TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291

TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291

The rights of members of a non-liquid managed investment scheme to withdraw are strictly regulated by Part 5C.6 of the Corporations Act 2001 (Cth) and the scheme's constitution. Obligations described as being undertaken 'in personal capacity' by a responsible entity do not transfer to a new responsible entity on a change, if not incurred in performance of the trust, and remain with the former responsible entity. In this case, TFML had no liability for MacarthurCook's claims for redemption or payment of conversion-related damages as compliance with statutory withdrawal offer procedures was lacking and contractual obligations were not transferred to TFML under s 601FS(1).

Parties
Appellant/first Cross Respondent: TFML Ltd; First Respondent/first Cross Appellant: MacarthurCook Fund Management Ltd; Second Respondent/second Cross Appellant: Sandhurst Trustees Ltd; Second Cross Respondent: Zhaofeng Funds Management Ltd
Jurisdiction
Australia
Judgment Date
03 September 2013
Procedural Posture
Civil Appeal / Court of Appeal Decision on Appeal and Cross Appeal
Outcome
Appeal allowed; cross-appeal allowed in part.
Legal Topics
Managed Investment Schemes, Unit Trusts, Withdrawal Rights, Obligations of Responsible Entities, Redemption of Units, Contractual Interpretation
Corporations Law Contract Law Trusts Law Managed Investment Schemes Unit Trusts Withdrawal Rights Obligations of Responsible Entities Redemption of Units +1 more

Case Brief

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Parties

TFML Ltd

Appellant/first Cross Respondent

MacarthurCook Fund Management Ltd

First Respondent/first Cross Appellant

Sandhurst Trustees Ltd

Second Respondent/second Cross Appellant

Zhaofeng Funds Management Ltd

Second Cross Respondent

Procedural Posture

Civil Appeal / Court of Appeal Decision on Appeal and Cross Appeal

Legal Issues

  1. 1 Whether redemption of units under facility agreements was subject to compliance with Part 5C.6 of the Corporations Act 2001 (Cth)
  2. 2 Whether the entry into facility agreements containing clause 2.4 constituted sufficient compliance with Part 5C.6 and the constitution
  3. 3 Whether the responsible entity was impliedly or expressly obliged to make withdrawal offers under the statutory scheme

Ratio Decidendi

The rights of members of a non-liquid managed investment scheme to withdraw are strictly regulated by Part 5C.6 of the Corporations Act 2001 (Cth) and the scheme's constitution. Obligations described as being undertaken 'in personal capacity' by a responsible entity do not transfer to a new responsible entity on a change, if not incurred in performance of the trust, and remain with the former responsible entity. In this case, TFML had no liability for MacarthurCook's claims for redemption or payment of conversion-related damages as compliance with statutory withdrawal offer procedures was lacking and contractual obligations were not transferred to TFML under s 601FS(1).

Court Disposition

Appeal allowed; cross-appeal allowed in part.

Orders

  • Appeal allowed.
  • Orders 1, 2 and 3 made by Court below on 17 August 2012 set aside.