Sandalwood Properties Ltd (Subject to a Deed of Company Arrangement) v Huntley Management Ltd

In the case of Sandalwood Properties Ltd (Subject to a Deed of Company Arrangement) v Huntley Management Ltd, the primary issue was whether the resolutions passed by the members of the TFS Sandalwood Project 2003 to remove Sandalwood as the responsible entity and appoint Huntley as the new responsible entity were valid. The court was also tasked with determining if the chair of the meeting was validly appointed and whether the new responsible entity, Huntley, held a valid Australian financial services licence (AFSL) at the time of the resolution to appoint the entity. The case was heard in the Federal Court of Australia.

The legal issues at the forefront of this case were centered around the validity of the resolutions passed by the members of the TFS Sandalwood Project 2003. The first issue pertained to the construction of the statutory licence under the Corporations Act 2001 (Cth) and whether the new responsible entity, Huntley, had to hold a valid AFSL at the time of the resolution to appoint the entity. The second issue was whether the chair of the members' meeting was validly appointed, particularly considering the exclusion of the responsible entity, Sandalwood, from voting on the appointment of the chair. The third issue was whether any substantive consequences arose from the chair presiding over the declaration of the result of the resolution to elect the chair.

The court found that the resolutions were invalid because they were conditional upon the passing of another resolution, which is not required by the Corporations Act. Additionally, the court determined that the chair of the meeting was not validly appointed since Sandalwood was excluded from voting on the appointment and the chair had presided over their own election. The court also found that Huntley did not hold a valid AFSL at the time of the resolution to appoint the entity, which further contributed to the invalidity of the resolutions. As a result, the court declared that the resolutions were invalid and of no effect.

In conclusion, the court ordered that each of the resolutions considered at the meeting of members of the TFS Sandalwood Project 2003 held on 23 July 2018 at Dalkeith Hall is invalid and of no effect. The court also ordered that the third defendant, Huntley, pay the plaintiff's costs of the application to be assessed if not agreed. Furthermore, the court granted liberty to the plaintiff to apply for further declaratory relief based on the reasons of the court if such further declaratory relief is considered necessary, as well as liberty to apply for orders in relation to the indemnification of the plaintiff for the costs and expenses of the application out of the assets of the TFS Sandalwood Project 2003.