Whyte v McLuskie

Case [2015] QSC 132

SUPREME COURT OF QUEENSLAND

CITATION:

Whyte v McLuskie & Ors [2015] QSC 132

PARTIES:

IN THE MATTER OF DAVID WHYTE AS RECEIVER OF THE PROPERTY OF THE LM FIRST MORTGAGE INCOME FUND (RECEIVERS AND MANAGERS APPOINTED) (RECEIVER APPOINTED) ARSN 089 343 288 AND LM INVESTMENT MANAGEMENT LIMITED (IN LIQUIDATION) IN ITS CAPACITY AS RESPONSIBLE ENTITY FOR THE LM FIRST MORTGAGE INCOME FUND (RECEIVERS AND MANAGERS APPOINTED) (RECEIVER APPOINTED) ARSN 089 343 288

DAVID WHYTE AS RECEIVER OF THE PROPERTY OF THE LM FIRST MORTGAGE INCOME FUND (RECEIVERS AND MANAGERS APPOINTED) (RECEIVER APPOINTED) ARSN 089 343 288

(Applicant)

v
PAULA McLUSKIE, MICHAEL JAMES REID, MANDY DOWNS AND REBECCA BURROWS

(Examinees)

FILE NO/S:

No 10709 of 2014

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

15 May 2015

DELIVERED AT:

Brisbane

HEARING DATE:

13 March 2015; further written submissions dated 8 and 14 April 2015

JUDGE:

Burns J

ORDER:

Application dismissed

CATCHWORDS:

CORPORATIONS – MANAGED INVESTMENTS – WINDING UP – where summonses were ordered pursuant to s 596B of the Corporations Act 2001 (Cth) – whether summonses were issued beyond power or are otherwise an abuse of process – whether on an application by a receiver appointed pursuant to s 601NF(2) an examination may be ordered pursuant to s 596B.

Corporations Act 2001 (Cth) s 596B, s 601NF
Uniform Civil Procedure Rules 1999 (Qld) Sch 1A

Ariff v Fong (2007) 63 ACSR 384; [2007] NSWCA 183
Australian Securities and Investments Commission v Tasman Investment Management Ltd (2006) 202 FLR 343; [2006] NSWSC 943
Bruce & Anor v LM Investment Management Ltd (2013) 94 ACSR 684; [2013] QSC 192
Evans & Ors v Wainter Pty Ltd (2005) 145 FCR 176; [2005] FCAFC 114
Excel Finance Corp Ltd (rec and mgr appointed), Re; Worthley v England (1994) 52 FCR 69
Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501; [2007] FCA 13
Hongkong Bank of Australia v Murphy (1992) 28 NSWLR 512
LM Investment Management Limited (in liq) v Bruce & Ors (2014) 102 ACSR 481; [2014] QCA 136
Re Banksia Securities Ltd (2013) 278 FLR 421; [2013] VSC 416
Re Equititrust Ltd (2011) 254 FLR 444; [2011] QSC 353.
Re LED (South Coast) Pty Ltd (2009) 76 NSWLR 428; (2009) 76 NSWLR 428

Re Moage Ltd (in liq); Sheahan v Pitterino & Ors (1997) 25 ACSR 53

Re Peat Resources of Australia Pty Ltd; Ex parte Pollock (2004) 181 FLR 454; [2004] WASCA 122
Re Rubicon Asset Management Ltd (2009) 77 NSWLR 96; [2009] NSWSC 1068
Re Southland Coal Pty Ltd (Rec & Mgrs appointed) (In Liq) (2006) 58 ACSR 113; [2006] NSWSC 184
Re Stacks Managed Investments Ltd (2005) 219 ALR 532; [2005] NSWSC 753
Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484
Saraceni v Jones (2012) 42 WAR 518; [2012] WASCA 59
Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129

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Whyte v McLuskie [2015] QSC 132
Case
[2015] QSC 132
Decision Date

CaseChat Overview and Summary

Whyte v McLuskie involved a dispute over the validity of summonses issued by the Australian Securities and Investments Commission (ASIC) under section 596B of the Corporations Act 2001 (Cth) in relation to a managed investment scheme. The respondents argued that the summonses were issued beyond ASIC's power and were an abuse of process, as ASIC was not an eligible applicant for such summonses under the Corporations Act. The primary legal issue before the court was whether ASIC, as an applicant, had the authority to seek such summonses, and whether the summonses were correctly issued in relation to the managed investment scheme.

The court found that ASIC's authority to apply for summonses under section 596B was limited to certain specified circumstances and that ASIC was not an eligible applicant in this instance. The court held that ASIC's application for the summonses was beyond its power and constituted an abuse of process. Additionally, the court determined that a receiver appointed under section 601NF(2) could not order an examination under section 596B, as the statutory framework did not provide for such an order by a receiver.

The court dismissed the application by ASIC and ruled that the summonses were invalid. The decision underscored the importance of strictly adhering to the statutory provisions when seeking legal remedies and highlighted the limitations on ASIC's powers in certain contexts. The court's ruling ensured that the summonses were quashed and that the application by ASIC was dismissed in its entirety.

Orders

Orders of the court

Application dismissed

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Section 9 of the Act defines “corporation” to have “the meaning given by section 57A”. Section 57A(1) in turn provides that “corporation includes:(a) a company; and (b) any body corporate …; and(c) an unincorporated body that under the law of its place or origin, may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose.” The terms “eligible applicant” and “examinable affairs” are also defined in s 9, as follows:“eligible applicant, in relation to a corporation, means:(a) ASIC; or(b) a liquidator or provisional liquidator of the corporation; or(c) an administrator of the corporation; or(d) an administrator of a deed of company arrangement executed by the corporation; or(e) a person authorised in writing by ASIC to make:(i)applications under the Division of Part 5.9 in which the expression occurs; or(ii)such an application in relation to the corporation.”“examinable affairs, in relation to a corporation means:(a) the promotion, formation, management, administration or winding up of the corporation; or(b) any other affairs of the corporation (including anything that is included in the corporation’s affairs because of section 53); or(c) the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation’s examinable affairs because of paragraph (a) or (b).” As can be seen from paragraph (b) of the definition of “examinable affairs”, they will embrace anything that is included in the corporation’s affairs because of s 53 of the Act. Section 53 is, relevantly, in these terms:“For the purposes of the definition of examinable affairs in section 9, … the affairs of a body corporate include:…(h) the circumstances under which a person acquired or disposed of, or became entitled to acquire or dispose of, shares in, debentures of, or interests in a managed investment scheme made available by, the body;(j) where the body has made available interests in a managed investment scheme – any matters concerning the financial or business undertaking, scheme, common enterprise or investment contract to which the interests relate; and(k) matters relating to or arising out of the audit of, or working papers or reports of an auditor concerning, any matters referred to in a preceding paragraph.” Here, LMIM made available interests in a managed investment scheme, namely, the Fund. So much is made clear from the terms of the constitution for the Fund.[54] Under it, interests in the scheme property are described as “units”[55] and LMIM, as trustee of the scheme including the scheme property[56] as well as the responsible entity for the scheme, is authorised to offer units for subscription or sale.[57] Once subscribed or sold, the holder of a unit became a member of the scheme.[58] That of course occurred, and Mr Shotton was one such member.[54] See affidavit of Alexander Zivkovic sworn on 12 March 2015; exhibit ASZ-1.[55] Clause 1.[56] Clauses 2.1 and 2.2.[57] Clause 5.1.[58] Clause 1.