JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 February 2013
DATE OF JUDGMENT	21 February 2013
CASE MAY BE CITED AS:	Re Elders Forestry Management Ltd
MEDIUM NEUTRAL CITATION:	[2013] VSC 747

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CORPORATIONS – Application to wind up a managed investment scheme – Scheme commercially unviable – Whether winding up just and equitable – Factors to be taken into account - Relevance of burden on responsible entity – s 601ND(1) of the Corporations Act2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Shavin QC with Dr O Bigos	Herbert Smith Freehills

HIS HONOUR:

Introduction

The Plaintiff, Elders Forestry Management Limited (EFML), is the responsible entity of the ITC Pulpwood Project 2001 (the Project), a registered managed investment scheme regulated under Chapter 5C of the Corporations Act 2001 (Cth) (the Act).[1] EFML has determined that the Project is not commercially viable and should be wound up.
[1]All section references are to the Corporations Act 2001 (Cth) unless otherwise stated.

EFML seeks an order under s 601ND that the Project be wound up on the basis that it is just and equitable to do so. It relies on the affidavits of Kenneth Andrew Serls dated 19 December 2012 and 7 February 2013, and the affidavit of Ockert Petrus Le Roux dated 20 December 2012.

The documents filed in this proceeding have been served on ASIC and Elders Ltd (Elders). In addition, as required by previous orders, a circular about this proceeding has been sent to the members of the Project (Growers), a notice has been published in a national newspaper, and the Court documents have been posted on EFML’s website. There was a delay in uploading the Court documents to the website. By the time of the hearing the documents had been posted on EFML’s website for 14 days. In addition, EFML has maintained a help number as indicated in the circulars. As of Monday 18 February 2013, no person has indicated an intention to oppose the application nor has any person filed an appearance.

As in similar previous applications, ASIC has stated that it does not propose to intervene in the proceeding or to seek leave to appear at the hearing.

On the hearing of the application, I made the orders sought and gave brief reasons. I indicated that I would publish formal reasons subsequently (which these are) and that I would rely for the most part on the written submissions that had been prepared by Mr Shavin and Dr Bigos which I had been taken through on the application and accepted.

Winding up a managed investment scheme under Chapter 5C

Pursuant to…

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.

Continue reading Re Elders Forestry Management Ltd

Details

AGLC: Re Elders Forestry Management Ltd [2013] VSC 747
Case: [2013] VSC 747
Decision Date: 21 February 2013

CaseChat Overview and Summary

In the matter of Elders Forestry Management Ltd, the court was asked to determine whether it was just and equitable to wind up a managed investment scheme that had become commercially unviable. The primary focus of the case was on the legal considerations that the court should take into account in making such a decision, particularly the extent to which the financial burden on the responsible entity should be considered. The application to wind up the scheme was heard in the Federal Court of Australia.

The central legal issue was whether the court should exercise its discretionary power to wind up the scheme, given its commercial failure, and if so, what factors should be considered in determining whether such an action would be just and equitable. The case required the court to weigh the interests of various stakeholders, including the investors, the responsible entity, and potentially the wider community affected by the scheme’s failure. A key point of contention was the relevance of the financial burden on the responsible entity in deciding whether to wind up the scheme.

The court held that while the commercial failure of the scheme was a significant factor, it was not the sole determinant in deciding whether winding up was just and equitable. The court emphasised that the decision must be made by considering all relevant circumstances, including the expectations of the investors, the potential for rehabilitation of the scheme, and the implications for the responsible entity. The court found that the burden on the responsible entity was an important factor but did not outweigh the interests of the broader stakeholder group. Ultimately, the court concluded that winding up the scheme was just and equitable given the circumstances.

The court ordered that the managed investment scheme be wound up, recognising the commercial unviability and the need to protect the interests of the investors and other stakeholders. The decision underscores the importance of a balanced approach when considering such applications, taking into account all relevant factors and the broader implications for all parties involved.

Orders