TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION)(ACN 092 311 469) IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE 2005 TIMBERCORP CITRUS PROJECT (ARSN 114 091 299)	First Plaintiff
MARK ANTHONY KORDA	Second Plaintiff
LEANNE KYLIE CHESSER	Third Plaintiff

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JUDGE:	DAVIES J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 – 17, 22, 24 February 2010
DATE OF JUDGMENT:	26 February 2010
CASE MAY BE CITED AS:	Re Timbercorp Securities Limited (In liq) (ACN 092 311 469)
MEDIUM NEUTRAL CITATION:	[2010] VSC 050

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CORPORATIONS – Application by liquidators for judicial advice and directions – Managed investment schemes – Responsible entity in liquidation – Sale of land on which citrus schemes conducted – Sale to be completed unencumbered by Growers’ rights to use and enjoy the land – Scheme constitution amended to include the power in the responsible entity to terminate the Growers’ licenses with respect to the use of the land – Whether liquidators justified in procuring the extinguishment of Growers’ rights – Net proceeds to be held on trust pending determination of persons entitled to receive the proceeds – S 511 of the Corporations Act 2001 (Cth).

STATUTORY INTERPRETATION – Power to amend a scheme constitution – Requirements for a responsible entity to amend a constitution unilaterally – S 601GC of the Corporations Act 2001 (Cth).

CORPORATIONS – Unilateral action by responsible entity to amend scheme constitution – Whether responsible entity considered whether the amendment “adversely affected members’ rights” – Whether consideration reasonably based.

LIQUIDATORS – Duties as a liquidator of a company which is the responsible entity of a managed investment scheme – Whether conflict of interest – Whether breach of fiduciary duty.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. L Zwier with Mr. O Bigos	Arnold Bloch Leibler
For the Timbercorp Growers Group	Mr. S G Hopper	Clarendon Lawyers
For the Receivers	Ms. W A Harris	Allens Arthur Robinson
For the Timbercorp Growers Group Citrus Inc	Mr. D Shavin QC with Mr. D C Gration	Herbert Geer

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HER HONOUR:

This is an application for directions from the Court pursuant to s 511 of the Corporations Act 2001 (“the Act”) by the second and third named plaintiffs (“the liquidators”) in their capacity as liquidators of the first named plaintiff (“TSL”). TSL is the responsible entity of the 2005 Timbercorp Citrus Project (“the Citrus Scheme”), a registered managed investment scheme under Part 5C of the Corporations Act 2001 (“the Act”) for the cultivation of citrus trees and the harvesting and processing of citrus. TSL cannot perform its obligations as the responsible entity of the Citrus Scheme because it is hopelessly insolvent and unable to continue to fund the operations of the scheme, which has placed the citrus orchards at risk of wasting. The liquidators seek a direction to the effect that they would be…

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 Timbercorp Securities Ltd

Details

AGLC: Re Timbercorp Securities Ltd [2010] VSC 50
Case: [2010] VSC 50
Decision Date: 26 February 2010

CaseChat Overview and Summary

The liquidators of Timbercorp Securities Ltd, the responsible entity for managed investment schemes, sought judicial advice and directions from the court regarding the sale of land on which the citrus schemes were conducted. The liquidators aimed to complete the sale of the land free from the growers' rights to use and enjoy the land. To achieve this, the liquidators proposed to amend the scheme constitution to include the power in the responsible entity to terminate the growers' licenses. The court was required to determine whether the liquidators were justified in procuring the extinguishment of the growers' rights and whether the net proceeds from the sale of the land should be held on trust pending the determination of the persons entitled to receive the proceeds. The court was also required to consider the statutory interpretation of the power to amend a scheme constitution, the requirements for a responsible entity to amend a constitution unilaterally, and the duties of liquidators as the responsible entity of a managed investment scheme.

The court held that the liquidators were justified in procuring the extinguishment of the growers' rights, as the amendment to the scheme constitution was necessary to complete the sale of the land free from the growers' rights. The court also held that the responsible entity had considered whether the amendment adversely affected the members' rights, and the consideration was reasonably based. The court held that the liquidators did not have a conflict of interest and did not breach their fiduciary duty in procuring the extinguishment of the growers' rights. The court held that the net proceeds from the sale of the land should be held on trust pending the determination of the persons entitled to receive the proceeds.

The court ordered that the net proceeds from the sale of the land be held on trust pending the determination of the persons entitled to receive the proceeds. The court also ordered that the amendment to the scheme constitution be approved, and the liquidators were authorised to procure the extinguishment of the growers' rights. The court held that the liquidators had acted within their powers and had discharged their duties as liquidators of the responsible entity.

Orders