Plaintiffs v Defendants

Plaintiffs v Defendants - [2011] VSC 417 - VSC 2011 case summary — Zoe

[42]

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.
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.
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.
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.
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.

[57]

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.
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.
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.
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).
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.
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).
On 20 July 2010, Simon Andrew Read retired as a joint and several receiver of GSMAL.
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,

[62]

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.

[67]

(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

[101]

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

[103]

(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

At a glance

Court

Decision date

Before

Source

Judgment (143 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (4)