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[2010] FCA 1048
Federal Court of Australia
2010-09-24
Gordon J
Original judgment source is linked above.
INTRODUCTION 1 This is the sixth judgment in a series about unregistered managed investment schemes in which Mr Mark Ronald Letten, the First Defendant, was involved. The history of the proceedings were summarised in Australian Securities and Investments Commission v Letten (No 3) [2010] FCA 512 at paragraphs [1] - [2]. These reasons for decision adopt the same abbreviations as the earlier reasons for decision. 2 On 25 February 2010, the Court made orders that the Receivers be appointed as receivers and managers to each of the schemes listed in Annexure A to those orders. One of the schemes (scheme numbered 15) named "Yarra Valley Golf Joint Venture" involved a number of defendants to this proceeding including: Yarra Valley Golf Pty Ltd - Twenty-First Defendant [(YVG)] Adina Rise Pty Ltd - Twenty-Second Defendant Albright Investments Pty Ltd - Twenty-Third Defendant Ashfield Rise Pty Ltd - Twenty-Fourth Defendant Bradfield Corporation Pty Ltd - Twenty-Fifth Defendant Copeland Enterprises Pty Ltd - Twenty-Sixth Defendant Devlin Way Pty Ltd - Twenty-Seventh Defendant First Hazelwood Pty Ltd - Twenty-Eighth Defendant Glenbelle Pty Ltd - Twenty-Ninth Defendant Glenvale Way Pty Ltd - Thirtieth Defendant Greenview Lane Pty Ltd - Thirty-First Defendant Hallmark Corporation Pty Ltd - Thirty-Second Defendant Moorleigh Holdings Pty Ltd - Thirty-Third Defendant Norton Ridge Pty Ltd - Thirty-Fourth Defendant Raleigh Glen Pty Ltd - Thirty-Fifth Defendant Redcrest Holdings Pty Ltd - Thirty-Sixth Defendant Suri Corporation Pty Ltd - Thirty-Seventh Defendant Sutton Rise Pty Ltd - Thirty-Eighth Defendant The Virtual Mlmer Pty Ltd - Thirty-Ninth Defendant Tivendale Pty Ltd - Fortieth Defendant Tulloch Downes Pty Ltd - Forty-First Defendant Mainking Pty Ltd - Forty-Second Defendant Topglen Pty Ltd - Forty-Third Defendant Allblue Pty Ltd - Forty-Fourth Defendant Aranbay Pty Ltd - Forty-Fifth Defendant The orders on 25 February 2010 also provided that the scheme numbered 15 be wound up pursuant to s 601EE(1) of the Act. 3 A subsequent Disclosure Report prepared by the Receivers identified the property of scheme 15 as the Heritage Golf Club and Country Club, Corner of Hughes and Yarraview Roads, Chirnside Park, Victoria (the YVG Property). The YVG Property was described by the Receivers as follows: The … property is situated within the Heritage Golf Club and Country Club Complex. This includes residential, hotel, day spa, conference and golf facilities (albeit these have different owners) The … property comprises the two golf courses (St John & Henley), clubhouse, residential development land and 92% of the shares in HGCC Pty Ltd. HGCC Pty Ltd in turn operates the Heritage Golf Club and Country Club (an unincorporated association). The St John course is subject to a lease to HGCC Pty Ltd. It was originally intended that a similar lease be provided to HGCC Pty Ltd once the subdivision of the relevant land occurs [Yarra Valley Golf Pty Ltd] is responsible for the day to day management of the golf operations and the development, marketing and sale of the residential land. The hotel operations including conference and day spa facilities are not owned by [Yarra Valley Golf Pty Ltd] 4 The Disclosure Report set out the "key" steps and processes by which the project was established. For present purposes, it is sufficient to note that the Receivers stated that: The investor funding for the development of YVG has been sourced from many different investors and in different forms over a long period of time and as such may constitute separate schemes There are a number of issues which make it difficult to identify the scheme property for each of the schemes. These include: · The fact that a number of [Joint Venture Agreements] appear to relate to the same physical assets (even though different corporate managers were appointed pursuant to the [Joint Venture Agreements]) · Any separate schemes are effectively 'cross collaterised' as the secured finance in relation to YVG has not been quarantined to particular assets of the schemes · The substantial number of investors who invested in various aspects of the YVG development 5 On 23 October 2000, Muirfield Golf Maintenance Pty Ltd (Muirfield) and YVG entered into a Golf Course Maintenance Contract (the Contract)whereby YVG engaged Muirfield to provide maintenance services on the St John Golf Course at the Heritage Golf and Country Club for a fixed term of five years. On 16 November 2000, YVG served a notice of default and, on 24 November 2000, a notice of termination, by which YVG purported to terminate the Contract. The notice of default alleged that Muirfield had failed to perform the maintenance services of it required under the Contract and, further or alternatively, YVG alleged that Muirfield had failed to supply the equipment necessary to perform the services. 6 On 22 October 2006, years before the appointment of the Receivers, Muirfield commenced proceedings in the Supreme Court of Victoria against YVG, Proceeding Number 9909 of 2006 (the Proceeding) alleging that YVG wrongfully terminated the Contract and unlawfully took possession of equipment owned by Muirfield. YVG counterclaimed. 7 At the time the Receivers were appointed, the Proceeding was set down for a ten day trial to commence on 9 August 2010. Directions hearings were held on 23 March, 20 April and 11 May 2010. At those hearings, the Proceeding was adjourned to allow the Receivers time to investigate the affairs of YVG and to determine their strategy in relation to the Proceeding. 8 Attempts to stay the Proceeding, by consent, were unsuccessful. A further directions hearing was held on 18 May 2010. On 6 July 2010, an application by the Receivers to have the Proceeding stayed was made and denied. At a further directions hearing on 20 July 2010, the August trial date was vacated and the Proceeding was relisted for trial on 4 October 2010. 9 On 13 September 2010, the parties attended mediation and, subject to Court approval, the Proceeding was settled. The terms of the settlement are contained in a confidential Settlement Deed (the Settlement Deed).
INTERLOCUTORY PROCESS 10 The present interlocutory application by the Receivers is made under ss 1323(5) and 601EE of the Corporations Act 2001 (Cth) (the Act) for the following relief: 1. Orders or directions determining questions in the receivership of YVG, namely that the Receivers are justified in settling the proceeding known as Yarra Valley Gold Pty Ltd ats Muirfield Gold Maintenance Pty Ltd, Supreme Court of Victoria, Proceeding Number 9909 of 2006, on the terms set out in the Settlement Deed exhibited at Confidential Exhibit DJT-49 to the Seventeenth Templeton Affidavit. 2. Confidential Exhibits DJT-48 and DJT-49 to the Seventeenth Templeton Affidavit be placed in a sealed envelope and marked "Confidential: No access without leave of a judge of the Court. 3. Such further or other orders or directions as the Court thinks appropriate. 4. That the time for service of this interlocutory process be abridged. 5. That the costs of this interlocutory application be reserved. Notice of the application was served on the Plaintiff and the First Defendant.
ANALYSIS AND CONCLUSION 11 In support of the application to approve the settlement, the Seventeenth Templeton Affidavit explained the background to the litigation and the reasons Mr Templeton thought that it was in the best interests of the unsecured creditors and investors in YVG to settle the Proceeding on the terms set out in the Settlement Deed. 12 Exhibited to the Seventeenth Templeton Affidavit was advice from Mr Troiani and Ms Papealia of Mallesons Stephen Jaques. That advice deals with the prospects of success. They are of the view that, in the circumstances, it was appropriate for the proceedings to be settled on the terms set out in the Settlement Deed. 13 As noted earlier, scheme 15 was wound up by the Court on 25 February 2010: see [2] above. Paragraph 3 of those orders was in the following terms: Pursuant to s 1323(1)(h)(ii) of the Act, and subject to paragraph 21 of these Orders and any further or other order of the Court, Mr Damian Templeton and Mr Phillip Hennessy of KPMG (the Receivers), be appointed, without giving security, as joint and several receivers and managers of the Property (as defined in Annexure A to these Orders) of each of the second to sixteenth and eighteenth to forty-fifth defendants (the Corporate Defendants) (other than Property that also constitutes Property of a Scheme as defined in Annexure A to this Order) with all of the powers provided in ss 420(1) and (2) of the Act, except the power of sale, for the purposes of identifying and securing all of the assets of the Corporate Defendants. 14 Having regard to the terms of that Order, the Receivers seek an order under ss 601EE and 1323(5) of the Act that they are justified in settling the Proceeding on the terms set out in the Settlement Deed. Order 26 r 7 of the Federal Court Rules provides the Court may authorise a receiver to do any act or thing which the parties or any of them might do if of full age and capacity. That rule permits the Court to invest the receiver with powers, including the power to conduct legal proceedings, to appoint lawyers to act and, subject to the Court's approval, to settle such proceedings: University of Western Australia v Gray (No 6) [2006] FCA 1825. 15 Having read the Seventeenth Templeton Affidavit which included the legal advice from Mallesons Stephen Jaques and the terms of the Settlement Deed, I am satisfied that the Receivers are justified in settling the Proceeding on the terms set out in the Settlement Deed. For completeness, I note that the Plaintiff and the First Defendant did not object to the Orders sought by the Receiver. For those reasons, there will be Orders in accordance with the minute of proposed orders which I have initialled and directed be placed on the Court file. Two exhibits to the Seventeenth Templeton Affidavit are confidential and appropriate Orders limiting disclosure of those documents will be made accordingly. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.
Australian Securities and Investments Commission
Letten