Re APT Projects Limited
[2013] VSC 471
•21 February 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
S CI No. 07027 of 2012
IN THE MATTER OF APT PROJECTS LIMITED
(ACN 054 653 039)
| APT PROJECTS LIMITED (ACN 054 653 039) (in its capacity as responsible entity of the registered management investment schemes listed in annexure A to the originating process.) | Plaintiff |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 February 2013 | |
DATE OF RULING: | 21 February 2013 | |
CASE MAY BE CITED AS: | Re APT Projects Limited | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 471 | |
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CORPORATIONS – Application for directions by responsible entity as trustee of four managed investments schemes – Whether responsible entity justified in amending constitution of schemes to permit surrender of leases over land in timber harvesting schemes – Corporations Act 2001 s 601GC(1)(b).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | D Shavin QC with Dr O Bigos | Herbert Smith Freehills |
| For Mr Stephen Dickens (a grower), by leave of the Court | M Bland | Mills Oakley |
HIS HONOUR:
In this matter, the plaintiff, APT Projects Limited (APT), in its capacity as responsible entity of four registered managed investment schemes[1] seeks a direction pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2000 that the plaintiff would be justified in amending the constitutions of the schemes pursuant to s 601GC(1)(b) of the Corporations Act 2001 (Cth) by executing a deed of variation in conformity with the schedule to the originating process, and lodging each deed of variation with the Australian Securities and Investments Commission.
[1]The four schemes are listed in annexure A to the originating motion of 17 December 2012.
Mr Bland, a solicitor, sought and was granted leave to appear for Mr Stephen Dickens, a grower in the APT Eucalypt Project 2001, being one of the four schemes.
The proposed amendments will give APT the power under the schemes to surrender, assign and terminate any interest that the growers have in the trees the subject of the four schemes. The amendments will enable the responsible entity to sell the trees the subject of the four schemes to New Forests Asset Management Pty Ltd in its capacity as trustee of the Forestry Investment Trust (New Forests) (the transaction). Currently, under the constitution of the schemes, the growers have the right to have the trees harvested and sold, but not the right to have the trees sold without being harvested.
Accordingly, the growers rights will be affected by the proposed amendments as the growers may be deprived of the right to have the trees harvested as the trees may be sold to New Forests without harvesting.
The question that I have to address is whether the directors of APT are justified in forming the view, which they have, that they reasonably consider that the proposed amendments will not “adversely” affect members' rights.
I am satisfied that the directors of APT reasonably consider that the amendments to the constitutions will not adversely affect members’ rights. The evidence before me is that the proposed transaction with New Forests will be to the financial benefit of growers. The evidence establishes that the growers are likely to receive significantly more if the trees are sold to New Forests than if the trees are sought to be harvested and the produce sold.
I have evidence before me of poor markets for harvested trees and the difficulty facing APT, the responsible entity, in its current financial position, of not being able to finance, as it has in the past, the further managing of the projects.
I am satisfied that all notices that ought to have been given to growers have been given. I am also satisfied that the board of APT has gone about its task in the proper fashion in assessing whether the members’ rights will be “adversely” affected by following the steps, in forming their view, that are set out by Barrett J of the New South Wales Supreme Court in ING Funds Management Ltd v ANZ Nominees Ltd,[2] and as amplified on by the Victorian Court of Appeal in 360 Capital Re Limited v Watts.[3]
[2](2009) 228 FLR 444; [2009] NSWSC 243 at [86]-[88] and [100].
[3][2012] VSCA 234.
Mr Bland is also concerned that the definition of transaction refers to the description of the transaction as referred to in the circular that went to growers.[4] I have before me the actual transaction which is a confidential exhibit. Mr Bland said he did not need to see the original to make the point that he wished to make.
[4]Exhibit KAS29.
The material discloses that under the proposed amendments to the constitutions, the sale to New Forest would be treated as if the trees have been harvested and sold. Where fees are accrued, as in the case of the APT Eucalypt Project 2001, the accrued fees that are payable by the growers will then be payable out of the proceeds of sale.
What concerns Mr Bland is that the circular to growers specified what that fee would be in a table in the circular. Mr Bland said that his client - and I infer that other growers as well - may want to take issue with the responsible entity as to the quantum of the fees that may be deducted as deferred fees.
Mr Bland asked that it be made clear, and Mr Shavin, senior counsel for the plaintiff, has no objection that I do so, that the amendments to the constitutions do not carry with them any fixing of the quantum of the fee. Rather, as I have said, all that the amendments do is to provide that the amount - whatever the appropriate sum is - will be paid out on the sale to New Forest, rather than as previously provided on the harvesting and sale of the trees. The quantum which is payable under the constitution is not being affected by the proposed amendments. Rather, the timing of the payment is being affected.
As I understand Mr Bland’s position, his client has no other objection to me giving the direction that is sought by APT.
I should also point out that my decision is necessary for this transaction to go ahead. It is a condition of the transaction itself that the Court’s directions be obtained that the responsible entity is justified in doing what it proposes to do.
The parties could have, if they so wished, gone ahead without my direction. My direction is merely one of expressing a view that what the responsible entity proposes to do is justified, and in doing so I am satisfied that the board of APT does reasonably consider that the change will not adversely affect the members’ rights.
The consequence of my decision will give direction to the responsible entity and it may in certain circumstances provide legal protection for any criticism that might be made of the action of the responsible entity as trustee of the schemes.
For those reasons, I propose to make the orders sought in the draft orders that were given to me including the order for costs.
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