In the matter of PrimeSpace Property Investment Limited (in liquidation) [2016] NSWSC 1113

In the matter of PrimeSpace Property Investment Limited (in liquidation) [2016] NSWSC 1113

Clause 22 of PAPF's constitution required the responsible entity, in order to wind up and terminate the fund, to convert assets into money, pay liabilities, distribute the balance to holders according to their entitlements, and then cancel the units. It did not authorise cancellation before or without those steps, nor a selective cancellation leaving economic value concentrated in the remaining unit holder. Because the purported February 2015 cancellation was not authorised by clause 22, was not reflected in the unit register, and was not consistent with s 601NC of the Corporations Act 2001 (Cth), the liquidators were justified in proceeding on the basis that it was invalid and of no...

Jurisdiction
Australia
Judgment Date
28 June 2016
Procedural Posture
Application for Directions Under S 511 of the Corporations Act 2001 (cth) and Opinion, Advice or Directions Under S 63 of the Trustee Act 1925 (nsw) / Amended Originating Process Dated 17 June 2016 Heard in the Equity Corporations List
Outcome
Directions and advice given; costs payable out of the assets of PSNT.
Legal Topics
['voluntary Winding Up' "liquidators' Directions" 'judicial Advice to Trustee' 'managed Investment Scheme' 'public Unit Trust' 'public Trading Trust' 'unit Cancellation' 'conversion of Preference Units to Loan Notes']
['corporations' 'trusts' 'taxation'] ['voluntary Winding Up' "liquidators' Directions" 'judicial Advice to Trustee' 'managed Investment Scheme' 'public Unit Trust' 'public Trading Trust' 'unit Cancellation' 'conversion of Preference Units to Loan Notes']

Case Brief

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Procedural Posture

Application for Directions Under S 511 of the Corporations Act 2001 (cth) and Opinion, Advice or Directions Under S 63 of the Trustee Act 1925 (nsw) / Amended Originating Process Dated 17 June 2016 Heard in the Equity Corporations List

Legal Issues

  1. 1 ['Whether the liquidators were justified in causing PPIL to make distributions to unitholders of PSNT on the basis that the purported cancellation of ordinary units in PAPF in February 2015 was invalid and of no effect.' 'Whether PPIL, as trustee of PSNT, was justified in making distributions to unitholders of PSNT on the basis that the purported cancellation of ordinary units in PAPF in February 2015 was invalid and of no effect.' "Whether it was necessary to determine the alternative question concerning the amount payable by return of capital on a preference unit under clause 12.2(1)(a) of PSNT's constitution."]

Ratio Decidendi

Clause 22 of PAPF's constitution required the responsible entity, in order to wind up and terminate the fund, to convert assets into money, pay liabilities, distribute the balance to holders according to their entitlements, and then cancel the units. It did not authorise cancellation before or without those steps, nor a selective cancellation leaving economic value concentrated in the remaining unit holder. Because the purported February 2015 cancellation was not authorised by clause 22, was not reflected in the unit register, and was not consistent with s 601NC of the Corporations Act 2001 (Cth), the liquidators were justified in proceeding on the basis that it was invalid and of no...

Court Disposition

Directions and advice given; costs payable out of the assets of PSNT.

Orders

  • ['Pursuant to section 511 of the Corporations Act 2001 (Cth), Shaun Robert Fraser and Anthony Gregory McGrath in their capacity as joint and several liquidators of PrimeSpace Property Investment Limited (PPIL) are justified in causing PPIL to make distributions to unitholders of the PrimeSpace Northbourne Trust...