Welcome to the latest update from Gilbert + Tobin’s Corporate Advisory team.
Legislation and proposed legislation
Leases of serial numbered goods will now only be deemed PPS leases if their term exceeds 12 months
Amendments to the Personal Property Securities Act 2001 (Cth) so that a lease of serial numbered goods will only be deemed to be a PPS lease if its term exceeds 12 months have been passed and will commence on the earlier of a date set by proclamation or 25 December 2015. The amendments will reduce confusion and risk to hire businesses by minimising the need to make registrations in respect of leases of a term of less than 12 months.
The Personal Property Securities Amendment (Deregulatory Measures) Bill 2015 (Bill) (which was originally introduced into Parliament in March 2014) has now received Royal Assent and will commence on the earlier of a date set by proclamation or 25 December 2015 (being 6 months after the date of Royal Assent).
The Bill amends the Personal Property Securities Act 2009 (Cth) (PPS Act) to delete section 13(1)(e), which will have the effect that leases of serial numbered goods (such as aircraft, motor vehicles and boats) will no longer be deemed to be “PPS leases” for the purposes of the PPS Act if they are for a term for 90 days or more. Leases of goods (whether serial numbered or not) will only be deemed PPS leases if they are for a term longer than 12 months or an indefinite term.
According to the Explanatory Memorandum, the amendment will reduce confusion, risk and cost to hire businesses by minimising the need to make registrations in respect of leases of a term of less than 12 months, and will also bring the PPS Act into alignment with personal property securities regimes in other common law countries (such as New Zealand and Canada).
The amendment will only apply to leases entered into after the amendments commence.
ASIC reduces red tape for change of auditors
ASIC has announced that it will now consent to the resignation of an auditor at any time, subject only to a couple of provisos. The change represents a fundamental shift in ASIC’s approach and is designed to give greater flexibility in the timing of change of auditors.
Following consultation in 2013, ASIC has announced that it will now generally consent to the resignation of an auditor at any time of the year if:
- ASIC has no concerns in connection with the resignation, such as a concern where there is a disagreement between management and the auditor over an accounting treatment; and
- the change in auditor and the reasons for the change are communicated to members or in a disclosure notice, unless the change occurs at an AGM of a public company.
Previously, unless there were exceptional circumstances, ASIC would only consent to the resignation of an auditor of a public company to take place at an AGM. ASIC's changed approach is designed to give greater flexibility in the timing of changes of auditors, and is broadly consistent with the approach in other jurisdictions including Canada, the European Union, the United Kingdom and the United States.
ASIC’s new approach is outlined in a revised Regulatory Guide 26 Resignation, removal and replacement of auditors which also sets out how to apply for ASIC consent to the resignation, removal and replacement of auditors of registered schemes, AFS licensee and credit licensee trust accounts.
See also ASIC media release dated 18 June 2015.
ASIC publishes updated guidance on collective action by investors
With shareholder activism on the rise in Australia (and globally), ASIC’s new guidance provides some timely certainty for investors as to whether, in pursuing a common goal or agenda with other likeminded shareholders, they become “associates”. The new guidance will make it easier for investors to take collective action to improve the corporate governance of listed entities without contravening the substantial holding disclosure and takeover provisions under the Corporations Act 2001 (Cth)).
Following consultation in February (see G+T March 2015 CA Client Update), ASIC has released an updated Regulatory Guide 128 Collective action by investors to help investors take collective action to improve the corporate governance of listed entities.
The updated guidance includes:
- illustrative examples of conduct which is unlikely or more likely to trigger the takeover and substantial holding provisions under the Corporations Act 2001 (Cth);
- an outline of ASIC's approach to enforcement of these provisions in the context of collective action by investors, which includes considering whether the conduct is control seeking rather than simply promoting good corporate governance; and
- an overview of some other legal and regulatory issues that can arise in relation to investor engagement ie the prohibition on insider trading, shadow directors, directors duties, misleading and deceptive conduct and handling of confidential information.
As part of the update, ASIC has also discontinued class order relief that facilitated voting agreements between institutional investors as it does not reflect the way institutional investors tend to engage with entities and has not been used for many years.
See ASIC media release dated 23 June 2015.
See also ASIC media release dated 17 February 2015 in relation to the February consultation,Consultation Paper 228 Collective action by investors: Update to RG 128 and Report 438 Responses to submissions on CP 228.
ASIC updates guidance for externally administered companies and registered schemes being wound up
ASIC’s new financial reporting guidance and relief for distressed entities seeks to strike the appropriate balance between the information needs of members and other users of financial reports, with the financial burden imposed on distressed entities by financial reporting obligations.
Following consultation launched in August 2014, ASIC has released updated Regulatory Guide 174 Relief for externally administered companies and registered schemes being wound up.
ASIC’s new legislative instrument ASIC Corporations (Externally – Administered Bodies) Instrument 2915/251 (Instrument) provides liquidator appointed companies with relief from financial reporting obligations. Companies in other forms of external administration with an uncertain future are permitted to delay preparing their financial reports under ASIC’s relief. The Instrument also provides relief from financial reporting obligations to insolvent registered managed investment schemes.
Further, the Instrument outlines the circumstances in which ASIC will give relief to externally administered public companies from the requirement to hold an annual general meeting.
For externally administered companies, the law already requires that members and creditors have access to certain public information that is prepared periodically by the external administrator and lodged with ASIC. To provide information to members of insolvent registered managed investment schemes, the Instrument requires those in charge of the winding up to periodically report to members and creditors by making certain information available.
In addition, the Instrument ensures that members of externally administered companies and registered managed investment schemes being wound up can obtain information by requiring the external administrator of the company or person having responsibility for winding up the registered managed investment scheme to have arrangements in place to answer any reasonable questions asked by a member without charge.
See ASIC media release dated 27 May 2015.
See also ASIC media release dated 25 August 2014 in relation to the August 2014 consultation,Consultation Paper 223 Relief for externally administered companies and registered schemes being wound up - RG 174 update and Report 434 Response to submissions on CP223.
By Hiroshi Narushima, Jessica van Rooy, Sally Randall
Restrictions on special crossings in securities subject to a takeover or scheme repealed
ASIC has repealed the prohibition in its Market Integrity Rules against ASX trading participants effecting special crossings in securities subject to a scheme or takeover (with ASX also making changes to remove the “NS” status notes on such securities). Restrictions on special crossings under the Corporations Act 2001 (Cth) will continue to apply to bidders and their associates (but not parties unrelated to the bidder). The changes should facilitate transactions in large crossings of stock by parties that are unrelated to the bidder.
Following consultation launched in August 2014, ASIC has repealed the prohibition in Rule 6.5 of the ASIC Market Integrity Rules (ASX Market) 2010 (Rules) against ASX trading participants effecting special crossings in securities subject to a takeover or scheme. The repeal reflects ASIC’s view that:
- conduct during takeovers and schemes is already appropriately regulated by the Corporations Act 2001 (Cth) (Act), which restricts trading by a bidder (or its associates) during a takeover bid; and
- the extension under the Rules to restrict special crossings during takeovers or schemes by parties unrelated to the bidder (or its associates) is unnecessary and goes beyond the policy objectives for imposing the prohibition.
Bidders and their associates will continue to be subject to the restrictions in the Act on executing off-market trades (including special crossings).
As a consequence, ASX has also amended Appendix 4013 to the ASX Operating Rules Procedures to allow it to stop applying “NS” (no special trades) status notes to securities subject to a takeover or scheme and to remove existing “NS” status notes on such securities.
See ASIC media release dated 4 May 2015 and ASX Notice 0447.15.05 dated 6 May 2015.
See also ASIC Market Integrity Rules (ASX Market) Amendment 2015 (No. 1) Explanatory Statement.
By Hiroshi Narushima, Jessica van Rooy, Sally Randall
ASIC updates guidance for carbon market participants
ASIC’s updated RG 236 reflects changes to the structure and regulation of carbon markets in Australia following the cessation of the carbon pricing mechanism, the establishment of the Emissions Reduction Fund and the anticipated introduction of the emissions reduction safeguard mechanism in July 2016. Carbon market participants should familiarise themselves with the new guidance which will assist them to operate their businesses in compliance with financial services laws.
ASIC has released updated Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets? (RG 236) to reflect changes made to the structure and regulation of carbon markets in Australia. Specifically, updated RG 236 now takes into account:
- the cessation of the carbon pricing mechanism in February 2015;
- the establishment of the Emissions Reduction Fund (ERF), taking into consideration the broader scope of project types and new participants under the ERF;
- anticipated ERF project structures which involve multiple small-scale carbon abatement activities under a single project (an ERF aggregated project);
- competitive ERF reverse auctions for carbon abatement contracts; and
- the introduction of the emissions reduction safeguard mechanism in July 2016.
The updated RG 236 also reflects:
- that carbon units, European Union Allowances and Australian-issued international units all cease to be financial products following the cessation of the carbon pricing mechanism; and
- the exemption of carbon abatement contracts from the definitions of ‘derivative’ and ‘financial product’ for the purposes of the Corporations Act 2001 (Cth) (which will mean that a person is not required to hold an Australian financial services licence to offer advice about, or enter into, a carbon abatement contract).
The Government will monitor ERF auction participation as it considers feedback from its consultation in January 2015 on certain exemptions from the managed investment scheme and Australian financial services licencing provisions for ERF aggregated projects, aggregators and technical advisers providing advice about Australian carbon credit units.
In the meantime, RG 236 provides guidance on the application of the current financial services laws to carbon market activities under the ERF and the emissions reduction safeguard mechanism and also provides particular guidance on:
- when an ERF aggregated project may be a managed investment scheme, and
- when the provision of carbon abatement by a person to an ERF project proponent may be a financial product.
See the ASIC media release dated 20 May 2015.
By Peter Reeves
Taxation of employee share schemes Bill passes the Senate without changes
Legislation amending the taxation of employee share schemes has passed through the Senate without amendment, with the new rules to apply to shares or options issued to Australian employees on and after 1 July 2015. The changes are aimed at supporting innovative start-up companies in Australia, and to improve the taxation arrangements for employee share schemes to be more internationally competitive.
See G+T Tax Update on 25 June 2015 for further details.
Proposed multinational tax anti-avoidance law
The Government has released exposure draft legislation to amend the anti-avoidance rules in Part IVA of the Income Tax Assessment Act 1936 (Cth) to prevent multinational entities using artificial or contrived arrangements to avoid a taxable presence in Australia. We will continue to monitor the progress of the exposure draft legislation.
Following the release of the Federal Budget, Treasury has released an Exposure Draft Tax Laws Amendment (Tax Integrity Multinational Anti-avoidance Law) Bill 2015 (Exposure Draft).
The new legislation, if enacted, would amend the anti-avoidance rules in Part IVA of the Income Tax Assessment Act 1936 (Cth) targeted at the erosion of the Australian tax base by approximately 30 specific multinational entities (according to Treasury) using artificial or contrived arrangements to avoid the attribution of business profits to Australia.
The measure, which will only apply where the non-resident's annual global revenue is greater than AUD$1 billion, is intended to target situations in which:
- a foreign multinational supplies goods or services to Australian customers and books that revenue offshore;
- the activities of an Australian entity are integral to the Australian customer’s decision to purchase the goods or services;
- the profits from Australian sales are subject to low or no global tax; and
- one of the principal purposes of the arrangements is to obtain a tax benefit (or both to obtain a tax benefit and to reduce other tax liabilities under Australian law (other than income tax) or under a foreign law).
Where the measure applies, it is proposed that the Commissioner of Taxation may cancel the Australian tax benefits obtained in connection with the scheme.
The measure is proposed to apply to tax benefits obtained from 1 January 2016 (under both new and existing schemes).
Submissions on the Exposure Draft closed on 9 June 2015.
See Treasury media release on 12 May 2015 and our Budget night briefing paper on these measures.
By Peter Feros, Andrew Sharp and Mack Wan
Goods and services tax
Proposed extension of GST to digital products and other services imported by consumers
The Government has released exposure draft legislation to amend the GST law to ensure products and services provided to Australian consumers are treated equivalently for GST purposes, whether they are provided by Australian entities or foreign entities. We will continue to monitor the progress of the exposure draft legislation.
Following the release of the Federal Budget, Treasury has released anExposure Draft Tax Law Amendment (Tax Integrity: GST and Digital Products) Bill 2015 (Exposure Draft Bill).
According to the Explanatory Material, the Exposure Draft Bill will ensure that digital products and other imported services supplied to Australian consumers by foreign entities are subject to GST in a similar way to equivalent supplies made by Australian entities.
The proposed amendments:
- make the supply of anything other than goods or real property to an entity that is not registered or required to be registered for GST potentially subject to GST if that entity is an Australian resident;
- provide that the GST will be payable on certain electronic supplies to which the above applies, by the operator of the service through which the supply is made to the consumer rather than the actual supplier; and
- allow for the making of regulations to provide simplified rules for registration, tax periods and GST returns for entities to which the proposed amendments apply.
Submissions on the Exposure Draft Bill close on 7 July 2015.
See Treasury media release on 12 May 2015.
By Hanh Chau and Grace Ho
When will a "hostile" minority shareholder be granted access to a company's books?: Mighty River International Limited v Mesa Minerals Limited  FCA 462
In this case, G+T acted for a minority shareholder who was granted access to the company’s books under section 247A(1) of the Corporations Act 2001 (Cth). It was alleged that the shareholder brought the application for collateral purposes arising from prior corporate hostilities between the shareholder and the company. However, the court found that the shareholder’s application was made for a proper purpose in circumstances where the company’s disclosure about certain leasing arrangements was ambiguous and incomplete.
Mighty River International Limited (Mighty River) applied under section 247A(1) of the Corporations Act 2001 (Cth), as a minority shareholder in Mesa Minerals Limited (Mesa), to inspect the books of Mesa.
Mighty River submitted that it had genuine concerns that certain arrangements entered into by Mesa allowing third parties to use Mesa’s assets may not be in the best interest of Mesa shareholders. Mesa pointed to the history of hostilities between particular directors of Mighty River and Mesa, and claimed that Mighty River had no genuine concerns and was in fact trying to force a purchase of its minority shares and seeking to act as a de facto director involving itself in the management of Mesa.
In finding that Mighty River made the application in good faith and that the inspection was for a proper purpose, Barker J in the Federal Court of Australia held that:
- while the principles that guide the exercise of the court’s discretion under section 247A(1) may be broadly stated (and an order should not be made just to satisfy the curiosity of an applicant), their application can involve complexities of judgement and there is no particular checklist of criteria that must be satisfied;
- Mighty River was a substantial shareholder (and had been for some time before the hostilities arose);
- the existing disclosure in relation to exactly what arrangements were in place was limited and the information was ambiguous and incomplete;
- it was reasonable for a minority shareholder in the position of Mighty River, especially in light of the drawn out hostilities, to want to be better informed about the arrangements;
- the fact that Mighty River would be pleased to receive an offer to buy out its minority shares in Mesa did not disentitle it to make an application under section 247A(1), nor did the history of hostilities with Mesa nor the fact that a particular action or court proceeding had not been finally identified as a possible consequence of Mighty River’s access to the books; and
- Mighty River was not impermissibly involving itself in the management of Mesa.
Many thanks to Tim O’Leary and Amanda Macmaster (who acted for Mighty River) for their assistance in preparing this summary.
Directors should carefully consider the terms of exclusion clauses in their D&O policies: OZ Minerals Holdings Pty Ltd & Ors v AIG Australia Ltd  VSC 185
In this case, a major shareholder and board position exclusion in a D&O policy was found to have been enlivened where the relevant shareholder was a shareholder at the time of the claim, but not at the time of the alleged wrongful acts. In so finding, the Court applied general principles of contractual interpretation and refused to strain to find ambiguity in the words of the exclusion clause where such ambiguity did not exist. Company officers should carefully review the scope and wording of exclusion clauses (and in particular major shareholder exclusions) when negotiating D&O policies to ensure that coverage is not unexpectedly denied.
This case involved a D&O insurance policy (Policy) with AIG Australia Ltd (AIG) taken out by OZ Mineral Holdings Pty Ltd (OZ Minerals Holdings). Previously, OZ Minerals Holdings had merged its mining business with the business of OZ Minerals Ltd (OZ Minerals) by way of a scheme of arrangement. Claims for breaches of continuous disclosure obligations and misrepresentations in connection with the scheme were brought against OZ Minerals, which then brought contribution proceedings against OZ Minerals Holdings and its directors. AIG denied liability under the Policy on the basis of a major shareholder and board position exclusion (Policy Exclusion) which provided that:
“The Insurer shall not be liable to make any payment under this policy in connection with any Claim brought by any past or present shareholder or stockholder who had or has:
(i) direct or indirect ownership of or control over 15% [or] more of the voting shares or rights of the Company or of any Subsidiary;
(ii) a representative individual or individuals holding a board position(s) with the Company”.
In finding that the Policy Exclusion applied despite the fact the 2 conditions were met only at the time of the claim being brought, but not at the time of the alleged wrongful acts (OZ Minerals did not become a shareholder of OZ Minerals Holdings, or have a representative on the board until after the merger), Hargrave J in the Supreme Court of Victoria:
- found that in interpreting the words of the Policy Exclusion and resolving ambiguity, the Court should proceed in a “common sense and non-technical way” and give the Policy a “commercially sensible construction”. Courts do not strain to find ambiguity in exclusion clauses and it is only appropriate to apply the contra proferentem rule where ambiguity remains after the application of the general principles of contractual interpretation;
- preferred AIG’s construction that the use of the present tense words meant that the conditions for the Policy Exclusion applied to the time of both the alleged wrongful conduct and the time of the claim. Such construction was grammatical, served an objectively reasonable purpose (ie protection from the risk of co-operation between a claimant and the company and misuse of confidential information to the claimant’s advantage) and accorded with the claims made structure of the Policy (which required both the alleged wrongful acts and the making of the claim within the policy period); and
- found that while the minimum shareholding percentage of 15% in the Policy Exclusion was low and would not provide sufficient influence over OZ Minerals Holdings, this was not the point and the level of risk to be accepted by AIG was a matter of negotiation between the parties.
Can a company indemnify officers against legal costs and expenses incurred in defending criminal proceedings prior to verdict?: Note Printing Australia Ltd v Leckenby  VSCA 105
In this case, the Court found that on a proper construction of section 199A(3)(b) of the Corporations Act 2001 (Cth) (and an analogous provision in a deed of indemnity with a director), a company was not prohibited from indemnifying its director for legal costs in defending criminal proceedings prior to a verdict being handed down, provided that the director is obliged to repay any amounts paid in the event that a guilty verdict is ultimately returned.
A deed of indemnity between Note Printing Australia Limited (NPAL) and Mr Leckenby (its then Chief Executive Officer) (Deed) provided that:
- to the fullest extent permitted by law, NPAL indemnifies Mr Leckenby against liability for legal costs and expenses incurred by Mr Leckenby or for which Mr Leckenby may become liable if defending actions for liability as an officer of NPAL, unless such costs were incurred in defending or resisting criminal proceedings in which [Mr Leckenby] is found guilty (clause 2.2); and
- Mr Leckenby was required to refund to NPAL all amounts incurred by NPAL in respect of a claim for which Mr Leckenby was not entitled to be indemnified.
Tate J (with whom Whelan JA and Ferguson JA agreed) in the Supreme Court of Victoria – Court of Appeal upheld the decision at first instance that NPAL was liable to pay Mr Leckenby’s legal costs in defending the criminal proceedings before a verdict was handed down for the following reasons:
- the carve out for criminal proceedings in clause 2.2 largely mirrors the prohibition against an indemnity for legal costs in section 199A(3)(b) of the Corporations Act 2001 (Cth) (Act). A proper construction of the use of the future perfect tense (ie is found guilty) in both clause 2.2 and section 199A(3)(b) meant that unless and until a finding of guilt occurs, NPAL’s obligation to indemnify subsists. At all relevant times before a verdict is reached, a person charged with an offence is not a person who has been found guilty of the offence;
- such finding was supported by the change in wording from the predecessor of section 199A(3)(b) which reflected a temporal shift in the prohibition on indemnifying officers for legal costs so as to permit such costs to be paid during criminal proceedings and up until, and unless, a guilty verdict is returned;
- Tate J accepted that the trial judge found that the requirement for Mr Leckenby to repay NPAL in the event that he was found guilty rendered the transaction something different to a traditional indemnity but was in effect an advance (as opposed to a loan) that was to be repaid if a guilty verdict was returned; and
- adopting a business-like approach, the parties were to be taken to have intended to make an arrangement which conferred upon Mr Leckenby the maximum protection available while respecting the prohibition in section 199A(3)(b). It would not have been difficult for the Deed to have stated that NPAL had a right to postpone payment of defence costs until the verdict was known if that had been the intention.
Parties may be bound by their “subject to contract” negotiations: Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd  QSC 119
This case serves as a reminder to negotiating parties to be clear about their intentions regarding the binding nature of their ‘subject to contract’ negotiations and to be aware that their conduct and language could result in them being bound prior to signing a formal contract. If the intention is not to be bound until a formal contract is signed, this should be communicated very clearly and (where possible) in writing, ideally before negotiations commence.
North Queensland Fuel Pty Ltd (NQF) appointed agents to sell a service station on its behalf. Stellard Pty Ltd (Stellard) made a verbal offer to purchase the service station, subject to due diligence and various other conditions. At Stellard’s request, the agents then emailed a representative of Stellard setting out the terms on which NQF would sign a contract (including the price, deposit, completion date and various other terms but made no mention of due diligence) and attaching a draft contract of sale which also included a director and shareholder guarantee.
After further negotiations, Stellard sent an email in which it confirmed its offer which was expressed to be “subject to contract and due diligence as previously discussed” and sought immediate confirmation that its offer was accepted so that exchange of contracts could take place by the following Monday. An authorised representative of NQF accepted the offer by email, noting that the offer was “subject to execution of the [C]ontract provided (with agreed amendments) on Monday”.
Stellard’s solicitor then sought amendments to the contract including a 40 day due diligence period and removal of the guarantee. However, relying on the deletion of the guarantee, NQF’s agents advised Stellard that NQF was terminating negotiations. In fact, NQF had at the same time been negotiating with another potential purchaser who had submitted a higher price.
In finding that there was a binding contract for sale, Martin J in the Supreme Court of Queensland found that:
- whether or not a contract has been formed requires an objective determination of the intention of the parties, which requires determination not only of the text but also of the surrounding circumstances known to the parties and the purpose and object of the transaction;
- although Stellard’s offer was expressed to be “subject to contract and due diligence as previously discussed”, such words needs to be measured against the relevant context;
- the broader context of the emails (including telephone conversations between the parties) and the expressions used in the emails strongly suggested that the parties “were content to be bound immediately and exclusively by the terms which they had agreed upon while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms”; and
- the parties had agreed on the essential terms of the contract. By sending the email accepting Stellard’s offer, NQF was taken to have agreed to the due diligence period and there was no evidence to suggest that the execution of personal guarantees was a matter essential to entry into the contract.
Failure to prohibit the mixing of funds may be fatal to a trust claim: Sino Iron Pty Ltd & Anor v Palmer & Anor (No 3)  QSC 94
This case illustrates the importance of ensuring that that any intention to create a trust is clearly and expressly provided for in writing as courts will not readily infer such intention. Specifically, a duty not to mix alleged trust funds with other funds is a “hallmark” duty of a trustee and, in the absence of an express trust, an intention to create a trust will not be inferred without an express or implied prohibition against such mixing of funds.
Sino Iron Pty Ltd and Korean Steel Pty Ltd (Companies) entered into facilities deeds with Mineralogy Pty Ltd (Mineralogy) relating to the approval, development, administration and maintenance of facilities by Mineralogy for the Companies (Facilities Deeds). The Facilities Deeds provided for Mineralogy to open a bank account and establish an Administrative Fund for the carrying on of its business, specifically payment and reimbursement of its administration costs and expenses of operating, maintaining and repairing the facilities. Contributions were made on behalf of the Companies into the Administrative Fund.
Mr Palmer, who was a director of Mineralogy, drew 2 cheques on the bank account of Mineralogy payable to Cosmo Developments Pty Ltd (Cosmo) in the sum of $10 million and payable to Media Circus Network Pty Ltd in the sum of $2.167 million (Payments). The question before the Queensland Supreme Court was whether the parties had shown a clear intention to create an implied trust over the contributions made on behalf of the Companies into the Administrative Fund such that the Payments were made by Mineralogy in breach of such trust.
Jackson J found that the contributions were not held on trust by Mineralogy on the following basis:
- the answer turned on an analysis of the structure of the parties’ relationship and the contractual rights and obligations that the Facilities Deeds created;
- a failure to expressly provide for a trust within a contract containing obligations consistent with a trustee did not necessarily speak strongly against an inference of an intention to create a trust;
- to support an inference that a trust is intended, an obligation not to mix trust funds must be found within the express or implied contractual terms as this is considered a ‘hallmark’ duty of a trustee;
- a term prohibiting the mixing by Mineralogy of contributions could not be implied into the Facilities Deeds because they worked perfectly well without it;
- the absence of an express or implied term in the Facilities Deeds prohibiting the mixing of funds in the accounts of Mineralogy was therefore determinative in the conclusion that no trust was intended; and
- “commercial necessity” is not made out merely because it is considered necessary to find an intention to create a trust to commercially protect the putative beneficiary.