Australian Pipeline v Hastings [2013] NSWSC 1657

Supreme Court New South Wales

Medium Neutral Citation: Australian Pipeline v Hastings [2013] NSWSC 1657 Hearing dates: 15/10/2013 and 16/10/2013 Decision date: 16 October 2013 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Plaintiff's claim to be dismissed with costs. Defendant to have judgment on its cross-claim with interest and costs. Parties to bring in draft orders. Catchwords: CONTRACTS - interpretation - calculation of incentive fee - where incentive fee calculated with reference to "trades on ASX" - meaning of "trades on ASX" within context of particular contract - whether term excluded sales resulting from acceptances of off-market takeover offer. Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Legal & General Life of Australia Ltd v A Hudson Pty Limited (1985) 1 NSWLR 314 Texts Cited: ASX's Market Rules and Procedures Category: Principal judgment Parties: Australian Pipeline Limited as Responsible Entity for APA Sub Group formerly known as Hastings Diversified Utilities Fund (Plaintiff) Hastings Funds Management Limited (Defendant) Representation: Counsel: DB Studdy SC / S Nixon (Plaintiff) JC Sheahan SC / MJ Darke / S German (Defendant) Solicitors: Clifford Chance (Plaintiff) Herbert Smith Freehills (Defendant) File Number(s): 2013/134612

Judgment (ex tempore revised - 4 November 2013) 1HIS HONOUR: Up until 17 December 2012, the defendant (Hastings) was the responsible entity of three managed investment schemes (the trusts). On 17 December, following a successful (off-market) takeover bid by its parent, the plaintiff (APL) replaced Hastings as responsible entity. A few days earlier, Hastings had paid itself out of the assets of the trusts some $28,680,000 on account of fees that it said would be payable when (as was then apparent would happen) it ceased to be the responsible entity. 2There is no doubt that Hastings was entitled to be paid a "Management Fee" and an "Incentive Fee"; nor as to the amount of the former. The present dispute concerns the latter fee. Hastings says it is entitled to be paid almost $8.3 million more. APL says that Hastings has been overpaid almost $10.2 million. 3The dispute arises from one element in the calculation of the Incentive Fee. That element is known as the "Securities Index". The constitutions of each fund provided for that to be determined by an "Approved Valuer". Such a determination has been carried out, on the instructions of APL. 4For reasons that are entirely unclear to me, the parties have ignored that determination, although it would be binding on them, as I understand it, unless susceptible to attack on the narrow basis identified by McHugh JA in Legal & General Life of Australia Ltd v A Hudson Pty Limited (1985) 1 NSWLR 314 at, in particular, 335-336. Instead the parties are asking the Court to determine the proper construction of the relevant element.