NOTICE OF FILING. Details of Filing

Transcription

1 NOTICE OF FILING This document was lodged electronically in the FEDERAL COURT OF AUSTRALIA (FCA) on 22/03/2018 4:01:53 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: WAD103/2018 IN THE MATTER OF SANDALWOOD PROPERTIES LTD (ADMINISTRAROTS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN WESTERN AUSTRALIA REGISTRY - FEDERAL COURT OF AUSTRALIA Dated: 23/03/ :03:02 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 1 Form 59 Rule 29.02(1) Affidavit Noof2ftia Federal Court of Australia District Registry: Western Australia Division: General IN THE MATTER OF SANDALWOOD PROPERTIES LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN Jason Preston, Shaun Robert Fraser and Robert Conry Brauer as receivers and managers of Sandalwood Properties Ltd (Administrators Appointed) (Receivers and Managers Appointed) (ACN ) Plaintiffs Affidavit of: Address: Occupation: Shaun Robert Fraser Level 12, 20 Martin Place, Sydney in the state of New South Wales Registered Liquidator Date: 22 March 2018 I, Shaun Robert Fraser of Level 12, 20 Martin Place, Sydney in the state of New South Wales, Registered Liquidator affirm: 1. I am a plaintiff in this matter and a partner of McGrathNicol. I am a registered liquidator and have been so for 14 years. Filed on behalf of: Jason Preston, Shaun Robert Fraser and Robert Conry Brauer as receivers and managers of Sandalwood Properties Ltd (Administrators Appointed) (Receivers and Managers Appointed), the plaintiffs Prepared by: Charles Philip Blaxill Law firm: Allens Tel: (08) Fax: (08) Philip.Blaxill@allens.com.au Address for service: Level 37, QV St Georges Terrace Perth, Western Australia Philip.Blaxill@allens.com.au kbpsa v

3 2 2. I make this affidavit in support of the plaintiffs' application to the Court for directions pursuant to section 424 of the Corporations Act 2001 (Cth) (Act). 3. On 23 January 2018, Jason Preston, Robert Conry Brauer and I were appointed joint and several receivers and managers (Receivers) of Sandalwood Properties Ltd (Administrators Appointed) (Receivers and Managers Appointed) (formerly known as T.F.S Properties Ltd) ACN (SPL). 4. At all relevant times, SPL was a wholly owned subsidiary of Quintis Ltd (Administrators Appointed) (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: Quintis Leasing Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) ACN (Quintis Leasing), and Quintis Forestry Ltd (Administrators Appointed) (Receivers and Managers Appointed) ACN (Quintis Forestry). 5. I am authorised by the Receivers to make this affidavit in support of their application for directions pursuant to section 424 of the Act. 6. The matters contained in this affidavit are based on my own knowledge and experience, except where otherwise stated. 7. Exhibited to me at the time of affirming this affidavit is a paginated bundle of documents marked Exhibit SRF1. Any reference to a page number throughout my affidavit is a reference to the corresponding page in Exhibit SRF1. Administration and Receivership of SPL 8. On 20 January 2018, Richard Tucker, Scott Langdon and John Bumbak were appointed as joint and several voluntary administrators of SPL (Administrators). 9. At pages 1 to 23 of Exhibit SRF1 is a historical company extract for SPL dated 19 March 2018 which I caused to be obtained from the Australian Securities and Investments Commission national database (ASIC). 10. At pages 24 to 25 of Exhibit SRF1 is a Form 505 lodged with ASIC by the Administrators in respect of SPL, 11. Following the appointment of the 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 between BTA Institutional Australia Limited, The Bank of New York kbpsa v

4 3 Mellon and Quintis, among others, appointed Mr Preston, Mr Brauer and myself as receivers and managers of SPL acting under the powers contained in: the Fixed Floating Charge dated 21 June 2011 and amended on 27 July 2016 (Fixed and Floating Charge). A copy of the Fixed and Floating Charge is at pages 26 to 66 of Exhibit SRF1; and various real property mortgages which are listed in the Notice of Appointment of Receivers dated 23 January 2018, served on, among other entities, SPL in respect of the Receivers' appointment. A copy of the Notice of Appointment of Receivers is at pages 67 to 69 of Exhibit SRF1. Business of SPL 12. The business of Quintis and its subsidiary companies (Quintis Group), including SPL, Quintis Leasing and Quintis Forestry, includes forestry managed investment schemes governed by Chapter 5C of the Act. For the purposes of this application, the relevant schemes are: the TFS Sandalwood Project 2002 (ARSN ) (2002 Project), and the TFS Sandalwood Project 2003 (ARSN ) (2003 Project), together the Projects. The Projects are governed by the following documents (together, the Scheme Documents): a Constitution between SPL as Responsible Entity and the members of the particular scheme (known as Growers). A copy of the Constitution in respect of: the 2002 Project is at pages 70 to 146 of Exhibit SRF1; and the 2003 Project is at pages 147 to 224 of Exhibit SRF1; together, the Constitutions a Compliance Plan, A copy of the Compliance Plan dated 27 May 2016 applicable to the Projects is at pages 225 to 279 of Exhibit SRF1; a Lease and Management Agreement between SPL as Manager and Head Lessor, Quintis Leasing as Lessor and each of the Growers (with SPL signing on behalf of each of the Growers pursuant to a power of attorney contained in the application form). The Lease and Management Agreement in respect of: the 2002 Project is at pages 280 to 329 of Exhibit SRF1; and kbps A v

5 4 the 2003 Project is at pages 330 to 378 of Exhibit SRF1; together, the Lease and Management Agreements (d) a Plantation Management Agreement between SPL as the Responsible Entity and Quintis Forestry as Manager. A copy of the Plantation Management Agreement in respect of: the 2002 Project is at pages 379 to 394 of Exhibit SRF1; and the 2003 Project is at pages 395 to 410 of Exhibit SRF1; together, the Plantation Management Agreements 14. The terms of the Scheme Documents include the following provisions: SPL acts as the Responsible Entity of the Projects (clause 2.2 of the Constitutions); SPL (in its personal capacity) leases the land on which the Projects operate to Quintis Leasing (clause 2.1 of the Lease and Management Agreements). SPL is the registered proprietor of that land; a Grower (being a person wishing to acquire an interest in the relevant Project which I describe more fully below) 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. A copy of the application form completed by Graeme Scott in respect of: the 2002 Project is at pages 411 to 414 of Exhibit SRF1; and the 2003 Project is at pages 415 to 418 of Exhibit SRF1; (d) (e) (f) 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 Plantation is established (clause 2.1 of the Lease and Management Agreements). A Grower sub-leases one portion of the land for each interest the Grower purchases known as a Timber Lot' (clause 1.1 of the Lease and Management Agreements). A Grower's combined Timber Lots are known as a 'Leased Area' (Leased Area) (clause 1.1 of the Lease and Management Agreements); 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 (clause 10 of the Lease and Management Agreements and clause 16.2 kbps A Ov

6 5 of the Constitutions). As a consequence, SPL is appointed as Manager of the whole Plantation for the Project; (g) (h) SPL in turn sub-contracts that management role to Quintis Forestry (clause 13.1 of the Lease and Management Agreements, clause 18 of the Constitutions and clause 2 of the Plantation Management Agreements); 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 Agreements); and 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 Plantation in accordance with the Grower's investment in the Project. Upon maturity, the Project's trees are harvested and either: 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 Agreements) 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 Agreements); or sold by SPL (clause 17.1 of the Lease and Management Agreements) (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 Agreements). The Grower's Obligations 15. The terms of the Scheme Documents include the following provisions which require the Grower to, among other things: manage, cultivate and work the Leased Area, in a proper and skilful manner and according to generally accepted silvicultural methods so as to maintain and develop the Leased Area for the purpose of long term commercial silviculture (clause 5.2 of the Lease and Management Agreements); keep their Leased Area free of noxious weeds, suckers, scrub and undergrowth (clause 5.3 of the Lease and Management Agreements); prevent erosion, overcropping or degradation of the Leased Area (clause 5.3 of the Lease and Management Agreements);

7 6 (d) (e) use all reasonable measures by dressing, fumigating and poisoning for exterminating and keeping the Leased Area free of rabbits or other vermin (clause 5.8 of the Lease and Management Agreements); and maintain, replace, repair and keep the fixtures situated on the Leased Area in good and substantial repair (clause 5.14 of the Lease and Management Agreements). The role of the Manager of the Projects 16. Linder the terms of the Scheme Documents each Grower appoints the Manager to provide the following services (Services) with respect to that Grower's Leased Area: The Establishment Services (outlined in clause 7A of the Schedule to the Lease and Management Agreements) which require the Manager to supervise and manage all commercial silvicultural activities to be carried on by the Grower on the Leased Area including, but not limited to: (iii) (iv) weed control, surveying and ground preparation of the Leased Area; planting on the Leased Area, in accordance with good silvicultural and forestry practices, sufficient Sandalwood seedlings or trees; irrigating, cultivating, tending, culling, pruning, fertilising, replanting, spraying, maintaining and otherwise caring for the trees as and when required; and maintaining the Leased Area according to good silvicultural and forestry practices. The Ongoing Services (as outlined in clause 7B of the Schedule to the Lease and Management Agreements) which require the Manager to supervise and manage all commercial silvicultural activities to be carried on by the Grower on the Leased Area including, but not limited to: (iii) irrigating, cultivating, tending, culling, pruning, fertilising, replanting, spraying, maintaining and otherwise caring for the trees as and when required; planting on the relevant Leased Area such other trees as it may be considered necessary to enable or encourage the growth of or to protect the Sandalwood seedlings or trees growing on the Leased Area; maintaining the Leased Area according to good silvicultural and forestry practices; and Kbps AD v

8 7 (iv) carrying out, or arranging to be carried out, the harvest and processing of the trees in a manner which maximises the return for the relevant Grower. The Sales and Marketing Services (as outlined in section 7C of the Schedule to the Lease and Management Agreements) which require the Manager to, among other things: (iii) supervise and manage the negotiating and marketing, at the maximum practicable price available, sales of the forest produce from the Leased Area; supervise and manage the contracting of expert personnel to negotiate a sales agreement with major purchasers of Sandalwood; and generate interest in Sandalwood as an end product so as to stimulate demand for the forest produce. SPL as Manager of the Projects 17. In order to comply with its obligations under the Scheme Documents, SPL has engaged Quintis Forestry to perform the Services, as its agent, in accordance with the terms of the Plantation Management Agreements. 18. Quintis Forestry has been providing commercial silvicultural services for approximately 15 years. Quintis Forestry has been performing the Services under the Planation Management Agreements in respect of the Project since the inception of the Projects. 19. I have set out below a description of Quintis Forestry's business and the activities that it undertakes in managing the Projects: Quintis Forestry currently employs approximately 89 employees who specialise in the provision of commercial silvicultural services. Approximately 22 of these employees are involved in the Projects; Quintis Forestry owns the following necessary equipment to perform the Services: (iii) (iv) five Kubota tractors with 600 litre spray tanks; a Kubota tractor for boundary spraying channels and drainage works; a delver for channel forming; a drag bucket for roadway levelling;

9 8 (v) (vi) (vii) two Terex, one feller buncher that can be fitted onto a Terex for cutting down trees and one corer fitted to remove tree stumps from the ground; a front end loader for the collection of tree logs after the trees have been cut down and merchantable material is identified; two Kubota 7040 tractors, each with a tipping trailer for the collection of tree stumps once removed from the ground; (viii) a Mack truck and side tipper trailer for the transportation of logs; (ix) (x) (xi) two service trailers; a John Deer gator; and three motor vehicles. The activities that Quintis Forestry is presently conducting in relation to the Projects and will be conducted in the coming months include the following: (iii) infield weed spraying for ground crews to gain access for harvest operations; infield slashing of selected inter-rows for ground staff to conduct harvest (approximately 30% of total hectares); and harvest operating As the rainy season is due to come to an end shortly, weeding as referred to in paragraph 19 above, and an aerial spray to combat fig leaf beetles are examples of Ongoing Services which need to be completed urgently to avoid any degradation in the value of the harvest. In providing the Services, Quintis Forestry also relies on the following: the grant of access to land which is owned by SPL (the registered proprietor of the land on which the Plantations are established) which is not leased to Quintis Leasing or sub-leased to any Grower. This land includes internal roadways and irrigation channels; and access to and the use of water for irrigating of the Plantation. SPL holds shares in Ord Irrigation Cooperative Limited (O/C), a registered co-operative under the Co-operatives Act 2009 (WA). The QIC is governed by the Rules of Ord Irrigation Cooperative Limited (O/C Rules), a copy of which is at pages 419 to 474 of Exhibit SRF1. Under the terms of the QIC Rules, QIC makes available to SPL, as a Member of QIC, the volume of water to which it is

10 9 entitled under the OIC Rules and as evidenced by the Certificate of Water Entitlement (rule 73.1 of the OIC Rules). A copy of the SPL Certificate of Water Entitlement for King Location 385 (being the land the subject of the Projects) is at page 475 of Exhibit SRF The Receivers have secured sufficient funding from their appointers to enable SPL to continue to perform the Services as Manager of the Projects in accordance with the Lease and Management Agreements during the receivership period. Quintis Forestry 23. Quintis Forestry holds interests as a Grower in both the Projects. It holds such interests in its own capacity and as trustee. Its interests in the 2002 Project represent 35.65% of the total project and its interests in the 2003 Project represent 41.93% of the total project. Sales process 24. The Receivers are currently conducting a sale and/or recapitalisation process of the Quintis Group with non-binding offers due by 23 March The Receivers' preferred outcome for the sale and/or recapitalisation process is to achieve a sale of the entire Quintis Group as a going concern or alternatively to undertake a recapitalisation of the Quintis Group. Purported termination notices and notices of meeting 26. SPL, in its capacity as Responsible Entity and Quintis Leasing, in its capacity as Lessor have received the following notices from Graeme Scott: a notice in his capacity as a Grower in the 2002 Project dated 12 February 2018 (2002 Notice). A copy of the 2002 Notice is at page 476 of Exhibit SRF1; and a notice in his capacity as a Grower in the 2003 Project dated 12 February 2018 (2003 Notice). A copy of the 2003 Notice is at page 477 of Exhibit SRF1; together, the Notices. 27. SPL and Quintis Leasing have not received any further Notices from any other Grower seeking to terminate SPL as Manager and/or appoint Sandalwood Growers Co-op Limited (SGC) as the new Manager of the Projects, either in respect of a particular Grower's Leased Area or in respect of the Plantation as a whole in. 28. In or around February 2018, the chairman of the SGC sent to Growers: kbps A v

11 10 of the 2002 Project, a notice of meeting, proxy form and explanatory memorandum, copies of which are at pages 478 to 489 of Exhibit SRF1. The requisitioning member of this meeting was Teague Czislowski; and of the 2003 Project, a notice of meeting, proxy forms, an explanatory memorandum and update to Growers, copies of which are at pages 490 to 501 of Exhibit SRF1. The requisitioning members of this meeting were Graeme Scott, Natasha Daniels, Valkar Holdings Pty Ltd, Ron Eacott, Jane Eacott and Matt Van Riessen). 29. In response to the Notices and the materials referred to at paragraph 28 above, the following correspondence has been exchanged between the solicitors engaged by the Receivers (Allens) and Graeme Scott or the solicitors for SGC (Mackay Lawyers & Advisors): (d) (e) (f) (g) (h) (j) letter from Allens to Graeme Scott and SGC dated 19 February 2018, a copy of which is at page 502 of Exhibit SRF1; letter from Allens to Mackay Lawyers and Advisors dated 7 March 2018, a copy of which is at page 503 of Exhibit SRF1; letter from Mackay Lawyers and Advisors to Allens dated 8 March 2018, a copy of which is at page 504 of Exhibit SRF1; letter from Allens to Mackay Lawyers and Advisors dated 9 March 2018, a copy of which is at page 505 of Exhibit SRF1; letter from Allens to Graeme Scott, Mackay Lawyers & Advisors and the Requisitioning Members dated 9 March 2018, a copy of which is at pages 506 to 508 of Exhibit SRF1; letter from Mackay Lawyers & Advisors to Allens dated 11 March 2018, a copy of which is at pages 509 to 510 of Exhibit SRF1; letter from Mackay Lawyers & Advisors to Allens dated 14 March 2018, a copy of which is at pages 511 to 512 of Exhibit SRF1; and letter from Allens to Mackay Lawyers & Advisors dated 15 March 2018, a copy of which is at pages 513 to 514 of Exhibit SRF1; letter from Mackay Lawyers & Advisors to Allens dated 18 March 2018, a copy of which is at pages 515 to 517 of Exhibit SRF1; letter from Allens to Mackay Lawyers & Advisors dated 21 March 2018, a copy of which is at pages 518 to 519 of Exhibit SRF1. kbps A v

12 11 Grower meetings 30. On 12 March 2018, I attended the meetings purportedly convened pursuant to the documents referred to at paragraph 26 above. I attended those meetings as an observer. 31. At the meeting of the Growers in the 2002 Project (among other things): Ron Eacott was elected as chairman of the meeting; the chairman said words to the effect that: "The value of the growers' assets is simplified to be one vote per timberlot." (d) (e) (f) the resolution referred to in the notice of meeting was put to the meeting in the form set out in the notice of meeting, save that it was put to the meeting as an extraordinary resolution; the chairman called for a poll; the chairman declared that the outcome of that poll was 134 votes in favour, which was 79.41% of Growers excluding Quintis' direct interests in the 2002 Project and interests of institutional investors or Quintis associates, no votes against and no abstentions; and the chairman declared the resolution carried. 32. At the meeting of the Growers in the 2003 Project, the same steps occurred except that: Graeme Scott was elected as chairman of the meeting; and the outcome of the meeting was declared by the chairman to be 164 votes in favour, which was 79.63% of growers excluding Quintis' direct interests 2003 Project and interests of institutional investors or Quintis associates, no votes against and no abstentions. Responsible Entity of the 2002 Scheme 33. In December 2017, being prior to the Receivers' appointment, a director of SGC issued a notice of meeting of members of the 2002 Project to be held on 30 January 2018, purportedly pursuant to section 252D of the Act. A copy of the notice of meeting is at pages 520 to 526 of Exhibit SRF On 19 January 2018, SPL sent a notice to 2002 Growers. A copy of this notice is at pages 527 to 528 of Exhibit SRF1. kbpsa v

13 Prior to the meetings, on 30 January 2018, an explanatory memorandum was sent to Growers in the 2002 Project dated 24 January 2018, copies of which are at pages 529 to 532 of Exhibit SRF On 25 January 2018, ASIC wrote to SGC. A copy of this letter is at pages 533 to 534 of Exhibit SRF After several adjournments, the meeting in relation to the potential replacement of SPL as Responsible Entity of the 2002 Project lapsed. Directions sought by the plaintiffs 38. Following the meetings described in paragraphs 30 to 32 above: I caused SPL to send: an update to Growers in the 2002 Project dated 9 March A copy the update to Growers is at pages 535 to 536 of Exhibit SRF1; and an update to Growers in the 2003 Projects dated 9 March A copy of the update to Growers is at pages 537 to 538 of Exhibit SRF1; and (iii) an update to Growers in the Projects (and other projects) dated 9 March A copy of the update to Growers is at pages 539 to 542 of Exhibit SRF1. SGC sent an update dated 12 March 2018 to Growers in the Projects which includes the statement: "SGC as new manager is granted all of the rights and powers under the Lease and Management Agreement as though it was named as the manager in the agreement". A copy of this update to Growers is at pages 543 to 544 of Exhibit SRF1. I caused SPL to send: an update to Growers in the 2002 Project dated 14 March A copy of the update to Growers is at page 545 of Exhibit SRF1; and an update to Growers in the 2003 Project dated 14 March A copy of the update to Growers is at page 546 of Exhibit SRF The plaintiffs seek the directions set out in the Originating Process in respect of the Notices, the Resolutions purportedly passed at the Meetings and its continued performance in the role of Manager of the Projects under the Scheme Documents. 40. I note the following: kbpsa v

14 13 SPL and Quintis Leasing have been issued with identical notices from a Grower each in respect of another three projects being TFS Sandalwood Project 2004 (ARSN ) (2004 Retail Project), TFS Premium Sandalwood Project 2004 (ARSN ) (2004 Premium Project) and TFS Sandalwood Project 2005 (ARSN ) (2005 Project). These notices are in identical form to the Notices. A notice of meeting was ed on 2 March 2018: (iii) to Growers in the 2004 Project advising that the meeting would be held on 28 March A copy of this notice of meeting is at pages 547 to 553 of Exhibit SRF; to Growers in the 2005 Project advising that the meeting would be held on 28 March A copy of this notice of meeting is at pages 554 to 560 of Exhibit SRF1; and to Growers in the 2004 Premium Project advising that the meeting would be held on 28 March A copy of this notice of meeting is at pages 561 to 567 of Exhibit SRF1. Affirmed by Shaun Robert Fraser at Sydney in New South Waleson 22 March 2018 Before me: Signature of witness Name: lat&th feaajsfca kbpsa v