Re Timbercorp Securities Ltd (in liq) (No 3) - [2009] VSC 510

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

No 9408 of 2009

IN THE MATTER OF TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION)
(ACN 092 311 469)

TIMBERCORP SECURITIES LIMITED (IN LIQUIDATION)
(ACN 092 311 469) in its capacity as responsible entity
of certain managed investment of certain managed investment schemes;
ALMOND MANAGEMENT PTY LTD (IN LIQUIDATION) (ACN 094 468 845)
in its capacity as manager of an unregistered managed investment scheme;
MARK ANTHONY KORDA;
LEANNE KYLIE CHESSER;
TIMBERCORP LIMITED (IN LIQUIDATION ) ( ACN 055 185 067) and
ALMOND LAND PTY LTD (IN LIQUIDATION)( ACN 091 460 9920) Plaintiffs

JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	6 October 2009
DATE OF JUDGMENT:	8 October 2009
CASE MAY BE CITED AS:	Re Timbercorp Securities Ltd (in liquidation) No 3
MEDIUM NEUTRAL CITATION:	[2009] VSC 510

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CORPORATIONS - application by liquidators for directions – managed investment schemes – responsible entity in liquidation - sale by responsible entity of schemes’ interest in almond orchards - grower members of the schemes and land owners of orchards each holding proprietary interests in the almond orchards to be sold - dispute between growers and land owners’ bank mortgagees on the value of the growers’ interests – liquidators wish to accept a sum offered by the bank mortgagees in satisfaction of the growers’ proprietary interests – liquidators justified in agreeing to sell orchards - liquidators not justified in accepting the bank mortgagees’ offer – liquidators justified in settling on basis that sale moneys are held on trust pending determination of growers’ proprietary interests and their proper share of the sale proceeds – appropriate basis for apportioning sale proceeds between growers and mortgagees - s 477(2)(b), s 511 and s 568(1)(a) of the Corporations Act 2001

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APPEARANCES:

Counsel

Solicitors

For the Plaintiff

Mr L Zwier with Ms B Toy-Cronin

Arnold Bloch Leibler

For the Timbercorp
Growers Group

For Keree Anne Bezencon

For the Bank of Scotland,
Westpac Banking Group and ANZ Banking Group

For ASIC

Mr G T Bigmore QC with Mr S G Hopper

Mr M W Shand QC

Mr P G Cawthorn SC with Mr R G Craig

Mr I Waller SC with Mr S J Hibble

Clarendon Lawyers

Maurice Blackburn

Blake Dawson Waldron

ASIC

Cases cited
Barnes v Addy (1874) LR 9 Ch App 244
Hazelton Air Charter Pty Ltd (2002) 41 ACSR 472

Inwards v Baker [1965] 2 QB 29
Muschinski v Dodds (1985) 160 CLR 583
National Australia Bank v State of New South Wales [2009] FCA 1066
Wilcox v Richardson (1997) 43 NSWLR 4

HIS HONOUR:

THE PROCEEDINGS

I have only had a very short period of time to consider the many issues this matter raises. My reasons, therefore, may appear a little inelegant, but my conclusions are clear.

By an originating process dated 5 October 2009, the plaintiffs, Timbercorp Securities Ltd (“TSL”) in its capacity as responsible entity of certain managed investment schemes, Almond Management Pty Ltd (“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 510
Decision Date: 8 October 2009

CaseChat Overview and Summary

In the matter of Timbercorp Securities Ltd (in liq) (No 3), the court was faced with a complex dispute concerning the liquidation of a managed investment scheme. The liquidators sought directions regarding the sale of almond orchards owned by the scheme. The orchards were subject to proprietary interests held by grower members of the scheme, as well as mortgages held by a bank over land owned by these growers. The court had to determine whether the liquidators were justified in accepting an offer from the bank's mortgagees for the growers' interests and how to apportion the sale proceeds between the growers and the mortgagees.

The primary legal issues before the court were whether the liquidators were justified in agreeing to sell the orchards, whether they could accept the bank mortgagees' offer, and how to determine the rightful share of the sale proceeds for the growers. The court had to consider provisions of the Corporations Act 2001, particularly sections 477(2)(b), 511, and 568(1)(a), to resolve these issues.

The court found that while the liquidators were justified in seeking to sell the orchards, they were not justified in accepting the bank mortgagees' offer without further consideration of the growers' proprietary interests. The court determined that the sale proceeds should be held on trust pending a final determination of the growers' interests. The appropriate basis for apportioning the sale proceeds between the growers and the mortgagees was found to be the respective values of their interests in the orchards at the time of sale. The court held that the liquidators' decision to hold the sale proceeds on trust was justified and provided a fair resolution pending the determination of the growers' proprietary interests.

As a result, the court ordered that the sale proceeds be held on trust by the liquidators, pending a final determination of the growers' proprietary interests and their proper share of the sale proceeds. The court's decision provided clarity on the liquidators' obligations and the rights of the parties involved in the liquidation of the managed investment scheme.

Orders