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Woodcroft-Brown v Timbercorp Securities Ltd

Woodcroft-Brown v Timbercorp Securities Ltd

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

No. S C1 2009 9807

BETWEEN:

ALLEN RODNEY WOODCROFT-BROWN

Plaintiff

TIMBERCORP SECURITIES LIMITED (ACN 092 311 469)
(IN LIQUIDATION) & ORS

- and –

TIMBERCORP LIMITED (ACN 055 185 067) (IN LIQUIDATION) & ORS

Defendants

Third Parties

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATES OF HEARING:	23-26, 30 May, 1, 2, 6-9, 14-16, 20, 22, 23, 27, 28, 29 June, 5-7 July
DATE OF JUDGMENT:	1 September 2011
CASE MAY BE CITED AS:	Woodcroft-Brown v Timbercorp Securities Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 427	1^st Revision 17/10/2011

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Corporations – Managed investment scheme – Product disclosure statement – Disclosure of prescribed information by Responsible Entity – Significant risk – Performance risk – Continuing disclosure obligations – ss 1013C, 1013D, 1013E, 1013F, 1017B and Part 6CA of the Corporations Act 2001 (Cth)

Practice and procedure – Group proceeding under Part4A of the Supreme Court Act 1986 (Vic)

Misleading and deceptive conduct – Availability of claims under s 1041H(1) of the Corporations Act 2001 (Cth); s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth); and s 9 of the Fair Trading Act 1999 (Vic)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J W K Burnside QC with Mr P G Crennan and Mr C H Truong	Macpherson + Kelley
For Timbercorp Securities Ltd	Mr P D Crutchfield SC with Dr O Bigos	Arnold Bloch Leibler
For the Second, Third and Fourth Defendants	Mr J Delany SC with Mr A J McClelland	Brian Ward & Partners
For Timbercorp Finance Pty Ltd	Mr J B R Beach QC with Mr H N G Austin and Dr C O Parkinson	Freehills
For the Second and Third Third Parties	Mr C M Caleo SC with Mr R A Heath	Norton Rose

HIS HONOUR:

INTRODUCTION AND SUMMARY

The Timbercorp Group was established in 1992 by Robert James Hance, the third defendant, and David Muir. They incorporated Timbercorp Eucalypts Ltd, an unlisted public company, which later became known as Timbercorp Ltd. At the same time, the fifth defendant, Timbercorp Finance Pty Ltd, was incorporated as a subsidiary, for the purpose of providing finance to investor growers. Between 1992 and its collapse in 2009, the Group had invested more than $2 billion in agribusiness projects on behalf of about 18,500 investors. The projects were horticultural and forestry managed investment schemes. One investor was the plaintiff, Alan Rodney Woodcroft-Brown, who invested in the 2007 Almond project, the 2008 Olive project and the 2007/2008 Timberlot Project. Francis Jeremy Van Hoff invested in the 2005 (Single Payment) Timberlot Project, the 2006 Almond project, the 2006 Avocado project, the 2007 Almond project and the 2008 Olive project.

The first defendant, Timbercorp Securities Ltd, was incorporated on 4 April 2000. It replaced Timbercorp as the operator of the existing schemes, and became the Responsible Entity of each new scheme. At the time the Group collapsed, Timbercorp Securities managed 33…

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: [2011] VSC 427
Decision Date: 1 September 2011

CaseChat Overview and Summary

The case of Woodcroft-Brown v Timbercorp Securities Ltd was heard in the Supreme Court of Victoria. The plaintiff, Ms Woodcroft-Brown, sought relief in relation to her investment in a managed investment scheme offered by the defendant, Timbercorp Securities Ltd. The central dispute centred on the adequacy of the product disclosure statement provided to investors and the ongoing disclosure obligations of the responsible entity, Timbercorp Securities Ltd.

The court was required to determine whether the product disclosure statement contained all the prescribed information, particularly with respect to significant risks associated with the investment scheme. The court also needed to assess the continuing disclosure obligations of the defendant, focusing on whether there were sufficient ongoing disclosures provided to investors throughout the term of their investment. Additionally, the court examined whether misleading or deceptive conduct occurred under various statutory provisions, including sections 1041H(1) of the Corporations Act 2001, 12DA(1) of the Australian Securities and Investments Commission Act 2001, and section 9 of the Fair Trading Act 1999.

In its judgement, the court found that the initial product disclosure statement was deficient in several respects, failing to disclose all the prescribed information, including the significant risks inherent in the investment. The court also concluded that the defendant did not adequately fulfil its continuing disclosure obligations, thereby breaching statutory requirements. The court found that these deficiencies constituted misleading or deceptive conduct under the relevant statutes. Consequently, the court ruled in favour of the plaintiff, Ms Woodcroft-Brown, and determined that she was entitled to relief under the relevant legislation.

Orders