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Re Elders Forestry Management Ltd

Re Elders Forestry Management Ltd

Case [2012] VSC 287 28 June 2012

Corporate Constitution

Amendment of Constitution

Rights of Shareholders

Corporate Law & Governance

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IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE

Not Restricted

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST No. 2322 of 2012

RE ELDERS FORESTRY MANAGEMENT LTD (081 643 147)
BETWEEN
ELDERS FORESTRY MANAGEMENT LTD (081 643 147)	Plaintiff
v
CHRISTOPHER ARTHUR SEELS	Defendant

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JUDGE:	ROBSON
WHERE HELD:	Melbourne
DATE OF HEARING:	30 May 2012
DATE OF JUDGMENT:	28 June 2012
CASE MAY BE CITED AS:	Re Elders Forestry Management Ltd
MEDIUM NEUTRAL CITATION:	[2012] VSC 287

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CORPORATIONS – Application for directions by Responsible Entity – Whether Responsible Entity justified in amending constitution of a managed investment scheme under s 601GC(1)(b) of the Corporations Act 2001 – Amendment to permit sale of standing timber of a forestry scheme – Existing constitution provided for trees to be harvested and proceeds of harvest distributed to growers – Whether rights of growers would be adversely affected by the amendment – Order that amendment justified – Re ING Funds Management Ltd (2009) 228 FLR 444 followed and applied.

CORPORATIONS – Application for directions – Whether Responsible Entity justified in calling a meeting of Grower members of Managed Investment Schemes to consider resolutions to amend constitution of schemes – Order that calling of meetings justified.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	D Shavin QC with Dr O Bigos	Freehills
For the Defendant	C Seels	A grower

HIS HONOUR:

Orders made on application

On 4 June 2012, after hearing the application for directions, I made orders as sought by the plaintiff (EFML). I reserved my reasons for making the orders. I now publish my reasons.

Purpose of application[1]

[1]In giving these reasons I have relied extensively on the written submissions of the plaintiff.

EFML is, relevantly:

(a) the responsible entity of 8 registered managed investment schemes[2] described as the Mature Projects;
[2]The Mature Projects are listed in Annexure A to the Originating Process.

(b) the responsible entity of 4 registered managed investment schemes[3] described as the Immature Projects; and

(c) the manager of an unregistered managed investment scheme described as the Tree Project 2005

collectively ‘the Projects’.

[3]The Immature Projects are listed in Annexure B to the Originating Process.

EFML proposes to restructure the Projects through a sale of certain plantations forming part of the standing timber of the Projects (and other assets) to entities associated with Global Forest Partners LP (GFP). In order for the sale transaction with GFP (GFP Transaction) to be completed for the benefit of Grower members, it is necessary to extinguish certain of the Growers’ rights.

EFML seeks directions pursuant to r 54.02 of the Supreme Court Rules in relation to the GFP Transaction. The documents filed in this proceeding have been served on ASIC, GFP and Elders Ltd (Elders). In addition, as required by previous orders, circulars about this proceeding have been sent to Growers, a notice has been published in a national newspaper, and the Court documents have been posted on EFML’s website.

ASIC informed EFML that it did not intend to appear at the…

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 [2012] VSC 287
Case: [2012] VSC 287
Decision Date: 28 June 2012

CaseChat Overview and Summary

The case of Re Elders Forestry Management Ltd involved a dispute regarding the amendment of the constitution of a managed investment scheme under section 601GC(1)(b) of the Corporations Act 2001. The parties in this case were Elders Forestry Management Ltd, the Responsible Entity, and the Grower members of the managed investment scheme. The issue at hand was whether the Responsible Entity was justified in amending the constitution to permit the sale of standing timber, which was a departure from the existing provision that only allowed for the harvesting and distribution of proceeds to the growers. The decision was made in the Federal Court of Australia.

The legal issues that the court had to address were whether the amendment to the constitution was justified and whether the rights of the growers would be adversely affected. The court was required to consider the provisions of section 601GC(1)(b) of the Corporations Act 2001 and the existing constitution of the managed investment scheme. The court also had to determine whether the amendment would have a detrimental impact on the growers' rights and interests.

In reaching its decision, the court relied on the case of Re ING Funds Management Ltd (2009) 228 FLR 444, which provided guidance on the application of section 601GC(1)(b) of the Corporations Act 2001. The court found that the amendment was justified as it was not detrimental to the rights of the growers and was in line with the overall objectives of the managed investment scheme. The court also found that the Responsible Entity was justified in calling a meeting of the Grower members to consider the resolutions to amend the constitution of the schemes. Therefore, the court ordered that the amendment was justified and that the Responsible Entity could proceed with the proposed changes.

In summary, the Federal Court of Australia ruled that the amendment to the constitution of the managed investment scheme was justified and did not adversely affect the rights of the growers. The court also found that the Responsible Entity was justified in calling a meeting of the Grower members to consider the proposed amendments. The final orders of the court allowed the amendment to proceed, and the Responsible Entity was permitted to call a meeting to consider the resolutions to amend the constitution of the schemes.

Orders