in seeking to resolve the deadlock. 79 It is important to bear in mind the recent correspondence which had passed between the solicitors for Perpetual Trustee and the respective parties to this litigation. The most recent and significant of these communications are as follows:

Letter 7 December 2007 from Mark Wilks/Mark Cessario of Corrs Chambers Westgarth to Peter Speed/Sophie Hunt of Speed & Stracey and Geoff McLellan/Cameron Hanson of Freehills

Perpetual Limited & Ors ats Westfield QLD No 1 Pty Limited & Ors Supreme Court of NSW Proceedings 50103 of 2007

We refer to the above proceedings and to Speed & Stracey's letter date 29 November 2007.

As you are aware, we act for Perpetual Limited and Perpetual Trustees Victoria Limited, the trustees of the CMS General Trust and the CMS Property Trust respectively.

We refer to the submissions served on behalf of Lend Lease Real Estate Investments Limited (LLREI). In paragraphs 36 to 43 of LLREI's submissions reference is made to clause 20.1(a) of the Trust Deed which allows the Trustee to remove the Manager in circumstances where: "(4) the Manager [Cairns Central Limited] fails or neglects to carry out or has contravened any obligation imposed on the Manager by this deed that in the reasonable opinion of the Trustee adversely affects the interests of the Unit Holders and fails to remedy the contravention within such period as is specified by the Trustee in a written notice to the Manager. (5) the Trustee reasonable believes that tis is in the best interests of the Unit Holders for the Manager to retire".

Our clients have not formed the opinion required of clause 20.1(a)(4), and have not formed the belief required of clause 20.1(a)(5) of the Trust Deeds. At this stage there is nothing to suggest to the Trustees that the Manager has failed or neglected to carry out any duty under the Trust Deeds.

We also note that the unit holders of the Trusts have not suggested that there is a current basis on which our clients could form the requisite opinion or belief under clause 20.1(a)(4) or 20.1(a)(5) of the Trust Deeds. Letter 16 May 2008 from Mark Wilks/Mark Cessario of Corrs Chambers Westgarth to Peter Speed/Sophie Hunt of Speed & Stracey and Geoff McLellan/Cameron Hanson of Freehills

Perpetual Limited & Ors ats Westfield QLD No 1 Pty Limited & Ors

1 We refer to the above proceedings and, in particular, to: (a) the agreement reached between the relevant Westfield and Lend Lease parties to extend the property management agreement with Lend Lease Real Estate Investments Australia Limited until the earlier of the resolution of the proceedings, or 30 June 2008; and

(b) the hearing of the proceedings, which is set down before Justice Einstein on 21 and 22 May 2008. 2 It appears to us that, following the hearing, any of the following scenarios could apply as at 30 June 2008:

(a) Justice Einstein may have reserved his judgment, and (as at 30 June 2008) not delivered that judgment;

(b) Justice Einstein may have delivered his judgment and found against the Plaintiffs and/or not made the types of orders they seek in their Summons; or

(c) Justice Einstein may have delivered his judgment, found in favour of the Plaintiffs and made orders of the type they seek in their Summons.

3 If either of the scenarios referred to in paragraph 2(a) or 2(b) apply as at 30 June 2008, it will be necessary for further arrangements to be made in respect of the property management of the Cairns Central Shopping Centre (Centre).

4 Our clients are concerned to ensure that, despite the apparent inability of the directors of Cairns Central Limited to appoint a property manager on a permanent basis, that arrangements are made to ensure the Centre is not left without a property manager. Of course, if it appears as though arrangements will not or cannot be made, this is a matter our client will have to consider as a matter of urgency.

5 Our clients would therefore appreciate it if you would let us know (as soon as possible) what your respective clients' intentions are with respect to the property management of the Centre, should either of the scenarios referred to in paragraph 2(a) or 2(b) apply as at 30 June 2008.

6 In making the request our clients do not seek to place your respective clients in a position where they make statements prejudicial to the approach they have adopted in the proceedings. To that end, our clients would be happy to receive responses that are made on a confidential and/or a without prejudice basis. 80 Towards the end of the submissions taken on the hearing Mr Cessario, the solicitor for Perpetual who had throughout the hearing been at the bar table, rose to announce that he did not wish the Court to be left with the impression that Perpetual had resolutely decided not to do anything. He said:

"I think the documents demonstrate that our client recognizes that there is an obligation on it to perform its duties and that it needs to form an opinion as to what is happening the best interests of the unit holders before it takes any action. The evidence that has been given yesterday is something our client will take into account and that will inform it when it is trying to work out whether or not [inaudible] has been breached. I just don't want to leave your honour with the impression that our client is not going to do anything at all." 81 A little later he said that to the extent that the Court may need to rely on evidence, there were facsimiles from his firm to the plaintiffs and to the defendants which demonstrated to some extent that his client had issued various documents. He submitted that, as he understood it, those documents were part of an exhibit and that in his submission they demonstrated that his client was taking into account all the matters that had been raised by the parties in determining whether or not it had formed or would form an opinion that would require it to intervene in the dispute. 82 Ultimately, there is nothing to suggest that the Trustee is not and would not perform its obligations in the manner required under the Trust Deed. The fact that the Trustee has not yet formed the opinion or belief required by clause 20.1 does not established that it will inevitably fail to do so when appropriate. If and when a situation arises whereby it is necessary, in the interests of Unit Holders, for action to be taken in connection with the conduct of the Manager, the Court would assume that the Trustee would take such action. The detriment to the Unit Holders if relief is granted or withheld 83 Based on the conclusions drawn above, it appears that there is no great detriment likely to be suffered by the Unit Holders if the Court refuses to grant the relief sought by the plaintiff. This is because, even if a deadlock eventuates, there are mechanisms under the Trust Deed by which such conflicts may be resolved and through which the Centre may continue to be managed effectively. 84 No case has been pleaded or proved to the effect that the property manager put forward by the Westfield parties is objectively superior to LLPMA with the result that CCL has breached its duties by not appointing Westfield, nor that retention of LLPMA as manager of the Centre has caused and will cause detriment to the Trust. The disagreement as to the appointment of a property manager is one of judgment, involving a choice between two competent property managers. 85 On the other hand, it is clear that there will be detriment to Unit Holders if relief is granted. The relief will involve potentially depriving beneficiaries of their beneficial interests in a highly sought after asset, contrary to the terms of the Trust Deed. 86 Mr Gupta, fund manager of APPF, gave evidence that "if APPF Retail were forced to sell its interest in Cairns Central… it would be extremely difficult to find an alternative major regional retail shopping centre to invest in". He expressed the view that it would not be in the interests of APPF to be forced to sell its interest at the present time, as the funds obtained could only be used to retire debt or return capital to Unit Holders and these options were not in the commercial interest of the fund [or of its constituent Unit Holders]. The existence of an alternative exit for the Westfield parties 87 Finally, the principled exercise of the discretion is not to order the drastic remedy of winding up, when there is an alternative exit for Westfield No. 1. 88 Westfield No. 1 and Westfield No. 2 are entitled to sell their interests. There is an available market. APPF has offered to acquire Westfield No. 1's interests for $203.5 million, being half of the value of the Shopping Centre as determined by an independent valuation. Other elements put forward as part of the discretionary decision but not relied upon 89 It is unnecessary to deal with the defendant's contention that the Court should refuse to grant the drastic remedy sought in view of the following suggested matters:

i. the allegation that the plaintiffs acquired their interests in the full knowledge that they would not be able to control the Manager, and that the plaintiffs' intention to seek the appointment of WSCM as manager in place of LLPMA was likely to give rise to a dispute with APPF of the type which they now rely upon;

ii. the allegation that having acquired its interest with this knowledge and intention, the so called "deadlock" identified by the plaintiffs is a "problem of the applicant's own making": Re Kornblums Furnishings Ltd (1981) 6 ACLR 456 at 466. Short minutes 90 The parties are to bring in short minutes of order on which occasion costs may be ordered.

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