Re Great Southern Managers Australia Limited (rec's & m'gers app'td) (in liq) [2009] VSC 557 (4 December 2009)

MANAGED INVESTMENT SCHEMES - Meetings of growers' to consider proposed amendments to constitution and growers' agreements - Format of meetings - Concurrent meetings - Whether processes are in place to ensure that voting is done only by those members entitled to vote and that members have the opportunity for discrete discussion.

MANAGED INVESTMENT SCHEMES - Meetings of growers' to consider proposed amendments to constitution and growers' agreements - Valuation of votes - Members holding interests in the same class - Distinction drawn between unimpaired interests, impaired interests and partly-impaired interests - Statutory function of RE under s 253F(c) - Whether same value required by s 601FC(1)(d) Corporations Act 2001 (Cth) to treat members "equally".

RECEIVERS & MANAGERS - Whether the calling of the meetings is within the power of the receivers and managers pursuant to s 420 Corporations Act 2001 (Cth).

STATUTORY CONSTRUCTION - Role of extrinsic material where statutory terms are clear.

WORDS & PHRASES - "Associate" - "Interest" - ss 11, 12 and 253E of the Corporations Act 2001 (Cth).

1 Application has been made to the Court by the fifth plaintiff ("GSMAL") and its receivers and managers, the first to fourth plaintiffs, ("the receivers") for judicial advice and directions on matters concerned with the registered managed investment schemes ("MIS") listed in Annexure A to this judgment, of which GSMAL is the responsible entity ("RE"). GSMAL is insolvent and unable to continue to operate the MIS. Gunns Limited has a proposal ("the Gunns' proposal") for the restructure and future operation of the MIS under a Gunns company, Gunns Plantations Limited ("Gunns Plantations"), as the new RE. The plaintiffs want to put the Gunns' proposal to the members of the MIS for their consideration and, if thought fit, to pass four resolutions that are intended to give effect to, and to implement, the Gunns' proposal. The four resolutions are set out in Annexure B to this judgment. The receivers plan to hold concurrent meetings of members of the MIS on 23 December 2009 in Sydney.

2 The plaintiffs have raised a number of matters for the Court's consideration about the Gunns' proposal, which involves amending the MIS constitutions and the growers' contracts to implement. The matters concern the scope for constitutional amendment and the scope for, and manner of effecting, amendments to the growers' agreements. The plaintiffs have also raised matters for the Court's consideration about the conduct of the meetings. The issues concern:

(a) the voting entitlement of two members that are companies in the same group of companies as GSMAL, namely Great Southern Plantations Holdings Pty Ltd (in liquidation) ("GSPH") and Great Southern Finance Pty Ltd (in liquidation) ("GSF"); and

3 The Court has not been asked to determine the lawfulness of the proposed amendments or the legal effectiveness of the resolutions, if passed at the meetings. Rather, the plaintiffs have sought the Court's advice on whether, having regard to the matters that they have raised, they would be justified, and would otherwise be acting reasonably, in calling meetings to enable the Gunns' proposal to be put to the members and in conducting the meetings in the manner contemplated. The plaintiffs seek the orders because of possible uncertainty about the legal efficacy of what is proposed, but they do not ask the Court to decide the points. None of the orders sought (which are set out in Annexure C to this judgment) determine substantive rights. Undoubtedly, the Court has jurisdiction to give such judicial advice and directions to GSMAL, as the RE, under r 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic)[1] and to the receivers under s 424 of the Corporations Act 2001 (Cth) ("CA")[2] and in my view, this is a matter where it is appropriate for the Court to entertain the application as a measure for protecting the interests of the members of the MIS, as well as those of the plaintiffs.

4 I have had the benefit of the representation before me of a number of interested parties, in addition to the plaintiffs. The plaintiffs briefed independent counsel, Mr Glick SC and Mr Parkinson, to appear as contradictor. The plaintiffs also gave notice of the application to the external administrators of GSMAL, GSPH and GSF, to ASIC, to Gunns Limited and Gunns Plantations, to Bendigo and Adelaide Bank Ltd, a creditor of many growers with security over their scheme interests, and to Robert Burns, a grower and chairman of the committee of 'Save My Trees'. Another interested party, Primary RE Ltd, also sought, and I gave it leave, to put submissions to the Court. Primary RE, with its related company Pulpwood Plantations Pty Ltd, have an offer for the future operation of the 1998 to 2003 MIS which they will put to the members of those schemes at meetings called for 10 December 2009 ("the Primary RE proposal").

5 The Court was asked to hear the application on an urgent basis as the plaintiffs required the Court's advice by 27 November 2009, if they were to send out notices calling meetings for 23 December 2009. It is the plaintiffs' view that it is in the members' interests to hold the meetings as soon as practicable so that the members are able to consider the Gunns' proposal within a short time of the Primary RE proposal, which members will consider on 10 December 2009. There is also the need for an RE to replace GSMAL as soon as possible so that essential works, such as fire prevention measures, can be undertaken.

6 I heard the application on 20, 24 and 25 November 2009. On 27 November 2009 I made orders giving the directions that the plaintiffs sought in the amended originating process filed 26 November 2009 on the basis that I would deliver my reasons for judgment as soon as possible thereafter.

A. Issues about the proposed amendments to the constitution and the Growers' agreements

7 Briefly stated, the amendments to the constitutions of each of the MIS which members will be asked to vote on relate to:

(b) the RE's rights of indemnity in relation to certain expenses and liabilities;

(c) permitting the RE to set the time when forest products are harvested;

(d) proposed changes to the pro-forma growers' agreements; and

(e) the insertion into the constitution of a power of attorney given by the growers to the RE, which, amongst other things, will authorise the RE to vary the growers' agreements in accordance with the amendments effected to the pro-forma growers' agreements.

The full details of the proposed amendments are set out in the supplementary scheme booklets to be sent to each member with the notice of meeting.

8 The first issue is whether these proposed amendments would be within the scope of the power to amend the constitution of a registered scheme as prescribed by s 601GC of the CA. Section 601GC provides relevantly:

(1) The constitution of a registered scheme may be modified, or repealed and replaced with a new constitution:

(a) by special resolution of the members of the scheme; or

(b) by the responsible entity if the responsible entity reasonably considers the change will not adversely affect members' rights.

(2) The responsible entity must lodge with ASIC a copy of the modification or the new constitution. The modification, or repeal and replacement, cannot take effect until the copy has been lodged.

9 Senior counsel for the Plaintiffs submitted that the proposed constitutional amendments would be permitted by s 601GC(1). No party contended that any of the proposed amendments would be outside the statutory power prescribed in s 601GC(1) and I do not think that the section fetters the kind of amendment that can be made to the constitution of a registered scheme.[3] In my opinion, it is legally permissible to effect the amendments to the constitutions of the MIS that Gunns' proposes, subject to the statutory prescription that it be done by way of special resolution of the members or by the RE if the RE reasonably considers that the amendments will not adversely affect the members' rights. The Gunns' proposal provides for the amendments to the constitutions to be effected by a special resolution,[4] thus satisfying the requirement in s 601GC(1)(a) and obviating the need for the RE to consider whether it can, or should, form a view for the purposes of s 601GC(1)(b). Accordingly I am of the view that the proposed amendments would be authorised by s 601GC(1) of the CA.

(ii) Scope of the power to amend, and manner of effecting amendments to, the Growers' Agreements

10 Some of the proposed constitutional amendments may require, or will be supported by, amendments made to the growers' agreements in the same terms as the changes to the pro-forma agreements in the constitutions. Case law indicates that simply amending the constitutions would not effect amendment of the growers' agreements and that it would be necessary for the actual contracts to be varied by agreement between the parties "as with any "ordinary" contract".[5] This means that any amendment would have to be in writing and "duly executed" by the parties, as required under the growers' agreements. [6]

11 The Gunns' proposal does not contemplate the RE seeking out the individual approval of each member for the variation of that member's grower's agreement. The Gunns' proposal will, instead, put to the members a resolution[7] that they approve the amendment of the growers' agreements in the manner set out in the supplementary scheme booklets and that they approve the right of the RE to make those amendments to the agreements on behalf of the growers using:

(a) the power of attorney that each grower/member gave GSMAL on signing the application form for an interest in the MIS ("the application power of attorney"). The grant of power included the grant of power to GSMAL "to vary" the provisions of the growers' agreements, subject to certain provisos;[8] and

(b) the power of attorney which will be inserted into the constitution as part of the constitutional amendments and effected by the members passing, by special resolution, resolution 2 ("the constitutional power of attorney"). The power will be an irrevocable grant of power to the RE "as the agent, representative and attorney of the Grower" "whether in the name of the Grower or the [RE]" "to ... amend" the relevant growers' agreements in the manner provided for in the supplementary scheme booklets.

12 The Court has been asked to consider whether those powers of attorney could be used to amend the growers' agreements on behalf of the growers.

13 The first matter raised for the Court's consideration concerned the status of the application power of attorney:

(a) one issue is whether that power of attorney remains in full force and effect. The plaintiffs submitted that the power has not been spent. The plaintiffs' submission is, in my view, supported by the provisions of the power of attorney and no submission was put to the contrary. I add the qualification "if valid" as Mr Glick SC for the contradictor has raised a potential issue about validity to which I refer later in this judgment. The power of attorney is to be found in the prospectus for each MIS. The power of attorney was created on each grower signing the application form for an interest in a MIS. By signing the application form, growers agreed to appoint GSMAL as their attorney "to the extent of, and with the powers as set out on pages 61 to 63 of [the] Prospectus".[9] The terms relevantly included clause 5 which provides for the power of attorney to "remain in full force and effect until notice of the death of the Appointor or the revocation of the Power of Attorney has been received by the Attorney".[10] The power, of course, would not be available where notice of the death of the grower or revocation of the power has been received by GSMAL. It would, in those circumstances, be necessary to rely on the constitutional power of attorney;

(b) another issue is whether a replacement RE could exercise the powers, given that they were granted to GSMAL. The issue arises because Gunns Plantations will become the RE in place of GSMAL, if the Gunns' proposal is approved by the members. Senior counsel for the plaintiffs submitted that the rights of GSMAL to exercise the application power of attorney would be novated to the new RE by operation of ss 601FS and 601FT of the CA, thus preserving for the new RE, the powers that had been granted in favour of GSMAL. I would read ss 601FS and 601FT as having that operation.

14 The second matter raised for the Court's consideration related to the operation of s 601GC of the CA and whether that section would permit the constitutions of the MIS to be amended to insert the constitutional power of attorney. I have dealt with that issue above and concluded that such an amendment would be authorised if made by special resolution, which is proposed here.

15 The third matter raised for the Court's consideration was whether amendment of the growers' agreements is within the powers conferred in the RE under either power of attorney. In my view, both powers confer such a right. Both powers of attorney contain an express power to vary the growers' agreements, subject to certain provisos. The provisos to the powers to vary are expressed in the same form as:

• in the opinion of the Responsible Entity is not likely to be to the detriment of the grower's interests in the [relevant agreement];
• will in the opinion of the Attorney enable the [relevant agreement] to better administered and managed in the interests of the registered scheme;
• is in the opinion of the responsible entity required as a matter of continuing compliance with the relevant statutory requirements;
• Is in the opinion of the responsible entity required to correct factual error in the documents; or
• is agreed between the grower and the responsible entity.[11]

It is also a term of the grant of the powers in each power of attorney that a variation may only be affected if it has been approved by an ordinary resolution at a formal meeting of growers of the project if, in the opinion of the RE, the variation may adversely affect the grower's interests.[12] I am satisfied that the legal framework for the exercise of power exists, because the use of such powers to amend the growers' agreements in the manner set out in the supplementary scheme booklets will be in accordance with the proposed resolutions, which can only take effect if all resolutions are passed. Significantly:

(a) the constitutional amendments can only be made if the grower/members pass special resolutions amending the constitutions;

(b) each grower acknowledged and agreed on signing the application form for interests in a MIS "[t]o be bound by the provisions of the Constitution constituting the scheme Great Southern Plantations [], as amended from time to time" (italics added)[13]; and

(c) the Gunns' proposal makes the effecting of the amendments to the growers' agreements using the powers of attorney interdependent on the grower/members approving the amendments by an ordinary resolution, which is the requirement if, and to the extent that, such amendments may be thought by the RE to be adverse to the members' interests.

In the circumstances, I am satisfied that the use of the powers is supported by the form of the resolutions.

16 Mr Glick SC for the contradictor did not oppose the Court making orders 1 and 2 of the orders sought in the amended originating process but he properly mentioned some other issues that raise uncertainty about the legal efficacy of relying on the powers of attorney to make the changes.

17 Mr Glick SC first submitted that there may be issues about the validity of the powers of attorney contained in the application forms as a power of attorney is not a contract but a grant of power in favour of a person and thus the proper law governing the power of attorney will not necessarily be the same as the law governing the contract in which the power was contained and each jurisdiction has its own rules about validity. Next Mr Glick SC submitted that a power of attorney in the constitution that is irrevocable may not be lawful. Next, it was submitted that there is a "major problem" about incorporating a power of attorney into the MIS constitutions to amend a contract unilaterally after the event. I was referred the High Court decision in Bailey v New South Wales Medical Defence Union Limited[14] and to the passage of the joint decision of Brennan CJ, Deane and Dawson JJ:

Whilst the articles of association of a company regulate the relations of the members amongst themselves as members and with the company, they do not preclude a member from contracting individually with the company upon terms which may or may not be defined by reference to the articles. Such a contract has been called a special contract... Even if the terms of a special contract are to be determined by reference to the articles, an alteration to those articles will not necessarily mean an alteration to the terms of the contract. ... On the other hand, a special contract may be concluded upon the basis of the articles but with the intention that the terms of the contract are not to be varied by an alteration to the articles. That will not confine the statutory power of the company to alter its articles, but the company in acting upon the basis of an alteration may be acting in breach of contract. That, we think, was what Lindley MR had in mind in Allen v Gold Reefs of West Africa Ltd when, in speaking of special contracts, he said that a "company cannot break its contracts by altering its articles". Put another way, a company cannot unilaterally vary its contracts by altering its articles unless that is the basis upon which the contract was made. (underlining added)[15]

Mr Glick SC submitted that it may be in breach of the growers' agreements for the RE to exercise its power of amendment contained in the constitutional power because, arguably, the only way in which those agreements can be varied is pursuant to the terms of the agreements themselves.

18 Mr Glick SC accepted that the issues he raised with the Court concerning the powers of attorney involve difficult and complex questions of law for determination and that they are matters of law on which reasonable people may differ. He was not therefore submitting that the resolutions, on any view, could not be legally effective and he agreed that it is properly arguable that the powers will be available for use. I agree with Mr Glick SC that it is open to argument that the proposed resolutions, if passed, may not achieve the legal effect that is intended, but it is by no means clear that such arguments must succeed. In the circumstances, I have concluded that the plaintiffs would be justified, and would be acting reasonably, in calling meetings of the members of the MIS to consider and vote on each of the proposed resolutions.

19 A meeting of members of each MIS is required for the purpose of considering and voting on the proposed resolutions to enable the Gunns' proposal to be approved and implemented. There is, however, a great deal of sense in holding the meetings concurrently provided that there are processes in place to ensure that the voting with respect to each scheme is done only by those members entitled to vote and that such members have the opportunity for discrete discussion concerning the resolutions on which they are voting.[16] Mr Anson, solicitor for the plaintiffs, deposed to processes that are to be put into place to enable that to occur. In the circumstance, I have concluded that the plaintiffs would be justified and acting reasonably in holding concurrent meetings.

20 GSPH and GSF are members of the Great Southern Group of companies. They also hold interests in certain of the MIS. As members of the MIS they are entitled to vote at the meetings unless s 253E of the CA applies. Section 253E of the CA places restrictions on the entitlement of the RE and its "associates" to vote on a resolution at a meeting of the registered scheme's members. Section 253E provides as follows:

Responsible entity and associates cannot vote if interested in resolution

The responsible entity of a registered scheme and its associates are not entitled to vote their interest on a resolution at a meeting of the scheme's members if they have an interest in the resolution or matter other than as a member. However, if the scheme is listed, the responsible entity and its associates are entitled to vote their interest on resolutions to remove the responsible entity and choose a new responsible entity.

21 The term "associate" is defined in ss 11 and 12 of the CA. The definition of "associate" in s 11, if it applies, would operate to make GSF and GSMAL "associates" for the purposes of s 253E. The definition in s 12 is narrower. Section 12 provides as follows:

(1) Subject to subsection 16(1), but despite anything else in this Part, this section applies for the purposes of interpreting a reference to an associate (the associate reference), in relation to a designated body, if:

(a) the reference occurs in a provision of Chapter 6, 6A, 6B or 6C; or

(b) the reference occurs in a provision outside those Chapters that relates to any of the following matters:

(i) the extent, or restriction, of a power to exercise, or to control the exercise of, the votes attached to voting shares in the designated body;

(2) For the purposes of the application of the associate reference in relation to the designated body, a person (the second person) is an associate of the primary person if, and only if, one or more of the following paragraphs applies:

(a) the primary person is a body corporate and the second person is:

(iii) a body corporate that is controlled by an entity that controls the primary person;

(3) For the purposes of the application of this section in relation to a designated body that is a managed investment scheme:

(b) a reference to voting shares in the designated body is taken to be a reference to voting interests in the managed investment scheme.

22 The first question for consideration is whether the definition in s 11 or the definition in s 12 applies for the purposes of s 253E. Counsel for RE Primary submitted that the provisions of s 11 of the CA define "associate" for the purposes of s 253E. He submitted that although the terms of s 12(1)(b), when "read literally", would appear to apply s 12 for the purposes of interpreting the expression "associate" in s 253E, the section should not be so construed, but rather should be construed consistently with the Explanatory Memorandum to the Financial Services Reform Bill 2001, which introduced s 12, and which indicated that the narrower definition applied only in the context of takeovers.[17] I reject the submission that the section should not be construed on its terms but by reference to the explanatory memorandum.[18] In my view the s 12 definition clearly applies for the purposes of s 253E.

23 The next question for consideration is whether either GSF or GSPH "is controlled by an entity that controls" GSMAL. "Control" for the purposes of s 12(2)(a)(iii) is defined in s 50AA of the CA as follows:

(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(2) In determining whether the first entity has this capacity:

(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and

(b) any practice or pattern of behaviour affecting the second entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(a) has the capacity to influence decisions about the second entity's financial and operating policies; and

(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity's members;

the first entity is taken not to control the second entity.

24 Senior counsel for the plaintiffs submitted that although GSMAL, GSPH and GSF have a common holding company, Great Southern Ltd (GSL), GSPH and GSF are not "associates" of GSMAL by reason that GSMAL and GSL are under the present control of the receivers whereas GSPH and GSF are under the control of different external administrators and thus the receivers of GSL and GSMAL do not have "control" over GSPH and GSF within the meaning of that expression as defined in s 50AA for the purposes of s 12(2)(a)(iii). There may be some force in those submissions. However, I have not formed any firm view about whether this submission should be accepted as the evidence about who was appointed to which company and in what capacity was not sufficiently explained to me.

25 That is not the end of the matter. Both GSF and GSPH have interests in the 1998 - 2003 MIS. The proscription in s 253E on an RE and its associates voting is "if they have an interest in the resolution or matter other than as member". I read the words "if they have an interest" as a reference only to the interest of the entity voting and not as including the interest of the RE. "Interest" in this context has been held to "encompass[] any direct or indirect benefit or advantage, other than as a member, arising out of the passing of the resolution".[19] As the material before me does not show or suggest that either company would obtain any direct or indirect benefit or advantage from voting on the proposed resolutions, other than in their capacity as members, I have concluded that the plaintiffs would be justified and would be acting reasonably in accepting and counting any votes by GSF and GSPH on resolutions put forward at the meetings. I was told by senior counsel for the plaintiffs that the receivers propose to ensure that the votes of GSF and GSPH will be able to be identified.

26 The next issue concerns the number of votes that members can have at the meetings. The issue arises because it will be necessary for the resolutions to be decided on a poll, as there are special and extraordinary resolutions to be passed.[20] Section 253C(2) of the CA provides:

On a poll, each member of the scheme has 1 vote for each dollar of the value of the total interests they have in the scheme.

The value of an interest in a registered scheme is:

...

(c) in any other case - the amount that the responsible entity determines in writing to be the price that a willing but not anxious buyer would pay for the interest if it were sold on the business day immediately before the day on which the poll is taken.

27 Historically the annual accounts of the MIS have valued the interests of members in each scheme at $0. In order to make a determination for the purposes of s 253F, the plaintiffs obtained advice on how to approach valuation, on which they intend to act. The plaintiffs, as advised, propose to approach the valuation of interests in the MIS by allocating nominal values to the interests, distinguishing between "unimpaired interests", "impaired interests" and "partly-impaired interests" as follows:

a) unimpaired interest: where the member holds leases in respect of woodlots on land where the head-leases of GSMAL have not been forfeited by the head lessor - $5.00 multiplied by the number of wood lots held by the member; and

b) impaired interest: where the member holds leases in respect of woodlots on land where the head-leases of GSMAL have been forfeited by the head lessor - $1.00 multiplied by the number of woodlots held by the member immediately before the forfeiture; and

c) partly-impaired interest: where the member holds leases partly in respect of woodlots on land where the head leases of GSMAL have been forfeited by the head lessor and partly in respect of woodlots on land where the head leases of GSMAL have not been forfeited by the head lessor:

(i) $5.00 multiplied by the number of woodlots held by the member on land where the head-leases have not been forfeited and

(ii) $1.00 multiplied by the number of woodlots held on land where the head-leases have been forfeited held by the member immediately before the forfeiture.

Further, the plaintiffs propose to allocate to a member on the poll one vote for each dollar of the value of the total interest the member has in the scheme.

28 Senior counsel for the contradictor informed the Court that he accepted that the plaintiffs would be justified and otherwise would be acting reasonably in accepting votes on the basis of the value so determined.

29 Senior counsel for ASIC argued that the proposed methodology was not in accord with the obligations of the RE under s 601FC(1), notably paragraph (d). Section 601FC(1)(d) provides that:

(1) In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:

(d) treat the members who hold interests of the same class equally and members who hold interests of different classes fairly.

It was argued, as a matter of construction, that the plaintiffs must determine the same value for the interests by reason of s 601FC(1)(d) of the CA and not differentiate between members whose leases have been forfeited and members who still have leases. Here, it was submitted, all members are of the same class, albeit that some now hold impaired interests, and thus the exercise of the function for the purposes of s 253F carries with it the duty to treat those interests "equally" in the sense of "the same". In other words, to attribute the same value to each member's interest, whether impaired or not. I am not persuaded that the construction urged on behalf of ASIC must be correct. In my view, the construction urged by ASIC elides the duty expressed in s 601FC(1)(d) with the statutory requirement on the RE to determine value of an individual interest for the purposes of voting rights. In my view, the preferable construction is that s 253F(c) requires the plaintiffs to determine the value of the individual interest of each member voting and that s 601FC does not mandate that such interests must be valued the same.

30 Accordingly, I have concluded that the plaintiffs would be justified and would otherwise be acting reasonably in determining value for the purposes of s 253F on the basis of the advice that they received, notwithstanding that the values will be different according to whether a member holds an unimpaired, impaired, or partly impaired and partly unimpaired interest.

31 I note for completeness that I am not persuaded that the plaintiffs have not put before me any proper basis for the proposed valuations. There were before me, and may continue to be, arguments about whether the values should be something different but it cannot be said, in my view, that the approach that the plaintiffs propose to take to valuation is so unreasonable as not to amount to the exercise of statutory function under s 253F(c) of the CA.

32 ASIC, Mr Burns and RE Primary each put the submission that it is undesirable for two separate lots of meetings to be held, one to consider the RE Primary proposal and the other to consider the Gunn's proposal. Counsel for Mr Burns elevated the submission to a contention that this is a factor against granting the relief sought. It is undoubtedly not desirable for multiple meetings to be held, if that can be avoided and this is a factor that I would take into consideration in determining whether to make the orders that are sought. Having said this, the fact that it is undesirable is not sufficient reason to withhold the relief, if otherwise I am satisfied, as I am, that the plaintiffs would be justified and acting reasonably in calling the meetings.

33 Finally, counsel for Mr Burns submitted that the receivers have no power or capacity to call the meetings and thus the orders sought should not be made without the approval of the liquidators or the Court under s 420C of the CA. It was submitted that upon the appointment of liquidators to GSMAL, the receivers' authority became limited to taking steps, on behalf of the mortgagee, to protect, enforce or realise the secured property and that the authority does not extend to calling meetings under s 252A, which power is vested exclusively in the RE. It was further submitted that unless it is shown that the calling of the meetings is "necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed",[21] namely the realisation of their appointer's security, then the exercise of the statutory power under s 252A is reserved to the liquidators. I do not accept that there is no evidence before the Court to show that the calling of the meetings is necessary or convenient or incidental to the attaining of the purposes for which they were appointed. I am satisfied that the affidavit material deposed to by Mr McGrath provides sufficient foundation for the Court to be satisfied that the receivers have the power to call these meetings.

34 For these reasons, the plaintiffs should have orders made in the terms they sought in the amended originating process, as outlined in Annexure C.

1. Great Southern Plantations 1998 (ARSN 092 780 204)
2. Great Southern Plantations 1999 (ARSN 092 452 849)
3. Great Southern Plantations 2000 (ARSN 085 669 361)
4. Great Southern Plantations 2001 (ARSN 089 958 029)
5. Great Southern Plantations 2002 (ARSN 095 343 963)
6. Great Southern Plantations 2003 (ARSN 099 131 825)
7. Great Southern Plantations 2004 (ARSN 107 811 709)
8. Great Southern Plantations 2005 (ARSN 112 744 877)
9. Great Southern Plantations 2006 (ARSN 112 744 902)

To consider and, if thought fit, pass the following resolutions as an ordinary resolution:

"That, subject to Resolutions 2, 3 and 4 being passed, the Growers approve the proposal by Gunns Plantations Limited described in Part C of the General Meeting Booklet and Part C of the Supplementary Scheme Booklet accompanying the Notice of Meeting dated 27 November 2009."

Resolution 2 - Amendments to the Constitution to implement the Gunns Proposal

To consider and, if thought fit, pass the following resolution as a special resolution:

"That, subject to Resolutions 1, 3 and 4 being passed, the constitution of Great Southern Plantations [] Scheme [] be amended by Gunns Plantations Limited immediately following its appointment as the responsible entity under section 601FJ of the Corporations Act in the manner set out in Part C of the Supplementary Scheme Booklet accompanying this notice of meeting dated 27 November 2009 in accordance with section 601GC(1)(a) of the Corporations Act."

Resolution 3 - Amendments to the Grower Agreements to implement the Gunns Proposal

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

"Subject to Resolutions 1, 2 and 4 being passed, that the Growers approve the amendment of the Growers' Agreements in the manner set out in Part C of the Supplementary Scheme Booklet and acknowledge the right of Great Southern Managers Australia Limited (In Liquidation) (Receivers and Managers Appointed) or Gunns Plantations Limited (as the case may be) acting as the responsible entity of Great Southern Plantations [] Scheme [] (the Scheme) to make those amendments using the rights of the responsible entity under any powers of attorney granted by Growers in relation to the Scheme, including the powers of attorney granted by Growers pursuant to Resolution 2, and the powers of attorney granted by Growers in their application forms submitted at the time of applying for interests in the Scheme (including as a prescribed interest undertaking prior the Scheme's registration under the Corporations Act)."

Resolution 4 - Appointment of New Responsible Entity for the Gunns Proposal

To consider and, if thought fit, pass the following resolution as an extraordinary resolution:

"That, subject to and conditional upon:

(1) Resolutions 1, 2 and 3 being passed; and

(2) all of the resolutions contained in the Notices of Meeting (dated on or about the date of this notice of meeting) for the:

"Great Southern Plantations []" ARSN [];

"Great Southern Plantations []" ARSN [];

"Great Southern Plantations []" ARSN [];

"Great Southern Plantations []" ARSN [];

"Great Southern Plantations []"ARSN [];

"Great Southern Plantations []" ARSN [];

"Great Southern Plantations []" ARSN []; and

"Great Southern Plantations []" ARSN [],

(the Other Projects) being passed or if all of the resolutions in the Notices of Meeting (dated on or about the date of this notice of meeting) for a majority of the projects (being the Great Southern Plantations [] Scheme ARSN [] (the Scheme) and the Other Projects) are passed, such number of Other Projects as Gunns Plantations Limited and Great Southern Managers Australia Limited (In Liquidation) (Receivers and Managers Appointed) (GSMAL) may agree and advise (including by notice on Gunns Plantations Limited's or GSMAL's website) no later than 10 Business Days after the day of the Meeting.

Gunns Plantations Limited be appointed the responsible entity of the Scheme on the retirement of GSMAL in accordance with section 601FL of the Corporations Act and GSMAL is released from all liabilities and further obligations in relation to the Scheme."

Annexure C - Orders sought in the Amended Originating Process

filed 26 November 2009

1. A direction pursuant to r. 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that the Fifth Plaintiff would be justified, and would otherwise be acting reasonably , in calling a meeting of members of each of the registered managed investment schemes more precisely identified in [the schemes] pursuant to s. 252A of the Corporations Act 2001 (Cth) to consider resolutions in the same or similar terms as the resolutions (Proposed Resolutions) referred to in affidavits to be filed with the Court in so far as each of the Proposed Resolutions purport to confirm or acknowledge the entitlement of, or otherwise enable, any replacement responsible entity, alternatively the Fifth Plaintiff, to effect the variation of the project documents set out in [the project documents].
2. Further and alternatively, a direction pursuant to s. 424 of the Corporations Act 2001 (Cth) that the First to Fourth Plaintiffs would be justified, and would otherwise be acting reasonably, in causing the Fifth Plaintiff to call a meeting of members of the Schemes pursuant to s. 252A of the Corporations Act 2001 (Cth) to consider resolutions in the same or similar terms as the Proposed Resolutions in so far as the Proposed Resolutions purport to confirm or acknowledge the entitlement of, or otherwise enable, any replacement responsible entity, alternatively the Fifth Plaintiff, to effect the variation of the Project Documents.
3. A direction pursuant to r. 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that the Fifth Plaintiff would be justified, and would otherwise be acting reasonably , in holding any meetings of members of each of the Schemes aforesaid concurrently with and at the same place and time as the meetings of members of each of the other Schemes.
4. Further and alternatively, a direction pursuant to s. 424 of the Corporations Act 2001 (Cth) that the First to Fourth Plaintiffs would be justified and would otherwise be acting reasonably, in causing the Fifth Plaintiff to hold any meetings of members of each of the Schemes aforesaid concurrently with and at the same place and time as the meetings of members of each of the other Schemes.
5. A direction pursuant to r. 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that the Fifth Plaintiff would be justified, and would otherwise be acting reasonably , in relation to the conduct of any meeting called as referred to above, in accepting and counting any votes by:
   • (a) Great Southern Plantations Holdings Pty Ltd (Administrators Appointed) (ACN 132 912 184);
   • (b) Great Southern Finance Pty Ltd (Administrators Appointed) (ACN 009 235 143),

on resolutions put forward at the meetings notwithstanding the provisions of s. 253E of the Corporations Act 2001 (Cth) if and to the extent that they apply solely by virtue of:

(i) the existence of a common holding company for each of those companies and the Fifth Plaintiff;

(ii) the Fifth Plaintiff's interest in the resolutions as current responsible entity.

1. Further and alternatively, a direction pursuant to s. 424 of the Corporations Act 2001 (Cth) that the First to Fourth Plaintiffs would be justified, and would otherwise be acting reasonably, in relation to the conduct of any meeting called as referred to above, in causing the Fifth Plaintiff to accept and count any votes by:
   • (a) Great Southern Plantations Holdings Pty Ltd (Administrators Appointed) (ACN 132 912 184);
   • (b) Great Southern Finance Pty Ltd (Administrators Appointed) (ACN 009 235 143),

on resolutions put forward at the meetings notwithstanding the provisions of s. 253E of the Corporations Act 2001 (Cth) ) if and to the extent that they apply solely by virtue of:

(i) the existence of a common holding company for each of those companies and the Fifth Plaintiff;

(ii) the Fifth Plaintiff's interest in the resolutions as current responsible entity.

1. A direction pursuant to r. 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that the Fifth Plaintiff would be justified, and would otherwise be acting reasonably , in relation to the conduct of any meeting called as referred to above, in determining for the purposes of 253F(c) of the Corporations Act 2001 (Cth) that the price that a willing but not anxious buyer would pay for a member's interest in the Scheme if it were sold on the business day immediately before the day of a poll in a meeting of members as follows:

(a) where the member holds Leases (as defined in the constitution of the Scheme) in respect of Woodlots (as defined in the constitution of the Scheme) situated on land where the head-leases of the Fifth Plaintiff have not been forfeited by the head lessor (Unimpaired Interest) - $5 multiplied by the number of Woodlots held by the member; and

(b) where the member holds Leases in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have been forfeited by the head lessor (Impaired Interest) - $1 multiplied by the number of Woodlots held by the member immediately before the forfeiture; and

(c) where the member holds Leases partly in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have been forfeited by the head lessor and partly in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have not been forfeited by the head lessor (Partly-Impaired Interest):

(i) $5 multiplied by the number of Woodlots, situated on land where the head-leases have not been forfeited, held by the member; plus

(ii) $1 multiplied by the number of Woodlots, situated on land where the head-leases have been forfeited, held by the member immediately before the forfeiture.

1. Further and alternatively, a direction pursuant to s. 424 of the Corporations Act 2001 (Cth) that the First to Fourth Plaintiffs would be justified, and would otherwise be acting reasonably, in relation to the conduct of any meeting called as referred to above, in causing the Fifth Plaintiff to determine for the purposes of 253F(c) of the Corporations Act 2001 (Cth) that the price that a willing but not anxious buyer would pay for a member's interest in the Scheme if it were sold on the business day immediately before the day of a poll in a meeting of members as follows:

(a) where the member holds Leases (as defined in the constitution of the Scheme) in respect of Woodlots (as defined in the constitution of the Scheme) situated on land where the head-leases of the Fifth Plaintiff have not been forfeited by the head lessor (Unimpaired Interest) - $5 multiplied by the number of Woodlots held by the member; and

(b) where the member holds Leases in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have been forfeited by the head lessor (Impaired Interest) - $1 multiplied by the number of Woodlots held by the member immediately before the forfeiture; and

(c) where the member holds Leases partly in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have been forfeited by the head lessor and partly in respect of Woodlots situated on land where the head-leases of the Fifth Plaintiff have not been forfeited by the head lessor (Partly-Impaired Interest):

(i) $5 multiplied by the number of Woodlots, situated on land where the head-leases have not been forfeited, held by the member; plus

(ii) $1 multiplied by the number of Woodlots, situated on land where the head-leases have been forfeited, held by the member immediately before the forfeiture.

1. A direction pursuant to r. 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) that the Fifth Plaintiff would be justified, and would otherwise be acting reasonably , in relation to the conduct of any meeting called as referred to above, in allocating to a member on a poll, for the purposes of s 253C(2) of the Corporations Act 2001 (Cth), 1 vote for each dollar of the value of the total interests the member has in the Scheme as determined in accordance with directions 7 and 8 above.
2. Further and alternatively, a direction pursuant to s. 424 of the Corporations Act 2001 (Cth) that the First to Fourth Plaintiffs would be justified, and would otherwise be acting reasonably , in relation to the conduct of any meeting called as referred to above, in causing the Fifth Plaintiff to allocate to a member on a poll, for the purposes of s 253C(2) of the Corporations Act 2001 (Cth), 1 vote for each dollar of the value of the total interests the member has in the Scheme as determined in accordance with directions 7 and 8 above.
3. Such further or other orders as may be just or necessary.

[1] Section 601FC(2) Corporations Act 2001 (Cth); Re Mirvac Ltd [1999] NSWSC 457; (1999) 32 ACSR 107, 113 (Austin J); Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Peter the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66; MTM Funds Management Ltd v Cavalane Holdings Pty Ltd [2000] NSWSC 922; (2000) 158 FLR 121; Re Macquarie Goodman Funds Management Ltd (2004) 52 ASCR 194; Re Abacus Funds Management Ltd [2005] NSWSC 1309; (2006) 24 ACLC 211.

[2] Re One.Tel Networks Holdings Pty Ltd [2001] NSWSC 1065; (2001) 40 ACSR 83.

[3] Cf Kearns v Hill (1990) 21 NSWLR 107; Permanent Trustee Co Ltd v National Australian Managers Ltd (Unreported, McLelland CJ in Eq, 8 August 1994).

[5] Alpha Wealth Financial Services Pty Ltd v Franklin River Olive Co Ltd [2008] WASCA 119; (2008) 66 ACSR 594, 597 [4] - [8] (Pullin JA); 621 - 623 [120] - [131] (Buss JA); Bailey v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399, 439 (McHugh and Gummow JJ).

[6] See cl 37.1 Lease and Management Agreement; 29.1 Land and Management Agreement; cl 20.1 Lease; cl 37.1 Forest Right and Management Agreement; cl 20.1 Forest Right Agreement.

[8] Replacement Prospectus, pp 61-63, and application form contained at p 69.

[9] Cl 3, applicant's acknowledgement and acceptance contained at p 70 of the Replacement Prospectus.

[11] Cl 1(e) and (j) of the application power of attorney at pp 61-63 of the Replacement Prospectus.

[13] Refer cl 2 of the applicant's acknowledgement and acceptance at p 70 of the Replacement Prospectus:

By signing the Application Form ... I/we hereby acknowledge and agree:

2. To be bound by the provisions of the Constitution constituting the scheme Great Southern Plantations [], as amended from time to time (italics added).

And cl 1 of the application power of attorney, at pp 61-63 of the Replacement Prospectus, in particular cl 1(e) and (j).

[14] [1995] HCA 28; (1995) 184 CLR 399.

[16] Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485; (2006) 57 ACSR 791; Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101.

[17] Paragraph 20.48 stated: "proposed subsection 12(2) will also clarify that where associate is used in another definition (such as the definition of substantial holding in s 9), and that other definition is used in a provision in Chapters 6 to 6C, then associate has the narrower section 12 meaning."

[18] Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214, 223 (Mason CJ and Toohey J); Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355.

[19] Southern Wine Corporation Pty Ltd v Perera [2006] WASCA 275; (2006) 61 ACSR 40.