Westfield and AMP entered into a joint venture agreement which provided that AMP with a two thirds share of the units in a managed investment scheme could not resolve to wind up the scheme under section 601NB of the Corporations Act without the consent of Westfield. AMP intended to exercise its voting right to wind up the scheme in breach of this obligation which would cause a sale of the shopping centre and Westfield sought an injunction to prevent this.
Section 601NB of the Corporations Act provides for the winding up of a scheme at the direction of members by way of an extraordinary resolution. As AMP holds two thirds of the shares, it will be in a position to carry the resolutions which only needs to be passed by 50% of the total votes by members.
The court held that Westfield was entitled to the injunction to retrain AMP from voting for the extraordinary resolution to wind up the scheme without Westfield’s consent because:
- the proper construction of the contract made it a breach for AMP to vote for a resolution to wind up the scheme without Westfield’s consent;
- the contractual provisions are not overridden by section 601 of the Corporations Law – it is simply the case that exercise of the statutory right amounts to a breach of contract;
- there is no public policy reason not to enforce the joint venture agreement because the contract does not deprive a unitholder of all means to wind up the scheme and there are other means by which AMP could exit the scheme; and
- damages for breach would be an inadequate remedy for Westfield given the dispute is as to the sale of the shopping centre.