Westfield Management Limited as Trustee for the Westart Trust v AMP Capital Property Nominees Limited as Nominee of Unisuper Limited in its Capacity as Trustee of the Complying Superannuation Fund Known as Unisuper & Anor [2012] HCATrans 208 (6 September 2012)

Last Updated: 6 September 2012

[2012] HCATrans 208

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S181 of 2012

B e t w e e n -

WESTFIELD MANAGEMENT LIMITED AS TRUSTEE FOR THE WESTART TRUST

Appellant

and

AMP CAPITAL PROPERTY NOMINEES LIMITED AS NOMINEE OF UNISUPER LIMITED IN ITS CAPACITY AS TRUSTEE OF THE COMPLYING SUPERANNUATION FUND KNOWN AS UNISUPER

First Respondent

UNISUPER LIMITED IN ITS CAPACITY AS TRUSTEE OF THE COMPLYING SUPERANNUATION FUND KNOWN AS UNISUPER

Second Respondent

FRENCH CJ
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 6 SEPTEMBER 2012, AT 10.03 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friends, MR J. POTTS and MR J. HEWITT, for the appellant. (instructed by Speed and Stracey Lawyers)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friends, MR M.I. BORSKY and MR W.A.D. EDWARDS, for the respondents. (instructed by Allens Lawyers)

FRENCH CJ: Yes, Mr Walker.

MR WALKER: If it please the Court, as your Honours have seen, or will see from the skeleton we have supplied, proposition 1 involves making good the meaning in its operation of clause 16.2 of something which is evocatively named “the unitholders and joint venture agreement”. The point, as proposition 4 in our skeleton tries to point out, that we identify as being, with respect, error in the Court of Appeal was not to give a proper operation to the so-called intent and effect of the provisions of that agreement, particularly the context that supplies the notion of giving full effect to clause 10.1(a). To make those propositions good, may I, however, start by noting the fairly standard terms of the trust deed itself which constituted the registered scheme. In the appeal book may I take you to page 64.

I am showing your Honours on this and the following few pages clauses 17 and 18, not because they are of any particular or unique significance, but because they show the breadth of control by a manager or trustee which was then cut back and distributed among the shareholders by the agreement to which I am about to come. So under clause 17, starting at the foot of page 64, one sees the manager’s powers in relation to termination, 17.1, and one sees that under 17.5 – this is a provision which is picked up later by statutory provisions to which I will come – under 17.5 the effect of termination, however it be brought about, 17.1 or 17.4, under 17.5 there is in effect a winding up – see 17.5(b), realising the whole of the fund, converting into money, dividing the net proceeds, et cetera.

On page 66 the natural conclusion of that process of winding-up is seen in 17.5(f). We are leaving aside what seems to be a glitch in the English of the provisions in the third line, “and to indemnify it”. Plainly, there is intended to be what might be called a quittance, a dissolution of the relations. Under 17.6 there are provisions which are headed “Completion of winding-up” and it can be seen that it is winding-up which is described as:

The realisation of the Fund and the division of the proceeds amongst the Unit Holders –

In 18, starting on page 67, about line 22, one sees that the management of the fund, as I say, in familiar terms, is given at clause 18.1 in extremely plenary terms, 18.1, 18.2. I do not need to pursue that theme more. It is against that background that one comes to what is called “The KSC Trust – Unitholders’ and Joint Venture Agreement”, the operative text of which starts on page 119 of the appeal book. Your Honours know from the written submissions that this is an investment project that started in 1994 with, again, a pair of trust deed and agreement - unitholders’ agreements remade in October 2000 in the form that has presented the dispute between these parties.

FRENCH CJ: I see the trust is the beneficial owner of the property. That is what Justice Meagher referred to as commercial drafting.

MR WALKER: Yes, and perhaps the cultural effect of the Tax Act, yes.

CRENNAN J: The respondent as a party to this deed, is it in its capacity as a unitholder and also in its capacity as the responsible entity of the trust? Is that right?

MR WALKER: They are separate entities and it is as the unitholders, but they are party. Could I in the - it is the last of the named parties as they were then at 119, line 22 or thereabouts, that is party as responsible entity in answer to Justice Crennan.

CRENNAN J: Sorry, say that again?

MR WALKER: “AMPAM” - you will see a reference to AMPAM.

CRENNAN J: Yes.

MR WALKER: In the recitals, A. refers to the parties who are unitholders, B. has the solecism the Chief Justice has noted, but it introduces an important concept for our argument, the property. May I take you, in terms of definition, to page 143. Just after line 10 you will see that it means:

The land described in item 3 of Schedule 1 including any land subsequently owned or acquired by the Trust and intended to be held and used as part of the Property –

So subsequent acquisitions are going to be linked to the original land. If one goes to page 146, you see “Item 3 Property” and it is:

The property known as the Karrinyup Regional Shopping Centre, Perth.

So subsequent acquisitions are to be related to, intended to be used as part of, that shopping centre. This is, according to the unitholders and joint venture agreement, something about a shopping centre, integrally about a shopping centre. In recital D. there is a reference to the 1994 arrangements between unitholders. In recital E. there is a reference to this replacing of that. Then in recital F. the arrangements agreed by the parties in relation to the above matters, which obviously include the holding by the trust of the property, the shopping centre, is set out in this deed. That is repeated on page 120 in clause 1.4, about line 22. This is the deed to record the arrangements between them in relation to the trust.

There are a number of matters to notice. It is convenient if I can do it more or less in sequence now. At the foot of page 120, clause 3.1, there is a promise inter se of the unitholders that they will not alienate, except as authorised by 4, 5 and 6. This is the first of a number of matters which show that the valuable private property, which consists of the units in this trust which gives commercial exposure to the advantages or disadvantages of owning a shopping centre, were such as between them were traded by an agreement for value perceived sufficient to reach agreement between them, and it starts with a restraint on alienation. In 4, one sees that that includes the granting of securities. May I note that there is an expression there in the third and fourth line:

in a form reasonably acceptable to the Unitholders –

That is the plural: other than the unitholder singular. There is an argument raised by one of our friend’s contentions concerning the meaning of the expression “unitholders” in another provision to which we will come. This is one where obviously, we submit, that must mean all the other unitholders.

Paragraph 5 introduces the concept, commercially quite familiar, of permitted transfers. You see that there are, as it were, intimates of a unitholder who can be the subject of a transfer. Then in clause 6, you have another very familiar outcome of a commercial trade between owners of such property rights as units or shares, namely pre-emption rights, and again one sees this notion of the role of, as we would put it, all the other unitholders in 6.1(a). At about line 40 on the page, just after the defined term “Transfer Notice”, you will see “on the other Unitholders”. That surely must mean in context on all the other unitholders.

On page 125, one sees that the pre-emption provisions work out in the normal kind of way. It is a right of first refusal, as it were, in clause 6.5. One sees that again there is a restraint agreed to, bargained in advance and in a binding fashion between these unitholders, that they will not sell to outsiders except on terms that bear the relation to the terms in the pre-emption notice that you will find picked up in the last four lines of 6.5. In clause 6.6, under the heading “Assumption of obligation”, there is a, as it were, accession or novation provision, again of a commercially familiar kind, which again restrains the terms upon which an owner may deal with its units.

FRENCH CJ: All this is short of the limiting case of winding-up?

MR WALKER: Yes. Then we come to the important provisions of clause 7 which, contrary to and engrafted over – operating over and above 17 and 18 of the trust deed to which I went at the outset – commits to the unitholders’ committee a number of important matters. At the foot of 124 it is established. On 125 there is a reference to its representative nature, 7.2, and its proceedings in Schedule 2. Could I go to 148, 149? It actually starts at 147 but if I could pick it up at 148 you will see in relation to “Voting”, clause 9:

each member of the Unitholders’ Committee shall be entitled to vote on any resolution to be considered by the Unitholders’ Committee.

It is “weighted” according to the holding of units. Clause 10:

A valid resolution of the Unitholders’ Committee shall require a majority vote in excess of 50% of the total votes that may be cast –

11 Those matters requiring a vote of not less than 75% -

are as follows and you see references in (a), (b), (c) and (d) to matters that have been drawn to attention in the written submissions and they are, it is common ground, matters which may involve considerable expenditure. In clause 12 there is a reference to a means by which a business may be transacted outside a meeting. In clause 13 it can be seen that this is rather more than procedure, this schedule, because the first sentence is obviously of substantive effect:

A valid resolution of the Unitholders’ Committee shall be binding on the Unitholders. No resolution of the Unitholders’ Committee shall override the terms of this deed.

So a resolution to be valid cannot be inconsistent with the provisions of this deed, that is the agreement, but, if consistent, “shall be binding”. Going back to page 125 could I just jump to 7.5 because the story of the effect a resolution is completed by a consideration of clause 7.5:

AMPAM, as the responsible entity of the Trust, must act in accordance with the valid resolutions of the Unitholders’ Committee.

FRENCH CJ: The unitholders’ committee operates as a kind of management committee.

MR WALKER: It does, yes, and it can be seen that by a process of vote – I stress vote – these parties have agreed about the way in which things would be done for the managing of this shopping centre investment. It is not adventitious that it happens to be at the time a shopping centre investment. It is set up by this agreement to be a shopping centre agreement and future changes to it will be part and parcel of being a shopping centre.

KIEFEL J: But there is, of course, power to acquire additional investments under clause 10.2.

MR WALKER: Yes, there is, but your Honour will recall that in relation to the definition “property” the land in question is defined to include land and property intended to be used with that original land. The relevant matters under clause 7.4 – it is quite a striking list particularly when one sees the last of the items, but the committee “must review”, et cetera - obviously that means it may, so this is, as it were, the jurisdiction being granted:

must review, consider and make determinations on substantive issues with respect to the management of the Trust including -

So what follows are illustrations rather than limitations:

all proposals and recommendations from the Asset Manager which relate to the acquisition, disposal, management or development of assets of the Property –

That is a rather awkward expression, but it must mean assets comprising the property or intended to be used with the property as the definition of “property” to which I drew attention earlier would indicate.

FRENCH CJ: This is all premised on the continuation of the trust?

MR WALKER: It is, quite so, yes. All of this is, as it were, the regime while the shopping centre is being operated. Under 7.4(b) you have this notion of “strategic matters affecting the assets of the Trust” and (c) is the matters “described in Schedule 3” which is pages 150 to 151. It is a mixed bag. One will see that it includes item 4 “In relation to Property Management”. We think that is an undefined term, notwithstanding its capitals, “the services which will comprise” it. So, it is obviously rather important in terms of obtaining the professional services involved. Item 5 is obviously of very considerable moment in terms of expenditure. Going back then to 125, clause 7.4, then there is this last category of what is called:

any other matter which a Unitholder deems important or necessary -

which would appear, subject only to requirements of good faith, to open the matter to what might be called an idiosyncratic view of what should be before the committee.

FRENCH CJ: But it must be a matter with respect to the management of the trust.

MR WALKER: It must be a substantive issue with respect to the management of the trust. I do not know whether “substantive” adds anything to the notion of the management of a trust of this kind any more than I can explain to your Honours why it was considered necessary, if I can use that word, to add the phrase “or necessary” at the end of (d), but in any event.

So, pausing at the end of clause 7, one can see that the units that are on issue which are obviously a valuable form of private property are agreed by the unitholders to be held in a way which, as between them, they have traded or negotiated in such a way as to restrain what would otherwise be as a matter of general law their rights with respect to that property. Of course, that is at the very heart of what it is to enjoy private property, that you may trade it, derive value from it, by agreeing, for example, to restrain your conduct in relation to it.

CRENNAN J: That is easy enough to understand. It is a bit like members having a binding agreement about how they are going to vote and so on in a corporate context.

MR WALKER: Exactly so.

CRENNAN J: But is not the real issue here about how 16.2 is going to work in the context of a need to determine the trust, for example, on the just and equitable ground or something of that sort to apply to a court to determine the trust?

MR WALKER: Yes. There is no question - - -

CRENNAN J: This is the point at the heart of the Court of Appeal decision in relation to this, is it not?

MR WALKER: If it is then that is another error because we do not maintain that the restraint on voting can of its nature have anything to do with a just and equitable winding-up. Why would it? A vote is not called for.

CRENNAN J: Going beyond the just and equitable ground, though, on an application to the court on that basis, there has to be, does there not, a potential for a determination of the trust?

MR WALKER: Yes. Our short point is, and we hope it grapples with what your Honour, with respect, correctly calls the heart of the matter, is that 16.2 regulates the way in which one exercises this aspect of the private property involved, the voting rights attached. It regulates the voting rights so far as they entail a sale. It obviously neither purports to nor would be capable of affecting sales entailed by other circumstances without a vote, such as a court application. We have never argued and we do not argue here that processes that entail a sale are to the slightest degree affected by 16.2, insofar as they do not involve any vote. 16.2 is about voting.

It is just one of the trades between these parties turning to account, giving value in their bargain to an aspect of their respective private property, just as they have agreed to restrain the alienability of the units by the clauses to which I have drawn attention, just as they have agreed to give up the rights – if I can call it that – of having the manager’s free discretion in management under the deed. They have given that up by reason of clause 7.

So they have given up when a vote is involved, and I stress when a vote is involved. So they have given up the liberty, which was of course an aspect of the property right they each enjoyed, by the trade represented by 16.2. It is absolutely no answer to – in fact, if anything, it strengthens our position to demonstrate that there are other means which do not involve a vote, do not involve that aspect of the property right which has been traded by 16.2 which could bring about a winding-up - - -

CRENNAN J: But a vote on a resolution to wind up is obviously a much cheaper option than approaching the court to determine the trust. I am just having a great deal of difficulty seeing why 16.2 should apply other than in the context of the circumstance that the managed investment scheme is rolling along and no question of determination of the trust has arisen. I can see it applying in that context, but beyond that context it is difficult to see. It just seems artificial to be saying well, 16.2 applies so you cannot have a resolution to wind up. On the other hand, it does not apply if you seek to determine the trust on some other basis, because obviously questions of the determination of the trust may involve fiduciary duties on the part of the manager, for example.

MR WALKER: True, but that has nothing to say to the bargain in 16.2 about voting rights as unitholders under the trust, so this is voting rights as unitholders. There is nothing fiduciary. That is part of their private property, they have traded – they have reached a bargain in 16.2. Now, at the heart of our case is, is the bargain represented by 16.2 to be set at nought by treating it as somehow incapable of restraining the voting which is proposed in this case? One thing is for sure, it is voting that is proposed in this case. Now, true, we still have the work to do to bring it within the realm of controlled voting stipulated by 16.2. We have to bring it within the realm:

so as to most fully and completely give effect to the intent and effect of the provisions of this deed.

I have to do that, that is a separate issue.

KIEFEL J: When you refer to the intent and effect of the provisions of this deed do you have to find an implied obligation on the part of the unitholders not to exercise their voting power so as to bring about a sale? That is what you are looking for in the intent and effect.

MR WALKER: It is not by implication but by interpretation of - - -

KIEFEL J: Of the terms of the - - -

MR WALKER: - - - of the terms, and that is the role, of course, of 10.1(a) to which I will be coming in a moment.

KIEFEL J: I was a bit confused about that. Certainly, below it was argued that it arose out of 10.1(a), but I was not sure that you were still relying on that.

MR WALKER: Very much so, yes. It is 10.1(a) in the context of – as one of the provisions of the deed. To put it another way, I think in order to give as plain a response as I can presently give to Justice Kiefel, but for 10.1(a) we would not have an argument of the kind we advance in this Court.

KIEFEL J: You have no other express terms that you can - - -

MR WALKER: No, it is 10.1(a), but the context is – I have already drawn to attention some of the most important aspects of that context – this is an agreement called a joint venture agreement for the running of a shop - the owning and running of a shopping centre. This is not, as it were, a temporary destination for large sums of investment moneys.

KIEFEL J: Well, one could understand then the restriction upon the responsible entity not selling without approval, particularly in the background of the powers under the trust deed.

MR WALKER: Yes.

KIEFEL J: But is clause 10 directed to the context of a winding-up?

MR WALKER: That is another question right at the heart of the matter. We submit very much so, bearing in mind that the winding-up in question is one which is simply being brought about by vote and by nothing else. It is not brought about by a responsible entity opinion as to the scheme being accomplished or incapable of being accomplished – I will come to that. It is not brought about by a just and equitable. It is not brought about by an insolvency.

BELL J: But it is brought about by a vote in the context of a statutory right that attaches to the arrangement that the parties chose to order their affairs.

MR WALKER: Absolutely. Another matter at the heart of the case is exactly what your Honour raises: is that something which is a valuable attribute of the private property in question? The answer is yes, very much so. Next question: is there any intent to be gathered from the parliamentary enactment, the statute that gives that vote? Is there anything to suggest that, unlike any other vote given by the constitution of this scheme which means it cannot be traded? The answer is no. Why would a set of provisions which are plainly designed to enhance rather than detract from enjoyment of the property right be construed so as to prevent that voting from being the subject of bargains making advantage from that right?

FRENCH CJ: Well, that was the subject of the comment about the public interest I mentioned in Justice Meagher’s judgment at paragraph 24, I think, was it not?

MR WALKER: Quite. As your Honours appreciate from the written submissions we, with respect, urge the approach taken on that contention point by the members of the courts below. In our submission, these statutory provisions bespeak most vehemently a supporting of these as property rights and to support these as property rights you must be able to turn to advantage every aspect of that property.

Now, obviously – this is jumping ahead in the argument but in a way which, with respect, conveniently pulls things together - in further answer to Justice Bell’s question, there can be little doubt that the legislation contemplates that people will discuss among themselves how they are going to vote at the kind of meeting contemplated by the provision in question. It is not an invariable thing, but it happens.

The next thing is there can be little doubt that Parliament has contemplated – when I say “Parliament”, I simply mean the enacted text – contemplates that people may reach arrangements about how they will vote induced by the legitimate self-interest that is of course the whole point of this private property. That is the point of our citation of Sir George Jessel in Pender v Lushington of course. So what might be called an ad hoc alliance can be obtained in a binding contractual fashion whether by the appointment of proxies and directions or any other approach taken to the voting contemplated under the statute and the constitution of the registered scheme. So you can have an ad hoc agreement either not to vote in a particular way, not to vote at all, or to vote in a particular way, et cetera, et cetera.

It would be, with respect, perverse for respondents in the position of our opponents to suggest that they have property rights which lack that elementary and very important aspect of a property right, namely, you can turn it to advantage, of course subject to the law. But there is no provision in the statute which grants an opportunity to work advantage, that is, by setting up an occasion for a vote to be cast. There is nothing in the statute which would forbid you from deriving that advantage from your property right. So it follows that this is a statute which on its face presents an occasion for perfectly legitimate trading of voting.

If that can, as we submit, be seen inexorably to follow from the statutory occasion, and what I will call ad hoc arrangements, what possible objection can be raised from the statutory text or the policy of the law for the purposes of putative application to circumstances not explicitly caught by the law? What possible objection could there be to an anterior and blanket agreement between parties, you say, if ever an occasion of a particular kind presents itself where we will get to exercise that aspect of our property right which is a vote. We agree in advance, because we are in a joint venture for a shopping centre, that we will exercise it in a particular way or not exercise it in a particular way. That is how we characterise 16.2 and 10.1(a), and it is why, for example, going back to the matter Justice Crennan raised with me, it is simply not to the point that there are other ways without a vote by which, pursuant to the statute, the same thing could be brought about.

It is not a question of the relative expense. After all, these parties no doubt have that in mind. They can assess the value of a dollar, or many millions of dollars, and in advance they decided, “We do not want that quick and easy way of bringing this investment to a screaming halt to be brought about unless we are all happy with it”. It is a lot of money involved in an ongoing large project. It is not the kind of thing, whereas the written submissions against us rather breezily suggest we should be really quite happy to have all this money in our pocket upon a realisation.

Your Honours may well appreciate that those who have a lot of money to invest are not always delighted to have it all in cash and nowhere to invest it. So an ongoing business, exposure to economic fortunes that constitutes a shopping centre is how they agreed they would organise their affairs in what I stress is a joint venture, to be brought to an end by sale only upon unanimous decision to that effect.

That is why when I come to complete what I want to say about 16.2, we have the two steps that we have to take, the two tasks of persuasion that I have to discharge in relation to those elements that first of all go to the notion of voting – can that avail against the statute? I have more or less given my argument on that, and second, do the provisions of this deed, as it describes itself, including 10.1(a) - - -

CRENNAN J: Do you mind reminding me, who first requested the meeting?

MR WALKER: UniSuper, yes. Could I go back then briefly to note – I do not have to dwell on these, I think – to these other very important controls, incursions, bargained limitations on what would otherwise be the position under the trust deed in relation to the management of this property. Under clause 8 – it is called “Repairs”, but it is obviously rather more than that. As you can see, it includes substantial alterations, see 8.2(a)(i) on page 125. Clause 8.1 and 8.2 balance between themselves what might be called the capped expenditure without consent, and one notes there the expression “the consent of the Unitholders and in accordance with the Trust Deed”.

One sees the role of the unitholders as determining what is to be spent, 126, about line 25. You see the unitholders “determine how such repairs will be funded”. That clearly enough will be by a committee decision. You see the important commercial decision making about borrowings in (e) and (f), et cetera. Then one comes to even what might be envisaged to be even larger expenditures in clause 9, starting on page 127. One sees that this is an agreement that bespeaks the expectation of the parties that it will endure for quite a long time. See the opening words of 9.1 at about line 28:

In view of the impossibility of determining in advance when it may be desirable in the interests of the Unitholders to redevelop or refurbish the Property –

So that is having the property, continuing to hold it and improving it. It certainly does not indicate that these parties had expected that, notwithstanding 16.2 and 10.1(a) over the dissent – that is, over the opposite of consent – over the dissent of a unitholder such as our client, there could be a sale and almost immediately.

One sees that there is in 9.1(a) and (b) an interplay between the judgment of the responsible entity, referred to as AMPAM in 9.1(a), and in particular that it looks to matters concerning the nature of the shopping centre in the market. At (b) about line 34:

ceased to be an economically advantageous development of the land –

and one sees the parenthetical references to ideas which certainly are looking to what might be called long-term and large-scale investment. Then one sees that there is an agreement among the unitholders that they will, by the voting requirements set out there, determine the matter. As to the funding of redevelopment under 9.2, I do not need to dwell on the detail, and 9.3 on pages 128 over to 130 there are again provisions by which there are ways of ensuring that everybody pays up.

Under clause 10, which is at the heart of our case, one comes to the matter which is the subject matter of the whole joint venture, that is, the property. There is a prohibition on what would otherwise be an available power of the responsible entity. There is a prohibition on sale:

without the written consent of the Unitholders.

That is obviously subject to 12.5(a)(i), if you go to page 132.

KIEFEL J: Just before you move onto that topic, you have taken us to some of what you, I think, referred to as “detailed provisions about the management of the property”.

MR WALKER: Yes.

KIEFEL J: In an endeavour to show that it was – the underlying intention was some long-term investment.

MR WALKER: Yes.

KIEFEL J: It would be sensible in any joint venture which has a capital asset of this nature to sensibly provide for its long-term maintenance and management of it.

MR WALKER: Yes.

KIEFEL J: How does one infer from that, though, some limitation on the ability of the unitholders to determine the underlying trust at any point they wish, from the fact that provision is made for long-term management? There is just a bit of a gap there. I see a few premises missing.

MR WALKER: It is at the heart of the matter, your Honour. The way we attempt to do that is by looking at what is not merely entailed in incidentally but which is the very substance of a winding-up of this trust. A winding-up of this trust is realising the property and distributing the proceeds. We know that from the trust deed and from commonsense. That is, it does not just meet incidentally but it is the sale of the property. It is converting the operating assets of a shopping centre to cash. That has been the subject of specific bargain between the parties. That is 10.1(a). It will not be sold without the written consent of the unitholders.

KIEFEL J: You see that as directed to the unitholders not to the responsible entity critically, do you not?

MR WALKER: It is a right of the unitholders to require that their written consent - - -

KIEFEL J: No, it is directed to the responsible entity.

MR WALKER: Control. It controls AMPAM, there is no doubt about that but it gives powers to the unitholders. You see a power in 10.1(b) and you see the power in 10.1(a) which is, in popular parlance, vetoed. So, every requirement for consent creates a veto right and veto rights are extremely valuable. Consent can be purchased, of course. So, these are very valuable property rights. They are not simply obligations or restraints imposed upon AMPAM. They come as - part and parcel of them, they come with this very valuable veto right.

KIEFEL J: That is as I raised with you earlier. Clause 10.1(a) in its terms relates to the responsible entity selling it at any time. That is restriction upon it.

MR WALKER: That is restrained, yes.

KIEFEL J: How do you put this in the context of a winding-up or a desire on the part of unitholders to determine the trust?

MR WALKER: “Determine the trust” means sale.

KIEFEL J: It might but - - -

MR WALKER: It can only be done by sale and, indeed, apart from distribution of proceeds which is consequential upon the sale - - -

KIEFEL J: No, sale is a consequence of the determination, is it not?

MR WALKER: That is true but, with respect, winding-up is, therefore, sale. Now, it is more than that, it is sale and distribution and acquittance of claims by trustee and beneficiary, but it is sale and distribution of the sale proceeds. So the question is whether 10.1(a), when it refers to sale, leaves out of account that which, bearing in mind, the definition of “property” - we do not have here constant change of investment such as one might have in many unit trusts, bearing in mind that one has all these terms about this property being improved, this property being redeveloped when it is looking a bit tired, et cetera, the question is whether the parties are to be understood as not intending to include the obvious way in which a sale is brought about, namely a winding-up.

KIEFEL J: On the other hand, one has to take account of the fact that there is no expression in any term of the joint venture deed to a restriction on voting rights in relation to a determination of winding-up expressly and there is no restriction upon any statutory rights expressed in the deed.

MR WALKER: The short answer is no to the last, in particular.

KIEFEL J: The other you would say is a matter of construction.

MR WALKER: Clause 16.2 quite expressly refers to “voting rights as unitholders under the Trust Deed”.

KIEFEL J: Yes, I see.

MR WALKER: It is only because you are unitholders under the trust deed - again, this not merely incidental, it is the very point – it is only because you are a unitholder under the trust deed, as such a person, that you get any of the votes, including the votes referred to in the statute. Now, I say referred to in the statute because they are votes still in accordance with the constitution of the scheme. The statute refers in the various provisions your Honours have had drawn to attention, for example, the winding-up proceeding in accordance with the constitution.

FRENCH CJ: That is the trust deed, is it?

MR WALKER: Yes, quite so. There was an earlier argument that it was more than that but that is what your Honours should take it at.

CRENNAN J: One way of reading this document is that 10.1(a) and nothing else in it deals expressly with the determination of the trust as contemplated by Part 5C.9.

MR WALKER: Yes.

CRENNAN J: So one explanation for that may be a recognition that Part 5C.9 must apply because normally you would expect to see in an agreement like this some provisions in relation to the determination of the trust because there may be a deadlock or.....of the substratum. All sorts of problems might arise where determination is something which has to be considered and Part 5C.9 makes provision for determination.

MR WALKER: Your Honour, somewhat gingerly the answer is yes to that but - - -

CRENNAN J: There is a gap, I think, as Justice Kiefel points out, is there not, in relation to that key issue in right for a trust?

MR WALKER: The parties actually have contemplated what would happen. Your Honour referred to deadlock. Deadlock does not really matter in a trust like this where the parties have agreed, see the committee stipulations, as to how certain issues will be according to the weighting of votes determined, so there is not going to be a deadlock, there is going to be a determination one way or the other. When there is a default the parties have contemplated the kind of position that, with respect, your Honour would have at least partly in mind.

CRENNAN J: To default.

MR WALKER: You will remember that when I first went to 10.1(a) I said of course it must be subject to 12.5(a)(i).

CRENNAN J: Yes.

MR WALKER: Then you go to page 132 of the book. When I say subject to – 10.1(a) talks about “the written consent of the Unitholders” and your Honours have gathered that we – we put the argument and defend the decisions below – that obviously means all the unitholders. There is an exception to that. If you default, see 12.5, what is called “the Other Parties” - and obviously that means all the other parties – they decide “whether to sell”, see 12.5(a)(i). I have misspoken – I said 12.5, I meant to say 12.5 on page 132. Then you will see under 12.5(b) - this shows the parties’ understanding of the relation between sale and determination – you will see that, “Should the Other Parties determine that the Property be sold” - and “the Property” is the thing which they are seeking to exploit and enjoy their ownership rights in, then the:

responsible entity of the KSC Trust, shall determine the Trust and realise the assets thereof (including the Property) in accordance with the Trust Deed.

We know that means – I have taken you to the provisions earlier – that means the winding-up.

So the parties have certainly given attention to and have regulated inter se the way in which there will be a decision leading to what we have called the premature sale – that is, a sale before every party consents, and that is only going to happen if there is a default. But significantly, in that case it is obviously all those not in default; all the innocent parties are required to determine on that sale and the parties demonstrate by 12.5(b)(i) a manifest connection of a kind which is in the nature of things between the sale and the winding-up.

For the purpose of this argument, it does not make a difference whether sale leads to winding-up or winding-up leads to sale because really the one constitutes the other; it is only the distribution of proceeds, and therefore as a matter of general trust law the termination of the trust obligation upon the erstwhile beneficiaries now enjoying legally their pro rata share of the erstwhile trust property – it is only that which is left.

That is the means by which we argue that of course 10.1(a) is directed at sale - if you have to say it for emphasis, any sale - and 16.2 is directed at vote – and if we have to add it, any vote – and when any vote could produce any sale, to give the so-called most full and complete effect to the intent and effect of the provisions of this deed, one must - - -

CRENNAN J: Does 10.1(a), in the context of 12.5(a)(i), require a unanimous vote in relation to the vote of those unitholders, other than the defaulting unitholder, to sell the property?

MR WALKER: Your Honour was asking about 10.1(a)?

CRENNAN J: Yes.

MR WALKER: Yes is the answer.

CRENNAN J: Does that mean that in the context of 12.5(a)(i), on your reading, there has to be a unanimous vote in relation to selling the property or is a majority vote enough?

MR WALKER: Well, we know it is not the committee in 12.5 - - -

CRENNAN J: That is right.

MR WALKER: - - - so it is simply what does “Other Parties” mean, and there being no other provisions then the English is that they would have to agree; the other parties will have to decide, and that means the other parties. It does not mean some of them. It does not mean a majority of them. It does not mean 75 per cent voting rights. It does not mean 50 per cent voting rights. It means the other parties.

CRENNAN J: It is a unanimous decision.

MR WALKER: That gels with 10.1(a), which is the written consent of the unitholders. You cannot get consent of the unitholders which includes the dissent of some of them. If you have the dissent of some, you do not have the consent of the unitholders. Could I at that point in relation to unitholders remind you of the definition that you will see on page 143? It defines both the plural and singular, which is unusual but perhaps significant. Unitholders, the plural, means X, Y and Z. It means:

ADP . . . UniSuper . . . and any other person who holds Units in the Trust from time to time –

and that is an aggregate. So “unitholders” means that aggregate. “Unitholders” means all of them; that is the ordinary English. “Unitholder” means each or only one. Now, it may be a laborious definition of the obvious, but there it is, and it seems, with respect, to support strongly the decisions of the courts below, which is our submission here, with respect, that 10.1(a) calls for unanimity, just as the exception to it in 12.5(a) calls for unanimity.

Now, the same can be said, of course, for 10.2. So you transform this scheme which is built around a particular shopping centre – Karrinyup - you transform that scheme by destroying it – sale - or by adding to it only by unanimous determination of the unitholders. It is a joint venture and it is for those reasons that, in our submission, Justice Ward was correct in her reading of the effect of the freely traded valuable right of voting constituted by the parties’ agreement in 16.2 in light of the intent and effect of the provisions of this deed wherein 10.1(a) is explicitly at the heart of our argument but is, of course, in the context of the other provisions to which we have now made, I think, sufficient reference.

Could I pick up something, your Honour? I think Justice Crennan was asking about gaps. Justice Kiefel had raised the matter but I think Justice Crennan had asked me about a gap and termination. Could I go to 135, clause 13? This is not just simply a provision of a kind familiar with attempted compliance with perpetuities and the like. The opening words of 13.1 provide another opportunity for the unitholders to determine their commercial destiny:

Unless the Unitholders otherwise unanimously agree –

and that means obviously that the unitholders have a power to agree otherwise.

CRENNAN J: It does not deal, does it, with the topic of the determination of the fund or the trust - - -

MR WALKER: Yes, it does.

CRENNAN J: - - - as was dealt with in the trust deed?

MR WALKER: No, it deals with it separately.

CRENNAN J: It is really focused on the determination of this joint venture.

MR WALKER: Absolutely, but this is a deed which will bring to an end, for example – sorry, 13.1 can bring to an end, for example, the restraint between the parties about how they will exercise their votes, the agreement between the parties as to no sale without written consent of all the unitholders. So the bargain can be, in accordance with ordinary contract law, remade by the parties otherwise unanimously agreeing. So, for example, they could put in an earlier date in 13.1.

So the scheme, in our submission, in relation to the commercial project regulated by this agreement which is clearly a long-term shopping centre commercial project is a scheme which is not to be brought to an end, at least so far in clause 13 as the stipulations of this agreement are concerned, except by the unanimous position of all the unitholders. Now, that is important because we saw otherwise in relation to the committee that there are a number of very important issues upon which there is a kind of majority rule.

KIEFEL J: I am sorry, what are you actually drawing from clause 13.1, some limitation – not a limitation on the ability to terminate the scheme?

MR WALKER: No, it is not the scheme. It is this deed.

KIEFEL J: Yes, this is the deed.

MR WALKER: This joint venture, I will call it joint venture. This joint venture can be brought to an end and, if this joint venture is brought to an end, of course everything that it entails, which is limitation on sale, the highly regulated way in which money can be determined to be spent on repairs and refurbishments, et cetera, all of that comes to an end as well. One sees that that can only be brought to an end by that which they have agreed in advance, or that which they otherwise determined, such as an even earlier date, but unanimously.

So it reinforces the notion that the joint venture here has its fundamental elements – I fear I am being repetitive – which is the running of a shopping centre, as to continue so far as the will of the unitholders is concerned, subject only to their unanimous view otherwise. The exception to that, 12.5, in the case of the defaulter, really is one that proves the rule.

CRENNAN J: Possibly 13.1(a) only lucidly refers to Part 5C.9.

MR WALKER: Possibly, yes. Those provisions certainly will include, or will bring about, a date upon which a trust is terminated, yes, your Honour. So 16.2, I think, which I now come to at page 136, I have now said everything I wanted to say about it. Could I notice clause 18 while we are here - - -

KIEFEL J: Yes, I was going to ask you about that. This is dealt with, I think, in the respondent’s notice of contention, ground 1.

MR WALKER: Yes, it is.

KIEFEL J: Speaking for myself, I had a little difficulty understanding your reply paragraph 14.

MR WALKER: Your Honour, in order for something to be cumulative with, all must be operating. Clause 16.2 grants rights, that is, a right to have observance of the obligation imposed on the others. That is cumulative with rights, powers and remedies provided by the law independently of the deed. In order to be cumulative with, 16.2 must also operate. Is there any difficulty with a statute recognising an occasion of voting, and parties among themselves agreeing how the vote will be exercised, and the answer is no, of course there is not. It is the very essence of a power or right to vote. It is the very essence that you can determine either ad hoc or well in advance. They are categorically how you will exercise it, and for value. It is for those reasons that we submit that clause 18 certainly lends no support to the contention.

One needs to see clause 18 in the context – on the next, page 137 – of clause 20. It is called “Supervening legislation” in the heading but, in fact - - -

KIEFEL J: I am sorry; clause 18 – the reference to “cumulative” would mean a remedy in addition to that provided by the deed.

MR WALKER: Quite.

KIEFEL J: Are you saying there is no - - -

MR WALKER: There is nothing in the statute that says you cannot trade the vote that the statute refers to. The statute does not say and you may not take into account contractual obligations you have in relation to casting this vote.

KIEFEL J: But that is another issue, is it not? That is an inconsistency issue. This is really just a question of construing clause 18

MR WALKER: It is.

KIEFEL J: Why does clause 18 not permit the right or remedy provided by section 601NB to make it to be available to the unitholders?

MR WALKER: Well, it does.

KIEFEL J: But you say clause 16.2 operates upon that?

MR WALKER: Yes. There is a vote under the statute and you have got to exercise it in a particular way. Clause 16.2 does not deny the vote and does not deny the right to vote or the power to vote. Clause 16.2 says, “And when the occasion arises I will vote in a particular way”, which entails, obviously, “I will not vote in an opposite way”.

KIEFEL J: How do you have clause 16.2 operating upon the right given by 601NB if clause 18 says that it is an additional remedy? That would be a stand-alone remedy. It would not require the two to be read together, one to restrict the other.

MR WALKER: Clause 16.2 does not grant any rights to vote; it assumes them.

KIEFEL J: It operates as a restriction.

MR WALKER: Yes, but it assumes them:

they will so exercise their respective voting rights –

et cetera. Whenever there is a voting right, as a unitholder under the trust deed, here is the bargain, an unexceptionable bargain, that the court would be astute to uphold rather than destroy as to how it is to be exercised. So the first thing it says is a bargain about the exercise in a vote presents no inconsistency with the grant of a vote; it operates upon it.

Clause 18 cumulates 16.2, which is the right to have the other unitholders observe 16.2. It cumulates that on the right granted under the trust deed. That is the most obvious right referred to in the second part of clause 18, the expression:

rights, powers or remedies provided by law independently of this deed.

It is not just statutory; it is also, obviously, trust deed rights. So you have got trust deed and then you have got the statute, which gives effect to the registered constitution, and you have got 601NB, et cetera. They cumulate; they can only cumulate if they are all operating. There will be a problem of cumulation of things which are mutually contradictory that for one to operate would destroy the other. But there is no problem of a mutual contradiction between observing the grant of a vote or an occasion for the exercise of a voting right on the one hand and, on the other hand, a contracted promise as to how you will exercise it. There is no contradiction at all. Indeed, the last is recognising the value in the nature of private property which is either created by or given an occasion for exercise in the first.

FRENCH CJ: You would say 16.2 deals with an obligation?

MR WALKER: Yes, 16.2 imposes an obligation into (c). They mutually agree that they will exercise their rights, so it is assumed that the rights come from somewhere else, there have to be rights as unitholders under the trust deed to vote, and impose an obligation as to how to do that. Nothing in the statute, nothing in the trust deed is contradicted by an agreement in advance as to how you will exercise that right.

BELL J: The obligation is to give effect to the intent and the effect of the provisions of the joint venture deed.

MR WALKER: That is what I earlier, I think, referred to as the second thing I have got to satisfy, yes.

BELL J: Yes.

MR WALKER: That is why I go to 10.1(a) and try to sit it in the context of the shopping centre.

BELL J: Clause 10.1(a) deals in terms with the responsible entity and the preclusion on the responsible entity selling without the agreement of the unitholders. It does not in terms deal with the statutory provision for winding-up, including under 601NB - - -

MR WALKER: No doubt.

BELL J: To come back to the point I raised with you earlier, I understand your response to that is to say, as part of the property rights that each of the parties enjoyed, it was open to them to bargain away the way in which they would vote under a 601NB contingency.

MR WALKER: Yes.

BELL J: Accepting that they do not in terms appear to have done that under the terms of the joint venture deed.

MR WALKER: Well, 16.2 is certainly framed so as to include statutory occasions because it is as unitholders under the trust deed that you are exercising a statutory occasion, vote on a statutory occasion, is the first thing. So in terms 16.2 applies and it applies comprehensively. So in terms expressly it applies to all occasions when there is to be voting by these people as unitholders under the trust deed, that is the first thing.

BELL J: In order to give effect to the provisions of the joint venture deed and that seems to me to have some difficulties - - -

MR WALKER: I have two quite separate steps. The first one and then I move to the second one which is can I bring the veto effect, the veto intent and effect, which is what we attribute to 10.1(a). Plainly, without written consent of all unitholders, and it must be all unitholders, provides a veto right to each of them and in order to give most fully and completely effect to the intent and effect of the provisions of this deed for the ongoing shopping centre with the sale requiring the same unanimity as one sees in the other provisions to which I have taken you, then there will have to be upon an occasion where sale is the outcome, because that is what winding-up is, there will have to be compliance with 16.2.

So this does not depend upon implication. Clause 16.2 expressly applies to the occasion of voting referred to. That is the first step. The second step, do the provisions of this deed yield an intent and effect to which 16.2 can speak by its contribution to the bargain over and above what has otherwise been stipulated between the parties so as to have this what is called most fully and completely “give effect” promise and, in our submission, 16.2 is not surplusage. Clause 16.2 is not redundantly saying a breach is a breach is a breach, whether it is committed by voting or any other way.

FRENCH CJ: Why should not one just regard 10 as a provision that is there to stop the tail wagging the dog, as it were?

MR WALKER: The commercial effect of 10 is to ensure that the poodle does not become a mastiff, yes – sorry, I should not have done that – but that is not its only effect. In terms, every provision stipulating for something to happen only upon the consent of a class, in terms, that provides veto.

KIEFEL J: But just in terms of construing clause 10, could we go back to clause 18? If you put aside the non-exclusivity provision that would confirm, would it not, the availability of statutory remedy such as 601NB?

MR WALKER: Quite.

KIEFEL J: You do not have any difficulty with that?

MR WALKER: No, it is only occasions when voting will come - - -

KIEFEL J: Well, putting voting to one side for one moment, if that is the case, are you not obliged to read clause 10.1(a) in light of the remedy that is available? I mean, if you were trying to determine what the obligation of the unitholders are, you would have regard to the remedies that are otherwise available statutorily.

MR WALKER: Yes. So nothing in what we put about 16.2 and 10.1 prevents an approach to the court by a tiny minority to invoke the court’s power regardless of vote. Indeed, a vote may well be part of the evidence in favour of the application which would produce a winding-up. That does not touch our argument. The remedy, to use the word Justice Kiefel has raised with me, in relation to 10.1 is ultimately an injunction. There is a promise between the parties that there will not be – and the parties include the responsible entity obviously – that there will not be a sale without something happening.

Now, if one of the unitholders says there can be a sale without the written consent of the unitholders, then the other unitholders are entitled to get an injunction against that proceeding. Clause 18 fits into the scheme by saying that you can get the remedy for the breach of clause 16.2 in light of 10.1, cumulated with the other remedies you have such as vindication of your right to vote granted by a statute, or a trust deed, more to the point. I stress the right to vote has no contradiction or inconsistency with an agreement as to how you will exercise that right. They are companions, not rivals.

Clause 20 bears comparison with clause 18. Although it is called “Supervening legislation”, in fact it is all legislation except for appealed legislation:

Any present or future legislation which operates to vary an obligation –

It is very odd language. It is either referring to a constitutional impossibility or, read commercially, it is a demonstration that these parties intended that to the extent the law permits – see the last phrase commencing with the word “except”; to the extent permitted, going back to how clause 1 started, these are the arrangements for the trust, for the subject matter of its management, et cetera, which are to obtain between these parties, even in relation to matters which have legislative source. The specificity of this to Karrinyup, that particular project, can be seen by the interplay between 21.1 and 22.2. There is a jurisdiction clause for New South Wales, but I do not know whether it is affected by Mozambique or not. There is in 21.1 a proper law for Western Australia.

In 25 on page 137 you have a “No partnership” provision. It could well be thought that there are other matters otherwise set out in this deed which could give rise to the idea of carrying on a project for profit in such a way as to give rise to a partnership, and the joint venture participants have stipulated to the contrary in 25. It is just a straw in the wind but it rather shows this notion that this is an ongoing venture. It is sensible to have provided the no partnership provision because there are otherwise obvious elements of an ongoing business to be conducted by managerial decisions taken by unitholders through their representatives on the committee.

Now, your Honours, that completes what we want to draw to attention in the text which, as we have put particularly in answer to some of your Honours’ questions, expressly involves interaction or intersection with both the trust deed and the statutory provisions. As to the statutory provisions, I think the effect of everything I wanted to go to has been pretty much dealt with in answers to some of your Honours’ questions.

In 601NB – your Honours, of course, appreciate that the action which is referred to there under Division 1 of Part 2G.4 contemplates a requisition by, depending upon the circumstances, five per cent, or 100 in number, of the members, and the extraordinary resolution to be considered and voted on at such a meeting is by section 9, one carried by 50 per cent of the votes.

One sees in 601NC that there is a statutory power for the responsible entity to put an end to a scheme that “has been accomplished” – its purpose “has been accomplished” or the purpose “cannot be accomplished” but that is in accordance with a process that gives members a decision-making role there. None of that is inconsistent with the unanimity requirements that we say 16.2 and 10.1(a) amount to. It provides an occasion when there may be a vote. It is obviously not inconsistent with in advance these investors having decided how they will exercise a vote.

Under 601NE the reference in subsection (1)(a) one sees that the statute picks up and seeks to dovetail with the constitution of the scheme and in paragraph (b) refers to the passing of “an extraordinary resolution”. Now that involves - so the word “vote’ is not used - we know that means an occasion for the casting of a vote and so the same point that we have been making emerges with great clarity there, that is an occasion upon which the vote may be required in accordance with contract by reason of the prior restraint agreed between unitholders as in the agreement in this case.

Your Honours, may I very quickly then complete, in accordance with our skeleton, again matters, much of which has been dealt with in answers to your Honours’ questions. I do not want to add anything to proposition 7. As to proposition 8 we have said enough to make good, if it can be, the proposition that these are not statutory provisions which should ever be construed so as to detract from the value of the property rights to which they are directed and one would vitally detract from the property right in relation to a unit, which is its voting, by purporting to forbid the making of agreements as to how the voting rights shall be exercised.

It would be absurd to suppose that is true of what I called earlier an ad hoc arrangement and it follows from that that it is equally absurd, no principal distinction can be made between that and the anterior or blanket agreement which is this case. I have also said everything I wanted to say in answer to one of your Honour’s questions earlier in elaboration of proposition 9. May it please the Court.

FRENCH CJ: Thank you, Mr Walker. Yes, Mr Jackson.

MR JACKSON: Your Honours, may we commence by saying one thing, and that is that this is of course a case which involves a registered managed investment scheme. Your Honours, if I could go for a moment to Recital C in the agreement, relied on by the appellant, at page 119, you will see it stated specifically there, that:

The Trust is a managed investment scheme under the Corporations Law –

as it was then. Your Honours, the fact that it is a registered managed investment scheme is referred to in the opening paragraphs of each of the judgments below. You will see that in Justice Ward at first instance, page 389, and in the Court of Appeal, paragraph 3 at page 443.

One of the features of a registered managed investment scheme is that the unitholders are given by section 601NB a statutory right, and that right is to call or participate in calling a meeting to consider and to vote on a resolution directing the responsible entity to wind up the scheme. May I go to the section for a moment? Your Honours will see that section 601NB applies to all registered schemes. It refers to “members of a registered scheme”. It gives a right to call a meeting, and a right to vote at that meeting. The purpose of the meeting is:

to consider and to vote on an extraordinary resolution directing the responsible entity to wind up the scheme.

Your Honours, importantly, no statutory ground for winding-up is required. By that, I mean one does not have to show that there is some disarray in the management or dissatisfaction or something worse. All that there has to be is that the necessary majority of members form the view and vote on the issue. Your Honours, one does need to bear in mind that in a registered managed investment scheme, there may be few or many investors and their investments may be large or small.

In our submission, it seems apparent that section 601NB is intended to give members of registered schemes the right to bring the scheme to an end in a democratic – if I could use that expression – way, that is, by a majority vote, and the provision, your Honours, is the ultimate way in which investors in a registered scheme can collectively protect themselves. Your Honours, I used the expression “the ultimate way”. Perhaps I should have said “the simplest way”, in a sense, the simplest and least expensive. That is because no ground other than the existence of the majority of votes is required to be satisfied under that section, and in that regard, section 601NB is quite different from the requirements under section 601ND.

FRENCH CJ: Now, it has to be read, I think, with section 252B. Is that right?

MR JACKSON: Yes, I think that is the correct one, your Honour, yes.

FRENCH CJ: So that when 601NB speaks of “members of a registered scheme” taking action, that must mean, must it, either members with at least five per cent of the votes, or at least 100 members?

MR JACKSON: Yes, your Honour. Your Honour, it is section 252B, and the registered entity is the body that then has to call it. There is a later provision which allows the calling of meetings by a sufficient number of the members themselves at their expense, if the registered entity does not do it. Section 252C, I think it is, your Honour.

FRENCH CJ: Anyway, action under that part may involve either of those mechanisms?

MR JACKSON: Yes. Now, your Honours, if I could just say something more about section 601ND? It gives a power to the court to order a winding-up of a scheme, but your Honours will see that there have to be grounds for it; it has to be done by a court. Your Honours, one goes also to section 601NC. That provides for a situation where the responsible entity, if it considers that the purpose of the scheme has been accomplished or cannot be accomplished, can take steps to wind it up.

To put it shortly, what the responsible entity has to do is to notify the unitholders so that they can then bring about the calling of a meeting on which there may be a vote on that issue. The argument of our learned friends, as we understand it, would have the effect that if the registered entity formed that view and took the steps provided for by the section, yet the provisions of the agreement as construed by the appellant would have the effect that the unitholders could not exercise their vote except in accordance with the contract which is contended for. So, your Honours, it would have a significant effect.

Your Honours, we have referred in our written submissions – and I will come to this aspect of it shortly – to the history leading to the enactment of section 601NB. We would say – and I will develop this again a little later, if I may – that the history leading to it is a factor against the notion that rights under section 601NB are ones which can be bargained away. If I could just say one thing about that, your Honours, at this point? Our learned friend used more than once, if I may say so, with respect, the expression, “valuable rights”, and so on, but one of the most valuable rights one would think of a unitholder is the right given by the statute to call a meeting so that the parties to the scheme can decide whether they do or do not want it to go ahead further.

It is a right the very nature of which, in our submission, is rather against the concept of it being bargained away. I will come to the history in a moment, your Honours. The point that we would seek to make now is that assuming for the moment that the provisions of section 601NB are able to be excluded by agreement at the same time, if that were to be so, one would expect there to be clear language having that effect in the agreement. One would expect the exclusion of a statutory right to be rather clearly expressed, particularly a right to bring the scheme to an end. Your Honours, the language of clause 18, if anything, seems quite against that notion, and again I will come to that.

Could I come, your Honours, to the question of the exclusion of the rights under section 601NB by the agreement, or as I think our learned friends would put it, have they been contracted to be exercised in a particular way? Your Honours, in the first place there is nothing in the agreement which says so specifically, and in our submission, one would rather expect some specificity in relation to an important right.

Your Honours, I will come to the provisions of the agreement in more detail shortly, but could we make one preliminary submission and that is that a great deal of the appellant’s case, both in writing and orally, has been devoted to the proposition that this was to be a closely held venture and that is, in a sense, correct. But some qualification should be added. Closely held, the entitlements may be originally three, originally, relevantly three, now two, but it does not follow that the trust was to go on forever.

In that regard, could we take your Honours for a moment to our written submissions in paragraphs 27 to 30. Your Honours will see paragraphs 27 and 28 refer to some more general matters but when one comes to paragraphs 29 and 30 we would submit the true situation was, as we say in paragraph 30 – paragraph 29, first of all, that nothing in the agreement purports to exclude the operation of the Act in terms. Then if one goes to paragraph 30, the intention and purpose was for the scheme to hold the investments from time to time in accordance with the relevant provisions and, to the extent permitted by law, subject to the provisions of the agreement.

Your Honours, just put simply, it puts too highly what the agreement deals with to suggest, we would submit – or we would submit to suggest that the scheme was not to be terminated until all unitholders consented in writing. Your Honours, the only basis for finding such a view is really the reliance upon clause 10.1(a). Your Honours, may I just say in relation to clause 10.1(a) that one is left, with respect, somewhat lacking in clarity on the effect that is to be given to clause 10.1(a) from our learned friend’s argument. Your Honours will have seen in their reply submissions – in paragraph 4 of the reply submissions at the top of the second page, it is said in the second sentence:

the appellant does not take issue with the construction affirmed by the Court of Appeal that cl 10.1(a) does not “prohibit a sale by the responsible entity of the property in accordance with an obligation arising on a winding up of the scheme following –

to put it shortly, a 601NB resolution. Now, your Honours, our learned friend’s argument does seem to place significant reliance now, as I must say it did in the two courts below, on clause 10.1(a). May I then just say this, that both the courts below have held that 10.1(a) does not have that effect and it is simply a restraint on the exercise by the responsible entity of certain powers which is actually what the clause says and really, with respect, not a bad starting point when it is precisely what the clause says. Your Honours, clause 10.1(a) is the provision which refers to there being written consent of the unitholders. That is the phrase that the appellant seeks to have restored.

You will see that from the primary judge’s order at page 432. It is order 1, your Honours, that the defendants be restrained from voting, and then it concludes:

without the prior written consent of the plaintiff to the sale of the Property, as defined, of the Trust.

That reflects the wording in clause 10.1(a).

FRENCH CJ: Clause 10.1(a) is a restraint on the exercise of a power. What are the sources of the power to sell?

MR JACKSON: I think it is clause 17 of the trust, your Honour.

FRENCH CJ: Yes.

MR JACKSON: It is 18.1, page 67, all the powers of a beneficial owner.

FRENCH CJ: Yes.

MR JACKSON: Now, your Honours, I was going to say that is the order that is sought to be restored if the Court of Appeal’s judgment is set aside. That can be seen from page 471. The position at the moment, your Honours, is that, as appears at page 443 in paragraph 3 of the Court of Appeal’s reasons, the trust presently has two members. At the time of the making of the agreement it had more; it had three. You can see that from the parties in the agreement and it is referred to also in the appellant’s submissions in-chief at paragraph 15. It could again have more by, for example, the sale of parts of a unitholder’s holding. Your Honours, as we adverted to earlier, the recitals of the agreement recognise that it is a scheme governed by the Corporations Act. Your Honours, if one goes to the contentions based on clause 10.1(a), one sees from clause 10.1(a) itself at page 130 that it provides that:

AMPAM, in its capacity as responsible entity of the KSC Trust, shall not sell the Property or any substantial part thereof, without the written consent of the Unitholders.

Your Honours will see the words “in its capacity as responsible entity” and that reflects the fact that, as one can see at page 119, the one company, AMP Henderson Global Investors Limited, was a party in two capacities. You will see in the parties part of the document the first reference to it is in its capacity as responsible entity, and then your Honours will see it as the last party in its capacity of another trust – I am sorry; I have not put that very clearly. The last reference to AMP Henderson is to it in its capacity as responsible entity of the trust presently in question, but it was also a party as a responsible entity of another trust.

CRENNAN J: Clause 10.1(b), the last two lines, would suggest that 10.1(a) - that the intent of it is to deal with AMPAM’s power to sell prior to the determination of any trust.

MR JACKSON: Yes, your Honour.

CRENNAN J: But it does not speak to the setting of the determination of the trust.

MR JACKSON: No, not at all, your Honour. That is the point of clause 10.1(a) to restrain the responsible entity in its activities as such. Now, your Honours, if one goes to clause 10.1(b), that too is a restraint on the exercise of the responsible entity’s powers as such, and the possible activities include the sale of the property – possible activities restrained by 10.1(a) are the sale of the property or a substantial part thereof and I referred in response to your Honour the Chief Justice to clause 18.1 of the trust.

Now, your Honours, could I just say this then. If one goes to the reasons for judgment of the two courts below, what is apparent is that neither court took and, in our submission, this Court should not take the view that clause 10.1(a) has any larger operation than that which I have just been discussing with your Honour Justice Crennan. Could I take your Honours, and I will do so as briefly as I can, to the four passages in the primary judges’ reasons where the issue was referred to. You will see this at page 403, firstly at page 403 in paragraph 47, where her Honour says:

I do not read clause 10.1 as being itself addressed to the situation of a winding up of the Trust (notwithstanding that a sale will result therefrom) –

She went on to say that if they had wanted to include a prohibition on winding-up without unanimous consent “they could readily have done so”, and her Honour accepted a submission which was put that:

a fetter on the right to wind up the scheme should ordinarily be expressed in the clearest of ways.)

That is the first reference. The second reference is at paragraph 54 of page 405 where her Honour said that:

If clause 10.1(a), properly construed, operated to preclude a winding up of the scheme without the consent of all unitholders to the sale . . . whatever avenue were to be adopted to obtain a winding up order, so as to lock unitholders into the scheme, then I would have considered such a clause to be contrary to the legislative intent of ss 601NB and 601ND. (That said, I do not construe clause 10.1(a) as operating in its terms necessarily to preclude a sale occurring in the context of a winding up whether or not the clause applies during or after the ongoing operation of the scheme.)

Then at paragraph 56 on page 406, her Honour said that she noted and thought there was force in Mr Cosgrave’s submission – he was acting for our side of the matter:

that had the parties intended to prohibit a unitholder from moving to wind up the scheme without the prior written consent of the unitholders . . . then they could have done so.

You will see an observation in the last four lines of that paragraph about clause 10.1(a). Finally, in relation to her Honour’s reasons at page 428 in paragraph 127, you will see in the second line – the part in brackets really:

given my construction of clause 10.1(a) as not, in its terms, precluding an indirect sale on a winding up in accordance with a s 601NB resolution pursuant to 601 NE).

The Court of Appeal, your Honours, dealt with this in two passages, first of all at page 459 in paragraph 44 where there is a quotation from paragraph 57 and then his Honour said at the last two lines:

I agree with this construction of cl 10.1(a).

Then, your Honours, in paragraph 46 on page 460 you will see the last two lines of paragraph 45:

Clause 10.1(a) was not directed to preventing any sale in accordance with cl 17.5.

Your Honour, it is in those circumstances where we would submit the observations made as to the effect of clause 10.1(a) are correct. If one makes that assumption, one then goes to clause 16.2 at page 136. What your Honours will see is that clause 16.2 speaks of voting rights as unitholders under the deed and says that such voting rights are to be exercised:

so as to most fully and completely give effect to the intent and effect of the provisions –

of the agreement. Your Honours, essential to the operation of clause 16.2 is the need to identify the provisions of the agreement - and I will come to that in just a moment – from which the intent and effect there referred to is to be derived. Your Honours, in that regard, if one goes to what was said about this by the Court of Appeal at page 459 in paragraph 43, their Honours said at clause 16.2 - and then they paraphrased it the first sentence and they said:

The earlier reference to “intent and effect” confirms that “provisions” is used to refer to clauses or other parts of that Agreement . . . Although the particular clause relied upon by Westfield is cl 10.1, as it points out, the meaning of that clause must be determined having regard to all of the provisions of the Agreement and the circumstances in which it was made . . . The “intent” of a provision is its meaning determined objectively –

and they went on to say what was meant by the effect of it. Their Honours, in our submission, were correct in their statement of the principles applicable in that part of it. Could I then go to the discussion of the application of those principles which your Honours will see in paragraphs 45 through to 50? Could I invite your Honours to note, however, particularly paragraphs 49 and 50, where having – perhaps I should just go back to paragraph 48. Their Honours referred to the intent and effect of clause 10.1(a) and then said:

the “intent and effect” of cl 10.1(a) does not include to prevent a sale of the property following a determination of the Trust, irrespective of how that determination comes about.

Your Honours, that, in our submission, is correct and there is no other provision, if one goes to the terms of the agreement, which says that this agreement will continue to go on and is incapable of being determined by the exercise of statutory powers.

FRENCH CJ: You would say, would you, that the notion of completely give effect to the intent and effect of the provisions means, or at least includes within the obligation it describes, not exercise their voting rights inconsistently with any of the provisions of this deed?

MR JACKSON: Your Honour, I would accept that. Could I just say for the moment - - -

FRENCH CJ: And that is sufficient for the purposes of your argument, is it not?

MR JACKSON: It is sufficient for that purpose. Clause 16.2, it has been held, is capable of including rights under statute. That, I think, has not been the subject itself of a notice of contention or capable of being. The question, however, is what that means in its application in particular circumstances. What we would say is that if one looks at the intent and effect of the provisions of the deed – and whether one does so by looking only at 10.1(a) or by looking at the provisions of the agreement as a whole – one does not see that there is any provision of it which is designed to exclude the possibility of the arrangement being brought to an end by the exercise of voting powers under 601NB. Your Honour, I am sorry; it is a long answer to your Honour’s question, but that is what I was seeking to convey.

Your Honours, could we just say also two further things about that? When one is looking at the intent and effect of the provisions of the deed, which is the term that is used – it refers to provisions – no doubt it is possible to look at the document as a whole or the provisions and no doubt it is possible to look at particular provisions. In the end, one has to derive from the provisions of the deed the intent and effect relied upon. That is the first thing. The second thing, your Honours, if I could go back to page 461 - - -

FRENCH CJ: One has to derive a proposition capable of expression for present purposes in terms of the parties “will not”.

MR JACKSON: Yes, your Honour. I will come to this when dealing with clause 18 and the operation of it. Our learned friend’s argument has to come down to saying that they are given, by clause 16.2, a right to prevent the exercise of a voting right under 601NB because of 16.2.

If your Honours would go to paragraph 49 of the Court of Appeal’s reasons at page 461. Your Honours, we would submit that in the circumstances, if one goes to about the fifth line of that paragraph, their Honours were right in saying:

Clause 16.2, by use of the expression –

there quoted –

does not require any more than that full and complete effect be given to cl 10.1(a).

Your Honours, if one sees the remainder of paragraph 49 and paragraph 50, what we would say is that the Court of Appeal was perfectly correct in its analysis of the operation of clause 16.2 going over to the other provisions of the document.

Your Honours, at paragraph 51 at page 462, the Court of Appeal referred to the argument that this was:

a closely held unit trust business structure, designed for the ownership and operation of a major retail shopping centre –

and they went on to say, your Honours, in our submission, correctly –

It does not, however, address the question in this appeal as to the construction of cll 10.1 and 16.2 and their operation in the circumstances of a proposed resolution under s 601NB.

In our submission, that was correct. Your Honours, one may accept, as I submitted earlier, that there was to be a closely held unit structure, but it does not follow that it was to last forever, and forever beyond the termination of the trust after 80 years or the earlier death of the last survivor – I have forgotten which king.

Your Honours, the fact that there are provisions such as clause 7 at page 124 and Schedule 2 at page 147, they deal with the position while it is operating, and the fact that there are those provisions does not mean that an intention that it will last for a very long time without the possibility of intermediate termination is to be inferred.

If I could just go back, your Honours, to clause 7 – page 124, I think it is, your Honours – at page 125, emphasis was placed by our learned friends upon clause 7.4(d) and other paragraphs in that provision, but each of those is prefaced, your Honours, by the words “with respect to the management of the Trust”, and they are speaking about ongoing matters.

Your Honours, could we refer, in relation to the matters that I have just been submitting, to our written submissions, paragraphs 23 to 30. They set out perhaps a little more fully, but perhaps I should add a little more succinctly, our submissions on these issues. I draw your Honours’ attention also to paragraph 31 and the proposition we have in the opening sentence of paragraph 41, which is developed later in that and, your Honours, paragraph 32 of the same document is one where we seek to express a little more fully the proposition that if the rights under section 601NB were to be and could be excluded, rather clearer language should be used.

Your Honours, in reality on the construction question, the appellant’s argument, in our submission, gives clause 16.2 an operation which, to put it shortly, can be derived, if it is to be derived at all, from no provision of the agreement other than clause 10.1(a), but it suffers from the difficulty that the present circumstances are ones where clause 10.1(a) has no operation. Could I turn, then, your Honours, to the legislative provisions a little more fully.

I referred earlier to the ambit of section 601NB. I took your Honours to the fact that the scheme originally had more members than two and the terms of the trust contemplated the possibility of listing and we have referred to the relevant provisions in that regard in our written submissions at paragraph 35, footnote 17. I think we should also have added clause 18.4(1) at page 68.

Your Honours, turning then back to 601NB, on it becoming part of the legislation, it provided the procedure whereby unitholders could bring a registered scheme to an end without the need to demonstrate that a suitable ground for winding-up by the court existed. One then sees that a winding-up brought about by a resolution under 601NB then brings about a winding-up in accordance with 601NE(1)(b).

Your Honours, the history leading to section 601NB, in our submission, is against the notion that the legislation, or the intention being manifested by the legislation, was that the rights conferred by 601NB – that is, the right to seek the meeting and to vote at it as one chose – may be the subject of contract. Your Honours, we have summarised the history in our written submissions.

FRENCH CJ: Is that on the basis of its protective origins?

MR JACKSON: Yes, your Honour, it is. It is protective in a number of senses or a number of circumstances. What I mean by that is that, as I said before, there can be registered schemes which have few or many members of them and people in them can be big investors or small investors. There can be forms of mismanagement by responsible entities; there can be forms of management with which members disagree. There can be unhappiness at the amounts that come by way of distributions or decline in value of the units in circumstances where they may be listed. There is a variety of circumstances where unitholders may wish simply to bring it to an end whether to avoid loss, further loss or any other economic consequence.

There may, of course, be just a kind of obsolescence that comes about with a type of trust when it is – if one took a shopping centre when there is a population movement away from it, things of this kind, time to bring it to an end, people say, let us vote on the question. But it is protective in the sense that it protects investment from the activities of others and it protects investment in its economic sense. Your Honours, that is what makes it in a sense unlikely that the right given to do those things is something which should be capable of being dealt with. It is one of a bundle of rights that you can sell off.

I was going to take your Honours to the history leading to the introduction of Part C which we have summarised in our submissions in paragraphs 37 and following. May I endeavour to put in in this way, giving your Honours the relevant references? Your Honours will see that, as we referred to in paragraph 37(a), there were prescribed interest provisions in the uniform Companies Act in 1962, the 1981 Companies Code or the Code brought about by the Commonwealth Act, an adoption of it, and the 1991 Corporations Act.

We have set out in paragraph 38(a) the relevant provisions. Each of those provisions is contained in the book that the Court should have, which is entitled “Respondent’s List of Authorities”, and those enactments are in the first few parts of it. Could I go, your Honours, behind tab 1? You will see, speaking about the Companies Act, as it was, a reference to section 76 which was the relevant definition section for that part of the Act. You will see the third definition being that of an interest. Then one goes over to the page numbered 88 at the bottom, the page with a number 88 – I think it is the section number. The top of the page is 621. The section is 87(1). You will see, your Honours, that it said:

Where the management company under a deed is in liquidation or where, in the opinion of the trustee or representative, the management company has ceased to carry on business or has, to the prejudice of holders of interest to which the deed relates, failed to company with any provision of the deed, the trustee or representative shall summon a meeting of the holders.

Then in paragraph (4) there is provision for a resolution:

passed by a majority of not less than three-fourths in value of the holders of the interests present –

and they can say that it should be wound up. Now, your Honours, there are similar provisions saying the same thing in the two succeeding pieces of legislation and, unless your Honours want me to, I will not go to the individual pieces of them.

What happened then, your Honours, was that there was concern about the adequacy of protection for investors. It resulted in a reference to the Australian Law Reform Commission and to its report which is ALRC 65, and there was an earlier discussion paper, DP 53. Your Honours, if I could go to the actual report which you will find behind tab 5A in that document and, your Honours, at page 8 of that report there is an introductory observation under the heading:

Protection of investors

An essential policy aim

2.4 The principal aim of the Review is to ensure adequate and effective protection for investors.

That is discussed a little in that paragraph. Then, your Honours, if one goes to paragraph 2.11 on page 11, one sees “The role of the investors” discussed, again in fairly general terms. Then if one goes to 8.5, you will see at page 74 it is said that the discussion paper:

proposed that investors should have the right to terminate a collective investment scheme where the scheme operator –

and your Honours will see the three possibilities there referred to. It then went on to say:

The Review now considers that the rights of investors to terminate a scheme should not be so limited. If a sufficient majority of investors wish to terminate a scheme, they should be able to do so. The Review recommends that investors should be able to terminate a collective investment scheme, for any reason, by the vote of the holders of more than 50% of the value of the interests in the scheme –

et cetera. So, your Honours, that resulted in the Managed Investments Act 1998 which introduced Chapter 5C. Your Honours, that Act is again referred to in that bundle. That included section 601NB and, your Honours, as we have said in our written submissions in paragraph 38(c), that section conferred on members of a registered scheme for the first time the right to bring the scheme to an end for any reason, or if I could put it another way, without reason other than the fact that they voted that way.

Now, your Honours, that gives rise to the question raised by I think ground 2 of our notice of contention whether that right, that is the right to vote as one chooses at a section 601NB meeting can be contracted away, or one can put it in various ways but can the persons who are unitholders agree that they are not to have the right conferred by section 601NB, that is the right to vote as they choose at the time, a power to vote as they choose as the occasion arises.

Your Honours, we would submit it is a case where the observation – and if I could just refer very briefly to what has been said in a number of decisions, including most recently I think Miller v Miller, dealing with this general topic, but if I could go first to what was said by Chief Justice Mason and Justices Gaudron and McHugh in Caltex Oil (Australia) Pty Ltd v Best [1990] HCA 53; (1990) 170 CLR 516 at page 522.

At page 522 this was a case where there was an express provision against contracting out, but their Honours went a little further. Your Honours will see in the paragraph in the middle of the page of 522 they said in the third line:

The most obvious and direct form of contracting out of a statute is the case in which a party covenants under seal or agrees for valuable consideration not to make a claim for a benefit for which the statute provides . . . But contracting out of a statute is not limited to cases in which a party simply foregoes or waives a benefit directly conferred . . . Contracting out may take many forms. They will vary with the nature, subject-matter and object or purpose of the statute –

et cetera. Your Honours will then see that in the next paragraph they refer to:

An express statutory prohibition against contracting out . . . Inconsistency between contract and statute is not confined to literal conflicts or collisions between the contractual provisions and the statutory provisions. Inconsistency in this context arises whenever there is a conflict between a contractual provision or the operation of such a provision and the purpose or policy of the statute.

Your Honours will see the effect set out in the last four lines of that paragraph. Your Honours, to similar effect were the observations of Justice Windeyer, though in dissent as to the ultimate result, within a passage which was picked up by the Court of Appeal in this case in Brooks v Burns Philp Trustee Co. Ltd [1969] HCA 4; (1969) 121 CLR 432 at 456 in the first new paragraph on the page. The relevant part of it, your Honours, was where his Honour said – I will not read it out, but it starts at the start of the first new paragraph and it goes through to the reference, “This has been long recognized : see Graham v. Ingleby”. Your Honours, we would refer in particular to the observation:

the policy and purpose of the statute may shew that the rights which it confers on individuals are given not for their benefit alone, but also in the public interest, and are therefore not capable of being renounced.

Your Honours, we would submit there is a public interest in rights of the nature given by 601NB, being ones that exist, because people may be unitholders or may have to remain as unitholders in a practical sense for years in circumstances where it is not to their advantage or to the public advantage to have schemes of particular kinds go on and go on without the ability to bring them to an end except by the use of the provisions of, say, section 601ND. We would submit that the right to vote in that sense is one of those rights.

Finally, your Honours, in this regard, could I take your Honours to the more recent decision in Miller v Miller [2011] HCA 9; (2011) 242 CLR 446, and commencing at paragraph 24 on page 457. In the joint reasons of six members of the Court it was said, in the second line of that paragraph:

Often enough, however, the statute in question does not expressly prohibit the making of the relevant contract and does not expressly prohibit its performance. Whether such a statute “prohibits contracts is always a question of construction turning on the particular provisions, the scope and purpose of the statute”.

Then in the next paragraph, 25:

But in addition to, and distinct from, cases where a statute expressly or impliedly prohibits the making or performance of a contract, are cases “where the policy of the law renders contractual arrangements ineffective or void even in the absence of breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text”. In cases of the latter kind the refusal to enforce the contract has been held to stem –

and your Honours will see the passage referred to there –

“ . . . primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable.”

FRENCH CJ: I think there was some discussion of that question also recently in Equuscorp vHaxton.

MR JACKSON: Yes, I am sorry, your Honour, that is so, yes. Your Honours, could I just say this that we would submit that the policy to be derived from the relevant provisions of the Corporations Act is that which we have set out in our written submissions in paragraphs 48 and 49 and, in particular, in the third line of paragraph 48, we would submit that the policy has the element, firstly, that investors in all registered managed investment schemes should have the protection of certain rights publicly stipulated by statute. Others can be left to private arrangements and one publicly conferred right for the protection of investors is a right to call a meeting and vote on whether the scheme should be wound up.

Now, your Honours, we elaborate upon that in paragraph 49 and could we add a reference to the first sentence of paragraph 50, it is a law of general application which must be capable of being consistently and practically applied to all kinds of registered managed investment schemes in accordance with the policy of the Act. It does not affect it that we are – both sides are not impoverished.

Could we say, your Honours, that the errors below on this issue - and I wanted to go to the reasons for judgment on the courts below in relation to this - the errors, in our submission, can be seen first in the reasons of the primary judge commencing at page 424 paragraph 116. Your Honours will see in paragraph 116 about line 25 that there is a submission by a Mr Jackman who is acting for the present appellants:

submits that whether one can contract out of, or limit by contract, a statutory right, hinges on the scope and policy of the particular statute –

Your Honours will see the arguments rehearsed, as it were, in paragraphs 119 to 121 and the judge commences to express her own views on the topic at paragraph 122.

Your Honours, at paragraph 122 her Honour appears to have taken the view that if it were being contended that there was an agreement not to seek a winding-up in any circumstances without the consent of the unitholders, that contention would go too far and it would do so because it would offend the public policy to which her Honour referred in the last five lines of paragraph 122.

If one goes then to paragraph 124, the views that her Honour expresses there appear to be ones saying that there were policy considerations which would prevent effect being given to contractual provisions which would prevent winding-up on the grounds of, say, insolvency or the just and equitable ground or perhaps other grounds.

Staying with paragraph 124 for a moment, at the top of page 427 her Honour adverted to the fact that there may be nothing offensive in an agreement which is temporal in nature not to wind up for a certain time. Our learned friends have put a submission along those lines also in their reply submissions in paragraph 13. I am going to come back to that, your Honours, and may I do so in a moment or two.

Your Honours, one goes then to paragraph 126. What her Honour said there was that the right to vote was not lost, but it may be that simply the member has bound itself in some circumstances not to exercise it or perhaps not to exercise in a particular way. Your Honours, that is literally true. However, that does seem, with respect, something of a distinction without a real difference. If the contract is not to exercise the statutory right then the statutory right, in effect, has been lost or bargained away – the ability to do it has been bargained away.

In the end, the judge’s view seems to be bound up in the conclusions one sees at paragraph 127. Your Honours, that seems to involve these elements – first, that there is not, and her Honour’s earlier discussion seems to suggest that there could not be, a restraint on the ability to call the meeting for the 601NB purpose. But there may be a valid restraint on the exercise of voting power at such a meeting. That is because other means of winding-up, which cannot be bargained away, would remain available.

Your Honours, we would submit that that approach should not be accepted and it should not be accepted because it suffers from some deficiencies, with respect. The first thing is, we would say, that it is a rather curious division of the rights under 601NB into two parts. You can participate in calling a meeting to vote on whether the scheme should be wound up but you cannot vote on the issue at the meeting. Secondly, your Honours, very significantly, it does not seem to reflect the history of 601NB and the reasons for its inclusion. It rather puts one back in a situation, rather akin to that before the inclusion of Part 5C.

Your Honours, this issue in the Court of Appeal was dealt with at page 462 commencing at paragraph 53. It was not, of course, necessary strictly for the Court of Appeal to deal with it because they were deciding for us on other grounds but your Honours will see at paragraph 53, part of the passage of Justice Windeyer from Brooks v Burns Philp is referred to. The approach then taken by the Court of Appeal appears in paragraphs 54 and 55.

Your Honours, if one goes to paragraph 54, it appears again to be accepted that clause 16.2, or an agreement in the form of 16.2, would not prevent the calling of the meeting under 601NB but that the right to vote as the unitholder chose could be bargained away or contracted away at the time. At paragraph 55 the Court of Appeal also placed weight on the fact that there were other sections of the Act available which might lead to a winding-up. But, your Honours, the absence of the ability to wind up otherwise than by reference to provisions of that kind appears to be, if I could use the perhaps old word “mischief” which led to the introduction of section 601NB and, your Honours, for the reasons we have submitted earlier that reasoning should not be adopted.

Your Honours, I put off for a moment dealing with a submission of our learned friends in their reply paragraph 12 and following. I am going to go to paragraphs 12, 13 and 14 of their reply. May I start with paragraph 12, dealing with the statutory history? What is set out there, in our submission, gives a very, very narrow operation to section 601NB. The submission made is that:

It demonstrates no more than that the legislature was concerned to protect unitholders from misfeasance by managers or trustees, rather than circumscribing agreements –

et cetera. Your Honours, the first thing is that leaves out of account the fact that removal of a responsible entity is already specifically dealt with by section 601FM, and section 601NB has a wider and more significant operation, and it is not limited to that class of case.

The second thing, your Honours, I want to refer to is paragraph 13 of the reply, and this is the example given to demonstrate the un-commerciality, as it were, of our contention that one cannot contract out of 601NB. Your Honours will see the example that is referred to in paragraph 13 of the reply. What one needs to bear in mind is that it is a case where the contract was between vendor and purchaser of interest in a scheme and as a contract regulating the position where, to use if I could for a moment, your Honours, without falling into too many holes, a legal equitable distinction, the purchaser is in effect the equitable owner of the unit, and is using its entitlement as such to direct the legal owner as to rights attaching to the unit in the period between, to use another phrase, contract and conveyance. It is not remotely akin, with respect, to an agreement of deed between unitholders of the nature for which the appellant contends.

Your Honours, there is no particular reason, in our submission, for adoption of the view that the rights in question are, or can be, freely traded, as it were. Could I come then, your Honours, to clause 18 and, your Honours, that is an issue raised by the notice of contention at page 473, paragraph 1. You will see the reference to clause 18. The argument which we put, to put it shortly, is that clause 18 of the joint venture agreement made it apparent that rights provided for by provisions such as 601NB remain available. May I go immediately to page 136, where one sees clause 18. Your Honours, if one looks at the words used in clause 18, the clause provides:

The rights, powers and remedies provided in this deed –

have, in a sense, two qualities; first they are “cumulative with” and secondly –

not exclusive of the rights, powers or remedies provided by law independently of this deed.

FRENCH CJ: Assuming your construction of 16.2, for which the appellant contends, is 16.2 concerned with the right, a power or a remedy?

MR JACKSON: Your Honour, without seeking any Hohfeldian approach to the matter, your Honour will recall that this is a case based on a claim for an injunction based on a right said to be conferred, pursuant to clause 16.2, the right being one to have each unitholder exercise a voting right in a particular way.

So, your Honours, certainly 16.2 casts an obligation on unitholders but there is a correlative right on the appellant’s argument in respect of the other unitholders. So it falls directly, in our submission, within the concept of a right referred to in clause 18.

Your Honours, if one goes to section 601NB, without taking your Honours to the words of it, your Honours, we would submit that the rights given to a unitholder by that provision also have two qualities. One is that the right is one provided by law, and if one looks at clause 18, the expression “provided by law” seems particularly apt to describe a right provided by statute law. That is the first thing.

The second thing is that it is a right provided independently of this deed. Now, your Honours, could I just say that the language actually used in clause 18 might not be entirely the purist or pedant’s choice, in the sense that perhaps a better choice of words might have been cumulative upon or something of that nature. But what we would submit is that clause 18 is endeavouring to convey that the rights, et cetera, given under the deed do not exclude rights elsewhere provided by law and, we would submit, that expression “provided by law” seems most apt to refer to rights provided for by statute.

Your Honours, if that is correct, we would submit it is very difficult to say that the right given by section 601NB is intended to be excluded by the deed or that its exercise is in any way picked up or controlled by clause 16. It is something, which as clause 18 says - it is one where clause 18 says the rights in this deed do not exclude, we would say, the rights and powers provided by, to put it shortly, statute.

Now, your Honours, the way in which the argument about clause 18 was dealt with by the courts below was, with respect, unsatisfactory in this respect. The primary judge at page 422 in paragraph 108 made a reference to the arguments about clause 18. You will see that at lines 25 to 36. But, having mentioned the argument, her Honour went on to deal with the argument concerning a different topic, namely whether, as a matter of public policy one could contract out of section 601NB. That is dealt with in paragraphs 109 to 132. She did not come back to the argument about clause 18. So that is where the matter ended at first instance.

In the Court of Appeal the court was referred to clause 18, both in written submissions and in oral argument, but it did not – but decided the case in our favour on other grounds and did not feel the need to refer to clause 18. So that is where the matter lay in the courts below and that is why one does not see much said about it.

Your Honours, if I could go then to clause 20, which you will see at page 137, clause 20 speaks of legislation which operates to vary an obligation or a right, power or remedy in connection with the deed. That is the first task, to identify what is the obligation, right, power or remedy. One asks then where is that to be found? Well, the cupboard is, in our submission, a little bare relevantly. If one looks to see what is the variation that is being affected, the cupboard is again, in our submission, relevantly bare.

Your Honours, if the submission we have made earlier about the terms or the effect of the introduction of 601NB and the rights concerning it are correct, then the exclusion of it by clause 20 would be prohibited or rendered ineffective by law – rendered ineffective by law would probably be the better description of the - - -

FRENCH CJ: Almost reduces to the proposition that any present or future law which varies is excluded except to the extent that it does not.

MR JACKSON: Yes, your Honour, I think that is right. Your Honour, those are the submissions we would make on that. Could I come to paragraph 14 of our learned friend’s submissions in reply, which again deal with ground 1 of the notice of contention?

Your Honours, if one looks at what is said about clause 18, it seems to be saying – so far as one can, if I may say so, work it out – that clause 16.2 is a restriction rather than giving rise to any right or remedy. Your Honours, I have dealt with that in passing, but the appellants themselves contend, as they have to contend, that they have a right, pursuant to clause 16.2, to prevent the respondents from exercising their voting rights under 601NB in a particular way.

Your Honours, may I deal with a couple of matters that have arisen in the course of our learned friend’s argument. I have referred already to what was said about what appears to be a variation, if I can put it that way, in paragraph 4 of the reply in relation to reliance on clause 10.1(a). Our learned friend said in his oral argument that 10.1(a) was – and these are his words – “at the heart of our case”. Your Honour, perhaps there has been a transplant.

One of your Honours asked who requested the meeting – I think your Honour Justice Crennan. One sees in the very early pages of the appeal book two affidavits by Mr Speed, a solicitor for the other side. We were the ones who asked for it, but it is not the case that this is something that has just happened the once. In fact, as appears from the affidavit, there were negotiations that had gone on. In the end the parties were not able to agree. We resiled from doing it the first time. The second time we have done it.

Your Honours, our learned friend referred also to clause 13.1 of the agreement as, in effect, filling the gap but it does not fill the gap that would exist if the provisions of Part 5C.9 were excluded. Could I come then, your Honours, to our notice of contention, ground 3? We have referred to this in our written submissions in paragraphs 54 to 59. May I endeavour to put the point in a number of very short points relating to it? The first is that, your Honours, the parties were capable of making it plain in the agreement when they required unanimous consent or approval to be obtained, and your Honours will see 13.1 at page 135.

If one goes to the default decision-making majority under the agreement, that was unsurprisingly 50 per cent of the total of votes that might be cast even for significant strategic matters within the ambit of the

unitholders’ committee’s powers and you will see that, your Honours, in clause 7 at page 125. You will see the matters they were able to deal with. Then if one goes to Schedule 7, item 10 at page 148, one sees that:

A valid resolution of the Unitholders’ Committee shall require a majority vote in excess of 50% of the total votes that may be cast –

et cetera. Your Honours, then there is a reference in paragraph 11 to the fact that there may be resolutions requiring a greater majority than that.

But your Honours will see that if one goes to item 12 that in the absence of a meeting there can be a resolution in writing signed by those members of the unit committee or the alternate having in excess of 50 per cent, or 75 per cent as required in the particular case, and, your Honours, a resolution so dealt with then has the effect of being binding on all the unitholders. You will see that from item 13 on page 149.

Now, your Honours, the short point we would make is that a resolution of a majority of unitholders consenting to a sale or something of that order is as much written consent of the unitholders, as referred to in 10.1(a), as a written consent in any other fashion would be. Your Honours, if that be accepted, we would say it follows that the injunction could not stand because it proceeded on the basis that the appellant had a right of veto when that was not the case. Your Honours, those are our submissions.

FRENCH CJ: Yes, thank you, Mr Jackson. Yes, Mr Walker.

MR WALKER: Your Honours, a short number of points in order as my friend put them. Under subsection (2) of 601NC it is for the meeting of members to consider and surely then to vote for or against a winding-up. It makes no sense to construe those provisions otherwise than that the responsible entity can proceed to wind up only following the steps, that is what subsection (1) says.

Subsection (2) provides the step of advising the members of the possibility of a meeting and that includes, of course, that there will be a meeting convened in accordance with the referred to provisions and, of course, that involves the notion of not only considering, but also voting for or against. So if there is a meeting upon the members being given such advice then the members may, for example, vote against a winding-up.

Subsection (3) shows, of course, that if there is a meeting whatever its outcome there will not be any power of the responsible entity to proceed. So it can be seen that there is an opportunity there for a vote, if there is a meeting called, and that provides another of these opportunities to which we say 16.2 naturally applies by its comprehensive words. As to 16.2 and contrary to the way my friend put the matter, there are no rights being excluded, there are no statutory rights being excluded by the reading of 16.2, for which we contend – I am trying not to repeat myself in-chief – the right is unaffected. The exercise of the right is something which is able to be traded, that being a valuable aspect of having the right in the first place. In particular, there is no 601NB right, which is excluded by clause 16.2.

As to paragraph 4 of our written submission the passage to which my learned friend went, yes, that is correct. Once one properly gets through a winding-up – through a termination, I should say – and the winding-up requires, as it must indeed as it solely constitutes, in this case, the sale and distribution of sale proceeds then of course 10.1(a) does not require the written consent. The question in this case is whether that anterior step, which consists in reality of determining on a sale, by means of a winding-up, can be controlled by 16.2. I do not wish to repeat what we have said in-chief about that.

My learned friend said in relation to the evident fact that this has been, and is, a tightly held investment project that there could be more members. It is to be recalled that however many one supposes hypothetically the number of members may be increased beyond the present number all of them will be bound, if the rights and obligations are honoured, set up by the agreement between the unitholders, see clause 6.6, the accession or novation provisions to which I drew attention in-chief, and they will be bound to the provisions of 16.2.

BELL J: At this point can I take up with you the point that Mr Jackson makes under his notice of contention with respect to the fact that these schemes may involve large numbers of small investors and the point that there is a protective quality which contemplates the small investors in the scheme. It is the point that he deals with at paragraph 50 of the written submissions. What do you say to that?

MR WALKER: A large number of small investors, of course, is not a circumstance which appears to inform any of the statutory provisions in question in this case. As my friend correctly says, with respect – and this is either for or against me or may be neutral – the words are expressed so as to comprehend a small number of very sophisticated wealthy joint venturers, as is this case, or a large number of the investors somewhat slightingly called “mums and dads”. But the statute does not in its expression and could not in its operation – and this is one of my friend’s points, with respect – alter depending upon the state of affairs in that sociological regard for a scheme which is caught by the terms.

BELL J: The point that I am directing your attention to in paragraph 50 is the suggestion that you might market a scheme with a pro forma provision respecting the waiver of voting rights and that that ends the public policy which is identified by the respondent as informing his contentions to - - -

MR WALKER: Yes. This is what might be thought of the subterranean presence in the argument against us on this contention of the law’s distaste for catching bargains or the law’s suspicion of contracts of adhesion – when I saw “the law” I do not just mean judge-made law, obviously there are many statutes which either, under the rubric of consumer protection or something thought to be related to that as a matter of policy, seeks to prevent, as it were, people bargaining their way out of future positions of freedom of choice.

It has to be recalled that all such legislative responses to such a generalised suspicion are butting up against, and running against, what is otherwise a very strong policy of the law to be seen in judge-made law and largely recognised, not uniformly or universally in statute, namely freedom of contract, and the proprietary nature of contractual rights, property being recognised obviously - - -

CRENNAN J: But what about the mischief, to use the word from - - -

MR WALKER: But the mischief here has nothing to do with people making a bargain or a deal about how to exercise a vote.

CRENNAN J: Well, the mischief is having a fetter or an inhibition on investors of a managed investment scheme being able to wind up should a majority choose to do so.

MR WALKER: We can turn the metaphor around though, your Honour, in the opposite direction. What my friends are really arguing for is a fetter on somebody’s capacity to say, “There is going to be a meeting next month, somebody wants to wind this terrific scheme up. Do you care?” “No, I do not really care”. “Can I induce you by $1000 to give me your vote?” That is not only entirely proper, it is perfectly commonsense self-interest of a proprietary kind that this statute says nothing to expel, nothing to contradict, and the fetter being proposed is a fetter on enjoying the property right.

The statute does not say all and any contracts about how to exercise the vote that the statute says can be had are to be treated with suspicion a priori regardless of the facts as some kind of deemed catching bargain or inappropriate contract of adhesion. They have to say “inappropriate contract of adhesion”, because contract of adhesion in many cases is an entirely convenient, transparent way of making standard terms apparent.

In our submission, one could not contemplate, bearing in mind the way in which people acquire units and by the accessional novation come to agree to the terms of this joint venture agreement, one cannot possibly contemplate that Parliament is saying, whether they are mums or dads or huge capitalist enterprises, one cannot assume that they do not understand that in advance they are agreeing to these matters. Indeed, 16.2 on its face says “your voting entitlements, you have agreed, will be controlled” in the way that 16.2 produces.

So that whether one moves, as the general terms of the statute clearly permit you to move, to test our arguments when there is a whole lot of small investors, or whether you confine it to the particular case which is concrete here, the same thing follows that the statute says nothing about the making of a contract about how to cast the vote. That is why one then asks, well, does the statute, having said nothing about the making of contracts about how to cast the vote, does it say anything about a subcategory of cases where a contract might be made, that is, in advance and in general terms. The answer is absolutely not, a fortiori, not.

My friend answered a question or an observation by Justice Crennan about 10.1(b) in a way that again we would seek to turn round in the opposite direction. Clause 10.1(b), in our submission, rather shows on its face the very explicit and advertent linking by these parties, these joint venturers, of sale and winding-up.

The Chief Justice proposed to my friend for consideration the notion that within the 16.2 concept of more fully and completely giving effect to the intent and effect of the provisions of the deed was as a matter of interpretation a promise not to act inconsistently by voting with the provisions of the deed. Obviously if you did so, you would be in breach of 16.2; I think that must be common ground if 16.2 means anything according to the respondents. But it plainly is not the full extent of 16.2 and we would urge against it being the full extent of 16.2 because, if that were its full extent, it is not adding anything to the promises found in the provisions of the deed other than 16.2.

FRENCH CJ: I think I put it to Mr Jackson on the basis that on his argument that proposition was sufficient.

MR WALKER: It is sufficient for him if he shows it is not inconsistent with 10.1(a) and, of course, I accept that logic.

FRENCH CJ: Yes, that is right.

MR WALKER: Yes, that is true. But in relation to the full extent of 16.2, we certainly do contest the proposition that it is nothing more than a belt and braces “you have to avoid breaching the other provisions of this deed when you come to vote”.

My friend took up the protective intent of 601NB and the related provisions in such a way as to characterise the interest that Parliament was intent on protecting as including the right to seek a meeting and to vote as the member chooses, so this idea of a choice. The argument did not explicitly continue thus but it must be that the premise to the argument is, “and that what we are doing is anti-choice”.

But that is not what a contract about the casting of a vote does. It does not abolish choice. It is an exercise of choice. Whether it is an ad hoc matter for a particular meeting as already called or whether it is in advance for a class of meeting that may or may not ever be called, it is a choice one exercises. You get value there and then from exercising that choice. There is no inconsistency with voting as you choose in voting therefore as you have agreed to do so by contract, there being liberty – that is, choice of contract.

The protection really of 601NB, as one sees from the provisions of 601NA as well, is against what I might call the entrenchment of or the domination or the domineering of members by a responsible entity and 8.5 in ALRC 65, to which my learned friend went, certainly does not suggest, in its terms, let alone in legislative enactments that might be seen to have emanated from that general project to amount to a ban on agreeing how one would exercise the vote that has been given.

In relation to Caltex there simply is no equivalent in this case in the legislation in question here of what was in that case section 7 of the Petroleum Retail Marketing Franchise Act, which was an anti-contracting Act avoidance provision. What the Court of Appeal or Justice Meagher wrote in paragraph 54 of his Honour’s reasons, appeal book 463, to which my learned friend went, is, with respect, correct and we adopt it and urge it as describing the legitimate effect of a provision such as clause 16.2.

My learned friend’s argument apropos our example of the vendor agreeing so as to get value in the bargain with a purchaser as to how a vote would be exercised between contract and completion, which is commercially not only normal, but as a matter of prudence obviously very important, is not dealt with by my learned friend saying, well, the vendor/purchaser position is different from unitholders inter se. A promise imposing an inhibition on how a right will be exercised is so by whatever means, that is by contract with whomever one imposes it.

To put it another way, if it were truly the case that the statute yields this intention that there be absolutely no prior contractual or no contractual inhibition at all, then it surely would not matter with whom that contract would be made. Otherwise, of course, there would be the most obvious forms of evasion available by which third parties could helpfully drive a bargain with a member as to how the vote may or may not be cast. Rather, that reveals that there is simply no statutory intention of the kind that the general principles discussed in general terms in Miller v Miller, for example, attach to in this case so as to invalidate 16.2.

Finally, the clause 18 argument, in our submission, fails to point out in which way there is any exclusion by the provisions in question of the statutory right to vote. There is a recognition of the statutory right and a giving of value to it by enabling it to be bargained for. It certainly does not – my friend’s argument certainly has not given any weight to the notion of accumulation involving the idea that each element being accumulated still operates.

As to clause 20, what my learned friend said, with respect, is right. Clause 20 does not apply in this case. We are not pointing to any so-called supervening legislation. We call it in aid only because you must see it as part of the context in which clause 18 is agreed between the parties. As I think I said in-chief, it shows an intention to go as far as one can to have this agreement govern their relations. May it please the Court.

FRENCH CJ: Yes, thank you, Mr Walker. The Court will reserve its decision. The Court will adjourn until 9.30 tomorrow morning in Canberra and 9.30 tomorrow morning in Sydney.

AT 12.58 PM THE MATTER WAS ADJOURNED