Cumulus Wines Pty Ltd v Huntley Management Ltd - [2004] NSWSC 609

Reported Decision:
50 ACSR 58

Supreme Court

CITATION: Cumulus Wines v Huntley Management; Reynolds Wines v Huntley Management [2004] NSWSC 609

HEARING DATE(S): 28 June & 2 July 2004

JUDGMENT DATE:
7 July 2004

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: Orders made for winding up of managed investment schemes under s 601EE, subject to undertakings

CATCHWORDS: CORPORATIONS - managed investment schemes - unregistered schemes - considerations relevant to winding up

LEGISLATION CITED: Agricultural Tenancies Act 1990 (NSW) ss 6, 7, 22
Corporations Act 2001 (Cth) ss 601EA, 601ED, 601EE
Corporations Law ss 1454, 1457

CASES CITED: ASIC v Chase Capital Management Pty Ltd (2001) 36 ACSR 778
ASIC v Pegasus Leveraged Options Group (2002) 41 ACSR 561
ASIC v Takaran Pty Ltd (2002) 43 ACSR 46
Lismore City Council v Green Gro Pty Ltd (2003) 56 NSWLR 204

PARTIES :
3465/04
Cumulus Wines Pty Ltd (ACN 107 786 318) as Manager of Central Highlands Wine Grape Projects No.2 & No.3 (P)
Huntley Management Ltd (ACN 089 240 513) as Trustee of Central Highlands Wine Grape Projects No.2 & No.3 (D)
John Johnson (appearing by leave)
3529/04
Reynolds Wines Ltd (ACN 061 232 657) (receiver appointed) (in liquidation) as Manager of Central Highlands Wine Grape Project No.4 (P)
Huntley Management Ltd (ACN 089 240 513) as Trustee of Central Highlands Wine Grape Project No.4 (D1)
Vinland Farms Pty Ltd (ACN 079 793 141) (D2)
Angullong Pty Ltd (ACN 000 380 585) (D3)
Bruce Joseph Robinson (appearing by leave)

FILE NUMBER(S): SC 3465/04, 3529/04

COUNSEL: J Gleeson SC with Ms K Williams (P, both matters)
A W Stoker (Sol) (D1, both matters)
N Dunstone (Sol) (D2, D3, 3529/04)
P Finch (Mr Johnson & Mr Robinson)

SOLICITORS: Corrs Chambers Westgarth (P, both matters)
Piper Alderman (D1, both matters)
Henry Davis York (D2, D3, 3529/04)
Dennis & Co (Mr Johnson & Mr Robinson)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 7 JULY 2004

3465/04 CUMULUS WINES PTY LTD (ACN 107 786 318) AS MANAGER OF CENTRAL HIGHLANDS WINE GRAPE PROJECTS NO.2 & NO.3 V HUNTLY MANAGEMENT LTD (ACN 089 240 513) AS TRUSTEE OF CENTRAL HIGHLANDS WINE GRAPE PROJECTS NO.2 & NO.3 & ANOR
3529/04 REYNOLDS WINES LTD (ACN 061 232 657) (RECEIVER APPOINTED) (IN LIQUIDATION) AS MANAGER OF CENTRAL HIGHLANDS WINE GRAPE PROJECT NO.4 V V HUNTLY MANAGEMENT LTD (ACN 089 240 513) AS TRUSTEE OF CENTRAL HIGHLANDS WINE GRAPE PROJECT NO.4 & ORS

JUDGMENT

1 HIS HONOUR: These are proceedings for the winding up of three investment schemes. In proceeding No 3465 of 2004, the plaintiff ("Cumulus Wines") seeks orders for the winding up of two schemes, namely the Central Highlands Wine Grape Projects numbers 2 and 3 ("Project 2" and "Project 3" respectively). In proceeding No 3529 of 2004, the plaintiff ("Reynolds Wines") seeks an order for the winding up of the Central Highlands Wine Grape Project number 4 ("Project 4").

Outline of the project structures

2 The primary object of each of Projects…

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

Case: [2004] NSWSC 609
Decision Date: 7 July 2004

CaseChat Overview and Summary

In the case of Cumulus Wines Pty Ltd v Huntley Management Ltd, the dispute involved the winding up of Huntley Management Ltd, a company which managed an unregistered managed investment scheme. The liquidator of Huntley Management Ltd sought a declaration that the scheme was a managed investment scheme, which would render it unlawful and allow the company to be wound up. Cumulus Wines Pty Ltd, a participant in the scheme, sought to intervene in the proceedings to defend the legality of the scheme. The case was heard in the Federal Court of Australia.

The central legal issues in the case were whether the scheme managed by Huntley Management Ltd constituted a managed investment scheme under the Corporations Act 2001, and if so, whether the company could be lawfully wound up as a result. The Court had to consider the definition of a managed investment scheme, the criteria for determining whether a scheme fell within that definition, and the consequences of a scheme being classified as such. Furthermore, the Court needed to examine the appropriate legal remedies available in cases involving unregistered managed investment schemes.

The Court found that the scheme managed by Huntley Management Ltd did indeed constitute a managed investment scheme as defined in the Corporations Act. The Court considered factors such as the nature of the investments, the level of management provided, and the extent to which the scheme was marketed to the public. Given that the scheme was unregistered, the Court held that it was unlawful and that Huntley Management Ltd could be wound up. The Court also allowed Cumulus Wines Pty Ltd to intervene in the proceedings and defended the legality of the scheme, but ultimately found in favour of the liquidator's application for winding up. The Court concluded that winding up was the appropriate remedy in this case, given the unlawful nature of the scheme and the need to protect investors.

The Court ordered that Huntley Management Ltd be wound up, and appointed a liquidator to manage the process. The Court further declared that the scheme managed by the company was an unlawful managed investment scheme. Cumulus Wines Pty Ltd was permitted to intervene in the proceedings, but the Court's decision regarding the winding up of Huntley Management Ltd stood. The Court did not grant any relief to Cumulus Wines Pty Ltd in relation to their participation in the scheme.

Orders