Australian Olives Limited (ACN 078 885 042) v Livadaras

The Project 4 Scheme and nature of a scheme interest 15 Project 4 is a managed investment scheme registered under the Act in March 2001 and governed by a Constitution which is binding on all members and the responsible entity of the scheme. Clause 11.4(a) of the Constitution describes the scheme as a project established for the purpose of inviting persons 'to become proprietors of their own business venture in the field of planting, maintaining and harvesting olive trees followed by marketing the olives and olive products'. A person wishing to so participate makes an application either in accordance with a prospectus or in the manner described in cl 13.1 of the Constitution. Upon acceptance by the responsible entity of an application, the participant enters into a Grove Licence Agreement for the use of a 'grove' as a farm and a Grove Agreement appointing the responsible entity to 'manage the member's business venture'. The participant agrees to be bound by the Constitution (cl 11.4(b)). The responsible entity is to ensure that land is available for the purpose of allocating groves on that land to members of the scheme (cl 11.5). A person is a member of Project 4 if that person holds an 'interest' in the scheme. A person holds an interest if their application has been accepted by the responsible entity and a Grove Licence Agreement and Grove Agreement is in force (cl 14.1(b)). 16 A grove is that 'specified and identifiable area of land on which a member carries or will carry on the business of primary production' (Schedule 1 - Dictionary). An interest in Project 4 includes a member's participation in a Grove Licence Agreement and a Grove Agreement; the member's business in carrying on the primary production enterprise; and the 'net proceeds which result from the member carrying on its business' (Dictionary). A single interest is held in respect of a single grove and two interests are held in respect of two groves and so on. The 'term' of the project is that determined by the events or the period described in cl 11.2 of the Constitution. The responsible entity is entitled to regard the register of members as conclusive proof of membership at any given time (cl 14.2). The responsible entity must establish an 'Application Fund' for receipt of all application money received from applicants and a 'Proceeds Fund' for the receipt of all money generated from the project excluding the initial application money. The responsible entity may transfer money from the Application Fund in accordance with cl 15.1. An applicant has an interest in the Application Fund equal to the proportional interest an applicant's application money bears to the total application money paid by all applicants. A member has an interest in the Proceeds Fund equal to the proportion the olives attributable to the member's grove bears to the total (cl 16). The responsible entity must pay the proceeds from the sale of olives attributable to a member's grove into the proceeds fund. 17 The Grove Licence Agreement and Grove Agreement must be read subject to the Constitution (cl 17.1). The responsible entity is entitled to be paid the fees described at Item 3 of Sch 3 (cl 7.1) of the Constitution. A member is entitled to the money held in the Proceeds Fund which represents the gross income from that member's olives attributable to the member's grove for a particular production period less all fees payable under the member's Grove Agreement; less fees payable under the member's Grove Licence Agreement to the Responsible Entity; and less any other monies payable by the member to any person either under the Constitution or the above two agreements. The member authorises the responsible entity to make the deductions and payments described above. The surplus available for each member after all deductions are made must be paid to the relevant member within five months after 30 June in each year. A member remains liable for all fees in the event that money generated by a member from the project is not sufficient to satisfy all fees due and payable under the Constitution and the related agreements. 18 Under cl 16.3(a) of the Constitution each member is 'vested' with the member's interest and the olives attributable to the member's grove as well as any by‑products from the sale of the olives. The responsible entity holds all investments, the application fund and the proceeds fund for the benefit of members (cl 16.3(b)). 19 Clause 17.5 of the Constitution deals with the consequences of termination of a member's interest in Project 4. Clause 18 deals with the transfer of a member's interest. Those clauses are in these terms: 17.5 Consequence of termination (a) If a Member has its Interest terminated due to a breach of the Grove Licence Agreement, the Grove Agreement or this Constitution and the breach entitled the Interest to be terminated then the procedure in this clause 17.5 applies. (b) The Responsible Entity may give notice to the defaulting Member stating that the Responsible Entity intends to sell the Member's Interest. (c) If the Responsible Entity gives a notice under clause 17.5(b) then the Responsible Entity will use reasonable endeavours to sell the defaulting Member's Interest as attorney for the Member for the best terms reasonably obtainable by the Responsible Entity. The Responsible Entity is not liable in any way if it is not able to sell the defaulting Member's Interest. The inability to sell the defaulting Member's Interest does not affect the Member's liability for any amounts owing to the Responsible Entity. (d) If the Responsible Entity is able to sell the defaulting Member's Interest then after completion of the sale the Responsible Entity must ensure the proceeds of the sale are held separately from the other assets of the Project. The Responsible Entity is entitled to deduct from the proceedings of that sale the amount of any fees payable to the Responsible Entity as well as any other liabilities and costs for which the defaulting Member may be responsible in this Constitution, the Grove Licence Agreement or the Grove Agreement or any other third party who the Responsible Entity is directed to pay. The Responsible Entity may also deduct reasonable costs and expenses incurred by the Responsible Entity in connection with the default. The balance of any money held on behalf of the defaulting Member after the Responsible Entity has paid all amounts owing must be paid to the Member. (e) If there is insufficient money remaining from the proceedings of the sale of the Member's Interest to pay all of the outstanding costs and liabilities then the Member must make good that difference. The difference constitutes a debt owing by the defaulting Member to the Responsible Entity. (f) If the Responsible Entity cannot sell the defaulting Member's Interest after three months from the date the Responsible Entity first offers the Member's Interest for sale then the following provisions apply: (i) If the Responsible Entity requires then the defaulting Member must transfer to the Responsible Entity the Member's Interest. The Responsible Entity must pay the Member the market value of the Interest which may be determined by an independent valuation at the defaulting Member's cost. (ii) The Responsible Entity must continue to manage the defaulting Member's Interest in accordance with the terms of this Constitution and the Grove Agreement. (iii) The gross income attributable to the defaulting interest will be applied in the following order of priority: · firstly, in the payment of any costs and expenses incurred by the Responsible Entity in connection with the assignment of the defaulting Member's Interest to the Responsible Entity · secondly, in the payment of any costs and expenses incurred by the Responsible Entity in enforcing its rights against the defaulting Member · thirdly, in the payment of the amounts due but unpaid by the defaulting Member to the Responsible Entity under this Constitution, the Grove Licence Agreement and the Grove Agreement · fourthly, in the payment of management fees under the Grove Agreement which accrue after the assignment of the defaulting Member's Interest · fifthly, in the payment of any other amounts outstanding which are attributable to the defaulting Members' Interest and which are recoverable by the Responsible Entity under this Constitution, the Grove Licence Agreement or the Grove Agreement, and · any amount of the gross income attributable to the defaulting Member's Interest remaining after payment of the amounts referred to in the above dot points must be distributed pro‑rata to the non‑defaulting Members. (iv) The Responsible Entity is not liable to any other party for any liability accruing in relation to the defaulting Member's Interest. All Members release the Responsible Entity from any such liability. 20 As to meetings, cl 23.1 of the Constitution applies Part 2G.4 of the Act to meetings of members of the project except as varied by cl 23. As to a proxy, the responsible entity may in its absolute discretion accept the appointment of a proxy as valid even though the appointment contains only some of the information required by s 252Y(1) of the Act. To be effective, an instrument of appointment of a proxy for a meeting of members must be received by the responsible entity at least 48 hours before the meeting. 21 Under the Grove Agreement a member engages the responsible entity to manage the member's grove specifically identified in Schedule 1 of each agreement. The Grove Agreements with each member for Project 4 expire upon particular events or alternatively, on 30 June 2023. The planting and initial maintenance obligations are set out in cl 4. Clause 6 of each agreement deals with the remuneration payable to the responsible entity including fees for carrying out the responsible entity's initial duties; fees for performing subsequent duties; and the responsible entity's entitlement to ongoing fees in accordance with the formula in cl 6.3. Harvesting fees payable to the responsible entity are dealt with by cl 7. Termination of the agreement by the responsible entity is dealt with by cl 12.3 which is in these terms: 12.3 Termination by Responsible Entity (a) If the Member fails to make a payment within the required time under this Agreement then the Responsible Entity may terminate this Agreement, but only after giving the Member seven days notice. (b) If this Agreement is terminated under clause 12.3(a) then - (i) the Member loses all rights as a Member in the Project; (ii) the Member remains liable for payment of all fees in respect of work done by the Responsible Entity, and (iii) the procedure for the consequence of termination as set out in the Constitution must be followed (c) The rights under this clause 12.3 are in addition to any other rights the Responsible Entity has at law or in equity in respect of default by the Member under this Agreement. 22 Under the Grove Licence Agreement, each member takes up a licence from the landowner, Collective Olive Groves Ltd ('COGL') which is a subsidiary of AOL, of an identified parcel of land for the conduct of the business venture of planting, growing, harvesting and marketing olives for commercial gain. In addition, each investor/member is allocated shares in COGL. Although the applicant says that the shares in COGL are not 'stapled' with each interest in a grove in Project 4, it is common ground between the parties that an entitlement to shares in the landowning company attaches to and can not be disconnected from an interest in a grove. Mr Ammit in his affidavit sworn 16 June 2008 and filed 9 July 2008 exhibits (BA3) a report prepared by 'Adviser Edge' commissioned by Stantins on behalf of members concerning an operational review of Project 4 and two other separate managed investment olive schemes described as Projects 5 and 6. In that report, the author describes Project 4 investors as receiving 186 COGL shares per grove. The report also notes that Projects 4, 5 and 6 were established at Yallamundi, a property located in the Darling Downs region of Southwestern Queensland between 2001 and 2005. Projects 4, 5 and 6 were the final three components of a six stage development commenced in 1998 at Yallamundi comprising 1,059 hectares of olive plantations representing approximately 321,000 olive trees. The report notes that each of the six projects has a proportional interest in the shares in COGL with some shares held by AOL. The purpose of the Adviser Edge report was to consider options for members of Projects 4, 5 and 6 in light of concerns expressed by members as to the financial performance of each of those projects, on a number of grounds. The Grove Licence Agreement may be terminated by the responsible entity for breach after giving the member 30 days notice.

The termination arrangements 23 On 6 August 2007, the following members of Project 4 ceased to hold an interest in the scheme in respect of 237 groves in the aggregate, as a result of termination steps taken by AOL: 1. Kaur Partnerhsip 62 groves 2. Sanjiv Gupta 7 groves 3. Simon Chmielewski 7 groves 4. Asif Muhammad Partnership 25 groves 5. Thiagarajah Chandrajit 37 groves 6. Aynkaran Sivaratnam 46 groves 7. The Sivaratnam Partnership 35 groves 8. Gowtham Reddy 18 groves 24 On 4 July 2007, Mr Blake Ammit as Executive Director of AOL wrote to each of the above members advising that the payment of annual management fees was outstanding. The letter contained a Notice to Remedy Default within seven days of 4 July 2007. The Notice sought, in the case of Thiagarajah Chandrajit, for example, payment of an amount of $169,923.08 as fees payable under the provisions of the Grove Agreement to the responsible entity for the period 24 June 2005 to the 30 June 2006. The Notice contained a statement that in the absence of default being remedied, 'the manager shall be at liberty to take action on account of your default under the law and as stipulated in the Grove Agreement and Project Constitution'. The letter notes, 'Should you not comply with this Notice to Remedy Default by paying your outstanding annual management fees to AOL by the date set out in the Notice, you are deemed to be in default of your Grove Agreement and AOL may pursue the remedies available to it under the law, the Constitution and the Grove Agreement'. A similar letter was sent to each member on 4 July 2007 enclosing a Notice to Remedy Default in the payment of fees payable under the Grove Licence Agreement. In the case of Thiagarajah Chandrajit, the Notice required payment of $1,689.05 as licence fees for the same period, within 30 days of 4 July 2007. The Notice contained a statement that in the absence of default being remedied, 'the Land Owner shall be at liberty to take action on account of your default under the law and as stipulated in the Grove Licence Agreement and Project Constitution'. The letter enclosing the Notice contained a paragraph in the same terms as that quoted above with the exception of the substitution of a reference to the Grove Licence Agreement rather than the Grove Agreement. 25 On 6 August 2007, Mr Blake Ammit on behalf of AOL sent a letter to each of the above members noting that each member had failed to comply with each of the notices of default referred to in the earlier correspondence. The letter gave notice to each member in these terms: Accordingly you are now deemed to be in default of the Grove Agreement and/or Grove Licence Agreement. We confirm that your Grove agreement and Grove licence agreement have been terminated. Relevant provisions relating to the Termination of the Grove agreement are set out in section 12.3 of the agreement. The provisions for Termination of the Grove licence agreement are set out in section 10 of the agreement. The remedies available under the law, the Constitution and the Grove Agreement and/or Grove Licence Agreement, include resuming your grove(s). The provisions relating to resumption of your grove are set in the extract of clause 17.4 & 17.5 of the Project Constitution. In addition to resuming your groves and shares, legal action will be commenced to recover all outstanding monies owed to Australian Olives Ltd and/or Collective Olive Groves Limited as well as legal costs associated with this recovery action. It is recommended that you seek professional advice in relation to the income tax and GST consequences of the resumption of your grove interest(s) and associated ordinary shares in Collective Olive Groves Limited to Australian Olives Ltd. 26 The members register for Project 4 was amended to note that each of the above members ceased to hold an interest in Project 4 as and from 6 August 2007 and that on 6 August 2007, AOL became the member holding all of the above resumed 237 interests. It is common ground that each of the 237 interests carried an entitlement to 20 shares in COGL representing 4,740 shares in COGL in all. 27 On 12 February 2007, AOL issued a seven page document to members explaining the methods by which an interest in any one of the six projects might be sold. In that document, AOL described the investment in any one of the six projects as 'ill‑liquid' there being 'no secondary market established to be able to buy or sell existing grove interests'. Two options were identified for selling or transferring groves to another person. The first option (Option A) involved the member establishing a price for the groves, advertising the groves, finding a buyer and notifying AOL of the proposed sale subject to the completion of documentation required by AOL. The second option (option B) involved a member registering the groves for sale with AOL. AOL said at p 3 of the document, 'AOL is not licensed by ASIC to advertise or promote existing groves for sale nor are we licensed to advertise a value for which your groves should be sold'. AOL noted that, 'if a potential buyer approaches AOL to discuss purchasing existing groves for investment then we ask the potential buyer which project they would like to invest in and how much they would like to offer an existing investor for their grove/s. AOL then passes this offer on to the registered seller and they (as the existing investor) decide to accept or reject the offer. If the offer is accepted then AOL prepares the necessary paperwork to transfer the ownership'. 28 In discussing option B, AOL said this: Please note that we currently have many groves listed on our secondary sales register and that we have not facilitated a secondary sale (using option B) for more than two years (Project 1, Project 2, Project 3 and Project 4). AOL stresses that you should have realistic expectations regarding the likelihood of a sale using this method. We highly recommend that you find your own buyer, using option A (above). 29 At p 4 of the document AOL notes that it is difficult to apply a dollar value to an interest in a project. AOL notes that 'In the past, investors with groves in Australian Olives project/s have offered them for sale between [a] minimum price (Project 4 $2,450.00) and [a] maximum price (Project 4 $5,000.00) with the average being approximately (Project 4 $3,500.00)'. Further, 'At 30 June 2006 the shares in [COGL] had an asset value of $2.05 per share. This is a non‑listed public company that currently does not issue a dividend'. 30 For those members wishing to use option B, AOL's document attached a 'Schedule 5 - Notice to Users' setting out the nature of the interests described as 'interests in registered managed investment schemes issued by Australian Olives Ltd and associated ordinary shares in Collective Olive Groves Limited issued by that company'. The Notice records that the Australian Olives secondary market is the subject of an exemption under s 791C of the Act and that AOL is not licensed under Part 7.2 of the Act. The Notice records that the operator is not subject to the legal obligations that apply to the operator of a licensed market including the requirement to do all things necessary to ensure that the market is fair, orderly and transparent. The Notice draws the user's attention to 'certain restrictions' upon the operator 'in relation to the maximum number and value of transactions which can occur on the Market in any 12 month period'. The document also attaches a schedule (Sch 7) setting out the information required for listing a seller's groves on the secondary register. 31 Mr Ammit gave evidence that upon resumption of the 237 interests, AOL listed those interests on the secondary register for sale. No other step was taken by AOL to secure a sale of the interests as Mr Ammit believed that restrictions upon AOL by operation of the Act and compliance obligations regulated by ASIC prevented AOL from 'making a market' for interests in Project 4 by offering those interests to other members or otherwise engaging in any conduct which might be characterised as making a market for interests in a registered managed investment scheme.

Mr Coney, Mr Ammit, Mr Handbury and Mr Johnston 32 Mr Sean Coney is a director of TOG which acts as trustee of the Tyrone O'Grady Trust. Mr Coney gave evidence that the Tyrone O'Grady Trust is a discretionary trust used principally for investment purposes. TOG is also the trustee of the Tyrone O'Grady Superannuation Fund. In that capacity, TOG owns 73 shares in COGL. TOG also holds a grove interest in Australian Olives Project No. 5 although the capacity in which TOG holds that interest is not entirely clear. Mr Coney was a director of AOL from 24 July 2002 to 11 September 2003; Secretary of AOL from July 2002 to 30 June 2006, a director of COGL from 15 January 2003 to 11 September 2003; and Secretary of COGL from 24 July 2002 to 30 June 2006. 33 Mr Ammit was appointed a Director of AOL on 23 October 2002 and remains a director. Mr Anthony Johnston and Mr Patrick Handbury are directors of AOL having been appointed on 24 January 2003. Messrs Ammit, Johnston and Handbury are directors of COGL having been appointed on 15 January 2003, 11 September 2003 and 3 October 2003 respectively. Mr Coney is the Chief Financial Officer of what he and Mr Ammit described as the 'Handbury Group' of companies being the companies associated with Mr Patrick Handbury. One company described by Mr Coney as a subsidiary in the Handbury Group is a finance company called Collinsville Finance Pty Limited ('Collinsville'). Mr Ammit and Mr Handbury are directors of that company having been appointed on 7 April 2003. Collinsville has acted as a lender to a number of members who invested in Projects 5 and 6. AOL was the responsible entity for each of those managed investment schemes until removed and Huntley appointed in its place by resolutions to that effect passed at meetings of members of each scheme. Mr Coney is the author of letters on behalf of Collinsville in which he describes himself as the Chief Financial Officer of that company. Mr Coney wrote letters in that capacity to members of Projects 5 and 6 in the context of notices calling meetings of members of each scheme to consider a resolution to remove AOL as responsible entity, contending that support for such a resolution would place the relevant members in breach of their loan agreements with Collinsville should they support a resolution to remove AOL. Mr Coney contended that support for the resolutions would entitle Collinsville to among other things terminate loan agreements and require immediate repayment of the loan. An example in evidence of such a letter was written to Anne Stout on 19 October 2007 concerning Project 6 and a similar letter was written to Mr Spiros Livadaras on 5 December 2007 in his capacity as a member of Project 5. 34 The respondents place emphasis upon the letter to Mr Livadaras on 5 December 2007 and other letters of a similar kind written to members in Projects 5 and 6 by Mr Coney in the context of his past association with Mr Ammit, Mr Handbury and Mr Johnston in AOL, his continuing role in companies associated with Mr Ammit and Mr Handbury and Mr Coney's agreement to purchase 237 interests in Project 4 on Friday, 7 December 2007, two days after the letter to Mr Livadaras and immediately before the meeting on Monday, 10 December 2007. The inference the respondents invite, in part from these facts, is that because Mr Coney was on 5 December 2007 agitating with members against support for a resolution to remove AOL from Project 5, the agreement reached late on 7 December 2007 to acquire a decisive number of interests in Project 4 from an entity controlled by those with whom Mr Coney previously enjoyed an association in AOL and continues to enjoy an association in other entities, is emblematic of an arrangement by Mr Ammit on AOL's behalf and Mr Coney on TOG's behalf to frustrate the passing of a proposed resolution on 10 December 2007 to remove AOL from Project 4 or a resolution proposed for any adjourned meeting of members convened for that purpose. 35 The letter which is said to, in part, suggest Mr Coney's role in assisting AOL to resist proposed resolutions to remove AOL from Projects 5 and 6 contains these paragraphs upon which the respondents rely: 5 December 2007 Spiros Livadaras … If you vote to change the responsible entity, then we will consider that you have dealt with your interest within the meaning of clause 12(b) of the loan agreement. If you do so without first obtaining our written consent, you have defaulted on the loan agreement and we will be entitled to exercise our rights under clause 9 of the loan agreement, which includes termination of the agreement and requiring you to immediately pay out all principal and interest payable. If you choose, or are required to repay your loan with us then your total loan payout figure as at 15 December 2007 is $12,643.68. We encourage you to seek our written consent prior to the meeting of members on 10 December 2007. Upon receipt of your request, we will conduct due diligence on PS (the cost of which is to be borne by you) and, if satisfied, provide you with our written consent. Alternatively, you may wish to offer us alternative security for the loan. Sean Coney Chief Financial Officer 36 The respondents also place emphasis upon a closeness of relationship between AOL and Collinsville by force of Mr Coney's business relationship with Messrs Ammit, Handbury and Johnston demonstrated, it is said, by letters written by Mr Coney on behalf of Collinsville sent to Project members in envelopes bearing the name, logo and address of AOL even though Mr Coney's formal role with AOL and COGL ended on 30 June 2006. 37 Reliance is placed by the respondents on all of these references as foundation facts which support an inference that 237 interests in Project 4 were transferred to TOG in furtherance of arrangements between Mr Ammit and Mr Coney to enable the interests to be cast against the resolutions at the meeting or adjourned meeting of members of Project 4. 38 The respondents also rely upon Mr Coney's position in the following companies and thus his continuing relationship with Messrs Ammit, Handbury and Johnston as a circumstance which aids in suggesting an inferred arrangement to act as contended rather than an arms‑length sale by AOL to TOG of the relevant interests to be voted by TOG on the resolutions independently of any conduct in concert with AOL. Mr Coney Handbury, Ammit or Johnston Company Secretary Patrick Handbury and Blake Ammit The Sands, Torquay Hotel Pty Ltd Directors Appointed: 27 February 2007 Appointed: 11 July 2002 and 27 February 2007 respectively Company Secretary Patrick Handbury The Sands, Torquay Limited Director Appointed: 27 February 2007 Appointed: 6 May 2003 Company Secretary Patrick Handbury and Blake Ammit Moonah Links Pty Ltd Directors Appointed: 7 February 2007 Appointed: 4 August 2004 Company Secretary Patrick Handbury and Blake Ammit Moonah Links Hotel Pty Ltd Directors Appointed: 7 February 2007 Appointed: 4 August 2004 Company Secretary Patrick Handbury and Blake Ammit Golf Australia Holdings Ltd Directors Appointed: 7 February 2007 Appointed: 4 August 2004 Company Secretary Patrick Handbury Jazzwater Holdings Pty Ltd Director Appointed: 14 March 2008 Appointed: 14 March 2008 Previous Company Secretary Blake Ammit and Anthony Johnston Origin Olives Australia Pty Limited Directors From 13 December 2005 to 30 June 2006 From 13 December 2005 Blake Ammit: Secretary from 30 June 2006 Previous Company Secretary Blake Ammit and Anthony Johnston HB Investment Management Pty Ltd Directors 9 October 2002 to 8 March 2004 Appointed: 8 March 2004 Previous Director 9 October 2002 to 8 March 2004 Previous Company Secretary Patrick Handbury, Anthony Johnston and Blake Ammit COGL Harvesting & Processing Pty Ltd 15 January 2003 to 30 June 2006 Directors: Previous Director Appointed: 6 November 2003, 11 September 2003 and 6 November 2003 respectively 15 January 2003 to 11 September 2003 Previous Company Secretary Patrick Handbury, Anthony Johnston and Blake Ammit Australian Olive Holdings Pty Ltd Directors 24 July 2002 to 11 September 2003 Appointed: 28 November 2003

39 Mr Ammit gave evidence that by reason of these various associations with Mr Coney, he would speak with Mr Coney approximately five times or so a week. Mr Coney agreed with that estimate.

Sale of the interests by AOL to TOG 40 On 26 October 2006, Mr Ammit sent an email to Mr Livadaras setting out a review of the associated cash flows likely to arise out of the Project 4 venture. Mr Ammit noted that the loss of approximately 20% of trees due to frost conditions would result in a reduction of revenues for the Project 4 pool. Taking account of project yields, Mr Ammit concluded that the outlook for Project 4 was 'very grim'. Against the background of these continuing considerations, Mr Ammit sent Mr Spiros Livadaras in his capacity as a member of Project 4 an email on 6 June 2007 attaching a draft letter to be sent to Project 4 members seeking to address a 19.8% loss of trees due to frost and the consequential impact on revenues. Mr Ammit said, 'Essentially, AOL will not partake in any future harvest returns until the project ends in June 2023'. The attached letter noted: By way of background [Project 4] contains 79,165 olive trees that have been planted at Yallamundi between the period June 2001 and June 2002 … a total of 15,641 olive trees or approximately 19.8% of the project, have been lost due to the heavy frosts in the second and third winter seasons … It has been decided by the AOL board not to attempt a replant at this time. As the AOL board acknowledges the need to act on this issue, a unanimous decision was made to forego AOL's participation in any future harvest distribution for the remaining term of the project (i.e. until 30 June 2023). With this decision the AOL board believes it will justly compensate the project for its decision not to replant as AOL currently has interests of over approximately 16,827 (21%) of the trees in the project. 41 On 2 October 2007, AOL wrote to Mr Kostas Livadaras at Stantins in response to an earlier meeting which addressed issues concerning the deductibility of management fees, due process in repossessing particular groves and the commercial prospects for Project 4. As to the repossessed groves, AOL said that it was not licensed by ASIC to advertise or promote existing groves for sale nor licensed to attribute a value to groves for sale. AOL said any secondary grove sales would be governed by AOL's 'Low Volume Financial Market Application' constraints with no more than 100 secondary grove sales within a 12 month period or alternatively, secondary grove sales with a total value of not more than $50,000 within a 12 month period. AOL said that it had received one enquiry in the past three months for the purpose of secondary groves in [Project 1] and restated the position in the document from February 2007 that, 'The average price of all historical secondary groves recorded by AOL are tabled below [AOP4 minimum 2,450; maximum 5,000; average 3,500]'. 42 As to the prospects of Project 4, AOL said: It is acknowledged by AOL that [Project 4] in particular has been adversely affected by the frost. AOL proactively moved in June 2007 to compensate all [Project 4] investor[s] by foregoing all participation in any harvest distribution over its 16,827 olive trees (i.e. 21% of the Project) for the remaining term of the Project. 43 On 13 November 2007, Mr Ammit wrote to Project 4 members in relation to correspondence concerning a proposed meeting of members to remove AOL as responsible entity and replace it with PSL. AOL again noted its commitment to Project 4 members to forego harvest distributions over its 16,827 olive trees in Project 4, 'to be shared amongst all other Project 4 members'. The benefit of retaining AOL was asserted to be, among other things, the retention of the gifting of future harvest distributions by AOL over its trees to members. At p 5/6 of the letter, AOL said, 'the unanimous decision of the AOL board was that AOL would forego its entitlement to any future harvest distributions for the remaining term of Project 4 (i.e. until 30 June 2023) from its own 16,827 olive trees [i.e. 21% of the project]'. In that letter, AOL asserted its view that the role played by Stantins had been detrimental to the running of the projects and AOL questioned 'the motives behind Stantins' actions'. AOL did not 'see how [Stantins] presence can add anything useful to discussions between the parties'. 44 On 3 December 2007, Mr Ammit wrote to Mr Coney in these terms: Further to our discussion last week, the 237 resumed groves in [Project 4] all relate to the Consult Solicitors' clients & have been recorded on our secondary groves register since their resumption in July. AOL would be willing to sell all or part of these secondary groves to you on the following basis: · you pay AOL for the groves & as discussed, will review the sale price historically achieved for secondary groves; · AOL will perform its management & harvest obligations for the groves purchased by you at no cost on the understanding that AOL has gifted the harvest proceeds from these groves to the harvest pool to be shared by all other [Project 4] investors. · AOL has reserved the right to replant groves on land specifically for [Project 4] that have been lost to frost & at that time, an arrangement will be made with you on the cost of management & harvest obligations plus your harvest share from the replanted groves. · your purchase will include 20 COGL ordinary shares for every secondary grove in [Project 4] that is purchased from AOL. AOL will cover the cost of any stamp duty liability that arises from your purchase. Other critical aspects relating to the resumed groves in [Project 4] are the ongoing legal proceedings between AOL & the Consult Solicitors' clients plus the adjourned [Project 4] members meeting for the purpose of replacing AOL with Primary Securities Limited. AOL cannot warrant to you the outcome of both these critical and ongoing aspects to [Project 4]. 45 Mr Ammit and Mr Coney gave evidence that Mr Coney initiated discussions in relation to the purchase of these interests. Mr Ammit gave evidence that Mr Coney was aware of the resumption of the 237 interests and made an enquiry of Mr Ammit as to whether those interests had been sold. The letter refers to a discussion in the week prior to 3 December 2007 and Mr Coney thought that the discussion may have begun sometime earlier and reached its conclusion on 7 December 2007. The letter notes that the 237 interests had been listed by AOL on the secondary grove register since resumption in July. AOL confirmed that it would perform its harvest and management obligations in relation to the groves at no cost to TOG for the reason that AOL had gifted the proceeds from the resumed groves to the harvest pool to be shared by all Project 4 members. The proposal contemplated that the reservation of the right to plant replacement groves might result in a new arrangement for the payment by TOG of the cost of management harvest obligations once a harvest share arose from the replanted groves. AOL confirmed that each grove would carry with it 20 COGL shares. The letter confirmed that AOL would review the sale price historically achieved for secondary groves to be paid by TOG. 46 On 7 December 2007 at 5.37pm, Mr Coney sent an email to Mr Simon Beddoe, the Investor Operations Manager of AOL, in these terms: Further to my discussions with Blake Ammit and yourself, I confirm that Tyrone O'Grady Pty Ltd ATF Tyrone O'Grady Trust agrees to purchase 237 groves in [Project 4] for $10 per grove (total $2,370). I understand that $10 is the last independent sale price for these groves in this project in the secondary market and therefore represents an appropriate market value to attribute to this transaction. 47 On 7 December 2007, AOL and TOG entered into a Deed of Assignment by which AOL as attorney for the former members assigned each of the grove interests set out at [23] to TOG and transferred to TOG each member's ordinary shares in COGL. The deed is expressed to be subject to the Constitution. The share transfer is expressed to be in consideration of $1.00. Mr Coney gave evidence that he regarded the consideration for each grove interest, namely $10, to be the real consideration for 20 shares attached to each interest thus valuing the shares at 50c as compared with the net asset backing value of each share of $2.05 recorded at p 5 of AOL's document of February 2007 [27] - [30]. The share transfer form dated 7 December 2007 records the transfer of 4,740 shares (i.e. 20 shares in respect of each of the 237 interests). The agreement contains a handwritten notation that it is to be read in conjunction with a memorandum of understanding. 48 Some time after 5.37pm on Friday, 7 December 2007, Mr Beddoe either altered the members register to reflect TOG as the new member or caused another AOL employee under his supervision to alter the register to reflect TOG's membership. 49 In the letter dated 26 October 2006 from Mr Ammit to Mr Spiros Livadaras and the email of 6 June 2007, AOL was plainly talking about its own olive trees within Project 4. That must be so because AOL had not by those dates resumed possession of the 237 interests. AOL's letter of 13 November 2007 continues to refer to its own olive trees. However, plainly enough, the letter dated 3 December 2007 is a reference to the resumed trees. Each grove interest in Project 4 represents 71 trees. Interests consisting of 237 groves therefore represent 16,827 olive trees which is the same number of trees referred to in the earlier correspondence. In any event, it is plain that AOL's proposal in response to Mr Coney's enquiry effected a transfer of the resumed groves to TOG. 50 As events transpired, the meeting of members of Project 4 on Monday, 10 December 2007 did not proceed to conclusion and ultimately a fresh meeting was convened by notice dated 4 April 2008 for 29 April 2008. 51 Exhibit 1 is an undated proxy form signed by Mr Coney. Mr Coney says that he completed the proxy form, directed the proxy in favour of Mr Blake Ammit and delivered the form to Mr Simon Beddoe at the premises of AOL 48 hours before the meeting. Mr Beddoe accepted the proxy. The proxy was available for inspection at the meeting on 29 April 2008. 52 Counsel for the respondents put to Mr Ammit in cross‑examination that the sale of the resumed interests to TOG in its capacity as trustee of the Tyrone O'Grady Trust on 7 December 2007 was a 'sham' brought into existence solely for the purpose of enabling TOG to vote the resumed interests at a meeting of members of Project 4 in circumstances where s 253E of the Act prevented the responsible entity from voting those interests on a resolution in which it had an interest. The respondents put to Mr Ammit that a sale price of $10 in respect of each interest was unrealistic, the price failed to take account of AOL's literature on historical values and did not derive from any step by AOL to seek or obtain the best price. Mr Ammit denied these propositions. Mr Ammit gave evidence that AOL had repossessed the interests due to systemic default by those previous owners; AOL had written off $880,000 as unpaid management fees due and payable from those members; negotiations had been conducted with Mr Livadaras to resolve aspects of these issues and AOL had elected to 'try and commercially resolve an outcome'. Mr Ammit gave evidence that each of the 237 groves reflected two problems. First, AOL, at the time of the sale, had continuing outstanding legal issues with the former members in relation to the resumption of the groves. Secondly, harvest distributions from those groves would be dedicated to members of Project 4 for the life of the project. Mr Ammit accepted that the resumed interests had not been offered to remaining members of Project 4. Mr Ammit gave evidence that he believed AOL was prevented from making offers of the resumed interests as causing offers to be made would engage the practice of making a market. Accordingly, the resumed interests were listed on the secondary register. Mr Ammit accepted that AOL operated within a 'low volume exemption' consistent with its ASIC registration for the scheme under the Act. However, Mr Ammit considered that AOL was not 'allowed to promote the sale of secondary groves' and that 'our role is to meet interested parties with interested sellers'. Mr Ammit accepted that between 6 August 2007 being the date of resumption and listing of the interests on the secondary register, and 3 December 2007, AOL '… did nothing apart from put it [the 237 interests] on our secondary register. We didn't promote the sale'. Mr Ammit gave evidence that there was no discussion between Mr Coney and Mr Ammit concerning the meeting to consider a resolution to remove AOL. Notwithstanding the compression in the timing (proposal put to Mr Coney on 3 December 2007; agreement reached on 7 December 2007 and a meeting of members on 10 December 2007), Mr Ammit gave evidence that no discussion of the resolutions for the meeting occurred. As to the price, Mr Ammit said that he was not familiar with the price of '… sales that had gone through. The process was between Simon Beddoe and Sean [Coney] as far as the conclusion of $10 was the last independent sale price'. Mr Ammit did not know whether there had been other sales at $10 for each interest or how many. Mr Ammit gave evidence that the 'intrinsic value' of the resumed interests was hard to determine as the harvest had been poor and value was thus questionable. Mr Ammit accepted that on behalf of AOL he had been willing commercially to accept a price of $10 per grove. Mr Ammit denied that he 'did a deal' with Mr Coney that TOG would support whatever was in the best interests of AOL at any meeting of members of Project 4. Mr Ammit gave evidence that he did not know how Mr Coney would vote on any resolution in relation to whether AOL might be removed as responsible entity of Project 4 and no arrangement was reached as to how Mr Coney would vote at the meeting of members of Project 4 called for 29 April 2008. 53 Mr Coney gave evidence that he had been willing to purchase the 237 interests in Project 4 for a number of reasons. First, he knew that the groves had been repossessed. Secondly, he gave evidence that because the income from those interests had been allocated to other members of Project 4, he would not be required to pay management fees or licence fees. Mr Coney said that he would not otherwise have been able to afford to acquire any interest in Project 4. Mr Coney said that in the result he was able to purchase the grove interests at $10 for each interest which gave him 'access to shares in the landowning company at a substantially discounted value'. Mr Coney said that he knew the net assets of COGL resulted in a value per share in that company in excess of $2. An acquisition of each interest at $10 carrying with it 20 shares in COGL provided 'a risk free investment' at 50c for each share. Mr Coney said that he understood that there were issues between AOL and the former members about the resumption process and that if the resumption was undertaken invalidly and the groves were to 'go back', Mr Coney believed that the COGL shares 'which is the whole purpose of the transaction' would also go back. Mr Coney said that he knew that the grove interests were essentially 'unmarketable' and that he would be willing to 'take the groves if they [AOL] would sell the shares in COGL'. Mr Coney gave evidence that AOL had 'warranted legal title in those groves' and he would rely on that warranty in the event that the former members were successful in their action against AOL and secured restitution of their grove interests and the shares. Mr Coney gave evidence that he would then seek 'appropriate commercial compensation for whatever adverse effect that would have on my position'. Mr Coney said that he bought the shares because he felt it would be of value to the Tyrone O'Grady Trust. Mr Coney denied that he had entered into any arrangement or understanding with Mr Ammit to vote his interest in the scheme against any resolution to remove AOL as a responsible entity. Mr Coney denied that the purpose of the transaction was to posit the 237 interests in a 'supposedly unrelated entity' to enable the votes to be cast against the resolution as AOL might direct. Mr Coney denied such an assertion, repeatedly put to him, and contended that such an arrangement 'did not occur'. Mr Coney accepted that although he knew that the income from the groves would be 'going to the members of the project for the duration of the project to 2023', the acquisition of the COGL shares gave TOG, in his view, a sound commercial reason for acquiring the groves. Mr Coney said that he cast his vote in favour of AOL because he had received nothing from the proposed new responsible entity, Huntley. He said he made his decision as to how he would vote just before he completed the proxy form and gave it to Mr Beddoe. Mr Coney gave evidence that had there been a change of appointment of responsible entity, he would have simply had to trust the new responsible entity to honour the commitment of AOL. An incoming responsible entity might, he thought, have sought to unilaterally change the Constitution. 54 As to the proxy form for the meeting on 29 April 2008, Mr Coney said that there was no discussion about how the vote would be cast as 'that would have been inappropriate'. Mr Coney sought all of the material relating to the proposed meeting from Mr Beddoe and completed the proxy 'just prior to the cut‑off date and handed it to Simon Beddoe'. Mr Coney said that in the period between handing Mr Beddoe the proxy and the Project 4 meeting, some general discussion did occur concerning the meeting, between Mr Coney and Mr Ammit in the course of day to day business discussion of the Handbury Group affairs. Any discussion was by telephone call. Mr Coney in cross‑examination accepted that he discussed the proposed resolutions with Mr Ammit. Mr Coney described those discussions in this way, 'we were just saying what they were - what they were seeking to do and what their intentions were, and general discussions like that'. Mr Coney said that he was comfortable with that general discussion; that he would have voted either way; that he did not tell Mr Ammit how he proposed to vote and Mr Ammit did not ask him. Mr Coney explained with emphasis that such a result arose because any other course 'would be totally inappropriate'. 55 Mr Simon Beddoe gave evidence concerning the changes to the members register. Mr Beddoe recalls receiving the email from Mr Coney. Mr Beddoe believes that he did change the register of members to reflect TOG's interest although he can not remember at what time on 7 December 2007 the change was made. Mr Beddoe said that he was advised by Mr Ammit of the sale; spoke to Mr Coney; obtained 'some written confirmation that the transfer had occurred and to the sum of the groves involved, the dollar amount involved and the entity to which the sale was taking place'. Mr Beddoe said that once he received that information he amended the register.

Conclusions as to the sale arrangements and contentions as to acting in concert 56 The respondents invite the Court to draw an inference that Mr Coney and Mr Ammit entered into an arrangement to act in concert in connection with the voting of TOG's interests in Project 4 at the meeting of members on 29 April 2008. In doing so the respondents rely upon 'circumstantial evidence' sometimes called 'evidentiary facts' (a 'factum probans') or 'facts relevant to an issue' from the existence of which the Court may infer the existence of a fact in issue sometimes called a 'principal fact' (or a 'factum probandum') ('Cross on Evidence', 7th Ed, 2004, J D Heydon [1100]). The meeting on 29 April 2008 represented a meeting ultimately called to consider resolutions to remove AOL as a result of earlier meetings not proceeding. The essential matters said to support an inference of acting in concert in relation to the resolution involve the extensive business relationship between Mr Coney and Mr Ammit; the relationship between Mr Coney and the Handbury Group entities and their directors; Mr Coney's former role in AOL and COGL at a time when Mr Ammit and Mr Handbury were directors of those companies; the compression in the timing between the transaction events on 3 December 2007 and 7 December 2007 and the meeting on 10 December 2007; the content of the terms on which TOG acquired 237 interests for a nominal sum having regard to historical sale prices; the appointment of Mr Ammit as TOG's proxy with a direction that TOG's interests be voted against the resolution to remove AOL; and the failure on the part of AOL to offer the resumed interests to any other member or to otherwise take reasonable steps to secure a sale price on behalf of the former members. 57 It seems to me that the evidence of Mr Ammit and Mr Coney in relation to a sale price at $10 and the evidence concerning the timing of the transaction raises real questions as to the purpose and objective of the transaction. However, I accept that the question of management fees payable by those members whose interests had been repossessed was a matter of significant controversy between AOL and the defaulting members (seven in all although represented by eight investor parties) and the subject of discussions with Mr Livadaras as to a number of issues. I accept that AOL was confronting a failure on the part of those members to pay substantial management fees and AOL saw some advantage in quitting those interests. Mr Coney says that the grove interests were in themselves, at best, of neutral value as all revenue from the 237 groves had been allocated to other members of Project 4 for the term of the project and correspondingly TOG assumed no responsibility for management or harvesting fees in respect of those groves and the trees planted on them. From Mr Coney's point of view, the COGL shares gave him a commercial reason for acquiring the groves coupled with some assurances which he described as a warranty in the event that the former members succeeded in claims of restitution of their interests in the project both as to groves and shares. 58 It seems to me that a finding of fact ought not to be made that Mr Coney and Mr Ammit acted 'in concert' as contended for to transfer the repossessed interests to TOG to enable TOG to vote those interests against a proposed resolution to remove AOL as responsible entity, in reliance upon an inference drawn from foundation facts unless those facts are not capable of bearing an inference consistent with the explanation of those foundation facts. Moreover, the respondents invite the Court to draw an inference and thus make a finding of fact as to acting in concert, expressly in the face of a denial by Ammit and Coney of the fact sought to be established by inference after those witnesses were subjected to cross‑examination on oath and gave direct evidence contradicting the inference. Although, of course, the Court might be persuaded to reject the evidence of Mr Ammit and Mr Coney and Mr Coney's assurances of what is 'proper' and what is not in the circumstances, the evidence does suggest that Mr Coney was provided with an offer by Mr Ammit to purchase the resumed interests then held by AOL on terms which were calculated to provide TOG with an opportunity to make a risk‑free acquisition of the groves to secure the COGL shares and an incentive to retain AOL as the responsible entity so as to preserve the benefit of the transaction terms Mr Coney had secured from Mr Ammit for the benefit of TOG. Arrangements which contain an incentive do not amount to acting in concert in the relevant sense. 59 Accordingly, I accept the evidence of Mr Ammit and Mr Coney on these matters. On all the evidence now available arising out of a trial of that controversy, the Court is not satisfied that an inference should be drawn that AOL and TOG were acting in concert in the manner contended for by the respondents.

Remaining questions 60 However, a number of important questions nevertheless remain. 61 The first is whether Mr Spiros Livadaras exhibited a lack of good faith in the conduct of the meeting of members of Project 4 on 29 April 2008. Assuming Mr Livadaras acted in good faith, the second question is did he act reasonably in the meeting in rejecting the votes of TOG on the information available to him having regard to what he knew when assuming the role of chair of the meeting and what he learnt in the course of the meeting? Was there material before him that entitled him, perhaps wrongly, to conclude on the facts before him that AOL and TOG were acting in concert in relation to a resolution in which AOL had an interest? Does error of fact as to an element upon which a proper operation of a statutory prohibition such as s 253E rests, give rise to supervisory review by the Courts of the decision of the chair of the meeting? Does s 253G operate as a privative clause as to the question of fact to be decided, objection having been taken as to the fact at the meeting and that objection having been determined by the chair? 62 The third question is whether the decision of the chair is susceptible of supervisory review on grounds analogous to the review of public administrative decisions. If so, is it sufficient that there is some evidence to support an inference of fact drawn by the chair as decision‑maker. Must those seeking to challenge the decision demonstrate that there is 'no evidence' to support the inference (that is, the facts found by inference), although a court might not draw that inference on all the evidence admitted in the disposition of the controversy. 63 A final question is whether the applicant failed to comply with the Project 4 Constitution and related agreements in the repossession and sale of the 237 interests to TOG.

The legal framework for resolving those questions 64 Clause 23.1 of the Constitution applies the provisions of Part 2G.4 of the Act to meetings of scheme members. Part 2G.4 deals with 'meetings of members of registered managed investment schemes'. The meeting on 29 April 2008 was convened by a notice issued by members holding 29% of the votes capable of being cast at a meeting. The meeting was called under s 252D(1) to consider 'extraordinary resolutions' which in relation to a managed investment scheme means a resolution of which notice has been given under the Act and which has been passed by at least 50% of the total votes that may be cast by members entitled to vote on the resolution including members who are present by proxy. Notice of the meeting must be given to each scheme member and other nominated parties (s 252G(1)). The members present at a meeting called under s 252D must elect a member present to chair the meeting and Mr Spiros Livadaras was so elected. A member of a registered scheme who is entitled to attend and cast a vote at a meeting of scheme members may appoint a person as the member's proxy to attend and vote at the meeting (s 252V(1)). A proxy so appointed has the same rights as a member to speak at the meeting and to vote. Section 253E contains the prohibition upon a responsible entity and its associates voting on any resolution in which it has an interest. Section 253G provides that a challenge to a right to vote at a meeting of members of a scheme may only be made at the meeting and 'must' be determined by the chair 'whose decision is final' [10]. An extraordinary resolution put to a vote at a meeting of a registered scheme's members must be decided on a poll. Project 4 is a registered managed investment scheme for the purposes of Chapter 5C of the Act. The members calling the meeting to consider an extraordinary resolution to remove AOL did so for the purposes of s 601FM of the Act. Division 3 of Part 5C.2 sets out the consequences of a change to the responsible entity. Chapter 5C by its Parts and Divisions provides for the adoption of a constitution, a compliance plan and the appointment of a compliance committee. Section 601FC sets out the duties of the responsible entity. 65 Accordingly, the scheme is a creature of the Act. 66 The convening of meetings is in part regulated by the Constitution and the Act. In this case, the Constitution adopts Part 2G.4 of the Act. The meeting was convened under the Act and the chair was elected in accordance with the provisions of the Act. Each member had a right to vote at the meeting either in person or by proxy. In making decisions in the course of the meeting, the chair was not, however, making those decisions under an enactment but was exercising a jurisdiction as chair and powers conferred upon him in that role. Nevertheless, the Act creates a regulatory framework within which conduct, rights and obligations are in part prescribed taken in conjunction with the Constitution. The Constitution for Project 4 does not itself contain a provision in like terms to s 253G of the Act. 67 The duty and function of the chair is to preserve order and take care that the proceedings are conducted in a proper manner and the sense of the meeting is properly ascertained with regard to any question properly before the meeting (National Dwellings Society v Sykes [1894] 3 Ch 159 per Chitty J at 162). Upon the chair rests the responsibility for making rulings as to the validity of matters. Some of those matters will be entirely procedural such as decisions concerning the putting of resolutions to the meeting. Others will involve determining an entitlement such as whether a member may vote by proxy having regard to a challenge to the validity of the proxy instrument, compliance with lodgement procedure or by reason of some other deficiency or restriction. The chair may foreshadow a ruling and entertain objections and discussion before deciding the question or invite discussion, then rule and note objections to the ruling. 68 In the course of considering an entitlement asserted by a member or a member's proxy as to particular subject matter giving rise to a ruling, facts may need to be considered by the chair. Those facts may be relevant matters known by the chair by reason of circumstances surrounding the calling of a meeting or facts learnt in the course of the meeting or a combination of fact‑finding circumstances. Some such facts, in another context, have been described as 'emergent questions, questions of fact that have to be decided then and there' (McLean Bros. & Rigg Ltd v Grice (1906) 4 CLR 835 at 860 per Barton J). A chair engaged in the conduct of a meeting is not in a position to undertake a 'voir dire' as to emergent factual contentions. He or she must hear the contentions of fact going to the question and decide the immediate question. A chair is not required to act judicially in deciding these questions before him or her. The chair is required to act 'bona fide' (Corpique (No. 20) v Eastcourt (1989) 15 ACLR 586 at 596 per Cohen J) or at least in a way that is not 'neglectful' (Corpique, per Cohen J at 596). On a question of whether the chair of a meeting of relevant members of a corporation, convened to consider a scheme of arrangement, had given members sufficient opportunity to debate the merits of the scheme, McLelland J, in Direct Acceptance Corporation Ltd (1987) 5 ACLC 1037 at 1041, said, 'However, on such a matter as this, the chairman as a matter of law has a wide discretion with which the court will not interfere unless the exercise of that discretion can be shown to be invalid, e.g. on the ground that it was exercised in bad faith'. In Fast Scout Ltd v Bergel & Ors (2001) 40 ACSR 376, Templeman J considered, in the context of a ruling relating to the validity of proxies, that 'generally, a chairman's decision will be amenable to review by the court if he makes an error of law'. Assuming the chair has exercised the jurisdiction conferred upon him by the meeting and the relevant instruments in good faith, the notion that his or her decision will be amenable to review on a ground of error of law although supported by established authority is more recently supported by a decision of the Court of Appeal of Victoria in Link Agricultural Pty Ltd v Shanahan & Ors (1998) 28 ACSR 498. Kenny JA with whom Batt JA and Buchanan J agreed, accepted that the powers exercisable by the chair are not unfettered and 'broadly speaking' the powers could not be exercised 'unlawfully' to deprive members of their votes (Kenny JA at 511). The decision taken by the chair to refuse Shanahan extra time to lodge his 'proxy holder card' after a particular deadline with the result that proxy voters lost the benefit of their right to vote, failed a test of legality [my term] because the chair's decision was not taken for the purpose of the power conferred by the Act (Kenny JA at pp 512 and 513). Kenny JA put the test in these terms, 'Whether or not there was error in the chairman's ruling depends on whether it was made in good faith and for [the] purpose. The ruling will be invalid if made in bad faith or for an ulterior or impermissible purpose' (Kenny JA at p 511). In Perera v Reilly (2006) 59 ACSR 317, Murray J considered the intersection between s 253G of the Act and the approach to supervisory review of decisions of a chair of the meeting and said this: [45] The provision is designed to facilitate the despatch of corporate business by decisions taken at meetings. In that context, it has often been held that such a provision will operate as a privative provision, rendering the decision not amenable to judicial review if the power is exercised bona fide, albeit mistakenly … at least in cases where there has been no error of law. 69 In Triden Contractors Ltd (1992) 30 NSWLR 615 at 616, McLelland J considered that, 'The chairman must act in good faith, in accordance with any relevant law [i.e. no error of law] and on reasonable grounds'. The obligation to act in good faith is understood as an obligation to act honestly and without ulterior motive. The obligation to act reasonably is an obligation not to act capriciously. A chair 'who makes an error of law which deprives a member of the statutory right to vote proxy may be corrected by the courts for technical misconduct' (ANZ Nominees Limited v Allied Resources Corporation Limited & Ors (1984) 2 ACLC 783 per O'Bryan J at 789). 70 It seems to follow therefore that a decision of the chair will be amenable to supervisory review by the courts if the chair has made a decision in bad faith. Secondly, the decision will be susceptible of review if the chair acting in good faith has made an error of law. That error may arise because the power has been exercised in a way which fails to facilitate the purpose of the power conferred upon the decision‑maker by the relevant instrument. Alternatively, an error of law may arise because the chair has simply misconceived the operation of the statutory power or instrument conferring the power. The decision of the chair is not susceptible of review if the power is exercised bona fide albeit mistakenly in a way which does not involve an error of law. A good faith exercise of the power in the determination of facts upon which an exercise of the power rests does not give rise to an error of law. The chair must however act reasonably. 71 The applicant contends that an error of law might well arise by reference to the analogue of supervisory review of administrative decision‑making. In Byng v London Life Association Ltd [1990] 1 Ch 170; [1989] 1 All ER 560, the Court of Appeal applying Wednesbury principles held that a chair exercising powers as chair at a meeting of members of a public company would fall into error of law if the chair, on facts which he knew or ought to have known, failed to take into account all relevant factors, took into account irrelevant factors or reached a conclusion which no reasonable chair properly directing himself or herself to the chair's duties could have reached. Sir Nicholas Browne‑Wilkinson, VC observed that the chair's decision 'must also be taken reasonably with a view to facilitating the purpose for which the power exists' (Byng per Browne‑Wilkinson, VC at p 189). In that sense, the question of whether the power is exercised reasonably is a function of the question of whether the decision facilitates the purpose for which the power was conferred. That is an error of law test. 72 If the approach to judicial review of administrative decisions is an applicable analogue for judicial review of decisions of a chair of a meeting of scheme members, having regard in part to the contextual provisions of the Act within which the chair of such a meeting discharges his or her role, the question to be determined in examining conclusions of fact or a process of reasoning leading to a conclusion of fact is whether there is any evidence before the chair upon which the decision could have been made irrespective of whether the Court would have reached that decision or drawn the same inference. However, care must be exercised when applying the authorities as they go to the exercise of the jurisdiction itself. 73 The position derived from the authorities on this question seems to me to be this. 74 Describing a process of reasoning as irrational, illogical or based upon an unsound approach to the assessment of a document (for example) or that findings are not based on inferences of fact supported on logical grounds, may merely be an emphatic way of disagreeing with a finding of fact (Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 per Gleeson CJ at [5]). It is necessary therefore to precisely identify the 'nature and quality' of the error of the administrative decision‑maker and the legal principle that attracts a particular legal consequence, such as error of law, that is, the 'legal rubric under which a decision is challenged' (MIMA; Ex parte S20/2002 per Gleeson CJ at [9]). The scope of the legal rubric is conventionally understood in terms of the well known passage from Craig v South Australia (1995) 184 CLR 163 at 179 per Brennan, Deane, Toohey, Gaudron and McHugh JJ; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 351 [82] per McHugh, Gummow and Hayne JJ and as to misconceptions which might suggest an unsupportable supposition on the part of the decision‑maker, see Avon Downs Pty Ltd v FCT (1949) 78 CLR 353 at 360 per Dixon J and R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co. Pty Ltd (1953) 88 CLR 100 at 120 per Dixon CJ, Williams, Webb and Fullagar JJ. As to the constraints upon a court interfering with the decision‑maker's assessment of the evidence, in exercising supervisory review of administrative decision‑making, see Attorney‑General (NSW) v Quin (1990) 170 CLR 1 at 35‑36 per Brennan J. 75 However, at common law, want of logic is not synonymous with error of law (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, per Mason CJ at 356, with whom Brennan, Toohey and Gaudron JJ agreed) and as to inferences, 'so long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.' (his Honour's emphasis, Bond, per Mason CJ at 356). On the other hand, where a statute requires the decision‑maker to discharge particular duties, 'irrationality of the kind described by Deane J in Australian Broadcasting Tribunal v Bond may involve non‑compliance with the duty' (MIMA; Ex parte S20/2002 per Gleeson CJ at [9]). In the context of the particular statutory framework relating to protection visas under the Migration Act 1958 (Cth) and the role and duty of the Refugee Review Tribunal, Gummow and Hayne JJ (with whom Gleeson CJ agreed) in Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 207 ALR 12 observed at [38] that although the question of whether protection obligations relevantly arose included a consideration of factual matters, 'the critical question is whether the determination [by the Tribunal] was irrational, illogical and not based on findings or inferences of fact supported by logical grounds' and 'inadequacy of the material before the decision‑maker concerning the attainment of that satisfaction is insufficient in itself to establish jurisdictional error'. 76 In Minister for Immigration and Multicultural Affairs v Epeabaka (1999) 84 FCR 411, Black CJ, von Doussa and Carr JJ at [25] observed that want of logic in drawing an inference will not of itself constitute an error of law. Their Honours also noted, however, that a want of logic 'may sound a warning note to put one on inquiry whether there was indeed any basis for the inference drawn': see also NAMM of 2002 v MIMIA [2003] FCAFC 32 per French, Lindgren and Finkelstein JJ; MIMIA v W306/01A [2003] FCAFC 208 per French, Hill and Marshall JJ; NACB v MIMIA [2003] FCAFC 235 per Tamberlin, Emmett and Weinberg JJ; W404/01A of 2002 v MIMIA [2003] FCAFC 255 per French, Lee and Carr JJ; NATC v MIMIA [2004] FCAFC 52 per Heerey, Sundberg and Crennan JJ; VWST v MIMIA [2004] FCAFC 286 per Kiefel, Marshall and Downes JJ, applying these principles. The question of whether there is evidence of a fact is a question of law and whether an inference can be drawn from facts is itself a question of law. In Minister for Immigration and Multicultural Affairs v Al‑Miahi (2001) 65 ALD 141, Sundberg, Emmett and Finkelstein JJ, said this: [34] The question whether there is any evidence of a particular fact is a question of law. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. That is because, before the inference is drawn, there is a preliminary question as to whether the evidence reasonably admits a different conclusion. Accordingly, in the context of judicial review, the making of findings and the drawing of inferences in the absence of evidence is an error of law. On the other hand, there is no error of law simply in making a wrong finding of fact. Even if the reasoning whereby the court reached its conclusion of fact were demonstrably unsound, that would not amount to an error of law. A party does not establish an error of law by showing that the decision‑maker inferred the existence of a particular fact by a faulty process, for example by engaging in an illogical course of reasoning. Thus, at common law, want of logic is not synonymous with error of law. So long as the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.

Good faith 77 As to the question of good faith, the applicant contends that Mr Livadaras exhibited a lack of good faith on the footing that he and the firm of accountants and advisers of which he is an employee, acted as prime movers amongst or coordinators of members of a number of the olive projects of which AOL was responsible entity, to agitate complaints and ultimately convene meetings to consider and, if thought fit, pass resolutions to remove AOL. 78 On 23 November 2007, the solicitors for AOL, McMahon Clarke Legal ('MCL', Mr Nathan Shaw), wrote to ASIC complaining about the conduct of Stantins in relation to Projects 4, 5 and 6. The applicant's lawyers contended that a number of investors in those projects were clients of Stantins and that Stantins had given advice designed to further its own interests rather than the interests of investors. The complaint addressed the implications of contended significant sales commissions derived by Stantins in the sale of interests in each project and Stantins' participation in the distribution of notices of meetings for each project. Mr Livadaras gave evidence that any commissions paid to Stantins were properly disclosed to members. 79 At meetings of members of Projects 5 and 6, AOL was removed as responsible entity of those projects. Mr Spiros Livadaras was the chair of those meetings and in particular the meeting of members of Project 5 held on 18 March 2008 that resolved to remove AOL. Shortly before that meeting, the solicitors for the applicant wrote on 14 March 2008 to the solicitors for Mr Spiros Livadaras so as 'to ensure that the chairperson of the meeting is aware of issues surrounding the voting on resolutions and voting on the resolutions' at meetings for Projects 5 and 6. The applicant's lawyers contended that concern had arisen out of Mr Livadaras' conduct of a Project 5 meeting he chaired in December 2007. The particular complaint was that Mr Livadaras 'allowed various questionable proxies to be counted and made errors of fact and law in his admission of those proxies'. 80 On receipt of that letter, Mr Livadaras sought specialist advice from Piper Alderman Solicitors (Mr Alan Jessup) concerning the letter. The solicitors generally representing Mr Livadaras are Frenkel & Partners. Based on the advice of Mr Jessup, Mr Livadaras as chair of the Project 5 meeting formed the view that TOG acting through Mr Coney was an associate of AOL and thus not entitled to vote on a resolution to remove AOL put to the meeting. Mr Livadaras said that having been voted into the chair for that meeting, he made a ruling in reliance upon the advice of Mr Jessup given prior to the meeting and decided that the vote of TOG would not be admitted. Mr Livadaras noted that a single grove held by TOG in Project 5 would not in any event affect the outcome of the vote conducted at the meeting. Mr Livadaras thus concluded that there was no need to consider that matter further during the course of the meeting. 81 On 24 April 2008, Mr Shaw wrote to the solicitors for Mr Livadaras concerning the notice of meeting issued on 4 April 2008 for the meeting on 29 April 2008. MCL anticipated that Mr Livadaras would be the chair for the meeting of Project 4 members and advised that in order to avoid the situation where Mr Livadaras would be required to take advice during the course of the meeting, MCL was instructed to raise certain issues prior to the meeting. The particular concern was the treatment by Mr Livadaras of the voting rights of TOG at the previous meeting and Mr Livadaras' decision that TOG was an associate of AOL. The letter contends that Mr Livadaras reached that conclusion because Mr Coney, TOG's officer, was a former officer of AOL. MCL put five propositions namely: 1. Mr Coney is not a director or officer of AOL or its parent company, United Capital Agricultural Holdings Pty Ltd. 2. Mr Coney is not an employee of AOL and has not been an employee of AOL since 2004. 3. Mr Coney's position as an officer of AOL ceased when he ceased employment with AOL in 2004. 4. Mr Coney is currently employed by the Handbury Group and he is not under the direction or control of AOL or any associated company. 5. There is no common intention between AOL and Tyrone that would give rise to an argument that the parties are acting in concert within the meaning of section 12 of the Act. 82 MCL contended that having regard to those matters, Mr Coney was not an associate of AOL and in any event the voting entitlements in Project 4 were held by the 'trustee of Mr Coney's superannuation fund' (TOG) which was not an associate of AOL. The applicant through MCL contended that if Mr Livadaras took the position that either TOG or Mr Coney was an associate of AOL, the applicant would contend that Mr Livadaras had acted in bad faith. Mr Livadaras sought advice about that letter from Mr Alan Jessup who on 28 April 2008 provided a six page letter of advice to Mr Livadaras. Mr Jessup notes that Mr Livadaras is 'concerned about the present responsible entity [AOL] entering into arrangements with third parties by transferring AOL's Groves to them to enable those third parties to vote on the extraordinary resolutions'. In the executive summary of advice to Mr Livadaras, Mr Jessup said this: In our view, if AOL enters into an arrangement with a second person by transferring AOL's Groves to that person to enable that second person to vote on the extraordinary resolutions then that second person is an associate of AOL because that second person is at the very least acting in concert with AOL with respect to matter concerning whether AOL remains the responsible entity of the above project. Further, if the vote of that second person is excluded and that ruling is challenged, the chairperson does not have any power to consider any such challenge to the right of AOL to vote. The Corporations Act automatically operates to exclude the votes. You will simply not count that second person's votes either in the total number or in the no votes'. [emphasis added] 83 In the final paragraph of the executive summary, Mr Jessup amplifies his comment concerning arrangements between AOL and a second person and its connection with the notion of a party being an associate of another. He said this: It should be easy for you to prove that the second person is acting in concert in the circumstances, because AOL has given away its olive trees to the other Growers so it has nothing left to transfer to the second person. [emphasis added] 84 Mr Jessup's letter explains the operation of s 601FC(1)(c) of the Act (the responsible entity's obligation to act in the best interests of members and prefer those interests when in conflict with AOL's interests), the prohibition arising under s 253E of the Act, the question of whether AOL had an interest in the proposed resolution, the operation of ss 12(2) and 12(3) of the Act and the scope and operation of s 253G. Consistent with the paragraph quoted at [83], Mr Jessup said this on the topic of s 12(2)(c): Even if you are unable to prove an agreement [that is, the operation of s 12(2)(b)] between AOL and the second person, it seems to us that it should not be difficult in the circumstances to establish that the second person is a person with whom AOL is acting or proposing to act in concert in relation to the Project's affairs. Therefore in our view the votes of that second person should be excluded from voting on the proposed extraordinary resolution. [emphasis added] 85 Mr Jessup did not deal with the factual foundation for reaching that conclusion other than to note in the executive summary that AOL's election to apply the revenue from the repossessed trees to other members of Project 4 for the life of the project left 'nothing' to transfer to a second person. Inferentially, any person acquiring those interests would be unlikely to have any good commercial reason for doing so and thus 'it should be easy' for Mr Livadaras to prove that the only reason for AOL transferring the interests is AOL acting or proposing to act in concert with a transferee to defeat the resolution to remove AOL as responsible entity of Project 4. Mr Jessup did not address the implications for the assumption that nothing was left to transfer, of the COGL shares attached to the grove interests. 86 Controversy arose in the course of the present proceedings concerning the accuracy of the minutes of meeting. Mr Livadaras had sought to secure the consent of AOL to tape record the meeting but no consent was forthcoming from AOL. Mr Livadaras made notes and a solicitor from Frenkel & Partners, Ms Paula Kairouz, also made notes. Ms Kairouz's notes in draft form were sent to Mr Livadaras for review. Mr Livadaras amended the minutes to reflect his recollection of particular events and a more comprehensive statement of his remarks made during the course of the meeting. Although Mr Livadaras contends that the minutes prepared in this way are a full and comprehensive record of all material matters occurring in the course of the meeting, the applicant's solicitor who also attended the meeting asserted that particular matters were objected to by him which are not reflected in the minutes. Mr Livadaras gave evidence that he relies upon the minutes as an accurate record of what was said and by whom and that he has no independent recollection of whether Mr Shaw made objection in the manner contended or as to the content of the objection unless those matters are reflected in the minutes. Since Mr Livadaras has no independent recollection beyond the minutes and relies upon them as an accurate record of the proceedings, I accept that Mr Shaw agitated his concern and objected to the chair determining that AOL and TOG were associates for the purposes of the Act. 87 Mr Kostas Livadaras of Stantins and Mr Simon Beddoe of AOL assumed the role for the purposes of the meeting of reviewing tallies for the votes, identifying how members voted, calculating and comparing votes independently to the parties and identifying differences between the parties. 88 Mr Shaw gave evidence that Mr Kostas Livadaras noted to the chair that the register of members reflected AOL owning 237 groves in Project 4. Mr Kostas Livadaras in doing so was relying upon a version of the members register dated 18 September 2007. Mr Beddoe who attended the meeting with a copy of the then current members register advised the chair that the 237 groves were owned by TOG. The minutes reflect the following exchange: KL (Kostas Livadaras) - The Members Register that AOL has identifies that AOL's 237 groves, 20% or so of trees, have been transferred recently. This is different from the Members Register that AOL had previously provided. LL (Leonie Ladgrove - Member) - I want the members here to understand and be clear of the fact that these are the same 237 groves discussed earlier that AOL in their letter of 13 November 2007 offered to us to offset the loss of the frost affected trees. AOL (BA) (Blake Ammit) - No that was from our holdings across the whole of the projects. LL - No Blake. 16,827 trees equals 237 groves exactly. We are talking about the same groves as per your letter and your earlier rendition. AOL (AJ) (Anthony Johnston) - That offer was only a short term offer. We have plants in the nursery waiting to be planted. LL - No Anthony your offer is until 2023, look at your letter. AOL (AJ) - I did not write that letter. PB (Peter Bysouth - Member) - You're the chairman. You signed it. You should know. AOL (BA) - There is a transactional deed in place transferring these groves to Tyrone O'Grady Super Fund. LL - Blake, you expect us to believe that a person through their self managed super fund would acquire 237 groves in Project 4, from AOL, that they have no entitlement to income until 2023 and have to pay in excess of $300,000 per annum in management fees. You expect us to believe that someone would do that? AOL (BA) - Yes. PB - That person would deserve a sainthood for that. Chairman - I note that Nathan Shaw wrote to me before the meeting regarding Sean Coney the controller and principal of Tyrone O'Grady SF, asking me to seek legal advice on the question of whether Sean Coney is an associate with AOL. I sought advice from Piper Alderman. I have a copy of that advice here. Sean Coney is the CFO of Collinsville Finance, a company associated with AOL. He sits on that board with Blake Ammit. Nathan Shaw in his letter to me confirms that Sean Coney is an employee of the Handbury Group. The advice I received is that under s 253E Sean Coney is an associate of AOL. Furthermore, Sean Coney appears to be acting in concert with AOL. Who would invest $300,000 per annum with no expectation of income to allow AOL to fulfil its promise to P 4 members. This in itself proves that they are acting in concert together. In light of this, Sean Coney's entity and the associated groves need to be deducted from the pool of eligible voters. His vote does not count. Sean Coney is associated to AOL and in my opinion acting in concert with AOL. SB (Simon Beddoe) - he is still a member. AOL (BA) - Could you please give us the reasons why he can't vote? Chairman - I thought I just did. Blake, we all know Sean Coney is directly associated with AOL. He is listed as being employed with Collinsville Finance. He resides in the AOL offices in Brisbane. His email address is sean @ olives . com . net. He sends Collinsville Finance mail in envelopes franked by AOL. If you telephone him you call him at the offices of AOL. He is also an ex‑director of AOL and a co‑director of yours and Paddy's across several of your related entities. AOL (Nathan Shaw) - We would like it noted that we object to the exclusion of these groves. Chairman - Objection noted. LL - What about the income from these groves? Are you saying that he is happy to forego this revenue from his super fund? Chairman - The 237 groves you offered to return the harvest income to the pool. KL - Here is a copy of an AOL letter dated 13 November 2007. 'AOL will forego future harvest distributions over its 16,827 olive trees (237 groves) in Project 4 to be shared amongst all other Project 4 members'. AOL (BA) - They were sold to Tyrone O'Grady. KL - Sold to Tyrone? Is he aware that you sold them to him? Is he happy to pay management fees of $300,000 per annum for 237 groves and forego income of the harvest to 2023? Chairman - We will also like to note that AOL did not respond to these questions and note that BA did not respond to the earlier question on the commercial viability of the scheme moving forward. PB - All I would like here is to avoid legal proceedings and the legal costs associated with it. How do you expect me to accept that someone will pay management fees without any future benefits? AOL (AJ) - As I advise we have trees in the nursery. The commercial trees are still there. It was agreed that there have been some losses yet there is a full pool at the same time. PB - That doesn't answer the question. Are you standing by that commitment that all of that yield from these 237 groves will be put into the project pool? Chairman - We need to stop. We are not getting any benefit from this. Anyway are there any members here present ineligible to vote by way of not paying management fees? 89 Apart from this exchange concerning TOG's acquisition of the resumed interests contextualised by the discussion about the groves and the treatment of revenue from the 237 interests, Mr Shaw gave evidence that he put to the chair that no reasonable grounds existed for the chair to conclude that TOG was an associate of AOL. After Mr Livadaras identified the factors leading him to his view, Mr Shaw repeated his objection and asked that it to be noted in the minutes. In light of the chair's decision to exclude TOG's 237 groves and having regard to other matters discussed between Mr Kostas Livadaras and Mr Simon Beddoe, both Livadaras and Beddoe advised the chair that the total number of members entitled to vote on the resolutions at the meeting was 741. The chair accepted that 401 votes had been cast in favour of the resolution to remove AOL as responsible entity and the resolution was declared passed. The second resolution appointing Huntley was also passed.

The evidence of Mr Spiros Livadaras 90 Mr Livadaras gave evidence that the issue of the status of Mr Coney and that of TOG had been a contentious issue in December 2007 in relation to the original meetings sought to be convened in December 2007 concerning Projects 4, 5 and 6. Mr Livadaras gave evidence that he sought advice from Mr Jessup on 17 March 2008 in relation to the meetings for Projects 5 and 6 convened for 18 March 2008 in the light of Mr Shaw's letter of 14 March 2008. The advice was directed to the implications of the role discharged by Sean Coney as self‑described CFO of Collinsville including Coney's past or present relationship in a range of entities with which Messrs Ammit and Handbury were associated. Mr Jessup said he would need to undertake company searches to determine whether, on the facts, particular relationships rendered a person an associate of another for the purposes of the Act. Mr Jessup made reference in his response to Mr Livadaras that Collinsville may arguably be a person with whom AOL was acting or proposing to act in relation to whether or not AOL would remain the responsible entity of the particular project. Mr Jessup mentioned the notion that emerged in his letter of 28 April 2008 that Mr Livadaras might 'be able to argue that [Sean] Coney is an associate on the basis that he is a person with whom AOL is acting or proposing to act in concert in relation to whether or not AOL is to remain the responsible entity'. Accordingly, Mr Livadaras had sought advice about these matters in the context of the earlier project meetings. As to the meetings on 18 March 2008, Mr Livadaras said that he relied upon the advice of Mr Jessup, as an expert, and was not able to comment on whether the conclusion reached by Mr Jessup that TOG was an associate of AOL was based upon a conclusion that TOG was a body corporate controlled by AOL; or, a body that controlled AOL; or, a body corporate controlled by an entity that controlled AOL. In other words, Mr Livadaras was not confident whether the ultimate view was based upon a result brought about by s 12(2)(a) of the Act or whether Mr Jessup's arguable notion that AOL and TOG were acting relevantly in concert was the prevailing basis for the view. However, Mr Livadaras gave evidence that in his view, informed by the advice of Mr Jessup, TOG was a person with whom AOL was acting or proposing to act in concert in relation to the voting of the 237 interests against the resolution to remove AOL at the meeting on 29 April 2008. 91 Mr Livadaras accepted that in seeking further advice from Mr Jessup on 24 April 2008 concerning Mr Shaw's letter of 24 April 2008, Mr Jessup had correctly noted in his letter of advice of 28 April 2008 Mr Livadaras' concern 'about the present responsible entity [AOL] entering into arrangements with third parties by transferring AOL's groves to them to enable those third parties to vote on the extraordinary resolutions'. Mr Livadaras accepted that upon receipt of Mr Shaw's letter of 24 April 2008 expressing concern over his previous decision to reject TOG's vote at the Project 5 meeting, Mr Livadaras became 'suspicious' that AOL was going to try and use the groves in conjunction with TOG to defeat the removal resolution on 29 April 2008. Mr Livadaras said that the members register available to him of September 2007 did not note Tyrone O'Grady as a member and since Mr Shaw had mentioned TOG in his letter, Mr Livadaras requested Mr Jessup to address the question of how Mr Livadaras as chair should deal with votes transferred by AOL to Tyrone O'Grady, at the meeting. Mr Livadaras accepted that he was suspicious AOL had a 'plan' to use TOG for that purpose. 92 Mr Livadaras did not anticipate that the 237 resumed groves would be or had been transferred to TOG or anyone else 'given the fact that the income from these groves had been gifted as compensation' to Project 4 members. Mr Livadaras thought such a transfer was inconsistent with the commitments AOL had already made to Project 4 members although he conceded the possibility of a sale. Mr Livadaras accepted that he did not make any investigations prior to the meeting as to whether there was, in fact, some agreement or arrangement or understanding entered into between TOG and AOL as foreshadowed by Mr Jessup in his letter of 28 April 2008. Mr Livadaras said that he had made several attempts in August and September to gain access to the registers for Projects 4, 5 and 6 and that AOL had prevented Mr Livadaras from gaining access to registers of members during September, October and November of 2007 leading up to the meetings of December 2007. Mr Livadaras accepted that a current membership list produced at the meeting on 29 April 2008 might well have shown changes from September 2007. However, Mr Livadaras gave evidence that he elected to wait until the meeting to determine whether transfers had occurred as AOL had 'made it difficult for me to gain access to those registers'. Mr Livadaras said that he took advice from Mr Jessup about aspects of the notices convening the meetings. 93 Mr Livadaras expressed surprise that AOL had not informed the members of Project 4 of the sale to TOG on 7 December 2007. Mr Livadaras took the view that since the 237 interests represented 20% of the voting membership of Project 4 and AOL had made a commitment for the life of the project to 'gift the compensation'from those groves to Project 4 members, AOL ought to have disclosed the transaction to members as 'it was a fairly crucial issue'. Mr Livadaras seemed to accept that AOL 'might not have been obliged to' disclose the transaction. 94 Mr Livadaras gave evidence that once Mr Beddoe disclosed that TOG had acquired the 237 groves, he took advice from Mr Jessup who was sitting next to him. Mr Jessup confirmed his advice that the vote of TOG ought to be rejected. Mr Livadaras said that he lent back in his chair and had a conversation with Mr Jessup and accepted his advice. Mr Livadaras took advice at a point during the course of the meeting reflected shortly after the entries at the top of p 9 of the minutes of the meeting. Mr Jessup advised that his earlier advice 'stood'. Mr Livadaras accepted that as a member of Project 4 his personal view was that AOL should be removed and Huntley appointed but that was his view simply as a member not as a chairperson. Mr Livadaras also accepted that he was suspicious that AOL had transferred interests in Project 4 to TOG in the period between the date of calling the meeting on 4 April 2008 and the meeting on 29 April 2008. Mr Livadaras accepted that although he did not expect to find that AOL had transferred the resumed interests it was nevertheless a possibility. Mr Livadaras recalled that shortly before the meeting an AOL employee, Dana Flanders, had sent an email to a Project 4 member confirming AOL's commitment to gift the income from the groves. Mr Livadaras says that he could 'not have actually determined the fact that the groves had been transferred' when Project 4 members were being told that the commitment to contribute the revenue to remaining Project 4 members would be honoured. 95 Mr Livadaras accepted that he did not inspect the register at the meeting although Mr Kostas Livadaras did examine it. Mr Spiros Livadaras remained concerned that AOL did not produce any documentation at the meeting in support of the transfer to TOG. Mr Livadaras considered that if AOL had produced documentation on the day at the meeting in support of the sale on 7 December 2007 'it would have become a non‑issue'. Mr Livadaras said that no documentation was produced on the day of the meeting. Mr Livadaras said the first material in support of a transfer of interests and shares on 7 December 2007 produced by AOL was copies of the documents exhibited to Mr Ammit's affidavit shortly before the commencement of the trial. 96 Mr Livadaras said that had Mr Jessup advised him to accept the votes of TOG he would undoubtedly have done so. Mr Livadaras accepted that AOL held the view, rightly or wrongly, that it was restricted in promoting or marketing the sale of the groves which had been terminated. Mr Livadaras also accepted that there could be some value to a buyer in acquiring shares in the landholding company. Mr Livadaras also accepted that those shares were attached to the groves and were transacted with the groves. Mr Livadaras accepted that if restitutionary orders were made in proceedings taken by the former grove members, those orders would in all likelihood also provide for the transfer back of the shares in COGL. Mr Livadaras accepted that TOG might thus have an interest in ensuring that AOL remained the responsible entity. Mr Livadaras did not expressly concede that such an interest might provide a basis for concluding that TOG might have a reason to vote for AOL. Although Mr Livadaras did not sight the proxy form given by TOG to Mr Ammit, the proxy document was at the meeting for inspection. 97 Mr Livadaras gave evidence that he caused Mr Jessup to undertake extensive company searches. Mr Livadaras gave evidence that he also undertook company searches of all the entities and 'all historical searches' with ASIC at the time. Mr Livadaras placed emphasis upon Mr Coney's role in Collinsville; his former role in AOL and COGL and entities associated with those companies; Mr Coney's role in writing as CFO of Collinsville to members and in particular to Mr Livadaras on 5 December 2007; Mr Coney's regular presence in AOL's offices; the dispatch of letters signed by Mr Coney on behalf of Collinsville in envelopes marked and franked by AOL and bearing AOL's logo; Mr Coney's employment by the Handbury Group; his association with directors in Handbury Group companies; and the compression in the timing in the sale and transfer of the resumed interests to TOG on 7 December 2007 at 5.37pm with changes to the members register later that evening. Mr Livadaras also gave evidence that the resumed grove interests had not been offered to other members although he accepted that AOL believed, rightly or wrongly, that it was not able to do under the Act. Mr Livadaras also noted that Mr Coney on behalf of TOG had given proxy to Mr Ammit to vote against the resolutions put to the meeting. 98 I accept Mr Livadaras' evidence. 99 Two things emerge from it. First, Mr Livadaras no doubt held a view as member that the interests of members of Project 4 would be advanced by removing AOL as the responsible entity. However, Mr Livadaras did not approach his task as chair of the meeting other than in good faith. The question of the relationship between Mr Coney and TOG on the one hand and AOL and its directors on the other, had been a matter which had caused Mr Livadaras to seek legal advice from Mr Jessup and the undertaking of detailed company searches at least from approximately 14 March 2008. Mr Livadaras was suspicious that AOL may have a plan to ensure that votes within its control would be transferred to a third party as Mr Livadaras perceived that AOL had an interest in retaining its position as responsible entity of Project 4 and, so far as Mr Livadaras was concerned, Mr Coney and Collinsville had sought to discourage members from voting in support of the removal of AOL from Projects 5 and 6. Mr Livadaras sought advice as to what he should do in dealing with votes transferred by AOL to a third party and in particular votes transferred to TOG. Mr Livadaras relied upon the advice of Mr Jessup of 28 April 2008 and also took his advice in the course of the meeting. Accordingly, no basis subsists for concluding that Mr Livadaras lacked good faith in the discharge of his role as chair of the Project 4 meeting. 100 The second question is whether it was reasonably open to Mr Livadaras to conclude, as a question of fact, that AOL and TOG were acting in concert in relation to the original motion to remove AOL to be put to the 10 December 2007 meeting or a like motion to be put to an adjourned or new meeting called for that purpose so as to effect a transfer of the resumed interests to TOG to avoid the statutory prohibition upon AOL voting those interests, by operation of s 253E of the Act. 101 It seems to me that such a conclusion was open to Mr Livadaras and he acted reasonably in drawing an inference that AOL and TOG were acting in concert as the respondents contend. 102 AOL had resumed the 237 interests in Project 4 which it elected to sell to TOG through its officer, Mr Coney. That transaction emerged relatively late having commenced with some discussions resulting in a letter of offer on 3 December 2007 and an agreement reached on 7 December 2007. The confirmation that an agreement had been reached was sent by email by Mr Coney to Mr Beddoe late on Friday afternoon at 5.37pm. The members register was altered some time after that email. Although Mr Livadaras did not know of the events of 3 December 2007, 7 December 2007 and the completion of an assignment deed and a share transfer form on 7 December 2007, Mr Livadaras knew at the meeting on 29 April 2008 that the original meeting had been convened for 10 December 2007 and the grove interests had, as it emerged, been transferred on the preceding Friday namely, 7 December 2007. The compression in the timing suggests that the meeting on Monday, 10 December 2007 to consider the removal resolution was catalytic. 103 Secondly, the buyer of the 237 interests was Mr Coney. 104 True it is that Mr Coney acted in his capacity as a director of TOG as trustee of the Tyrone O'Grady Trust but the plain fact is that the arrangements put in place for the sale and purchase of the interests were arrangements struck between Mr Blake Ammit and Mr Sean Coney personally. Mr Beddoe gave evidence that he was told of the sale on Friday, 7 December 2007 by Mr Ammit. Mr Coney confirmed the sale and purchase directly to Mr Beddoe by email at 5.37pm. Mr Coney, as Mr Livadaras knew from company searches he had undertaken, was a man who had an extensive professional inter‑relationship with Mr Ammit, Mr Handbury and Mr Johnston. In that sense, Mr Livadaras knew that Mr Coney was in that camp. Mr Livadaras knew that Mr Coney had discharged formal roles as an officer of AOL and COGL. Mr Livadaras knew that Mr Coney was acting as the Chief Financial Officer of Collinsville by force of his position as CFO of the Handbury Group entities. Mr Livadaras was aware of the various relationships between Mr Coney and Messrs Ammit, Handbury and Johnston ([32] - [38]). 105 Thirdly, although AOL had no obligation to do so, it nevertheless failed to proffer any explanation of the sale of the resumed interests to TOG or produce any of the documents which demonstrated an arms‑length transaction in favour of Mr Coney's entity. AOL in one sense had no obligation to explain itself to Mr Livadaras or the members of Project 4 as to sale documents. However, AOL was the responsible entity for the project. The project had suffered frosts and losses which rendered the prospects of the project at one point 'very grim'. The project members knew that seven members had struggled and defaulted in the payment of management and harvest fees and other financial obligations owed to the responsible entity. Grove interests had been terminated and repossessed. Project members had been expressing discontent to the point of convening a meeting to remove AOL from Project 4 among other projects. Project revenues referable to the resumed grove interests had been dedicated to the remaining members of Project 4 for the life of the project. Mr Livadaras took the view that members at least had an interest in being told of developments that might affect their interests. One such affect was perceived to be a sale of the resumed groves in the context of the commitment by AOL to apply the revenue from those groves to other members until 2023. The failure to disclose the transaction and the content of the commitments attached to it was a matter Mr Livadaras considered relevant in the context of the transfer of those interests to TOG. In other words, the transfer of those interests seemed inconsistent with the status quo and the purchaser of the interests was a person closely associated in a range of business dealings with Messrs Ammit, Handbury and Johnston. Mr Livadaras was also concerned that Mr Coney in discharging his role in Collinsville seemed to have a close physical association with AOL and used its premises, and its stationery. Mr Lividaras was concerned that Mr Coney as CFO for Collinsville had agitated the position that members of a related project who voted in favour of a resolution to remove AOL would do so in breach of their loan agreements with Collinsville. 106 Fourthly, Mr Livadaras noted that Mr Coney had directed TOG's proxy to Mr Ammit to vote against the resolutions. 107 Fifthly, during the course of the meeting, members of Project 4 sought to press questions of Mr Ammit and Mr Johnston concerning the sale transaction to TOG and the odd notion that a buyer would acquire 237 interests in Project 4 with an obligation to pay substantial management fees notwithstanding the application of revenue from those groves to other Project 4 members until 2023. The minutes reflect confusion between Mr Ammit and Mr Johnston about the precise arrangement, the affect of the moratorium and related matters. Neither Messrs Ammit nor Johnston provided any explanation to the meeting that the contended underlying commercial explanation for the acquisition of the groves by TOG was the opportunity offered to TOG to acquire 4,740 shares in COGL at 50c per share at a discount of approximately $1.55 to the net asset backing value of the shares previously held by the defaulting members in circumstances where the value of the groves was treated as zero with no revenue to be derived and no management fees to be incurred. Had Messrs Ammit or Johnston explained the underlying commercial grounds for the transaction, the transaction might not have seemed so anomalous or as unusual as it did to some of the members (LL and PB [86]). 108 As to specific relationship matters, Mr Livadaras placed emphasis in the course of the meeting upon Mr Coney having been a former director of AOL; apparently CFO of Collinsville a company Mr Livadaras believed to be associated with AOL; Mr Coney's status as an employee of the Handbury Group; his presence within the AOL offices in Brisbane; his use of an email address apparently connected with AOL; his use of telephone facilities at AOL such that calls to him were placed to the offices of AOL; and a perception Mr Livadaras held of Mr Coney as 'a co‑director of yours [Mr Ammit] and Paddys [Mr Handbury] across several of your related entities'. It seems clear that Mr Livadaras was not relying upon these relationships as a factual basis for a conclusion that s 12(2)(a) of the Act was enlivened. Mr Livadaras placed emphasis upon these matters as demonstrating a closeness of connection between Mr Coney and Mr Ammit both in relation to AOL and COGL historically and a continuing connection through entities with which Messrs Ammit and Handbury, in particular, were associated. 109 Accordingly, it was open to Mr Livadaras acting in good faith and acting reasonably to conclude as a question of fact that AOL and TOG were acting in concert to transfer the resumed groves to TOG for the purpose of enabling those votes to be cast against the resolutions to remove AOL as responsible entity. There was evidence before Mr Livadaras of the relevant facts and those facts supported the inference he drew, as a matter of law. Once Mr Livadaras reached his conclusion on the facts, s 12(2)(c) had the effect as a matter of law of rendering TOG an associate of AOL and s 253E of the Act then had the effect that TOG's vote could not be cast on a resolution in which AOL had an interest. Mr Livadaras' decision was not a decision on a question of law. He decided a question of fact and having done so the Act prescribed the result that TOG was precluded from casting its vote on the resolution as an associate of AOL. Having decided the relevant fact, his rejection of TOG's vote was not an error of law.

Compliance by AOL with the scheme Constitution and related documents 110 Mr Ammit gave evidence that the letters and notices [24] and [25] sent to the defaulting scheme members [23] could have been better. By that observation, Mr Ammit recognised that the letters and notices did not give notice to those defaulting members of AOL's intention to 'sell the members' interest' for the purposes of cl 17.5 of the Constitution. Counsel for the applicant, correctly in the light of that evidence, acknowledged that it was open to conclude that AOL had failed to comply with the notice requirement. The termination provisions of the Grove Agreement and Grove Licence Agreement incorporate the 'consequences of termination' clause of the Constitution [19]. That clause requires AOL to give the defaulting member notice of an intention to sell the members' interest. If such a notice is given, AOL is obliged to use 'reasonable endeavours' to sell the members' interest, as attorney, for the best terms reasonably obtainable by AOL. 111 AOL says that it was not able to give notice of the proposed sale of the 237 interests to other members of Project 4 or third parties as to do so would contravene the Act and the limitations upon 'making a market'. Notwithstanding those limitations, whether real or not, AOL was plainly required to give notice to the defaulting members of an intention to sell. Had notice been given of the proposed sale, the defaulting members would have been provided with an opportunity to caucus with other Project 4 members and perhaps other third parties to solicit interest in purchasing the members' interest. More particularly, had AOL given notice to the defaulting member of a proposal to sell that members' interest on the TOG terms which involved, for the buyer, an opportunity to purchase an interest which attracted no revenue, incurred no obligation to pay management fees and carried with it an opportunity to acquire the members' interest in the COGL shares, each defaulting member may have sought to explore the possibility that other Project 4 members might have acquired the interest. It seems to me that two things flow from AOL's failure. First, each defaulting member was not provided with a last opportunity to secure the best possible transactional arrangements which might otherwise have prevailed having regard to the TOG terms of sale attaching to each interest which AOL regarded as entirely proper and appropriate. In the result, for example, Mr Chandrajit whose 37 grove interests were resumed for a failure to pay fees of $169,923.08 due for the period 24 June 2005 to 30 June 2006, were sold to Mr Coney's entity for $370.00 representing 740 shares in COGL at 50c. Although it seems that a defaulting member was not in a position to secure 'relief from forfeiture' of the interest in the scheme (the interest bearing the elements and character described at [15] - [18]) as no member had demonstrated a capacity to pay or tender the outstanding management fees, each member had a continuing interest in receiving proper notice of the proposed sale and securing whatever transactional advantage might have been able to be arranged through an alternative sale. Each member remained liable under the documents for the full net amount of the unpaid debt after sale of the member's interest. 112 Secondly, the failure to give notice for the proposed sale was not simply a procedural irregularity. It was a matter of substance. That becomes plain from a consideration of the nature of the interest of each member in the scheme forfeited upon termination under cl 12.3 of the Grove Agreement [21]. By cl 12.3(b)(iii), compliance with cl 17.5(b) of the Constitution was a necessary element of a valid sale in the even that AOL elected to sell the member's interest consequent upon termination. The requirement to give notice was not permissive once AOL elected to sell that interest. The exercise of the power of sale thus failed. Since Mr Coney and Mr Ammit concluded the sale and purchase agreement on 7 December 2007 with effect being given to the agreement by the Deed of Assignment and the transfer of the shares in COGL immediately on 7 December 2007 and registration of TOG's interest in the register of members some time after 5.37pm on the evening of 7 December 2007, it would have been plain to both Mr Ammit and Mr Coney that none of the defaulting members had been given notice of an intention to sell the members' interest to TOG. TOG could not be described as a bona fide purchaser for value of those interests without notice of AOL's failure to give notice to the defaulting members. 113 Thus it follows that the power of sale was not exercised validly and TOG did not acquire the interests it sought to cast at the meeting to be held on 10 December 2007 or to be cast at the meeting on 29 April 2008. 114 Having regard to all of these considerations, the application is to be dismissed with an order that the applicant pay the costs of the respondents of and incidental to the proceedings. I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate: Dated: 15 September 2008 Counsel for the Applicant: Mr C Wilson

Solicitor for the Applicant: McMahon Clarke Legal

Solicitor for the Respondents: Frenkel Partners, Solicitors

Date of Hearing: 8 and 9 August 2008