On 5 October 2011 Justice Barrett of the Supreme Court of NSW handed down a decision in Centro Retail Limited and Centro MCS Manager Limited in its capacity as Responsible Entity of the Centro Retail Trust [2011] NSWSC 1175 (“Centro”) where he found that the responsible entity of Centro Retail Trust would be justified in modifying the constitution of the trust without unitholder approval to a insert a provision permitting the issue of units at a price different to that provided for by the pre-existing provisions.

On 16 September 2011 judgment was handed down by the BVI Commercial Court in a number of cases that have been brought by the liquidators of Fairfield Sentry Limited (“Fairfield”), a "feeder fund" into Bernard L Madoff Investment Securities Limited (“BLMIS”), against a number of investors that historically redeemed out of the fund (the "Fairfield judgment"). Subject to any appeal, the Fairfield judgment should put an end to the liquidators’ claims in the BVI.

The British Virgin Islands Commercial Court has recently delivered a decision in Western Union International Limited v Reserve International Liquidity Fund Ltd which addresses the issue of when during the redemption process a redeeming investor becomes a creditor of the fund and is therefore entitled to apply for the appointment of a liquidator.

The British Virgin Island’s Commercial Court has recently delivered a decision in Western Union International Limited v Reserve International Liquidity Fund Ltd which addresses the issue of when during the redemption process a redeeming investor becomes a creditor of the fund and is therefore entitled to apply for the appointment of a liquidator.

The drafting changes just discussed are primarily intended to ensure that funds do not become embroiled in contractual disputes, but in a global recession more and more funds are finding themselves in disputes that threaten to end up, and sometimes do end up, before the courts. In this chapter we analyse the legal issues surrounding key matters in the current litigious environment and cover the following:  

The Privy Council has handed down judgment in the claim brought by the liquidators of Fairfield Sentry Limited ("Fairfield") against a number of redeemed investors, seeking to recover the amounts paid out to them on redemption.

History of the Case

On 13 June 2012, the Court of Appeal handed down its judgment in the claims that have been brought by the liquidators of Fairfield Sentry Limited ("Fairfield") against a number of investors that redeemed out of the fund.  The Court of Appeal has upheld the decision of the trial judged albeit, in some instances, for different reasons.  Fairfield was a fund that invested into in Bernard L.