The Farming Agreements thereby contemplated were agreements between a Grower and the Manager to, in effect, operate the farming allotment of that Grower and to sell the fruit from it. The definition of "Farming Agreement" contemplated that that sale of fruit would be on the terms of a document which was annexed to the deed. It was under clause 11 of that pro forma Farming Agreement that there was provision for each Grower to appoint the Manager as his agent and nominee to sell the fruit which was harvested pursuant to the Agreement. Even though the farming operations which were contemplated by the deed were individual farms, of individual Growers on individual allotments, the Manager had power, under this clause, to pool the fruit from various farms. The Manager had complete discretion as to the manner in which it sold that fruit.
The Rights Assigned to the Plaintiff
14 The plaintiff in the present proceedings is the assignee of three different categories of rights which have arisen in relation to the scheme. One category of such rights is Auditor's fees. It appears that the Auditors of the project were, for a period, not paid, and they have assigned (through one or two intermediaries) their right to be paid to the plaintiff.
15 The second type of claim which the plaintiff is the assignee of, is the claim of the Manager to be paid fees. The third type of claim is a claim of the Manager to be reimbursed various expenses connected with the scheme.
16 The assignment of these rights to the plaintiff took place in August 2001, and October 2001. A further deed of assignment dated 22 December 2004 sought to clarify the precise identity of certain of the claims which had been assigned. Each of the instruments of assignment referred to the claims which were assigned as being debts.
17 In January 2002 the plaintiff sent notice of the assignment to the liquidator of the Representative, and, in February and May of 2002, also sent letters of demand to the Liquidator, requiring the payment of the various amounts it had been assigned.
The Commercial List Proceedings
18 On 27 June 2005 the Originating Process for the proceedings which I am now hearing was filed. It was filed in circumstances where the plaintiff was fearful that a limitations period would expire on 30 June 2005. In consequence, on 29 June 2005 his Honour Justice White made an order which, in effect, granted leave to the plaintiff to commence certain proceedings in the Commercial List of this Court, but left open the question of whether leave should be granted for the plaintiff to continue those proceedings. His Honour established a regime whereby, when a determination was made about whether leave to continue the proceedings should be granted, the rights of the parties would be determined in the same way as though the question of whether leave to commence and continue was all decided at the one time. It is the interlocutory application for leave to continue the proceedings which is now before me.
19 The summons which has now been filed in the Commercial List is a document of some 36 pages, which sets out, in the familiar Commercial List format, the claims made, the nature of the dispute, the issues likely to arise, and the plaintiff's contentions. The plaintiff's contentions are pleaded over some 20 pages.
20 There is a diffuseness in the claims which are made by those contentions. It is not clear the exact nature of the claims which are being made, or the legal basis upon which they are asserted.
21 The relief which is sought, in relation to the Tumut River Orchard Project, is as follows:
"(a) A declaration that [a company not party to these proceedings] holds the property leases over the land described in and required by the Tumut River Orchard Project Investment Deed dated 31 December 1990 (as amended) on which the Tumut River Orchard Project is located on trust for the First Defendant, in its capacity as representative under the said deed, up to and including 12 May 2010 or until the said project is terminated, whichever is the earlier.
(b) A declaration that the [Second] Defendant holds the property sub-leases over the land described in and required by the Tumut River Orchard Project Investment Deed dated 31 December 1990 (as amended) on which the Tumut River Orchard Project is located on trust for the First Defendant, in its capacity as representative under the said deed, up to and including 11 May 2010 or until the said project is terminated, whichever is the earlier.
(c) A declaration that pursuant to the terms of the Tumut River Orchard Project Investment Deed dated 31 December 1990 (as amended) [a company not party to these proceedings] and the [Second] Defendant are required to pay all Gross Sale Proceeds of the Tumut River Orchard Project (as that term is defined in the said deed) without deduction or set off to the First Defendant who is required to deposit such proceeds without deduction or set off into the Investment Account established in accordance with Clause 16.1 of the said deed.
(d) A declaration that monies deposited in the said Investment Account are to be disbursed by the First Defendant in the following order of priority:
"(i) First Priority to any amounts paid by the current or any previous manager under the said deed which are reimbursable under Clause 16.7 of the said deed with all such payments under Clause 16.7 to be made on a pari passu basis irrespective of the order in which such reimbursable payments were made and irrespective of whether the entitlement for reimbursement is to the current or a previous manager under the said deed.
(ii) Second Priority to any costs, expenses, remuneration or other payments which are payable under Clause 16.3 of the said deed with all such payments under Clause 16.3 to be made on a pari passu basis irrespective of the order in which such costs, expenses, remuneration or other payments were made and irrespective of whether the entitlement for payment is to the current or a previous manager, representative or auditor under the said deed.
(iii) Thereafter in accordance with the said deed.
(e) A declaration that the plaintiff is entitled to be paid the following amounts from the said Investment Account without deduction or set off:
(i) $97,668.64 pursuant to Clause 16.7 of the said deed, and
(ii) $34,456.00 pursuant to Clause 16.3 of the said deed, and
(iii) $12,089.07 pursuant to Clause 16.3 of the said deed."
22 I mention that the defendants are differently numbered in the Commercial List summons to the way that they are numbered in the proceedings I am now hearing, and I have, in this quotation, substituted the numbering which the parties have in these proceedings.
23 It appears that there has never been any Investment Account opened for these Projects, and that, therefore, there is no fund to which any obligations under clause 16.3 or 16.7 of the deed can presently attach. As well, the liquidator's current estimate is that the liquidation will result in a nil payment to unsecured creditors, and will conclude this year.
Application for Leave to Continue Against First Defendant
24 A claim for leave to bring or continue legal proceedings against the company in liquidation is made under section 471B Corporations Act 2001 (Cth). Concerning such an application, the applicant for leave must show that the claim has a solid foundation and gives rise to a serious dispute, in a sense analogous to the "serious question to be tried" test which is used for interlocutory injunctions: Vagrand Pty Ltd (in liquidation) v Fielding (1993) 41 FCR 550. That case establishes that it is not necessary for the applicant for leave to show a prima facie case, in the sense of proof of every element of the claim made.
25 In argument, Mr Stitz, counsel for the plaintiff, submitted, and stressed, that the substantial relief which the plaintiff seeks is against parties other than the first defendant. The plaintiff wishes to contend that the various investment schemes have been mismanaged, and that the Manager, and various sub-managers who the manager appointed under its power of delegation, have failed to observe their obligations under the deeds. What the plaintiff seeks to achieve by the proceedings, I am told, is to compel the Managers and sub-managers to give an account of the way in which they have managed the schemes, and to pay to the Representative amounts of Gross Sale Proceeds which, the plaintiff says, should have been paid to the Representative, to be paid into the Investment Account. Once the money is in the Investment Account, the plaintiff says that it will be entitled, pursuant to clause 16 of the deed (and its analogues in the various other investment schemes) to be paid the various amounts which have been assigned to it. The plaintiff does not seek to have the first defendant part with a cent of its own money, just to fill the role that the deed requires it to fill of administering the Investment Account. In this way, Mr Stitz submits, there is no diminishing of the rights of ordinary creditors to prove in the liquidation and be paid such dividend as might be declared.
26 The company in liquidation opposes the grant of leave. It points to the fact that the declaration of entitlement to be paid, in paragraph (e) of the claim for relief, is one which does not say that it is contingent upon money actually being paid into the Investment Account. If the declaration in paragraph (e) were to be made, it would provide a basis on which the first defendant would be unable to oppose judgment being entered against it for the amount of the liability which had been declared to exist.
27 The way in which the case is put against the first defendant, in the statement of contentions, includes allegations that "In breach of clause 16.3 of the Tumut Deed, the First Defendant has not paid to [the auditors] the Tumut Audit Fees from the Tumut Investment Account". Similar allegations of breach are made, in relation to the other two categories of claim which have been assigned to it, by paragraph 32 and 35 in the contentions.
28 A reader of this summons would not, in my view, get the message that the only claim sought to be made was one which did not cut into the assets of the first defendant, or that the declaration which was sought was contingent upon any assets being paid into the Investment Account.
29 As well, however, there is a deeper problem. To the extent to which there are contractual obligations arising under the deed, those contractual obligations are ones which exist between the Representative, the Manager and (I shall assume for present purposes) the various Growers. It is only the parties to the deed who can enforce the contractual obligations contained in it. If there is a trust arising under the deed establishing the prescribed interest scheme at all, the beneficiaries of that trust are the Growers. The only people who are entitled to assert a breach of an equitable obligation are those people to whom the equitable obligation is owed. What the plaintiff is seeking to do, in these proceedings, is to assert rights like those which the Growers might have to enforce the benefit of a trust, and, having enforced those rights to recoup the trust fund, namely, the Investment Account, to then have that Investment Account applied in a way whereby the benefit will flow not only to the Growers, but also to the plaintiff, as the assignee of claims which, under clause 16 of the deed, are to be paid from the Investment Account.
30 In my view, that type of claim is one which is unknown to the law. It frequently happens that, when a contractual or an equitable obligation owed by A to B is not performed, other people suffer in consequence of B not having the assets he or she would have had if the obligation had been performed. The fact that those other people have suffered does not confer upon them entitlement to enforce B's contractual or equitable rights. Thus, even if the pleading were to be clarified to make clear whether it seeks to enforce contractual obligations or seeks to enforce a trust, I am not persuaded that the claim is one which would be viable as a matter of law.
31 To the extent to which the claim, read literally, seems to assert a liability on the first defendant to pay money, it would be the type of claim which would be provable in a liquidation. To the extent to which a claim, on its face, appears to be one which is provable in the liquidation, there is no reason why it should be taken out of the ordinary course of the liquidation, and given effect to by a proof of debt.
32 When a court is asked to grant leave to permit a claim to be brought against a company in liquidation, the claim which the Court considers is the claim which is actually sought to be brought, not the claim as it might possibly be amended: Hirlian & Ors v Rodgers [2005] NSWSC 295. The actual claim which is articulated in the summons is one which, insofar as one can distil either a contractual or a trust claim from it which would result in money flowing into the Investment Account, is not a viable one, at the suit of this plaintiff. This plaintiff is not the assignee of any right to enforce any such trust, or of any right to recover damages for breach of contract.
33 There is an additional twist to the claim which the plaintiff seeks to make in relation to one of the Projects, known as the Harcourt Vines Project. Concerning it, the plaintiff asserts that a purported resignation of the first defendant as Representative is ineffective, and that it ought be declared that it is still the Representative. Once that has happened, what is sought to happen is to have the same sort of relief against the first defendant as is claimed in relation to the other projects. When the end which is sought to be achieved in relation to the Harcourt Vines Project is not one concerning which it is appropriate to grant leave, the fact that there is an additional twist in the means by which that end is arrived at, does not assist the plaintiff.
Application for Leave Against Second Defendant
34 The second defendant in these proceedings is a company which was a sub-manager of one of the investment properties. It is subject to a deed of company arrangement. Leave to proceed is sought against it under section 444E Corporations Act 2001 (Cth).
35 The deed of company arrangement is one which binds various creditors of the company, namely people who at 31 January 2003 had a claim against it. The deed establishes a moratorium so far as such claims are concerned. Claim in the deed is defined as:
"A debt or debts payable by and all claims against the [company] (present or future, certain or contingent, ascertained or sounding in damages) being debts or circumstances giving rise to claims which occurred on or before [30 January 2003]."