20 It is not the Court's task on an application such as this to decide between the opposing contentions. The question is whether ASIC's contentions recorded at [15], [18] and [19] are bound to fail. In my view they are not. To use Dixon J's language in Dey, there is a real question of law to be determined as to whether the correct temporal approach to the relevant provisions is that propounded by the defendants (focusing on promotion) or that by ASIC (focusing on operation). If ASIC's approach is open, there is certainly evidence that operation took place after 1 July 1998.
21 I have dealt with the promotion/operation issue assuming in the defendants' favour the correctness of their contention that all critical promotional events occurred before 1 July 1998. ASIC's Statement asserts promotional events before and after that date.
22 The defendants next contended that the matters relied on in ASIC's Statement are not capable of constituting promotion. In ASIC v Young (2003) 173 FLR 441 at [53] Muir J said of "promoted" in s 601ED(1)(b):
"Whatever the full scope of the meaning of "promoted" in the subject context, it plainly extends to activities in which a person formulates a scheme such as the JVP scheme, advertises it, solicits others to participate in it and embarks upon its implementation."
His Honour had earlier referred at [52] to the Shorter Oxford Dictionary meaning of promote:
"to further the growth, development, progress or establishment of (anything) …."
In Tracy v Mandalay Pty Ltd (1953) 88 CLR 215 at 241 the High Court quoted with approval the words of Lindley J in Emma Silver Mining Co Ltd v Lewis & Son (1879) 4 CPD 396 at 407:
"As used in connection with companies the term 'promoter' involves the idea of exertion for the purpose of getting up and starting a company (of what is called 'floating' it) …."
23 The matters alleged in ASIC's Statement are in my view capable of constituting "promotion" in the sense described in the authorities. It first alleges "promotion" by PLC and then provides particulars of what it was PLC, by the Property Report, did or proposed to do. The Report was aimed at attracting a purchaser. It encouraged multiple purchasers to form a syndicate or partnership. PLC proposed to construct the Facility on the Property. It would market the apartments and operate the Facility until the Completion Date, when it would manage the Facility's business on the purchaser's behalf. The investment was said to have the potential for high yields and capital appreciation resulting from the growth of the Facility's business. It would not be inappropriate to infer from the events that happened that PLC did engage in the activities foreshadowed in the Report. As to post‑1 July 1998 matters, it would not be inappropriate to infer that since the ACFPA was not executed by the investors until 1 August 1998 at the earliest, the investors who ultimately joined the Scheme did not do so before 1 July 1998, and that promotion of the Scheme took place after 1 July. In view of the foregoing, ASIC's contention that there was relevant promotion of the Scheme both before and after 1 July 1998 is not bound to fail.
24 The next question under s 601ED(1)(b) is whether a promoter of the Scheme was in the business of promoting managed investment schemes when the Scheme was promoted. In the Property Report PLC refers to "its industry knowledge, past performance and the expertise of its personnel and consultants". Other material before the Court, referred to in ASIC's Statement, related to "Brighton Bay Plaza - Lifestyle Apartments for Retirees". The Property Report for this project is dated 7 June 1999 and contains these passages about PLC:
"PLC commenced its involvement with the retirement industry in 1992 and is the only publicly listed retirement village developer and operator in Victoria. Led by executive directors with more than 30 years' experience in aged accommodation, the company has gathered the resources of an informed group of personnel and consultants - including project managers, architects, solicitors, town planners, managers and marketers - to form a substantial team with the specialised skills and expertise required to expand the company's retirement village interests.
…
By the end of the current financial year, PLC will own and/or operate 7 Retirement Villages plus a further 10 facilities offering higher‑level care - a total of around 1700 units - with 20 additional facilities in town planning, construction or held as greenfield land‑banks. The company expects its portfolio to grow to approximately 3650 units by the year 2002.
PLC's financial performance has grown steadily since the seeding period which followed the company's entry to the retirement village market …."
Then appears a table headed "PLC's Retirement Village Portfolio", listing 31 villages under its management and control, and showing the status of each - for example, fully sold, opened, construction in progress, town planning in progress, 90 per cent sold. The Facility is shown as "construction in progress".
25 The promotion period appears to have been from May 1998 or thereabouts to at least April 2001, when the Facility opened. In light of the Property Report referred to at [8] and the evidence that PLC was promoting other schemes during that period, it would not be unreasonable to infer that throughout the relevant period it did so, and accordingly that when the instant Scheme was promoted it was in the business of promoting managed investment schemes.
26 Accordingly it cannot be said that ASIC's case is bound to fail for want of satisfaction of the requirement in s 601ED(1)(b) that the Scheme was promoted by a person who, when the Scheme was promoted, was in the business of promoting managed investment schemes.
27 I turn now to the definition of "managed investment scheme". The defendants contend that none of the three features of the definition is present. First, it is said that the requirement in par (i) that "people contribute money … to acquire rights … to benefits produced by the scheme" is not satisfied. Rather, the benefits to the contributors are produced by ownership of the Facility and not from the MMA.
28 All the word "scheme" requires is that there should be some program or plan of action: Australian Softwood Forests Pty Ltd v Attorney‑General (NSW) (1981) 148 CLR 121 at 129 per Mason J. His Honour went on to say:
"It is not an objection to an enterprise qualifying as an undertaking or scheme that it consists of a number of parts or elements, the participation of individual parties being limited to one of these parts or elements, their profit or remuneration being derived from the particular activities in which they engage."
29 In Takaran at [15] to [16] Barrett J said:
"The essence of a 'scheme' is a coherent and defined purpose, in the form of a 'program' or 'plan of action', coupled with a series of steps or course of conduct to effectuate the purpose and pursue the programme or plan. In some cases, the scope of the scheme will readily be gathered from some constitutive document in the nature of a blueprint setting out all relevant matters. In others, there may be no writing or such as there is may tell only part of the story, leaving the remainder to be supplied by necessary implication from all the circumstances. Profit making will almost invariably be a feature or objective of the kind of scheme with which the s 9 definition of 'managed investment scheme' is concerned, given the definition's references in several places to 'benefits'. Whatever is incidental and necessary to the pursuit of the profit (or 'benefits') will therefore be comprehended by the scheme ….
It must also be emphasised that a scheme having the characteristics bringing it within the s 9 definition of 'managed investment scheme' will not necessarily possess those characteristics alone. In Royal Bank of Canada v Inland Revenue Commissioners [1972] Ch 665, Megarry J observed, in relation to the concept of 'ordinary banking business', that 'a statement of the essentials of a business does not seem to me, without more, to be exhaustive of all that is ordinary in that business'. A managed investment scheme, like a banking business, may involve elements beyond the core attributes that give it its essential character. Elements that lie beyond those attributes but contribute to the coherence and completeness which make a 'programme' or 'plan of action' must form part of that 'scheme'. Every programme or plan of action must be taken to include the logical incidents of and consequences of and sequels to its acknowledged components."
30 At [14] Barrett J endorsed the view of the Queensland Court of Appeal in ASIC v Enterprise Solutions 2000 Pty Ltd (2000) 35 ACSR 620, that attempts to read down the words of the definition of "managed investment scheme" are to be discouraged.
31 ASIC relies on Pegasus by way of analogy. There it was held that a "managed investment scheme" existed in circumstances where the contractual arrangements between the operator and the investors provided for the operator to use the funds supplied by the investors to purchase US Treasury Bonds, which generated returns for the investors. It was submitted that on the defendants' present argument, the Pegasus investors would have derived their benefits from their ownership of the bonds and not from profits produced by the scheme.
32 In view of the amplitude of the word "scheme", the warnings against reading down the definition of "managed investment scheme", Mason J's observations about parts of a scheme, and Barrett J's "incidental and necessary" remarks, ASIC's claim that the present Scheme encompasses not only the contractual arrangements by which the investors purchased the Property and constructed the Facility, but also all assets purchased with their funds (including the Facility itself) and the subsequent operation of the Facility as a going concern, is not a claim that is bound to fail. Pegasus is an apposite analogy.
33 Accordingly ASIC's claim that feature (i) in the definition of "managed investment scheme" is present raises a serious question for determination, which it cannot be said is bound to fail.
34 The defendants then contend that the Scheme does not possess the feature in par (ii) of the definition on the ground that there was no pooling of contributions to produce financial benefits or interests in property as part of the Scheme. It was said that the only pooling occurred as part of the Partnership's purchase of the Property, and that was an acquisition from "a financial or business undertaking or scheme" and did not entail the required acquisition of an interest in "a financial or business undertaking or scheme". Any financial benefit is said to derive from PCM's ownership and exploitation of the Facility and not from any scheme. In other words, the necessary connection between the pooling of contributions and a benefit is absent.
35 The defendants then describe the effect of the contracts relating to the operation of the Facility. First, the Profit Sharing Agreement provides that the vendor of the Property receives a profit share in consideration for selling the Property and procuring PLC to enter into the MMA. Thus "there is no financial benefit or interest in property produced by 'contributions [which] are to be pooled' because there is no pooling or common enterprise which results from the profit sharing agreement and no rights to benefits are thereby acquired".
36 The defendants then say that the MMA provides that PLC will provide marketing and management services in respect of PCM's business in consideration of a commission. They again claim that there is no financial benefit or interest in property produced by "contributions [which] are to be pooled" as "there is no pooling or common enterprise which results from the MMA and no rights to benefits are thereby acquired".
37 What I have said about the defendants' par (i) submission is applicable here. As with that submission, the defendants do not accept that the purchase of the Property and the operation of the Facility are part of the Scheme. As the rendering of the argument at [34]‑[36] shows, the defendants concentrate exclusively on the contracts relating to the operation of the Facility - the Profit Sharing Agreement and the MMA.
38 ASIC's contention that the purchase of the Property and the operation of the Facility are parts of the Scheme is not bound to fail. If that is correct, the investors' contributions were to be pooled to produce financial benefits or interests in property. On the same basis, the investors' contributions were to be used in a common enterprise to produce financial benefits or interests in property, the common enterprise being the construction and operation of the Facility, a necessary prerequisite to the implementation of the MMA and the profit sharing agreement.
39 The defendants finally contend that the feature in par (iii) of the definition is not present. It is said there is no evidence that the Partners do not have day‑to‑day control over the operation of the Scheme. They rely on the affidavit of Kevin Munro sworn 28 January 2005. Mr Munro is a Partner and the sole director of PCM and ACPM. The defendants' summary of the relevant parts of the affidavit is that it discloses that the Partners met and still meet on an ongoing basis and communicated regularly by email and telephone in relation to the affairs of the Partnership, including all investment decisions.
40 In connection with this submission the defendants describe the Scheme as "the program or plan of action pursuant to which the investment in the Facility was made and implemented". Conformably with that, they say that the partnership investment decision was to buy and develop property as an aged care facility, and that was done by the partners "quite independently". They conclude by saying that the fact that the Partners used agents to carry out their decision does not entail loss of day‑to‑day control over the operation of the Scheme "unless the 'Scheme' is confined to the day‑to‑day operation of the Facility".
41 The submission thus begins by identifying the scheme as the defendants have consistently seen it - the plan of action pursuant to which the investment in the Facility was made and implemented. Later they refer to a scheme (not espoused by them) that is confined to the day‑to‑day operation of the Facility. The Scheme propounded by ASIC consists of all the elements of those two schemes. As I have said, that Scheme is not bound to be rejected.
42 The provisions of the MMA summarised in ASIC's Statement (as to which see [5]) form the base for its contention that the Partners do not have day‑to‑day control over the operation of the Scheme on which ASIC relies. They do not control the decisions about how the Facility (the enterprise from which the income or return is to be generated) is operated. PLMS supervises and co‑ordinates management of the Facility's business, carries out PCM's obligations under loan/licence agreements with the Facility's residents, and employs staff: cl 2.1. Clause 2.2 then provides:
"[PCM] must not during the Term interfere with [PLMS] in the implementation of the practices and policies of [PLMS] in respect of the marketing and day to day management of the Apartments and other services to be provided by [PLMS] under this Agreement, provided that such practices and policies are substantially consistent with the practices and policies which are being implemented at other retirement villages or aged accommodation centres currently managed or operated by [PLMS] or Associates of [PLMS]. Consistent with this all persons to be employed by [PCM] in connection with the Business must be prior approved of by [PLMS]." (emphasis added).