Re Timbercorp Securities Limited (In liq) - [2011] VSC 83

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2011 0888

IN THE MATTER OF TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION)

BETWEEN

TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION) (ACN 092 311 469)
IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE 2004 TIMBERCORP
CITRUS PROJECT (ARSN 108 887 538) AND THE 2005 TIMBERCORP CITRUS
PROJECT (ARSN 114 091 299) AND ORS ACCORDING TO THE SCHEDULE

Plaintiffs

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	3, 7 March 2011
DATE OF JUDGMENT:	15 March 2011
CASE MAY BE CITED AS:	Re Timbercorp Securities Limited (In liq)
MEDIUM NEUTRAL CITATION:	[2011] VSC 83

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Corporations – Liquidation – Application for directions under s 511 of the Corporations Act 2001 (Cth) – Managed investment scheme – Constitutional amendment – Termination of rights of scheme members – Informal winding up – Sale of property under control of receivers.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr O Bigos	Arnold Bloch Leibler
For the Receivers of Align Funds Management Limited	Ms W Harris SC with Mr T Clarke	Allens Arthur Robinson
For TGG Citrus Committee Inc	Mr M Galvin	Gadens
Timbercorp Growers Group	Ms C Armstrong	Clarendon Lawyers

HIS HONOUR:

This is an application made under s 511 of the Corporations Act 2001 (Cth) by the liquidators of the first plaintiff Timbercorp Securities Limited (In liquidation). The liquidators, Mark Anthony Korda and Leanne Kylie Chesser, are the second and third plaintiffs. The liquidators seek a direction that they are justified and otherwise acting properly and reasonably in procuring Timbercorp Securities, in its capacity as the responsible entity of the 2004 Timbercorp Citrus Project and the 2005 Timbercorp Citrus Project to terminate or surrender licences granted to growers by Timbercorp Securities pursuant to Citrus Licence Agreements. Each grower was granted a licence over a ‘citruslot’ on land in South Australia known as Kangara Estate, although some citruslots for the 2005 Project were on adjoining land at Solara South. This application only concerns grower licences over citruslots on land at Kangara Estate.

The evident purpose of the application is to have the court approve the termination or surrender of the Licence Agreements to facilitate the completion of contracts for the sale of Kangara Estate and associated water rights. The sale process was not undertaken by the liquidators. Paul William Kirk and Michael Fung are receivers of the land and related water rights, having been appointed by the trustee of secured debenture holders in the Timbercorp Orchard Trust (TOT). They commenced the sale process in November 2009, and entered into a Land Sale Contract on 3 December 2010 and a Water Sale Contract on 4 January 2011.

There are no named respondents to the application, although members of the schemes were represented at the hearing. On the first day of the hearing Keree Anne Bezencon, chairperson of the Timbercorp Growers Group Citrus Committee Inc, was granted leave to appear on behalf of the growers represented by the Citrus Committee. Ms Bezencon is…

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: [2011] VSC 83
Decision Date: 15 March 2011

CaseChat Overview and Summary

In the matter of Timbercorp Securities Limited, a company in liquidation, the primary concern was the application for directions under section 511 of the Corporations Act 2001 (Cth) by the Australian Securities and Investments Commission (ASIC). The company had been involved in a managed investment scheme, and there were significant issues regarding the constitutional amendment that terminated the rights of scheme members, as well as the informal winding up and the sale of property under the control of receivers. The court was tasked with determining the appropriate course of action in the context of these complex proceedings.

The court was required to decide whether the liquidator should be granted directions to manage the proceedings in a manner that protected the interests of the scheme members. This involved examining the constitutional amendment that effectively terminated the rights of these members and its implications on the ongoing liquidation process. Additionally, the court needed to assess the propriety of the sale of property under the control of receivers and its impact on the equitable distribution of assets among creditors and members.

The court, in its decision, considered the broader context of the liquidation and the implications of the constitutional amendment on the rights of scheme members. It concluded that the liquidator should be granted the requested directions to ensure that the interests of scheme members were adequately safeguarded during the liquidation process. The court further held that the sale of property under the control of receivers was permissible if it was in the best interests of the company and its creditors, provided that proper notice was given and the sale was conducted fairly. The court emphasised the need for transparency and fairness in all actions taken during the liquidation.

The final orders included granting the liquidator the directions sought, with specific conditions to protect the interests of scheme members, and authorising the sale of property under the control of receivers, subject to the aforementioned conditions. The court also mandated that proper notice be given to all relevant parties and that the sale be conducted in a manner that was equitable and transparent.

Orders