Australian Securities Commission v United Tree Farmers Pty Ltd - [1997] FCA 479

CATCHWORDS

CORPORATIONS LAW - Application for Declaration that the respondent companies together participated in offering investors ‘prescribed interests’ contrary to the corporations law - five respondent companies owned and operated by various members of a family - investors invited to enter into agreements with the second respondent for use of land for harvesting tea trees - investors at same time invited to enter agreement with first respondent for provision of management services for planting, tending etc of tea trees - investors also offered finance by a third respondent - whether the three respondents were involved in offering interests in the profits or assets of a scheme - meaning of scheme - meaning of interest in assets - whether less than proprietary interest sufficient - investors later introduced to fifth respondent as a company with the expertise to harvest tea trees - whether fifth respondent sufficiently part of scheme - remaining respondent provided land enabling second respondent to offer land to investors - whether that company sufficiently part of scheme.

Corporations Law, 1018(1); 1064(1); 1065(1)

Ashgrove Pty Ltd v Deputy Commissioner of Taxation (1994) 124 ALR 315
Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex rel Corporate Affairs Commission (1981) 148 CLR 121
Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426
Securities and Exchange Commission v W J Howey Company 90 Led 1244 (1946)(US)
Warren v Nut Farms of Australia Pty Ltd [1981] WAR 134

Butt P, Land Law, (3rd Ed), Law Book Co, Sydney, 1996
Bradbrook, MacCallum and Moore, Australian Real Property Law, (2nd Ed), Law Book Co Sydney, 1997
Gray K, Elements of Land Law, (2nd ed) Butterworths, London, 1993

CORPORATIONS LAW - Appointment of manager and receiver - evidence of poor management and financial affairs of first respondent - preconditions for appointment of receiver satisfied - relevance of a voluntary change in management structure of company - appointment of receiver delayed to provide new management an opportunity to direct company to comply with law.

ASC v AS Nominees Ltd (1995) 133 ALR 1
Beach Petroleum NL V Johnson (1992) 9 ACSR 404
Corporate Affairs Commission v United International Technologies Pty Ltd (1987) 6 ACLC 637

AUSTRALIAN SECURITIES COMMISSION v UNITED TREE FARMERS PTY LTD & OTHERS
No AG3004 of 1996
FINN J
CANBERRA
2 JUNE 1997

IN THE FEDERAL COURT OF AUSTRALIA )
AUSTRALIAN CAPITAL TERRITORY     )
DISTRICT REGISTRY                )    No. AG3004 of 1996
GENERAL DIVISION                 )

IN THE MATTER OF UNITED TREE FARMERS PTY LTD
AUSTRALIAN COMPANY NUMBER (“ACN”): 000 497 183
& THE OTHER RESPONDENTS

AUSTRALIAN SECURITIES COMMISSION
Applicant
UNITED TREE FARMERS PTY LTD
(ACN 000 497 183)
First Respondent
TRANSGROWTH ASSOCIATION (AUST) LTD
(ACN 002 786 263)
Second Respondent
HYSWIN (NORTH) LIMITED
(ACN 010 979 549)
Third Respondent
SYFIND (FINANCES) PTY LTD
(ACN 001 961 940)
Fourth Respondent
TEA TREE OIL COMPANY OF NORTH QUEENSLAND PTY LTD
(ACN 057 437 028)
Fifth Respondent

COURT:FINN J
PLACE:CANBERRA

DATE: 2 JUNE 1997

MINUTES OF ORDERS

THE COURT ORDERS THAT:

the applicant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Australian Securities Commission v United Tree Farmers Pty Ltd [1997] FCA 479
Case: [1997] FCA 479
Decision Date: 2 Jun 1997

CaseChat Overview and Summary

The Australian Securities Commission applied for a declaration that the respondents, five companies, were in breach of the Corporations Law by offering investors “prescribed interests” contrary to ss1018(1), 1064(1) and 1065(1). The respondents were United Tree Farmers Pty Ltd, Transgrowth Association (Aust) Ltd, Hyswin (North) Ltd, Syfind (Finances) Pty Ltd, and Tea Tree Oil Company of North Queensland Pty Ltd. The respondents were involved in offering investors an “occupation interest” in strips of contiguous land on two properties in North Queensland. The investors could then have their strips managed by United Tree Farmers, Tea trees were planted and grown on the land, and while no express agreement to harvest the trees was offered, the profit derived from the investment was projected to come from oil production. The investment was facilitated by the availability of financial services offered by Syfind. The ASC alleged that the respondents were in breach of the Corporations Law as the “package” involved the offering of a “prescribed interest” as defined in s9 of the Corporations Law. If such was the case then it was conceded that the prospectus and other provisions of the Corporations Law had not been complied with. The ASC further alleged that Transgrowth, United Tree Farmers, Syfind, Tea Tree Oil Company of North Queensland, and/or Hyswin were participants in the investment scheme. In particular, it was alleged that the respondents had been associated through their directors and members. The court found that the investment scheme involved the offering of a “prescribed interest” as defined in s9 of the Corporations Law. The court held that the scheme was one which gave the investors a right to participate in, or an interest in, the profits and assets of the scheme. The court concluded that Transgrowth, United Tree Farmers, Syfind and Tea Tree Oil Company of North Queensland were participants in the investment scheme, but Hyswin was not. The court made a declaration relating to the contraventions. The court also ordered that a receiver and manager of the property of United Tree Farmers be appointed.

Orders