This article is from the Australian Property Journal archive
THE corporate regulator has taken Jenny Hutson's Wellington Capital, the responsible entity of the Premium Income Fund, to the Federal Court.
ASIC is seeking declarations of contravention by Wellington and injunctions preventing Wellington from putting the five resolutions to unit holders of the PIF on 14 June 2013.
The two other companies who are defendants in the proceedings are Perpetual Nominees Limited, the custodian of the PIF, and Asset Resolution Limited (ARL), a company founded by former federal minister for resources David Bedall last year to buy the assets from Wellington, which included seven mortgages over tourism assets including the $24.6 million Forest Ridge Hotel in Victoria, $20 million Kooralbyn Resort on the Gold Coast, and $9.8 million in 12 apartments within the Icon complex in Port Macquarie, New South Wales.
ASIC is trying to block the sale.
ASIC is concerned that the resolutions would involve a winding up of the PIF, which, if it proceeded, would not be in accordance with the Corporations Act 2001 (Corporations Act) or the PIF constitution, and a retirement of Wellington as the responsible entity of the PIF, which, if it proceeded, would not be in accordance with the Corporations Act or the PIF constitution.
Further, ASIC is concerned that one of the resolutions, seeking to implement a compulsory buy-back of all issued units of the PIF in exchange for shares in ARL, required Wellington to issue a prospectus. Wellington did not issue a prospectus in relation to the resolution.
ASIC is also concerned that the disclosure in the Notice of Meeting and Explanatory Memorandum and the Supplementary Explanatory Memorandum dated 1 June 2013 is misleading, and certain statements in media releases issued by Wellington to the National Stock Exchange of Australia Limited on 28 and 29 May 2013 are misleading.
This fresh legal action comes hot on the heels of the Full Court of the Federal Court finding Wellington improperly distributed shares to ARL last month.
The Full Court ordered declarations that Wellington did not have the power to make an ín specie distribution of shares, as opposed to cash, to unit holders in the PIF and that Wellington had acted contrary to the PIF Constitution in doing so.
The court also rejected Wellington’s arguments as being “fundamentally flawed’.
The court said that Wellington’s conduct, as responsible entity of the PIF, “amounted to a partial retirement from office other than in accordance with the provisions of the [Corporations] Act’ and “without the consent of the unit holders.’
In its decision the Full Court said:
“The Unit Holders subscribed for units in a pooled investments fund managed by the Responsibility Entity. But 41% of the pooled assets which were managed by Wellington were distributed to Unit Holders who now hold shares in an unlisted company. Shares in a company are an entirely different species of property from units in a managed investment scheme … The management of the company is in the hands of the directors rather than in Wellington and the directors are subject to the constitution of ARL rather than to the terms of the trust comprised in the constitution of the Fund.’
In June 2011, the Federal Court found Wellington breached the Corporations Act and ruled in favour of PIF Action Group’s application to stop Jenny Hutson from changing the PIF’s constitution.
Property Review