Huntley Management Limited v Australian Olives Limited

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Counsel for the Appellant/Cross-Respondent: Mr SR Donaldson SC, Mr BL Jones

Solicitor for the Appellant/Cross-Respondent: Piper Alderman

Counsel for the Respondent/Cross-Appellant: Mr JC Giles, Mr JS McLeod

Counsel for the Respondent/Cross-Appellant: Harris & Harris

BETWEEN: HUNTLEY MANAGEMENT LIMITED (ACN 089 240 513)

AND: AUSTRALIAN OLIVES LIMITED (ACN 078 885 042)

1. The appeal be dismissed.
2. The appellant pay the respondent's costs of and incidental to the appeal.
3. The cross-appeal be dismissed.
4. The cross-appellant pay the cross-respondent's costs of and incidental to the cross-appeal up to and including 28 April 2010.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

BETWEEN: HUNTLEY MANAGEMENT LIMITED (ACN 089 240 513)

AND: AUSTRALIAN OLIVES LIMITED (ACN 078 885 042)

REASONS FOR JUDGMENT THE COURT: 1 This appeal and the cross-appeal concern some of the olives projects with which the appeal in NSD 1479 of 2009 was concerned. Judgment in that appeal was delivered on 29 June 2010 (Australian Olive Holdings Pty Ltd v Huntley Management Limited [2010] FCAFC 76). This appeal and appeal NSD 1479 of 2009 were heard on the same day by the same Full Court. 2 As we said in Australian Olive Holdings Pty Ltd [2010] FCAFC 76 at [1]-[2]: 1 Australian Olives Projects 1 to 6 (the projects) are carried out at Yallamundi, Qld. Yallamundi is approximately 85 km south-west of Toowoomba, Qld and about 65 km north-west of Warwick, Qld. 2 Each project is separate from the others although all six of the projects are conducted in approximately the same geographical area. Each project is a separate managed investment scheme which is registered and operated pursuant to Chapter 5C of the Corporations Act 2001 (Cth) (the Act). 3 As at early March 2008, the respondent (AOL) was the responsible entity of all six projects. By several decisions made by the investors in those projects in the period from late March 2008 to late November 2008, AOL was removed as the responsible entity of all six projects and replaced as such entity by the appellant (Huntley). 4 In the proceeding below, Huntley claimed that it was entitled to an order that AOL pay to it a proportion of the total amount of management fees paid to AOL by the investors in Projects 1, 2 and 6. Huntley's claim was for that part of the management fees which was referable to the period after the change of responsible entity of each of those projects had been effected, that is to say, referable to the period during which Huntley was the responsible entity of those projects. 5 At trial AOL contended that it was entitled to retain all of the management fees which had been paid to it. It also cross-claimed for an order that Huntley pay to it the total amount of management fees which Huntley had received from the investors in Projects 1 and 2 for the year ended 30 June 2009 and which Huntley had received from the investors in Projects 4, 5 and 6 for the year ended 30 June 2008. 6 The primary judge dismissed all of Huntley's claims and dismissed AOL's claims in respect of Projects 1, 2 and 6. The primary judge upheld AOL's cross-claim in part and entered judgment in favour of AOL against Huntley for the total amount of management fees paid to Huntley by the investors in Projects 4 and 5 for the relevant period as well as for interest on those sums (Huntley Management Ltd v Australian Olives Ltd (No 3) [2009] FCA 1549). The total amount of that judgment was $295,806.97. 7 In the present appeal, Huntley seeks to reverse the primary judge's decision to dismiss all of its claims. It also raises a separate issue concerning the date upon which the removal of AOL as the responsible entity of Project 5 and its replacement with Huntley became effective. The learned primary judge held that, in respect of Project 5, the removal of AOL and its replacement with Huntley became effective on 28 March 2008, the date when the Australian Securities and Investments Commission (ASIC) record was actually altered by ASIC in order to reflect the change of responsible entity. On appeal, Huntley contended that the replacement became effective on 18 March 2008, the date when the investors in Project 5 passed the resolution removing AOL as the responsible entity of Project 5 and replacing it with Huntley. There is no longer any dispute between the parties concerning Project 4. 8 AOL cross-appealed. In its cross-appeal, AOL sought to set aside the primary judge's decisions that Huntley did not hold the management fees which it had received from the investors in Projects 1 and 2 for the year ended 30 June 2009 in trust for, or otherwise for the benefit of, AOL. It raised a similar point in respect of Project 6 for the year ended 30 June 2008. 9 In Written Submissions filed on 28 April 2010, just before the hearing of the appeal and cross-appeal, AOL abandoned its cross-appeal. The cross-appeal will therefore be dismissed with costs. Costs should only be payable up to the date when AOL notified Huntley and the Court that it had abandoned its cross-appeal.

The Issues on Appeal 10 The following issues arise in the appeal: (1) Whether, in respect of Projects 1, 2 and 6, Huntley is entitled to recover from AOL a proportion of the management fees paid to AOL by the investors in those projects in advance of management services being provided to those investors by AOL, such proportion being referable to that part of the relevant financial years (ie financial year 2007-2008 for Project 6 and financial year 2008-2009 for Projects 1 and 2) after AOL had been removed as the responsible entity of those projects and replaced with Huntley. (2) Whether, in respect of Project 5, Huntley's entitlement to recover a proportion of the management fees paid to AOL arose on the date when the investors passed the resolution to remove AOL as responsible entity and to replace it with Huntley (18 March 2008) or on the date when ASIC actually altered its record so as to note this change in the responsible entity of Project 5 (28 March 2008). The difference between the two dates is 10 days.

Issue 1 - Huntley's Claim for a Proportion of the Amount of Management Fees Paid to AOL in respect of Projects 1, 2 and 6

Huntley's Claim at Trial 11 As pleaded, Huntley's claim was as follows: 5. It is a term of the Constitutions and Grove Agreements of Projects 1, 2 and 6 that for each financial year (1 July to 30 June) the Responsible Entity is entitled to be paid by each member fees for the performance of its duties under the Constitutions (Management Fees). Particulars

Project 1 - clause 4.1 of the Constitution which is undated but registered with ASIC on 22 June 2000 with clause 6.3 of the Grove Agreement referred to in that clause being Schedule 4 of the Constitution.

Project 2 - clause 7.1 of the Constitution dated 13 October 1998 read with Item 3 of the Item Register in Schedule 3 of the Constitution and clause 5.3 of the Grove Agreement in Schedule 6 of the Constitution.

Project 6 - clause 7.1 of the Constitution dated 29 January 2004 read with Item 3 of the Item Register in Schedule 3 of the Constitution and clause 6.3 of the Grove Agreement in Schedule 6 of the Constitution.

6. On becoming Responsible Entity of Projects 1, 2 and 6 Huntley acquired the rights accruing to the Responsible Entity under the Constitutions and Grove Agreements of Projects 1, 2 and 6. Particulars

Sections 601 FS and 601 FT of the Corporations Act 2001 (Cth)

7. The Responsible Entity's rights to Management Fees accrue from day to day and are apportionable. Particulars

Project 1 - clause 31.3 of the Constitution and clause 6.3 of the Grove Agreement.

Project 2 - clause 7.3 of the Constitution and clause 5.3 of the Grove Agreement.

Project 6 - clause 7.3 of the Constitution and clause 6.3 of the Grove Agreement.

Section 601FS(2)(a) of the Corporations Act 2001 (Cth).

8. Members of Projects 1 and 2 have paid AOL Management Fees for the financial year ended 30 June 2009. Particulars

9. AOL ceased: 9.1 to perform any duties as Responsible Entity of Project 1 on 6 November 2008; and 9.2 to perform any duties as Responsible Entity of Project 2 on 17 November 2008. 10. Huntley commenced:

10.1 to perform duties as Responsible Entity of Project 1 on 6 November 2008; and 10.2 to perform duties as Responsible Entity of Project 2 on 17 November 2008. 11 In the circumstances pleaded at paragraphs 2 and 4-10 above, Huntley is entitled to the portion of Management Fees paid by members that relate to the period since it became the Responsible Entity of Projects I and 2 (Projects 1 and 2 Pro Rata Fees). 12. The amount of Projects 1 and 2 Pro Rata Fees held by AOL is held for the benefit of Huntley. Particulars Particulars will be provided following discovery 13. AOL has failed or refused to pay Huntley the Projects 1 and 2 Pro Rata Fees. Claim for Management Fees in Project 6 14. Members of Project 6 have paid AOL fees for the financial year ended 30 June 2008 totalling $815,485.54. Particulars Document entitled "Australian Olives Project 6 Hand over to HM - Balance of Fees Owed Reconciliation" dated 1 July 2007 to 30 June 2008, under column entitled "Amount Received by AOL."

15. AOL ceased to perform any duties as Responsible Entity of Project 6 on 19 March 2008. 16. Huntley commenced performing duties as Responsible Entity of Project 6 on 19 March 2008. 17. In the circumstances pleaded at paragraphs 2, 4-7 and 14-16 above, Huntley is entitled to the portion of Management Fees paid by Members that relate to the period since it became the Responsible Entity of Project 6 (Project 6 Pro Rata Fees). 18. The amount of the Project 6 Pro Rata Fees is the sum of $232,357.52. Particulars Total Fees received by AOL Period No of Days AOL Share HML Share $815,484.54 1/7/07 - 18/3/08 261 $583,128.02 N/A 19/3/08 - 30/6/08 104 N/A $232,357.52

19. The sum of $232,357.52, being the Project 6 Pro Rata Fees, is held by AOL for the benefit of Huntley. 20. AOL has failed or refused to pay Huntley the Project 6 Pro Rata Fees. 21. Huntley claims the relief specified in the Originating Process. 12 In pars 11 and 17 of its pleading, Huntley asserted that it was "entitled" to that portion of management fees paid by the investors in Projects 1, 2 and 6 that related to the period after it became the responsible entity of each of those Projects. That entitlement was said to be founded upon two fundamental propositions, namely that: (a) Upon becoming the responsible entity of Projects 1, 2 and 6, Huntley acquired AOL's rights under the Constitutions and Grove Agreements for those Projects by reason of the operation of s 601FS and s 601FT of the Corporations Act 2001 (Cth) (the Act); and (b) The responsible entity's rights to management fees accrued from day to day, those management fees being apportionable accordingly. This proposition was based upon a construction of the relevant Constitutions and Grove Agreements and the operation of s 601FS(2)(a) of the Act and, to the extent that it may be necessary, s 232 of the Property Law Act 1974 (Qld) (the Property Law Act). 13 In answer to these contentions, AOL pleaded: (a) Under each of the relevant constituent documents in respect of each project, the management fee was an annual fee payable annually in advance and was not apportionable; and (b) Upon the removal of AOL and the appointment of Huntley as the responsible entity of each of Projects 1, 2 and 6, insofar as the payment of management fees was concerned, there was no right referable to the balance of the relevant years in respect of which s 601FS or s 601FT of the Act could or did operate. 14 There is no suggestion that Huntley's claim was litigated at trial on a basis which differed from or was additional to its pleaded case.

The Primary Judge's Reasons 15 The primary judge held that: (a) Neither s 601FS nor s 601FT of the Act permits a rewriting of contracts to which the former responsible entity was a party (Reasons at [37]); (b) Section 601FS(1) and s 601FT(1) place a new responsible entity in the shoes of the former responsible entity in relation to rights, obligations and liabilities that would have been those of the former responsible entity in respect of the post-changeover period, but for the changeover (Reasons at [37]); (c) Section 601FS(2)(a) does not affect the former responsible entity's right to retain management fees which have been paid to it in satisfaction of a present debt (Reasons at [38]); (d) Upon the true construction of the relevant provisions of the Grove Agreements used in respect of Projects 1 and 2, a debt in respect of management fees comes into existence in favour of AOL at the commencement of each year (Reasons at [39]); (e) Neither cl 29.3 nor cl 31.3 of the Project 1 Trust Deed or similar provisions in the Constitution for Project 2 affect the position described in (d) above (Reasons at [42]-[43]); (f) If Huntley had an entitlement to be paid management fees for the post-changeover part of the years in question, that would be a right against the investors in the projects, not a right against AOL. The members might wish to cross-claim against AOL. The primary judge expressly refrained from commenting on the prospects of such claims, if made (Reasons at [44]); and (g) The observations set out in subpars (a) to (f) above apply in equal measure to Project 6 (Reasons at [53]).

The Facts 16 At [7]-[13] of his Reasons, the primary judge set out the relevant facts as follows: FACTS

7. On 18 March 2008 the members of Projects 5 and 6 resolved to remove AOL as RE for those Projects and to appoint Huntley as RE in its place. Apparently on the same day, Huntley lodged an ASIC Form 5107 (Notification of Change of Responsible Entity) in respect of each of Projects 5 and 6. On 28 March 2008, ASIC processed the Forms 5107 in the sense noted above of recording Huntley as RE in respect of Projects 5 and 6 in place of AOL. 8 On 29 April 2008 the members of Project 4 resolved to remove AOL as RE for Project 4 and to appoint Huntley as RE in its place. On the following day, 30 April 2008, Huntley lodged ASIC Form 5107 for Project 4 with ASIC. On that same day, ASIC processed the Form 5107 in the sense noted above of recording Huntley as RE for Project 4 in place of AOL . 9. On 6 November 2008 the members of Project 1 resolved to remove AOL as RE for that Project and to appoint Huntley as RE in its place. On the same day Huntley lodged ASIC Form 5107 with ASIC. On 12 November 2008 ASIC processed the Form 5107 by recording Huntley as RE for Project 1 in place of AOL. 10 On 17 November 2008 the members of Project 2 resolved to remove AOL as RE for that Project and to appoint Huntley as RE in its place. On the same day Huntley lodged ASIC Form 5107 with ASIC. On 19 November 2008 ASIC processed the Form 5107 by recording Huntley as RE for Project 2 in place of AOL. Receipt of Management Fees

11 AOL received management fees for Projects 1, 2 and 6 in respect of annual periods that included a period during which Huntley was the RE for those Projects. 12. Huntley received management fees for Projects 4 and 5 in respect of annual periods that included a period during which AOL was the RE for those Projects. Two Agreed Facts

(1) Costs (excluding harvesting costs - see [21] below) of the RE in performing its duties under the Grove Agreements referred to below are incurred unevenly throughout the year, and vary in relation to time of the year and conditions; and (2) Management fees for Project 4 were in fact charged in arrears by AOL. 17 Contrary to the primary judge's findings set out at [7] of his Reasons, the ASIC record suggests that the relevant notification was lodged with ASIC on 19 March 2008, not 18 March 2008. Nothing turns on this. 18 At [14]-[20] of his Reasons, the primary judge set out particular findings concerning the establishment of Projects 1, 2 and 6 and the relevant terms of the Grove Agreements. His Honour said: THE DOCUMENTS

14 Alone of the Projects, Project 1 was established prior to the amendment of the Corporations Law as from 1 July 1998 by the Managed Investments Act 1998 (Cth) (MI Act). Project 1 was established by a Project Deed dated 4 August 1997. After 1 July 1998 Project 1 was required to be registered with ASIC as an MIS. Under the MI Act, AOL was authorised to amend the Project Deed in certain respects and did so by a Supplemental Deed dated 5 June 2000. By reason of the Supplemental Deed references to "Trustee" and "Manager" in the Project Deed are to be read as references to the RE. The Constitution for Project 1 is therefore to be found in the Project Deed as amended by the Supplemental Deed. This consolidated document has a heading of "Trust Deed". I will refer to the "Trust Deed" and the "Constitution" for Project 1 indiscriminately. 15 Projects 2 to 6 were established directly by "Constitutions" to which AOL and all persons holding interests in the Project are parties. Grove Agreements

16 The RE's entitlement to management fees arises under a Grove Agreement between the RE and each member of the particular Project (Member). 17 Save for the due date for fees in Projects 4 and 5, the material terms of the Grove Agreements for all Projects are mutuatis mutandis identical. (In Project 5 fees are payable six-monthly in arrears and in Project 4 they are payable on the rendering of an invoice (clause 6.3(c)) - as noted earlier, the parties agree that the fees have in fact been invoiced in arrears.) 18 Clause 4.3 of the Project 1 Grove Agreement lists the ongoing management and harvesting duties that the RE must perform. 19 Clause 6.3 of the Project 1 Grove Agreement entitles the RE (Manager) to management fees. It provides: (a) In consideration of the Manager carrying out its duties under clause 4.3 for the third Year and onwards of this Agreement (except for clause 4.3((l)) [sic] in the relevant Year) the Manager is entitled to be paid a fee calculated in accordance with the following formula:- A = B x C D

Where: - A = the new fee to be calculated B = the annual fee payable under this Agreement and current at the time of the adjustment C = the quarterly CPI figure most recently published before the date the adjustment is made D = the quarterly CPI for the corresponding quarter in the Year before the CPI figure for "C" is taken.

(b) Any adjustment made to the fee under clause 6.3((a)) [sic] must not lead to the fee in any Year which is the subject of the adjustment being less than the fee for the previous Year. (c) The Manager's fees under clause 6.3((a)) are a debt due and owing by the Member to the Manager at the commencement of each Year. [My emphasis]

20 "Year" is defined to mean a period of 12 calendar months: see cl 1.1 of the Project 1 Grove Agreement and cl 1.1 of, and Schedule 1 to, the Trust Deed. The parties approached the matter on the basis that this reference was to 12 calendar months commencing on the date of the Grove Agreement or the anniversary of that date. 19 At [21]-[23] of his Reasons, his Honour observed that there were no material differences between the Grove Agreements deployed for Project 1 and those which were deployed for Project 2. As far as Project 6 was concerned, his Honour held that the only difference between the terms of the Grove Agreements used for that project and those used for Projects 1 and 2 was as to the time at which the debt came into existence. 20 At [53]-[55] of his Reasons, his Honour said: … The only difference relates to the time at which the debt comes into existence. In the case of Project 6 the fees are payable for years commencing on 1 July and ending on the following 30 June. Clause 6.3(c) of the Project 6 Grove Agreement provides that the RE will issue the Members with an invoice by 1 October in the year for the annual fee and that payment must be made by 31 October in that year.

54. Clause 6.3(d) provides that the fees are a "debt due and owing by the Member to the Responsible Entity". 55. In the case of Project 6, the debt arises either upon the issue of the invoice to the Member or, the invoice having first been issued, at the end of the day on 31 October. It was not suggested that anything turns on the difference between those two times. 21 In Australian Olive Holdings [2010] FCAFC 76 at [74]-[84], we said: The Interpretation and Relevance of s 601FS and s 601FT of the Act

74 Chapter 5C - Managed Investment Schemes of the Act now regulates managed investment schemes as defined in the Act. Such schemes must be registered with the Australian Securities and Investments Commission (ASIC) and must have a responsible entity. The responsible entity must be a public company and must hold an Australian financial services licence (s 601FA of the Act). 75 Part 5C.2 - Division 2 - Changing the Responsible Entity contains a number of provisions which govern and regulate what is to happen when the responsible entity is changed. 76 The members of the scheme may remove a responsible entity (s 601FM) and, subject to compliance with the requirements of s 601FL, a responsible entity may retire. Pursuant to s 601FN and s 601FP, a temporary responsible entity may be appointed. 77 The terms of s 601FJ to s 601FT make clear that, under the Act, a managed investment scheme must have an appropriately qualified responsible entity at all times. Should the members of a scheme fail to appoint a new responsible entity upon the retirement or removal of an incumbent responsible entity at the same meeting where they resolve to approve the retirement of the incumbent responsible entity or to remove that responsible entity and should no temporary responsible entity otherwise be appointed, the scheme must be wound up (s 601NE). 78 The evident object of these provisions is that a managed investment scheme must have an appropriately qualified responsible entity at all times and that the selection of that entity should be the right (and responsibility) of the members of the scheme. 79 Section 601FS and s 601FT are in the following terms: 601FS Rights, obligations and liabilities of former responsible entity

(1) If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity. (2) Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity: (a) any right of the former responsible entity to be paid fees for the performance of its functions before it ceased to be the responsible entity; and (b) any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and (c) any right, obligation or liability that the former responsible entity had as a member of the scheme; and (d) any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme's responsible entity. 601FTEffect of change of responsible entity on documents etc. to which former responsible entity is party

(1) If the responsible entity of a registered scheme changes, a document: (a) to which the former responsible entity is a party, in which a reference is made to the former responsible entity, or under which the former responsible entity has acquired or incurred a right, obligation or liability, or might have acquired or incurred a right, obligation or liability if it had remained the responsible entity; and (b) that is capable of having effect after the change; has effect as if the new responsible entity (and not the former responsible entity) were a party to it, were referred to in it or had or might have acquired or incurred the right, obligation or liability under it. (2) Subsection (1) does not apply to a right, obligation or liability that remains a right, obligation or liability of the former responsible entity because of subsection 601FS(2). 80 In Re Investa Properties Ltd (2001) 187 ALR 462 at 465 ([11]), Barrett J correctly described the purpose of s 601FS as "to cause an incoming responsible entity to step into the shoes of its predecessor". This statement of principle was followed by RD Nicholson J in Syncap Management (Rural) Australia Ltd v Lyford (2004) 51 ACSR 223. 81 Section 601FS(2) sets out four classes of rights and liabilities of the former responsible entity which are not to be taken over by the incoming new responsible entity. 82 Section 601FT of the Act gives effect to the principles embodied in s 601FS insofar as the interpretation of particular documents is concerned. 83 At [85] of his Reasons, the primary Judge said: 85 The question that then arises is whether ss 601FS and 601FT alter this result. In my opinion they do not. The construction supported by AOHL would involve re-writing the CWSA by omitting its various provisions as to what is to happen upon the removal or retirement of AOL as RE. I do not think that s 601FS(1) of the Act requires or permits this to be done. The "rights, obligations and liabilities of the former responsible entity" to which s 601FS(1) refers are impliedly limited to those that are capable of having an ongoing operation after the change in RE. Paragraph (b) of s 601FT(1) reflects this idea expressly in the words "that is capable of having effect after the change". If the CWSA did not provide for the effect on it of a removal or retirement of AOL, it would make sense to conceive of the new RE as stepping into the shoes of the outgoing one. That would be a situation in which the rights, obligations and liabilities of the former RE had an ongoing operation. 84 We agree with the conclusions which his Honour expressed in that paragraph and with the reasons which he gave for those conclusions. 22 We adhere to these observations. We will apply them in the present appeal.

Consideration 23 His Honour held that the management fees payable in respect of Projects 1, 2 and 6 were not apportionable. His Honour arrived at that conclusion by construing the relevant Grove Agreements. There was no error in his Honour's construction of those Agreements. His Honour also held that s 601FS and s 601FT of the Act did not affect AOL's right to retain management fees which had been paid to it in satisfaction of a present debt. There were no "shoes" into which Huntley could step. These conclusions were also correct. 24 Pursuant to cl 6.3(c) of the Grove Agreements used for Project 1 and pursuant to cl 5.3(c) of the Grove Agreements used for Project 2, a debt in favour of AOL for the whole of the management fee payable by the investors in those projects in respect of each year comes into existence at the beginning of each year. This was the conclusion reached by his Honour at [39] of his Reasons. We agree with his Honour's conclusion. Once the annual amount was paid, the investors' debts to AOL as the responsible entity of Projects 1 and 2 were discharged. There was nothing to which Huntley could accede upon its appointment as the new responsible entity for those projects. 25 AOL was removed as the responsible entity of Projects 1 and 2 in November 2008. Management fees for the 2008-2009 financial year were paid by the investors in those projects to AOL prior to the date when AOL was removed as the responsible entity of Projects 1 and 2. Those management fees were paid in advance of the services being provided by AOL for which the fees were paid. 26 For Project 6, the same conclusions follow. In respect of that project, the debt becomes due and payable either on 1 October in each year or on 31 October in each year. For present purposes, the precise date does not matter since, for the financial year ended 30 June 2008, both dates antedate the date of AOL's removal as the responsible entity of Project 6 (18 March 2008 or perhaps 28 March 2008). 27 Section 232 of the Property Law Act does not alter the position as explained at [23]-[26] above because the management fees for Projects 1, 2 and 6 which were the subject of Huntley's claim were all payments made in advance. 28 Section 232(1) and s 232(2) of the Property Law Act provides as follows: (1) All rents, annuities, dividends, and other periodical payments in the nature of income whether reserved or made payable under an instrument in writing or otherwise shall, like interest on money lent be considered as accruing from day to day, and shall be apportionable in respect of time accordingly. (2) The apportioned part of any such rent, annuity, or other payment shall be payable or recoverable in the case of a continuing rent, annuity, or other such payment, when the entire portion of which such apportioned part, forms part becomes due and payable, and not before, and in the case of a rent annuity or other such payment determined by re-entry, death, or otherwise, when the next entire portion of the same would have been payable if the same had not so determined, and not before. 29 Various courts in a number of authorities have construed s 232, or provisions in substantially the same terms as s 232, as requiring an apportionment only if the payments which are the subject of the claim are payments which have been made in arrears. Those authorities stand for the proposition that s 232 does not apply to payments made in advance. Like the primary judge, we see no reason to depart from established authority in support of those propositions (as to which, see Ellis v Rowbotham [1900] 1 QB 740 at 743-744; Australian Guarantee Corporation Ltd v Balding (1930) 43 CLR 140 at 152-154 per Isaacs J; Amad v Grant; Grosglik v Grant (1947) 74 CLR 327 at 338 per Latham CJ; at 346 per Dixon J; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313, (2000) 10 BPR 18,235 at [147] per Giles JA; and Ocelota Ltd v Water Administration Ministerial Corporation [2000] NSWSC 370 at [77]-[81]). 30 At [51] of his Reasons, the primary judge also held that, even if s 232 of the Property Law Act did apply, it would be a matter relevant to the rights and obligations as between Huntley and the investors in Projects 1, 2 and 6, not as between Huntley and AOL. We also agree with his Honour's observations to this effect. 31 In its Written Submissions in Chief filed in support of its appeal, Huntley suggested that the cause of action which underpinned its claims was a cause of action available to the members of Projects 1, 2 and 6 which was being brought by Huntley, as the responsible entity, on behalf of those members. Reliance was placed upon cl 27.8 of the Trust Deed for Project 1 and upon cl 20.4 of the Constitution for Projects 2 and 6. The terms of those clauses are identical. They provide that the trustee or responsible entity might on its own behalf or on behalf of any applicant or member commence and prosecute legal proceedings of any kind in any court in respect of the project or any member's interest. 32 In its Written Submissions, AOL submitted that it would have conducted its case at trial differently had it known that Huntley was relying upon the clauses to which we have referred at [31] above. In its Written Submissions in Reply, Huntley said: AOL has submitted that, had Huntley sought to pursue a claim for recovery of management fees from Huntley through the exercise of the rights of members (as outlined in paragraphs 53 to 56 of Huntley's submissions) it would have conducted the proceedings below differently. In light of that submission, Huntley does not seek to pursue in these proceedings any such claim and withdraws its submissions to the contrary. 33 This exchange between the parties in their Written Submissions highlighted a fatal flaw in Huntley's case. Even if Huntley were able to persuade the Court that the management fees were apportionable, Huntley was unable to identify a cause of action known to the law which would enable it to succeed in its claim against AOL. 34 In its Written Submissions in Reply, Huntley submitted that it had a cause of action against AOL for money had and received in respect of that part of the management fees for Projects 1, 2 and 6 which was referable to the period of time when Huntley was the responsible entity of those projects. Huntley submitted that this cause of action was "independent of any action that the members might have". 35 There are two fundamental problems with this submission: (a) First, in our view, Huntley did not plead a cause of action for money had and received against AOL nor did it litigate such a case at trial. In its pleading, Huntley simply relied upon the two propositions which we have noted at [12] above. The words "money had and received" do not appear in Huntley's pleading and the cause of action for money had and received is not fairly raised in that pleading; and (b) Second, Huntley was unable to point to any authority which supports the proposition that an action for money had and received could be brought by someone other than the person or entity which had made the payment in respect of which suit is brought. 36 In our view, it is now too late for Huntley to rely upon a cause of action for money had and received. Counsel for AOL submitted that, if AOL had known that a cause of action for money had and received was being litigated at trial, then: (a) Its legal representatives would have investigated and probably sought to prove what work was done in respect of Projects 1, 2 and 6 during 2008 in order to demonstrate that there had been no total failure of consideration; and (b) The legal representatives of AOL would have investigated and possibly raised a change of position defence. Further, Counsel for AOL submitted that it would be wrong for the Court to assume that AOL was unjustly enriched. He submitted that AOL had not sought to establish before the primary judge what its expenditure on works relevant to Projects 1, 2 and 6 had been and what moneys remained in its hands when it was removed as the responsible entity of those projects. 37 The matters to which reference is made at [36] above are all matters which would have legitimately arisen for consideration by AOL and its lawyers had Huntley pleaded and litigated a case based upon the cause of action for money had and received. The cause of action for money had and received cannot now be relied upon as the foundation for Huntley's claims. 38 In any event, we are of the view that Huntley's reliance upon that cause of action is misconceived. 39 In an endeavour to overcome the problem described at [35(b)] above, Huntley referred the Court to general statements made in a number of relevant authorities and sought to build its case from those general statements. For example, Huntley cited the following statement made by Viscount Haldane LC in Royal Bank of Canada v The King [1913] AC 283 at 296: It is a well-established principle of the English common law that when money has been received by one person which in justice and equity belongs to another, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as for money had and received to his use. The principle extends to cases where the money has been paid for a consideration that has failed. 40 In similar vein, Huntley cited passages from Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516. In particular, certain general statements made by Gleeson CJ, Gaudron and Hayne JJ in their joint judgment at [15] and [16] (at 525-526) and by Gummow J at [104]-[106] (at 557-558) were relied upon. But these observations made by the High Court do not support the proposition for which Huntley was contending. 41 Huntley ultimately submitted that: While claims for money had and received are generally available to the payer of the funds, there is no reason in principle why a third party who, pursuant to an obligation owed to the payer, has performed the duties to which the payment relates, should not be able to recover the money directly from the recipient. Such a state of affairs is supported by equity's preference for substance over form: Roxborough v Rothmans of Pall Mall at 552 per Gummow J.

The critical issue in the present case is whether Huntley has a superior claim to that of AOL to the fees that relate to the period during which Huntley was responsible entity: Roxborough v Rothmans of Pall Mall at 529 (per Gleeson CJ, Gaudron & Hayne JJ). 42 We are of the opinion that Huntley's submissions are incorrect and should be rejected. If Huntley's submissions were correct, a party who was not the payer of funds would have an action for money had and received which would stand in competition with the conventional form of the action at the suit of the paying party. This cannot be correct. For example, what would be the position if the investors in Projects 1, 2 and 6 had consciously taken the view that AOL was entitled to keep the whole of the amount of management fees paid to it by those investors and had unanimously passed a resolution to that effect? In those circumstances, could Huntley seriously suggest that it could nonetheless bring the present claims? 43 Further, there is no authority which supports the submissions made by Huntley. There is, however, authority which conflicts with those submissions. 44 In Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380, the English Court of Appeal considered a claim by a bank for the restoration of a sum of money paid to a local council pursuant to an agreement which was ultra vires the council and void. At 392-393, Evans LJ said: Conclusion

I can accept Mr Underhill's submission that the phrase "at the expense of" forms part of the definition of a restitutionary claim and that the central issue is whether that has to be interpreted by reference to the payer/payee relationship alone, as distinct from other parts of what he calls the overall transaction. But I have no doubt that the former interpretation is correct. This is because the payee's obligation, which is correlative to the payer's right to restitution, is to refund or repay the amount which he has received and which it is unjust that he should keep. "At his expense", in my judgment, serves to identify the person by or on whose behalf the payment was made and to whom repayment is due (compare Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105,125E per Goulding J and see Birks, Introduction to the Law of Restitution, p 132). That person, having made the payment, is necessarily out of pocket to that extent, and the defendant's obligation is to replenish his pocket when the circumstances are such that the money should be returned.

If the payment was made for valuable consideration, then the payer did not suffer "loss" even though the payment was made by him. But if it appears, as it did in the present case, that in law there was no consideration for it, then in that sense the payer has suffered loss. His pocket is emptier than it would have been if the money, or its value, was still there. But I would not give "loss" any wider meaning than that. In particular, it seems to me that it would be inconsistent with the principle of repayment that "loss" should be given some wider meaning equivalent to "overall losses on the transaction", even if "the transaction" could be sufficiently identified, or that the right to recover restitution should be limited to the amount of "loss" in that sense, though never increased above the amount of the payment. 45 Saville LJ agreed with Evans LJ and with Morritt LJ. At 395, his Lordship said: The expression "at the payer's expense" is a convenient way of describing the need for the payer to show that his money was used to pay the payee. Thus there may well be cases where this cannot be shown, where in truth, for example, the payer was only the conduit through which the funds of others passed to the payee. 46 Morritt LJ focused on the phrase "at the expense of the plaintiff" in order to explain both the origins and basis of the cause of action for money had and received. His Lordship quoted from the judgment of Mason CJ in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. At73-74, Mason CJ said: Historically, as I have already noted, the basis of restitutionary relief in English law was not compensation for loss or damage but restoration of what had been taken or received. The requirement that the defendant be unjustly enriched "at the expense of" the plaintiff can mean that the enrichment is "by doing wrong to" or "by subtraction from" the plaintiff [Birks, An Introduction to the Law of Restitution (1985), pp. 23-24]. Hence, a plaintiff can succeed by showing that he or she was the victim of a wrong which enriched the defendant - this is not such a case - or that the defendant was enriched by receiving the plaintiff's money or property.

When the plaintiff succeeds in a restitutionary claim, the court awards the plaintiff the monetary equivalent of what the defendant has taken or received, except in those cases in which the plaintiff is entitled to specific proprietary relief. Because the object of restitutionary relief is to divest the defendant of what the defendant is not entitled to retain, the court does not assess the amount of its award by reference to the actual loss which the plaintiff has sustained. That is what Windeyer J. was saying in Mason v New South Wales [(1959) 102 CLR at p. 146] when he rejected the notion that impoverishment of the plaintiff is a correlative of the defendant's unjust enrichment. 47 In his judgment, his Lordship discussed authorities from other jurisdictions. The fundamental premise upon which that discussion proceeded was that it is the party deprived of the payment who is the proper plaintiff in an action for money had and received. 48 In the course of summarising the effect of the various authorities which his Lordship discussed, his Lordship went on to say (at 400): Second, the words "at the expense of the plaintiff" on which the authority placed such reliance do not appear in a statute and should not be construed or applied as if they did. In my view they do no more than point to the requirement that the immediate source of the unjust enrichment must be the plaintiff. Were it otherwise the decision of this court in Banque Belge pour l'Etranger v Hambrouck [1921] 1 KB 321 would have been different. Some commentaries equate the phrase "at the expense of" with a subtraction from the wealth of the plaintiff. No doubt this is a useful description. But the type of restitutionary claim with which this appeal is concerned relates to a subtraction from the plaintiff's gross wealth. The suggested defence of passing on would involve the different concept of a reduction in the net worth of the plaintiff. 49 At the very end of his judgment, his Lordship said (at 401-402): I add this footnote to record the product of the further researches of counsel which they brought to our attention when our judgments were handed down. The first use of the phrase "at the expense of another'" in the context of unjust enrichment published in the United States of America appears to be an article by J B Ames, then Bussey Professor of Law at the University of Harvard, entitled "The History of Assumpsit" (1888) 2 Harv. L.R. 1. He described the third class of quasi-contract as founded "upon the fundamental principle of justice that no one ought unjustly to enrich himself at the expense of another": p. 64. Later, he stated that "the equitable principle which lies at the foundation of the great bulk of quasi-contracts, namely, that one person shall not unjustly enrich himself at the expense of another, has established itself very gradually in the common law": p. 66. The principle is stated in similar terms in Keener on Quasi-Contracts (1893), p 19. Neither of those works refers to any authority or earlier work in which the phrase is to be found. Further, it is interesting to note that Woodward, The Law of Quasi-Contracts (1913) does not use the phrase at all. Thus it would appear that Professor J B Ames was the originator of the phrase which, though not initially commanding universal acceptance, was incorporated into the American Restatement. 50 In the present case, the contentious payments claimed by Huntley were made to AOL by the investors in Projects 1, 2 and 6 at a time when AOL was the responsible entity of those projects and at a time when Huntley was not on the scene. 51 Huntley was not the victim of some interception of its funds. Its claimed entitlement to a share of the management fees paid to AOL could not sensibly be said to arise from a total failure of consideration in respect of those payments. The management functions were not carried out equally from month to month across each 12 month period and there was no evidence before the primary judge from which any conclusions could be drawn as to what work had been carried out by AOL as at the dates when it was removed as the responsible entity of Projects 1, 2 and 6 nor was there evidence as to what work remained to be done as at those dates. There was no identifiable portion of the management functions to be performed by AOL and, subsequently, by Huntley, referable to the claimed consideration. 52 Huntley's claimed entitlement does not arise from the circumstance that it was the payer of the management fees in question but rather arises solely from the circumstance that it became the responsible entity of Projects 1, 2 and 6 part way through the year in respect of which the payments were made. In truth, the claims made by Huntley are not restitutionary claims at all but rather are claims in contract founded upon the Grove Agreements and the relevant Constitutions and the operation of s 601FS and s 601FT of the Act. 53 Both the primary judge in the present case and this Full Court in Australian Olive Holdings [2010] FCAFC 76 have held that s 601FS and s 601FT enable and require Huntley to step into the shoes of AOL but only in respect of those rights and obligations which continued post changeover of responsible entity. In the present case, the requirement to pay management fees in advance was not apportionable with the consequence that there was no right extant as at the date when Huntley was appointed as the responsible entity of each of Projects 1, 2 and 6 in respect of management fees which could inure for the benefit of Huntley. 54 For these reasons, Issue 1 in the appeal must be decided against Huntley.

Issue 2 - The Effective Changeover Date for Project 5 55 At [56] and [59] of his Reasons, the primary judge recorded the fact that the parties had reached an agreement concerning Projects 4 and 5. Subject to the resolution of Issue 2, that agreement between the parties remains in force. We have not been asked to consider AOL's entitlement to the judgment which it obtained from his Honour pursuant to the agreement which it reached with Huntley concerning Project 5 save insofar as that judgment might be affected by our resolution of Issue 2. 56 As noted at [16] above, the investors in Project 5 resolved to remove AOL as the responsible entity of that project and to appoint Huntley as the responsible entity of that project in its place on 18 March 2008. On 19 March 2008, Huntley lodged an ASIC Form 5107 (Notification of Request to Change Responsible Entity) in respect of Project 5. That form was not processed by ASIC until 28 March 2008. On 28 March 2008, ASIC altered its record in respect of Project 5 in order to show the removal of AOL as the responsible entity of that project and its replacement with Huntley. 57 The precise entries in the ASIC record concerning the change of responsible entity of Project 5 were as follows: (a) In the running list of materials received by ASIC which appear under the heading Documents Received, the following entries appear: Form Type Date Received Date Processed No. Pages Effective Date 5107 19/03/2008 28/03/2008 1 18/03/2008 023216880 5107B Notification of Request to Change Responsible Entity Retirement - Notice Received From New Responsible Entity

(b) Under the heading Responsible Entity, the following appears: Responsible Entity 023216880 089 240 513 HUNTLEY MANAGEMENT LIMITED OFFICE 301 LEVEL 3 37 BLIGH STREET SYDNEY NSW 2000 Appointment Date: 28/03/2008 ABN (Australian Business Number) 52 089 240 513

(c) Under the heading Previous Responsible Entity, the following appears: Previous Responsible Entity 024332371 078 885 042 AUSTRALIAN OLIVES LTD UNIT 2 100 CAMPBELL STREET BOWEN HILLS QLD 4006 Appointment Date: 13/03/2003 Cease Date: 28/03/2008 ABN (Australian Business Number) 33 078 885 042

58 The primary judge determined this question at [58] of his Reasons as follows: 58 In my opinion, provided there has been a valid removal and appointment at all (see Huntley Management Ltd v Australian Olives Ltd (No 2) (2009) 178 FCR 51 at [12]-[13]), the former RE remains RE until the ASIC record is altered to name another company as RE: see s 601FJ(1) of the Act. In the present case, AOL remained the RE for Project 5 until 28 March 2008 when ASIC's record in relation to that Project was altered to name Huntley as RE. 59 In support of its contention in respect of Issue 2, Huntley submitted that it was entitled to the benefit of the fees for Project 5 from the day when the investors passed a resolution removing AOL as the responsible entity of Project 5 (viz 18 March 2008) and replacing it with Huntley. It said that it was from 18 March 2008 that it became liable to perform the duties which devolved upon it as the responsible entity of Project 5. The fact that ASIC did not process the Form 5107 lodged by Huntley until some nine or ten days later is irrelevant. Huntley submitted that the ASIC register clearly records the fact that the effective date of the change was 18 March 2008 (the date upon which the removal resolution was passed by the investors). Huntley ultimately submitted that it was from that date that Huntley became the responsible entity. 60 The resolution of this issue depends upon the construction of s 601FJ of the Act and the interpretation of ASIC's record. That section provides as follows: 601FJ Changes only take effect when ASIC alters record of registration

(1) Despite anything in this Division, the company named in ASIC's record of registration as the responsible entity or temporary responsible entity of a registered scheme remains the scheme's responsible entity until the record is altered to name another company as the scheme's responsible entity or temporary responsible entity. (2) A purported change of the scheme's responsible entity is ineffective unless it is in accordance with this Division. 61 The critical word in s 601FJ(1) is "... until …". 62 If the ASIC record is never altered, the company named in ASIC's record of registration as the responsible entity or temporary responsible entity of a registered scheme remains the responsible entity of that scheme. This may be so, notwithstanding the fact that the members of that scheme had resolved to remove that entity and to replace it with another. 63 The evident purpose of the requirement imposed upon ASIC to record all changes in the identity of the responsible entity of a managed investment scheme is to enable those entities seeking to deal with the appropriate controller of a particular managed investment scheme to know with certainty the identity of the responsible entity of that scheme. In our view, it is not to the point that, on one possible interpretation, ASIC may have recorded that the effective date of the changeover in the present case was 18 March 2008. Were a third party interested in ascertaining the identity of the responsible entity of Project 5 at any time between 18 March 2008 and 28 March 2008, the latter date being the date when the ASIC record was ultimately altered, a search of the ASIC record would have revealed that AOL was still the responsible entity. 64 In any event, we think that the entries in the ASIC record under the heading Documents Received are not the entries which matter for the purposes of s 601FJ(1) of the Act. The part of ASIC's record which matters for the purposes of s 601FJ(1) is that part in which the responsible entity is "named". We have extracted that part of ASIC's record at [57(b)] and [57(c)] above. According to that part of ASIC's record, AOL ceased to be the responsible entity of Project 5 on 28 March 2008 and Huntley commenced to be the responsible entity of that project on the same day. 65 The reference in that part of ASIC's record which bears the heading Documents Received to the Form 5107 lodged by Huntley is a reference to a document which contains a request to ASIC to alter its record in accordance with the contents of the form. The column headed Effective Date is a reference to the date shown on the face of the form as the date when the relevant resolution was passed. Section 601FJ of the Act contemplates that ASIC will alter its record if it is satisfied that there has been a change of responsible entity. ASIC is required to make such alterations as it is satisfied should be made. The legislation envisages four steps: The passing of a resolution by the members of the scheme; the lodgement of a request with ASIC that it alter its record in order to give effect to that resolution; ASIC's consideration of that request; and the alteration by ASIC of its record in order to give effect to the request. The final step in this process was not completed until 28 March 2008. 66 We think that the correct construction of s 601FJ is that the changeover of responsible entity does not become effective unless and until the ASIC record is relevantly altered and only becomes effective from the date when that record is relevantly altered. The alternative construction propounded by Huntley would not give appropriate effect to the evident purpose of the requirement set out in s 601FJ. In the present case, ASIC's record was relevantly altered on 28 March 2008 when the entries extracted as [57(b)] and [57(c)] were made. There was, therefore, no error in the primary judge's conclusion on this point. 67 For these reasons, we reject Huntley's contentions in respect of Issue 2.

Conclusions 68 For the above reasons, the appeal must be dismissed with costs. For reasons explained at [9] above, the cross-appeal must also be dismissed with costs up to and including 28 April 2010. There will be orders accordingly. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Gilmour and Foster.