NOTICE OF FILING. Details of Filing

Transcription

1 NOTICE OF FILING This document was lodged electronically in the FEDERAL COURT OF AUSTRALIA (FCA) on 17/08/ :39:04 PM AWST and has been accepted for filing under the Court s Rules. Details of filing follow and important additional information about these are set out below. Details of Filing Document Lodged: Affidavit - Form 59 - Rule 29.02(1) File Number: File Title: Registry: WAD367/2018 SANDALWOOD PROPERTIES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS AND MANAGERS APPOINTED) ACN v HUNTLEY MANAGEMENT LIMITED ACN & ORS WESTERN AUSTRALIA REGISTRY - FEDERAL COURT OF AUSTRALIA Dated: 20/08/ :48:10 AM AWST Registrar Important Information As required by the Court s Rules, this Notice has been inserted as the first page of the document which has been accepted for electronic filing. It is now taken to be part of that document for the purposes of the proceeding in the Court and contains important information for all parties to that proceeding. It must be included in the document served on each of those parties. The date and time of lodgment also shown above are the date and time that the document was received by the Court. Under the Court s Rules the date of filing of the document is the day it was lodged (if that is a business day for the Registry which accepts it and the document was received by 4.30 pm local time at that Registry) or otherwise the next working day for that Registry.

2 Form 59 Rule 29.02(1) Federal Court of Australia District Registry: Western Australia Division: General Affidavit No of2018 IN THE MATTER OF SANDALWOOD PROPERTIES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS AND MANAGERS APPOINTED) ACN: Sandalwood Properties Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) (ACN ) Plaintiff Huntley Management Limited (ACN ) and others named in the schedule Defendants Affidavit of: Address: Occupation: Shaun Robert Fraser Level 12, 20 Martin Place, Sydney in the state of New South Wales Registered Liquidator Date: 17 August 2018 Contents Document Details Paragraph Page Number Affidavit of Shaun Robert Fraser in support of application for the Plaintiff affirmed on 17 August Filed on behalf of: Sandalwood Properties Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed), the plaintiff Prepared by: Matthew Whittle Law firm: Allens Tel: (03) Fax: (03) Address for service: 37/101 Collins Street, Melbourne VIC DX: Melbourne Page 1

3 Annexure 'SRF-1', being a copy of a historical 8 19 company extract for SPL dated 16 August Annexure 'SRF-2', being a copy of the Form lodged with ASIC by the Voluntary Administrators in respect of SPL 3. Annexure 'SRF-3', being a copy of the 14(a) 57 Constitution dated 18 March 2003 between SPL as responsible entity and the Growers 4. Annexure 'SRF-4', being a copy of the Lease and 14(b) 91 Management Agreement dated 23 June 2003 between SPL as manager and head lessor, Quintis Leasing as lessor and each of the Growers 5. Annexure 'SRF-5', being a copy of the Plantation 14(c) 140 Management Agreement dated 30 June 2004 between SPL as the responsible entity and Quintis Forestry as manager 6. Annexure 'SRF-6', being a copy of an extract of the 2003 Project Grower register 7. Annexure 'SRF-7', being a copy of the notice of meeting of the Growers (to be held on 30 January 2018) and explanatory memorandum 8. Annexure 'SRF-8', being a copy of the letter sent from ASIC to SGC dated 25 January Annexure 'SRF-9', being a copy of the notice of meeting of the Growers (to be held on 5 June 2018) 10. Annexure 'SRF-1 0', being a copy of the notice of meeting of the Growers (to be held on 23 July 18) and explanatory memorandum 11. Annexure 'SRF-11 ', being a copy of the ASIC search for Huntley dated 16 August 2018 Page 2

4 12. Annexure 'SRF-12', being copies of proxies and certain corporate authorities lodged in relation to the 2003 Project meeting on 23 July Annexure 'SRF-13', being a copy of the notes taken by Shaun Fraser at the 23 July 2018 Project Meeting 14. Annexure 'SRF-14', being a copy of the notes taken by Ms Cummings at the 23 July 2018 Project Meeting 15. Annexure 'SRF-15', being a copy of the TFS Sandalwood 2003 Press Release dated 23 July Annexure 'SRF-16', being a copy of a letter from 62(a) 248 Allens to SGC and Piper Alderman dated 26 July Annexure 'SRF-17', being a copy of an from 62(b) 257 Piper Alderman to Allens sent 27 July Annexure 'SRF-18', being a copy of an from 62(c) 259 SGC to Allens sent 27 July Annexure 'SRF-19': being a copy of from ASIC to Shaun Fraser sent 26 July Annexure 'SRF-20', being a copy of from ASIC to Shaun Fraser sent 20 July Annexure 'SRF-21 ', being a copy of the Grower Alert 22. Annexure 'SRF-22', being a copy of the Product Disclosure Statement I, Shaun Robert Fraser of Level 12, 20 Martin Place, Sydney in the state of NSW, Registered Liquidator affirm: 1. I am a partner of McGrathNicol. I am a registered liquidator and have been so for 14 years. Page 3 ~-, -

5 2. I make this affidavit in support of the plaintiffs application under section 1322(2) of the Corporations Act 2001 (Cth) (Corporations Act), and section 21 of the Federal Court of Australia Act 1976 (Cth), for declarations in relation to: (a) (b) the role of the plaintiff as the responsible entity of the TFS Sandalwood Project 2003 (ARSN ) (2003 Project); and the meeting of members of the 2003 Project held at 4pm on 23 July 2018 at Dalkeith Hall. 3. On 23 January 2018, Jason Preston, Robert Conry Brauer and I were appointed as joint and several receivers and managers (Receivers) of the plaintiff, Sandalwood Properties Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) (ACN ) (SPL). 4. At all relevant times, SPL was a wholly owned subsidiary of Quintis Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) (ACN ) (Quintis). The Receivers are also the joint and several receivers and managers of Quintis and certain of its other wholly owned subsidiaries including : (a) (b) Quintis Leasing Pty Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) (ACN ) ( Quintis Leasing); and Quintis Forestry Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) (ACN ) (Quintis Forestry). 5. I am authorised by the Receivers to make this affidavit in support of the plaintiffs application referred to in paragraph 2 above. 6. The matters contained in this affidavit are based on my own knowledge and experience, except where otherwise stated. 7. Where I give evidence of things people said, except where I use quotation marks, I am describing the effect of what they have said, rather than their exact words. Administration and Receivership of Quintis and SPL 8. On 20 January 2018, Richard Tucker, Scott Langdon and John Bumbak were appointed as joint and several voluntary administrators of Quintis and certain of its wholly owned subsidiaries, including SPL (Voluntary Administrators). Now produced and shown to me and marked 'SRF-1' is -a true copy of a historical company extract for SPL dated 16 August 2018, which I caused to be obtained from the Australian Securities and Investments Commission (ASIC) national database. Now Page 4

6 produced and shown to me and marked 'SRF-2' is a Form 505 lodged with ASIC by the Voluntary Administrators in respect of SPL. 9. Following the appointment of the Voluntary Administrators, on 23 January 2018, BTA Institutional Services Australia Limited (ACN ) in its capacity as trustee of the trust established under a 'Collateral Trust Deed' dated 21 June 2011 (as amended from time to time) appointed Mr Preston, Mr Brauer and myself as Receivers of the same entities to which the Voluntary Administrators had been appointed. 10. On 8 June 2018, unsecured creditors of Quintis and its wholly owned subsidiaries in voluntary administration and receivership (including SPL) resolved to enter into a deed of company arrangement (DOCA). 11. On 29 June 2018, the DOCA was executed and Richard Tucker, John Bumbak and Scott Langdon were appointed as joint and several deed administrators. 12. The Receivers are pursuing a recapitalisation proposal for Quintis and its subsidiaries (Quintis Group) to be implemented by way of the DOCA and a creditors' scheme of arrangement under Part 5.1 of the Corporations Act between Quintis and its wholly owned subsidiaries which are party to the DOCA and certain of the Quintis Group's secured creditors. It is currently expected that, if the relevant approvals for the scheme of arrangement are obtained from the secured creditors and the Court, the recapitalisation of the Quintis Group will complete in early October Accordingly, I expect that the Receivers will retire as receivers and managers of Quintis, SPL and related entities at that time Project 13. The business of the Quintis Group (including SPL, Quintis Leasing and Quintis Forestry) includes forestry managed investment schemes governed by Chapter SC of the Corporations Act. For the purpose of the plaintiffs application, the relevant managed investment scheme is the 2003 Project. 14. The 2003 Project is governed by the following documents (together, the 2003 Project Documents): (a) (b) a Constitution dated 18 March 2003 between SPL (under its former name T.F.S. Properties Ltd) as responsible entity and the members of the 2003 Project (known as Growers). Now produced and shown to me _and marked 'SRF-3' is a true copy of the Constitution; a Lease and Management Agreement dated 23 June 2003 between SPL as manager and head lessor, Quintis Leasing as lessor (under its former name T.F.S. Leasing Pty Ltd) and each of the Growers (with SPL signing on behalf Page 5

7 of each of the.growers pursuant to a power of attorney contained in the application form). Now produced and shown to me and marked 'SRF-4' is a true copy of the Lease and Management Agreement; and (c) a Plantation Management Agreement dated 30 June 2004 between SPL as the responsible entity and Quintis Forestry (under its former name Tropical Forestry Services Ltd) as manager. Now produced and shown to me and marked 'SRF-5' is a true copy of the Plantation Management Agreement. 15. The terms of the 2003 Project Documents include the following provisions: (a) (b) (c) (d) (e) (f) (g) SPL acts as the responsible entity of the 2003 Project (clause 2.2 of the Constitution); SPL (in its personal capacity, that is, not in its capacity as responsible entity) leases the land on which the 2003 Project operates to Quintis Leasing (Recitals A and B of the Lease and Ma~agement Agreement). SPL is the registered proprietor of that land; a Grower (being a person wishing to acquire an interest in the 2003 Project) submits an application form containing a power of attorney in favour of SPL as responsible entity _to enable various contracts to be signed on their behalf; the Grower can acquire an interest in one or more parts of the Project; the Grower sub-leases from Quintis Leasing a specific portion of the land on which the 2003 Project plantation is established (clause 2.1 of the Lease and Management Agreement). The Grower sub-leases one portion of the land for each interest the Grower purchases known as a 'Timber Lot' (clause 1.1, definition of 'Timber Lot' of the Lease and Management Agreement). A Grower's combined Timber Lots are known as a 'Leased Area' (Leased Area) (clause 1.1, definition of 'Leased Area' of the Lease and Management Agreement); each Grower has obligations under the sub-lease to undertake activities associated with the 2003 Project plantation, such as to cultivate, maintain, undertake fire protection, control pests and comply with statutory requirements (clause 5 of the Lease and Management Agreement); each Grower appoints SPL as manager (Manager) and engages the services of SPL (as Manager) to plant, develop and manage each Grower's Leased Area (clauses 10 and 11 of the Lease and Management Agreement and clause 16.2 of the Constitution). As a consequence, SPL is appointed as Manager of the whole Plantation for the 2003 Project; Page 6 ~--

8 (h) (i) SPL in turn sub-contracts that management role to Quintis Forestry (clause 13.1 of the Lease and Management Agreement, clause 18(a) of the Constitution and clause 2 of the Plantation Management Agreement); each Grower pays SPL that Grower's proportion of certain costs associated with the establishment, management and ultimately the harvest of the. Plantation ( clause 19 of the Lease and Management Agreement); U) the Grower is not entitled to specific trees grown on the Grower's Leased Area, but a proportionate share of the volume of trees on the 2003 Project plantation in accordance with the Grower's investment in the 2003 Project. Upon maturity, the 2003 Project's trees are harvested and either: (i) (ii) a proportionate share of the total produce is collected by the Grower (if so elected in accordance with clause 15.1 of the Lease and Management Agreement) and taken in full satisfaction of their rights to the trees on their Leased Area (clause 1.1, definition of 'Collectable Produce' and clause 16.3 of the Lease and Management Agreement) ; or sold by SPL ( clause 17.1 of the Lease and Management Agreement) (again with all the trees being pooled) and a proportionate share of the net proceeds of sale are payable to the Grower (clause 16.2 of the Lease and Management Agreement); and (k) meetings of Growers must be held in accordance with the provisions of Part 2G.4 of the Corporations Act (clause 26 of the Constitution). Interests held by SPL in the 2003 Project as trustee 16. Quintis Forestry holds interests in the 2003 Project of 5.49% in total in its own capacity. 17. In addition to being the responsible entity of the 2003 Project, SPL holds interests in the Project for an unrelated third party institutional investor (Investor) through a trust structure involving two separate head trusts and sub trusts. The Investor is the sole beneficiary of each head trust (by holding various classes of units) and SPL is the trustee of each head trust. Each head trust is the beneficiary of certain sub trusts and SPL is also the trustee of those sub trusts. SPL's interests in the Project are held in its capacity as trustee of the sub trusts. 18. SPL is recorded as a Grower on the 2003 Project Grower register. While SPL holds the interest as trustee of the sub trusts, the trustee capacity is not recorded on the register. Clause 25.6 of the Constitution provides that the responsible entity is not Page 7

9 required to enter on the Register 'notice of any trust... in respect of any Interest'. Now produced and shown to me and marked 'SRF-6' is a true copy of an extract of the 2003 Project Grower register. 19. The interests held by SPL in the 2003 Project in this trustee capacity on behalf of the Investor are 37.35% in aggregate: 2002 Project Growers' Meeting and Huntley AFSL 20. On or around 11 December 2017 (prior to the Receivers' appointment), a Notice of Meeting and an explanatory memorandum were published on the website of the Sandalwood Growers Co-op Limited (SGC) for a meeting to be held on 30 January 2018 for the purpose of Growers in the TFS Sandalwood Project 2002 (ARSN ) (2002 Project) considering and voting on, among other things, the removal of SPL as the responsible entity of the 2002 Project and the appointment of Huntley Management Limited (Huntley) as replacement responsible entity. Now produced and shown to me and marked 'SRF-7' are true copies of the Notice of Meeting and explanatory memorandum obtained from SGC's website. 21. At the time of publication of the Notice of Meeting and explanatory memorandum, Huntley did not at that time have an Australian Financial Services Licence (no ) (AFSL) authorising it to operate the 2002 Project. 22. On 24 January 2018, Huntley applied to ASIC seeking the necessary variation to its.afsl. 23. On 25 January 2018, ASIC sent a letter to SGC confirming that it was considering Huntley's application but foreshadowing that it may not be in a position to make a determination in respect of the application prior to the meeting on 30 January Now produced and shown to me and marked 'SRF-8' is a true copy of the letter. 24. Following ASIC's letter dated 25 January 2018, the 2002 Project Growers' meeting was adjourned on several occasions. Ultimately, ASIC granted the variation on 4 May 2018 and, on 5 June 2018, Growers passed resolutions for the replacement of SPL as the responsible entity of the 2002 Project, the appointment of Huntley as the new responsible entity and the appointment of SGC as the manager. Now produced and shown to me and marked 'SRF-9' is a true copy of the Notice of Meeting by which that meeting was convened. Page 8

10 2003 Project Growers' Meeting Notice of meeting for the 2003 Proiect 25. On or around 16 June 2018, the SGC published on its website a 'Notice of Meeting of Members' (NoM) and an explanatory memorandum (EM) for a meeting to be held on 23 July 2018 for the purpose of considering and voting on, among other things, the following resolutions: (a) (b) (c) the removal of SPL as responsible entity of the 2003 Project (Resolution A); the appointment of Huntley as the replacement responsible entity of the 2003 Project (Resolution B); and the appointment of SGC as manager of the 2003 Project (Resolution C). 26. Now produced and shown to me and marked 'SRF-1 0' are true copies of the NoM (containing a proxy form) and the EM. The requisitioning Growers in the 2003 Project who are named in the NoM are Mr Jason Townes and Mr Ronald Eacott. Status of variation to Huntley's AFSL by ASIC 27. The EM states: "[Huntley] has applied to ASIC for a variation of their license to include the operation of the Project but at the date of this document has not yet received that approval [s]ubject to legal advice the meeting may be adjourned until such time as the approval from ASIC is likely to be granted." 28. As far as I am aware, as at the date of affirming this affidavit Huntley has not received a variation of its AFSL allowing it to operate the 2003 Project. Now produced and shown to me and marked 'SRF-11' is a true copy of an ASIC search for Huntley. Proxies and corporate authorisations lodged bv SPL and Quintis Forestry in relation to the 2003 Proiect meeting 29. Based on the interests referred to at paragraphs 16 and 19 above, the Receivers caused the following to be lodged in respect of the meeting to be held on 23 July 2018: (a) a corporate representative form appointing Mr Matthew Whittle and Ms Anna Schwartz of Allens jointly and severally as Quintis Forestry's corporate representatives for the meeting; Page 9

11 (b) (c) (d) a proxy form appointing Mr Matthew Whittle and Ms Anna Schwartz of Allens jointly and severally as Quintis Forestry's proxies for the meeting; a corporate representative form appointing myself as SPL's corporate representative for the meeting; and a proxy form appointing myself as SPL's proxy for the meeting. Now produced and shown to me and marked 'SRF-12' is a true copy of these forms other than the corporate representative form appointing myself as SPL's corporate representative for the meeting. I do not have a copy of this form as the original was lodged in person at the meeting rather than being lodged by prior to the meeting (which is the manner by which the three other forms were lodged) and a copy of this form was not taken prior to its lodgement. 30. It was anticipated by the Receivers that the proxies held by SPL and Quintis Forestry would enable SPL and Quintis Forestry to represent the majority of the votes at the 2003 Project meeting in respect of procedural matters, in particular the appointment of the Chair and any motion to adjourn the meeting. 31. In the event that the conveners of the meeting sought to proceed with putting the resolutions in the NoM to the Growers, notwithstanding the absence of ASIC's approval of a variation to Huntley's AFSL to operate the 2003 Project, the Receivers proposed to appoint me as the Chair of the meeting. 32. Had I been appointed as Chair, I would have proposed a motion that the meeting be adjourned and the Receivers would have caused SPL and Quintis Forestry to vote in support of that motion. 33. My view, and that of the other Receivers, was that the meeting should be adjourned because, among other reasons, Huntley's variation to its AFSL had not been obtained. As mentioned above, in similar circumstances in respect of the 2002 Project, where Huntley had not obtained a variation of its AFSL prior to the meeting, the meeting had been adjourned until conditional variation of Huntley's AFSL had been granted by ASIC. On this basis, and having regard to the letter from ASIC in respect of the 2002 Project referred to at paragraph 23 above, the Receivers considered that, in the absence of Huntley receiving a variation of its AFSL to operate the 2003 Project prior to the meeting (on a conditional basis or otherwise), the meeting should be adjourned. Conduct of 2003 Project Meeting 34. On 23 July 2018 at 4pm, I attended the meeting of Growers in the 2003 Project convened pursuant to the NoM at Dalkeith Hall, Waratah Avenue, Dalkeith. Pursuant Page 10

12 to the authorisation discussed in paragraph 29 above, I attended the meeting as SPL's appointed corporate representative and proxy. With me were members of the Receivers' staff as well as Matthew Whittle, Anna Schwartz and Miranda Cummings of Allens. 35. I took notes at the meeting and notes were also taken by Miranda Cummings of Allens. I have read both sets of notes. They accord with my recollection of what happened at the meeting and I have used them to refresh my memory. Now produced and shown to me and marked 'SRF-13' and 'SRF-14' respectively is a true copy of each of: (a) (b) 'SRF-13' - the notes taken by me; and 'SRF-14' - the notes taken by Ms Cummings. 36. Prior to the meeting being formally declared open, I asked Mr Teague Czislowski (who is the Chairman and a Director of the SGC and is named on the NoM as the relevant contact person) as to whether Huntley had obtained a variation from ASIC of its AFSL to enable it to operate the 2003 Project. Mr Czislowski confirmed that the variation had not been granted. I asked him whether the meeting would be adjourned and he said that the conveners of the meeting intended to proceed with the meeting notwithstanding the absence of the variation. I informed Mr Czislowski that, if the meeting was going to proceed, the Receivers would cause SPL and Quintis Forestry to seek to have me appointed as Chair and, if appointed, I would propose a motion that the meeting be adjourned. 37. Mr Czislowski then asked for all forms appointing corporate representatives and proxies be provided to Mr Graeme Scott (a Grower in the 2003 Project), indicating that Mr Scott would be acting as the interim Chair pending the formal appointment of the Chair of the meeting. 38. Mr Czislowski then told those in attendance that: (a) (b) I was SPL's corporate representative and SPL's interest in the 2003 Project represented 102 lots; and Mr Whittle was Quintis Forestry's corporate representative and Quintis Forestry's interest in the 2003 Project represented 15 lots. 39. Mr Czislowski asked me whether I had written directions from the beneficiaries given that he was aware that SPL holds its interests in a trustee capacity and said that, if there were no written directions or instructions from beneficiaries, then no votes could be counted. Mr Whittle said that given the corporate representative form had been prepared, there was no need to look behind to the structure of the entity. Page 11

13 40. Mr Czislowski then said that Mr Scott would be acting as interim Chair and that Mr Scott has some issues reading so Mr Scott would likely be asking Mr Czislowski to assist him with reading the run sheet (Mr Scott appeared to have impaired vision). 41. Upon Mr Czislowski declaring that a quorum was present and declaring the meeting open, Mr Scott invited motions to appoint the formal Chair of the meeting pursuant to section 252S(3) of the Corporations Act. Mr Scott received a nomination to be elected as Chair and I also received a nomination to be elected as Chair. 42. Mr Scott then said that the first motion was the one to appoint me as Chair. Following votes cast by a showing of hands, Mr Whittle (as Quintis Forestry's corporate representative) called for a poll which was conducted. 43. Mr Scott asked Mr Czislowski to declare the outcome of the poll. Mr Czislowski declared that 127 votes in total had been cast in favour of the resolution and said that 102 votes had been excluded for having no written authority from the beneficiaries of the trusts. He said that SPL, because it acts as bare trustee for entities, needed written authorities from the beneficiaries. 44. Mr Czislowski (not Mr Scott as the interim Chair) then said that the outcome of the poll for my appointment as Chair was 24 votes in favour and 111 votes against.(excluding SPL's votes). I am aware that the vote results do not add up to 127, being the total number of votes mentioned by Mr Czislowski. I am not aware of the basis for this discrepancy. 45. Mr Whittle then objected to the purported exclusion of SPL's votes and said words to the following effect: The structure by which SPL holds the interest is not a basis to exclude SPL from voting. We anticipate you will say all motions will have the same invalidity. We don't accept that. Can you explain why we have been excluded? On what basis can you look behind the structure when the corporate representative is here? 46. Neither Mr Scott nor Mr Czislowski responded to Mr Whittle's objection or questions and Mr Scott proceeded to put the second motion to Growers for his appointment as Chair. Following votes cast by a showing of hands, Mr Whittle called for a poll which was conducted. 47. Mr Czislowski said that the outcome of the poll was that 111 votes had been counted in favour and 24 votes counted against, with SP L's 102 votes having been excluded. I am not aware of the total number of votes cast in favour of the resolution as this number was not declared by Mr Czislowski. Page 12

14 48. Mr Whittle and I objected to the purported exclusion of SPL's vote and I said that since there was clearly an issue that needed to be resolved, we should go and get some advice on this issue. I proposed adjourning the meeting. 49. Mr Scott responded by saying that he proposed proceeding with the meeting, that he declared the motion carried, and that he was the Chair. 50. Mr Czislowski then proceeded to describe the resolutions contained in the NoM and referenced at paragraph 25 above, declared that the value of the Growers' interests pursuant to section 253F of the Corporations Act was one vote for every one woodlot held in the 2003 Project, and invited questions from the floor. 51. Mr Whittle asked Mr Scott whether Huntley was authorised by ASIC under its AFSL to allow it to become the responsible entity of the 2003 Project. Mr Czislowski said that to the best of his knowledge, Huntley had lodged an application with ASIC and provided all information but had not received approval to vary their licence to be the responsible entity of the scheme as yet. 52. Mr Whittle asked Mr Czislowski what the consequences would be if Huntley was appointed as responsible entity without having received the required variation of its AFSL to operate the 2003 Project. Mr Czislowski said that SPL would continue in its role as the responsible entity in those circumstances. 53. Mr Whittle said that there was a risk that if Growers voted to remove SPL and there was no valid replacement, then the scheme would have to be wound up. 54. Mr Czislowski responded to Mr Whittle with words to the following effect: In the EM we said if there was no ASIC approval of Huntley then we would rely upon legal advice as to whether or not to proceed. Our legal advice that we have received is that based on ss 601 FA and 601 FM we are entitled to proceed. Huntley is a public company and holds an AFS licence. Upon a proper resolution being passed, then SPL ought to notify ASIC of change. If SPL fails to do so, then Huntley does so. If Huntley doesn't do that because they don't have approval, then SPL remains as RE. There's no winding up if there is an RE on the register. 55. There was some further debate about that between Mr Whittle, Mr Frank Wilson, Mr David Renton of Quintis, and Mr Czislowski, with some Growers indicating support for Mr Czislowski when he expressed the view that the responsible entity (SPL) was being uncooperative and seeking to interfere with what the Growers who are not excluded from voting want to do. Page 13

15 56. Mr Czislowski then put Resolution A to the meeting and called for a poll in respect of Resolution A which was conducted. Mr Czislowski said that the outcome of the Resolution A poll was 111 votes in favour, 7 votes against and no abstentions. Mr Scott declared Resolution A carried. 57. Mr Czislowski then put Resolution B to the meeting and called for a poll in respect of Resolution B which was conducted. Mr Czislowski said that the outcome of the Resolution B poll was 111 votes in favour, 7 votes against and no abstentions. Mr Scott declared Resolution B carried. 58. Mr Czislowski then put Resolution C to the meeting. A vote on Resolution C was taken on a show of hands, with the majority of hands voting in favour of Resolution C. I did not record the number of votes on the show of hands in my notes. Mr Scott declared Resolution C carried. I then said words to the following effect: I make a statement on behalf of SPL. We register our protest to the approach that has been taken today. We disagree with the exercise of discretion not to allow SPL to vote. We reserve our rights to challenge. We would like that recorded in the minutes please. 59. Mr Scott noted my statement and declared the meeting closed. Mr Czislowski then made some comments about the outcome of the harvest of the 2002 Project, and said that SGC would be calling for an inquiry by ASIC into the conduct of Quintis's directors in relation to that harvest. He then said that Today Huntley's was appointed by the growers to replace Quintis as RE for the 2003 Project, and the SGC has been appointed as manager for the 2003 project. SGC will be making a recommendation to Huntley's regarding the timing of the harvest for 2003 Project, and also growers in 2003 high net worth Project, after advice from its independent expert forester, and consultation with its harvesting contractor. 60. Mr Czislowski appeared to me to be reading from a document when he made those comments. Now produced and shown to me and marked 'SRF-15' is a true copy of the TFS Sandalwood 2003 Press Release 23 July 2018, which contains the passages that Mr Czislowski read out (which are set out at the end of Ms Cummings' note of the meeting). 61. On my calculations, had SPL and Quintis Forestry's votes been counted on the first motion proposed, the majority of votes cast at the meeting would have been in favour of the appointment of myself as the Chair. As Chair, I would have proposed a motion that the meeting be adjourned and the Receivers would have caused the votes of Page 14

16 SPL and Quintis Forestry to have been cast in support of that motion. Based on the number of votes held by SPL and Quintis Forestry, the adjournment motion would have been passed. Events following the 2003 Project Meeting 62. Subsequent to the 2003 Project meeting taking place on 23 July 2018, the following correspondence has been exchanged between Allens, SGC and the solicitors for Huntley (Piper Alderman): (a) (b) (c) On Thursday 26 July 2018, on the Receivers' instructions, Allens sent a letter to SGC and Piper Alderman setting out SPL's objections to the conduct of the 2003 Project meeting and requesting that each of SGC and Huntley confirm that the resolutions purportedly passed at the meeting were invalid (for the reasons set out in the letter) and that SPL remains the responsible entity of the 2003 Project. Now produced and shown to me and marked 'SRF-16' is a true copy of this letter. At 2:36pm on Friday 27 July 2018, Allens received a response to its correspondence from Piper Alderman in which the required confirmations were not provided. Now produced and shown to me and marked 'SRF-17' is a true copy of this . At 2:40pm on Friday 27 July 2018, Allens received a response to its correspondence from SGC in which the required confirmations were not provided. Now produced and shown to me and marked 'SRF-18' is a true copy of this At 11 :02am on Thursday, 26 July 2018, I received an from ASIC in which it requested certain information relating to the 2003 Project, the TFS Sandalwood Project 2004, the TFS Premium Sandalwood Project 2004 and the TFS Sandalwood Project 2005 for the purpose of assisting ASIC with its assessment of the application by Huntley to operate the 2003 Project, including, amongst other things, information regarding the infrastructure arrangements in place for the management of these schemes. Now produced and shown to me and marked 'SRF-19' is a true copy of this This request for information followed an earlier from ASIC which I received at 2: 14pm on Friday, 20 July 2018 (prior to the 2003 Project meeting) in which ASIC requested that SPL draw Growers' attention to the fact that Huntley, if appointed, would not have access to infrastructure to perform the responsible entity role. Now produced and shown to me and marked 'SRF-20' is a true copy of this . In Page 15

17 response to that request, the Receivers prepared a notification to Growers (a 'Grower Alert') and caused it to be published on the Quintis website and sent by to Growers (for whom the Receivers have addresses). Now produced and shown to me and marked 'SRF-21' is a true copy of the Grower Alert Project harvest 65. In order to comply with its obligations under the 2003 Project Documents, Quintis Forestry is engaged by SPL to, among other things, perform the upcoming harvest of the 2003 Project, as its agent, in accordance with the terrris of the Plantation Management Agreement. 66. The rainy season is due to begin in around October or November. As described in the Product Disclosure Statement for the 2003 Project, harvest of the Project is scheduled for this year (as it is intended to be a 15 year Project). Now produced and shown to me and marked 'SRF-22' is a true copy of the Product Disclosure Statement. 67. I understand that, if the harvest is not completed before the rainy season starts, there will be impediments to undertaking the harvest, such as access issues for staff and harvesting equipment due to flooding and occupational health and safety risks for workers. If the harvest does not occur before the rainy season commences, the harvest could not occur prior to May 2019, which would result in Growers incurring additional maintenance fees and costs for the additional period of maintenance and management required prior to harvest. For these reasons, the Receivers intend to complete the harvest before the rainy season starts. 68. As a result of the matters referred to at paragraphs 65 to 67 above, and in accordance with SP L's usual business practice, the harvesting of the 2003 Project needs to be completed ideally by mid October, which means that the harvest needs to be commenced by late August or early September at the latest. Page 16

18 Declarations sought by the plaintiff 69. The Receivers are concerned to ensure that the uncertainty for Growers created by the purported passing of resolutions for the replacement of SPL at the 2003 Project meeting is resolved as a matter of priority, particularly having regard to the imminent timing of the harvest of the 2003 Project and, in the interim, will cause SPL to continue to fulfil its functions as the responsible entity of the 2003 Project. 70. The plaintiff seeks the declarations set out in the Originating Process and the orders set out in the Originating Process in respect of costs of the application. Affirmed by the deponent at Sydney in New South Wales on I!:I-- August 2018 Before me: Page 17

19 SCHEDULE Federal Court of Australia District Registry: Western Australia Division: Corporations List IN THE MATTER OF SANDALWOOD PROPERTIES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (RECEIVERS AND MANAGERS APPOINTED) ACN: Defendants First Defendant: Huntley Management Limited (ACN ) Second Defendant: Sandalwood Growers Co-op Ltd (registration number C B) Third Defendant: Graeme Eric Scott Page 18