PHILIPPA MARGARET WALSH RICHARD DOUGLAS BLYTHE SYLVIA JOAN BLYTHE DONALD ROBERT BONNY JOYCE EVELYN BONNY ALFRED ERNEST RYDER FINTEIN PTY LTD (ACN 009 387 553) JOHN KENNETH WALSH MARGARET JOSEPHINE WALSH ROSS EDWARD YEATS LORNA MAY YEATS JOHN HERBERT MONCRIEFF FISHER JENNIFER BLAKE FISHER DONALD GEORGE BELL PATRICIA LORRAIN BELL GARY ALLAN HOWIE PHILIP JAMES HOWIE COLIN EASTWOOD KNIGHT NOLA CARMA KNIGHT CHARLES LOUIS BLADEN JEAN BLADEN KEITH HAROLD LARKE SHIRLEY ALEXANDRIA LARKE VERNON WILLIAM DEAGUE KAY MARIE DEAGUE ENKLEMAN PTY LTD (ACN 071 458 430) OCEAN GARDENS INC JOSHRICH PTY LTD (ACN 008 755 477) NANCY MICHELLE VERNALEO SHANKLAND NOMINEES PTY LTD (ACN 009 221 278) BERNARD ARTHUR McFALL DOLORES JOAN McFALL LANCE BRIAN PRESCOTT McDONALD JENNIFER DAWN ATHERTON KENNETH CHARLES COLLINS IRENE ENID COLLINS KENNETH NEIL SELBY MARY ELIZABETH SELBY DONALD CARL SLATER ELAINE LILY SLATER Appellants
AND
ALBERT LAWRENCE ARCUS VIVIENNE CONSTANCE ARCUS First Respondents
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :JOHNSON J
Citation :BURTON AND THE PERSONS NAMED IN SCHEDULE 1 TO THE ORIGINATING PROCESS OF THE PLAINTIFFS DATED 17 APRIL 2003 -v- ARCUS & ORS [2004] WASC 244
File No :COR 138 of 2003
Catchwords:
Corporations - Managed investment scheme - Unregistered scheme - Contributory mortgage investment - Characteristics of the scheme - Meaning of "to be pooled" - Whether members of a scheme must agree to, approve of or know of the pooling - Meaning of "day-to-day control" - Whether managerial activities of the promoter or operator of a scheme are to be imputed to the members for the purpose of determining whether the members have day-to-day control of the scheme - Winding up
Mortgages and securities - Torrens system - Indefeasibility - Rights of a co-mortgagee as a tenant in common - Whether the Court has power to order winding up under s 601EE of the Corporations Act 2001 (Cth) notwithstanding the rights of a co-mortgagee under the mortgage and the Transfer of Land Act 1893 (WA) - Whether the Court should, in its discretion, order winding up
Transfer of Land Act 1893 (WA), s 52, s 63, s 67, s 68, s 76, s 134, s 188(ii), s 199, s 202, s 222, s 231
Result:
Appeal allowed Unregistered managed investment scheme ordered to be wound up
Category: A
Representation:
Counsel:
Appellants: Mr C L Zelestis QC & Mr J…
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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AGLC
Burton v Arcus [2006] WASCA 71
Case
[2006] WASCA 71
Decision Date
CaseChat Overview and Summary
Burton v Arcus is a case concerning the operation of an unregistered managed investment scheme. The dispute arose between the applicant, Burton, and the respondent, Arcus, the promoter of the scheme. The case was heard in the Supreme Court of Western Australia. Burton applied for an order for the winding up of Arcus pursuant to section 601EE of the Corporations Act 2001 (Cth), on the basis that Arcus was operating an unregistered managed investment scheme. Arcus opposed the application, arguing that the scheme was not an unregistered managed investment scheme because the assets of the scheme were not pooled with the assets of other members of the scheme, and the members of the scheme did not have day-to-day control of the scheme.
The legal issues before the court included whether members of an unregistered managed investment scheme must agree to, approve of, or know of the pooling of assets for the scheme to be an unregistered managed investment scheme, and whether managerial activities of the promoter or operator of a scheme are to be imputed to the members for the purpose of determining whether the members have day-to-day control of the scheme. The court also considered whether it had the power to order winding up under section 601EE of the Corporations Act, notwithstanding the rights of a co-mortgagee under the mortgage and the Transfer of Land Act 1893 (WA).
The court held that the assets of the scheme were not pooled with the assets of other members of the scheme because the mortgagee under the mortgage that secured the loans provided to the scheme was not a trustee for the members of the scheme. The court also held that the promoter or operator of a scheme has day-to-day control of the scheme, and that this control cannot be imputed to the members of the scheme. The court further held that it did have the power to order winding up under section 601EE of the Corporations Act, notwithstanding the rights of a co-mortgagee under the mortgage and the Transfer of Land Act. However, the court exercised its discretion not to make an order for winding up, on the basis that it was not in the interests of justice to do so.