Plaintiffs v Defendants

No appearance by or on behalf of the Second and Third Defendants

1 This is the return of the receivers' application for indemnification out of the scheme property ("the lienable property") of ten managed investment schemes, secured by equitable lien, for their remuneration for work performed and expenses reasonably incurred in taking steps for the care, protection, preservation and realisation of the assets and property of those schemes. This judgment is to be read in conjunction with the judgment delivered by the Court in Thackray & Ors v Gunns Plantations Limited & Ors.[1]

2 Since the initial hearing, Mr Burns and the first defendant ("Gunns") have reached agreement on the quantum of the receivers' claim and all claimed categories of expense and remuneration, including the two categories previously the subject of objection by Mr Burns. No further objections have been raised pursuant to paragraph 9 of the orders made on 3 August 2011. The orders now sought are:

(a) an order confirming the receivers' prima facie entitlement to the amounts claimed in respect of the two categories previously objected to by Mr Burns;

(b) final orders to the effect that the receivers are entitled to an indemnity secured by equitable lien upon the lienable property as claimed and are entitled to the payment out of that lienable property in the amounts set out in the Ready Reckoner which is attached as part of Annexure A to this judgment;

(c) appropriate orders regarding the receivers' proposed assignment to Gunns of their rights and entitlements secured by equitable lien; and

(d) an order by consent concerning the costs of this proceeding.

3 The categories that were objected to initially by Mr Burns were the receivers' legal costs of calculating the lien and their remuneration relating to the calculation of the value of their indemnity and lien. I am satisfied that allowances should be made for those costs and remuneration.[2] The costs and remuneration relating to the calculation of the lien are properly to be regarded as incidental to the functions performed by the receivers which have entitled them to the indemnity secured by equitable lien. The work and expense related to calculating the lien was necessary in order to determine what amount was properly claimable by the receivers and the work undertaken was obviously complex in respect of which the receivers required legal assistance and thereby incurred legal fees.

4 The receivers seek the costs of this proceeding on an indemnity basis. The receivers should also get those costs on that basis as an incident of the costs of the receivership.[3] Mr Burns' costs fall within the same principles and should also be paid on an indemnity basis.[4] Gunns does not seek an order as to its costs as it is indemnified under the terms of its engagement as responsible entity of the Gunns Schemes. The receivers and Mr Burns have agreed that they will each accept a 10% discount on their costs, and seek an order by consent to that effect in the orders made.

5 The receivers propose to assign their entitlement to indemnities and liens to Gunns, so that Gunns may enforce those rights both against the existing fund for the 1998 to 2000 schemes and in the future, when a fund is created for the 2001 to 2006 schemes. The reason for the assignment is that in respect of the 2001 to 2006 schemes the lien is secured against rights to proceeds from trees which have not yet been harvested. If the receivers were to wait until a fund came into existence, they would need to remain in office until the 2006 scheme trees were harvested and sold. The final harvest of that scheme is not expected to occur until 2018. There potentially would be considerable costs associated with the receivers remaining in place for that period of time, only for the purpose of facilitating the collection of their indemnity from the funds as they came into existence. The receivers wish to retire from office as soon as practicable to reduce the cost of their appointment to their appointers and to the unsecured creditors. The assignment of their rights would allow them to retire before harvest is completed. The receivers seek a declaration that the assignment of their rights to the indemnities and liens, or alternatively the proceeds thereof, is effective and that following the assignment Gunns will be entitled to exercise the receivers' liens and indemnities. Alternatively they seek a declaration that Gunns will be subrogated to their rights.

6 No assignment deed has yet been executed. Nonetheless it was submitted that it is open to the Court to make a declaration about how the prospective deed will operate as the parties have agreed in principle to enter into the assignment. The agreement is also subject to, and conditional upon, the receivers obtaining Court orders, declarations and/or directions confirming, amongst other things, that the assignment of the receivers' indemnities and liens will be effective to entitle Gunns to exercise the receivers' liens and indemnities either by way of assignment or subrogation.[5] In the circumstances, I am satisfied that the receivers and Gunns each have a "real interest" in the declaratory relief that is sought so that the fact that the assignment has not yet been executed does not prevent a declaration being made.[6]

7 No authority has been found on whether an indemnity and supporting lien arising from the salvage principles or by way of equitable allowance are assignable. However I am satisfied that rights to an indemnity secured by a lien arising from the salvage principles are assignable. The rights arise automatically by operation of law when the claimant incurs expenditure or the firm performs work for the purposes defined by the principles. The existence of the lien does not depend upon possession or other personal characteristics.[7] The interest of the receivers in the lienable property arising from the equitable lien attaching to its right of indemnity is a proprietary chose in action and hence is capable of assignment.[8] The position with respect to equitable allowances under the principle in Re Berkeley Applegate[9] is different in that no enforceable right or interest exists before the Court has exercised its discretion to require an allowance to be made for costs incurred and for remuneration in respect of work done in the administration.[10] However, in this instance the Court has already determined that the receivers are entitled to an equitable allowance for their expenses and remuneration to the extent that the salvage principles did not otherwise entitle them to an indemnity secured by equitable lien in relation to such costs and remuneration.[11] Accordingly, I am prepared to make the declarations sought with respect to the assignment.

8 I will make orders in the form of the orders that are annexed to this judgment.

JAMES GERARD THACKRAY IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

COLIN MCINTOSH NICOL IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

ANTHONY GREGORY MCGRATH IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

MARTIN JONES, ANDREW SAKER, DARREN WEAVER AND JAMES STEWART IN THEIR CAPACITY AS LIQUIDATORS OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED)

IN THE MATTER OF: GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED

(ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

JAMES GERARD THACKRAY, COLIN MCINTOSH NICOL AND ANTHONY GREGORY MCGRATH IN THEIR PERSONAL CAPACITY AND AS RECEIVERS AND MANAGERS OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED

(ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED)

At the trial of the Originating Process dated 20 April 2011 and the return of the Plaintiffs' Interlocutory Process dated 25 July 2011 and at a further directions hearing on 17 August 2011

Dr. O Bigos of Counsel and Mr. M McKillop of Counsel for the Plaintiffs.

There was no appearance for the Second and Third Defendants.

By orders made on 3 August 2011 the Court made directions and declarations in respect of the Plaintiffs' claim to an indemnity secured by an equitable lien in respect of certain categories of claim. The directions made in orders 3 and 5 by the Court were subject to any objections to be made by any person, and a process to consider those objections was ordered. By orders 7A and 8A, the Court reserved making any declarations regarding the claims until the objections process was completed.

The Court has been informed by the First Defendant, by its Counsel, and Mr Burns, by his Counsel, that no objections have been made and final directions and declarations can be made. The Court has further been informed that the Plaintiffs have by agreement with the first Defendant and Mr Burns reduced the claims they have made by way of indemnity against the Lienable Property and for no other purpose, in respect of certain categories. The reductions are reflected in the Revised Ready Reckoner which is contained in Schedule B to these orders.

The Court also received a further affidavit of Jane Louise Salveson sworn on 17 August 2011 which exhibited a proposed draft assignment deed between the Plaintiffs and the First Defendant.

The First Defendant, by its counsel, undertakes that (without any obligation to pursue any member to recover the same) should it recover from members of the Gunns Schemes any insurance premiums in respect of Woodlots of those members, it will not seek to recover the same amounts under the indemnity and lien over Lienable Property assigned to it (as contemplated in paragraph 7 below). [The expressions Gunns Schemes and Lienable Property are defined below. Woodlot is defined in the constitutions of the respective schemes.]

1. The Plaintiffs ('Receivers') are justified, and otherwise acting reasonably, in asserting an entitlement to an indemnity secured by an equitable lien upon:
   • (a) the assets and/or property, including the trees ('Scheme Property') of each of the managed investment schemes listed in Schedule A to these orders (being the 'Gunns Schemes' and the '1997 Scheme');
   • (b) the proceeds of sale of any Scheme Property of each of the Gunns Schemes and the 1997 Scheme;
   • (c) the proceeds of any insurance claims in respect of each of the Gunns Schemes and the 1997 Scheme,

whether present or future (together, 'Lienable Property'), for the payment of their costs, expenses and remuneration in each of the categories in the amounts listed in Schedule B to these orders (lien consolidation - revised spreadsheet ready reckoner) reasonably incurred in taking steps, in their capacity as receivers and managers of the Second Defendant ('GSMAL'), for the care, protection, preservation and/or realisation of the Scheme Property of each of the Gunns Schemes and the 1997 Scheme.

1. The Receivers are justified, and otherwise acting reasonably, in asserting an entitlement to the payment out of:
   • (a) any proceeds of sale of any Scheme Property of each of the Gunns Schemes and the 1997 Scheme; and/or
   • (b) any insurance claim proceeds in respect of the Gunns Schemes and the 1997 Scheme;

for the payment of their costs, expenses and remuneration in all categories listed in Schedule B to these orders in the amounts set out for those items in relation to that scheme.

1. The First Defendant would be justified, and otherwise acting reasonably, in making a payment to the Receivers out of any proceeds of sale of any Scheme Property of each of the Gunns Schemes for the Receivers costs, expenses and remuneration in all categories listed in Schedule B to these orders in the amounts set out for those categories as detailed for each of the Gunns Schemes, in respect of that part of the Receivers' rights and entitlements to an indemnity secured by an equitable lien not the subject of an assignment to the First Defendant referred to in paragraph 7 below.
2. The Third Defendants would be justified, and otherwise acting reasonably, in making a payment to the Receivers of their costs, expenses and remuneration in each of the categories in the amounts listed in Schedule B to these orders for the 1997 Scheme out of:
   • (a) any proceeds of sale of any Scheme Property of the 1997 Scheme; and/or
   • (b) any insurance claim proceeds in respect of the 1997 Scheme.

1. The Receivers are entitled to an indemnity secured by an equitable lien upon the Lienable Property, in respect of the payment of their costs, expenses and remuneration in each of the categories in the amounts listed in Schedule B to these orders reasonably incurred in taking steps, in their capacity as receivers and managers of GSMAL, for the care, protection, preservation and/or realisation of the Scheme Property of each of the Gunns Schemes and the 1997 Scheme.
2. The Receivers are entitled to the payment out of:
   • (a) any proceeds of sale of any Scheme Property of each of the Gunns Schemes and the 1997 Scheme; and/or
   • (b) any insurance claim proceeds in respect of the Gunns Schemes and the 1997 Scheme;

their costs, expenses and remuneration in each of the categories in the amounts listed in Schedule B to these orders for each of the Gunns Schemes and the 1997 Scheme.

1. The Receivers' rights and entitlements to an indemnity secured by an equitable lien over the Lienable Property specified in the draft deed of assignment set out in Schedule C (Draft Deed of Assignment) may be properly the subject of an assignment to the First Defendant by means of a Deed of Assignment substantially in the form of the Draft Deed of Assignment, upon which the First Defendant may exercise the Receivers' rights and entitlement secured by an equitable lien, by directly applying any Lienable Property of the Gunns Scheme in satisfaction of that part of the Receivers' indemnity and equitable lien so assigned.

1. The Third Defendants are ordered to pay to the Receivers their costs, expenses and remuneration in each of the categories in the amounts listed in Schedule B to these orders for the 1997 Scheme out of:
   • (a) any proceeds of sale of any Scheme Property of the 1997 Scheme; and/or
   • (b) any insurance claim proceeds in respect of the 1997 Scheme.
2. The Receivers' costs of and incidental to this proceeding, excepting any costs included in Schedule B including any reserved costs and excepting any costs regarding the question of the goods and services tax the subject of the order for liberty to apply made on 3 August 2011, be paid on an indemnity basis, less a reduction of 10%, out of the assets constituted by the Lienable Property, such costs to be apportioned equally between each of the schemes referred to in Schedule A and to be taxed in default of agreement.
3. Mr Burns' costs of and incidental to this proceeding including any reserved costs be paid on an indemnity basis, less a reduction of 10%, out of the assets constituted by the Lienable Property, such costs to be apportioned equally between each of the schemes referred to in Schedule A and to be taxed in default of agreement.
4. For the purposes of section 101(1) of the Supreme Court Act 1986, the date from which the costs payable to the Receivers or to Mr Burns pursuant to order 9 and order 10 is the date of this order.
5. The Plaintiffs, and/or the First Defendant and /or the Second Defendant are granted liberty to apply on 2 business days' notice in respect of:
   • (a) any amount by which the costs, expenses and remuneration listed in Schedule B have been reduced by reason that an input tax credit in relation to those costs, expenses and remuneration, which the Plaintiffs or an entity in the Great Southern Group have claimed, is not received; and
   • (b) any obligation to remit goods and services tax (GST) not claimed in this application, in the event that the exercise of the indemnity secured by the lien represents consideration for a taxable supply made by the Plaintiffs and/or First Defendant and/or the Second Defendant.

JAMES GERARD THACKRAY IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

COLIN MCINTOSH NICOL IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

ANTHONY GREGORY MCGRATH IN HIS CAPACITY AS RECEIVER AND MANAGER OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

MARTIN JONES, ANDREW SAKER, DARREN WEAVER AND JAMES STEWART IN THEIR CAPACITY AS LIQUIDATORS OF GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (ACN 083 825 405) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)

The scheme below referred to as the '1997 Scheme'

Each of the Schemes below referred to collectively as the 'Gunns Schemes'

Simon Andrew Read, James Gerard Thackray, Anthony Gregory McGrath and Colin McIntosh Nicol, each in their personal capacity and as joint and several receiver and manager of Great Southern Managers Australia Limited (ACN 083 825 405) (Receivers and Managers Appointed) (In Liquidation) (Assignors)

Gunns Plantations Limited (Assignee) (ACN 091 232 209)

Simon Andrew Read, James Gerard Thackray, Anthony Gregory McGrath and

Colin McIntosh Nicol, each in their personal capacity and as joint and several receivers and managers of Great Southern Managers Australia Limited (ACN 083 825 405) (Receivers and Managers Appointed) (In Liquidation)

Level 17, 37 St Georges Terrace, Perth, Western Australia 6000

1. By a deed of appointment dated 18 May 2009, the Assignors were appointed as receivers and managers (Receivers) of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (In Liquidation) ACN 083 825 405 (GSMAL) and certain other entities within the Great Southern group of companies.
2. As at the time of the appointment of the Assignors as Receivers of GSMAL, GSMAL was the responsible entity of, among others, the following registered managed investment schemes (Gunns Scheme(s)):
   • (i) Great Southern Plantations 1998 (ARSN 092 780 204) (1998 Scheme);
   • (ii) Great Southern Plantations 1999 (ARSN 092 452 849) (1999 Scheme);
   • (iii) Great Southern Plantations 2000 (ARSN 085 669 361) (2000 Scheme);
   • (iv) Great Southern Plantations 2001 (ARSN 089 958 029) (2001 Scheme);
   • (v) Great Southern Plantations 2002 (ARSN 095 343 963) (2002 Scheme);
   • (vi) Great Southern Plantations 2003 Scheme (ARSN 099 131 825) (2003 Scheme);
   • (vii) Great Southern Plantations 2004 (ARSN 107 811 709) (2004 Scheme);
   • (viii) Great Southern Plantations 2005 Project (ARSN 112 744 877) (2005 Scheme); and
   • (ix) Great Southern Plantations 2006 Project (ARSN 112 744 902) (2006 Scheme).

1. GSMAL, as the responsible entity of the Gunns Schemes, was unable to fund the expenses of operating the Gunns Schemes and the Assignors, in their capacity as Receivers of GSMAL, incurred costs, expenses and remuneration in the care, protection, preservation and/or realisation of the property of the Gunns Schemes.

1. The Assignors claim a right of indemnity, secured by an equitable lien, in respect of the recovery of those costs, expenses and remuneration out of the property of the Gunns Schemes.
2. In late 2009 and early 2010, pursuant to s 601FM of the Corporations Act 2001 (Cth), the Assignee replaced GSMAL as responsible entity of each of the Gunns Schemes.
3. Under the terms of an Implementation Agreement dated 20 November 2009 (Implementation Agreement) the Assignors agreed the Receivers' Indemnity and Lien would be assigned to the Assignee upon certain conditions.
4. During GSMAL's tenure as the responsible entity of the Gunns Schemes, the Assignors provided funds to Great Southern Limited (Receivers and Managers appointed) (In liquidation) to enable it to make certain payments due under an insurance funding contract with BMW Australia Finance Limited (ACN 007 101 715), to pay for insurance policies for the entire Great Southern group of companies, including those policies that insured the plantations used in the Great Southern forestry schemes (including the Gunns Schemes) against fire. The Assignors claim to be entitled to recover under the Receivers' Indemnity and Lien the portion of the payments made under the insurance funding contract that related to the insurance of the Gunns Schemes (Insurance Component).
5. Under the documents which govern the Gunns Schemes, the responsible entity has a right to be reimbursed by members of the Gunns Schemes (Growers) in respect of payments which it makes relating to insurance for the protection of the plantations in the Gunns Schemes on behalf of the Growers.
6. Under a deed of assignment between GSMAL and the Assignee dated 28 April 2010 (Insurance Debt Assignment Deed), GSMAL assigned to the Assignee its rights, title and interest in the debts in the amount of $3,813,612 owed to it by Growers in respect of insurance premiums paid by GSMAL on behalf of Growers (Outstanding Grower Insurance Payment).
7. On 20 July 2010, Simon Andrew Read retired as a joint and several receiver of GSMAL.
8. Notwithstanding clause 6.5 of the Implementation Agreement, or the terms of the Insurance Deed Assignment Deed, as between the parties to this Deed, the Assignors agree to assign their rights, title and interest in the:
   • (i) Assigned Receivers' Indemnity and Lien; and
   • (ii) the Assigned Insurance Component,

to the Assignee, and the Assignee accepts the assignment, on the terms of this deed.

Assigned Insurance Component means that part of the Insurance Component relating to the Grower insurance for the 1998 Scheme, the 1999 Scheme and the 2000 Scheme paid by GSMAL on behalf of Growers, in the amount of $456,262, as set out in category 5 of exhibit JLS 7 to the affidavit of Jane Louise Salveson sworn 17 August 2011, known as the Revised Ready Reckoner.

Assigned Receivers' Indemnity and Lien means that part of the Receivers' Indemnity and Lien relating to the Assigned Schemes.

Assigned Schemes means the 2001 Scheme, 2002 Scheme, 2003 Scheme, 2004 Scheme, 2005 Scheme and 2006 Scheme.

Business Day means:

(a) for receiving a Notice under clause 12, a day that is not a Saturday, Sunday, public holiday or bank holiday in the place where the Notice is received; and

(b) for all other purposes, a day that is not a Saturday, Sunday, public holiday or bank holiday in Victoria.

Conditions Precedent means the conditions precedent described in clause 2.

Court means the Supreme Court of Victoria.

Discount Rate means a rate of 11% per annum.

Implementation Agreement means the Implementation Agreement between GSMAL, the Assignee, the Assignors and others dated 20 November 2009.

Insolvency Event means the occurrence of any one or more of the following events in relation to the Assignee:

(a) an application is made to a court for an order that it be wound up, declared bankrupt or that a provisional liquidator or receiver or receiver and manager be appointed, and the application is not withdrawn, struck out or dismissed within 21 days of it being made;

(b) a liquidator or provisional liquidator is appointed and the appointment is not terminated within 21 days of its being made;

(c) an administrator or a controller is appointed to any of its assets and the appointment is not terminated within 21 days of it being made;

(d) it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors;

(e) it proposes a winding-up or dissolution or reorganisation, moratorium, deed of company arrangement or other administration involving one or more of its creditors;

(f) it is insolvent as disclosed in its accounts, or otherwise states that it is insolvent, or it is presumed to be insolvent under an applicable law;

(g) it becomes an Insolvent under Administration under the Corporations Act 2001 (Cth) or action is taken which could result in that event and the proceeding is not dismissed within 21 days of the date action is taken;

(h) it is taken to have failed to comply with a statutory demand as a result of s 459F(1) of the Corporations Act 2001 (Cth);

(i) a notice is issued under ss 601AA or 601AB of the Corporations Act 2001 (Cth) and not withdrawn or dismissed within 21 days;

(j) a writ of execution is levied against it or a material part of its property which is not dismissed within 21 days;

(k) it ceases to carry on business or threatens to do so; or

(l) anything occurs under the law of any jurisdiction which has a substantially similar effect to any of the above clauses of this definition.

Insurance Component has the meaning given in Recital G.

Net Proceeds of Sale has the same meaning as the Scheme Documents of the Gunns Schemes.

Proceeds Fund has the same meaning as the Scheme Documents of the Gunns Schemes

Purchase Price means the consideration payable for the assignment of the Assigned Receivers' Indemnity and Lien as determined in accordance with clause 5.

Receivers' Indemnity and Lien means the costs, expenses and remuneration, whether present or future, in respect of which the Assignors are entitled to be indemnified out of:

(a) the assets and/or property including the trees (Scheme Property) used in the operation of any of the Gunns Schemes;

(b) the proceeds of sale of any Scheme Property of any of the Gunns Schemes; and

(c) the proceeds of any insurance claims in respect of any of the Gunns Schemes.

Scheme Documents in relation to each of the Gunns Schemes means the scheme constitution and any variation thereto, the lease and management agreement or forest right and management agreement, land and management agreement, and lease or forest right agreement.

In this deed, except where the context otherwise requires:

(a) the singular includes the plural and vice versa, and a gender includes other genders;

(b) another grammatical form of a defined word or expression has a corresponding meaning;

(c) a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this deed, and a reference to this deed includes any schedule or annexure;

(d) a reference to a document or instrument includes the document or instrument as novated, altered, varied, supplemented or replaced from time to time;

(e) a reference to A$, $A, dollar or $ is to Australian currency;

(f) a reference to time is to Melbourne, Australia time;

(g) a reference to a party is to a party to this deed, and a reference to a party to a document includes the party's executors, administrators, successors and permitted assigns and substitutes;

(h) a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;

(i) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, reenactments or replacements of any of them;

(j) a word or expression defined in the Corporations Act has the meaning given to it in the Corporations Act;

(k) the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;

(l) any agreement, representation, warranty or indemnity by two or more parties (including where two or more persons are included in the same defined term) binds them jointly and severally;

(m) any agreement, representation, warranty or indemnity in favour of two or more parties (including where two or more persons are included in the same defined term) is for the benefit of them jointly and severally;

(n) a rule of construction does not apply to the disadvantage of a party because the party was responsible for the preparation of this deed or any part of it; and

(o) if a day on or by which an obligation must be performed or an event must occur is not a Business Day, the obligation must be performed or the event must occur on or by the next Business Day.

1.3 Headings

Headings are for ease of reference only and do not affect interpretation.

The assignment of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component provided for in clause 3 of this Deed is subject to and conditional upon:

(a) the Assignors obtaining Court orders, declarations and/or directions confirming:

• (i) the costs, expenditure and remuneration (including any GST), in respect of which the Assignors are entitled to be indemnified out of Scheme Property and the allocation of those costs, expenditure and remuneration (including any GST), to each of the Gunns Schemes;
• (ii) that a sale and assignment by the Assignors to the Assignee of:
  • (A) the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component; and
  • (B) the proceeds of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component,

will be effective by way of assignment or subrogation and that following assignment or subrogation, as the case may be, the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component will be recoverable and exercisable by the Assignee directly from Scheme Property of the Assigned Schemes, notwithstanding the retirement of the Assignors, as Receivers of GSMAL; and

(iii) the manner in which the costs, expenditure and remuneration (including any GST), may be recovered from Scheme Property,

in a form acceptable to the Assignors and the Assignee (each acting reasonably); or

(b) if the Court makes the orders, declarations and/or directions sought in clause 2(a)(i) but refuses to make the orders, declarations and/or directions sought in clauses 2(a)(ii) and 2(a)(iii), the Assignors and the Assignee obtaining an opinion which:

• (i) is from a Senior Counsel appointed by both the Assignors and the Assignee (each acting reasonably); and
• (ii) confirms the matters in clauses 2(a)(ii) and 2(a)(iii), in a form acceptable to both the Assignors and the Assignee (each acting reasonably).

Subject to the satisfaction of the Conditions Precedent and payment of each component of the Purchase Price under clause 6.3 below:

(a) the Assignors irrevocably, absolutely and unconditionally assigns all of the Assignors' rights, title, interests in the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component to the Assignee; and

(b) the Assignee accepts the assignment.

If, and to the extent that the assignment under clause 3 is not effective to assign the Receivers' right, title and interest in the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component, in accordance with its terms:

(a) to the fullest extent permitted by law;

• (i) the Assignee will be entitled to be subrogated to the Receivers' right, title and interest in the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component; and
• (ii) the Assignee will be entitled to enforce the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component in its own name; and

(b) each Receiver agrees to hold on trust for the Assignee any proceeds of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component received by that Receiver, and to promptly account to the Assignee for any recovery.

1. Discharge of the Receivers' Lien and Indemnity in respect of the 1998, 1999 and 2000 Schemes

The Assignee agrees to effect payment in full in discharge of any Court orders requiring payments pursuant to the exercise of the Receivers Receivers' Lien and Indemnity in respect of the 1998, 1999 and 2000 Schemes within 20 Business Days of the making of those orders, such amounts to be in aggregate equal to [TBC].

6.1 Determination of Purchase Price

• (a) The Purchase Price for the assignment, or the subrogation, of the Receivers' right, title and interest in the Assigned Receivers' Indemnity and Lien is [TBC].
• (b) The Purchase Price has been calculated as:
  • (i) the sum equal to the net present value of the amount secured by the Assigned Receivers' Indemnity and Lien for each of the Assigned Schemes, as determined by the Court, or by a Special Referee appointed by the Court, discounted at the Discount Rate, having regard to the time that the Assignors and the Assignee have agreed (as set out in Annexure 1) that the amount secured by the Assigned Receivers' Indemnity and Lien is likely to be recovered from the Net Proceeds of Sale of each of the Assigned Schemes; and
  • (ii) such amounts being discounted by the Discount Rate, pro-rated monthly from the date that the Conditions Precedent are satisfied until the date that the Assignors and the Assignee have agreed (as set out in Annexure 1) that the amount secured by the Assigned Receivers' Indemnity and Lien is likely to be recovered from the Net Proceeds of Sale for each of the Assigned Schemes.

6.2 Insurance

• (a) The Assignors and the Assignee agree that in calculating the Purchase Price such amount of the Assigned Receivers' Indemnity and Lien as is referable to the Outstanding Grower Insurance Payment which was assigned to the Assignee under the Insurance Debt Assignment Deed (being a total of $2,179,842) will be valued at nil.
• (b) The Assignee undertakes that it will not seek to recover from any of the Assigned Schemes, an equivalent amount under the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component assigned to it under this deed, that has been repaid by Growers in the Schemes to the Assignors, or to the Assignee in respect of the Outstanding Grower Insurance Payment.

6.3 Payment of the Purchase Price

The Assignee must pay the Purchase Price in full to James Gerard Thackray, on behalf of the Assignors, in cleared funds to the bank account nominated by the Assignors, in two instalments, being:

(a) an amount of $4 million, less any amount payable under clause 5, on the date 20 Business Days after the date the Conditions Precedent are satisfied; and

(b) the balance by 31 October 2011.

6.4 Dispute resolution

• (a) If the Assignee and the Assignors fail to agree the amount of the Purchase Price, as is to be calculated under clauses 6.1 and 6.2, within the 10 Business Day period calculated under clause 6.1(a) then the Assignee and the Assignors must appoint an independent expert to determine the amount of the Purchase Price in accordance with the principles set out in clauses 6.1 and 6.2.
• (b) If the Assignee and the Assignors cannot agree on an independent expert with 5 Business Days after the end of the 10 Business Day period calculated under clause 6.1(a), either of them may request the then President of the Institute of Chartered Accountants in Australia to appoint such a person.
• (c) The costs of an independent expert appointed under this clause 6.4 must be borne equally by the Assignee and the Assignors.
• (d) The decision of an independent expert under this clause 6.4 as to the amount of the Purchase Price will be final and binding on the Assignee and the Assignors in the absence of manifest error.

The Assignee acknowledges that the amount secured by the Assigned Receivers' Indemnity and Lien is recoverable from the Net Proceeds of Sale in priority to all other claims and entitlements for each of the Assigned Schemes.

1. Termination
   • (a) This deed and each party's obligations under it will immediately terminate if, prior to the payment of the Purchase Price in accordance with clause 6, the Assignee is subject to an Insolvency Event.
   • (b) The Assignee must notify the Assignors as soon as practicable on becoming subject to an Insolvency Event.
2. Representations and warranties

9.1 Assignee's representations and warranties

The Assignee represents and warrants that as at the date of execution of this deed:

(a) it has the full power and authority to enter into and perform its obligations under this deed;

(b) the execution, delivery and performance by it of this deed does not and will not:

• (i) violate in any respect any provision of any law, regulation, authorisation, ruling, consent, judgement, order or decree of any governmental agency;
• (ii) violate in any respect any provision of its constituent documents; or
• (iii) result in a breach or default in any material respect under any agreement binding it;

(c) its obligations under this deed are valid and binding and enforceable against it in accordance with their terms;

(d) any authorisation required in connection with the execution, delivery and performance by it and the validity and enforceability against it of this deed have been obtained or effected and are in full force, and there has been no material default by it in the performance of any of the terms and conditions of any of these authorisations; and

(e) it is not the subject of an Insolvency Event.

9.2 Assignors' representations and warranties

Each Assignor represents and warrants that as at the date of execution of this deed:

(a) they have the full power and authority to enter into and perform their obligations under this deed;

(b) the execution, delivery and performance by them of this deed does not and will not:

• (i) violate in any respect any provision of any law, regulation, authorisation, ruling, consent, judgement, order or decree of any governmental agency; or
• (ii) result in a breach or default in any material respect under any agreement binding them;

(c) their obligations under this deed are valid and binding and enforceable against them in accordance with their terms; and

(d) any authorisation required in connection with the execution, delivery and performance by them and the validity and enforceability against them of this deed have been obtained or effected and are in full force, and there has been no material default by them in the performance of any of the terms and conditions of any of these authorisations.

Nothing in this deed has the effect of compromising or qualifying any rights any of the Assignors may have to enforce the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component, or detracts from the efficacy of the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component, where:

(a) the Conditions Precedent are not satisfied; or

(b) the Deed is terminated pursuant to clause 8.

If the Conditions Precedent are satisfied and the Purchase Price is paid in accordance with clause 6.3 but it is subsequently held by a court that:

(a) the proceeds of the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component are not assignable or capable of subrogation; and

(b) the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component is not assignable or terminates on the vacation of office of the Assignors; and

(c) the Assignee is not to be entitled to be subrogated to the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component despite paying the Purchase Price under clause 6,

then the Assignors will within 15 Business Days reimburse the Assignee the Purchase Price paid by the Assignee.

A notice given under this Deed is only effective if it is:

(a) in writing, in English and signed by a person duly authorised by the sender; and

(b) hand delivered, sent by prepaid post, or facsimile, or electronic mail (e.mail), attaching a pdf (portable document format) copy of the notice, to the recipient's address for notices specified in the Details, as varied by any notice given by the recipient to the sender.

12.2 Effective on receipt

A notice given in accordance with clause 12.1 takes effect when taken to be received (or at a later time specified in it), and is taken to be received:

(a) if hand delivered, on delivery;

(b) if sent by prepaid post, the second Business Day after the date of posting (or the seventh Business Day after the date of posting if posted to or from a place outside Australia);

(c) if sent by facsimile, when the sender's facsimile system generates a message confirming successful transmission of the entire notice unless, within eight business hours after the transmission, the recipient informs the sender that it has not received the entire notice; or

(d) if sent by email, when the email is received,

but if the delivery, receipt or transmission is not on a Business Day, or is after 5.00pm on a Business Day, the notice is taken to be received at 9.00am on the next Business Day.

13.1 Stamp duty and costs

• (a) The Assignee must pay all stamp duty in respect of the execution, delivery and performance of this deed and indemnify the Assignors against non payment of the stamp duty (including additional stamp duty, interest, penalties and fines for late payment or non payment).
• (b) Each of Assignors and the Assignee must pay their own costs and expenses in respect of the negotiation, preparation, execution, delivery and registration of this deed.

13.2 GST treatment of the assignment of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component

• (a) In this clause 13.2, clause 12.3 and 13.4 a word or expression defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) has the meaning given to it in that Act.
• (b) For GST purposes, the Assignors intend to treat the assignment of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component to the Assignee under this deed as a supply by the Assignors to the Assignee of an interest in a debt.
• (c) If, notwithstanding clause 13.2(b), the Assignors or any relevant competent authority determines that the Assignors (or any of them) is liable to pay GST on the basis of a taxable supply made by the Assignor to the Assignee on the assignment of the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component (in whole or in part):
  • (i) the Assignee must pay to the Assignors in addition to the Purchase Price and any other consideration to be provided by the Assignee to the Assignors for that supply under this deed (GST exclusive consideration), an amount equal to the GST exclusive consideration multiplied by the prevailing rate of GST (GST Amount);
  • (ii) in addition to the GST Amount, the Assignee must pay to the Assignors an amount equal to any interest, fines, penalties and additional tax payable by the Assignors as a result of the assignment being incorrectly treated as an input taxed supply or otherwise resulting from the GST payable on the supply being paid late or the GST Amount being paid late;
  • (iii) the GST Amount and any amount payable under this clause 13.2 must be paid by the Assignee to the Assignors within 10 Business Days of the Assignors issuing a tax invoice to the Assignee for the relevant taxable supply; and
  • (iv) it will not be a defence to any claim against the Assignee pursuant to this clause 13.2 that the Assignors did not pay the GST on the supply when it fell due under the GST Law, provided that the Assignors otherwise act reasonably in mitigating any loss.

13.3 GST in connection with any payment in discharge of the Assigned Receivers' Indemnity and Lien and the Assigned Insurance Component

The parties acknowledge and agree that to the extent that a payment received under, in respect or, or pursuant to, the Assigned Receivers' Indemnity and Lien or the Assigned Insurance Component represents consideration for a taxable supply:

(a) the benefit of any additional amount received by the Assignee or Assignors on account of GST (including pursuant to a court order)(GST gross up amount) will accrue to the party who is liable to pay that GST under the GST law;

(b) each party must make all reasonable endeavours to ensure that each of the Gunns Schemes pays the relevant GST gross up amount (including, but not limited to applying for Court orders that each of the Gunns Schemes pays the relevant GST gross up amount), and do so in a timely manner; and

(c) any payment to be made between the Assignee and the Assignors (as appropriate) to give effect to clause 12.3(a) must be made within 7 days of the Assignee or Assignors (as the case may be) receiving the benefit of the GST gross up amount.

13.4 GST on other supplies

• (a) If a party (Supplier) makes a supply under or in connection with this deed in respect of which GST is payable, the consideration for the supply but for the application of this clause 13.4 is increased by an amount equal to that consideration multiplied by the rate of GST prevailing at the time the supply is made plus an amount equal to any interest, fines or penalties imposed on the Supplier.
• (b) If a party must reimburse or indemnify another party for a loss, cost or expense, the amount to be reimbursed or indemnified is first reduced by any input tax credit the other party is entitled to for the loss, cost or expense, and then increased in accordance with clause 13.4(a).
• (c) A party need not make a payment for an amount under clause 13.4(a) until it receives a tax invoice (or an adjustment note if required under the GST Law) for the supply to which the payment relates.

13.5 Indemnity

• (a) The Assignee agrees to indemnify the Assignors against any loss or damage suffered by the Assignors as a consequence of the Assignee's breach of this deed.
• (b) Each Assignor agrees to indemnify the Assignee against any loss or damage suffered by the Assignee as a consequence of any Assignor's breach of this deed.
• (c) Nothing in this clause 13.5 relieves any party from any duty at law to mitigate any loss or damage that it may suffer or incur as a result of any breach of this deed (including a breach of any representation or warranty).

13.6 Alterations in writing

This deed may be altered only in writing signed by each party.

13.7 Assignment

• (a) Except as provided in clause (b), a party may only assign this deed or a right under this deed with the prior written consent of each other party, which consent is not to be unreasonably withheld.
• (b) No consent is required for any assignment by the Assignors to the liquidators of GSMAL or any other entities within the Great Southern Group of Companies.

13.8 Further action

Each party must do all things and execute all further documents necessary to give full effect to this deed, provided nothing in this deed requires any party to incur any expense unless indemnified by another party.

13.9 Governing law and jurisdiction

• (a) This deed is governed by the laws in force in Victoria.
• (b) Each party irrevocably submits to the non exclusive jurisdiction of the courts of Victoria.

13.10 Waiver

A party does not waive a right, power or remedy under this deed if it fails to exercise or delays in exercising the right, power or remedy. A single or partial exercise of a right, power or remedy does not prevent another or further exercise of that or another right, power or remedy. A waiver of a right, power or remedy must be in writing and signed by the party giving the waiver.

As between the parties, this deed supersedes and replaces the obligations of the parties under 6.5(c) and (d) of the Implementation Agreement.

Each of the attorneys executing this deed states that the attorney has no notice of the revocation of the power of attorney appointing that attorney.

Any indemnity or any obligation of confidence under this deed is independent and survives termination of this deed. Any other term by its nature intended to survive termination of this deed survives termination of this deed.

This deed may be executed in any number of counterparts. Each counterpart constitutes an original of this deed, all of which together constitute one instrument. A party who has executed a counterpart of this deed may exchange it with another party by faxing, or by emailing a pdf (portable document format) copy of, the executed counterpart to that other party, and if requested by that other party, will promptly deliver the original by hand or post. Failure to make that delivery by hand or by post will not affect the validity of this deed.

If any payment required to be made under this deed is not made by the due date, the outstanding amount will accrue interest on a daily basis at the rate of 11% per annum.

Executed by Gunns Plantations Limited ACN 091 232 209

Signed sealed and delivered by Simon Andrew Read in the presence of

Signed sealed and delivered by James Gerard Thackray in the presence of

Signed sealed and delivered by Anthony Gregory McGrath in the presence of

Signed sealed and delivered by Colin McIntosh Nicol in the presence of

X= Subject to clauses 5.1(b) and (c) of this deed, each year's Discount Rate will be applied as at 31 December to the amount secured by the Assigned Receivers' Indemnity and Lien for the relevant Assigned Scheme as determined by the Court, or by a Special Referee appointed by the Court. The application of the Discount Rate for each of the relevant Assigned Schemes is set out below.

Discounts applicable to the Purchase Price of the amounts secured by the Assigned Receivers' Indemnity and Lien for each of the Assigned Schemes

2001 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2013 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2013.

2002 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate, pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2013 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2013.

2003 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate, pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2014 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2014.

2004 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate, pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2016 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2016.

2005 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate, pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2017 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2017.

2006 Scheme = Subject to clause 6.1(b), the Purchase Price will be discounted by the Discount Rate, pro-rated monthly so that the discount only applies for full months between the date that the Conditions Precedent are satisfied and 31 December 2018 being:

where months = the number of full months between the date that the Conditions Precedent are satisfied and 31 December 2018.

[1] [2011] VSC 380.

[2] Reiter Brothers Exploratory Drilling Pty Ltd; Ex Parte Andrew Charles Robert Lee (Unreported, Zeeman J, Supreme Court of Tasmania, 21 April 1994), 13.

[3] Cape v Redarb Pty Ltd [1992] HCA 28; (1992) 107 FLR 362, 388 (Higgins J); 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) [1999] FCA 144; (1999) 30 ACSR 377, 386 (Finkelstein J); Re Universal Distributing Co Limited (In Liquidation) [1933] HCA 2; (1933) 48 CLR 171, 177.

[4] 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) [1999] FCA 144; (1999) 30 ACSR 377.

[5] Receivers' Indemnity and Lien Assignment Deed, Cl 2.

[6] Old Kiama Wharf Company Pty Ltd (in liq) v Betohuwisa Investments Pty Limited [2011] NSWSC 823, [42]-[44] and the cases cited therein.

[7] Hewitt v Court [1983] HCA 7; (1983) 149 CLR 639, 663 (Deane J); Re S&D International (in liq)(receiver and manager appointed) [2009] VSC 225, [261] .

[8] Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, 53 (Owen J).

[9] [1988] 3 WLR 95

[10] Trio Capital Ltd (Administrator appointed) v ACT Superannuation Management Pty Ltd [2010] NSWSC 941; (2010) 79 ACSR 425, [20]-[23].

[11] Thackray & Ors v Gunns Plantations Ltd & Ors [2011] VSC 380.