JUDGE:	DAVIES J
WHERE HELD:	Melbourne
DATE OF HEARING:	23-25 January, 27-29 February and 1 March 2012
DATE OF JUDGMENT:	3 April 2012
CASE MAY BE CITED AS:	Re Willmott Forests Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2012] VSC 125

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CORPORATIONS – WINDING UP – APPLICATION UNDER SECTION 511 OF THE CORPORATIONS ACT FOR JUDICIAL ADVICE – Where the company in liquidation is the responsible entity and manager of registered and unregistered managed investment schemes – Where the schemes are forestry operations conducted on land which is either freehold land owned by the company or leasehold land that the company leases to the members of the schemes – Where the liquidators are realising the assets of WFL in the course of winding up the company – Where the liquidators have entered into sale contracts for the land with the trees grown on the land which are the property of the members of the schemes – where the contracts are conditional upon the giving of clear title to the land unencumbered by the rights of the members of the scheme, including their rights with respect to the trees – application by the liquidators under s 511 of the Corporations Act 2001 (Cth) for approval for entering into and completing the contracts – Whether the liquidators acted properly and reasonably in conducting the sale process – Whether the liquidators are justified in terminating and disclaiming the agreements that govern the schemes conducted on the land to be sold – Where the sale contracts provide for the allocation of the sale proceeds between the liquidators and receivers appointed over the land to be sold – Whether the liquidators are justified in allocating the sale proceeds in the manner proposed between themselves and the receivers based on the value of the land to be sold (excluding the trees) – Whether the liquidators are justified in allocating the sale proceeds amongst the growers based on the value of the trees sold with the land on a scheme-by-scheme basis in the manner proposed - Corporations Act 2001 (Cth) s 511

CORPORATIONS – WINDING UP – JURISDICTION AND POWERS OF COURT UNDER SECTION 511 OF THE CORPORATIONS ACT – Where substantive rights of third parties affected by the orders and directions sought under s 511 – Whether the Court has the power under s 511 of the Corporations Act to determine third party rights – Whether the third parties must be joined as parties to the proceeding – Factors relevant to the exercise of power to give judicial advice under s 511 – Whether the determination of the questions in the…

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 Willmott Forests Ltd (No 2)

Details

AGLC: Re Willmott Forests Ltd (No 2) [2012] VSC 125
Case: [2012] VSC 125
Decision Date: 3 April 2012

CaseChat Overview and Summary

The liquidators of Willmott Forests Ltd (WFL) applied for judicial advice under section 511 of the Corporations Act 2001 (Cth) regarding the sale of land and trees, which were integral to forestry managed investment schemes conducted by WFL. The land in question was either freehold land owned by WFL or leasehold land leased to the members of the schemes. The liquidators sought approval to enter into and complete sale contracts for the land, conditional upon providing clear title unencumbered by the rights of the scheme members, including their rights with respect to the trees. They also sought to terminate and disclaim agreements governing the schemes and to allocate the sale proceeds in a specific manner.

The court had to determine whether the liquidators acted properly and reasonably in conducting the sale process, whether they were justified in terminating and disclaiming the agreements governing the schemes, and whether they were justified in allocating the sale proceeds in the proposed manner. Additionally, the court needed to consider whether it had the power to determine third-party rights under section 511 of the Corporations Act and whether those third parties should be joined as parties to the proceeding. The court also had to decide if any of the land used by the schemes was scheme property and whether the land was held on trust by WFL for the growers in any of the schemes.

The court found that the liquidators acted properly and reasonably in the sale process and were justified in terminating and disclaiming the agreements governing the schemes. The allocation of the sale proceeds was deemed appropriate, considering the value of the land and the trees. The court held that it had the power under section 511 of the Corporations Act to determine third-party rights without requiring those parties to be joined as parties to the proceeding. The determination of the questions in the winding up of WFL was found to be just and beneficial, taking into account all relevant factors. The court determined that the land used by the schemes was not scheme property and was not held on trust by WFL for the growers in any of the schemes.

Orders