Re Brighton Rv Syndication Pty Ltd v Asic

[2007] AATA 1305

Re Brighton Rv Syndication Pty Ltd
v.Asic

Tribunal:
Administrative Appeals Tribunal

Member: Deputy President S A Forgie

Subject References:
Managed Investments Scheme
exemption from registration
scope of discretion
relevance of any taxation implications of registration
relevance of any burden in requirement to be both a responsible entity and an approved provider under the Aged Care Act 1997
relevance of consequences of winding up
decision affirmed

Legislative References:
A New Tax System (Tax Administration) Act 1999 - s 3
Acts Interpretation Act 1901 - s 15AB
Administrative Appeals Tribunal Act 1975 - s 37
Aged Care Act 1997 - s 7-1; s 8-1; s 8-3; s 9-1
Australian Securities and Investments Commission Act 2001 - s 1
Corporations Act 2001 - s 9; s 65; s 68; s 101A; s 207; s 319; s 340; s 342; s 601E; s 601EA; s 601EB; s 601ED; s 601EE; s 601FA; s 601FB; s 601FC; s 601FD; s 601FE; s 601FG; s 601GA; s 601GB; s 601GC; s 601HA; s 601HC; s 601HE; s 601HG; s 601JA; s 601JB; s 601KA; s 601KB to 601KE; s 601LA to 601LE; s 601MA; s 601MB; s 601NA; s 601NB; s 601NC; s 601ND; s 601NE; s 601NF; s 601NG; s 601QA; s 601QB; s 601PA; s 601PB; s 601PC; s 760A; s 761A; s 766A; s 780; s 783; s 784; s 911A; s 911B; s 912A; s 913A; s 913B; s 914A; s 915B; s 915C; s 915F; s 1010B; s 1011A; s 1012A; s 1012B; s 1012C; s 1012D to 1012DA; s 1020A; s 1020D; s 1020F; s 1020G; s 1339; Part 5C; Part 7.6; Part 7.9; Part 7.12
Financial Services Reform Act 2001 - The Act
Financial Services Reform Amendment Act 2003 - The Act
Income Tax Assessment Act 1936 - s 170; Part IVA
Managed Investments Act 1998 - The Act
Taxation Administration Act 1953 - s 14ZAAE; Part IVAAA

Case References:
Alexandra Private Geriatric Hospital Pty Ltd v. Blewett - (1984) 2 FCR 368; 56 ALR 265
Armitage v. Nurse - [1998] Ch 241
Austin v. Austin - (1906) 3 CLR 516
Australian Securities and Investments Commission v. Knightsbridge Managed Funds Ltd - [2001] WASC 339
Australian Securities and Investments Commission v. Pegasus Leveraged Group Pty Ltd - (2002) 41 ACSR 561
Australian Securities and Investments Commission v. Primelife Corporation Limited - [2006] FCA 1072
Australian Securities and Investments Commission v. Takaran Pty Ltd - (2002) 43 ACSR 46
Breen v. Williams - (1996) 186 CLR 71
Burrows v. Walls - [1855] 5 De GM & G 233; 3 ER 859
CIC Insurance Ltd v. Bankstown Football Club Ltd - (1997) 187 CLR 384; 141 ALR 618
Cowan v. Scargill - [1985] 1 Ch 270
Fouche v. Superannuation Fund Board - (1952) 88 CLR 609
McMillan v. McMillan - (1891) 17 VLR 33
Minister for Aboriginal Affairs v. Peko-Wallsend Ltd - (1986) 162 CLR 24
Minister for Immigration and Multicultural and Indigenous Affairs v. SZAYW - [2005] FCAFC 154
Pikos Holdings (Northern Territory) Pty Ltd v. Territory Homes Pty Ltd - [1997] NTSC 30
R v. Australian Broadcasting Tribunal Ex parte 2HD Pty Ltd - (1979) 144 CLR 45
Rankine, Pountney Ors v. Rankine - [1998] QSC 48
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) - (1979) 2 ALD 634
Re Gray and Australian Securities and Investments Commission - [2004] AATA 1235
Re SAQ and Australian Securities and Investments Commission - [2005] AATA 553
Re VBN and Others and Australian Prudential Regulation Authority - [2006] AATA 710
Speight v. Gaunt - (1883) 9 App Cas 1
Tanti v. Carlson - [1948] VLR 401
TCN Channel Nine Pty Ltd v. Australian Mutual Provident Society - (1981) 148 CLR 1; 37 ALR 317
Wacando v. The Commonwealth - (1981) 148 CLR 1; 37 ALR 317
Water Conservation and Irrigation Commission (NSW) v. Browning - (1947) 74 CLR 492

Hearing date: 18 September 2006
Decision date: 7 May 2007

Melbourne


146. For the reasons I have given, I affirm the decision of the respondent dated 23 December 2005.

I certify that the one hundred and forty-six preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S A Forgie,

Signed: Jayne Rathjen Associate

Date of Hearing 18 September 2006

Date of Decision 7 May 2007

Counsel for the Applicants Mr P. Bick QC

Solicitor for the Applicants Madgwicks Lawyers

Counsel for the Respondent Mr R. Niall

Solicitor for the Respondent Australian Securities & Investments Commission

Construction Agreement - Stage One and Construction Agreement - Stage Two between Primelife and Brighton Syndication referred to in Contract of Sale of Real Estate between them and dated 10 February 2000.

Contract of Sale of Real Estate; settlement to be 12 months after the issue of Certificate of Completion Stage Two.

Business Sale Agreement - Stage One Brighton Aged Care Hostel and Business Sale Agreement - Stage Two Brighton Aged Care Hostel. The Tie-in Deed executed on behalf of Primelife and Brighton Syndication stated that the parties had agreed that Brighton Syndication would acquire the Project for the total consideration of $36,000,000 on the terms and conditions in the Agreements to which I have referred as well as the Marketing and Management Agreement and the Profit Share Agreement all of which are interdependent: cl 3.

Business Sale Agreement - Stage One Brighton Aged Care Hostel and Business Sale Agreement - Stage One and Business Sale Agreement - Stage One and Brighton Aged Care Hostel and Business Sale Agreement - Stage Two, [3.1]-[3.6] in each.

Business Sale Agreement - Stage One Brighton Aged Care Hostel and Business Sale Agreement - Stage One and Business Sale Agreement - Stage One and Brighton Aged Care Hostel and Business Sale Agreement - Stage Two, [4.1]

Profit Share Agreement between Primelife and Brighton Syndication dated 10 February 2000

Primary Joint Venture Agreement, cl. 7.2

Primary Joint Venture Agreement, cl 8.1

Applicants' Contentions of Fact and Law, [19]

Primary Joint Venture Agreement, cl 3.3

Primary Joint Venture Agreement, cl 3.4

First Joint Venture Agreement, cl 7.2

First Joint Venture Agreement, cl 8.1

First Joint Venture Agreement, cl 8.2

Taxation Ruling TR 93/D27

TR 94/24, [1]

TR 94/24, [1]

TR 94/24. [3]

Media Release, Nat 2000/35

Nat 2000/35

Nat 2000/35

TR 2002/14, [80]

Report of Inspector-General of Taxation on 18 November 2004: Review of the Remission of the General Interest Charge for Groups of Taxpayers in Dispute with the Tax Office, Appendix 6, [A6.9]

Documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents), 91-92

TD 2004/D78, Preamble

TD 2004/D78, Heading

TD 2004/D78, [1]

TD 2004/D78

TD 2004/D78

TD 2005/28, [4]. These schemes are called "MIS syndicates": [5].

TD 2004/D78, [6]-[8]

TD 2005/28, [14]

TD 2004/D78, [8]-[10]

T documents, 10, Application for exemption/relief, [1.5]

T documents 10-11, Application for exemption/relief, [1.6]

Corporations Law, s 9

Explanatory Memorandum to Managed Investments Bill 1997, cl 1

s 9

A person is not "operating a scheme merely because: (a) they are acting as an agent or employee of another person; or (b) they are taking steps to wind up the scheme or remedy a defect that led to the scheme being deregistered: s 601ED(6).

The expression "in this jurisdiction" means, in broad terms, the geographical area consisting of the States and Territories as described in the definition in s 9.

s 601EE(1)

Section 601EA sets out the manner in which a person may apply to ASIC to register a managed investment scheme. Once the person lodges an application, ASIC must register that managed investment scheme unless the application or the scheme itself does not comply with specified sections of Chapter 5C: s 601EB(1).

s 601ED(3)

s 601EB

ss 601EB(1)(d) and 601FA

s 601FB(1)

ss 601FB(2)-(4)

s 601FC

s 601FD

s 601FE

s 601FC(1)(g)

s 601FC(1)(h)

s 601FC(1)(c)

s 601FC(1)(d)

s 601FC(1)(j)

s 601FC(1)(k)

s 601FC(1)(l)

s 601GB

s 601GA(1)

s 601GA(2)

s 601GA(3)

s 601GA(4)

s 601GC(1)

s 601GC(2)

s 601HA(1)(a)

s 601JA(1). An "external director" is defined in s 601JB(2).

s 601JB(1)

s 601HA(1)(b)

s 601HE(1)

s 601HE(2)

s 601HE(3)

s 601HG(1)

s 601KA(3)

s 207

s 601LB

s 601MA(1)

s 601MB

s 601NA

s 601NB

s 601NC(1)

s 601ND(1)

s 601ND(2)

s 601ND(3)

s 601NE(1)

s 601NG

s 1339(1)

s 601PA(1)

s 601PA(2)

s 601PB

ss 601PB(1)(b) and (c)

s 601PB(1)(a)

s 601PB(1)(d)

s 601PC(1)

s 601PC(2)

s 601PC(3)

s 601QA(2)

s 601QA(3)

s 601QA(3)

s 601QB

[PS 136.1] A

[PS 136.2]

[PS 136.12]

e.g. s 601QA

[PS 136.17]

[PS 136.18]

[PS 136.32]

[PS 136.14]. PS 51 was later re-issued on 14 September 2006. In view of my conclusion at [108-109] that I am reviewing the matter as at the date of APRA's decision, I have had regard to the earlier version of PS 51 as it existed on 23 December 2005.

[PS 51.6]

[PS 51.7]

[PS 51.24]

[PS 51.9]

[PS 51.10]

[PS 51.34]

[PS 51.35]

[PS 51.37]

[PS 51.37]

[PS 51.39]

ASIC Act, s 1(2)

s 780. An "exempt dealer" was either an "eligible money market dealer" or an "exempt public authority": ss 9 and 68(1). An "eligible money market dealer" is a "body corporate in respect of which there is a declaration in force under s 65(1)(a)": s 9. A "body corporate in respect of which there is a declaration in force under s 65(1)(a)" is a body corporate declared by the then Commission to be an authorised dealer in the short term money market" ss 9 and 65(1)(a).

ss 783 and 784

Explanatory Memorandum to the Financial Services Reform Bill 2001

s 766A(1)

s 766A(2)(a)

s 766A(2)(b)

s 766A(3)

s 911A(1) Section 911D prescribes when a financial services business is taken to be carried on in this jurisdiction.

s 761A

s 911A(2)-(6)

s 911B

s 914A

s 915C(4)

s 915C(1)

s 915C(2)

s 915F

[PS 167.5]

s 1010A(1)

s 1010A(2)

s 1010B(1)

s 1011A(1)

s 1012A(1)

s 1012B(1)

s 1012D

ss 1012D(2) and (3)

s 1020D

s 1020F(1)

s 1020F(4)

s 1020F(5)

s 1020F(5)

s 1020F(6)

[PS 169.1]

[PS 169.3]

[PS 169.3B], [PS 169.3C] and [PS 169.5]: see [85-87above]

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 per Mason J. See also R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49 per Stephen, Mason, Murphy, Aickin and Wilson JJ citing with approval Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505.

Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 640 per Brennan J

Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) at 641 and see also the general discussion of the principles by Mr SC Fisher, Member, in Re Gray and Australian Securities and Investments Commission [2004] AATA 1235

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; 141 ALR 618 at 408; 634-5. Referring to this authority, Weinberg J in Minister for Immigration and Multicultural and Indigenous Affairs v SZAYW [2005] FCAFC 154 at [6]-[7]

Wacando v The Commonwealth (1981) 148 CLR 1; 37 ALR 317 at 25; 335 per Mason J decided before the enactment of s 15AB of the Acts Interpretation Act 1901 (AI Act)

Alexandra Private Geriatric Hospital Pty Ltd v Blewett (1984) 2 FCR 368; 56 ALR 265 at 375; 272

AI Act, ss 15AB(1) and (2)

Alexandra Private Geriatric Hospital Pty Ltd v Blewett (1984) 2 FCR 368; 56 ALR 265 at 375; 272

Law Reform Commission Report No 65, the Companies and Securities Advisory Committee Report, "Collective Investments: Other People's Money" 1993

Explanatory Memorandum, [1]-[5]

[2005] AATA 553

[2005] AATA 553 at [123]-[145]

A New Tax System (Tax Administration) Act 1999, s 3, Schedule 3, Item 1 and later amended by the Tax Laws Amendment (Improvements to Self Assessment) Act(No.2) 2005, s 3, Schedule 2

TAA, s 14ZAAE

ITAA 36, s 170

ITAA 36, s 170

TD 2005/28, [14]

Applicants' Contentions of Fact and Law, [95]

Applicants' Contentions of Fact and Law, [95]

Aged Care Act, s 7.1

Aged Care Act, s 8.1(1)(c)

Aged Care Act, s 8.3

Aged Care Act, s 9.1(2)

Aged Care Act, s 9.1(3)

Rankine, Pountney Ors v Rankine [1998] QSC 48

Burrows v Walls [1855] 5 De GM & G 233; 3 ER 859 per Lord Cranworth LC at 249; 866

McMillan v McMillan (1891) 17 VLR 33 at 38-39

Rankine, Pountney Ors v Rankine [1998] QSC 48

Pikos Holdings (Northern Territory) Pty Ltd v Territory Homes Pty Ltd [1997] NTSC 30 at [9]

Mitigation does not extend to exempting a trustee from liability for acts of fraud or dishonesty for to do so would be contrary to public policy. Abrogation of a trustee's responsibility to exercise care and skill, prudence and diligence is not contrary to public policy. (Armitage v Nurse [1998] Ch 241 at 254 per Millett LJ)

[2006] AATA 710 at [272]-[281]

Speight v Gaunt (1883) 9 App Cas 1 at 19 approved in Austin v Austin (1906) 3 CLR 516 at 525 per Griffith CJ and in Fouche v Superannuation Fund Board (1952) 88 CLR 609 at 641 per Dixon CJ, McTiernan and Fullagar JJ. Most recently, Gummow J has said in Breen v Williams (1996) 186 CLR 71 at 137:
"Where an express trust has been effectively constituted and under its terms the trustee is obliged to manage a trust business, the trustee is required both to observe the terms of the trust, and in doing so, to exercise the same care as an ordinary, prudent person of business would exercise in the conduct of that business were it his or her own."

Cowan v Scargill [1985] 1 Ch 270 at 286-287. In Tanti v Carlson [1948] VLR 401 at 405 Herring CJ said that "It is also their duty to be impartial in the execution of their trust and not to exercise their powers so as to confer an advantage upon one beneficiary at the expense of all others."

[1985] 1 Ch 270 at 287

[1985] 1 Ch 270 at 288

Recital A and [3.3(a)] of each

Transcript, 37

Transcript, 37

Tribunal Book, 783

See, for example, those at Tribunal Book, 778-786.

[2006] FCA 1072

[2001] WASC 339 at [45]-[49]

(2002) 41 ACSR 561 at [26]-[32]

(2002) 43 ACSR 46

[2006] FCA 1072 at [33]

[2006] FCA 1072 at [33]

[2006] FCA 1072 at [34]-[35]

[2006] FCA 1072 at [36] and [42]