AgriWealth Capital Limited v Australian Financial Complaints Authority Limited

• Jurisdiction: Australia Federal only
• Judgment Date: 10 November 2022
• Neutral Citation: [2022] FCA 1336
• Date: 10 November 2022
• Court: Federal Court

Federal Court of Australia

AgriWealth Capital Limited v Australian Financial Complaints Authority Limited [2022] FCA 1336

File number:	NSD 792 of 2021
Judgment of:	MARKOVIC J
Date of judgment:	10 November 2022
Catchwords:	ADMINISTRATIVE LAW – where the Australian Financial Complaints Authority Limited (AFCA) determined that the second respondent’s complaint was partially within the Australian Financial Complaints Authority Complaint Resolution Scheme Rules (AFCA Rules) – where the applicants contend AFCA did not have jurisdiction to determine the complaint – where AFCA can consider a complaint arising from or in relation to a legal or beneficial interest of the complainant, arising out of a financial investment such as, relevantly, an interest in a managed investment scheme – where the second applicant is a “contractor” of the first applicant for the purposes of the definition of “financial firm” as it applies to rule B.2 of the AFCA Rules – where the complaint relates to or arises from the provision of a “financial service” – where the complaint does not relate to the management of the scheme as a whole – application dismissed
Legislation:	Corporations Act 2001 (Cth) ss 601FB, 761A, 912A, 1050
Cases cited:	Merkel v Superannuation Complaints Tribunal [2010] FCA 564 Notesco Pty Ltd v Australia Financial Complaints Authority Ltd [2022] NSWSC 285 Vision Super Pty Ltd v Poulter (2006) 154 FCR 185
Division:	General Division
Registry:	New South Wales
National Practice Area:	Administrative and Constitutional Law and Human Rights
Number of paragraphs:	96
Date of hearing:	5 April 2022
Counsel for the Applicants:	Mr J Ireland KC
Solicitor for the Applicants:	McGirr Lawyers
Counsel for the Respondents:	Mr M Izzo SC with Mr M Pulsford
Solicitor for the Respondents:	Becketts Lawyers

ORDERS

		NSD 792 of 2021
BETWEEN:	AGRIWEALTH CAPITAL LIMITED First Applicant ; AUSTRALIAN FORESTRY MANAGEMENT PTY LIMITED Second Applicant
AND:	AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY LIMITED First Respondent ; STEVEN KIRBY Second Respondent

order made by:	MARKOVIC J
DATE OF ORDER:	10 November 2022

THE COURT ORDERS THAT:

1. The proceeding be dismissed.

2. The applicants pay the first respondent’s costs, as agreed or taxed.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1. Since 2007 AgriWealth Capital Limited (ACL), the first applicant, has carried on business developing and managing soft wood timber (pine) forestry plantations in New South Wales and Victoria. It is a wholly owned subsidiary of Agriwealth Pty Limited. Australian Forestry Management Pty Limited (AFM), the second applicant, is also a wholly owned subsidiary of Agriwealth.

2. On 5 August 2021 ACL and AFM (collectively, applicants) commenced this proceeding by filing an originating application and statement of claim. The Australian Financial Complaints Authority Limited (AFCA) is named as the first respondent and Steven Kirby is named as the second respondent. In effect, the applicants seek to challenge AFCA’s jurisdiction to determine a complaint lodged with it in July 2020 against ACL by Mr Kirby (Kirby Complaint). In particular, the proceeding concerns AFCA’s decision, made by an ombudsman on 30 June 2021, that the Kirby Complaint was partially within its jurisdiction (Jurisdiction Decision).

3. Mr Kirby filed a submitting appearance. In the absence of any other contradictor, AFCA has taken an active role in the proceeding and filed a defence.

background

4. As part of its business ACL offers investors (referred to as Growers) participation in timber plantations under the terms of commercial agreements executed for the purposes of each individual project. Growers acquire shares in a project, referred to as “timberlots”. One timberlot is a share in the project representing half of one hectare of the total planation area. Growers may acquire a number of timberlots in a particular project according to the scale of their particular investment.

5. Since 2006 ACL has held Australian Financial Services Licence (AFSL) No. 317238. ACL’s AFSL authorises it to carry on a financial services business in the capacity of a responsible entity, relevantly, to operate the “Australian Forestry Management 2005 Land Trust”, “Australian Forestry Management 2005 Plantation Investment”, “Australian Forestry Management 2004 Plantation Investment” and “Australian Forestry Management 2004 Land Trust”, all of which are registered managed investment schemes.

6. AFM does not hold an AFSL.

7. ACL is a member of AFCA while AFM is not.

8. The structure of the projects in which ACL is involved as responsible entity is as follows:

1. ACL owns the forestry plantation land in the capacity of a trustee of a unit trust (referred to as a Land Trust) for participating Growers;

2. the participating Growers are issued with units in the Land Trust which they acquire upon application, according to the number of timberlots for which they subscribe; and

3. participating Growers are also granted a “forestry right” over the plantation land owned by ACL in its capacity as trustee of the relevant Land Trust for the project. The forestry right acquired by a participating Grower is a dealing registered on title granting the Grower a profit à prendre to grow trees on the land, to manage those trees to maturity and, at the end of the project, to harvest the mature trees to be sold as commercial timber to provide a return to investors.

9. Mr Kirby was an investor and participating Grower in two softwood timber forestry projects, the Australian Forestry Management 2004 Tumut Softwood Project (made up of the Australian Forestry Management 2004 Plantation Investment and the Australian Forestry Management 2004 Land Trust) and the Australian Forestry Management 2005 Softwood Project (made up of the Australian Forestry Management 2005 Plantation Investment and the Australian Forestry Management 2005 Land Trust) which were established in 2004 and 2005 respectively by Mr Kirby’s then employer, the Rothschild Australia Group.

10. At the time of their respective establishment by Rothschild the responsible entity under the Corporations Act 2001 (Cth) for the 2004 Softwood Project was Heathley Asset Management Limited and the responsible entity under the Corporations Act for the 2005 Softwood Project was Arrow Capital Limited.

11. On 3 June 2005 Arrow replaced Heathley as responsible entity for the 2004 Softwood Project.

12. Upon their respective commencement, AFM became the manager of each of the 2004 Softwood Project and the 2005 Softwood Project.

13. ACL acquired legal title to the plantation land for the 2004 Softwood Project and the 2005 Softwood Project as a successor trustee of the relevant Land Trust in each case and Agriwealth acquired all of the shares in AFM from Rothschild.

The project documents

14. For the reasons explained at [36] below, the issues that arise between the parties only concern the 2005 Softwood Project. Accordingly, it is only necessary to have regard to the project documents for it.

15. Relevantly, Mr Kirby holds 16 timberlots and 16 associated Land Trust units in the 2005 Softwood Project. According to Wayne Curtis Jones, a...