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Syncap Management (Rural) Australia Ltd v Lyford

Syncap Management (Rural) Australia Ltd v Lyford

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FEDERAL COURT OF AUSTRALIA
Syncap Management (Rural) Australia Ltd v Lyford [2004] FCA 1352
CORPORATIONS – managed investment scheme - validity of appointment of receivers to responsible entity – appointment applicable to changed responsible entity – indemnity exception not applicable – section said to attract a constitutional argument not material – no ambiguity in notice of appointment of receivers – no ambiguity in nature of property charged
Acts Interpretation Act 1901 (Cth) s 15AA
Corporations Act 2001 (Cth) ch 5C, ss 418A, 601FC, 601FS, 601FT, 601GA, 1324, 1350
Federal Court of Australia Act 1976 (Cth) s 22
Judiciary Act 1903 (Cth) s 78B
WJ Gough, Company Charges, 2^nd ed, Butterworths, London, 1996
Agnew v Commissioner of Inland Revenue [2001] 2 AC 710 cited
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 95 FCR 292 followed
Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 applied
Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 cited
Capricorn Diamonds Investments Pty Ltd v Catto (2002) 5 VR 61 cited
Investa Properties Ltd, Re (2001) 187 ALR 462 applied
Jones v Dunkel (1959) 101 CLR 298 applied
Kay v Australian Securities and Investments Commission (2002) 43 ACSR 229 cited
Kendle v Melsom (1998) 193 CLR 46 cited
Narain v Parnell (1986) 9 FCR 479 applied
Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 205 ALR 1 cited
Nolan v Collie (2003) 7 VR 287 cited
SYNCAP MANAGEMENT (RURAL) AUSTRALIA LTD v MAURICE HODGSON LYFORD and MRI HOLDINGS LTD
WAD 166 of 2004
RD NICHOLSON J
20 OCTOBER 2004
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 166 OF 2004

BETWEEN:

SYNCAP MANAGEMENT (RURAL) AUSTRALIA LTD
ACN 095 807 837
PLAINTIFF

AND:

MAURICE HODGSON LYFORD
FIRST DEFENDANT

MRI HOLDINGS LTD
ACN 007 871 963
SECOND DEFENDANT

JUDGE:

RD NICHOLSON J

DATE OF ORDER:

20 OCTOBER 2004

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1The application is dismissed.
2The plaintiff pay the defendants’ costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 166 OF 2004

BETWEEN:

SYNCAP MANAGEMENT (RURAL) AUSTRALIA LTD
ACN 095 807 837
PLAINTIFF

AND:

MAURICE HODGSON LYFORD
FIRST DEFENDANT

MRI HOLDINGS LTD
ACN 007 871 963
SECOND DEFENDANT

JUDGE:

RD NICHOLSON J

DATE:

20 OCTOBER 2004

PLACE:

PERTH

REASONS FOR JUDGMENT

This is an application brought in reliance on s 418A of the Corporations Act 2001 (Cth) seeking a declaration of the invalidity of the appointments of the first defendant by the second defendant as receiver and manager of assets of the plaintiff.
The plaintiff seeks a declaration under s 418A of the Corporations Act to the effect that both the first and second appointments were not valid. It seeks consequential relief in terms of rectification of the records of the plaintiff maintained by the Australian Securities…

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: [2004] FCA 1352
Decision Date: 20 OCTOBER 2004

CaseChat Overview and Summary

In the matter of Syncap Management (Rural) Australia Ltd v Lyford, the plaintiff sought to determine the extent to which the provisions of the Corporations Law should be interpreted in relation to a charge on a managed investment scheme. Specifically, the plaintiff argued that the statutory charge imposed by the FPA should not be included within the scope of the transition provisions under s 601FS and s 601FT of the Corporations Law. The defendants contested this, arguing that the transition provisions should be broadly interpreted and that the charge was indeed assumed by the incoming responsible entity. The case was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the transition provisions, s 601FS and s 601FT, should be narrowly construed to exclude the FPA charge from the obligations assumed by the incoming responsible entity. This hinged on whether the charge was for the benefit of the scheme and whether the new responsible entity acquired property subject to the charge. The court had to consider the implications of the decision in Re Investa, which was the only previous authority addressing these sections, and the broader context of statutory interpretation.

The court, in dismissing the plaintiff's application, reasoned that the transition provisions should not be narrowly construed to exclude the FPA charge. It held that the provisions were intended to transfer the rights, obligations, and liabilities of the former responsible entity to the new one, including those arising from charges on the scheme's property. The court found that the charge was indeed for the benefit of the scheme and that the new responsible entity acquired the property subject to the charge, thus assuming the obligations under the charge. The court relied on the decision in Re Investa, where it was established that the new responsible entity assumed the obligations of the former entity, including those relating to charges.

The court ordered that the application be dismissed and that the plaintiff pay the defendants’ costs of the application. This outcome reinforced the broad interpretation of the transition provisions, ensuring that incoming responsible entities assume all relevant obligations associated with the scheme’s property.

Orders

Orders of the court

1 The application is dismissed.

2 The plaintiff pay the defendants’ costs of the application.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Regarding the plaintiff’s submission that s 601FS is to be narrowly construed to exclude the FPA charge, the defendants say Re Investa does not support the plaintiff’s submission – the obligations under the charge in Re Investa were assumed by the new responsible entity. Again, the evidence shows the charge was entered into for the benefit of the scheme. The plaintiff has not lead any admissible evidence to the contrary.The decision in Re Investa It is accepted by the parties that Re Investa is the only authority in which the effect of s 601FS and s 601FT has been considered. The issue before Barrett J was whether time for lodgement of a notice of a charge should be extended in circumstances where a trust had attained registration as a registered managed investment scheme under the newly introduced provisions. Permanent Nominees (Aust) Ltd (‘Permanent’) was the trustee of the Investa Property Trust (‘Investa’) and Westpac Property Funds Management Ltd (‘Westpac’), the latter being the management company which thereby became the responsible entity. Barrett J at 463, at [3] said of the application of the above sections:‘The former had the effect that, subject to exceptions not presently relevant, “the rights, obligations and liabilities” of Permanent “in relation to the scheme” became “rights, obligations and liabilities” of Westpac. The latter caused every “document” to which Permanent was a party or in which a reference to it was made (or under which it had acquired or incurred a right, obligation or liability), being a document capable of having effect after the registration, to have effect as if Westpac, instead of Permanent, was the party or was referred to. Section 601FT(1) is not expressly restricted to documents concerning the scheme but such a limitation must be implied.’Subsequently Investa replaced Westpac as responsible entity of the trust. Barrett J found that Investa was, by direct operation of those sections, substituted for Westpac in the ways the sections prescribe (at 464, at [7]). The principal issue before Barrett J was whether, at the time either Westpac or Investa became the responsible entity, the incoming responsible entity ‘acquire[d] property that is subject to a charge’ as referred to in s 264(1) of the Corporations Law from which the obligation to give a notice of charge arguably arose. In that context Barrett J (at 465) said of the sections here in issue:‘[11] Sections 601FS(1) and 601FT are drafted in a particular economical way. They appear intended to cause an incoming responsible entity to step into the shoes of its predecessor (or, in a case in which the sections are activated by s 1462, those of the combination of trustee and management company). Yet nowhere does one find in those two sections any reference to property. There is a reference to “rights”, being rights “in relation to the scheme”, and there can be no doubt that certain “rights” (although not all) are property. The sections do not seem to effect a form of statutory vesting or assignment of property generally in such a way that the incoming responsible entity “acquires property that is subject to a charge” (as mentioned in s 264) except, perhaps, to the extent that the subject matter of the charge is a species of property which clearly involves no more than a “right”. An example might be the kind of property involved in a charge made registrable by s 262(1)(f) referring to “a charge on a book debt”. A debt as a chose in action falls quite comfortably within the concept of “right”. But even then, there is a question whether a chose in action forming part of the assets of a scheme is a right “in relation to the scheme”. These last words are perhaps intended to cover only rights vis à vis parties such as members of the scheme, being rights arising from or forming part of the matrix of legal relationships making up the scheme, including rights derived from the scheme’s constitutional documents.[12] But these doubts about ss 601FS(1) and 601FT(1) are, in the present context, largely overshadowed by the effect of s 601FC(2).’Section 601FC(2) declared that the responsible entity ‘holds scheme property on trust for scheme members’. Barrett J held that this section produced the result that the incoming responsible entity on both occasions began to hold property and so acquired property within s 264(1). His reasoning was that ‘attainment of the office of responsible entity is made by statute to bring about consequences in terms of the holding of property’. At 467 he said:‘[17] The property which Westpac thus came to hold was property which was at that time subject to the charge created by Permanent in 1994, since the charge, by its terms, extended to “all the present and future assets and undertaking of the Trust”. Furthermore, s 601FT(1) had the effect that the references to Permanent as mortgagor in the charge given to Perpetual in 1994 became references to Westpac, while s 601FS(1) caused the obligations and liabilities of Permanent in relation to the scheme to devolve upon Westpac. It may be that these obligations and liabilities included those arising from or in relation to the charge, although again the words “in relation to the scheme” are the product of some doubt about this.’Reasoning

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 166 OF 2004

BETWEEN:	SYNCAP MANAGEMENT (RURAL) AUSTRALIA LTD ACN 095 807 837 PLAINTIFF
AND:	MAURICE HODGSON LYFORD FIRST DEFENDANT MRI HOLDINGS LTD ACN 007 871 963 SECOND DEFENDANT
JUDGE:	RD NICHOLSON J
DATE OF ORDER:	20 OCTOBER 2004
WHERE MADE:	PERTH

JUDGE:	RD NICHOLSON J
DATE:	20 OCTOBER 2004
PLACE:	PERTH