Willmott Forests Limited, in the matter of Willmott Forests Limited (Receivers and Managers appointed) (in liq) [2011] FCA 1517

Willmott Forests Limited, in the matter of Willmott Forests Limited (Receivers and Managers appointed) (in liq) [2011] FCA 1517

It was appropriate in the circumstances to issue directions that the liquidators could amend the relevant constitutions under s 601GC(1)(b) of the Corporations Act and disclaim project documents as onerous under s 568(1), as the factual context—including the insolvency of the schemes and the absence of viable alternatives—rendered reasonable the responsible entity's belief that amendments would not adversely affect growers' rights; further, such actions would be subject to further court approval and growers would receive compensation referable to their rights.

Parties
First Plaintiff: Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) (ACN 063 26 650); Second Plaintiff: Craig David Crosbie; Third Plaintiff: Ian Menzies Carson; Receivers and Managers: KordaMentha (Ms W Harris with Mr T Clarke; Solicitor: Allens Arthur Robinson); Non Party Intervener/contradictor: Willmott Growers Group (intervener); Non Party: Willmott Action Group (non-party)
Jurisdiction
Australia
Judgment Date
29 June 2011
Procedural Posture
Directions Application—liquidation / Application for Directions Made by Liquidators Under S 511 Corporations Act; Contested Hearing and Orders
Outcome
Directions granted as sought by the plaintiffs, subject to undertakings and safeguards.
Legal Topics
Liquidation—directions to Liquidators, Amendment of Managed Investment Scheme Constitutions, Disclaimer of Onerous Property, Termination of Scheme Documents
Corporations Law Insolvency Managed Investment Schemes Liquidation—directions to Liquidators Amendment of Managed Investment Scheme Constitutions Disclaimer of Onerous Property Termination of Scheme Documents

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Parties

Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) (ACN 063 26 650)

First Plaintiff

Craig David Crosbie

Second Plaintiff

Ian Menzies Carson

Third Plaintiff

KordaMentha (Ms W Harris with Mr T Clarke; Solicitor: Allens Arthur Robinson)

Receivers and Managers

Willmott Growers Group (intervener)

Non Party Intervener/contradictor

Willmott Action Group (non-party)

Non Party

Procedural Posture

Directions Application—liquidation / Application for Directions Made by Liquidators Under S 511 Corporations Act; Contested Hearing and Orders

Legal Issues

  1. 1 Whether the liquidators are justified in amending the constitutions of managed investment schemes to permit power to terminate or disclaim project documents and investor rights;
  2. 2 Whether such amendments would 'adversely affect members' rights' under s 601GC(1)(b) Corporations Act;
  3. 3 Whether the liquidators are entitled to disclaim project documents as onerous property;

Ratio Decidendi

It was appropriate in the circumstances to issue directions that the liquidators could amend the relevant constitutions under s 601GC(1)(b) of the Corporations Act and disclaim project documents as onerous under s 568(1), as the factual context—including the insolvency of the schemes and the absence of viable alternatives—rendered reasonable the responsible entity's belief that amendments would not adversely affect growers' rights; further, such actions would be subject to further court approval and growers would receive compensation referable to their rights.

Court Disposition

Directions granted as sought by the plaintiffs, subject to undertakings and safeguards.

Orders

  • The Second and Third Plaintiffs are justified in procuring the First Plaintiff to amend scheme constitutions as set out in the schedules, pursuant to s 601GC(1)(b) Corporations Act, by executing proposed deeds not adversely affecting members' rights.
  • The Second and Third Plaintiffs are justified in amending investment deeds and constitutions of Professional Investor Schemes as set out.