The High Court has ironed out any confusion over the role of two court-appointed observers to funds caught up in related-party loans with the Pyne Gould Corp-managed Torchlight fund after Perpetual Trust sought an urgent hearing.
Perpetual raised concerns the court-appointed observers, Vivian Fatupaito and Christopher Duffy of WHK, had "inadvertently" overstepped their powers, Judge Paul Heath said in a July 24 judgment.
The judge clarified their role in overseeing the activities of the Perpetual cash management and mortgage funds, saying "genuine issues" had been raised and neither Perpetual nor its statutory supervisor, Trustees Executors, should be criticised.
"Their appointment was not intended to intrude on decision-making powers of the directors of Perpetual Trust, but was designed to enable oversight of the activities of the Perpetual Trust Board, insofar as it related only to management of the cash fund and the mortgage fund," the judgment said.
The need to separate the observers' court-ordered functions from those in their role for Trustees Executors "was underscored by the order for costs and reasonable expenses incurred" being met by Perpetual rather than the funds, the judge said.
The observers were appointed earlier this month by Judge Heath to keep tabs on the funds and ask questions relating to the Torchlight Fund No 1 LP advances.
"I intended that the power to ask questions of board members would operate both within the confines of a formal board meeting and outside," he said.
The order was made after Trustees Executors passed on concerns about the Torchlight loan to the Financial Markets Authority, and has led to a full repayment of the $28 million facility.