Court of Appeal Supreme Court New South Wales Medium Neutral Citation: AMP Capital Property Nominees Ltd & Anor v Westfield Management Ltd [2011] NSWCA 386 Hearing dates: 18 November 2011 Decision date: 14 December 2011 Before: Giles JA at [1] Campbell JA at [2] Meagher JA at [3] Decision: (1)Appeal allowed. (2)Set aside the orders made by Ward J on 1 September 2011. (3)Order that the summons be dismissed and that the respondent pay the costs of the summons. (4)Order that the respondent pay the appellants' costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CORPORATIONS - managed investment scheme - appeal from final injunction restraining unitholder in registered management investment scheme from voting for an extraordinary resolution to direct the winding up of the scheme pursuant to s 601NB of the Corporations Act 2001 (Cth) - construction of provisions of trust deed constituting scheme and unitholders' agreement - whether unitholder can by contract fetter or forgo right to vote at s 601NB meeting CONTRACTS - construction and interpretation - "intent and effect" of provisions - whether provision fettering exercise of right to vote unenforceable as contrary to Act or public policy Legislation Cited: Corporations Act 2001 (Cth) Corporations Law (Cth) Cases Cited: Beaufort Developments (NI) Ltd v Gilbert Ash NI Ltd [1999] 1 AC 266 Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 Brown v The Queen (1986) 160 CLR 171 Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 Felton v Mulligan (1971) 124 CLR 367 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2002) 210 CLR 181 Nullagine Investments Pty Ltd v The Western Australian Club Incorporated (1993) 177 CLR 635 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522 Zurich Australian Insurance Ltd v Metals & Minerals Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 Category: Principal judgment Parties: AMP Capital Property Nominees Ltd (First Appellant) UniSuper Ltd (Second Appellant) Westfield Management Ltd (Respondent) Representation: Counsel D F Jackson QC, M I Borsky, W A D Edwards (Appellant) I M Jackman SC, J A C Potts (Respondent) Solicitors Allens Arthur Robinson (Appellant) Speed & Stracey (Respondent) File Number(s): 2011/262574 Decision under appeal Citation: Westfield Management Ltd v AMP Capital Property Nominees Ltd & Anor [2011] NSWSC 1015 Date of Decision: 2011-09-01 00:00:00 Before: Ward J File Number(s): 2011/262574 Judgment 1Giles JA : I agree with Meagher JA. 2Campbell JA : I agree with Meagher JA. 3Meagher JA : The KSC Trust (the Scheme or Trust ) is a managed investment scheme registered under Part 5C.1 of the Corporations Act 2001 (Cth) (the Act ) and was as at October 2000 registered under Part 5C.1 of the Corporations Law . The principal asset of the Trust is the Karrinyup Regional Shopping Centre in Perth, Western Australia which has a current value said to be in excess of $500 M. The first appellant, AMP Capital Property Nominees Ltd ( AMPCN ) is the holder, as nominee for the second appellant, UniSuper Ltd ( UniSuper ), of two-thirds of the units in the Trust and the respondent ( Westfield ) is the holder of the remaining one-third of those units. AMP Capital Investors Ltd ( AMPCI ) is trustee of the Trust and responsible entity of the Scheme. The question in this appeal 4The question in this appeal is whether AMPCN and UniSuper should be restrained from exercising their voting rights at a meeting of unitholders called under s 601NB of the Act to vote in favour of a resolution directing AMPCI as responsible entity to wind-up the Scheme. 5AMPCI, AMPCN, UniSuper and Westfield are parties to a Unitholders' and Joint Venture Agreement dated 30 October 2000 ( Unitholders' Agreement ). Clauses 10 and 16.2 of that Agreement provide: "10. Sale of Property and acquisition of additional investments Sale of premises 10.1 (a) 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. (b) On completion of the sale of the Property, or if part of the Property has already been sold, the completion of the sale of the remainder of the Property, AMPAM, in its capacity as responsible entity of the KSC Trust, shall thereupon determine the Trust unless otherwise directed by the Unitholders. Acquisition of additional investment 10.2 AMPAM, in its capacity as responsible entity of the KSC Trust, shall not without the written consent of the Unitholders acquire any investments other than the Property or for the short-term investment of liquid funds." "16. Exercise of rights 16.1 ... Exercise of Voting Rights 16.2 Each and all of the Unitholders mutually agree that they will so exercise their respective voting rights as unitholders under the Trust Deed so as to most fully and completely give effect to the intent and effect of the provisions of this deed." 6Section 601NB provides: "If members of a registered scheme want the scheme to be wound-up, they may take action under Division 1 of Part 2G.4 for the calling of a members' meeting to consider and vote on an extraordinary resolution directing the responsible entity to wind-up the scheme." The reference to an "extraordinary resolution" in the context of a registered managed investment scheme, in which the relevant "interests" are units in a unit trust, means one passed by votes of unitholders who together hold at least 50 percent of the units in the scheme. 7The primary judge (Ward J) held that on the proper construction of cll 10.1 and 16.2, AMPCN was prohibited from voting in favour of the proposed winding-up resolution in the absence of Westfield's prior written consent to the sale of the shopping centre because the necessary effect of the winding-up resolution would be to cause a sale of the shopping centre in the winding-up of the Trust without Westfield's written consent: [7]. The primary judge also held that such a prohibition was not inconsistent with the winding-up provisions in Part 5C.9 of the Act or otherwise unenforceable as a matter of public policy: [8]-[10]. On that basis, the primary judge made an order in the following terms: "The [appellants] be restrained from voting for the extraordinary resolution notified pursuant to the notice dated 10 August 2011 to wind-up the KSC Trust pursuant to s 601NB and 601NE of the Corporations Act 2001 (Cth) without the prior written consent of the [Respondent] to the sale of the Property, as defined, of the Trust." 8This appeal by AMPCN and UniSuper is from that decision and order. Other relevant provisions of the Trust Deed and Unitholders' Agreement 9Before addressing the specific issues raised by the appeal, it is necessary to say something about the other relevant provisions of the Trust Deed and Unitholders' Agreement. 10It was in issue before the primary judge but not before this Court that the Trust Deed was the document which contained the constitution of the Scheme: [85]; see ss 601GA, 601GB of the Act. The Trust Deed contains provisions concerning the nature of a unitholder's interest (cll 8, 9), the transfer of units (cl 13), withdrawal or redemption requests (cl 16), the termination of the Trust (cl 17), the management and investment of the Trust fund (cll 18-20), distributions to unitholders (cl 22), the remuneration, obligations, powers and liabilities of the responsible entity (described as "Manager") (cll 25, 28-30) and meetings of members (cl 31). 11Clause 17 provides that the Trust may be "terminated" by the responsible entity on written notice (cl 17.1) or in "special circumstances" (cl 17.4). It also provides that the Trust "shall be terminated" in the event that the office of Manager becomes vacant and a new Manager is not appointed within a stipulated period (cl 17.2). Clause 17.5 then states: "Upon termination of the Fund the following provisions shall have effect: (a) ... (b) The Manager shall as soon as practicable realise the whole of the Fund and convert the same into money and ... shall divide the net proceeds of sale ..." Any sale of property and division of proceeds has to be completed "as soon as is reasonably practicable". However, the responsible entity/ Manager is entitled to "postpone the sale of any asset" where it is of the view that to do so would be in the "best interests of Unit Holders": cl 17.6. Westfield submits that the consequence of these provisions is that the necessary effect of a resolution directing the winding-up of the Trust would be to cause a sale of the shopping centre: [7], [36]. 12The power of the responsible entity to sell or dispose of the main undertaking of the Fund is limited by cl 19.14 which provides: "Except upon the determination of the Fund, any sale or disposal of the main undertaking of the Fund shall be subject to the prior approval of the Unit Holders pursuant to an Ordinary Resolution passed at a meeting of Unit Holders in accordance with the provisions of this Deed, provided that any person who may benefit (in a capacity other than as a Unit Holder) from such sale or disposal and any person who is an associate of that person, shall not vote on the resolution." 13The Unitholders' Agreement records that the "Trust is a managed investment scheme under the Corporations Law ": Recital C; and contains an acknowledgement that it was entered into "to record the arrangements between [the unitholders] in relation to the Trust": cl 1.4. To the extent that there is any inconsistency between its provisions and those of the Trust Deed, the provisions of the Unitholders' Agreement prevail: cl 30.4. At the time the Agreement was executed there were three unitholders, two of whom each held one-quarter of the units in the Trust with the third holding the remaining one-half of those units. One of the unitholders holding one-quarter of the units was AMPCI (then named AMP Henderson Global Investors Ltd) which was also the responsible entity: [13], [14]. Westfield and AMPCN later acquired units in the Trust and acceded to the terms of the Agreement by deeds dated 30 January 2008: [15]. 14The Unitholders' Agreement contains restrictions on the disposition of units except in circumstances which permit mortgages and transfers to nominees or approved transferees. It also provides unitholders with rights of pre-emption in the event that another unitholder wishes to sell its units: cll 3, 4, 5 and 6. 15The Agreement established a Unitholders' Committee which is required to "review, consider and make determinations on substantive issues with respect to the management of the Trust". Those matters include "all proposals and recommendations from the Asset Manager relating to the acquisition, disposal, management or development of assets of the Property". The "Property" is the Karrinyup shopping centre "including any land subsequently owned or acquired by the Trust and intended to be held and used as part of the Property from time to time": cl 30.1. Thus, Westfield argues that by the terms of the Unitholders' Agreement, the unitholders have agreed that subject to cl 10.2, which permits the acquisition of additional investments, the purpose of the Trust is the holding, management and operation of that shopping centre. Part 5C.9 of the Act 16Chapter 5C of the Act, as did Chapter 5C of the Corporations Law , regulates managed investment schemes and includes provisions for registration of managed investment schemes, the obligations and duties of responsible entities, the constitution of such schemes and, by Part 5C.9 the winding-up of those schemes. That Part provides that a scheme may be wound-up if required by its constitution (s 601NA), if the responsible entity is directed to do so by a resolution of members (s 601NB), if the scheme's purpose is accomplished or cannot be accomplished (s 601NC), or by order of the Court in circumstances which include that the Court "thinks it is just and equitable" to make such an order (s 601ND(1)(a)) or where execution or process on a judgment or order obtained in favour of a creditor against a scheme's responsible entity has been returned unsatisfied (s 601ND(1)(b)). 17The Court also may make orders and directions as to how a registered scheme is to be wound-up: s 601NF(2). Section 601NE(1) requires the responsible entity to ensure that a scheme is wound-up "in accordance with its constitution" and any orders or directions made under s 601NF(2). In support of its argument that a sale is a necessary consequence of a winding-up, Westfield relies upon cll 17.5 and 17.6 of the Trust Deed as provisions which the responsible entity is required to comply with under s 601NE(1)(b). The issues before the primary judge and on appeal 18Westfield's argument before the primary judge and this Court was that it would be a breach of cl 16.2 for a unitholder to exercise its voting power to direct a winding-up of the scheme if that would inevitably lead to a sale of the shopping centre without the consent of all of the unitholders, because to do so would not be to act so as to "most fully and completely give effect to the intent and effect" of cl 10.1: [39]. The primary judge accepted that argument: esp [7], [106]. 19The argument raises a number of questions concerning the interpretation of cll 10 and 16.2 of the Unitholders' Agreement. The principal question is what is the "intent and effect" of cl 10.1 (that being the provision of that Agreement relied upon) which cl 16.2 requires must be "fully and completely" given effect to by the exercise of voting rights. A related question, which arises from the way this principal question was argued and decided, is whether cl 16.2 requires that the voting rights be exercised as contended for by Westfield, even if cl 10.1 is not construed as prohibiting a sale of the shopping centre by the responsible entity following a determination of the Scheme and in accordance with its obligation to do so in a winding-up of the Scheme: [56], [57], [106]. 20There are two other questions of interpretation which arise. The first is whether the expression "written consent of the Unitholders" in cl 10.1 means, as Westfield must contend, the consent of all of the unitholders. The second is whether the voting rights the subject of cl 16.2 include voting rights in relation to specific matters (such as that dealt with by s 601NB) which are conferred by statute on unitholders in a registered scheme, as Westfield also must contend, or are only those given to unitholders by the Trust Deed. The answer to this second question depends on whether, in the expression "voting rights as unitholders under the Trust Deed" in cl 16.2, the words "under the Trust Deed" are to be construed as qualifying the words "as unitholders" or the words "voting rights": [96]. 21The primary judge rejected AMPCN and UniSuper's argument that "written consent of the Unitholders" requires something less than unanimity ([58]-[70]) concluding: "70. I construe the expression 'written consent of the Unitholders' in cl 10.1(a) as meaning the written consent of all of the unitholders and not some unspecified proportion of them." That conclusion is the subject of ground of appeal 1. 22The primary judge also rejected AMPCN and UniSuper's argument that the voting rights which are the subject of cl 16.2 do not include voting rights conferred by the Act and specifically those arising under s 601NB: [95]-[104]. That holding is the subject of ground of appeal 2. 23The primary judge addressed the remaining questions concerning the "intent and effect" of cl 10.1 and the operation of cl 16.2 at [39]-[57], [91]-[94] and [105]-[106]. In accepting the argument summarised in [18] above, the primary judge reasoned as follows. First, a winding-up of the Trust, in accordance with a direction given by a resolution under s 601NB and before the shopping centre has been sold, must inevitably involve the sale of that property: [36]. Secondly, cl 10.1(a), considered in isolation, does not extend in its terms to prohibit a sale by the responsible entity of the shopping centre in accordance with an obligation arising on a winding-up of the scheme following a resolution by the members directing that the scheme be wound-up: [56], [57]. Finally, the effect of cl 16.2 is to preclude AMPCN and UniSuper from voting in favour of a resolution which would result in a sale of the property without Westfield's consent and that would be contrary to the "intent" of cl 10.1(a): [91], [106]. The primary judge's resolution of these questions is the subject of ground of appeal 3. 24If cll 10.1 and 16.2 operate to prohibit the unitholders from voting in favour of a resolution directing the responsible entity to wind-up the scheme, AMPCN and UniSuper argue that those clauses are to that extent unenforceable because s 601NB is inconsistent with an ability to forgo or fetter a right to vote at such a meeting or because the right to vote was not given solely for the benefit of a unitholder but also in the public interest and as a result is not capable of being bargained away: see Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 456-457; Felton v Mulligan (1971) 124 CLR 367 at 386, 407; Brown v The Queen (1986) 160 CLR 171 at 208; and Nullagine Investments Pty Ltd v The Western Australian Club Incorporated (1993) 177 CLR 635 at 645. The primary judge dealt with this question at [108]-[128], concluding that cl 16.2 was not unenforceable on that basis. That conclusion is the subject of ground of appeal 4. 25It is convenient to deal first with the arguments raised by grounds 1 and 2 and then those raised by ground 3. As I have concluded that the appeal should succeed on ground 3, it is strictly not necessary to address the issue raised by ground 4. I will, however, deal shortly with that question. Does "written consent of the Unitholders" in cl 10.1 mean consent of all unitholders? 26As I have noted in [21] above, the primary judge held that the expression "written consent of the Unitholders" in cl 10.1 of the Unitholders' Agreement meant the "written consent of all of the unitholders and not some unspecified proportion of them": [70]. In my view, the primary judge was correct in that conclusion for the reasons she gives. As the primary judge noted (at [60]) the term "Unitholders" is defined to include each of the specifically named parties to the Unitholders' Agreement "and any other person who holds units in the trust from time to time". It follows, unless "the contrary intention appears" that what is required is the written consent of all of the unitholders. Clause 14.1 of the Agreement describes how such a written consent is to be given by each unitholder. The primary judge also observed that if something less than the consent of all unitholders were required, the question of what consent would be sufficient for the purposes of cl 10.1 is left uncertain: [59]. 27AMPCN and UniSuper submit that there is no such uncertainty and that by a process of construction, having regard to cl 19.14 of the Trust Deed, cl 7.4 of the Unitholders' Agreement and provisions of the Act, the intent of cl 10.1(a) may be "discerned" as being that a simple majority must concur in the sale of the property. There are a number of difficulties with this argument. First, there is no reason for assuming that cl 10.1(a) should be construed consistently with cl 19.14 of the Trust Deed. On the contrary, cl 30.4 of the Unitholders' Agreement contemplates inconsistencies between its provisions and those of the Trust Deed and provides in that event that its provisions should prevail. Secondly, as Westfield submitted to the primary judge (at [64]) and to this Court, it would be an odd result if having provided that matters such as discretionary repairs and redevelopment or refurbishment and funding of redevelopment require a 75 percent majority (calculated on the basis of units held), the parties nevertheless agreed that the sale of the shopping centre could be dealt with by a simple majority. Thirdly, cl 7.4 does not address the subject of unitholders' consent. It describes the issues which are to be the subject of consideration and determination by the Unitholders' Committee. That Committee is required to make its determinations by resolutions, either passed at meetings or circularised in writing, which, in either case, must have the majority required by cll 10 or 11 in Schedule 2 to the Agreement. Finally, the provisions of Part 2G.4 of the Act govern meetings of members of registered managed investment schemes. They do not address the subject of "written consent" of unitholders. Nor do they specify what majority would be required to pass a resolution addressing the subject matter of cl 10.1(a). 28AMPCN and UniSuper point to other clauses of the Unitholders' Agreement which use "each" or "all" in relation to the defined term "Unitholders" and argue that if cl 10.1(a) required unanimous consent the parties could and would have said so. The provisions relied upon include cll 9.2(a) and 16.2. These and the other clauses relied on (see [62], [63]) illustrate the need for caution when comparing the manner in which different provisions deal with matters which require the agreement or consent, or a determination or resolution of all or a particular majority of the unitholders or a committee of the unitholders, in a context where the definitions of "Unitholders" and "Unitholder" are expressed to apply "unless the contrary intention appears". For example, cl 9.2 addresses the subject of funding of any redevelopment of the Property. Clause 9.2(a) requires that consent to the redevelopment be sought from "each Unitholder" and says that "all the Unitholders" agree to advise of their consent or non-consent. The references to "each" or "all" make clear that the indication of consent or non-consent is required from each unitholder because of the number of different possible scenarios which the following paragraphs of cl 9.2 then address. Those scenarios include that all unitholders agree to the development (cl 9.2(b)), that all agree but not to the amount of borrowings to be made for the redevelopment (cl 9.2(c)) and that only some unitholders, being those holding at least 75 percent of the units on issue, agree to the redevelopment (cl 9.2(d)). Strictly speaking, it may have been unnecessary to use the adjectives "each" or "all" but their use is not an indication that "Unitholders" has other than its defined meaning. Another example relied upon is cl 16.2. That clause contains an agreement by unitholders as to the exercise of voting rights. In that context, the reference to "[e]ach and all of the Unitholders" is explicable as making clear that the promise is several and made by all of the unitholders. 29As the primary judge observes (at [63]), there are other provisions which make clear when unanimous consent or approval is not necessary. For example, cl 7.3 and cll 10 and 11 in Schedule 2 address the different majorities required for resolutions of the Unitholders' Committee depending upon the issue being addressed. Similarly, cl 8.2(d) provides for a determination by a 75 percent majority of unitholders with respect to the carrying out of "discretionary repairs". By way of contrast, the references to the agreement or not of "Unitholders" as to whether those repairs shall be funded by borrowings (see cll 8.2(e) and (f)), in the absence of any contrary indication, are to be taken as being to the agreement of each and all of them. In this regard, the primary judge rightly concluded as follows: "66. While on occasions in their agreement the parties have expressed that the consent or approval of each or all of the unitholders is required for particular matters under the Joint Venture Agreement (which I accept that this would strictly not be necessary if the term 'the Unitholders' already meant all of them), they have also, where making provision for the consent or approval of only a percentage of the unitholders, expressly stipulated what level of consent was necessary (and have not made similar provision in clause 10)." 30For these reasons, in the absence of any contrary intention, when used in cl 10.1, the reference to "consent of the Unitholders" must be construed as being to the consent of all of the unitholders. Does cl 16.2 apply to the exercise of voting rights at a meeting called under s 601NB? 31AMPCN and UniSuper argue that the words "under the Trust Deed" qualify the words "voting rights" and accordingly that the voting rights referred to are those given by the Trust Deed with respect to specific matters as distinct from those conferred by provisions of the Act. In this construction "under" is used in the sense "pursuant to" or "derived from". The primary judge rejected that argument. She held that the words "under the Trust Deed" qualify the words "unitholders": [104]. A principal reason that the primary judge gives for adopting that construction is that it is necessary to read the words "under the Trust Deed" as qualifying "unitholders" in order to give those words some operation because there were no voting rights given by the Trust Deed with respect to specific matters: [97], [102], [104]. The primary judge's reliance upon the presumption against the use of redundant language, as Lord Hoffmann has observed, does not necessarily reflect the reality of commercial documents drafted by lawyers which use unnecessary language for reasons which include clumsy drafting or a lawyer's desire to cover "every conceivable" point: Beaufort Developments (NI) Ltd v Gilbert Ash NI Ltd [1999] 1 AC 266 at 273-274. AMPCN and UniSuper do not rely on that observation as a reason for rejecting the primary judge's conclusion. They submit that she was wrong to conclude that the Trust Deed did not give such voting rights and that for that and other reasons, her conclusion on this question should be rejected. An analysis of the Trust Deed does show that there are at least three specific matters in relation to which it gives voting rights. To that extent I agree that the primary judge erred in concluding otherwise. 32It does not follow, however, that the construction adopted by the primary judge should be rejected. In my view, for the reasons which follow, that construction is to be preferred. It reflects what a reasonable person in the circumstances of the parties would have understood the parties to be saying by the language which they have used, accepting that the language is susceptible of more than one possible meaning: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22]; Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [53], [98]. 33At the time the Unitholders' Agreement was executed, the Scheme was registered under Part 5C.1 of the Corporations Law . Part 2G.4 of the Law contains general provisions dealing with meetings of members of registered managed investment schemes. The Trust Deed, by cl 31.1, provided that the way in which it dealt with meetings was "subject to" the Law. It also, by cl 31.1, provided that the Manager "must" convene a meeting of unitholders if required by the Law. One such requirement was contained in s 601NB which enabled the calling of a meeting under s 252B. Part 2G.4 of the Law contained specific provisions dealing with meetings of members of registered managed investment schemes. This had the consequence that in most respects the provisions in Part 2G.4 prevailed over the more general provisions in cl 31. 34At the same time, there were two sources of express provisions which created rights in unitholders to vote on specific matters. Those sources were the Trust Deed and, as the Scheme was registered, Chapter 5C of the Law. Chapter 5C conferred voting rights with respect to election or removal of a responsible entity (ss 601FL, 601FN, 601FQ), changing the constitution (s 601GC(1)), approval of related party benefits (Part 5C.7) and winding-up (Part 5C.9). A number of these provisions, either alone or read with s 252B require the responsible entity/Manager to convene a meeting of unitholders and would, as a result, be the subject of the obligation under cl 31.1 of the Trust Deed. They include ss 601FL(1), 601M(1), 601FQ(1), 601GC(1) and 601NB. On that basis, the right to vote with respect to those particular matters could be said also to be given by the Trust Deed. 35The Deed also conferred voting rights with respect to particular matters by cll 4.7(b)(ii)(2), 19.14 and 25.3. Clause 4.7(b)(ii) required that unitholders approve an issue of additional units in circumstances where the units were quoted on the ASX and additional units were to be issued, other than to the responsible entity/Manager or pro rata to current unitholders, and those additional units would comprise more than 10 percent of the units on issue in the same class. Clause 19.14 (which is set out in [12] above) addressed the same subject matter as cl 10.1 and required an ordinary resolution to approve any sale or disposal of the main undertaking of the Trust except upon the determination of the Scheme. Clause 25.3 permitted the Manager's management fee to be increased pursuant to a special resolution of unitholders. 36Reference should also be made to cl 16.1(f) of the Trust Deed which, when addressing the obligations of the Manager to satisfy a withdrawal request, provides that the Manager has no obligation to satisfy that request if it is made after any notice convening a "meeting of Unit Holders to vote on whether to wind-up the fund has been sent to Unit Holders by the Manager". As there is no express right given in cl 19 of the Trust Deed to unitholders to direct that the Trust be determined, this provision is to be construed either as giving rise to such a right or to assume the existence of such a right by the operation of s 601NB of the Law. 37The matters relied upon by AMPCN and UniSuper as favouring the interpretation they contend for are: first, that it was unnecessary to qualify "unitholders" by the words "under the Trust Deed" if it was intended to refer to persons holding units in the Trust; secondly, that if it was intended to refer to such unitholders, the words "in the Trust" would have been used to identify the Trust in which they are unitholders (as those words have been used in Recital A); thirdly, that it was apt to use the expression "under the Trust Deed" to describe rights given by the Trust Deed and to distinguish them from voting rights conferred by the Law; and, finally, that there were such voting rights given by the Trust Deed so that construed in that way the expression has work to do. 38In order to explain why the construction adopted by the primary judge should be preferred it is necessary to address each of these matters. As to the first: at the time of the Unitholders' Agreement, AMPCI was a "Unitholder" as well as responsible entity of the Trust. In its capacity as responsible entity it was contemplated that AMPCI might hold units in the Trust: cl 30.10(a) of the Trust Deed. The other parties to the Unitholders' Agreement were parties in their capacities as trustees of particular Trusts. For these reasons, the Agreement contains provisions which make clear the capacity in which particular agreements or obligations are undertaken: see, for example, cll 1.1, 2, 8.2, 10.1, 10.2 and 29.1. These considerations provide a reason for using the words "as unitholders" in cl 16.2 to make clear that the agreement with respect to voting rights did not extend to voting rights held in any capacity other than as a unitholder. They also provide a reason for then seeking to make clear that cl 16.2 was only concerned with voting rights as a holder of units in the Trust as distinct from in any other trust in which a party in some capacity held units. This second reason addresses and is an answer to the first matter relied upon by AMPCN and UniSuper. Furthermore, if the parties intended that the words "under the Trust" qualify "voting rights" and not "unitholders" it would not have been necessary to use the words "as unitholders". 39As to the second and third matters: although the words "in the Trust" could have been used to describe the voting rights as unitholder which were to be the subject of restraint, the parties have also used the singular expression "unitholder under the Trust Deed" in cl 5.1 (in the words preceding paragraph (f)) and in cl 12.4. In cl 5.1 that expression is used to describe the Trust in which the units are held, ie as equivalent to the words "in the Trust". Clause 12.4 operates to suspend the voting rights of a defaulting "Unitholder" (called the Defaulter) and in that event provides: " Voting rights on Default 12.4 ... the Defaulter shall not exercise its voting right [sic] as a unitholder under the Trust Deed, to the intent that for the purposes of calculating the number of votes cast at any meeting of unitholders, the Units ... to which the Defaulter is entitled, shall be deemed not to have been issued." Although this use of the expression gives rise to the same ambiguity as cl 16.2, the subject matter of this clause and the reference to "votes cast at any meeting", rather than to meetings addressing specific matters, indicate that the words "under the Trust Deed" qualify "unitholder" and are used in the sense "in the Trust". Although one must be careful when weighing one interpretation against another by reference to considerations of "business commonsense", there does not appear to be any reason why the parties would have intended that any suspension of voting rights for default under cl 12.4 should apply to some only of those rights: see Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2002) 210 CLR 181 at [43]. 40A similar observation may be made with respect to cl 16.2. One would not conclude, in the absence of some likely explanation and where there was another available interpretation, that the parties, when agreeing to exercise their voting rights as unitholders in a way which would "most fully and completely" give effect to their agreement, have agreed that not all of those voting rights should be the subject of that agreement. 41As to the final matter: whilst voting rights were given in respect of specific matters by the Trust Deed, when one also considers the voting rights conferred by the Act, there is no obvious reason why the parties would only make the former the subject of their agreement. This is particularly so in circumstances where the Scheme was registered, and therefore subject to the provisions of Chapter 5C of the Law, and the Trust Deed expressly provided by cl 31.1 that the responsible entity "must" convene a meeting to address a particular subject, if required by the Law. That clause meant that the right to vote in respect of a number of matters was not referable only to the Law. 42In my view, the primary judge was correct to construe cl 16.2 as applying to the exercise of voting rights at a meeting called in accordance with s 601NB. Does cl 16.2 prohibit AMPCN and UniSuper from voting in favour of a resolution to direct a winding-up in the absence of Westfield's written consent to a sale of the shopping centre? 43Clause 16.2 requires that the unitholders exercise their voting rights in a way which has the result of "most fully and completely" giving effect to the "intent and effect" of the "provisions" of the Unitholders' Agreement. The earlier reference to "intent and effect" confirms that "provisions" is used to refer to clauses or other parts of that Agreement: Zurich Australian Insurance Ltd v Metals & Minerals Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 at [31]. 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: Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522 at [16] citing Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]-[71]. The "intent" of a provision is its meaning determined objectively by reference to what a reasonable person in the position of the parties would have understood the language of the provision to mean. The "effect" of a provision describes the result or consequence of its operation construed in that way. 44The primary judge held that as a matter of construction cl 10.1(a) does not: "57 ... prohibit a sale by the responsible entity of the property in accordance with an obligation arising on a winding up of the scheme following a resolution by the members directing that the scheme be wound up." That construction was said to be the result of considering the clause "in isolation" and without regard to the "import of cl 16.2 in this context": [57]. I agree with this construction of cl 10.1(a). 45Although in its terms the clause is not subject to any express limitation as to the time during which or circumstances in which it applies, there are a number of matters which indicate that it is to be construed as only directed to the exercise of the power of sale by the responsible entity before the "determination" or "termination" of the Trust. Each of these expressions is used in the Trust Deed to describe the period or phase of activity involving the winding-up of the Trust by the realisation of its assets and the distribution of the proceeds of realisation among the unitholders: see cll 17.1, 17.2, 17.4 and 17.5 which use the word "terminated" in relation to the Fund and cl 19.14 which uses the expression "determination of the Fund". Clause 18.1 of the Trust Deed gives the responsible entity/ Manager all the powers in respect of the assets and investments of the Trust which it could exercise if it were absolute and beneficial owner of those assets and investments. However, upon "termination" of the Fund, cl 17.5(b) requires the responsible entity/Manager to sell the assets and investments of the Trust. Thus, at the time of the Unitholders' Agreement (and as continues to be the position) the operation of s 601NE(1) was that upon a determination of the Trust the shopping centre property had to be sold and that was not a matter in respect of which the responsible entity had any discretion, except as to timing. Clause 10.1(a) was not directed to preventing any sale in accordance with cl 17.5. 46A construction of cl 10.1(a) as concerned only with a sale before a winding-up of the Trust is in accord with the provisions of cll 10.1(b) and 10.2. Clause 10.1(b) requires that "on completion of the sale" AMPCI should "thereupon" determine the Trust unless otherwise directed. The "sale" is a sale which has occurred in accordance with cl 10.1(a). Thus, cl 10.1(b) proceeds on the basis that any sale to which cl 10.1(a) applies will take place before the determination of the Trust. Similarly, cl 10.2 which deals with the acquisition by the responsible entity/Manager of additional investments provides that that should not occur without written consent. As with the prohibition in cl 10.1(a), that prohibition is unnecessary once the Fund has been determined because of the requirements of cl 17.5 and s 601NE(1). 47Relevantly, the "intent" of cl 10.1(a) is that AMPCI should not sell the Karrinyup shopping centre before the determination of the Trust without the written consent of all of the unitholders and the "effect" of that provision is that in no circumstances should the property be sold without such written consent before the determination of the Trust. 48It is then necessary to consider the operation of cl 16.2 in light of the "intent and effect" of cl 10.1(a). The question is whether to vote in favour of a resolution directing the responsible entity to wind-up the Scheme would "fully and completely" give effect to that "intent and effect". In my view it would, because 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. 49Having correctly construed cl 10.1(a), the primary judge, when applying cl 16.2 treats the "intent" of cl 10.1(a) as being to prohibit a sale in all circumstances including following a determination of the Trust: [106]. In doing so she erred in not applying the provisions of cl 16.2 to the "intent and effect" of cl 10.1(a) properly construed. Clause 16.2, by use of the expression "to most fully and completely give effect to" does not require any more than that full and complete effect be given to cl 10.1(a). The argument put by Westfield makes the same error. When applying cl 16.2, the "intent and effect" of cl 10.1(a) was said to be that there "will not be a sale of the property without the written consent of unitholders by the responsible entity". 50In its written submissions Westfield submitted that the combined effect of cll 10.1 and 16.2 was to prevent a unitholder from exercising its voting rights in a way to achieve indirectly what could not be done directly because of cl 10.1(a) and that this was what AMPCN and UniSuper sought to do. I do not agree. What is achieved by a resolution that the responsible entity determine the Trust is not something which cl 10.1(a) prohibits or contemplates as only occurring with the consent of all unitholders. 51A further argument put by Westfield was that the arrangements made by the Unitholders' Agreement were intended to regulate a closely held unit trust business structure, designed for the ownership and operation of a major retail shopping centre, in which each party had agreed by cl 16.2 to use its voting rights in a particular way. All of that is correct. 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. 52I conclude that the primary judge erred in construing cl 16.2 as preventing AMPCN and UniSuper from exercising voting rights in favour of a resolution to wind-up the Trust without the prior written consent of Westfield. It follows that the appeal should be allowed and the orders made by the primary judge should be set aside. Is cl 16.2 unenforceable? 53Although it is not necessary to answer this question in view of my conclusion that the appeal should succeed on ground 3, I will address it shortly. The primary judge concluded that cl 16.2 would not be unenforceable if, in order to give effect to the "intent and effect" of cl 10.1(a), it required that unitholders exercise their rights to vote against a resolution directing the responsible entity to wind-up the Scheme. In doing so the primary judge identified the relevant principles: [116]-[118]. In Brooks v Burns Philp Trustee Co Ltd , Windeyer J (at 456) stated those principles in the following terms: "When a statute creates and confers rights and imposes corresponding duties, persons for whose benefit this was done may by contract waive or renounce their rights, unless to do so would be contrary to the statute. It may be seen that it would be so, because of an express prohibition against 'contracting out', or because the provisions of the statute, read as a whole, are inconsistent with a power to forgo its benefits: or 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." 54I agree with the conclusion of the primary judge, assuming the correctness of the construction that she adopted, that cl 16.2 was not unenforceable in its operation in relation to s 601NB. Section 601NB permits a unitholder to call a members meeting to consider and vote on a resolution directing the responsible entity to wind-up a scheme. Clause 16.2 would not prevent a member from calling such a meeting. Section 601NB does not require a unitholder to exercise its right to vote at such a meeting or to do so in a particular way or with regard to any particular interests as distinct from its own selfish interests whatever they might be. Nor is there any express provision preventing a unitholder from "contracting out" of its right to exercise the power to vote at such a meeting or from agreeing to vote in a particular way. 55It is then necessary to consider the other provisions of the Act and the policy and purpose of the Act. Those matters were addressed by the primary judge: esp at [122]-[127]. The primary judge noted that there are provisions which enable the Court to order that a scheme be wound-up on the application of the responsible entity or a member of the scheme if it is "just and equitable" or if execution or process issued on a judgment in favour of a creditor of the scheme has been returned unsatisfied. In broad terms, these provisions address circumstances where there may be a deadlock in the management or operation of the scheme or the scheme is being conducted in some way which is unfairly oppressive to the interests of some of the unitholders or if the scheme is likely to be insolvent. Clause 16.2 does not prevent a scheme being wound-up in the circumstances addressed by these sections and where the public interest may be served by the winding-up of the scheme. 56Had I arrived at a different conclusion in respect of ground 3, I would not have allowed the appeal on ground 4. Proposed orders 57The orders I propose are as follows: (1) Appeal allowed. (2) Set aside the orders made by Ward J on 1 September 2011. (3) Order that the summons be dismissed and that the respondent pay the costs of the summons. (4) Order that the respondent pay the appellants' costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2011