Huntley Management Limited v Australian Olives Limited

Introduction 1 By a notice of motion filed on 14 May 2009, the defendant, Australian Olives Limited (AOL), seeks an order that the proceeding "be permanently stayed and/or struck out", or, in the alternative, an order that the proceeding be stayed until the determination of both proceeding QUD 22/2009 in the Queensland District Registry of this Court (the Queensland Federal Court proceeding) and proceeding 2979/2008 in the District Court of New South Wales (the NSW District Court proceeding).

Facts 2 The plaintiff, Huntley Management Limited (Huntley) and AOL have been or are parties to several proceedings concerning six registered managed investment schemes. Those schemes are Australian Olives Projects Nos 1, 2, 3, 4, 5 and 6. The disputes relate to the alleged removal of AOL as responsible entity (RE) and its replacement by Huntley as RE, and the consequences of the alleged change in relation to the handing over of books and records, the transfer of assets and the apportionment of management fees. 3 The dispute in relation to Project 4 has already been the subject of decision: see Australian Olives Ltd v Livadaras (2008) 172 FCR 34. In that case, the meeting of members took place on 29 April 2008. The chairman of the meeting, Mr Livadaras, excluded certain votes which would have been favourable to AOL, the incumbent RE. Greenwood J rejected AOL's challenge to its removal and the appointment of Huntley based on the chairman's decision to exclude those votes and other grounds. 4 The present proceeding was commenced on 24 April 2009 and relates to Projects 1, 2 and 3. At the time of its commencement, the two other proceedings referred to at [1] above were already on foot. 5 In the Queensland Federal Court proceeding, C&C Fisher Pty Ltd (Fisher) as first plaintiff and AOL as second plaintiff seek relief against Mr Livadaras, Huntley and others in respect of Project 3. They seek a declaration that resolutions purportedly passed at a meeting of the members of Project 3 on 12 December 2008 removing AOL as RE and replacing it with Huntley as RE were not validly passed and were defeated. One of the declarations sought is that Fisher is not an associate of AOL within the meaning of the Corporations Act 2001 (Cth) (the Act). Apparently it is to be argued in that case that the removal and replacement resolutions were invalid because the chairman, again Mr Livadaras, wrongly rejected votes attempted to be cast by Fisher favourable to AOL. I was told, however, that the issue is not identical to that which was before Greenwood J in relation to Project 4. For one thing, it was explained that by the time of the meeting of the members of Project 3 on 12 December 2008, Mr Livadaras was possessed of more information than he had had when he chaired the meeting of the members of Project 4 on 29 April 2008. 6 The Queensland Federal Court proceeding is due to be heard by Reeves J in Brisbane from 10-12 June 2009. 7 In the NSW District Court proceeding, Huntley is the plaintiff and AOL the defendant. Huntley's claim in that proceeding relates to Project 6, while a cross-claim brought by AOL relates to Projects 4 and 5. It is not disputed that Huntley has replaced AOL as RE in respect of Projects 4, 5 and 6 (likewise, it is not disputed that it has done so in relation to Projects 1 and 2). Indeed, AOL has apparently delivered the books and records relating to Projects 1, 2, 4, 5 and 6 to Huntley. The dispute in the NSW District Court proceeding relates to an accounting for management fees for the financial year ended 30 June 2008. Huntley asserts that it is entitled to have AOL account to it for a proportion of the management fees received by AOL in respect of the full financial year ended 30 June 2008. Huntley claims to be entitled to the proportion represented by the period 19 March 2008 to 30 June 2008, which it asserts is $267,004.10. In its defence, AOL asserts that the relevant date is not 19 March 2008 but 28 March 2008. Moreover, it says that it was paid only $808,408.80 for the full year even though the total amount payable by members for the full year was $931,511.76. AOL states that the proportion of the $931,511.76 for the period 28 March 2008 to 30 June 2008 is only $239,240.73, not $267,004.10. 8 By its cross-claim in the NSW District Court proceeding, AOL claims that Huntley is liable to account to it for certain fees in respect of Projects 4 and 5 and is liable to it for interference with contractual relations. It further claims as a set off against any amount found to be owing by it to Huntley in respect of Project 6, the amount of Huntley's liability to it on the cross-claim. 9 The NSW District Court Proceeding is fixed for hearing commencing on 20 August 2009. 10 Against the above background, I turn to the forms of relief sought by Huntley in the present proceeding. 11 First, in paras 1.1 and 1.2 of its application (the proceeding should have been commenced by an originating process and the parties designated plaintiff and defendant) Huntley seeks a declaration that it is entitled pursuant to s 601FR of the Act to all books kept in relation to Project 3 and an order that AOL deliver to Huntley all books in its possession or control in relation to Project 3. AOL accepts that if the Queensland Federal Court proceeding is decided against it and in favour of Huntley, it must deliver up those books and has undertaken to do so. 12 Second, in paras 1.3 and 1.4 Huntley seeks a declaration that certain leases in respect of Projects 1, 2 and 3 are held by AOL on behalf of Huntley and an order that AOL transfer them to Huntley. 13 Third, in paras 1.5 and 1.6, Huntley seeks a declaration that all moneys held by AOL representing "scheme property" is held on behalf of Huntley and an order that AOL pay Huntley "all moneys representing scheme property". 14 Fourth, in paras 1.7 and 1.8, Huntley seeks a declaration that fees paid by members of Projects 1, 2 and 3 to AOL relating to the respective periods since it ceased to be the RE are held by AOL for the benefit of Huntley and an order that AOL pay those moneys to Huntley. 15 AOL has proffered an undertaking that if it is unsuccessful in the Queensland Federal Court proceeding and on any appeal against an unfavourable result at first instance, it will deliver to Huntley the books in respect of Project 3, as it says it has done in respect of Projects 1, 2, 4, 5 and 6, and execute transfers of the leases. Similarly, it undertakes that upon determination of the NSW District Court proceeding, subject to any appeal it will pay the management fees in respect of Projects 1, 2 and 3 in accordance with the decision of the District Court.