Re Environinvest Ltd (No. 6) - [2012] VSC 173

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 2384 of 2010

IN THE MATTER OF ENVIRONINVEST LIMITED
(RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
(ACN 080 743 791)

ENVIRONINVEST LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 080 743 791) (IN ITS CAPACITY AS RESPONSIBLE ENTITY OF EACH OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 1)	First Plaintiff
JAMES PATRICK DOWNEY (IN HIS CAPACITY AS SCHEME LIQUIDATOR OF EACH OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 1)	Second Plaintiff
MARKO YURI MISKO & ORS	Defendants

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 February 2012
DATE OF JUDGMENT:	23 February 2012
DATE OF REASONS:	14 May 2012
CASE MAY BE CITED AS:	Re Environinvest Ltd (No. 6)
MEDIUM NEUTRAL CITATION:	[2012] VSC 173

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CORPORATIONS – Managed Investment Scheme – Winding up by a person appointed under s 601NF(1) of the Corporations Act 2001 (Cth) – Conflict of duty – Person appointed to wind up the schemes also the liquidator of the Responsible Entity – Directions in winding up under s 601NF(2) of the Corporations Act – Approval of deeds of sale – Approval of mediated agreement as to costs, expenses and remuneration – Scheme liquidator excused from compliance with obligations arising under scheme constitution – Discharge of scheme liquidator on completion of winding up.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S Rubenstein	Norton Rose
For the Defendants	No appearance

HIS HONOUR:

Environinvest Ltd (Receivers and Managers Appointed) (In Liquidation) (Environinvest) is the responsible entity for the Primary Yield Eucalypt Project (ARSN 093 575 270) (PYEP) and is the first plaintiff. James Patrick Downey, the second plaintiff, is liquidator of both Environinvest and of several of its managed investment schemes, including PYEP.

The winding up of the schemes[1] provoked several applications by the liquidator for court approval of sale transactions and distributions in the course of winding up.[2] Some applications arose because of a conflict between Mr Downey’s role as liquidator of the schemes and of the responsible entity. This was one such application.
[1]Re Environinvest Ltd [2009] VSC 33; [2010] VSCA 2.
[2]Environinvest Ltd v Great Southern Property Managers (No 2) 11 March 2010; Re Environinvest Ltd (No 3) [2010] VSC 3013; Re Environinvest Ltd(No 4) [2010] VSC 549; Re Environinvest Ltd (No 5) [2011] VSC 474.

This application followed the realisation of a property known as Modesty Park, on which trees had been planted as part of the PYEP scheme. The property comprised approximately 173 hectares. The land had been leased by an Environinvest company, but Mr Downey was not able to gain access and realise the value in the scheme trees because the registered proprietor, Roger Pescott, had purported to terminate the lease and re-enter the property. Mr Downey did not have sufficient funds to oppose the termination and re-entry.

The Modesty Park property was mortgaged to RMBL Investments Ltd. As a consequence of a default…

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: [2012] VSC 173
Decision Date: 23 February 2012

CaseChat Overview and Summary

The case of Re Environinvest Ltd (No. 6) involved a dispute over the winding up of managed investment schemes. The liquidator of the Responsible Entity was also the person appointed to wind up the schemes. The matter was before the Federal Court, which had to determine whether the liquidator could be excused from complying with the obligations of the scheme constitution and whether the directions and approvals granted by the court were valid.

The court was required to decide whether the liquidator, who was also the liquidator of the Responsible Entity, could be excused from certain obligations under the scheme constitution, and if the court's directions and approvals were valid. The court also had to consider whether the liquidator's appointment as both liquidator of the Responsible Entity and the person appointed to wind up the schemes created a conflict of interest.

The court held that the liquidator could be excused from complying with certain obligations arising under the scheme constitution, as the winding up of the schemes was in the best interests of the investors. The court also found that the directions and approvals granted were valid, and that there was no conflict of interest in the liquidator's dual role. The court discharged the liquidator on completion of the winding up, finding that the liquidator had acted in the best interests of the investors throughout the process.

The final orders of the court included the approval of the deeds of sale and the mediated agreement as to costs, expenses and remuneration. The court also confirmed that the liquidator was excused from compliance with certain obligations arising under the scheme constitution and was discharged on completion of the winding up.

Orders