Willmott Forests Ltd (Receivers & Managers appointed) (in liquidation) v Primary Securities Ltd - [2013] VSC 574

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
corporations list
S CI 2013 02145
IN THE MATTER of Willmott Forests Limited (Receivers and Managers Appointed) (in Liquidation) (ACN 063 263 650)
BETWEEN:

WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650) & ORS Plaintiffs and Defendants by Counterclaim

v

PRIMARY SECURITIES LTD (ACN 089 812 635) IN ITS CAPACITY AS RESPONSIBLE ENTITY OF WILLMOTT FORESTS PROJECT 1995-1999 (ARSN 089 598 612) Defendant and Plaintiff by Counterclaim

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JUDGE:

FERGUSON J

WHERE HELD:

Melbourne

DATE OF HEARING:

10, 11 September 2013

DATE OF JUDGMENT:

25 October 2013

CASE MAY BE CITED AS:

Willmott Forests Ltd (Receivers & Managers appointed) (in liquidation) v Primary Securities Ltd

MEDIUM NEUTRAL CITATION:

[2013] VSC 574

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CORPORATIONS – Forestry managed investment scheme – Responsible entity replaced – Whether land on which scheme operates is scheme property – Not contribution of money’s worth to the scheme – Not property acquired with contributions or proceeds of contributions – Land not held on trust – Former responsible entity stands in the shoes of outgoing responsible entity – Rights of former responsible entity now rights of replacement responsible entity – Extent of forestry rights – Replacement responsible entity’s entitlement to those rights – Corporations Act 2001 (Cth) ss 9, 601FC, 601FS, 601FT.
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APPEARANCES:
Counsel Solicitors

For the Plaintiffs/Second Defendant by Counterclaim Mr P D Crutchfield SC
with Mr R G Craig Arnold Bloch Leibler

For the Defendant/Plaintiff by Counterclaim Mr T Woodward SC
with Mr M Kennedy Mills Oakley
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
The Scheme and associated documents......................................................................................... 4
Prospectuses................................................................................................................................... 5
Investment Deed......................................................................................................................... 10
Transition to a Managed Investment Scheme – the Constitution........................................ 13
The Grower Leases, Preparation & Planting and Maintenance Agreements.................... 15
WFL’s Australian Financial Services licence, the Forestry Right Agreement and the Forest Property Agreement................................................................................................................... 15
Other users of the Land.................................................................................................................. 23
Legal principles................................................................................................................................ 24
Is the Land ‘scheme property’?...................................................................................................... 43
Contribution of money’s worth to the Scheme....................................................................... 47
Property acquired with the proceeds of contributions.......................................................... 49
What is the effect of ss 601FS and 601FT?................................................................................... 53
Do the scheme documents have effect as if Primary is named in them?.............................. 59
Certificates of title....................................................................................................................... 59
Forestry Right Agreement......................................................................................................... 59
Forest Property Agreement....................................................................................................... 61
Grower Leases............................................................................................................................. 62
Is WFIM required to transfer the forestry rights to Primary?................................................. 63
Do the forestry rights extend to the Non-leased land?............................................................. 63
Is the Land held on trust by WFL?................................................................................................ 64
Schedule of defined terms............................................................................................................. 67
Attachment A – an aerial photograph of Ando 1 plantation................................................... 69
Attachment B – map of allotted hectares on Ando 1 Plantation............................................. 71
Attachment C – certificate of title details for the Land............................................................. 73
HER HONOUR:
Introduction

1 Willmott Forests Limited (‘WFL’)[1] acted as the responsible entity of a number of managed investment schemes. In September 2010, WFL collapsed financially and receivers were appointed as was a voluntary administrator. Subsequently, the creditors resolved to place WFL (and other companies 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.

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Details

Case: [2013] VSC 574
Decision Date: 25 October 2013

CaseChat Overview and Summary

Willmott Forests Ltd (Receivers & Managers appointed) (in liquidation) v Primary Securities Ltd concerned a dispute about the nature of land held under a forestry managed investment scheme. The Federal Court was tasked with determining whether land used for the scheme should be considered property of the scheme. The case also involved the replacement of the scheme’s responsible entity and the transfer of rights and entitlements to the new entity.

The central legal issues revolved around whether the land operated by the forestry scheme constituted scheme property. The court needed to examine the definition of scheme property under the Corporations Act 2001 (Cth) and ascertain whether the land was a contribution of money’s worth to the scheme or property acquired with contributions or proceeds of contributions. Another critical issue was whether the land was held on trust and if the former responsible entity's rights could be transferred to the replacement entity.

The Court held that the land was not scheme property as it did not qualify as a contribution of money’s worth or property acquired with contributions. The land was not held on trust, and the replacement responsible entity stood in the shoes of the outgoing entity, acquiring the same rights. The extent of forestry rights was clarified, and the replacement responsible entity was entitled to these rights. The Court's decision was based on statutory interpretation and the principles of equity, ensuring that the replacement entity could continue to manage the scheme effectively.

The Court’s final orders confirmed the replacement responsible entity's entitlement to the forestry rights and clarified the status of the land in relation to the scheme. The orders ensured continuity in the management of the forestry scheme, providing certainty for all stakeholders involved.

Orders