In this important case the Court of Appeal considered the identity of the proper plaintiff to commence actions in relation to the business of managed investment schemes. Prior to this judgment there was relatively little authority on this point.
The respondent, Opus Capital Limited, (“Opus”), was the Responsible Entity of the Opus Property Trust No 12 which was a registered managed investment scheme. The Public Trustee of Queensland (“PTQ”) was the Custodian under the scheme and held a lease (as lessor) of a commercial property in Cairns for the scheme. The appellants had been tenants in that commercial property. A dispute arose as to amounts alleged to be owing under the lease and Opus commenced proceedings for their recovery. At no time was Opus the owner of the real property in question and nor was it a party to the lease or to any guarantees given as security for the lease. Opus claimed that it was empowered by ss 601FB and 601FC of the Corporations Act and the Constitution of the scheme to bring the proceedings to recover the allegedly outstanding rent. The appellants sought to strike out part of the pleading on the basis that Opus did not have any cause of action to pursue them under the lease or associated guarantees.
In upholding the claim that Opus was not the correct party to bring the proceedings, the Court of Appeal (Jackson J with whom Fraser and Gotterson JJA agreed) made the following points:
• The claims under the lease and guarantee were contractual in nature and there was no plea that that the PTQ was the trustee and Opus was the beneficiary of any benefit or contractual chose in action relating to the lease or guarantee;
• Even if Opus was a beneficiary of the trust of a chose in action that did not convert Opus into a party to the lease.
• Under the Managed Investment Scheme provisions in the Corporations Act the Responsible Entity of a scheme holds the scheme property as trustee for the members, however, it is also authorized to appoint an agent to hold scheme property separately.
• An agent for the Responsible Entity may enter into a contract for the Responsible Entity for the purposes of the scheme’s business, but it does not necessarily follow that the Responsible Entity, as trustee, is entitled to sue on that contract.
• That where a Custodian holds property for the Responsible Entity under a custodian agreement, it may be that the beneficial interest in the property so held is vested in the members of the scheme and not in the Responsible Entity. That particular issue did not have to be fully determined in the present case.
• The case before the Court could be analysed on general trust principles being that legal title to the land and to the contractual rights in the lease and guarantees vested in PTQ and neither the provisions of the Constitution nor the Corporations Act operated to vest in Opus the right to commence proceeding in respect of those agreements.
• It followed that Opus had no right to commence the proceedings in question and the pleading did not disclose any relevant cause of action.
Note: It is important to recognise Jackson J’s endorsement of an approach by which questions of law, which are decisive in the action, are considered at an early stage in the litigation by way of a strike out or other summary procedure. His Honour identified that this was in accordance with the philosophy stated in UCPR 5 and that it was likely to result in the saving of costs over the long term.