Lake Coogee Estate Management Pty Ltd v Australian Securities and Investments Commission [2007] FCA 692

FEDERAL COURT OF AUSTRALIA

Lake Coogee Estate Management Pty Ltd v Australian Securities and Investments Commission [2007] FCA 692 CORPORATIONS – managed investment scheme – failure to register scheme – proposals by investors to complete scheme – land purchased and substantial number of lots sold – developer seeking to wind up scheme upon completion of development – bank finance now finalised – other adverse issues addressed – orders in manner permitting completion of residential development the subject of the scheme approved Corporations Act 2001 (Cth) ss 477, 535, 601EB, 601ED(1), 601ED(5), 601EE(1), 1323(2A) Australian Securities and Investments Commission v Koala Quality Produce Ltd (2002) 41 ACSR 628 Lake Coogee Estate Management Pty Ltd v Australian Securities and Investments Commission (2006) 60 ACSR 281 LAKE COOGEE ESTATE MANAGEMENT PTY LTD (ACN 115 352 504), ALB DEVELOPMENTS NO 1 PTY LTD (ACN 113 785 050) and CITIBOND FINANCE AND INVESTMENTS PTY LTD (ACN 114 597 912) v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION WAD 286 OF 2006

NICHOLSON J

11 MAY 2007

PERTH IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 286 OF 2006

IN THE MATTER OF LAKE COOGEE ESTATE MANAGEMENT PTY LTD (ACN 115 352 504) BETWEEN: LAKE COOGEE ESTATE MANAGEMENT PTY LTD

(ACN 115 352 504)

First Plaintiff

ALB DEVELOPMENTS NO 1 PTY LTD

(ACN 113 785 050)

Second Plaintiff

CITIBOND FINANCE AND INVESTMENTS PTY LTD

(ACN 114 597 912)

Third Plaintiff

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Defendant

JUDGE: NICHOLSON J DATE OF ORDER: 11 MAY 2007

WHERE MADE: PERTH

1 For the purposes of these orders the terms: 1.1 'Act' means the Corporations Act 2001 (Cth). 1.2 'Information Memorandum' means the information memorandum dated approximately July 2005 with the title 'Lake Coogee Estate Development Trust'. 1.3 'Compliance Plan' means the compliance plan at p 111 of the affidavit of Glenda Jane Currie sworn on 5 December 2006 and filed on 6 December 2006. 1.4 'Investor' means a person or entity who has contributed moneys in respect of the Scheme as a holder of A Class units in the LCDT. 1.5 'Investor's funds' means money contributed by an Investor for the purposes of investing in the Scheme. 1.6 'LCDT' means the Lake Coogee Estate Development Trust as constituted by the Lake Coogee Estate Development Trust Unit Trust Deed. 1.7 'Property' means all real or personal property, assets or interests in property of any kind, within or outside Australia including by virtue of s 1323(2A) of the Act, any property held otherwise than as sole beneficial owner. 1.8 'Real Property' means the property represented by the following Western Australian Department of Land Administration certificates of title or rights under contracts for the purchase of the property in the following titles and titles issued in substitution for these titles: CT Fol/Vol Address 1694-608 2 Fawcett Road 1166-554 4 Fawcett Road 1216-46 81 Mayor Road 1059/527 256 Mayor Road 2621-738 3 Fawcett Road 1.9 'Scheme' means the managed investment scheme described in the Information Memorandum operated by the first, second and/or third plaintiffs, and promoted by the plaintiffs whereby: 1.9.1 The first, second and third plaintiffs issued the Information Memorandum. 1.9.2 The Information Memorandum invited recipients to offer to purchase units in the LCDT and thereby become entitled to participate in profits from the development of residential lots from the Real Property and the subsequent sale of those lots. 1.9.3 Investors provided the Investors' funds to the first plaintiff to acquire a unit or units in the LCDT. 1.9.4 Investors, as holders of units in the LCDT, became entitled to benefits in the Scheme as identified in writing in the Information Memorandum, the 'Application Form' attached to the Information Memorandum, the 'Unit Certificate' issued to each Investor by the first plaintiff, and the Lake Coogee Estate Development Trust Unit Trust Deed dated 2005. 1.9.5 By the terms of the Information Memorandum the Investor's funds would be and were used in the common enterprise identified in the Information Memorandum. 1.9.6 The investor's funds contributed to the first plaintiff were pooled into a receiving bank account. 1.9.7 The first plaintiff agreed to lend the Investors' funds to the second plaintiff pursuant to an agreement in writing titled 'Facility Deed', undated but stamped 20 October 2005 and said to be binding from 5 August 2005 and other security documents. 1.9.8 The first and second plaintiffs agreed the first plaintiff would develop and manage the Real Property pursuant to an agreement in writing titled 'Management and Service Agreement', undated but stamped 20 October 2005. 1.9.9 The first and third plaintiffs agreed the third plaintiff would provide project management services and other services to the first plaintiff. 1.9.10 The plaintiffs managed the day to day operations of the Scheme using the Investor's funds or Scheme Property while the Investors did not have and do not have day to day control over the Scheme, the use of the Investor's funds or Scheme Property. 1.9.11 The plaintiffs have operated the Scheme by completing some of the contracts to purchase the Real Property using Investors' funds and loan funds, and have progressed other aspects of the Scheme. 1.10 'Scheme Property' means the Investor's funds, the Real Property, the bank account or accounts of the Scheme, rights of the first, second and third plaintiffs under the documents related to the Scheme including the Trust Deed, the Facility Deed, the Mortgages and the Charge related to the Facility Deed in which the first plaintiff is Mortgagee or Chargee, the Management and Service Agreement, the Property acquired by the use of Investor's funds and the books and records kept by the plaintiffs which record the operations of the Scheme or record information concerning the Scheme assets and liabilities its income and expenditure. 1.11 'Scheme Completion' means the completion of sales of all lots or proposed lots comprising the subdivided Real Property, the final distribution of net proceeds to Investors, and the proper completion and discharge of all other aspects of the Scheme.