Silvia administrators appointed, in the matter of FEA Plantations Ltd (subject to deed of company arrangement) (receivers appointed) [2013] FCA 1331

FEDERAL COURT OF AUSTRALIA

Citation:	Silvia administrators appointed, in the matter of FEA Plantations Ltd (subject to deed of company arrangement) (receivers appointed) [2013] FCA 1331

Parties:	BRIAN SILVIA AND PETER KREJCI AS DEED ADMINISTRATORS OF FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED) and FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

File number:	VID 1157 of 2013

Judge:	GORDON J

Date of judgment:	28 November 2013

Date of hearing:	26 and 27 November 2013

Date of Publication of Reasons:	9 December 2013

Date of last submissions:	28 November 2011

Place:	Melbourne

Division:	GENERAL DIVISION

Category:	No catchwords

Number of paragraphs:	49

Counsel for the Plaintiffs:	AP Young with VM Priskich

Solicitor for the Plaintiffs:	Cornwall Stodart

Counsel for the Receivers and Managers of Forest Enterprises Australia Ltd, FEA Carbon Pty Ltd and Tasmanian Plantation:	PD Crutchfield SC with O Bigos

Solicitors for the Receivers and Managers of Forest Enterprises Australia Ltd, FEA Carbon Pty Ltd and Tasmanian Plantation:	Maddocks Lawyers

Counsel for Patricia Bennett and Peachbride Pty Ltd:	S Hopper

Solicitors for Patricia Bennett and Peachbride Pty Ltd:	Mills Oakley

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1157 of 2013

IN THE MATTER OF FEA PLANTATIONS LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

BETWEEN:

BRIAN SILVIA AND PETER KREJCI AS DEED ADMINISTRATORS OF FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

First Plaintiff

FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

Second Plaintiff

AND:

JUDGE:	GORDON J
DATE:	28 NOVEMBER 2013
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1 Brian Silvia and Peter Krejci (the Administrators) of FEA Plantations Ltd (ACN 055 969 429) (subject to deed of company arrangement) (receivers appointed) (FEAP) and FEAP sought relief in relation to eight registered managed investment forestry schemes (the Schemes) and the administration of the Deed of Company Arrangement (DOCA) executed in respect of FEAP. The Schemes are listed in Annexure 1. FEAP is the responsible entity of each Scheme.

2 Pursuant to s 601ND of the Corporations Act 2001 (Cth) (the Act), FEAP sought an order that each Scheme be wound up. The Administrators also sought related orders and directions. First, that they be given responsibility to ensure each Scheme is wound up in accordance with its Constitution and any orders of the Court pursuant to s 601NF(1) of the Act. Second, the Administrators sought orders conferring on FEAP what was described as a Termination Power and which, in general terms, authorised the Administrators to terminate particular rights and obligations in relation to or arising out of each Scheme. Third, they sought ancillary directions and orders. It will be necessary to consider each limb of the orders in further detail below.

3 These Reasons for Judgment record why the orders and directions in Annexure 2 were made on 28 November 2013.

4 Before turning to consider the various legal and factual issues that arose for consideration, it is appropriate to describe in general terms what necessitated the Administrators’ application. The purpose of each Scheme was to plant and cultivate trees for sale for profit. Profits were to be realised upon the harvest and sale of the trees (about 13 years after the trees were planted) and then distributed amongst the scheme members, known as Growers. As already mentioned, FEAP is the responsible entity of each Scheme. FEAP is not able to continue to act as the responsible entity. Due to a lack of funds, FEAP is unable to continue to operate the Schemes. No viable proposal exists from any willing and able replacement responsible entity. Each Scheme is unviable and its purpose cannot be accomplished. Litigation in the Supreme Court of Victoria against FEAP by companies in the FEA group of companies (FEA Group) and their receivers, managers and controllers (as the case may be) (the Receivers) was instituted in 2011 seeking declarations that certain leases and other interests in the land on which the trees were planted (the Land) had been validly terminated. That litigation has been settled (the Compromise). The terms of the Compromise are confidential. It is sufficient for present purposes to record that the Compromise extended to other earlier managed investment forestry schemes involving FEAP as the responsible entity, related entities of FEAP and banks.

5 The orders in the present application, in part, were sought to deal with the rights of the Growers and FEAP in respect of the Land in a way that would facilitate the sale of the Land unencumbered and permit the Compromise and relevant DOCAs for the benefit of Growers. In general terms, the Compromise, inter alia, took away the Growers’ rights under the Schemes (as well as certain obligations they had as Growers under the Schemes) and replaced those rights and obligations with a return to Growers of between 39 cents per woodlot and $161.79 per woodlot. The Administrators estimate that absent the Compromise, the return to Growers will be nil.

NOTICE AND POSITION ADOPTED

6 Notice of the application was given to:

1. the Growers;

2. FEA Growers Group Inc (Victorian Registered incorporated association no. A005461 OB), which has represented members of, amongst others, the Schemes in proceedings in this Court (the Growers Group);

3. the Receivers; and

4. the Australian Securities and Investments Commission (ASIC).

7 The Administrators, the Receivers and the Growers Group filed submissions and appeared at the hearing. The Receivers supported the Administrators’ application. At the hearing, Patricia Bennett and Peachbride Pty Ltd, two Scheme members, were joined as defendants to the proceeding. They were represented by Counsel and solicitors. They filed affidavit material and provided written and oral submissions. Their participation in the application was of great assistance. Subject to a couple of issues which will be addressed in further detail below, they also supported the Administrators’ application. Finally, ASIC was given late notice of the application. ASIC informed the Court that it did not oppose the orders and directions sought in the originating process, had no submissions to make and did not intend to appear.

FACTS

8 FEAP was registered on 19 May 1992. Until 2 October 2000, it was known as Tasforestry Ltd. From 3 October 2000 to 13 November 2002, it was known as Ausforestry Ltd.

9 Each Scheme was registered and FEAP became the responsible entity:

Date registered	Scheme entity	No. of Growers	Total funds subscribed
28.02.02	Australian Forests Project 2002 (ARSN 099 656 381) (the 2002 Scheme)	140	$1,829,694
30.03.03	Australian Forests Project 2003 (ARSN 099 656 381) (the 2003 Scheme)	599	$12,139,000
05.03.04	Australian Forests Project 2004 (ARSN 099 656 381) (the 2004 Scheme)	1,156	$26,217,000
14.03.05	Australian Forests Project 2005 (ARSN 099 656 381) (the 2005 Scheme)	2,174	$54,150,000
11.04.06	Australian Forests Project 2006 (ARSN 099 656 381) (the 2006 Scheme)	2,839	$67,318,650
23.04.07	Australian Forests Project 2007 (ARSN 099 656 381) (the 2007 Scheme)	2,345	$57,928,500
28.02.08	Australian Forests Project 2008 (ARSN 099 656 381) (the 2008 Scheme)	3,785	$107,713,120
14.04.09	Australian Forests Project 2009 (ARSN 099 656 381) (the 2009 Scheme)	565	$12,739,470

In fact, FEAP is the responsible entity of 17 registered managed investment schemes being forestry schemes established from 1993 to 2009 (inclusive). This application concerns only the Schemes in the above table.

10 For each Scheme, there was a Product Disclosure Statement (PDS). Each Scheme was promoted by FEAP. In general terms, the Growers invested money in the Schemes in return for interests comprising rights in respect of the land on which plantation trees were planted and grown and, further or alternatively, the plantation trees. Each PDS stated that the relevant plantation trees would be harvested and sold, with the object of producing financial returns for Growers commencing, at the earliest, about 13 years after the trees were planted.

11 The plantations the subject of the Schemes occupy a total of approximately 51,890 hectares of land in Tasmania, New South Wales, Queensland and the Northern Territory. Each parcel of land used in the Schemes, and on which plantation trees were planted and grown, was owned and leased by Forest Enterprises Australia Ltd (ACN 009 553 548) (FEA), FEA Carbon Pty Ltd (ACN 009 505 195) (FEAC), Tasmanian Plantation Pty Ltd (ACN 009 560 463) (TP) or an external landowner. In other words, some of the land was owned and leased by FEA Group companies other than FEAP (Internal Land), while other land was owned and leased by landowners external to the FEA Group (External Land). From at least May 2001, TP granted to FEAP forestry rights, in the nature of statutory profits a prendre, capable of registration pursuant to statute, in respect of the Land. Examples of the forestry rights were in evidence. They varied in nature depending on the location of the Land. Books and records belonging to and kept by FEA and FEAP in and for the purposes of the Schemes show, among other things, that forestry rights granted to FEAP were, and are, treated as being held by FEAP on trust for the Growers in the Schemes.

12 All of the Schemes were and are operated, at least notionally, by FEAP as responsible entity. However, books and records belonging to and kept by FEA and FEAP in and for the purposes of their businesses show that FEAP never employed any staff of its own. Rather, books and records belonging to and kept by FEA and FEAP in and for the purposes of their businesses show that from in or about 1992, FEAP engaged and retained FEA to plant and establish, maintain and harvest all of the plantation trees.

13 In or about 2001, FEAP and FEA agreed to terms governing the provision by FEA to FEAP of forestry establishment and maintenance services in respect of then existing and future schemes (2001 Management Agreement). In or about 2009, the 2001 Management Agreement was replaced with an agreement between FEAP and FEA dated 25 March 2009.

14 The trees planted and grown in, and for, the Schemes have not been harvested. They are too immature. In relation to the 2009 Scheme, some of the plantations have not been planted.

Appointment of administrators, other external controllers and the Litigation

15 On 14 April 2010, two events occurred. The Administrators (as well as a Mr Muldoon) were appointed as administrators of FEAP and three other FEA Group companies – FEA, FEAC and TP. Also on 14 April 2010, ANZ Fiduciary Services Pty Ltd (ANZ Fiduciary) appointed the Receivers as receivers and managers of FEA and FEAC and controllers of the property of TP. Then, on 3 June 2010, ANZ Fiduciary appointed the Receivers as receivers of the non-Scheme property of FEAP. FEAP, FEAC and TP is each a wholly owned subsidiary of FEA. That last appointment did not extend to any property held by FEAP in its capacity as responsible entity or any managed investment scheme.

16 On 27 April 2010, the Administrators (and Mr Muldoon) were replaced as administrators of FEAC and TP. On 10 August 2010, FEAC and TP executed a DOCA. On 12 May 2010, Mr Muldoon resigned as an administrator of FEA and FEAP. On 7 June 2010, Michael Williams, a director of FEAP, signed and provided to the Administrators a Report as to Affairs for FEAP. On 23 November 2010, FEAP and FEA’s creditors resolved that FEAP and FEA respectively execute a DOCA. FEAP and FEA each executed a DOCA on 14 December 2010 (FEAP DOCA and FEA DOCA respectively) and the Administrators became the Deed Administrators of FEAP and FEA.

17 Since soon after 14 April 2010, when the Administrators and Receivers were appointed, there have been disputes between FEAP, on one hand, and the owners of the Land (see [11] above) on the other, as to the terms upon which FEAP was entitled to occupy and use the Land and whether FEAP was in breach of the terms upon which FEAP was entitled to occupy and use the Land.

18 Those disputes underlay, and have been referred to in, various proceedings in this Court, including those resulting in the following judgments:

1. Silvia v FEA Carbon Pty Ltd (2010) 185 FCR 301;

2. Silvia, in the matter of FEA Plantations Ltd (Administrators Appointed) [2010] FCA 468;

3. Silvia v FEA Carbon Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 2) [2010] FCA 572;

4. Norman v FEA Plantations Ltd (2010) 191 FCR 39;

5. Norman, in the matter of Forest Enterprises Australia Ltd (Administrators Appointed) (Receivers & Managers Appointed) v FEA Plantations Ltd (Administrators Appointed) (Receivers Appointed) [2010] FCA 1444; and

6. Norman v FEA Plantations Ltd (2011) 195 FCR 97.

19 On 30 September 2011, proceedings were commenced in the Supreme Court of Victoria by TP, FEA, FEAC and the Receivers seeking, among other things, possession of the Internal Land (the Land Proceeding). Negotiations between the principal parties in the Land Proceeding commenced in November 2012.

20 The First Deed Administrators’ Report was sent to creditors of FEA and FEAP on 18 June 2013. On 28 June 2013, in anticipation of a conditional compromise of the Land Proceeding, meetings of creditors of FEA and FEAP were convened.

21 At the 28 June 2013 Meetings, creditors of FEA and FEAP were informed:

1. of the then proposed compromise with Australia and New Zealand Banking Group Ltd and Commonwealth Bank of Australia;

2. that the proposed compromise would involve a restructure or winding up of each of the Schemes;

3. that the Schemes for the years 1995 to 2001 may be modified and continue as part of a so-called “Macquarie Proposal”;

4. that, absent the adoption of the so-called “Macquarie Proposal”, the proposed compromise contemplated that the Internal Land used in all of the Schemes (and the trees grown thereon) would be sold and a share of the net proceeds (together with other assets) made available for distribution amongst Growers;

5. that, in any circumstance, the Schemes would be wound up; and

6. that by the proposed compromise, attempts were being made to achieve some return for all classes of FEA’s and FEAP’s creditors.

22 The creditors of FEA resolved to vary the FEA DOCA and the creditors of FEAP resolved to vary the FEAP DOCA. The same day, 28 June 2013, FEA and FEAP executed a varied DOCA.

23 On 5 September 2013, the principal parties to the Land Proceeding agreed to the Compromise. On 18 September 2013, the Compromise was varied in writing.

24 The Second Deed Administrators’ Report was sent to creditors of FEA and FEAP on 21 October 2013.

25 On 29 October 2013, meetings of creditors of FEA and FEAP were convened. At the meetings, the creditors were informed of, among other things, the Compromise. The creditors of FEA resolved to vary and extend the FEA DOCA to 29 November 2013 and the creditors of FEAP resolved to vary and extend the FEAP DOCA to 29 November 2013.

CURRENT POSITION

26 What then is the current position of FEAP? It was not in dispute that:

1. FEAP is insolvent;

2. FEAP does not have any assets of its own with which to meet the costs of any Scheme;

3. FEAP appears to have no assets other than the “scheme property” that it holds on trust by reason of s 601FC(2) of the Act and, in any event, any other assets held by FEAP are charged in favour of ANZ Fiduciary;

4. if FEAP were to be wound up in liquidation, its ordinary unsecured creditors (including the Growers and members of all of the other managed investment schemes of which it is the responsible entity) would receive no distribution from the winding up;

5. FEAP does not satisfy material conditions of its Australian Financial Services Licence; and

6. FEAP is unable to discharge the functions of responsible entity of any managed investment scheme.

27 Ordinarily, a solution would be to replace the responsible entity. The difficulty is that no willing and able replacement responsible entity has been identified for any of the Schemes. That is not surprising. The cash flow projections for the Schemes are not positive.

28 The evidence disclosed that the 2002 Scheme was structured differently from the later Schemes. Each Grower in the 2002 Scheme made a substantial initial payment to FEAP and is obliged to make regular periodic payments to FEAP on account of rent and management fees. The object of the regular periodic payments from Growers was to provide FEAP with a source of funds with which to meet the costs of the 2002 Scheme through to the completion of harvest. However, many Growers in the 2002 Scheme have failed, and continue to fail, to meet their obligations to make the payments. The 2002 Projected Cash Flow showed that even if Growers in the 2002 Scheme continued to make payments to the responsible entity at the present rate (which is unlikely) and FEAP or another responsible entity expended the funds necessary through to the completion of the harvest, FEAP or another responsible entity would suffer a net loss.

29 Each of the other Schemes is different. While Growers made an initial payment, FEAP was expected to meet the costs of the Scheme through to the completion of harvest. FEAP was expected then to recoup those costs from harvest proceeds.

30 The Projected Cash Flow for each Scheme (other than the 2002 Scheme) shows that to meet the costs of that Scheme through to the completion of harvest, FEAP (or another responsible entity) would be required to expend a specified sum but that if FEAP (or another responsible entity) were to expend that sum through to the completion of harvest, FEAP (or another responsible entity) would suffer a net loss. The difficulty faced in each of the 2003 to 2009 Schemes is that each of those Schemes is in a negative cash position, Growers are under no obligation to make further contributions to those schemes, FEAP is insolvent and does not have any assets of its own with which to meet the costs of the Schemes through to the completion of any harvest and it is most improbable that any other responsible entity would be willing to expend the required monies through to the completion of harvest only to suffer the projected loss.

31 It is in those circumstances that it was appropriate to order that pursuant to s 601ND(1)(a) of the Act that each Scheme be wound up in accordance with its Constitution and any orders of the Court made pursuant to s 601NF(2) of the Act: see paragraph 1 of the Orders made on 28 November 2013. As noted earlier, if wound up, as part of the Compromise, Growers in each Scheme will share in a distribution as a result of the Compromise.

32 The next question was who would be responsible for ensuring that each of the Schemes was wound up in accordance with its Constitutions and any orders made under s 601NF(2). Under s 601NF(1) of the Act, the Court may appoint a person, other than the responsible entity of a scheme, to take responsibility for ensuring that the scheme is wound up in accordance with its constitution and any orders made under s 601NF(2). Such appointments are not unusual: Re PWL ACN 084 252 488 Ltd (No 2) [2008] WASC 232 at [86]-[92]; Shepard v Downey (2009) 69 ACSR 530 at [131]-[132] and Re Rubicon Asset Management Ltd (2009) 77 NSWLR 96 at [30].

33 In the present case, it is appropriate that the Administrators be appointed, pursuant to s 601NF(1) of the Act, to take responsibility for ensuring that the Schemes are wound up in accordance with their Constitutions. FEAP is insolvent and under external administration. Since April 2010, the Administrators have built up a substantial body of knowledge as to the affairs of each Scheme. It would be wasteful and expensive if their services, and that body of knowledge, were not utilised in the winding up process: see Re Rubicon at [30].

34 Therefore, ancillary to paragraph 1 of the Orders made on 28 November 2013, it was necessary and appropriate, pursuant to s 601NF(1) of the Act, to appoint the Administrators to take responsibility for ensuring that each Scheme is wound up in accordance with its Constitution and any orders of the Court made pursuant to s 601NF(2) of the Act: see paragraph 2 of the Orders made on 28 November 2013.

Paragraphs 3 – 7

35 The next five paragraphs of the Orders made on 28 November 2013 are interrelated. There are two aspects to them – the reason for them and their content. I will deal with each in turn.

36 To facilitate the winding up of the Schemes, give effect to the Compromise by enabling the Internal Land used in the Schemes to be offered for sale unencumbered, and thereby enable members of the Schemes to share in a distribution as a result of the Compromise, it was necessary to deal with any remaining rights and agreements of FEAP and further or alternatively the Growers in respect of the Internal Land.

37 As the Receivers submitted in support of these Orders, the basis for the termination of any land rights (eg leases, sub-leases, ancillary rights) can be seen in the contentions of FEA, FEAC and TP in the Land Proceeding. To the extent that the land was governed by a tenancy at will or a periodic tenancy, it was determinable with immediate effect or on the giving of one month’s notice. Where land was governed by a tenancy for a fixed term, defaults have occurred in respect of all the tenancies, giving the relevant landlord a right to terminate, which has been exercised. The termination of the tenancies in favour of FEA and FEAP has resulted in the termination of any interests granted by them in favour of Growers, and also the termination of any ancillary rights. These contentions are by their nature contentious. But they amply illustrate the nature and complexity of the issues in the Land Proceeding.

38 Next, the form of Orders. There are five. The first, in paragraph 3, is that pursuant to s 447D(2) of the Act, there be a direction that the Administrators are justified in causing FEAP to acknowledge that particular rights, interests and agreements have been terminated if it is necessary or expedient for such an acknowledgement to be made to enable the Scheme to be terminated, the winding up of the Scheme to be brought to a conclusion, the FEAP DOCA to be given effect and further or alternatively, the land used in the Scheme to be sold unencumbered. Initially the “rights, interests and agreements” were described in general terms. The parties were directed to identify the rights, interests and agreements with precision. As a result, for each Scheme the relevant rights, interests and agreements that are subject to the direction are identified in a schedule to the Orders and defined as the Rights. Unsurprisingly, they are different for each Scheme, although there is some overlap. For the reasons set out above, it is appropriate that a direction in those terms be made in relation to each Scheme.

39 Having provided the Administrators with that direction, it was necessary to enable FEAP in its capacity as the responsible entity and as a trustee to be granted, and exercise, the Termination Power. The first step was to define the power: paragraph 4 of the Orders. That power is appropriately limited by two matters. It can be exercised only in relation to the Rights and for the stated purposes. It is this power that grants FEAP the power to take steps to deprive the Growers of the Rights.

40 Having defined the Termination Power, two further orders were necessary. First, an order under the relevant provisions of the applicable Trustee Act and s 447A(1) of the Act granting FEAP the Termination Power: paragraph 5 of the Orders. The applicable Trustee Act varied between the Schemes for at least two reasons. The applicable law under the Constitution of each Scheme varied to some extent. Moreover, the land was situated in a number of States. As a result, the parties prepared a schedule, by reference to each Scheme, which identified with precision, the basis or bases on which this power was to be granted to FEAP. Having considered the provisions relevant to each Scheme, the orders were amended to refer to that power and paragraph 5 of the Orders was made in those terms. Having considered the extensive affidavit material and the submissions filed in this proceeding, I was satisfied that it was expedient within the meaning of the relevant Trustee Act provision to confer the Termination Power on FEAP: see, by way of example, Riddle v Riddle (1952) 85 CLR 202 and Heydon JD and Leeming MJ, Jacobs’ Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006) at [1706] and, as to the power of the Federal Court, see Rocke (as liquidator of ACN 080 794 636 Pty Ltd) [2007] FCA 1687 at [58] and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559.

41 As noted, the Termination Power was also conferred on FEAP under s 447A(1) of the Act. That aspect of paragraph 5 of the Orders was further or alternative to the grant of power under the Trustee Acts. The power conferred by s 447A(1) of the Act is wide: Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at [20]; Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 at 611; White v Huxtable (2006) 57 ACSR 435 at [29]-[30]. Section 447A(1) is not confined to curing defects or remedying the consequences of some departure from the scheme set out in the other provisions of Pt 5.3A of the Act, or to merely modify what would otherwise be the operation of a provision within Pt 5.3A itself: Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at [17]; Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 34 ACSR 391 at [30] and Correa v Whittingham [2013] NSWCA 263 at [6].

42 The power is broad and extends to permitting a Court to fashion a new provision within Pt 5.3A of the Act – provided it promotes the objects of Pt 5.3A: Correa at [6]-[8]. Indeed, the power extends to adversely affecting the interests of creditors if it is in the creditors’ interests to make the order: Re Pasminco Ltd (No 2) (2004) 49 ACSR 470 at [35] and Re Paradox Digital Pty Ltd [2001] WASC 182 at [16]-[18].

43 Accordingly, it was on that basis that the Court made an order pursuant to s 447A(1) of the Act conferring on FEAP the Termination Power. In conferring that power, it should be noted that no disadvantage or prejudice will accrue to any of FEAP’s creditors and such an order is not opposed by any relevant party: Secatore, in the matter of Fletcher Jones and Staff Pty Ltd (Administrators Appointed) [2011] FCA 1493 at [28] and [31]; Re Spyglass Management Group Pty Ltd (2004) 51 ACSR 432 at [6]; Australasian Memory Pty Ltd v Brien (1998) 29 ACSR 344 at 381; Portinex at [30] and Re Great Southern Infrastructure Pty Ltd [2009] WASC 161 at [14]-[16].

44 The following passage from Mentha v GE Capital Ltd (1997) 27 ACSR 696 at 707 is apposite to the circumstances of the present application:

such an order [under s 447A] should be made. If it is not made the [varied] deed will not come into effect and the proposal, which will see significant benefits accruing to the creditors, will be thwarted. The court has the power to avoid that result and that power should be exercised unless it is evident that unfair prejudice would result to either the creditors or the companies in administration. It is clear that their interests will not be prejudiced in that way.

45 The other necessary order in relation to the Termination Power was the direction pursuant to ss 447D(2) and 601NF(2) of the Act, that the Administrators would be justified in causing FEAP to exercise the Termination Power. That direction is to be found in paragraph 7 of the Orders. The next ancillary order or direction necessary to facilitate the sale of the Land contemplated by the Compromise, was the direction to the Administrators, pursuant to s 447D(2), that the Deed Administrators take steps at an appropriate time to amend the Constitution of each Scheme to provide that the responsible entity of each Scheme has the Termination Power. That direction is found in paragraph 6 of the Orders.

46 The other Orders are self-explanatory – liberty to apply for further directions (para 8) and costs (para 9).

47 That leaves paragraph 10. It is not an Order but a note. It states:

The Plaintiffs will not exercise the Termination Power with respect to, or acknowledge the termination of, any of the Rights without first or simultaneously exercising the Termination Power with respect to, or acknowledging termination of, any scheme member's Rights in respect of, associated with or derived from those Rights.

48 This note was inserted with the agreement of the persons and entities that appeared at the hearing of the application. The purpose of the note was to record that if FEAP is “let off the hook” in relation to the Rights, the Growers should be relieved of their obligations in relation to the Rights. That concern was addressed by the insertion of the note in paragraph 10.

CONCLUSION

49 It is for those reasons that the orders and directions in Annexure 2 were made in relation to each Scheme on 28 November 2013.

I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:

Dated: 9 December 2013

Annexure 1

1 AUSTRALIAN FORESTS PROJECT 2002 (ARSN 099 656 429)

2 FOREST ENTERPRISES PLANTATION PROJECT 2003 (ARSN 1 04 31 1 533)

3 FEA PLANTATIONS PROJECT 2004 (ARSN 108 148 198)

4 FEA PLANTATIONS PROJECT 2005 (ARSN 113 195 583)

5 FEA PLANTATIONS PROJECT 2006 (ARSN 119 069 591)

6 FEA PLANTATIONS PROJECT 2007 (ARSN 125108 063)

7 FEA PLANTATIONS PROJECT 2008 (ARSN 129 750 296)

8 FEA PLANTATIONS PROJECT 2009 (ARSN 136 438 616)

Annexure 2

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

No: (P)VID 1157/2013

IN THE MATTER OF FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

AND IN THE MATTER OF AUSTRALIAN FORESTS PROJECT 2002 (ARSN 099 656 429) and the other schemes enumerated in Schedule 1.

BRIAN SILVIA AND PETER KREJCI (as deed administrators of FEA PLANTATIONS LTD (ACN 055 969 429) (Subject to deed of company arrangement) (receivers appointed) and another named in the schedule of parties

First Plaintiffs

PATRICIA ANNE BENNETT and another named in the schedule of parties

Defendants

ORDER TWO

JUDGE:	Justice Gordon
DATE OF ORDER:	28 November 2013
WHERE MADE:	Melbourne

THE COURT ORDERS AND DIRECTS THAT:

1. Pursuant to s 601ND(1)(a) of the Corporations Act 2001 (Cth) (the Act), the Australian Forests Project 2002 (ARSN 099 656 429) (2002 Scheme) be wound up in accordance with the Constitution dated 24 January 2002 (as amended from time to time) (the Constitution) and any orders of the Court made pursuant to s 601NF(2) of the Act.

2. Pursuant to s 601NF(1) of the Act, the First Plaintiffs, Peter Paul Krejci and Brian Raymond Silvia (FEAP’s Deed Administrators), are appointed to take responsibility for ensuring that the 2002 Scheme is wound up in accordance with the Constitution and any orders of the Court made pursuant to s 601NF(2) of the Act.

3. Pursuant to s 447D(2) of the Act, FEAP’s Deed Administrators are directed that they would be justified in causing the Second Plaintiff, FEA Plantations Ltd (ACN 055 969 429) (subject to deed of company arrangement) (receivers appointed) (FEAP), to acknowledge that the rights, interests and agreements as set out in Schedule 2 (Rights) (or any of them) have been terminated if it is necessary or expedient for such an acknowledgement to be made to enable:

(a) the 2002 Scheme to be terminated;

(b) the winding up of the 2002 Scheme to be brought to a conclusion;

(d) the land used in the 2002 Scheme to be sold unencumbered.

4. In this order the Termination Power, in respect of the 2002 Scheme, means the power to deal with (including, without limitation, by assigning, surrendering or terminating) the Rights (or any of them), if it is necessary or expedient for such a dealing to occur to enable:

(a) the 2002 Scheme to be terminated;

(b) the winding up of the 2002 Scheme to be brought to a conclusion;

(d) the land used in the 2002 Scheme to be sold unencumbered.

5. Pursuant to s 47 of the Trustee Act 1898 (Tas), s 81 of the Trustee Act 1925 (NSW), s 94 of the Trusts Act 1973 (Qld) and further or alternatively s 447A(1) of the Act, FEAP is hereby granted the Termination Power in respect of the 2002 Scheme.

6. FEAP’s Deed Administrators are directed pursuant to s 447D(2) of the Act that they would be justified in taking steps to procure FEAP to amend, and FEAP is directed that it would be justified in taking steps to amend, the Constitution pursuant to s 601GC(1)(b) of the Act to give to the responsible entity of the 2002 Scheme the Termination Power.

7. Pursuant to s 447D(2) and s 601NF(2) of the Act, FEAP’s Deed Administrators are directed that they would be justified in causing FEAP to exercise the Termination Power.

8. FEAP’s Deed Administrators have liberty to apply for further directions pursuant to s 447D(2) and s 601NF(2) of the Act and FEAP has liberty to apply for further directions pursuant to s 601NF(2) of the Act.

9. Pursuant to s 601NF(2) of the Act, FEAP’s Deed Administrators are directed that their:

(a) costs of this application; and

(b) reasonable remuneration and costs and expenses of ensuring that the 2002 Scheme is wound up in accordance with the Constitution and the orders of the Court,

be paid from the property of the 2002 Scheme and, if the 2002 Scheme’s property is inadequate, be costs and expenses in the deed administration of FEAP.

AND THE COURT NOTES THAT:

10. The Plaintiffs will not exercise the Termination Power with respect to, or acknowledge the termination of, any of the Rights without first or simultaneously exercising the Termination Power with respect to, or acknowledging termination of, any scheme member's Rights in respect of, associated with or derived from those Rights.

SCHEDULE 2

1. The following rights, interests and/or agreements insofar as they relate to the 2002 Scheme or the land used in connection with the 2002 Scheme (including any trees on that land) (Land):

(a) any right and/or interest (whether legal or equitable) in or in respect of the Land, including (without limitation) any lease, sublease, profit-a-prendre, forestry right, lease of forestry right, other grant, or charge held by any member of the 2002 Scheme;

(b) any management agreement to which any member of the 2002 Scheme is a party;

(c) the 2000 Standard Head Lease (a copy of which is behind tab 22 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(d) the 2002 FEA-TPT Head Lease (a copy of which is behind tab 30 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(e) the 2002 FEA-CBA Head Lease (a copy of which is behind tab 31 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(f) the 2002 FEAP-TPT Head Lease (a copy of which is behind tab 32 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(g) the 2002 FEAP-CBA Head Lease (a copy of which is behind tab 33 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(h) the 2004 FEA-TPT Head Lease (a copy of which is behind tab 34 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(i) the 2004 FEAP-TPT Head Lease (a copy of which is behind tab 35 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(j) the 2003 Master Head Lease (a copy of which is behind tab 36 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(k) the 2009 Deed of Variation (a copy of which is behind tab 37 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(l) the 2001 Management Agreement (a copy of which is behind tab 26 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(m) the 2009 Management Agreement (a copy of which is behind tab 27 of annexure BRS-1 to the affidavit of Brian Raymond Silvia sworn 8 November 2013);

(n) any wood purchase agreement, management services agreement, wood supply agreement or similar agreement to which any member of the 2002 Scheme is a party;

(o) the Deed of Charge, 2002 Head Lease, 2003 Head Lease, 2004 Head Lease, 2005 Head Lease, 2006 Head Lease, 2007 Head Lease, 2008 Head Lease, 2009 Head Lease, First Forestry Right, Second Forestry Right, Third Forestry Right and Fourth Forestry Right, as those terms are defined in FEAP's amended statement of facts and contentions and counterclaim dated 21 December 2012, filed in Supreme Court of Victoria proceeding no S CI 2011 5202 (a copy of which is exhibit BRS-4 to the affidavit of Brian Silvia sworn 22 November 2013);

(p) any interest (whether legal or equitable) held by FEAP in or in respect of any of the Land, including (without limitation) any lease, sublease, profit-a-prendre, forestry right, lease of forestry right, other grant or charge; and

(q) any obligations associated with any of the above.

2. For the avoidance of doubt, any reference to Rights does not include:

(a) the Constitution; and

(b) any loan agreement (or security for obligations under any loan agreement) to which any member of the 2002 Scheme is a party.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

No: (P)VID 1157/2013

IN THE MATTER OF FEA PLANTATIONS LTD (ACN 055 969 429) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS APPOINTED)

AND IN THE MATTER OF AUSTRALIAN FORESTS PROJECT 2002 (ARSN 099 656 429) and the other schemes enumerated in Schedule 1.

First Plaintiffs

PATRICIA ANNE BENNETT and another named in the schedule of parties

Defendants

ORDER THREE

JUDGE:	Justice Gordon
DATE OF ORDER:	28 November 2013
WHERE MADE:	Melbourne

THE COURT ORDERS AND DIRECTS THAT:

1. Pursuant to s 601ND(1)(a) of the Corporations Act 2001 (Cth) (the Act), the Forest Enterprises Plantation Project 2003 (ARSN 104 311 533) (2003 Scheme) be wound up in accordance with the Constitution dated 28 April 2003 (as amended from time to time) (the Constitution) and any orders of the Court made pursuant to s 601NF(2) of the Act.

2. Pursuant to s 601NF(1) of the Act, the First Plaintiffs, Peter Paul Krejci and Brian Raymond Silvia (FEAP’s Deed Administrators), are appointed to take responsibility for ensuring that the 2003 Scheme is wound up in accordance with the Constitution and any orders of the Court made pursuant to s 601NF(2) of the Act.

(a) the 2003 Scheme to be terminated;

(b) the winding up of the 2003 Scheme to be brought to a conclusion;

(d) the land used in the 2003 Scheme to be sold unencumbered.

4. In this order the Termination Power, in respect of the 2003 Scheme, means the power to deal with (including, without limitation, by assigning, surrendering or terminating) the Rights (or any of them), if it is necessary or expedient for such a dealing to occur to enable:

(a) the 2003 Scheme to be terminated;

(b) the winding up of the 2003 Scheme to be brought to a conclusion;

(d) the land used in the 2003 Scheme to be sold unencumbered.

7. Pursuant to s 447D(2) and s 601NF(2) of the Act, FEAP’s Deed Administrators are directed that they would be justified in causing FEAP to exercise the Termination Power.

9. Pursuant to s 601NF(2) of the Act, FEAP’s Deed Administrators are directed that their:

(a) costs of this application; and

(b) reasonable remuneration and costs and expenses of ensuring that the 2003 Scheme is wound up in accordance with the Constitution and the orders of the Court,

be paid from the property of the 2003 Scheme and, if the 2003 Scheme’s property is inadequate, be costs and expenses in the deed administration of FEAP.

AND THE COURT NOTES THAT:

SCHEDULE 2

1. The following rights, interests and/or agreements insofar as they relate to the 2003 Scheme or the land used in connection with the 2003 Scheme (including any trees on that land) (Land):

(b) any management agreement to which any member of the 2003 Scheme is a party;