FEDERAL COURT OF AUSTRALIA

AK Ippolito Investments Pty Limited v Family Farm Management Pty Ltd, in the matter of Family Farm Management Pty Ltd [2026] FCA 780

ORDERS

THE COURT ORDERS THAT:

1.    The Defendant’s application for summary judgment filed 2 April 2026 is dismissed.

2.    The Plaintiffs are granted to leave to amend its originating application, in the form of Annexure A to their interlocutory process filed on 2 April 2026.

3.    The question of costs of these applications be reserved and subject to further case management orders.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHEATLEY J:

INTRODUCTORY OVERVIEW

1    A dispute has arisen amongst investors in an arrangement which will simply be identified as “Mt Lion Farm”. Given the issues involved it is appropriate to describe it neutrally. Broadly, it appears that Mt Lion Farm relates to an arrangement by which investors could gain access to organic, nutrient dense food, receive a (or at least potentially a) financial return and have some sort of right to a share in Australian farmland. Mt Lion Farm attracted over 125 investors who contributed more than $6 million.

2    There was an arrangement whereby the funds to be invested were paid to an online platform known as “Bricklet”, which ultimately paid funds to Family Farm Management Pty Ltd, the Defendant (FFM).

3    The Bricklet platform (for want of a better description) maintains an ‘Australian Property Co-Ownership Register’ (APCOR Register), as a private property register. The APCOR Register records that each of the investors hold one or more ‘Bricklets’ which are said to represent a 1/140th fractional interest in Mt Lion Farm. The APCOR Register does not have any formal status in recording title to land.

4    On 23 December 2022, FFM used the investors’ funds to purchase farmland at 789 - 886 Lynches Creek Road, Lynchs Creek, in the State of New South Wales (the Farmland). FFM is the registered owner of the Farmland. Since 2022, FFM has used investor funds to pay for (amongst other things) the operation of a farm on the Farmland.

5    A cohort of investors, being the 10 Plaintiffs have commenced these proceedings against FFM. Those Plaintiffs claim that they have invested just under $600,000 in Mt Lion Farm. Different Plaintiffs invested at different times, some before the Farmland was purchased, some after.

6    The key issue in this proceeding is whether Mt Lion Farm is a managed investment scheme, as that term is defined in the Corporations Act 2001 (Cth) (the Corporations Act). The Plaintiffs contend that Mt Lion Farm is a managed investment scheme, the Defendant contends it is not.

7    The Plaintiffs originating application lodged on 10 July 2025, sought for Mt Lion Farm to be wound up, alleging certain contraventions of the Corporations Act: s 601EE of the Corporations Act.

8    The Plaintiffs allege that Mt Lion Farm is an unregistered managed investment scheme, in circumstances where it was required to be registered: s 601ED(1)(a) and s 601EB of the Corporations Act. As such, the Plaintiffs seek that it be wound up.

9    Initially, when the matter was first listed for final hearing of the originating application, FFM, by its former solicitors who ceased acting shortly before the hearing indicated that it did not oppose the relief sought in the Plaintiffs’ originating application. However, on that first day of the hearing several other co-owners/investors were granted limited leave to appear on that final hearing. They sought to be heard to oppose the winding up. None of those co-owners/investors have since been joined to the proceedings, despite being provided with the opportunity to do so. The final hearing was adjourned.

10    FFM has changed solicitors and now opposes the relief sought. This has also led to two interlocutory applications being brought and the subject of a hearing on 11 June 2026.

APPLICATIONS BEFORE THE COURT

11    The two applications to be determined are (which will be described in more detail below):

(1)    The Defendant’s application for summary judgment filed on 2 April 2026.

(Summary Judgment Application)

(2)    The Plaintiffs’ application for leave to amend its originating application filed on 2 April 2026.

(Amendment Application)

(together, the Applications).

12    For the reasons that follow, the Summary Judgment Application will be dismissed and the Amendment Application will be allowed. In the circumstances, it is appropriate to hear the parties further on the question of costs.

APPROACH TO THESE APPLICATIONS

13    Given the issues to be ventilated on these Applications, the parties provided draft concise statements so that the dispute between the parties could be understood. Of course, concise statements are not pleadings, in the traditional sense: Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388; [2021] FCAFC 121 at [140]-[154], McKerracher and Colvin JJ explained the nature and purpose of a concise statement; also see Norden Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd (No 3) (2025) 311 FCR 588; [2025] FCA 661 at [10]. Concise statements are designed to address the key issues and key facts at the heart of the dispute.

14    At a high level of generality, what emerges from the concise statements is the following:

(a)    The Plaintiffs contend and the Defendant disputes that Mt Lion Farm was an unregistered managed investment scheme;

(b)    The parties both accept that Mt Lion Farm has never been registered as a managed investment scheme (the Defendant contends Mt Lion Farm was not required to be registered);

(c)    The Plaintiffs contend it was required to be registered and the Defendant disputes this on the basis that all of the investors at all material times, had the legal capacity to participate in the management of Mt Lion Farm “and in fact did so”;

(d)    Notices under the Corporations Act were issued by the Plaintiffs to bring the relevant contract to an end. Both parties rely on these notices to advance different arguments. These notices were pursuant to s 601MB of the Corporations Act (the 601MB Notices);

(e)    The Plaintiffs rely on the 601MB Notices and contend these were validly issued and operate to void the contract: s 601MB(3) of the Corporations Act. Further, that the Plaintiffs have a claim in restitution (variously described) on the basis that the contract is void ab initio;

(f)    The Defendant also relies on the 601MB Notices and contends that the effect of these notices was to end the Plaintiffs’ status as a member in Mt Lion Farm (irrespective of the proper characterisation of Mt Lion Farm);

(g)    The Plaintiffs alleges that a suite of Agreements was entered as follows:

(i)    the ‘Co-Ownership Deed’ entered into between Bricklet and FFM, which deals with Bricklet’s powers and some of the rights of investors;

(ii)    a Deed of Accession by which each investor purported to agree with every other investor from time to time to be bound by the Co-Ownership Deed;

(iii)    the ‘Supplementary Deeds’ which included:

(a)    the ‘Supplement to the Co-owner Deed’;

(b)    the Property Management & Membership Program Agreement; and

(c)    General Waiver & Liability Form;

(h)    The Defendant admits that the Co-Ownership Deed was entered into between FFM and Bricklet and that all investors entered into a Deed of Accession by which each investor purported to agree with every other investor from time to time to be bound by the Co-Ownership Deed, but denies the Supplementary Deeds;

(i)    The Plaintiffs make allegations regarding how Mt Lion Farm was operated, the day-to-day operations and management, including by reference to “crack-on” meetings. Generally, these allegations are denied by the Defendant, although it does recognise the “crack-on” meetings took place however it contends they were of a different character;

(j)    The Plaintiffs allege that Mt Lion Farm is operating at a loss, which the Defendant admits. The Plaintiffs quantify that loss at just under $50K per month, which the Defendant denies. The Defendant also observes that it has spent monies on legal fees. The Plaintiffs also allege that the Defendant is insolvent, which is denied; and

(k)    The Plaintiffs allege that on the declaration being made that the 601MB Notices are valid, they are entitled to restitution of the amounts invested. The Defendant denies any clam in restitution, which has not been determined or quantified. Further, the Defendant denies any claim in restitution having regard to its change in position including the purchase of the Farmland and costs and expenses of that purchase and expenses of operating and maintaining the Farmland.

15    The Plaintiffs allege that Mt Lion Farm is a managed investment scheme within the meaning of the definition under s 9 of the Corporations Act because it was a scheme in which:

(a)    the investors contributed money as consideration to acquire rights (interests) to benefits produced by the scheme (whether those rights are actual, prospective, contingent and whether they are enforceable or not). Those rights were constituted by:

(i)    the right to receive financial benefits;

(ii)    the right to receive food from Mt Lion Farm;

(iii)    the right to access the Farmland (or to use the Farmland, which the Defendant accepted could be a benefit); and

(iv)    an interest in the Farmland and other farm assets;

(b)    the contributions of the investors were pooled into the purchase of the Farmland and other farm assets; and

(c)    the investors do not have day-to-day control of the operation of Mt Lion Farm.

16    Whereas the Defendant alleges that Mt Lion Farm is not a managed investment scheme within the meaning of s 9 of the Corporations Act because the investors had the legal capacity to participate in the day-to-day control of the management of Mt Lion Farm and in fact did so.

17    Therefore, a critical issue between the parties is whether Mt Lion Farm is a managed investment scheme.

SUMMARY JUDGMENT APPLICATION

18    However, while the Defendant maintains its primary position, that Mt Lion Farm is not a managed investment scheme, it brings this Summary Judgment Application on the “hypothesis” that Mt Lion Farm is a managed investment scheme. On this basis, the Defendant contends that the 601MB Notices operate and cease the Plaintiffs’ status as members, which means that the Plaintiffs are unable to bring this application.

19    From the outset, there is an obvious tension in the Defendant’s position that it advances on the Summary Judgment Application, given the legislative intent to wind up unregistered management schemes. The argument was advanced on the basis that “assuming”, (but without accepting) that the Plaintiffs are correct, that Mt Lion Farm is a managed investment scheme, it still cannot bring this application because it lacks standing. This, so the Defendant advanced, was sufficient to grant summary judgement.

20    Initially, the Summary Judgment Application was advanced against the whole of the Plaintiffs’ originating application. However, in counsel’s written submissions and during the course of argument certain aspects of the Summary Judgment Application were not pressed. That is, it was accepted by the Defendant that particular aspects of the Plaintiffs’ (draft) amended originating application would need to progress to trial, in any event.

Relevant Principles - Summary Judgment

21    The relevant principles were not in dispute. The Defendant brings the application pursuant to r 26.01 of the Federal Court Rules 2011 (Cth) (the Rules). This was on the basis that the Plaintiffs have no reasonable prospect of success in the proceeding.

22    The High Court in Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [17], [24] (French CJ and Gummow J) and [55] (Hayne, Crennan, Kiefel and Bell JJ) explained as follows:

Federal Court Act, s 31A

17    Section 31A(2) of the Federal Court Act provides:

“The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.”

A proceeding need not be “hopeless” or “bound to fail” for it to have no reasonable prospect of success. Section 31A(1) provides for a party prosecuting a proceeding to obtain summary judgment against a respondent. The section does not limit any other powers that the Court has.

…

24    The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said:

“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”

More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:

“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”

There would seem to be little distinction between those approaches and the requirement of a “real” as distinct from “fanciful” prospect of success contemplated by s 31A. That proposition, however, is not inconsistent with the proposition that the criterion in s 31A maybe satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.

…

55    In General Steel Industries, Barwick CJ pointed out that previous decisions about summary termination of actions on the motion of a defendant had been given in cases in which the so-called “inherent” jurisdiction of a court to protect itself and its processes from abuse had been invoked, and in cases where the defendant had relied upon a particular rule of court permitting the court to strike out pleadings or dismiss an action on it being shown that a pleading “does not disclose a reasonable cause of action” or the action “being shown by the pleadings to be frivolous or vexatious”. The material available to the court might differ, depending upon which power was invoked, but all the cases emphasised the need for “exceptional caution” in exercising a power to dismiss an action summarily. As Barwick CJ also pointed out in General Steel Industries, the test to be applied was expressed in many different ways, but in the end amounted to different ways of saying “that the case of the plaintiff is so clearly untenable that it cannot possibly succeed” (emphasis added). As that formulation shows, the test to be applied was one of demonstrated certainty of outcome.

[footnote references omitted – emphasis in original]

23    It is clear, that the “General Steel test” is no longer required to be met to grant summary judgment. The relevant standard is whether there are “real” prospects of success. In considering this, it must always be approached with appropriate caution. However, an applicant/plaintiff must have more than a “fanciful” prospect of success. Where there are factual disputes, summary judgment should not be awarded simply because the Court, at that stage, has formed the view that the applicant/plaintiff is unlikely to succeed on the factual issue. Further, this summary process must not be used to stultify the development of the law: Spencer at [25].

The Plaintiffs’ Originating Application

24    Rather than quote in full the paragraphs of the Plaintiffs’ originating application, it is sufficient to summarise it. There is also the cross-application for leave to amend by the Plaintiffs. The Defendant approached the Summary Judgment Application on the basis of seeking summary judgment as against the relief sought in the (draft) amended originating application. As such (and prior to considering the question of leave) it is appropriate to refer to those proposed amendments to the originating application (of course, leave would not be granted to amend, if such amendments had no real prospect of success).

25    The Plaintiffs’ (draft) amended originating application seeks the following:

(1)    A declaration of contravention that Mt Lion Farm was an unregistered managed investment scheme, in circumstances where it was required to be registered under the Corporations Act.

(2)    Mt Lion Farm be wound up, pursuant to s 601EE(2) of the Corporations Act.

(2A)    Further or alternatively, that FFM be wound up on just and equitable grounds, pursuant to s 461(1)(k) of the Corporations Act.

(2B)    Mr Combis of Vincents Chartered Accountants be appointed as Liquidator of Mt Lion Farm and FFM.

(2C)    A declaration that the 601MB Notices are valid and sufficient to rescind the Agreements.

(2D)    Further to (2C), an order that the Plaintiffs relinquish their Bricklets and the Defendant pay to the Plaintiffs, by way of restitution the amount of their Bricklets (as set out in the Schedule to the originating process).

(3)    Further (and also pursuant to s 601EE) orders relating to the conduct of the winding up of Mt Lion Farm.

(3A)    That in winding up FFM and Mt Lion Farm, the liquidator shall also have the powers specified in s 477 of the Corporations Act.

(4)    The Plaintiffs’ costs of the proceeding be paid out of the property of Mt Lion Farm, pursuant to s 466(2) of the Corporations Act.

(5)    The Liquidator have liberty to apply to the Court on 3 days’ written notice.

What was sought in the Summary Judgment Application

26    The Plaintiffs were granted leave to file an amended interlocutory application at the hearing. However, this was on the basis that the final paragraph (being paragraph 5) would be adjourned and not heard together with the other aspects of the Applications.

27    The Summary Judgment Application sought (together with costs), the following.

(1)    For the whole proceeding to be dismissed.

(2)    Alternatively, an order dismissing paragraphs 2 to 4 of the Originating Application.

28    The Defendant (quite properly) accepted that the following issues could only be resolved at a final hearing, because of the factual disputes involved in these issues.

(a)    Whether Mt Lion Farm is a managed investment scheme.

(b)    What is the effect of the 601MB Notices.

29    This aligns with the Defendant’s position that Mt Lion Farm is not a managed investment scheme.

30    Ultimately, the Defendant accepted that the Summary Judgment Application was not pressed as against paragraphs (1), (2C) and (2D) of the (draft) amended originating application.

31    It is somewhat difficult to properly reconcile the matters that were accepted to be triable issues, and the acceptance that paragraph (1) of the (draft) amended originating application should go to trial (being the declaration of contravention), but that the Defendant pressed the balance of the Summary Judgment Application. The factual disputes which underpin those issues permeate though the proceeding. However, that is the position advanced by the Defendant.

Should Summary Judgment be granted?

32    The remaining paragraphs of the originating application for which the Defendant sought summary judgment can be considered as follows:

(A)    relief seeking to wind up Mt Lion Farm pursuant to s 601EE of the Corporations Act - being paragraphs (2), (2B), (3), (3A) and (4) (as amended), of the (draft) amended originating application; and

(B)    relief seeking to wind up FFM on a just and equitable basis under s 461(1)(k) of the Corporations Act - being paragraphs (2A), (2B) and (3A), of the (draft) amended originating application.

Should the winding up application of Mt Lion Farm proceed to trial?

33    The Defendant submitted that its argument was based on a simple matter of statutory construction. Properly construed, the Defendant submitted that the Plaintiffs were no longer members, assuming (but not accepting) that Mt Lion Farm was a managed investment scheme.

34    The Plaintiffs bring this part of the originating application pursuant to s 601EE of the Corporations Act. That section provides as follows:

601EE    Unregistered schemes may be wound up

(1)    If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up:

(a)    ASIC;

(b)    the person operating the scheme;

(c)    a member of the scheme.

(2)    The Court may make any orders it considers appropriate for the winding up of the scheme.

35    The Plaintiffs accept that they can only bring their application on the basis that they are “members” of the scheme: s 601EE(1)(c) of the Corporations Act.

36    It is accepted (although relied on for different purposes) that the Plaintiffs issued and served the 601MB Notices. That provision of the Corporations Act relevantly provides as follows:

601MB     Voidable contracts where subscription offers and invitations contravene this Act

(1)    If:

(a)    a managed investment scheme is being operated in contravention of subsection 601ED(5) and a person (the offeror) offers an interest in the scheme for subscription, or issues an invitation to subscribe for an interest in the scheme; or

(b)    a person (the offeror) fails to comply with Division 2 of Part 7.9 when offering an interest in a registered scheme for subscription or issuing an invitation to subscribe for an interest in a registered scheme;

a contract entered into by a person (other than the offeror) to subscribe for the interest as a result of the person accepting the offer, or of the acceptance of an offer made by the person in response to the invitation, is voidable at the option of that person by notice in writing to the offeror.

(2)    If the person gives a notice under subsection (1), the obligations of the parties to the contract are suspended:

(a)     during the period of 21 days after the notice is given; and

(b)     during the period beginning when an application is made under subsection (4) in relation to the notice and ending when the application, and any appeals arising out of it, have been finally determined or otherwise disposed of.

(3)    Subject to subsection (6), the notice takes effect to void the contract:

(a)    at the end of 21 days after the notice is given; or

(b)    if, within that 21 days, the offeror applies under subsection (4)—at the end of the period when the obligations of the parties are suspended under paragraph (2)(b).

(4)     Within 21 days after the notice is given, the offeror may apply to the Court for an order declaring the notice to have had no effect.

(5)    The Court may extend the period within which the offeror may apply under subsection (4), even if the notice has taken effect.

(6)     On application under subsection (4), the Court may declare the notice to have had no effect if it is satisfied that, in all the circumstances, it is just and equitable to make the declaration.

37    That provision provides, by s 601MB(3), that the notice takes effect to void the contract. A consideration of this was had by Finkelstein J in Re York Street Mezzanine Pty Ltd (in liq) (2007) 162 FCR 358; [2007] FCA 922 at [47] whereby his Honour relevantly held that:

… “the notice takes effect to void the contract”: s 601MB (3). I take this to mean that the contract is void ab initio, with the consequence that the investor can recover what he paid for his investment.

38    The contract being void ab initio, so the Defendant submits, must mean that the Plaintiffs are no longer members. If the Plaintiffs are no longer “members”, then the Defendant contends they have no standing under s 601EE(1)(c) to bring this application to wind up Mt Lion Farm.

39    The term “member” is relevantly defined in the Corporations Act as follows (s 9):

member:

(a)    in relation to a managed investment schememeans a person who holds an interest in the scheme; or

(c)    in relation to a sub-fund of a CCIV—means a person who is a member under subsection 1222Q(3); or

(e)    in relation to a company—a person who is a member under section 231.

…

40    It is the definition in subsection (a) which is relevant. The position of member is defined “in relation to” the “managed investment scheme”. The degree of connection required the “member” and the “managed investment scheme”, being the two subject matters can be direct or indirect. That will be determined by reference to the text, context, legislative purpose, history of the provision and the facts of the case: Minister for Home Affairs v DMA18 as Litigation Guardian for DLZ18 (2020) 270 CLR 372; [2020] HCA 43 at [43] (and the authorities referred to therein) (Kiefel CJ, Bell, Gageler, Keane and Gordon JJ).

41    The member is a person who holds an “interest” in the scheme, being the managed investment scheme. The term “interest” is also defined in the Corporations Act as follows (s 9):

interest:

(a)    interest in relation to land includes:

(i)    a legal or equitable estate or interest in the land; or

(ii)    a right, power or privilege over, or in relation to, the land; and

(b)    interest in a managed investment scheme (including a notified foreign passport fund) means a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not); and

(c)    in Part 5D.5 (limit on control of licensed trustee companies) interests of clients of a licensed trustee company—has a meaning affected by section 601VCB.

…

42    It is the definition in subsection (b) which is relevant. It means a “right to benefits produced by the scheme”, being the managed investment scheme. Those rights are further described as being actual, prospective or contingent, whether the right is enforceable or not. This concept of the “right” to “benefits of the scheme” is to be considered broadly, given it is whether the right is enforceable or not.

43    The term “benefit” is also defined in the Corporations Act as follows (s 9):

benefit:

(a)    means any benefit, whether by way of payment of cash or otherwise; and

(b)    when used in Division 2 of Part 2D.2 (sections 200 to 200J)—has the meaning given by section 200AB.

…

44    It is the definition in subsection (a) which is relevant. The term benefit is broadly defined.

45    The starting point for construing a statutory provision is the text of the statute understood in context, whilst regard is had at the same time, to its statutory purpose: Palmanova Pty Ltd v Commonwealth of Australia (2025) 99 ALJR 1362; [2025] HCA 35 at [4] (Gageler CJ, Gordon, Jagot and Beech-Jones JJ); SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14] (Kiefel CJ, Nettle and Gordon JJ); Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69]-[70] (McHugh, Gummow, Kirby and Hayne JJ). In this sense, context is an inquiry made at this first stage and in its widest sense: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ); SZTAL at [14]; R v A2 (2019) 269 CLR 507; [2019] HCA 35 at [33] (Kiefel CJ and Keane J) and [148] (Nettle and Gordon JJ); Palmanova at [5].

46    It is necessary to construe the provision in light of the relevant extrinsic materials and legislative history, that being the statutory purpose which the provision is designed to actually achieve: Palmanova at [4]. Extrinsic material may assist in understanding the context and in fixing the meaning of the statutory text: Palmanova at [6]. Such materials will illuminate the mischief which the statute is intended to remedy: R v A2 at [33] and [148]; CIC Insurance at 408. However, considerations drawn from the extrinsic materials cannot be relied on to displace the clear meaning of the text of the relevant provision: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 at [47] (Hayne, Heydon, Crennan and Kiefel JJ); Federal Commissioner of Taxation v Consolidated Media Holdings Pty Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ). Furthermore, such extrinsic materials cannot be substituted for the text of the statute: Consolidated Media at [39]. The construction which best achieves the purpose or object of the legislation is to be preferred: s 15AA of the Acts Interpretation Act 1901 (Cth).

47    The arguments advanced involve defined terms in the Corporations Act. As such, it is well to observe that ordinarily statutory definitions are construed according to their ordinary meaning, read in context: PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301; [1995] HCA 36 at 310 (Brennan CJ, Gaudron and McHugh JJ). Limitations and qualifications are not to be read into a statutory definition unless clearly required by its terms or its context: PMT Partners at310; SkyCity Adelaide Pty Ltd v Treasurer of South Australia (2024) 419 ALR 361; [2024] HCA 37 at [32] (Gageler CJ, Gordon, Edelman, Gleeson and Beech-Jones JJ).

48    The term benefit is defined by reference to that same term. There is no rule against construing the words of a definition by reference to the terms that those words define, it forms part of the context within which the definition must be construed: SkyCity at [32]. The interpretative principle is more nuanced and is not an inflexible rule of statutory construction: Federal Commissioner of Taxation (Cth) v Auctus Resources Pty Ltd (subject to deed of company arrangement) (2021) 284 FCR 294; [2021] FCAFC 39 at [56]-[69] (Thawley J, McKerracher and Davies JJ agreeing), approved in SkyCity at [32]. The proper course is to read the words of the definition into the substantive enactment and construe the definition in the context of the substantive provision: Kelly v R (2004) 218 CLR 216; [2004] HCA 12 at [103] (McHugh J); SkyCity at [32].

49    On this basis then, the reference to member in s 601EE(1)(c) means (once the words of the definitions are read into this provision) a person who holds a right to any benefit, being by way of payment of cash or otherwise produced by the scheme, whether that right is actual, prospective or contingent and whether it is enforceable or not. The Defendant accepted that while the Plaintiffs were member(s) they would have received “benefits”, however, it was the severing of the membership status by the 601MB Notices which the Defendant relies on for the Summary Judgment Application.

50    The argument advanced by the Defendant proceeds on a basis that if a managed investment scheme is being operated in contravention of the Corporations Act and if the person gives notice to void the contract which was entered to subscribe for an interest, that person can no longer bring an application to wind up the scheme. That person after a s 601MB Notice would no longer be a member and hence would not have standing.

51    The Defendant seeks on this interlocutory Summary Judgment Application a determination that the 601MB Notices meant that the contract was void ab initio and hence the Plaintiffs no longer have any “interest” in the scheme. No authority was brought to the Court’s attention to support the Defendant’s construction. However, the Defendant submitted that if it was the intention of the legislature that a member who had exercised rights by way of a s 601MB notice was to retain the ability to wind up the scheme, it would have been a simple matter to say that such a person still has standing. Potentially the legislature has done this, as a member has standing and a member includes a person even if the rights to benefits are no longer enforceable.

52    This chapter of the Corporations Act was introduced by the Managed Investments Act 1998 (Cth) (MIA), which commenced operation on 1 July 1998. It was in response to recommendations made by the Australian Law Reform Commission and the Companies and Securities Advisory Committee Report No 65, entitled “Collective Investments: Other People’s Money” (the Review).

53    The Defendant’s submissions made no reference to the Review, the MIA or any explanatory memorandum to the Managed Investments Bill 1997 (Cth) or any subsequent amendments to the relevant provisions (for example, ASIC v Hopkins [2024] FCA 1371 at [44]-[45], Beach J). The process of statutory construction is one of construing the text, in its context, recognising that the context is to be regarded in the widest sense. The relevant extrinsic materials and legislative history may assist in understanding the context and fixing a meaning of the statutory text of these provisions.

54    On the current arguments, the Plaintiffs contracts are void ab initio, that is, they are unenforceable. The definition of interest includes a right to benefits “whether it is enforceable or not”. Those words in the definition of interest must be given work to do. None of the definitions of member, interest or benefit refer to the contract entered into by the person to subscribe for an interest in the managed investment scheme. Section 601MB which permits the giving of the notice to void the contract, does not refer to that person’s status as a member (it could have done so). None of the other relevant provisions expressly provide for the membership of a person, having issued a s 601MB notice, to automatically come to an end on the serving of the notice.

55    The Defendant did also submit that the effect of the 601MB Notices would be to sever the person’s money (or money’s worth of) contribution as consideration to acquire rights to the benefits produced by the scheme. However, s 601MB does not expressly sever or nullify that contribution. This was submitted in the context of the definition of the managed investment scheme (particularly sub-paragraph (a)(i)). Relevantly a managed investment scheme is defined in the Corporations Act (s 9) as follows:

managed investment scheme means:

(a)    a scheme that has the following features:

(i)    people contribute money or money’s worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not);

(ii)    any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders);

(iii)    the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions); or

…

56    The consistent language in sub-paragraph (a)(i) in the definition of a managed investment scheme and that of the defined term interest is relevant to the construction task.

57    Further, s 601MB does not provide a statutory remedy for the recovery of a person’s investment, once the contract is void. It is presumably one in restitution: Stewart v Spicer Thoroughbreds Pty Ltd (2022) 414 ALR 431; [2022] NSWSC 558 at [52] (Black J), which although overturned on appeal, it does not appear that the Court of Appeal reversed or considered this observation.

58    There is a clear legislative intent behind s 601EE, that managed investment schemes that are required to be registered, but are not registered, should be wound up. There is a public interest in preserving the integrity of the system of investor protection which justifies that schemes operated in contravention of the Corporations Act should be wound up: Hopkins at [92]-[94]. Further an interest can still be held in a managed investment scheme, “whether it is enforceable or not”.

59    Therefore, on a preliminary basis there are “real” prospects of the Plaintiffs establishing at the final hearing, that they remain members of Mt Lion Farm as they may still hold an unenforceable right to benefits in the scheme. The contract may be void and hence any contractual rights previously held may not be enforceable. However, the Plaintiffs’ contributions of money to acquire rights to benefits (whether enforceable or not) remain. On this basis and this Summary Judgment Application the Plaintiffs have standing to bring this application to wind up Mt Lion Farm under s 601EE(1)(c) of the Corporations Act.

60    In addition to that reason, as the present case does not fall within any identified authority, without any reference to relevant extrinsic material and given the issues are complex and novel, summary judgment is not appropriate. Caution must be exercised not to stifle the development of the law by summarily rejecting a novel claim: Spencer at [25]; Kent Projects Pty Ltd v Communications Electrical Electronics Energy Information Postal Plumbing and Allied Services Union of Australia [2026] FCAFC 74 at [63] (O’Sullivan J, with whom Collier and Bromberg JJ agreed).

Should the just and equitable winding up proceed to trial?

61    The Defendant also submitted that the Plaintiffs lacked standing to wind up FFM on a just and equitable basis. This relief is sought pursuant to s 461(1)(k) of the Corporations Act. Relevantly, that provision states:

461    General grounds on which company may be wound up by Court

(1)    The Court may order the winding up of a company if:

…

(k)    the Court is of opinion that it is just and equitable that the company be wound up.

62    Section 462 then provides who can bring an application, pursuant to s 461 of the Corporations Act. Relevantly, it states:

462    Standing to apply for winding up

(1)    A reference in this section to an order to wind up a company is a reference to an order to wind up the company on a ground provided for by section 461.

(2)    Subject to this section, any one or more of the following may apply for an order to wind up a company:

(a)    the company; or

(b)    a creditor (including a contingent or prospective creditor) of the company; or

(c)    a contributory; or

(d)    the liquidator of the company; or

(e)    ASIC pursuant to section 464; or

(f)    ASIC (in the circumstances set out in subsection (2A)); or

(h)    APRA.

…

(4)    The Court must not hear an application by a person being, or persons including, a contingent or prospective creditor of a company for an order to wind up the company unless and until:

(a)    such security for costs has been given as the Court thinks reasonable; and

(b)    a prima facie case for winding up the company has been established to the Court's satisfaction.

(5)    Except as permitted by this section, a person is not entitled to apply for an order to wind up a company.

63    The Defendant also approached this submission on the basis that the 601MB Notices meant that the contract was void and the Plaintiffs only had a claim in restitution. As that claim in restitution was genuinely disputed and defended on the basis of a change in position, the Defendant argued that the Plaintiffs were not a creditor with the proper standing to bring a winding up application under s 462 of the Corporations Act. The Defendant commenced this with reference to Santow J in Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (No 2) (1996) 39 NSWLR 311 at 318 that “(t)he potentially fatal power to trigger winding up was not intended to be vested in those with merely arguable claims”. Such claims might turn out to be without foundation but the company may have suffered from the stigma of a winding up application, without redress: also see Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130; [2004] NSWSC 527 at [72], (White J), in the context of seeking to set aside a statutory demand and for substitution of another creditor.

64    Further, the Defendant relied on what Barrett AJA (with whom Gleeson and Leeming JJA agreed) said in Treadtel International Pty Ltd and Anor v Cocco (2016) 117 ACSR 176; [2016] NSWCA 360 at [58]:

58    The rationale of the several decisions I have mentioned concerning contingent and prospective creditors is, it seems to me, that such a creditor will not be permitted to apply for winding up unless there is an existing obligation of the company (as required by the decision in Engwirda), which obligation can be viewed with a high degree of assurance as a source of financial liability. Thus, in a case such as Re PMC, a defaulting purchaser under a conveyancing transaction may be seen to be subject to a relevant obligation where the standard contractual position is uncontroversial and the value of the property is shown to be such that the default has occasioned loss to the vendor, even though no proceedings for damages have crystallised that liability. But the position is otherwise where, as in Mackay, the existence of the obligation, as well as the quantification of any damage, is dependent on the resolution of disputed or otherwise unclear legal rights and duties by means of proceedings for damages brought against the company.

(emphasis added)

65    The Defendant also referred to Barrett AJA’s observation in Treadtel at [57], that:

…It is a well-established rule of practice that a person who claims to be a creditor but whose debt is disputed on genuine grounds will not be permitted to initiate or pursue a winding up application.

66    This was advanced on the basis that I should follow this intermediate appellant authority: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). The Defendant also relies on the approach of Stewart J in Hayes (Liquidator) v 5G Developments Pty Ltd, in the matter of 5G Developments Pty Ltd [2019] FCA 1541 at [24]-[25].

67    Treadtel involved an application for leave to amend pleadings to introduce a winding up claim and an oppression claim by Mr Cocco. However, Mr Cocco was neither a member (contributory) or on his alternative case, a creditor of Treadtel: Treadtel at [4], [47], [61], [83] and [97]. Mr Cocco’s claim to be a creditor was based on an untried and unascertained claim for unliquidated damages for breach of a certain agreement, the making and existence of which was denied by Mr Cocco. Allowing Mr Cocco to advance the amendments would have required determination in the same proceedings of the very matters upon which his standing to apply for winding up and for relief in the case of oppression depended. Gleeson JA (at [7]) described this as a “cut-through” approach, which would necessarily introduce additional costly and time-consuming contentions. By Mr Cocco’s originating process he sought an order that the share register of Treadtel be rectified to record that the share was held by him, amongst other claims regarding that share. In defence to these claims, it was pleaded that an oral agreement was entered in Milan to relinquish his interest in Treadtel, including his interest in the share (at [15]). Mr Cocco denied the agreement but pleaded in the alternative that if there was an agreement, then it was an agreement to transfer the (beneficial interest in) share for a payment, which had not been made (at [17]). Treadtel also pleaded a cross-claim. The amendments sought were then explained, including those described as a third group, which on Mr Cocco’s principal case never became binding so as to be a source of legal rights and obligations. This was a claim for damages as against the company, Treadtel (at [46]). To the above observations of Barrett AJA must be added those at [47]-[48] as follows:

47    It is axiomatic that a claim for damages differs in nature and in substance from a claim in debt. Mr Cocco does not consider himself to be a person to who Treadtel presently owes money. Rather, he says that Treadtel has breached a contractual obligation owed to him (despite, it seems, the absence of the “series of legally enforceable contracts” referred to in his pleading) and thereby rendered itself liable to an action for damages for breach of contract. The contract apparently alleged cannot be equated with one under which a right to claim money will arise progressively or upon some future event, so that it can be said that there exists an obligation making Mr Cocco a contingent or prospective creditor.

48    It may readily be accepted that a claim for damages for breach of contract is provable in a winding up. Section 553(1) makes admissible to proof “all debts payable by, and all claims against, the company (present or future, certain or contingent, as curtained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date”. These categories extend far beyond the concepts suggested by the expression “contingent or prospective creditor”. When it comes to standing to seek winding up, however, the case law has tended to exhibit a measure of uncertainty whether someone with no more than an untested claim for unliquidated damages qualifies.

[footnote references omitted]

68    Barrett AJA then referred to Roy Morgan (at 323) for the proposition that there is no basis for including under ‘contingent or prospective creditor’ a person with an untried claim for unliquidated damages (Treadtel at [49]). After consideration of further authorities, Barrett AJA held that the present case (at [59]) was one of disputed or otherwise unclear legal rights and duties, in relation to the unliquidated damages claim by Mr Cocco against Treadtel. On the face of Mr Cocco’s own pleading his status as a creditor was questioned (at [60]), that is he was not a current creditor: Krejci (liquidator) v Panella, in the matter of Richmond Lifts Pty Ltd (in liq) (No 6) [2026] FCA 75 at [84] (Moore J).

69    The Defendant argues that the Plaintiffs have a merely arguable claim which will not satisfy the requirements of being a creditor, because of the defence of change in position by the Defendant. Part of that defence includes the purchase of the Farmland. However, there was some recognition of a difference between those Plaintiffs who contributed to Mt Lion Farm before and after the purchase of the Farmland. Alternatively, the Defendant argues that if the Court was inclined to acknowledge the Plaintiffs’ standing as creditors, they are only contingent creditors and security for costs should be ordered: s 462(4) of the Corporations Act. This is in the context of the Defendant accepting that the amendments sought as to the claim for restitution is a triable issue. However, the Defendant contends that the claim for restitution is not an interest in the scheme.

70    The Plaintiffs seek to maintain the relief under s 461(1)(k) of the Corporations Act because if they are wrong about still having an “interest” in the scheme after the 601MB Notices, then they would not be able to apply to the Court for an order winding up under s 601EE. In that circumstance, if Mt Lion Farm was required to be registered, the Plaintiffs maintain that it should be wound up. As such, they would be a creditor, with a claim in restitution, albeit potentially without an interest in the scheme. The Plaintiffs are not arguing a wholly inconsistent position. The Plaintiffs maintain that Mt Lion Farm is an unregistered management investment scheme. Whether the 601MB Notices severed the Plaintiffs’ membership as well, does not alter that the Plaintiffs maintain a claim in restitution against FFM. Further, the relief under s 461(1)(k) also supports the winding up of FFM, while the relief under s 601EE is sought to wind up Mt Lion Farm. It would usually follow, if the schemes are wound up that the associated entities would be wound up as well: Hopkins at [97].

71    In Richmond Lifts, Moore J gave detailed consideration to Treadtel and the submissions regarding when a creditor whose debt is disputed can bring an application for winding up: Richmond Lifts at [57]-[98]. Although the submissions advanced in Richmond Lifts was put slightly differently to that of the Defendant, the effect of the submission was the same, it was a matter of standing. That is, as the Defendant challenged the basis upon which the Plaintiffs claimed to be creditors, the Plaintiffs lacked standing as creditors to bring the winding up application. I agree with and gratefully adopt the observations of Moore J at [98], as follows:

98    In my view, the position can be summarised as follows:

(a)    In order to bring a winding up application, a person must fall within one of the categories of person identified in s 459P(1). In the present case, the relevant category is that one or more of the plaintiffs must be a “creditor”. The satisfaction of that requirement is a question of standing to bring the application. Like any question of standing, the company can challenge the standing of the applicant to bring an application for winding up.

(b)    A challenge to standing is a substantive challenge which the Court could resolve as a separate issue, or as part of the determination of the winding up application.

(c)    However, a creditor does not cease to be a person who can bring an application merely because the company asserts that the person is not a creditor because the debt is disputed. If a person’s status as a creditor is challenged, the Court may need to deal with that challenge, and do so prior to making any order for winding up.

(d)    I say “may”, because the Court could also, in its discretion, determine that the question as to whether a debt is owing is unsuitable for determination in a winding up application. A Court may well do that if the issue involves factual or legal disputes that are not straightforward. That is, the Court may say that the dispute as to the alleged debt should be determined in separate proceedings, and refuse to further entertain the application for winding up.

(e)     In a particular case, a refusal to further entertain an application could take the form of refusing to permit an application to be brought: e.g. the refusal of leave to amend to bring a winding up application, or a refusal to make an order for substitution in favour of a creditor with a disputed debt. However, that is an exercise of discretion. It is not because the Court lacks power to entertain the winding up application (at least prior to any determination by the Court that the asserted “creditor” is not in fact a creditor).

(f)    The Court could also determine that the application involves an abuse of process. A proceeding may be an abuse if it is being used as an improper mechanism to coerce the payment of a genuinely contested debt. But the commencement of a winding up proceedings by a creditor, even if the company disputes the debt, is not automatically or necessarily an abuse of process.

(g)    More generally, there is no assumption in favour of a dismissal or stay of proceedings where a company disputes the existence or amount of a debt (Lanepoint at [30]), and no presumption that a dispute as to a debt should be resolved separately and apart from the winding up process (Lanepoint at [31]-[33]). Rather, it is a matter for the Court dealing with the application.

72    The claim for restitution by the Plaintiffs is sufficient to make the Plaintiffs creditors, and adopting the above approach it is a matter the Court may need to deal with prior to any orders for winding up. During submissions, issues (in passing) were raised as to whether this matter should proceed by way of a separate question. It is not necessary to determine this issue on these applications; however consideration may be appropriate in the future. The parties will be able to consider this, in relation to the future conduct of the proceeding and bring any such application they so choose.

73    The Defendant also argued that the Plaintiffs were only (in the alternative) a contingent creditor and hence security should be ordered. It is not necessary to decide that question on this application. There will be competing costs and similar applications which will need to be determined in due course.

74    For the above reasons, I am satisfied that the Plaintiffs have standing to bring the application for winding up on the just and equitable basis under s 461(1)(k) of the Corporations Act.

Conclusion on the Summary Judgment Application

75    For the above reasons each of the Plaintiffs’ claims for a winding up of:

(a)    Mt Lion Farm under s 601EE; and

(b)    FFM under s 461(1)(k),

should not be the subject of an order for summary judgment.

76    Having denied the Summary Judgment Application principally considering the relief sought in paragraphs (2) and (2A) of the (draft) amended originating application, the remaining paragraphs advanced by the Plaintiffs in the (draft) amended originating application, seek orders that are ancillary to that relief. Summary judgment should not be granted in relation to those paragraphs either.

77    The Summary Judgment Application should be dismissed. I will hear further from the parties in relation to the costs of that application.

AMENDMENT APPLICATION

78    The Plaintiffs seek leave to amend the originating process, in terms of the (draft) amended originating application, as set out above pursuant to r 8.21 of the Rules.

79    Stone J described the relevant principles on such an application as follows in Ron Medich Properties Pty Ltd v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8]:

The general principle is that leave to amend should be granted unless the proposed amendment is obviously futile or would cause substantial prejudice or injustice which could not be compensated for. These considerations require the Court to take account of the nature of the proposed amendment, whether it is made in good faith, the stage in the proceedings at which leave is sought, the nature of the prejudice that may be caused and the means by which such prejudice might be redressed. The question of delay is relevant to these considerations however it is not the purpose of the Court to punish a party for delay in seeking an amendment.

80    The question is whether the relevant claims are so obviously untenable or groundless that there exists a “high degree of certainty” that they will fail if such claims proceed to trial: Treadtel at [31]; Spencer at [24].

81    For the same reasons given dismissing the Summary Judgment Application, the proposed amendments are not so obviously untenable or groundless. The Plaintiffs should be permitted to advance their case, in the way they now seek to, by way of the amended originating application.

82    Leave to amend will be granted.

83    Again, however, given how the Applications progressed, I will hear from the parties further on the question of costs.

Associate:    

Dated:    19 June 2026

SCHEDULE OF PARTIES