LM Investment Management Limited (in liq) v Bruce & Ors

[2014] QCA 136

Queensland Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Managed investments
3. › Winding up of registered scheme
4. › Appointment of independent person under s 601NF(1)
5. › Whether appointment 'necessary'
6. › Meaning of 'necessary' in s 601NF(1)
7. › Whether potential conflicts of interest sufficient
8. › Corporations Act 2001 (Cth), s 601NF(1)
1. Corporations
2. › Managed investments
3. › Responsible entity
4. › Duties of administrators as responsible entity
5. › Conflicts of interest
6. › Actual versus potential conflicts
7. › Distributions between classes of unit holders
8. › Corporations Act 2001 (Cth), Pt 5C.9, s 601NE(1)
1. Evidence
2. › Witnesses
3. › Cross-examination
4. › Rule in Browne v Dunn
5. › Whether adverse findings must be set aside where imputations not put to witnesses
6. › Whether breach vitiates ultimate conclusions
1. Appeal
2. › General civil appeal
3. › Findings of fact
4. › Whether setting aside supporting findings vitiates ultimate conclusions
5. › Remaining findings sufficient to support orders

Quick Take

The word 'necessary' in s 601NF(1) of the Corporations Act 2001 (Cth) imposes a more stringent test than 'convenient' or 'desirable', bearing the ordinary meaning of 'that which cannot be dispensed with', but comprehends the situation where the Court is satisfied there is an unacceptable risk that the responsible entity will not properly discharge its obligations. Potential conflicts of interest alone do not make an appointment 'necessary', but a demonstrated pattern of conduct showing the responsible entity has preferred its own interests to those of members may satisfy the test. Adverse findings about a party's conduct in litigation cannot be sustained where the relevant imputations were not put to witnesses in cross-examination and unchallenged evidence to the contrary was not addressed.