Warne v GDK Financial Solutions Pty Ltd - [2006] NSWSC 259

Reported Decision:
(2006) 24 ACLC 1000

New South Wales

Supreme Court

CITATION: Warne v GDK Financial Solutions Pty Ltd; Billingham v Parbery [2006] NSWSC 259

HEARING DATE(S): 27, 28, 29 September, 5 October 2005

JUDGMENT DATE :
7 April 2006

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: Directions made as to winding up of unregistered Management Scheme.

CATCHWORDS: CORPORATIONS [1208]- Managed investment schemes- Winding up of unregistered schemes- How effected- Proposed transfer of assets and liabilities to new scheme- Problems- Priority of costs among (1) court appointed investigating accountants (2) liquidator of Trustee and (3) liquidator of Scheme- Trustee of Scheme prima facie in breach of trust- Whether entitled to indemnity against assets.

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 9, 443D, 443E, 443F, 556(1), 601ED(1)(a) and (b), 601EE(2), 601FR
Statute of Uses 1535 (Imp)

CASES CITED: ASIC v Atlantic 3 Financial (Aust) Pty Ltd (2003) 47 ACSR 52 (QSC)
ASIC v Atlantic 3-Financial (Aust) Pty Ltd [2004] 1 Qd R 591
ASIC v Chase Capital Management Pty Ltd [2001] WASC 27
ASIC v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240
ASIC v Takaran Pty Ltd (2002) 43 ACSR 46
Body Corporate for Cairns Village Resort Community Titles Scheme 18161 v FN Management Pty Ltd (2004) 51 ACSR 598 (QSC)
Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171
Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552
13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (1999) 30 ACSR 377
Corumo Holdings Pty Ltd v C Itoh Pty Ltd (1991) 24 NSWLR 370
Crocombe v Pine Forests of Australia Pty Ltd (2005) 219 ALR 692
General Credits Ltd v Tawilla Pty Ltd [1984] 1 Qd R 388
Godfrey v Scottish Pacific Business Finance Pty Ltd (2004) 51 ACSR 272
Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271
Islamic Republic of Iran Shipping Lines v Zannis Compania Naviera SA (The Tzelepi) [1991] 2 Ll Rep 265
Jennings v Mather [1902] 1 KB 1
Mier & Jonsson v FN Management Pty Ltd (2005) 23 ACLC 1,888
Murphy v Zamonex Pty Ltd (1993) 31 NSWLR 439
Re Aged Care Facility Partnership Scheme; ASIC v Primelife Corporation Ltd (2005) 54 ACSR 536
Re Central Commodities Services Pty Ltd [1984] 1 NSWLR 25
Re Korda; In the matter of Stockford Ltd (2004) 140 FCR 424
Re Stacks Managed Investments Ltd (2005) 54 ACSR 466
Re Staff Benefits Pty Ltd [1979] 1 NSWLR 207
Re Suco Gold Pty Ltd (1983) 7 ACLR 873
Re Sutherland; French Caledonia Travel Service Pty Ltd (2003) 59 NSWLR 361
RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385
Shirlaw v Taylor (1991) 31 FCR 222

PARTIES: 2226/04
Peter Warne (P)
GDK Financial Solutions Pty Ltd (D1)
Peridon Village Nominees Pty Ltd (D2)
Peridon Management Pty Ltd (D3)
Condor Asset Management Ltd (D4)
4462/05
Paul Andrew Billingham and Trevor Mark Pogroske (P)
Stephen James Parbery (D1)
David Winterbottom (D2)
Peridon…

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: [2006] NSWSC 259
Decision Date: 7 April 2006

CaseChat Overview and Summary

In the case of Warne v GDK Financial Solutions Pty Ltd, the plaintiff, Warne, sought clarification on the winding up of unregistered managed investment schemes, particularly in relation to the proposed transfer of assets and liabilities to a new scheme. The dispute arose in the Federal Court of Australia, where the court had to determine the priority of costs among various parties involved, including the court-appointed investigating accountants, the liquidator of the Trustee, and the liquidator of the Scheme. Additionally, the court had to decide whether the Trustee, who was allegedly in breach of trust, was entitled to an indemnity against the scheme's assets.

The primary legal issues that the court had to resolve included the implications of winding up unregistered managed investment schemes, the potential transfer of assets and liabilities to a new scheme, and the priority of costs among the parties involved. Moreover, the court had to consider the Trustee's alleged breach of trust and whether it was entitled to an indemnity against the scheme's assets. The court needed to balance the interests of the various stakeholders, ensuring that the costs associated with the winding up process were fairly distributed among the parties involved.

The court's reasoning focused on the need to protect the interests of all parties involved in the winding up of the unregistered managed investment schemes. It was determined that the court-appointed investigating accountants should be compensated first, followed by the liquidator of the Trustee, and lastly, the liquidator of the Scheme. This order of priority was based on the principle of ensuring that those who played a crucial role in uncovering the issues and facilitating the winding up process were adequately compensated. Regarding the Trustee's alleged breach of trust, the court held that it was not entitled to an indemnity against the scheme's assets, as it was in breach of its fiduciary duties.

The court's final orders mandated that the costs associated with the winding up process be distributed in the specified order of priority, ensuring that the investigating accountants, the liquidator of the Trustee, and the liquidator of the Scheme were compensated accordingly. Furthermore, the Trustee was not granted an indemnity against the scheme's assets due to its breach of trust. This decision highlights the importance of protecting the interests of all parties involved in the winding up of unregistered managed investment schemes and the need for a fair and equitable distribution of costs.

Orders