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Should statutory oppression remedies apply to unit trusts? A comparison of unitholder and shareholder rights

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thesis
posted on 20.02.2019, 21:25 by Bergman, Ari Braham
This thesis analyses the case for amendments to be made to the Corporations Act 2001 (Cth) (‘the CA’) to afford Australian unitholders the same rights of recourse as Australian shareholders under statutory oppression remedies. Australian unit trusts and companies operate under similar commercial conditions, and the types of disputes that arise concerning shareholders and unitholders are comparable. However, there are distinct structural differences between unit trusts and companies that affect the legal principles that apply to such disputes. Given these differences, the unit trust structure may not adequately protect the interests of the venturers if the business relationship breaks down. One of the most common forms of dispute in such circumstances involves allegations of oppressive conduct. For companies, Part 2F.1 of the CA (which contains the statutory oppression remedies) can provide effective relief to oppressed shareholders. In contrast, unit trusts are predominantly subject to traditional trust law principles, which lack tailored oppression remedies that shareholders enjoy under Part 2F.1. In particular, this thesis demonstrates that the grounds for securing relief under trust law principles are more difficult for oppressed unitholders to establish. Even where such grounds are successfully established, the remedies available are often inadequate to provide substantive and effective relief to unitholders. Notwithstanding the CA has only limited jurisdiction over unit trusts (especially private unit trusts), oppressed unitholders have sometimes sought relief under Part 2F.1 in an attempt to access more effective remedies than those available under trust law. While a number of earlier decisions determined unitholders are entitled to relief under Part 2F.1, it is argued that the judicial grounds used to support such relief are debatable, therefore the status of the law remains unclear. In addition, several recent court decisions have rejected these earlier findings. Such contradictory decisions expose the abstruseness of the legislation in this area. Therefore, with inadequate protections against oppression afforded to unitholders under trust law, it is submitted there is a strong argument for legislative reform, ideally by extending the rights of unitholders to access statutory oppression remedies under Part 2F.1 of the CA.

History

Campus location

Australia

Principal supervisor

John Duns

Year of Award

2014

Department, School or Centre

Law

Course

Doctor of Philosophy

Degree Type

DOCTORATE

Faculty

Faculty of Law