Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd

MANAGED INVESTMENTS ACT 18 The Managed Investments Act inserted a definition of the term "managed investment scheme" into s 9 of the Corporations Law (now the Corporations Act) (the "s 9 definition") and also added Ch 5C. When the Managed Investments Bill 1997 (Cth) was introduced, the explanatory memorandum stated that it represented the Government's response to the recommendations in the Report. Although the Bill reflected many of the recommendations concerning the regulation of investment schemes, it did not adopt the Commission's recommendation that relevant schemes be described as "collective investment schemes", nor the recommendation that the definition of that term reflect the previous definition of "interest". The Managed Investments Act requires the registration of some schemes which satisfy the s 9 definition (s 601ED(1)) and prohibits the operation of unregistered schemes which are required to be registered (s 601ED(5)). The s 9 definition as enacted in 1998 defines a managed investment scheme as: (a) a scheme that has the following features: (i) people contribute money or money's worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not) (ii) any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders) (iii) the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions); or (b) a time-sharing scheme; but does not include the following: (c) a partnership covered by an application order made for the purposes of section 115 (d) a body corporate (other than a body corporate that operates as a time sharing scheme) (e) a scheme in which all the members are bodies corporate that are related to each other and to the body corporate that promotes the scheme (f) a franchise (g) a statutory fund maintained under the Life Insurance Act 1995 (h) a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust, or a public sector superannuation scheme, within the meaning of the Superannuation Industry (Supervision) Act 1993 (i) a scheme operated by an Australian bank in the ordinary course of its banking business (j) the issue of debentures or convertible notes by a body corporate (k) a barter scheme under which each participant may obtain goods or services from another participant for consideration that is wholly or substantially in kind rather than in cash (l) a retirement village scheme operating within or outside Australia: (i) under which the participants, or a majority of them, are provided, or are to be provided, with residential accommodation within a retirement village (whether or not the entitlement of a participant to be provided with accommodation derives from a proprietary interest held by the participant in the premises where the accommodation is, or is to be, provided); and (ii) which is not a time-sharing scheme (m) a scheme that is operated by a co-operative company registered under Part VI of the Companies (Co-operative) Act 1943 of Western Australia or under a previous law of Western Australia that correspondents to that Part (n) a scheme of a kind declared by the regulations not to be a managed investment scheme. 19 There have been some amendments to exemption provisions in the definition of a managed investment scheme since it was first enacted. Those amendments are not material for present purposes. 20 Section 9 also contains the following definition: interest in a managed investment scheme means a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not). 21 In the Second Reading Speech, Mr Miles (the Parliamentary Secretary to the Prime Minister) said: Managed investment schemes are any type of scheme where an investor purchases an interest from a professional manager who manages the funds received to produce a return. Schemes encompass a wide range of investment products and services including property, equities and cash management trusts as well as smaller schemes such as ostrich farms and pine plantations. … One factor which has made these schemes popular with investors is that they allow them to diversify their investments into areas which, traditionally, have required large sums to participate. Another is that they also allow investors, who might otherwise lack the skill or confidence to participate in direct investment opportunities, to rely on the expertise of professional investment managers. This bill is not concerned with the superannuation segment of the managed funds industry, which includes products provided by superannuation funds and approved deposit funds. … The segment of the managed funds industry with which the bill is concerned is non-superannuation managed investments, which are at present regulated as prescribed interests under the corporations law. 22 The Bill was referred to a Joint Parliamentary Committee. In its report dated 1 April 1998, the Committee reproduced some elements of those remarks as follows: 1.1 Managed investment schemes are schemes where an investor purchases an interest in a fund which is managed by a professional manager to produce a return for the investor. They encompass a wide range of investment products and services including property, equities and cash management trusts, as well as smaller schemes such as ostrich farms and pine plantations. Approximately $85 billion is invested in managed investment schemes at present and the amount continues to grow by about $20 billion a year. 1.2 These schemes allow investors to diversify their investments over a wider range of investment types than might otherwise be available and allow them to have their funds professionally managed. 1.3 The Bill is not concerned with superannuation funds which are dealt with under the Superannuation Industry (Supervision) Act 1993. 23 At a superficial level, these statements might suggest that Ch 5C of the Corporations Act deals with a relatively narrow range of investment schemes. However the process of identifying the schemes to which Ch 5C applies must still commence with an inquiry as to whether a particular scheme satisfies para (a) (or para (b)) of the s 9 definition. In Australian Softwood Forests Pty Ltd v Attorney-General for New South Wales; Ex relatione Corporate Affairs Commission (1981) 148 CLR 121, the Court considered the definition of "interest" in the Uniform Companies Acts. At 129-130 Mason J said (Gibbs CJ and Stephen J concurring): Apart from any considerations which may be derived from the general context in which the statutory definition appears, there is no very good reason for reading the words down. The context is that of prohibitions against issuing or offering to the public for subscription or purchase or inviting the public to subscribe for or purchase "interests" unless there is in force in relation to them an approved deed and unless there is provided information similar to that which is prescribed in connection with an offer to the public of shares. Indeed the prospectus provisions of the Act are applied to offers to the public of "interests" as if they were shares … . This context supplies no reason for denying that the proposed activities constitute a "financial or business undertaking or scheme" within the meaning of the statutory definition. That a very wide meaning should be given to "interest" is attested by the exclusion from the statutory definition of shares and debentures … , interests in life assurance policies … and, subject to some qualifications, interests in partnership agreements … . The presence of the power to exempt by regulation other rights or interests from the definition … is also of telling significance. There are real difficulties in the suggestion that the Court can read down the very comprehensive definition of "interest" by reference to the supposedly unintended consequences of a literal reading on everyday commercial transactions. The definition is so general and all-embracing that it is impossible to say that it necessarily excludes particular transactions which appear to be covered by the general words. The hazards of adopting such a course are not dispelled by the absence of a supporting context. It would be different if we could glean from the legislative provisions an overall purpose which, being limited in scope, justified a reading down of the definition. Unfortunately in this case the search for a legislative purpose takes us back to the very words of the definition for the intended scope of the operative provisions depends so heavily on the comprehensive language of that definition. As Young C.J. observed … in discussing the meaning of "interest" as defined in s.76(1): "If it were said that we should give effect to the purpose Parliament wished to achieve, we must first ascertain the purpose and that can only be ascertained from the language used". 24 The passage, or parts of it, have been applied to the definition of "managed investment scheme". See Australian Securities and Investments Commission v Enterprise Solutions 2000 Pty Ltd (2000) 35 ACSR 620 at [17]; Burton v Arcus (2006) 32 WAR 366 at [51]; and Australian Securities and Investments Commission v Emu Brewery Mezzanise Ltd (2004) 52 ACSR 168 at [80]. We also note the observation by the learned authors of Ford's Principles of Corporations Law (LexisNexis Butterworths, subscription service) (service 34: 8/2002) at [22.470]: Managed investment schemes are residual investment opportunities remaining after shares and debentures are considered. The concept of investment opportunity is elusive. In the present context the legislation is concerned only with those offerings of investment opportunities which are so similar to offerings of shares and debentures that regulation about them calls for regulatory techniques that developed in relation to offerings of shares and debentures. 25 Apart from requiring the registration of certain managed investment schemes, Ch 5C regulates the constitution and conduct of registered schemes and imposes duties upon the responsible entities which manage them. For example, there must be a written constitution which is legally enforceable as between members and the responsible entity. See s 601GA. There must also be a compliance plan to ensure compliance with the provisions of the Corporations Act and the scheme constitution. See Pt 5C.4. There are many other requirements. 26 Clearly, many schemes which satisfy the requirements of para (a) of the s 9 definition will not require registration. The s 9 definition includes 13 categories of exclusion, plus the power to exclude other kinds of scheme. Section 601ED further narrows the range of schemes which must be registered. Part 5C.11 provides for exemption and modification orders. When it was said in the Second Reading Speech and in the Joint Parliamentary Report that the Managed Investments Act was not concerned with superannuation funds, the statement was correct to the extent that superannuation arrangements are not regulated by that Act. Such funds are expressly excluded from the s 9 definition by para (h), suggesting that it was thought that they might otherwise have fallen within para (a) of that definition. The references in those statements to a professional manager, to purchasing interests (as opposed to contributing money or money's worth) and managing funds do not refer to express elements of the s 9 definition. It is likely that the statements were generalizations concerning the way in which Ch 5C was expected to operate rather than indications as to the proper construction of the s 9 definition. 27 Jacobson J has set out paras 19.3 to 19.7 of the Explanatory Memorandum relating to the Managed Investments Bill 1997. Although that passage demonstrates an intention to clarify the definition which was to engage the proposed regulatory regime, it says little or nothing about the approach to be taken to construing the s 9 definition. 28 The primary Judge concluded that for present purposes the requirements of para (a) of that definition were not satisfied. We will consider the correctness of that conclusion at a later stage. However we will first consider some more general remarks made by his Honour. At [37] he said: The upshot of this reasoning is that the arrangements with the funder and [MBC] do not create a managed investment scheme. This should not come as a surprise. First, with the evident purpose of the legislation in mind, the essence of a managed investment scheme, stripped of all its technicalities, is a scheme in which people invest money (or money's worth) in a common venture with the expectation of profit that will result from the efforts of others. That is not what has happened here. 29 In our view, that statement as to the "essence of a managed investment scheme" is of little assistance in construing the Act and may be misleading. We have referred to the difficulties experienced by the Commission in seeking to identify with precision the subject matter of such a generalization. It abandoned the task as too difficult. With all respect, his Honour's approach seems not to recognize those difficulties. Further, it is difficult to infer an intention to exclude an undefined category of schemes which would otherwise be within para (a) of the s 9 definition in light of the extensive list of express exclusions contained in the definition and the power to exclude or exempt others administratively. 30 His Honour continued: Second, the obligations that would come into existence if this were a managed investment scheme, assuming they could be put into effect, would afford group members little protection of the kind envisaged. 31 In the Report at 2.5 the Commission identified the risks against which any regulatory system would guard. They were: • investment or market risk - the risk that the investment will decline in value, either because the market as a whole declines in value or because the particular investments of the scheme decline in value • institution risk - the risk that the institution which operates the scheme will collapse • compliance risk - the risk that the operator of a scheme will not follow the rules set out in the scheme's constitution or the laws governing the scheme, or will act fraudulently or dishonestly. 32 We consider that to be a fair summary of the risks likely to be encountered by investors. Although the risk of a decline in value of the investment may not be particularly relevant to a scheme of the present kind, one can imagine a situation in which such a risk could arise. There may be a risk that claims will be devalued by a decline in the fortunes or asset position of Multiplex, the Funder or MBC or by the likely incurrence of previously unexpected costs, necessitating some action to protect the group members' interests. It is not difficult to imagine circumstances in which there could be institutional or compliance risk. Many of the provisions of Ch 5C are designed to minimize such risks. We refer particularly to ss 601FC, 601FD, 601FE, 601FF, 601GA, 601GB, 601HA and subsequent sections dealing with compliance plans. It is no answer to say that a solicitor's duty would sufficiently safeguard the interests of group members against professional misconduct by MBC. However such a matter may be relevant in connection with any contemplated exercise of the power conferred by para (n) of the s 9 definition or that conferred by Pt 5C.11. 33 For present purposes, the proper approach to the application of the s 9 definition is to identify whether or not para (a) is fairly satisfied. If so, and assuming that there is no exemption pursuant to paras (c) to (n), then the question is whether or not the scheme must be registered pursuant to s 601ED. It is not helpful or possible to limit the operation of para (a) of the s 9 definition by reference to some implied limitation to be derived from the Ch 5C regulatory scheme itself. In that respect, the remarks by Mason J in Australian Softwood Forests 148 CLR at 129-130 are apposite for present purposes.

APPLICATION OF THE S 9 DEFINITION 34 As Jacobson J has pointed out, Barrett J, in Australian Securities and Investments Commission v Takaran Pty Ltd (2002) 170 FLR 388 at [12], identified five elements in para (a) of the s 9 definition. They were: … first, the act of contribution of money or money's worth by several persons; secondly, the accruing to those persons in return (as consideration) of certain rights to benefits produced by the scheme; thirdly, pooling of the contribution or other use of them in a common enterprise; fourthly, an objective or expectation of accrual of benefits to persons for the time being holding the rights generated by contributions; and, fifthly, absence of day-to-day control over the operation of the scheme by those persons. 35 Whilst such an approach to the section may have been appropriate for the task undertaken by Barrett J, in the present case, it may lead to confusion. Firstly, the approach does not sufficiently recognize that the requirements of subparas (a)(i) and (a)(ii) are discrete, and that each must be satisfied. Secondly, it describes the relationship between contributions and rights to benefits in language which does not quite reflect that of subpara (a)(i) of the s 9 definition. Thirdly, the description of the relationship between pooling or use in a common enterprise and benefits differs from the language used in subpara (a)(ii). We prefer to approach the problem by addressing the sub-paragraphs separately and in accordance with their terms. Of course, as Jacobson J has pointed out, there is now no dispute as to compliance with subpara (a)(iii). Before considering subparas (a)(i) and (a)(ii), it is necessary to consider the meaning of the word "scheme" in the introductory part of the s 9 definition.

"A scheme that has the following features …" 36 In Australian Softwood Forests 148 CLR at 129,Mason J said that "… all that the word 'scheme' requires is that there should be 'some programme, or plan of action' …". His Honour then continued: The next step is that, … the statutory definition [of "interest"] is not concerned with the identity of the person or persons who carry it [the scheme] on. It is not material that the person who offers the "interests" to the public does not himself carry on the undertaking or scheme. Nor does it matter that by subscribing for an interest a member of the public will constitute himself as one who is engaging in carrying on the enterprise. Nor again does it matter that the subscriber by accepting the offer constitutes himself as one who executes some elements of the scheme and derives from so doing a financial advantage which is not earned by other participants whose activities relate to other elements of the scheme. 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 to one of these or elements, their profit or remuneration being derived from the particular activities in which they engage. There is nothing in the notion of an undertaking or scheme that requires or implies that there is joint participation in everything comprised in a plan or that there must be a sharing or pooling of profits or receipts. 37 Although these observations concern the definition of "interest" in earlier legislation, they are helpful in closing off unnecessary lines of enquiry concerning the s 9 definition. For present purposes, there is no reason to doubt that there was, and is, a programme or plan of action. The primary Judge observed at [12]: It is hard to avoid the conclusion that the agreements brought into existence a plan of action. In essence the plan involves: (a) putting in place a group of persons willing to participate in proceedings against Multiplex; (b) ensuring that those persons would not be exposed to costs; (c) retaining a firm of solicitors that would act on the group's behalf; and (d) making sure that the legal fees would be paid. 38 This approach overlooks some aspects of the scheme, particularly: · the deferred payment of up to 25% of MBC's fees, and the possibility that such amount and interest thereon might not be paid at all; · the arrangements for reimbursing and remunerating the Funder; and · the consequential interests of MBC and the Funder, as well as the group members, in the successful resolution of the proposed litigation. 39 We would prefer to describe the scheme as having the following purpose: · To facilitate the realization of claims by group members against Multiplex, using legal services to be provided by MBC at the expense of the Funder; · which company also undertakes to meet any order for costs made against group members or any order for security for Multiplex's costs; · with the intention that the Funder be reimbursed from, and derive a profit from, the proceeds of such realization; and · that the group members be otherwise protected from any liability for their own costs, any order that they pay Multiplex's costs, or any order that they give security for costs in the relevant proceedings. 40 Steps in the scheme include: · the Funder offering to undertake the payment of group members' costs, to meet any order for costs made against group members, and to provide security for costs if necessary; · MBC offering to accept instructions on the basis that it will look to the Funder for its costs and outlays in accordance with the terms of the scheme; · the group members accepting the Funder's offers and instructing MBC accordingly; · the subsequent conduct of the matter; and · the distribution of the Resolution Sums. 41 Performance of the scheme involves the observance by each party of its obligations thereunder. 42 The s 9 definition focusses upon contributions to the scheme by the group members and the Funder, and benefits to be derived from the scheme by those parties. As to the group members, Multiplex pleads in para 40 of the further amended statement of claim that they contributed as follows: Dawson Nominees, Frederick Hart, and the Group Members are required to pay money's worth as consideration for the benefits under the Brookfield Multiplex Group Funding Agreement and the Brookfield Multiplex Group Retainer pleaded in paragraph 39 above, being the obligations undertaken by those persons pursuant to the Brookfield Multiplex Group Funding Agreement and the Brookfield Multiplex Group Retainer, which include: (a) Dawson Nominees, Frederick Hart and each of the group members irrevocably authorises and directs Maurice Blackburn to receive any Resolution Sum in respect of its claim against the Brookfield Multiplex Group and to immediately pay any Resolution Sum into an account kept for that purpose; … (b) if Dawson Nominees, Frederick Hart or any Group Member obtains any settlement or judgment in respect of its claims against the Brookfield Multiplex Group, it will treat any such moneys received as the Resolution Sum, and will call such moneys to be delivered to Maurice Blackburn to be dealt with as part of the Resolution Sum, this being a continuing obligation that survives any termination of the Brookfield Multiplex Group Funding Agreement other than termination for serious breach by the Funder; … (c) Dawson Nominees, Frederick Hart and each of the Group Members irrevocably authorises and directs Maurice Blackburn to pay out of the account referred to in paragraph (a) above all of the payments to the fund referred to in clause 10.1 of the Brookfield Multiplex Group Funding Agreement; … 43 Pursuant to each funding agreement any moneys received in connection with a group member's claim (other than by way of costs) are described as the "Resolution Sum". This includes amounts so derived other than by way of participation in the scheme. See the definition of "Resolution Sum" in cl 1.1 and cl 8.3 of the Funding Agreement. All Resolution Sums are to be held by MBC in order to meet the group members' obligations to the Funder and then for distribution to the group members. 44 The benefits or rights to benefits to be derived by the group members are pleaded in para 39 as follows: … (a) Dawson Nominees, Frederick Hart and the Group Members are able to pursue claims against the Brookfield Multiplex Group, and to participate in any successful resolution by settlement or judgment of the Dawson Nominees Proceeding, without having to provide any security for costs and without any liability to the Brookfield Multiplex Group or to Maurice Blackburn or to the funders in the event that there is judgment for Brookfield Multiplex in the Dawson Nominees Proceeding; … (b) The Funders agree to pay all invoices issued by Maurice Blackburn during the Dawson Nominees Proceeding, and Dawson Nominees, Frederick Hart and the Group Members have no obligation to pay any legal costs or disbursements in respect of services provided by Maurice Blackburn in relation to the prosecution of their claims against the Brookfield Multiplex Group unless and until there is a successful resolution of those claims either by way of judgment or settlement; … (c) If there is a successful resolution of their claims against the Brookfield Multiplex Group, Dawson Nominees, Frederick Hart and the Group Members do not have any liability to pay any legal costs or disbursements in respect of services provided by Maurice Blackburn until such Resolution Sum has been paid; … (d) If there is a successful resolution of their claims against the Brookfield Multiplex Group, Dawson Nominees, Frederick Hart and the Group Members are entitled to a pro rata share in the balance of any resolution sum, after payment of certain amounts to the Funders; … (e) The amount payable by Dawson Nominees, Frederick Hart and the Group Members for legal costs or disbursements in respect of services provided by Maurice Blackburn in relation to the prosecution of their claims against the Brookfield Multiplex Group cannot exceed the total of any amount received by way of judgment or settlement together with any amount received by way of a costs order in any relevant proceeding; … (f) The costs involved in the prosecution of their claims against the Brookfield Multiplex Group are spread amongst Dawson Nominees, Frederick Hart and the Group Members; … (g) The Funders undertake to bear any adverse costs order in any proceeding regarding the claims of Dawson Nominees, Frederick Hart and the Group Members against the Brookfield Multiplex Group; … (h) The Funders agree, as soon as reasonably practicable upon any request from Maurice Blackburn, to provide a written undertaken to the respondents in the proceeding to pay any costs order made against Dawson Nominees, Frederick Hart or any Group Member in the proceedings brought against the Brookfield Multiplex Group, insofar as such costs were incurred during the term of the Brookfield Multiplex Group Funding Agreement; and (i) the Funders undertake to provide any security for costs ordered in any proceeding regarding the claims of Dawson Nominees, Frederick Hart and the Group Members against the Brookfield Multiplex Group; … 45 In para 41 Multiplex pleads that the benefits pleaded in para 39 are produced by the scheme: … in that only those persons who acquired an interest in securities issued by Brookfield Multiplex Group between 2 August 2004 and 30 May 2005 and who entered into a Brookfield Multiplex Group funding agreements are entitled to such benefits, including the right to share in any sum achieved by way of settlement of or judgment in the Dawson Nominees Proceedings. 46 Multiplex also pleads that the Funder made contributions to, and is to derive benefits from, the scheme. In para 41B it pleads that: The Funders are required to pay money, or money's worth, as consideration for the benefits under the Brookfield Multiplex Group Funding Agreement pleaded in paragraph 41A above: (a) the Funders are required to pay, and have paid, all legal costs and disbursements of Dawson Nominees, Frederick Hart and Group Members incurred by Maurice Blackburn and which have been invoiced by Maurice Blackburn to the Funders; (b) the Funders are required to procure, and have procured (or have had procured on their behalf), one or more irrevocable Standby Letters of Credit in favour of Maurice Blackburn in a form and for such an amount as required by Maurice Blackburn, as security for the obligations imposed upon the Funder by … the Brookfield Multiplex Group Funding Agreement; and (c) the Funders are required to procure (where ordered to do so), and have procured (or have had procured on their behalf), security for Brookfield Multiplex's costs of the Dawson Nominees Proceedings. The security has been provided by way of a bank guarantee having been requested of the Commonwealth Bank of Australia by the Bank of Montreal, Toronto, Canada on the account of Siskinds, in favour of the District Registrar of the Victorian District Registry of the Federal Court of Australia, such security being provided in discharge of the obligations owed by the Funders under … the Brookfield Multiplex Group Funding Agreement. 47 In para 41A, Multiplex pleads the benefits to be derived by the Funder as follows: (a) if there is a successful resolution of the claim brought by Dawson Nominees, Frederick Hart and the Group Members, the Funders are entitled to an amount from the Resolution Sum equivalent to that paid by the funders to Maurice Blackburn in respect of legal costs and disbursements incurred in relation to the prosecution of the claims of Dawson Nominees, Frederick Hart and the Group Members against Brookfield Multiplex …; and (b) if there is a successful resolution of the claim brought by Dawson Nominees, Frederick Hart and the Group Members, the Funders are entitled to a percentage of the balance of the Resolution Sum, which percentage is calculated in accordance with … the Brookfield Multiplex Funding Agreement … . 48 In para 41C Multiplex pleads that the benefits pleaded in para 41B are produced by the scheme and that they are derived from, and depend upon execution by Dawson Nominees, Frederick Hart and group members of the Brookfield Multiplex Group Funding Agreement and Brookfield Multiplex Group Retainer and the performance by the parties of their respective obligations thereunder. 49 As we have observed, we would have thought that MBC was also to make contributions to the scheme by foregoing payment of one quarter of its professional fees until such time as the proceedings are successfully resolved. In that event, it will receive the remaining 25% of its fees plus interest. However Multiplex seems not to have relied upon this aspect of the matter.

Subparagraph (a)(i) - "… people contribute money or money's worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not) …" 50 The requirements of the subparagraph are: · that people contribute money or money's worth; · as consideration to acquire rights to benefits; · such benefits being produced by the scheme.

"contribute money or money's worth" 51 In connection with subpara (a)(i) of the s 9 definition, the primary Judge found that group members contributed money or money's worth, but that such contributions were not made in consideration of the acquisition of rights to benefits. Multiplex appeals against the latter aspect of the finding. By notice of contention, the respondents plead that his Honour erred in finding that there were any contributions, and in finding that the contributions constituted money or money's worth. As to the latter point we consider that the promises given by the group members and by the Funder may properly be described as "money's worth". We respectfully adopt the reasons given by Jacobson J for so concluding. 52 The primary Judge considered that the word "contribute" means "make available", "pay" or "supply", referring to the decisions in Crocombe v Pine Forests of Australia Pty Ltd (2005) 219 ALR 692 at [52]-[53] and Burton v Arcus (2006) 32 WAR 366 at [56]-[57]. In our view, the word "contribute" has a somewhat more specific meaning. The New Shorter Oxford English Dictionary (4th ed, Oxford University Press, 1993) Vol 1 gives, as its primary meaning: Supply or pay along with others to a common fund or stock. The Macquarie Dictionary (4th ed, The Macquarie Library, 2005) gives the primary meaning as: To give in common with others; give to a common stock or for a common purpose. 53 In other words, the requirement for contribution foreshadows the requirement for pooling or use in a common enterprise to produce financial benefits identified in subpara (a)(ii) of the s 9 definition. The respondents submit that subparas (a)(i) and (ii) of the s 9 definition and ss 601FC and 601GA of the Corporations Act demonstrate that, for the purposes of subpara (i) any contribution must be: (a) capable of being "paid" or "supplied"; (b) capable of being "pooled" or "used" in a "common enterprise" to produce benefits; (c) apt to be held separately from the property of the responsible entity, to be valued, and held in trust for the member (i.e., in this case, for the person making the contribution); (d) apt to be "invested" or "dealt with". 54 The respondents submit that the group members' promises are not capable of being so characterized. It is not clear whether the respondents also submit that the contributions allegedly made by the Funder suffer from the same deficiencies. Point (a) depends upon the meaning of the word "contribute" in subpara (a)(i) of the s 9 definition. Point (b) is derived from para (a)(ii) of that definition. Point (c) is derived from s 601FC(1)(i) and (j). Point (d) is derived from s 601GA(1)(b). 55 Whilst it is appropriate, in construing the s 9 definition, to consider the interaction of its parts, it may not be appropriate to look to the operative provisions of Ch 5C in that process. When, in Australian Softwood Forests 148 CLR 121, Mason J spoke of "unintended consequences of a literal meaning", he was warning against such an approach. If, in construing a definition which identifies the subject matter to be regulated by a regulatory regime, it is clear that a key regulatory provision cannot apply to a particular arrangement or situation which prima facie falls within the definition, then there may be justification for a narrower reading of the definition. However, if other regulatory provisions are capable of application, then it may be inappropriate to adopt that approach. In that situation, it cannot be said that there is a clear intention that the regulatory regime should not apply to the particular arrangement or situation. Further, it will often be difficult to determine whether, or how, a particular provision may operate in all future circumstances. It may be unwise to construe the definition narrowly merely because there may be difficulties in applying part of the regulatory regime. 56 The scheme of the Corporations Act is to define the term "managed investment scheme" in s 9 and to regulate some of those schemes pursuant to Ch 5C. Many of the regulatory provisions will affect the constitution and conduct of any scheme which must be registered. In other words, if a scheme falls within the s 9 definition, and if it is required to be registered, then it must be constituted and conducted so as to comply with Ch 5C. It follows that one cannot hold that a particular scheme is not within the s 9 definition simply because its structure does not comply with the requirements of Ch 5C. If the scheme must be registered then it must be constituted and conducted so as to permit registration. 57 Before considering the respondents' submissions we should point out that ss 601FC and 601GA speak of "scheme property", which term is defined in s 9 as follows: scheme property of a registered scheme means: (a) contributions of money or money's worth to the scheme; and (b) money that forms part of the scheme property under provisions of this Act or the ASIC Act; and (c) money borrowed or raised by the responsible entity for the purposes of the scheme; and (d) property acquired directly or indirectly, with, or with the proceeds of, contributions of money referred to in paragraph (a), (b) or (c); and (e) income and property derived, directly or indirectly, from contributions, money or property referred to in paragraph (a), (b), (c) or (d). 58 We turn to the particular points made by the respondents as identified above. Point (a) - capable of being paid or supplied 59 The group members promise to allow the Funder a financial benefit in the event of a successful resolution of their claims. The Funder, in effect, promises to pay for legal services, to meet any order for costs made against group members, and to meet any order for security for costs. It also agrees that each group member will become contractually entitled to the balance of his or her Resolution Sum after the Funder's claims have been met. As we have said, we consider that these various promises are to provide money's worth. The question is whether they are contributed. It may not be correct to say that in giving such promises the relevant parties "pay" money's worth. However we have no difficulty in concluding that they "give" or "supply" it. We have previously observed that the word "contribute" generally involves the concept of giving for a common purpose. Perhaps unfortunately, the s 9 definition does not identify to whom, to what or for what purpose such contributions are to be made. Although a scheme may be treated as an identifiable entity for the purposes of Ch 5C, it is, of course, not a legal person. We consider that the intention is that the contributions be for the purposes of the scheme, regardless of the identity of the person to whom they are to be paid, given or supplied. 60 At [3] the primary Judge found that the group members' instructions to MBC included instructions to perform work for the common benefit of persons who had entered into funding agreements with the Funder as well as work in connection with specific claims. In other words the promises by the group members were given for the purpose of securing legal services for the group as a whole, and so each promise was a contribution in the sense to which we have referred. That collection of promises is the Funder's inducement to accept and fulfil its obligations. The Funder's promises were given for the purpose of advancing its own interests and those of the group. In our view, its promises to individual group members were to be used collectively to provide legal services to individual group members, the whole group and itself. The group members' promises and the Funder's promises were contributed for the purposes of the scheme. Point (b) - capable of being pooled or used in a common enterprise 61 The respondents submit that the relevant "contributions" for the purposes of subpara (a)(i) are not capable of being pooled and used in a common enterprise as required by subpara (a)(ii), and so cannot be contributions for the purposes of subpara (a)(i). Much of what we have said concerning the meaning of the word "contribute" suggests that this argument is without foundation. Nonetheless, it will be better if we consider it further as part of our consideration of subpara (a)(ii). In any event we see no reason to limit subpara (a)(i) so as only to apply to contributions which are capable of complying with subpara (a)(ii). Point (c) - held separately, valued and held in trust for scheme members 62 It is said that the promises cannot be held separately from the property of the responsible entity, valued or held in trust for scheme members. It is also submitted that each promise must be held for the benefit of the group member making it. That submission misconceives the effect of s 601FC(2). The benefit of each promise is to be held on trust for the benefit of all scheme members. 63 These propositions rely upon s 601FC(1)(i) and s 601FC(2). We see no difficulty in holding the promises by group members and the Funder separately from other property. Indeed, it is difficult to see how they could be mixed. We also see no difficulty in valuing them. The respondents, in fact, said very little about these matters. As to the requirement that scheme property be held on trust by the responsible entity, the respondents submit that it is difficult to see how the burden of group members' promises may be held on trust for them. They accept that the benefit of such promises may be so held. 64 As we have previously observed it may be inappropriate to base a construction of the s 9 definition upon perceived difficulties in applying one aspect of the Ch 5 regulatory regime. If a particular arrangement is within the s 9 definition, and if it is required to be registered, then by force of the legislation, scheme property is to be held on trust by the responsible entity. It may be that this requirement necessitates some degree of adjustment to traditional views as to the appearance and functions of a trust, but Parliament may take such a step. The mere fact that there may be difficulty in giving effect to s 601FC(2) does not justify a narrowing of the clear meaning of the s 9 definition. 65 In any event, we see no real difficulty in the present case. Firstly, we cannot see that the burden of the group members' promises is of any relevance. We are rather concerned with the benefits. The promises are primarily for the ultimate benefit of the Funder but, in the interim, they provide the basis upon which the Funder is willing to meet its obligations under the scheme. The Funder may not enforce the promises absent a favourable realization of the claims. Further, it may lose any potential benefit if it breaches the Funding Agreements so as to entitle the group members to determine them. See cl 15 of the Funding Agreement. There is no difficulty with the concept of a contractual promisee holding the promise on trust for another. See Chitty on Contracts (30th ed, Thomson Reuters, 2008) Vol 1 at 1-191 and 18-078 et seq although, in general, there must be an intention to create a trust. Regardless of whether the Funder had such an intention, its absence cannot prevent the statutory imposition of a trust relationship. Given the role that the promises play in fulfilling the aim of the scheme, there is nothing curious about the fact that the group members should be treated as having an interest in them. 66 As to the Funder's promises, the benefit of each is vested in the individual group member to whom it is made. However it is clear that all parties intend that the benefit of the Funder's promises concerning legal services be enjoyed by the scheme members collectively. Such services are for common legal work as well as for work on individual claims. Similarly, the promises to meet any order for security for costs will provide a common benefit. Superficially, there may be a difficulty in asserting that the responsible entity (presumably the Funder) holds the benefits of such promises on trust for scheme members as it does not hold any title to them. A possible answer is that each scheme member has impliedly promised to hold the benefit of the Funder's individual promise upon trust for the scheme members generally, and that s 601FC(2) vests the benefit of that promise in the responsible entity. 67 In any event, we do not see these difficulties as relevant to the task of construing the s 9 definition. Point (d) - investing or otherwise dealing with scheme property 68 Finally, it is submitted that the promises are not "apt to be invested or dealt with" as contemplated by s 601GA(1)(b). That section requires that a scheme constitution make provision for the responsible entity having power to invest or otherwise deal with, scheme property. Once again, the respondents did not really develop this submission. The requirement is only that the constitution provide for such power. It does not require that all scheme property be capable of investment. As to "dealing with" the promises, the expression is very wide, and may include assignment, by way of security or otherwise, enforcement of the promises or protection of their value. Again, we see no basis in s 601GA(1) for reading down the s 9 definition. 69 We should say something about one other matter. The respondents submit that Multiplex relies upon the finding by the primary Judge that the group members' undertakings constituted equitable assignments of future property. It is said that this matter was not the subject of pleading. Reference was made to a passage in the transcript of the proceedings at first instance (at TS 60 ll 10-20), which passage the transcript and the respondents attribute to Mr Bathurst QC, counsel for Multiplex. It is said that in that passage, counsel effectively eschewed reliance on such assignments. Multiplex submits that the relevant statement was actually made by counsel for the first and second respondents, Mr Sheahan SC. Mr Sheahan said that he had no recollection concerning the matter. Multiplex's submission may be correct. There is no apparent reason why Mr Bathurst would have interrupted Mr Sheahan at that point in his submissions. His Honour obviously did not understand Multiplex to have eschewed such reliance. In any event it does not matter. The relevant facts were pleaded. Whether or not they could be characterized as evidencing an equitable assignment seems to be of little significance.

"as consideration to acquire rights to benefits" 70 The fourth and fifth respondents submit that the benefits of the various promises were not acquired in consideration of the contribution of money's worth, but rather upon entry into the relevant agreements. This submission seems to distinguish between entering into a contract and receiving the benefit of it. However, in the present case, the promises made by each of the group members and the Funder were made in consideration of their acquiring rights to share in the relevant Resolution Sum or Sums and the benefit of the Funder's promises concerning legal services, costs orders and security for costs. It may be true that the benefits for group members and the Funder were derived pursuant to their contracts, but that is the way in which the scheme works. It involves the exchange of contractual obligations. We suspect, although we are not entirely sure, that this submission, if accepted, would effectively exclude from the s 9 definition many, perhaps all, schemes in which the promoter enters into individual contracts with members. That is clearly not the purpose of the legislation.

"benefits produced by the scheme" 71 The remaining question in connection with para (a)(i) of the s 9 definition is whether or not the relevant benefits were produced by the scheme. The benefits derived by group members were, subject to the Funder's rights to participate in any Resolution Sums: · the provision of legal services at no cost to the group members; · absence of exposure to any adverse costs order; · the benefit of the Funder's promises to provide security for costs; and · the benefit of contractual rights to participate in the distribution of the Resolution Sums in accordance with the terms of the scheme. The Funder derived the benefit of the right to participate in the distribution of the Resolution Sums in accordance with the terms of the scheme. 72 The primary Judge considered that it was necessary that the relevant benefit have been acquired by the contributors and produced by the scheme. At [20] his Honour observed that: The principal object of the scheme is to recover in litigation the loss which each group member says he or she has suffered as a result of the alleged wrong-doing by Multiplex. The recovery of damages or compensation is not, by any meaning, a "benefit" a group member has acquired. If any group member is entitled to recover damages or compensation from Multiplex it is because there is in existence a justiciable cause of action against Multiplex, a cause of action which exists separately from, and is antecedent to, the scheme. No group member has given value or paid for those causes of action as part of the scheme. 73 The word "benefit" is relevantly defined in s 9 to mean: (a) … any benefit, whether by way of payment of cash or otherwise; … 74 The New Shorter Oxford English Dictionary (4th ed) defines "benefit" as: … A thing well done; a good deed … . A kind deed; a favour, gift; a benefaction … . (An) advantage …" 75 The Macquarie Dictionary (4th ed) defines the term as: … an act of kindness … anything that is good for a person or thing. 76 Each group member claims to have a cause of action against Multiplex. Whether each has such a cause of action remains to be determined. Frequently, when a lawyer says that a person has a cause of action, he or she means that, on the person's version of events, there is a cause of action. Much trouble, time, effort and cost frequently lie between assertion of a cause of action and the derivation of a financial benefit. On the other hand, it is not unknown for somebody without a cause of action to make an unmeritorious claim and enjoy a degree of success. A process which enables or assists a claimant to turn a claim into an amount of money, whether by judgment or settlement, seems to us to be a benefit. In the present case, each group member acquires a contractual right to share in his or her Resolution Sum in accordance with the terms of the scheme. It is reasonable to infer that each group member perceived some benefit or advantage in giving up part of any amount recovered in order to have access to legal services, protection from any adverse order as to costs and avoidance of any need to give security. 77 The relief from exposure to an order for costs should not be undervalued simply because the matter may be proceeding as a representative action. Even if group members, other than the representative party, may not generally be subject to such orders, a representative party may not be willing to accept that role unless other claimants offer appropriate indemnities. Further, an order for security for costs may have the effect of obliging other claimants to pay the other side's costs if the action is unsuccessful. 78 At [22] the primary Judge said: For an investor to obtain a benefit under a managed investment scheme he or she must acquire a right to some hoped for profit or gain the scheme will produce. 79 However subpara (i) of the s 9 definition speaks of "rights … to benefits produced by the scheme". We see no justification for substituting the words "profit" or "gain" for the word "benefit". Use of those words inevitably leads to a focus upon expenditure and receipts. The word "benefit" has a much wider meaning. Whilst there may be cases in which a managed investment scheme makes a gain or profit in which its members have interests, there will be other cases in which the scheme produces an outcome which is, itself, a benefit for members. The recreational or lifestyle schemes referred to in the Report are examples of that type of scheme. Again, it must be kept in mind that the "scheme" is not a legal entity. 80 The respondents submit that one must distinguish between "advantages that are merely direct incidents of the scheme" and "benefits produced by the scheme". One is tempted to ask why that distinction should be drawn. The approach seems to assume that a scheme must necessarily involve discrete stages involving entry into the scheme, operation of the scheme and emergence of benefits from the scheme. The s 9 definition does not prescribe such an approach. In the present case, the benefit to the group members will be cumulative in the sense that as legal services are provided, the claims will progress towards their anticipated resolution. The definition simply does not require that the benefit be derived once and for all at the end of the undertaking. 81 It would do violence to language to deny that the opportunity to prosecute a claim, with virtually no exposure to any costs or outgoing in the event of failure, is a benefit. Such benefit will be the result of all parties carrying out their obligations under the scheme. It follows that it will be produced by the scheme. Similarly, any eventual financial yield to group members or to the Funder will be so produced.

The scheme satisfies subpara (a)(i) 82 We consider that the requirements of subpara (a)(i) of the s 9 definition are satisfied.

Subparagraph (a)(ii) - "… any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interest from holders) …" 83 The requirements of the subparagraph are: · that any of the contributions are pooled, or used in a common enterprise; · to produce financial benefits or benefits consisting of rights or interests in property; · for the scheme members.

"any of the contributions are to be pooled, or used in a common enterprise" 84 The primary Judge, referring to the decision of Pullin J in Australian Securities and Investments Commission v Knightsbridge Managed Funds Ltd [2001] WASC 339, said that the word "pooled" has its ordinary meaning, and that it "describes an arrangement where there is a 'common fund into or from which all gains and losses of the contributions are paid', or 'a fund made up of numerous payments from the participants and used for a purpose they contemplate' ". His Honour considered that the phrase "to be pooled … to produce" implies that the intention must be to "pool the contributions and, by use of the pool, produce benefits". Other possible meanings were said to include "any aggregation of the interests or property of different persons made to further a joint undertaking or end by subjecting them to the same control and a common liability" and "a common fund or combination of interests for the common adventure in buying and selling". The primary Judge then concluded that it was not possible to apply any of those meanings to the facts in question, at least in part because his Honour considered it "difficult" to pool choses in action because the concept of pooling "is a physical concept". His Honour conceded that choses in action might be "pooled" by being bundled together and dealt with as a bundle by, for example, sale or mortgage but considered that nothing of that kind had occurred in this case. 85 Multiplex submits that the promises were "aggregated in the hands of MBC", in that it was able to deal with the Resolution Sums in accordance with the agreements, and that such aggregation constituted pooling. It also submits that amounts actually received by way of Resolution Sums are to be pooled in the hands of MBC. His Honour considered that each group member had assigned to the Funder part of his or her Resolution Sum. In return the litigation Funder had agreed to provide funding for each group member. The result was a series of bilateral arrangements, not an aggregation of them. This approach appears to overlook the conclusion expressed at [3] that individual group members instructed MBC to perform work for their common benefit as well as in connection with individual claims. 86 The approach taken to pooling in Knightsbridge [2001] WASC 339 was based upon the decisions at first instance and on appeal in Australian Securities and Investments Commission v Enterprise Solutions 2000 Pty Ltd (1999) 33 ACSR 403 (at first instance) and (2000) 35 ACSR 620 (on appeal). Both that case and Knightsbridge [2001] WASC 339concerned contributions of money. However the s 9 definition clearly contemplates contributions other than of money. 87 In our view the term "pooled" in subpara (ii) bears a somewhat wider meaning than that suggested by the primary Judge. The Oxford English Dictionary (2nd ed, Oxford University Press, 1989) Vol XII, the New Shorter Oxford English Dictionary (4th ed) and the Macquarie Dictionary (4th ed) all demonstrate that the word "pool" has two distinct derivations, resulting in two broad categories of meaning which are distinct, but associated. The word was originally derived from a Germanic source. From that source its meaning, as a noun, is "a body of water or other liquid" with similar associated meanings. This usage focuses upon the physical accumulation of a substance in a particular location. As a verb it means "to form pools", focussing upon the process of accumulation. 88 All three authorities identify a second derivation from the French word "poule" meaning "hen". In this sense (according to the Oxford English Dictionary (2nd ed)) the word means "In certain card games, etc: The collective amount of the stakes and fines of the players joining in the game". The word may also mean "The receptacle containing the stakes" and "A game played on a billiard-table … each player contributing an agreed sum, the whole of which at the end falls to the winner". Perhaps the term "hen" was treated as being synonymous with "prize". Another meaning is "a common fund into or from which all gains or losses of the contributors are paid; hence, a combination of capitalists for united speculative operation in a stock or commodity; a combine". Yet another is "[a]n arrangement between previously competing parties, by which rates or prices are fixed, and business or receipts divided, in order to do away with mutually injurious competition …". As a verb in this sense the word means: To throw into a common stock or fund to be distributed according to agreement; to combine (capital or interest) for a common benefit; spec. of competing railways companies, etc,: To share or divide (traffic or receipts). 89 This second usage focusses not so much on physical pooling or co-location as upon the common purpose for which the relevant subject matter has been provided. Examples of pooling in the second sense suggest that physical pooling is not always necessary. One example of that usage identified in the Oxford English Dictionary (2nd ed) is as follows: Sometimes the proceeds of the traffic on competing lines are put into a common fund, and afterwards distributed according to conditions previously agreed on. This is called a "Financial Pool". In other cases, arrangements are made for distribution of the traffic, each line agreeing to accept a specified proportion. This is called a "Physical Pool". 90 In our view there is no justification for limiting the meaning of the word "pooled" by requiring that it involve a fund. In common experience many things other than money are pooled, including motor vehicles, typists and skills or talents. In such cases, there is no identifiable fund. Further, in its second sense the word "pool" does not necessarily involve a "physical concept". The purpose for which particular resources are pooled may be fulfilled simply by knowing where resources are located and that they are available. Two other definitions were advanced by his Honour, namely "any aggregation of the interests or property of different persons made to further a joint undertaking or end by subjecting them to the same control and common liability" and a "common fund or combination of interests for the common adventure in buying or selling". These definitions seem to be designed to meet specific situations and not to provide an exhaustive definition of the term "pool". 91 Given the very wide range of property which may fall within the term "money's worth" it may be inappropriate to approach the question of pooling with preconceived ideas about the arrangements which may be so described. Whether and how a particular type of property, being money's worth, can be pooled will depend very much upon its characteristics. It is not clear to us that individual contributions must be of a homogeneous character in order to be pooled. After all, the degree of uniformity amongst typists in a typing pool or cars in a car pool may vary substantially. Further, we not infrequently speak about pooling talents or skills, usually meaning a variety of talents or skills. However, assuming that we are speaking only about pooling like with like, the question is whether or not the promises made by the group members are to be pooled, and whether or not the promises made by the Funder are to be pooled. 92 It is likely that the pooling contemplated in para (a)(ii) of the s 9 definition is within the second sense discussed above rather than the first. The focus is not upon physical pooling, such as that which occurs with water or blood, but rather upon pooling for a purpose. In our view the definition would be satisfied if the contributions were available, and known to be available, for a relevant purpose, regardless of physical location. Of course, there may be reasons of convenience or security for keeping the contributions in one place. No doubt, in this case, the parties would want to keep the contractual documents in a secure place. However the pooling is effected by the group members making their individual promises available, ultimately for the Funder's benefit, but in the meantime, for the purposes of the scheme and the benefit of scheme members. That benefit is the role played by such promises in inducing the Funder to make its promises and to honour them. Any ultimate pooling of Resolution Sums may also satisfy the requirements of the definition. However there is a conceptual difficulty in relying upon it as the sole basis for holding that the requirement for pooling is satisfied in that such pooling may not occur. Further, the first and second respondents submit that this approach was not part of Multiplex's pleaded case. However we consider it to be within para 40 of the further amended statement of claim. In any event, it is not necessary that we finally resolve that matter. 93 As to the Funder's promises, similar considerations apply. In our view, there is a clear intention that its promises to each group member be used collectively to advance the scheme for the benefit of scheme members, as well as for work on individual claims. 94 We turn to the meaning of the term "common enterprise". The primary Judge referred to the following passage from the judgment of Mason J in Australian Softwood Forests 148 CLR at 133: An enterprise may be described as common if it consists of two or more closely connected operations on the footing that one part is to be carried out by A and the other B, each deriving a separate profit from what he does, even though there is no pooling or sharing of receipts of profits. It will be enough that the two operations constituting the enterprise contribute to the overall purpose that unites them. There is then an enterprise common to both participants and, accordingly, a common enterprise. 95 His Honour seems to have considered that Mason J was advancing an exhaustive definition of the term. In our view, he was not purporting so to do. His Honour was rather giving his reasons for rejecting an argument that a common enterprise necessarily involves "a joint participation in all elements and activities that constitute the enterprise". The above passage was designed to identify at least one way in which the requirement for a common enterprise might be satisfied short of such joint participation. 96 The New Shorter Oxford English Dictionary (4th ed) defines "enterprise" as "A piece of work taken in hand, an undertaking; esp. one that is bold, hazardous, or arduous … . The action of engaging in enterprises; esp. activity undertaken with an economic or commercial end in view." The Macquarie Dictionary (4th ed) defines the word to mean a "project undertaken or to be undertaken, especially one which is of some importance or that requires boldness or energy". The former authority defines "common" as meaning "Of a public or non-private nature … . Shared alike by all the persons or things in question …; having the same relationship to all the persons or things in question … . Belonging to more than one as a result of joint action or agreement". The latter authority defines "common" as "belonging equally to, or shared alike by, two or more or all in question". 97 The example given by Mason J demonstrates that separate actions by different participants, deriving separate profits, may constitute a joint enterprise if the actions are sufficiently closely connected and contribute to a shared purpose. However, in many cases, there will be a much closer integration of actions and outcomes than is demonstrated in that example. There is, in the present case, a shared purpose, namely to prosecute the group members' claims to successful realization for the benefit of the group members, the Funder and MBC. The group members give appropriate instructions to MBC and promises to the Funder; the Funder provides funds; and MBC provides legal services. Each will derive a benefit from any success enjoyed by the scheme. In the case of the group members and the Funder, their benefits will come directly from the fruits of such success. MBC will indirectly benefit from that source because its outstanding costs and interest thereon will be received only if the Funder receives money from the pooled Resolution Sums. 98 The scheme is clearly an undertaking. As the dictionary definitions suggest, an enterprise may often be of an economic or commercial nature and may be bold, hazardous or onerous. None of these characteristics is said to be a necessary element of an enterprise, but at least some seem to be present in this case. We see little difficulty in characterizing the scheme as being of an economic nature from the points of view of the group members, the Funder and MBC. From the point of view of the Funder and MBC it is commercial. Perhaps, too, from the point of view of any institutional investor, it would be commercial. The intended litigation may or may not be bold, but there are risks. Indeed, a purpose of the scheme is to deal with those risks. There can be little doubt that the scheme may involve much hard work, depending upon Multiplex's attitude. The scheme is a common enterprise in the sense demonstrated by Mason J and described in the dictionary definitions. It belongs to "more than one as a result of joint action or agreement" or is shared. 99 We conclude that the scheme involves both pooling of contributions and use in a common enterprise. We should say something about the distinction between the two. Pooling will frequently be a question of degree. There may be cases in which relevant assets are utilized by individual members in such a way that it cannot readily be said that they are pooled. Using discrete parcels of land to produce crops which are pooled may be an example. In such a case, there may be use in a common enterprise but no pooling of the land. We do not mean to imply that land may never be pooled. 100 On our view of the case, the singular-plural problem, which was raised in argument and dealt with by Jacobson J, does not arise. The contributions are the promises of the group members and those of the Funder.

"to produce financial benefits or benefits consisting of rights or interests in property" 101 We turn to the question of benefits. We have already explained that the group members' promises are pooled to enable them to induce the Funder to fund the litigation. We have also explained why we consider that such arrangement confers a benefit upon the group members. It is a financial benefit in that the group members are protected from financial exposure. It is intended that those promises and the Funder's promises, together, will produce a successful realization of the group members' claims. That success will yield a financial benefit to group members, the Funder and, indirectly, MBC. The Funding Agreements also contemplate the possibility of a non-financial outcome. See the definition of "Resolution Sum". In that event, the benefits may involve rights or interests in property.

"for members" 102 Clearly, these benefits will inure for the benefit of scheme members, including group members, the Funder and MBC (indirectly).

The scheme satisfies subpara (a)(ii) 103 We are satisfied that the scheme satisfies subpara (a)(ii) of the s 9 definition.

RESPONSIBLE ENTITY 104 There is some debate about whether the Funder or MBC is presently the responsible entity for the purposes of Ch 5C. Both fulfil functions which might be thought to be part of the operation of the scheme, but neither is qualified to be a responsible entity as required by s 601FA. If either is operating the scheme, it will be in breach of s 601ED(5). There can be little doubt that between them, they are operating the scheme which is unregistered and lacks a responsible entity. The obvious consequence of our view that the scheme must be registered is that a qualified responsible entity must be appointed, unless the Australian Securities and Investments Commission ("ASIC") takes action to excuse the scheme from registration.

RELIEF 105 Multiplex seeks declaratory and injunctive relief. The respondents submit that it has no standing to seek injunctive relief, a question to which we will return. They do not submit that Multiplex lacks standing to seek declaratory relief. However a number of discretionary consideration are said to militate against the grant of such relief. They include: · delay; · that Multiplex seeks to stop the proceedings between the group members and Multiplex; · that any declaratory relief lacks utility; · that any grant of relief would prejudice the respondents; · that no group member has been prejudiced by the failure to comply with Ch 5C; · that only Multiplex has any interest in obtaining relief; and · that a breach of s 601ED(5) may give rise to quasi-criminal liability. 106 The matter has been further complicated by the parties having agreed that in the event that the appeal succeeds, the matter should be referred to the primary Judge for further consideration as to appropriate relief. It is not clear whether the parties intend that the question of declaratory relief be so treated. However at least some of the discretionary considerations may go to that matter. 107 In our view the parties' agreement demonstrates a preoccupation with process rather than concern for the ultimate outcome. If the scheme falls within the s 9 definition and is required to be registered by virtue of s 601ED, some form of declaratory relief is almost inevitable. If the Court concludes that there has been, and continues to be, a breach of the law, the public interest and the need to maintain the dignity of the Court would dictate that the decision be recorded in some formal way. 108 We consider that Multiplex, as the respondent in the representative proceedings, is entitled to have confidence, in its dealings with MBC as solicitors on the record, that they are properly authorized to act, albeit in a representative action. It is also entitled to have confidence that the proceedings will not, in the future, be disrupted or delayed by any intervention by ASIC or by a disgruntled group member, asserting an irregularity of the kind which Multiplex has demonstrated. That interest is sufficient to justify the grant of declaratory relief, although it may have to be balanced against the discretionary matters outlined above. 109 As to injunctive relief, the question of standing depends upon the proper construction of s 1324(1) of the Corporations Act which provides: Where a person has engaged in, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: (a) a contravention of this Act; or (b) attempting to contravene this Act; or (c) aiding, abetting, counselling or procuring a person to contravene this Act; or (d) inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or (f) conspiring with others to contravene this Act; the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. 110 In Broken Hill Proprietary Company Limited v Bell Resources Limited (1984) 2 ACLC 157 at 162 Hampel J observed: In my view the interests referred to in this subsection are interests of any person (which includes a corporation) which go beyond the mere interests of a member of the public. It is not necessary that personal rights of a proprietary nature or rights analogous thereto are or may be affected nor need it be shown that any special injury arising from a breach of the Act has occurred. 111 We consider that Multiplex's interest, as identified above, satisfies this test. It follows that the appeal should be allowed and the orders below be set aside. We understand that the parties wish to develop their arguments concerning discretionary matters. They should do so in writing. Such submissions should also address: · the forms of any declaratory and/or injunctive relief; · costs at first instance and on appeal; and · in the event that the respondents propose to seek any form of statutory relief from ASIC, the question of a short deferment of the pronouncement of our orders. 112 Given the nature of these matters, it will be appropriate if Multiplex first address the forms of order, and that the respondents then make their submissions concerning all matters. Multiplex may then reply. We do not expect lengthy submissions.

ORDERS 113 We order that: · within seven days of publication of these reasons, Multiplex file and serve written submissions concerning proposed forms of order; · within 14 days of such publication, the respondents file and serve their submissions concerning all outstanding matters; · within 21 days of such publication, Multiplex file and serve its reply to the respondents' submissions; and · the parties have liberty to apply. I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Sundberg and Dowsett.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BROOKFIELD MULTIPLEX LIMITED (ACN 008 687 063)

BROOKFIELD MULTIPLEX FUNDS MANAGEMENT LIMITED (ACN 105 371 917)

AND: INTERNATIONAL LITIGATION FUNDING PARTNERS PTE LTD

INTRODUCTION 114 This appeal arises from an application by the appellants ("Multiplex") for a declaration that the litigation funding arrangements and solicitors' retainers for two representative proceedings in this Court constitute an unregistered "managed investment scheme" as defined in s 9 of the Corporations Act 2001 (Cth) ("the Act"). 115 Multiplex sought declaratory and injunctive relief which would have had the effect of restraining the litigation funders, the solicitors and representative applicants in the proceedings from taking any steps pursuant to the litigation funding agreements and the solicitors' retainers. 116 The primary judge, Finkelstein J, said at [2] that "[w]hat lies behind this allegation is Multiplex's desire to stop the action in its tracks": Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (2009) 256 ALR 427. In dismissing the application, his Honour said at [6] that the difficulties in construing the definition of "managed investment scheme" fall away when the construction takes account of the purpose of Ch 5C of the Act. 117 At the heart of Multiplex's submission on the appeal was that the primary judge failed to have regard to the proper principles of construction, as explained in various authorities, which govern the definition of the term "managed investment scheme". 118 These principles include the proposition that the broad language of the statutory definition ought not to be read down to avoid the supposedly unintended consequences of a literal interpretation: Australian Softwood Forests Proprietary Limited v Attorney General for the State of New South Wales; Ex relatione Corporate Affairs Commission (1981) 148 CLR 121 at 129-130. 119 However, senior counsel for Multiplex, Mr T.F. Bathurst QC, conceded that at least in the case of ambiguity, it is permissible to refer to extrinsic evidence in accordance with s 15AB of the Acts Interpretation Act 1901 (Cth). The thrust of his submission on this issue was that the extrinsic material is of little assistance. 120 It seems to me that in considering the issues raised on the appeal, it is necessary to have some regard to the legislative history. It is of course critical to the appeal to consider the terms of the litigation funding agreements and the solicitors' retainers in order to determine whether those arrangements fall within the definition of a "managed investment scheme". 121 There was debate between the parties as to whether, in determining that question, Multiplex was confined to the case pleaded in its Further Amended Statement of Claim. It seems to me that it ought to be, although ultimately nothing turns on it. Nevertheless, I will set out the relevant paragraphs of the pleading later in my reasons. 122 A further issue which arises in the event the appeal is allowed is whether Multiplex has standing to bring the proceeding.

THE RELEVANT PROVISIONS OF THE ACT 123 The term "managed investment scheme" is defined in s 9 of the Act to mean: (a) a scheme that has the following features: (i) people contribute money or money's worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not); (ii) any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders); (iii) the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions) […]. [Emphasis in original] 124 The definition goes on to set out a list of 13 exclusions. These include a partnership with more than 20 members, a body corporate (other than one which operates a time sharing scheme), and certain other arrangements, schemes and statutory funds. 125 The term "interest" which is referred to in the definition of "managed investment scheme" is defined in s 9 as follows: interest in a managed investment scheme means a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not). 126 The term "benefit" is defined in s 9 to mean, relevantly "any benefit, whether by way of payment of cash or otherwise […]". 127 The provisions of the Act which deal with managed investment schemes are contained in Ch 5C of the Act. 128 To register a managed investment scheme, a person must lodge an application with the Australian Securities and Investments Commission ("ASIC"): s 601(EA)(1). The application must state, inter alia, the name of the responsible entity: s 601(EA)(2). The application must be accompanied by certain documents including a copy of the scheme's constitution and a copy of its compliance plan: s 601(EA)(4). 129 ASIC must register the scheme within 14 days of lodgement unless it appears that certain requirements of Ch 5C in relation to the application, the responsible entity, the scheme's constitution or its compliance plan are not met: s 601EB(1) 130 The critical provision of Ch 5C on which Multiplex relies is s 601ED. That provision specifies that, subject to an exception which is not presently relevant, a managed investment scheme must be registered under s 601EB if it has more than 20 members. 131 Section 601ED(5) goes on to provide: (5) A person must not operate in this jurisdiction a managed investment scheme that this section requires to be registered under section 601EB unless the scheme is so registered. 132 Section 601EE provides: (1) If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up: (a) ASIC; (b) the person operating the scheme; (c) a member of the scheme. (2) The Court may make any orders it considers appropriate for the winding up of the scheme. 133 The duties and powers of the responsible entity are set out in Div 1 of Pt 5C.2 of the Act. 134 Section 601FA provides that the responsible entity of a managed investment scheme must be a public company that holds an Australian financial services license authorising it to operate a managed investment scheme. 135 The responsible entity is to operate the scheme and perform the functions conferred on it by the scheme's constitution and the Act: s 601FB(1). 136 Section 601FC(1) provides, relevantly, that in exercising its powers and carrying out its duties, the responsible entity must: (h) comply with the scheme's compliance plan; and (i) ensure that scheme property is: (i) clearly identified as scheme property; and (ii) held separately from property of the responsible entity and property of any other scheme; and (j) ensure that the scheme property is valued at regular intervals appropriate to the nature of the property; and (k) ensure that all payments out of the scheme property are made in accordance with the scheme's constitution and this Act […]. 137 There is a definition of "scheme property" in s 9 as follows: scheme property of a registered scheme means: (a) contributions of money or money's worth to the scheme; and (b) money that forms part of the scheme property under provisions of this Act or the ASIC Act; and (c) money borrowed or raised by the responsible entity for the purposes of the scheme; and (d) property acquired, directly or indirectly, with, or with the proceeds of, contributions or money referred to in paragraph (a), (b) or (c); and (e) income and property derived, directly or indirectly, from contributions, money or property referred to in paragraph (a), (b), (c) or (d). 138 Section 601FC(2) provides that the responsible entity holds scheme property on trust for the scheme members. 139 The requirements for the constitution of a registered scheme are contained in Pt 5C.3 of the Act. 140 The provisions which deal with the compliance plan of a registered scheme are contained in Pt 5C.4 of the Act. 141 It is not necessary for present purposes to set out or refer to these provisions. 142 Part 5C.5 provides for the establishment by the responsible entity of a compliance committee in the circumstances provided in s 601JA. The remaining provisions of that Part deal with the membership, functions and duties of the committee. 143 Part 5C.6 deals with members' rights to withdraw from a managed investment scheme. There are different provisions which apply depending upon whether the scheme is liquid or illiquid at the time of withdrawal.

LEGISLATIVE HISTORY: "INTERESTS", "PRESCRIBED INTERESTS" 144 The regulation of managed investment schemes under Ch 5C of the Act was introduced by the Managed Investments Act 1998 (Cth). The new regime introduced by that Act replaced the regulatory regime originally introduced in the 1970s by various amendments to the State Uniform Companies Acts: Ford, Austin and Ramsay, Ford's Principles of Corporations Law (LexisNexis AU Online Subscription), [22.470]. 145 An example of the earlier regime was to be found in the amendments to the Companies Act 1961 (NSW) introduced by Act No 61 of 1971. That regime applied to "interests" and was contained in Div 5 of Pt IV which was headed "Interests other than Shares, Debentures etc". 146 "Interests" later became known as "prescribed interests" when the Uniform Companies Codes commenced in the early 1980s, but the substance of the definition was unchanged. As Ford observes at [22.470], the basic definition and regulatory regime under the Companies Codes were adopted in the Corporations Law in 1991, although over time there were developments and modifications. 147 The definition of "interest" introduced by the 1971 amendments to the Companies Act 1961 (NSW) was contained in s 76 as follows: "Interest" means any right to participate, or interest, whether enforceable or not and whether actual prospective or contingent - (a) in any profits, assets or realisation of any financial or business undertaking or scheme whether in the State or elsewhere; (b) in any common enterprise whether in the State or elsewhere in which the holder of the right or interest is led to expect profits, rent or interest from the efforts of the promoter of the enterprise or a third party; or (c) in any investment contract whether or not the right or interest by a formal document and whether or not the right or interest relates to a physical asset […]. 148 "Investments contract" was also defined in s 76 as follows: "Investment contract" means any contract scheme or arrangement which in substance and irrespective of the form thereof involves the investment of money in or under such circumstances that the investor acquires or may acquire an interest in or right in respect of property which under or in accordance with the terms of investment will, or may at the option of the investor, be used or employed in common with any other interest in or right in respect of property acquired in or under like circumstances.

Report of the Law Reform Commission and Companies and Securities Advisory Committee 149 On 24 May 1991, the then Federal Attorney-General asked the Australian Law Reform Commission and the Companies and Securities Advisory Committee to carry out a review of the regulatory framework for "prescribed interests" and "like collective investment schemes". The review was carried out and, in 1993, the Commission and the Advisory Committee produced a joint report entitled "Collective Investments: Other People's Money". 150 The Report was critical of the then existing regulatory regime and made 185 recommendations. In particular, the Report recommended that the responsibility for a collective investment scheme should be with the operator of the scheme. 151 The Report also considered the question of whether the definition of "prescribed interest" should be amended. It said at [3.5]: The Review now accepts that it is not possible to replace the existing definition of 'prescribed interest' with a more precise definition of 'collective investment scheme' which applies to fund raising schemes other than those which are prudentially supervised or schemes in which the investors themselves are primarily responsible for the conduct of their scheme. The Review therefore recommends that the existing definition of prescribed interests in the Corporations Law should be the basis of the definition of 'collective investment schemes' to which the regulatory regime recommended in this report will apply. The Review also recommends that the expression 'prescribed interests', which is a less than helpful expression except to the cognoscenti, be abandoned in favour of 'collective investment schemes'. [Emphasis in original] 152 Although the Report was tabled in 1993, its recommendations were not adopted until 1997 when the Managed Investments Bill 1997 (Cth) was introduced by the then Treasurer, the Hon Peter Costello MP.

The Explanatory Memorandum to the Managed Investments Bill 153 The Explanatory Memorandum to the Managed Investments Bill 1997 commenced by acknowledging that the Bill represented the Government's response to the recommendations in the Report of the Commission and the Advisory Committee, as well as to the Final Report of the Financial System Inquiry ("the Wallis Committee Report"). 154 Paragraph 19.1 of the Explanatory Memorandum stated that s 9 of the Corporations Law would be amended to include a number of new definitions, including the term "managed investment scheme". 155 The following paragraphs of the Explanatory Memorandum are relevant: 19.3 The central definition of the Chapter 5C regime is that of 'managed investment scheme'. 19.4 Managed investment schemes are currently regulated under the 'prescribed interest' provisions of the Law. The complex and seemingly all embracing definition of 'prescribed interest' has been widely criticised because of its lack of precision. 19.5 The definition of a 'managed investment scheme', to be inserted in section 9 (proposed Schedule 2, item 16), will provide greater certainty and guidance as to what investment arrangements are to be regulated under the Law. The definition sets out the key elements of a managed investment scheme for the purposes of the Law. 19.6 The essential features of a scheme are that: (a) persons contribute money or money's worth to acquire interests in the scheme - incorporating a purposive element in the definition (b) any of the contributions are pooled or used in a common enterprise to produce financial or other benefits to members; and (c) the members do not have day to day control over the operation of the scheme although they may be consulted. 19.7 Notably, the term 'used in a common enterprise' may include arrangements described as enterprise or agricultural schemes. The concept of a 'common enterprise' has been judicially considered on a number of occasions and continues to be relevant for the purposes of this definition. Since 'any of the contributions' are to be pooled, arrangements, such as those known as managed discretionary accounts or member discretionary master funds where part of the contributions made by a member to a scheme may not be pooled, will nonetheless fall within the definition. [Emphasis in original]

The Parliamentary Joint Committee 156 Following the publication of the Explanatory Memorandum, a Parliamentary Joint Committee recommended to the Parliament that the Managed Investments Bill be passed. 157 The Parliamentary Committee's written recommendation contained the following observations by way of background: 1.1 Managed investment schemes are schemes where an investor purchases an interest in a fund which is managed by a professional manager to produce a return for the investor. They encompass a wide range of investment products and services including property, equities and cash management trusts as well as smaller schemes such as ostrich farms and pine plantations. Approximately $85 billion is invested in managed investment schemes at present and the amount continues to grow by around $20 billion a year. 1.2 These schemes allow investors to diversify their investments over a wider range of investment types than might otherwise be available and allow them to have their funds professionally managed. 1.3 The Bill is not concerned with superannuation funds which are dealt with under the Superannuation Industry (Supervision) Act 1993. 158 The Parliamentary Committee made reference to the Report of the Commission and the Advisory Committee and to the recommendations of the Wallis Committee. It noted that the Wallis Committee recommended that the regulatory framework for public offer collective investments and superannuation should be harmonised and that both types of products should be subject to a single consumer protection regime: … bringing the structure of collective investments into line with that for superannuation funds, by introducing the requirement of a single responsible entity.

THE REPRESENTATIVE PROCEEDINGS 159 The representative proceedings were described by the primary judge at [1] of his reasons. As his Honour noted, P Dawson Nominees Pty Limited ("Dawson") is the representative party in one of the proceedings and Frederick Henry Hart ("Hart") is the representative party in the other. 160 The representative proceedings brought by Dawson and Hart against Multiplex seek damages or compensation for the alleged failure of Multiplex to comply with the obligation of continuous disclosure under ss 674 and 675 of the Act. The claims arise from the losses suffered by Multiplex in the construction of the Wembley Stadium and the allegation that Multiplex failed to notify the market about cost and budget over-runs which had a substantial adverse effect on the profitability of the project. 161 The proceeding brought by Dawson was described in some detail in an earlier interlocutory proceeding between the parties: P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111; see also on appeal, Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275. 162 In that proceeding, the Court determined that Pt IVA of the Federal Court of Australia Act 1976 (Cth) does not preclude a definition of a group which restricts membership of the group to persons who have entered into a litigation funding agreement at the commencement of the proceeding. 163 The Dawson representative proceeding was commenced on 18 December 2006. The Hart representative proceeding was commenced nearly two years later on 10 December 2008. The case management of both proceedings has been conducted by the primary judge. His Honour ordered that the proceedings be heard together and the "consolidated action should be ready for trial some time early next year". 164 There are well over 20 group members in each of the representative proceedings. The numbers set out at [5] of the primary judge's reasons indicate that there are in excess of 45 group members in the Dawson representative proceeding and over 100 in the Hart representative proceeding.

The Solicitors' Retainer 165 As the primary judge observed, all of the retainer agreements are in common form and it is necessary to refer only to the Dawson retainer agreement ("the Retainer"). 166 The Retainer recites that Dawson wishes to prosecute its claims against Multiplex and that Dawson wishes to retain Maurice Blackburn Cashman ("MBC") upon the basis that the nominated litigation funder ("the Funder") will, on the terms set out in the litigation funding agreement ("the Funding Agreement"), pay MBC's costs and disbursements. 167 Clause 3.1 of the Retainer provides that Dawson instructs MBC to provide advice and legal services to Dawson as MBC may consider reasonably necessary to negotiate a settlement of the "Claims". That term is defined to mean Dawson's claims and the claims that other persons may have against Multiplex. 168 Under cl 3.1, Dawson also instructs MBC to commence and prosecute the "proceedings" against Multiplex. That term is defined to include an action brought by Dawson, a representative proceeding and a "Test Case". A "Test Case" is one that, in MBC's reasonable opinion, will or is likely to determine important issues of liability or quantum for some or all of the other group members. 169 The scope of the legal work which may be performed by MBC under the Retainer includes work for the common benefit of other group members as well as work connected with the specific claims of other such persons. 170 No fees, costs or disbursements of MBC incurred by Dawson are payable by Dawson. Those expenses are to be met by the Funder in accordance with the terms of the Funding Agreement: see cl 4.1 of the Retainer. 171 The effect of those terms is that the Funder is to pay all of the disbursements and 75% of MBC's fees on receipt of each invoice, with the remaining 25% of the fees to be payable only in the event of a successful outcome: cl 4.2. 172 Dawson is bound to provide full and honest instructions to MBC and to cooperate in the preparation of its own claims and those of the other group members: cl 8.4. That clause also binds Dawson to: accept and follow MBC's reasonable legal advice, including advice as to reasonable Settlement offers when supported by Senior Counsel briefed by MBC […]. 173 MBC is authorised by cl 12 of the Retainer to receive, on behalf of Dawson, any "Resolution Sum". That term is defined to mean any amount for which the claims are settled or for which judgment is given in Dawson's favour, or in favour of any other group member. 174 Clause 12.1 authorises MBC, upon receipt of the Resolution Sum, to pay it into an account kept for that purpose and: · to combine in the one account amounts received in respect of the claims of other group members; and · to disburse the Resolution Sum in accordance with the Funding Agreement. 175 Clause 13 sets out the events in which the Retainer may be terminated by MBC or Dawson. The events in which Dawson may terminate the Retainer include the filing of a Notice of Opting Out before any Opt Out Date set by the Court, or by Dawson effecting a settlement other than a group settlement. 176 If the Retainer is terminated, MBC remains entitled to payment of costs and disbursements incurred in respect of Dawson under the Retainer and the Funding Agreement prior to termination: cl 13.2.

The Funding Agreement 177 As with the Retainer, the Funding Agreements are in common form and it is sufficient to refer only to the Funding Agreement made with Dawson. 178 It appears that all of the Funding Agreements were initially made with the company now known as 2117980 Ontario Inc and were later assigned to International Litigation Funding Partners Pte Ltd. 179 The Funding Agreement contains a number of acknowledgments that the Funder has an interest in the Resolution Sum. One such acknowledgment is found in cl 4.1 which provides that in recognition of that fact, and the Funder's interest in the prosecution of the proceedings, Dawson directs MBC to consult with the Funder with regard to any significant issue in the proceedings and to properly consider its views as to the conduct of the proceedings. 180 Clause 4.2 of the Funding Agreement restates and reinforces the obligations of Dawson as stated in the Retainer to provide instructions to MBC and to accept and follow MBC's reasonable legal advice. 181 Clause 4.5 of the Funding Agreement prevents Dawson from having any communications with Multiplex, other than through MBC, or upon MBC's reasonable advice. That clause also prevents Dawson from disclosing to Multiplex any information provided to MBC or the Funder in relation to the claims against Multiplex. 182 The obligations in cl 4.5 survive the termination of the Funding Agreement: see cl 4.6. The apparent purpose of the clause is to avoid the possibility of Dawson (or any other group member) negotiating an individual settlement with Multiplex. 183 If there are settlement discussions, Dawson authorises MBC to advise the Funder and to invite the Funder to attend such discussions, as well as to report the detail of the discussions to the Funder. Dawson also authorises MBC to consult with the Funder about the terms of any proposed settlement: cl 4.10. 184 There is a further acknowledgment of the fact that the Funder has an interest in the Resolution Sum in cl 4.11. That clause provides that if there is a disagreement between Dawson and the Funder as to the appropriate terms of settlement, MBC will brief Senior Counsel to advise as to whether the proposed settlement is reasonable. 185 Clause 5 deals with the funding of the proceedings. The principal terms of this clause are that the Funder is to: · pay all legal costs and disbursements reasonably incurred by Dawson and payable to MBC for the preparation and prosecution of the proceedings, including settlement negotiation; · meet any adverse costs order; and · provide any security for costs ordered by the Court. 186 Clauses 8, 9 and 10 deal with the receipt and application of the Resolution Sum. 187 Clause 8 repeats the obligation of Dawson contained in the retainer to authorise MBC to receive the Resolution Sum and pay it into an account for that purpose. 188 Clauses 9 and 10 contain a direction to MBC to pay to the Funder out of the Resolution Sum: · Dawson's share of the fees, costs and disbursements paid by the Funder to MBC; plus · a "commission" calculated as a percentage of the Resolution Sum determined by reference to the number of Multiplex shares purchased by Dawson and the date on which the proceedings are determined or settled. 189 The percentage fee payable to the Funder under this clause ranges from a minimum of 25% to a maximum of 40%. The lower percentage applies to purchases of more than 1,000,000 shares and is plainly referable to institutional investors. 190 The balance of the Resolution Sum is to be distributed to Dawson and other group members, pro rata by reference to the "Gross Recovery" of each such person. 191 Clause 12.4 provides that if Dawson acts in breach of the Funding Agreement, the obligations as to repayment of the legal fees and disbursements and payment of the Funder's "commission" continue to apply to any payment received by Dawson in respect of its claims against Multiplex. 192 That is to say, the Funder will be entitled to receive its commission and reimbursement for Dawson's legal fees and disbursements if Dawson negotiates an individual settlement or otherwise recovers on its claims against Multiplex. 193 Clause 15 deals with termination of the Funding Agreement by Dawson. It is sufficient to note for present purposes that Dawson remains liable under this clause to pay the Funder's commission if there is a settlement of a representative proceeding or a "group action" against Multiplex which is rejected by Dawson.

The Statement of Claim 194 The benefits or rights to benefits said to have been acquired by Dawson, Hart and the group members in accordance with paragraph (a)(i) of the definition of managed investment scheme are identified in [39] of the Further Amended Statement of Claim. 195 The benefits or rights which are identified are, for the most part, benefits which flow from the ability to pursue their claims against Multiplex without being subject to the ordinary incidents of litigation. They are all "benefits" which are said to flow from the Retainer and the Funding Agreement. 196 They are said to consist of the following: · the absence of any obligation to pay legal fees or disbursements to MBC unless and until there is a successful resolution of the proceedings by way of receipt of the Resolution Sum; · the absence of any obligation to provide security for costs of the proceedings; · the entitlement to a pro rata share of the balance of the Resolution Sum after payment of their share of MBC's legal fees and disbursements and the Funder's commission; · the cap on payment of legal fees by reference to their share of the balance of the Resolution Sum; · the spreading of the costs of the litigation amongst Dawson, Hart and the group members; and · the Funder's undertaking to meet any adverse costs order. 197 The contribution of money's worth which Dawson, Hart and group members are said to have been required to pay as consideration to acquire those benefits are identified in [40] of the Further Amended Statement of Claim. 198 All of those contributions are identified as obligations undertaken by Dawson, Hart and the group members in the Retainer and the Funding Agreement "which include": · the authorisation to MBC to receive the Resolution Sum and to pay it into an account kept for that purpose; · the obligation to treat any moneys received by them directly by way of a settlement or judgment as though it were the Resolution Sum and the concomitant obligation to pay it to MBC to be dealt with as part of the Resolution Sum; · the authorisation to MBC to pay out of the Resolution Sum the amounts required to reimburse the Funder for its payment of the legal fees and disbursements paid to MBC; and · the payment of the Funder's 25% - 40% commission out of the Resolution Sum. 199 The Funder is also said to obtain benefits or rights to benefits under the Funding Agreement. Those benefits are stated in [41A] of the Further Amended Statement of Claim and include: · an entitlement to be reimbursed from the Resolution Sum for the amount paid by the Funder to MBC for the legal costs and disbursements of Dawson, Hart and the group members against Multiplex; and · an entitlement to a commission, taken from the Resolution Sum in accordance with the Funding Agreement. 200 The contributions of money or money's worth said to have been made by the Funder as consideration to acquire those rights, benefits or rights to benefits, are stated in [41B] of the Further Amended Statement of Claim. 201 Those contributions consist of: · the Funder's obligation to pay to MBC the legal fees and disbursements of Dawson, Hart and the group members; · the requirement on the Funder to obtain standby letters of credit in favour of MBC as security for the Funder's obligations to meet MBC's invoices as well as to meet any adverse costs order; and · the provision of a bank guarantee by the Funder as security for Multiplex's costs in the Dawson proceeding.

THE PRIMARY JUDGE'S REASONS 202 The primary judge considered that the question of whether the arrangements between the group members, MBC and the Funder satisfied the features of a managed investment scheme was a difficult one. 203 His Honour dealt with the question at two separate levels. First, he said at [6] that the difficulties fall away when the construction takes account of the purpose which underlies the regulation of managed investment schemes in Ch 5C of the Act. Second, he considered whether the Funding Agreements and the Retainer satisfied the features of each of the three paragraphs of the definition of managed investment scheme in s 9 of the Act. 204 The essence of the primary judge's reasons was that, although the arrangements constituted a "scheme", they do not amount to a managed investment scheme because the features identified in paragraphs (a)(i) and (a)(ii) of the definition are not satisfied. 205 In coming to that conclusion, his Honour analysed each of the component parts of the definition. He considered that some of the component parts of paragraphs (a)(i) and (a)(ii) of the definition are satisfied. However, ultimately, he concluded that: · paragraph (a)(i) is not satisfied because the group members are not made to acquire rights to benefits produced by the scheme: see [20]; · paragraph (a)(ii) is not satisfied because the group members' contributions are not pooled and are not used in a common enterprise: see [28] and [31]. 206 Although it was unnecessary for him to decide whether the third feature of the definition is satisfied, the primary judge expressed the view that it is, because "group members seem to have ceded control to [MBC]".

THE PROPER APPROACH TO CONSTRUCTION OF THE DEFINITION 207 The observations made by Mason J in Australian Softwood Forests about the breadth of the definition and the difficulties in reading down the comprehensive language were concerned with the definition of "interest" in the Companies Act 1961. 208 Nevertheless, his Honour's approach to construction has been applied to the definition of "managed investment scheme" in numerous authorities: see, eg, Burton v Arcus (2006) 32 WAR 366 at [51]; Australian Securities and Investments Commission v Emu Brewery Mezzanine Ltd (ACN 104 639 410) (2004) 52 ACSR 168 at [81]; Australian Securities and Investments Commission v Knightsbridge Managed Funds Ltd [2001] WASC 339 at [48]; Australian Securities and Investments Commission v Takaran Pty Ltd (2002) 170 FLR 388 at [13]; Australian Securities and Investments Commission v Enterprise Solutions 2000 Pty Ltd (2000) 35 ACSR 620 at [17]. 209 Indeed, as Buss JA (with whom Steytler P and McLure JA agreed) said in Burton v Arcus at [51], it is "settled" that the broad words of the definition of "managed investment scheme" should not be read down. 210 So much may be accepted. But it does not follow that the Court is relieved from carrying out the primary object of statutory construction, which is to construe the relevant provision in a way that is consistent with the language and purpose of the statute considered as a whole: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]. 211 Moreover, the modern approach to construction emphasises the need to construe the provision in its context, having regard to, inter alia, the legislative history and relevant extrinsic material in order to ascertain the "mischief" which the statute is intended to cure: CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408. 212 The starting point is to consider the context in its widest sense, and this process may be undertaken without any reliance on s 15AB of the Acts Interpretation Act: Bankstown Football Club at 408; see also Kennon v Spry (2009) 251 ALR 257 at [89]. 213 I do not consider that this is inconsistent with the observations of Mason J in Australian Softwood Forests. His Honour referred at 129 to the importance of context. His remarks at 130 about the comprehensive language of the definition must be considered in light of the statements in the Explanatory Memorandum to the Managed Investments Bill which point to the difficulties of the earlier definition and the search for greater certainty in the new definition of "managed investment scheme". 214 This is not to cast any doubt on the authorities, which I accept, to the extent that they discourage the reading down of the broad language of the definition influenced by any preconceptions of the unintended impact of the definition on particular transactions.

PRELIMINARY OBSERVATIONS 215 As Barrett J pointed out in Takaran at [12], the Act contains a definition of "managed investment scheme" but it does not define "scheme" for these purposes. Rather, it refers to the features of a scheme that make it a managed investment scheme. 216 The features of a scheme that bring it within the definition are divided into three sub-paragraphs, but Barrett J identified five features which are to be gleaned from the composite definition in the Act. These features are: · the act of contribution of money or money's worth by several persons; · the accruing to those persons in return (as consideration) of certain rights to benefits produced by the scheme; · pooling of contributions or other use of them in a common enterprise; · an objective or expectation of accrual of benefits to persons holding the rights, generated by the contributions; and · absence of day to day control over the operation of the scheme by those persons. 217 Whilst it would of course be wrong to depart from the language of the Act in answering the questions before us, I consider that the five features identified by Barrett J accurately reflect the terms of the definition in s 9. They also assist in identifying the issues which arise on the appeal. 218 No issue arises as to whether the fifth feature, the absence of day-to-day control was satisfied. Reliance upon a notice of contention which would have raised this issue was abandoned at the hearing. 219 Four issues therefore arise. The first issue is whether the members contributed money or money's worth. The second issue is whether any such contributions were made in order to acquire rights to benefits produced by the scheme. The third issue is whether any such contributions were to be pooled to produce financial benefits for the members. The fourth issue is whether any such contributions were to be used in a common enterprise to produce financial benefits for the members. 220 A "scheme" is not a managed investment scheme unless it has the features identified above. No issue arises as to whether the Retainer or the Funding Agreements amounted to a scheme. 221 The parties proceeded upon the basis that the primary judge was correct in finding at [11]-[12] that these arrangements brought into existence a program or plan of action and that this was sufficient to constitute a scheme: Australian Softwood Forests at 129; Takaran at [13], [15]. 222 The primary judge found that the plan involved: (a) putting in place a group of persons willing to participate in proceedings against Multiplex; (b) ensuring that the group of persons would not be exposed to liability for costs; (c) retaining a firm of solicitors that would act on behalf of group members; (d) ensuring that the solicitors' legal fees would be paid.

ISSUE 1 - WHETHER THE MEMBERS CONTRIBUTED MONEY OR MONEY'S WORTH 223 The word "contribute" means to "make available" (Crocombe v Pine Forests of Australia Pty Ltd (2005) 219 ALR 692 at [52]-[53]) or to "pay or supply", and it is implicit in the first limb of the definition of managed investment scheme that people pay or supply money or money's worth to or as directed by the promoter or operator: Burton v Arcus at [57]. 224 The primary judge proceeded on the basis that the participants in the scheme were the Funder and the group members. He found at [14] that the contribution of the Funder is money (the payment of legal fees etc) or its promise to pay that money. No issue was taken with this on appeal. 225 However, the respondents took issue with the primary judge's finding as to the contributions made by group members. His Honour found at [14] that the contribution of group members was an assignment of future property, namely an assignment of the fruits of the litigation in the form of a promise to pay the group member's share of the Funder's commission out of the Resolution Sum. 226 It is true that the characterisation of the group members' contribution as an assignment was not pleaded, but nothing turns on this. The question which arises is whether the promise to pay a percentage of the Resolution Sum (and to reimburse the Funder for legal fees out of the Resolution Sum) constituted a contribution of money or money's worth. 227 I am prepared to proceed on the basis that the promise was a contribution in the sense referred to in the authorities because the group members agreed to supply or make available the relevant percentage of the Resolution Sum under the terms of the Funding Agreement. However, in saying this, I accept the force of the submission of the respondents that the Resolution Sum only comes into existence if a settlement or favourable judgment is achieved as a result of the proceeding. This suggests that the contributions here in question may not fall within the type contemplated by the definition. 228 The real question in relation to the first issue is whether the group members' contractual undertakings were contributions of money or money's worth. 229 The primary judge addressed this question by considering the English and Australian authorities which have dealt with the meaning of the phrase "money's worth". Only two of those authorities were concerned with the meaning of this phrase in the context of the definition of "managed investment scheme". 230 Those two authorities were the decision of Young CJ in Eq in Crocombe (referred to above) and the decision of a Full Court in Hance v Commissioner of Taxation [2008] ATC ¶20-085. 231 In Crocombe, Young CJ in Eq held that the contribution of interests in land by investors in a pine forest plantation scheme was a contribution of money's worth. His Honour emphasised the need to take a wide view of the meaning of contributions. He accepted that a contractual promise to contribute an interest in land to be used for the purposes of the venture was a contribution of money's worth: Crocombe at [49]-[54]. 232 Hance was concerned with the tax treatment of income received and outgoings incurred in connection with the operation of a managed investment scheme. An issue arose as to the meaning of "money's worth". Their Honours (Finn, Dowsett and Edmonds JJ) referred at [99]-[100] to English authorities, which were also cited in the present matter by Finkelstein J, for the proposition that the phrase means equivalent to money in the sense of something essentially material. 233 Finkelstein J was prepared to accept that the promises given by the group members were money or money's worth. He said at [19] that each promise was capable of being valued, notwithstanding the contingent nature of "the right that has been assigned". 234 The authorities to which the primary judge referred, including the decision of Buckley J in Secretan v Hart (Inspector of Taxes) (1969) 1 WLR 1599 at 1603, support the proposition that the phrase "money's worth" must be something which is essentially material. 235 This is borne out by a consideration of that phrase in its full statutory context. 236 Contributions of money or money's worth form part of the "scheme property" of a registered scheme: see definition in s 9. The "scheme property" of a registered scheme serves as a guide to what should be considered to be the property of an unregistered scheme: Mier v F N Management Pty Ltd (2005) 56 ACSR 93 at [26]-[28] per Keane JA. 237 The scheme property of a registered scheme (which includes contributions of money or money's worth) must be clearly identified as scheme property, held separately from the property of the responsible entity, and valued at regular intervals: s 601FC(1)(i) and (j). The responsible entity must hold it on trust for scheme members: s 601FC(2). 238 The duties and responsibilities of the responsible entity in relation to scheme property are clearly inapplicable to contributions that are not capable of being characterised as material in nature. But having regard to the mandate that the broad words of the definition should not be read down, I do not see that it is possible to exclude a contractual promise to pay a sum of money from the concept of "money's worth". 239 Whilst there may be practical difficulties in the discharge of the responsibilities of the responsible entity, for example, in relation to valuation of the contractual promises, this is not a reason for reading down the meaning of the statutory definition because provision is made for exemptions of schemes which might unintentionally be caught by the definition: see s 601QA; Australian Softwood Forests at 130; Knightsbridge Managed Funds at [49]. 240 It follows that, subject to the reservation I have expressed as to whether the contractual undertakings in relation to the Resolution Sum were contributions, I agree with the approach taken by the primary judge, namely that the promises given by the Funder and the group members were contributions of money's worth.

ISSUE 2 - WHETHER THE CONTRIBUTIONS WERE "CONSIDERATION TO ACQUIRE RIGHTS … TO BENEFITS PRODUCED BY THE SCHEME" 241 The primary judge held that this feature of the characteristics of a managed investment scheme was not satisfied. 242 The essence of his Honour's reasoning, expressed at [20]-[22], was that the group members' contributions were not consideration for the acquisition of a benefit produced by the scheme, because the object of the scheme was for group members to recover damages on a pre-existing cause of action against Multiplex. His Honour said: The recovery of damages or compensation is not, by any meaning, a "benefit" a group member has acquired. If any group member is entitled to recover damages or compensation from Multiplex, it is because there is in existence a justiciable cause of action against Multiplex, a cause of action which exists separately from, and is antecedent to, the scheme. No group member has given value or paid for those causes of action as part of the scheme. 243 The primary judge also said at [22] that although group members obtained a benefit from the scheme in that their claims are prosecuted "risk free", this is not a relevant benefit. He said that for an investor to obtain a benefit under a managed investment scheme, he or she must acquire a right to "some hoped for profit or gain the scheme will produce". 244 His Honour went on to say that although each group member may obtain an "advantage" from his or her risk free contribution to the scheme and from achieving economies of scale enabling the class action to be commenced, these are not benefits produced by the scheme. 245 It seems to me that there are a number of difficulties with his Honour's analysis. 246 First, the principal benefit which the group members acquired under the scheme was the contractual entitlement to a pro rata share of the balance of the Resolution Sum, after payment of their share of commissions, legal fees and disbursements. 247 This "benefit" is not identical to the justiciable cause of action which existed before the formation of the scheme. Rather, it is the realisation of the pre-existing cause of action and consists of a contractual entitlement to a share of the Resolution Sum. 248 Considerations relating to the administration of justice may suggest that the benefits which flow from a successful judgment ought to be treated as arising from the pre-existing cause of action. But once it is accepted that the scheme provides for a contractual benefit that is different from the pre-existing right, it seems to me to follow that it is a benefit produced by the scheme. 249 This is because "benefit" is defined in broad terms in s 9 of the Act to mean any benefit, whether by payment of cash or otherwise. 250 Also, under the 1971 amendments to the Companies Act 1961,an "interest" included any right to participate in the realisation of a business undertaking or scheme. This suggests that the contractual entitlement to receive a share of the Resolution Sum (if any) is a benefit produced by the scheme, and that the promise by a group member to pay commission and legal fees was the consideration for the acquisition of that benefit. 251 This approach is reinforced by the statements in the authorities that the words or expressions used in the earlier form of the definition are relevant to the meaning of the expressions contained in the new definition: Knightsbridge Managed Funds at [44]; see also Report of the Law Reform Commission and Companies and Securities Advisory Committee, Collective Investments: Other People's Money at [3.5]. 252 Second, in light of the broad definition of "benefit", there is force in the submission that the benefits comprised in the immunity from legal fees and exposure to costs orders are benefits produced by the scheme. 253 It is true that exposure to costs orders is limited by s 43(1A) of the Federal Court Act so that any analysis of the "benefits" of the scheme would have to bear in mind the incidents of representative proceedings under Pt IVA of that Act. 254 However, it is sufficient for present purposes to say that the conclusion I have reached about the benefit of the share in the Resolution Sum leads me to a different view from the primary judge on this feature of the scheme.

ISSUE 3 - WHETHER THE CONTRIBUTIONS "ARE TO BE POOLED" 255 The primary judge accepted that it may be possible to "pool" choses in action, but he found at [28]-[29] that the group members' contractual undertakings were not pooled in the present case. 256 His Honour considered the proper characterisation of the arrangements to be a series of bilateral arrangements, rather than an aggregation of the choses in action which are pooled in order to produce benefits for the members of the scheme. 257 It is true that, in a sense, every managed investment scheme involves a number of bilateral agreements. Nonetheless, I agree with the primary judge that the contractual promises in this case were not "pooled" in accordance with the meaning of that term as construed in the relevant authorities. 258 The meaning of the word "pooled" and the expression "to be pooled" were stated by Pullin J in Knightsbridge Managed Funds at [46] as follows: … the word ['pooled'] has its ordinary meaning. In particular, it will apply to describe arrangements where that is "a common fund into or from which all gains and loses of the contributors are paid" or "a fund made up of numerous payments from participants and used for a purpose they contemplate". The phrase "to be pooled … to produce" implies that the intention must be to pool the contributions and, by use of the pool, produce benefits. Pooling will occur where moneys are paid into or collected in an account: see Australian Securities and Investments Commission v Enterprise Solutions 2000 Pty Ltd (2000) 35 ACSR 620 at [8], [9] and [13]. 259 This statement was cited with apparent approval by Barrett J in Takaran at [13]. 260 The same approach was adopted by the Western Australian Court of Appeal in Burton v Arcus at [60]-[66]. 261 There are three principal reasons why the contractual undertakings of the group members are not "pooled" in accordance with those principles. 262 First, there is no common fund into or from which the gains or losses of the contributors are to be paid. 263 Whilst the Retainer and the Funding Agreements authorise MBC to receive the Resolution Sum and to combine it into one account, I do not consider this to be "pooling" in the sense required by the second limb of part (a)(ii) of the definition in s 9. 264 The payment of the Resolution Sum into one bank account, and the subsequent payments of the Funder's commission and group members' shares out of that account are merely matters of administrative convenience. They are carried out after the Resolution Sum has been received. They are not the pooling of the contributions required from the group members. 265 Second, other than in the sense referred to in the previous paragraph, there is no fund made up of payments or "contributions" from the participants and used for the purposes they contemplate. 266 Third, the expression "to be pooled" has a purposive element. This is clear from the observations of Pullin J and from the language of this limb of the definition. The contributions are to be pooled to produce benefit for the members; they are to be used for the purposes they contemplate: see also Enterprise Solutions at [9]; Burton v Arcus at [61]; ASIC v Emu Brewery at [101] per Simmonds J. 267 Here, the group members' contributions comprising their contractual authorisation to MBC to receive and disburse the Resolution Sum are not pooled to produce financial benefits. 268 It may be accepted that the scheme contemplates the identification of a sufficient number of group members so that funding becomes commercially worthwhile. Indeed, this may be part of what Barrett J referred to as the "blueprint" of the scheme: Takaran at [15]. 269 But here, the purpose of the individual group members in giving their contractual undertakings was not to produce financial (or other) benefits from the pooling of those contributions. Rather, the purpose of them was to deal with the financial benefits consisting of the realisation of the members' claims for compensation, if and when produced. 270 The position here is unlike that which existed in ASIC v Emu Brewery where a form of promissory note was issued to lenders to raise funds. Those funds were then on-lent to another company in order to make possible particular finance arrangements for a specific project. 271 Simmonds J considered that the funds contributed to make possible the finance arrangements, which would produce the benefits contemplated by the contributors, were pooled: ASIC v Emu Brewery at [99]. 272 Here, the contractual undertakings of group members may, in a loose sense, make possible the financial benefits that are contemplated. But it would be wrong to equate these promises with the provision of funds by a contributor which are combined in a discernible pool that is then used to produce financial benefits for the benefit of contributors.

ISSUE 4 - "COMMON ENTERPRISE" 273 The primary judge was of the view that the phrase "any of the contributions" makes it clear that not all of the contributions need be used in the enterprise. He considered it to be enough if a single contribution, for example the money contributed by the Funder, is used: see at [30]. 274 With respect to his Honour, I do not agree that this is the proper construction of the second limb of part (a)(ii) of the definition of managed investment scheme in s 9. 275 The opening words of that limb have to be construed as a whole. As Mr Hutley SC submitted, the words "any of the contributions are to be pooled" imports the plural; there must be two or more contributions to be pooled. It is not possible to pool one contribution. 276 This is further emphasised by the use of the plural "are" in the expression "are to be pooled". .It must follow that the words "used in a common enterprise" also imports the plural. What is required is that any two or more of the contributions are used in a common enterprise. 277 The relevant part of the phrase is "are to be pooled, or used in a common enterprise". It is true that the word "are" does not specifically qualify the word "used". But upon the meaning contended for by Multiplex, the phrase would have to be read as "is or are used in a common enterprise". That would be contrary to a literal reading of the phrase and is not supported by the context. 278 Nevertheless, for reasons mentioned above, I think that the plural is necessarily imported by implications from the opening words and the context. 279 The primary judge went on to reject Multiplex's submission that the network of contractual rights and obligations under the Retainer and the Funding Agreements constituted a common enterprise engaged in by group members, MBC and the Funder: see at [31]. 280 His Honour said: In my opinion, where there is nothing more than an agreement to fund litigation on behalf of a group, whether that litigation be a representative proceeding, a class action or a test case, there is no joint participation in any enterprise. Nor, if it matters, is there a relationship between the group members and either the litigation funder or MB which could properly be described as an "enterprise". For there to be an enterprise there must be something in the nature of a business or commercial undertaking; perhaps even something difficult, risky or hazardous. Litigation is not of that order. 281 Multiplex criticised his Honour's suggestion that litigation is not "difficult, risky or hazardous". The force of that criticism speaks for itself but it does not affect the primary judge's conclusion. 282 A "common enterprise" was an element of the definition of "interest" in the 1971 amendments to the Companies Act 1961. For reasons already referred to, the meaning of the same term in the current definition is to be informed and assisted by the earlier authorities. 283 Those earlier authorities establish that an enterprise is a common enterprise if it consists of two or more closely connected operations with one part to be carried out by A and the other by B, each deriving a separate profit, and even in the absence of pooling or sharing of receipts of profit: Australian Softwood Forests at 133; Knightsbridge Managed Funds at [47]. 284 The Retainer and the Funding Agreement provide for the Funder to obtain a separate profit, but this is the only aspect of the test stated by Mason J in Australian Softwood Forests that is satisfied. 285 Here it cannot be said that the contributions of the group members and the Funder, consisting of their respective contractual undertakings, are used in an enterprise where one part is carried out by the group members and another by the Funder, or by MBC. 286 The correct characterisation of the arrangements appears from the explanation of the nature of the promise to pay the Resolution Sum stated by a Full Court in IMF (Australia) Ltd (ACN 067 298 088) v Meadow Springs Fairway Resort Ltd (In Liq) (ACN 084 358 592) (2009) 253 ALR 240 at [72], [73] and [77]. It is part of the price or cost of the Funder's agreement to fund the litigation. 287 Moreover, it may be doubted whether the arrangements are properly characterised as an enterprise notwithstanding the risky nature of the undertaking. This is because I accept that a "common enterprise" must be a business or commercial undertaking. This seems to me to be clear from the use of that term in the earlier definition which was concerned with a "business undertaking or scheme" and profits derived from the efforts of a promoter. 288 Whilst a business undertaking is a broad concept, which would plainly extend to the efforts of the Funder, I doubt whether the contractual undertakings of group members can be so characterised. However, in view of the conclusion that I have reached that the network of contractual arrangements is not a common enterprise, I do not need to deal further with this issue.

THE PRIMARY JUDGE'S REFERENCE TO POLICY AND PURPOSE 289 After construing the features of the "scheme", the primary judge stated that the "upshot" of his reasoning was that the arrangements between the Funder, MBC and the group members do not fall within the statutory definition: see [37]. 290 He went on to say that it should not come as a surprise because the arrangements do not fall within the evident purpose of the definition "stripped of all its technicalities", and the registration of the scheme, if it were to fall within the definition, would not afford group members the protections of the kind contemplated by Pt 5C of the Act. 291 I reject the submission that this passage from his Honour's judgment indicates that he sought to construe the definition by impermissibly resorting to policy considerations to avoid the apparent unintended consequences of a literal reading of the definition. 292 First, it is clear that his Honour did construe, in an orthodox manner, the various limbs of the definition. Second, although I have departed from some of the reasons adopted by the primary judge, I have reached the conclusion that he was correct in finding that the arrangements do not constitute a managed investment scheme. 293 Third, I consider there is some force in the proposition that the context in which the statutory definition appears reinforces the view that the present arrangements do not constitute a managed investment. 294 The context includes the comments in the Explanatory Memorandum to the Managed Investments Bill and the recommendation of the Parliamentary Joint Committee. These comments, which I have set out above at [155] to [157], indicate that the regulatory regime introduced by Pt 5C was intended to govern collective investments where financial contributions are gathered from investors and are pooled or used in a common enterprise. 295 This can be seen most clearly in the requirements of registration (s 601ED(5)), operation by a public company with a financial services licence (s 601FA), and identification of scheme property which is to be held separately (s 601FC)(1)(i)) and on trust for members (s 601FC(2)). 296 What may be seen in the present case is the use by a promoter of the scheme, namely the Funder, of its own funds to obtain a financial benefit for the members. This is not to eliminate the possibility that MBC may also be a promoter. It serves to emphasise that what occurs here is not consistent with the regulatory purpose. 297 The evident purpose of Pt 5C is to protect the investment of pooled contributions, or contributions that are used in a common enterprise, by a person who has day-to-day control. For the reasons given above, that is not what occurs in the present case.

STANDING 298 Since in my view the arrangements constituted by the Retainer and the Funding Agreements do not constitute a managed investment scheme, it is unnecessary for me to consider the issue of standing. 299 However, there appears to be force in the submission of the respondents that Multiplex lacks the requisite standing. 300 This is most clearly illustrated by the provisions of s 601EE which stipulate the classes of persons who have standing to apply to wind up a scheme which operates in contravention of the requirement of s 601ED(5) that it be registered. 301 That is the contravention of which Multiplex complains, but it has no standing under s 601EE to have the scheme wound up. Standing is limited under that section to ASIC, the person operating the scheme, or a member of the scheme. 302 This may suggest that Multiplex has no standing to seek an injunction, but I do not need to express a concluded view on that question. 303 Nor do I need to consider whether a declaration would have had any utility: see eg Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd (2007) 164 FCR 487 at [14]; Australian Securities and Investments Commission v FUELbanc Australia Ltd (2007) 162 FCR 174 at [61].

CONCLUSION 304 The appeal should be dismissed. The orders I would make are that: 1. The appeal be dismissed 2. The appellants to pay the costs of the respondents of the appeal. I certify that the preceding one hundred and ninety-one (191) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: Dated: 20 October 2009 Counsel for the First and Second Appellants: Mr TF Bathurst QC with Mr SM Nixon and Mr DFC Thomas

Solicitor for the First and Second Appellants: Mallesons Stephen Jaques

Counsel for the First and Second Respondents: Mr J Sheahan SC

Solicitor for the First and Second Respondents: Piper Alderman

Counsel for the Third, Fourth and Fifth Respondents: Mr NC Hutley SC with Mr MBJ Lee

Solicitor for the Third Respondent: Maurice Blackburn Pty Limited

Solicitor for the Fourth and Fifth Respondents: Harris Legal