Re Timbercorp Securities Limited (in liquidation) No 2 - [2009] VSC 411

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

No 7114 of 2009

IN THE MATTER OF TIMBERCORP SECURITIES LIMITED
(IN LIQUIDATION) (ACN 092 469)

TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION) IN ITS CAPACITY AS REPSONSIBLE ENTITY OF EACH OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 1 OF THE ORIGINATING PROCESS and MARK ANTHONY KORDA and LEANNE CHESSER

Plaintiffs

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 September 2009
DATE OF JUDGMENT:	14 September 2009
CASE MAY BE CITED AS:	Re Timbercorp Securities Limited (in liquidation) No 2
MEDIUM NEUTRAL CITATION:	[2009] VSC 411

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CORPORATIONS – application by liquidators for directions – liquidators facing conflict in duties – liquidators of members of a group of companies – one of the companies in the group acts as a responsible entity for horticultural managed investment schemes growing almonds – another company owns the land on which the managed investment schemes are conducted - interest of scheme members different to owner of the land - whether liquidators justified in appointing another person to assess the reasonableness of division of sale proceeds between the land owning company and the managed investment schemes - whether direction sought appropriate for a court to give – whether an additional liquidator to represent the managed investment schemes should have been appointed – direction given as sought – s 511 of the Corporations Act 2001.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L Zwier	Arnold Bloch Leibler
For ASIC	Mr S J Hibble	ASIC
For the Timbercorp Growers’ Group	Mr G T Bigmore QC	Clarendon Lawyers

Cases referred to:

Lo v Nielsen [2008] NSWSC 407
Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409

HIS HONOUR:

The liquidators of Timbercorp Securities Ltd (in liquidation) (TSL) seek directions pursuant to s 511 of the Corporations Act 2001 that Mark Anthony Korda (one of the liquidators) is justified in entering into the agreement a copy of which is annexed to the application.

Before going to the agreement, it is convenient to say something about the liquidation of TSL. The Timbercorp Group of Companies carried on business promoting managed investment schemes whereby investors (known as growers) invested in and participated in the growing of trees, almonds, olives and other horticultural products. This application concerns several managed investment schemes that grew almonds.

The Timbercorp Group of Companies appointed administrators after they could not renegotiate large amounts of bank debt. The creditors then resolved to put each of the group companies into voluntary liquidation. TSL (a member of the group) acted, inter alia, as the responsible entity of the relevant almond schemes.

Andrew Malarkey is a partner of Mr Korda and Ms Chesser (the liquidators) and has sworn an affidavit explaining the circumstances giving rise to the application for the direction. Mr Korda was not available to swear the affidavit in support of the application.

Mr Malarkey deposes that in the 2002, 2005, 2006 and 2007 Almond Schemes, Almond…

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: [2009] VSC 411
Decision Date: 14 September 2009

CaseChat Overview and Summary

The liquidators of Timbercorp Securities Limited sought directions from the court in relation to a conflict of duties they faced in managing the liquidation of a group of companies. The primary dispute involved the allocation of sale proceeds from the land owned by one company, which was used for horticultural managed investment schemes growing almonds. The court was tasked with determining whether the liquidators were justified in appointing an independent person to assess the division of sale proceeds between the land-owning company and the managed investment schemes. Additionally, the court had to decide whether the direction sought was appropriate for the court to grant and whether an additional liquidator should have been appointed to represent the managed investment schemes.

The legal issues before the court included whether the liquidators could properly appoint an independent assessor to evaluate the division of sale proceeds and whether this action was justified given the conflict of interest. The court also needed to consider whether the direction sought was within the court's purview under section 511 of the Corporations Act 2001. Furthermore, the court had to determine if the appointment of an additional liquidator for the managed investment schemes was necessary to resolve the conflict of interest effectively.

In its reasoning, the court found that the liquidators had a justifiable basis for seeking to appoint an independent person to assess the division of sale proceeds. The court acknowledged the conflict of interest between the interests of the scheme members and the land-owning company. It concluded that the direction sought was appropriate for the court to give, as it was necessary to resolve the conflict and ensure a fair distribution of sale proceeds. The court determined that the appointment of an additional liquidator was not necessary, as the independent assessor could adequately address the conflict of interest. Consequently, the court granted the directions as sought by the liquidators.

The final orders of the court included granting the liquidators the authority to appoint an independent person to assess the division of sale proceeds and directing the liquidators to proceed with the sale of the land under the conditions set by the independent assessor's evaluation. The court's decision aimed to resolve the conflict of interest and ensure a fair outcome for all parties involved in the liquidation process.

Orders