FMIF Receiver’s Court Application for Remuneration Approval – Hearing Date 29 November 2018

On 14 November 2018, the Court Appointed Receiver made an application for the approval of his remuneration for the period 1 May 2018 to 31 October 2018 together with his remuneration for work undertaken in respect of the Controllership appointments for the period 1 May 2018 to 31 October 2018. The Notice to the Members of the LM First Mortgage Income Fund (Receivers and Managers Appointed) (Receiver Appointed) with respect to that application together with a copy of the application and supporting material can be found below.

The hearing for the remuneration application of the Court Appointed Receiver took place on 29 November 2018. The court approved the remuneration sought of $1,946,635.35 (inclusive of GST) in respect of work undertaken in dealing with FMIF during the period from 1 May 2018 to 31 October 2018. In addition, the court approved the remuneration sought of $20,902.75 (inclusive of GST) in respect of the work undertaken on the controllerships during the period 1 May 2018 to 31 October 2018. A copy of the order made on 29 November 2018 is available below:

Application by Mr Park for directions in relation to the dual appointments to wind up the FMIF (“the Application”)

On 10 October 2018, Mr Park filed an application in Supreme Court of Queensland Proceeding 3508/15 seeking, among other things, orders or directions to the following general effect:

  1. Directions in relation to the dual appointments of Mr Park (the Liquidator) and myself (the Receiver) to wind up the FMIF, including that my appointment to supervise the winding up of the FMIF continue only in relation to certain specified legal proceedings and the Liquidator take responsibility for ensuring that the FMIF is wound up in accordance with its Constitution;
  2. That the Liquidator is directed to act as contradictor to the Breach of Trust Proceeding (Supreme Court of Queensland No 11560/2016) and the Feeder Fund Proceeding (Supreme Court of Queensland No 13534 of 2016);
  3. That the Liquidator and Receiver each submit a budget of remuneration and expenses to the conclusion of the winding up of the FMIF, that the remuneration of the Liquidator and the Receiver be fixed or determined on the hearing of the application in the amount of 50% of the amount of stated in the relevant Budget, and paid during the course of the winding up, with all other remuneration and expenses of the Liquidator and the Receiver to be deferred and sought at the conclusion of the winding up at which time the amounts stated in the Budgets can be reduced, increased or stay the same;
  4. That the costs of the Application be paid from the FMIF and other funds in such proportions as may be just.

Copies of documents relevant to the above proceeding are below:

The application is set down for a final hearing on 10 December 2018, in the Supreme Court of Queensland. The members of FMIF are not respondents to the application but any member is entitled to be heard in the application if they wish.

Members should read the Notice and the Application for full details of the orders or directions sought and the steps to be taken by any member that wishes to appear.

Further information can be found at https://www.lminvestmentadministration.com

Notice to Members

TAKE NOTICE that John Richard Park, the Liquidator of LMIM, has applied to the Supreme Court of Queensland for the determination and fixing of the Liquidators’ remuneration. A copy of the application and notice issued to members of the FMIF is below:

Please note that there is a typographical error in the fax number of Russells in the Notice to Members. The correct fax number for Russells is +61 7 3004 8899.

Further information can be found at https://www.lminvestmentadministration.com.

To the members of the LM Currency Protected Australian Income Fund ARSN 110 247 875 (Receiver Appointed)(“CPAIF”) and the members of the LM Institutional Currency Protected Australian Income Fund ARSN 111 052 868 (Receiver Appointed)(“ICPAIF”)

TAKE NOTICE that David Whyte, the person appointed pursuant to section 601NF(1) of the Corporations Act 2001 (Cth) to take responsibility for ensuring that THE LM FIRST MORTGAGE INCOME FUND ARSN 089 343 288 (Receivers and Managers Appointed) (Receiver Appointed) (“FMIF”) is wound up in accordance with its constitution, has applied to the Supreme Court of Queensland including for declarations that:

  1. would, depending on the amount ultimately available for distribution in the winding up of the FMIF, have the effect of reducing or eliminating any distribution to be paid to the CPAIF and the ICPAIF, to the extent of the value of redemptions that were allowed in favour of the Class B unitholders between 11 May 2009 and 31 January 2013 without power and in breach of trust, as adjusted for any overpayment or underpayment of capital distributions made in February and June 2013;
  2. would adjust the number of units held by the CPAIF and the ICPAIF in the FMIF to reinstate those units, but also to cancel further units in the FMIF issued to the CPAIF and the ICPAIF between 1 July 2011 and 1 November 2012 without power and in breach of trust.

Following the hearing of an application in the above proceedings on 29 May 2018, orders were made on 13 June 2018 (the 13 June 2018 Orders) that, inter alia, the parties to the proceedings engage in a mediation on a date to be agreed and to be completed by 28 September 2018.

In accordance with order 18 of his Honour Justice Jackson’s Orders dated 13 June 2018, notice is hereby given to the members of the CPAIF and the ICPAIF of the Orders of his Honour Justice Jackson dated 4 September 2018 (the 4 September 2018 Orders).

The 4 September 2018 Orders amend the 13 June 2018 Orders by providing for mediation to take place on 5 and 6 November 2018.

Any member has a right to apply to the Court if they wish to be heard in the proceeding or to be represented in the mediation.

Any member who wishes to know more about the proceedings and the proposed mediation in the proceedings, including if the member wishes to request any material relating to the mediation, should contact the solicitors for the receiver of the CPAIF and the ICPAIF, Messrs. David O’Farrell of HWL Ebsworth, on +61 7 3169 4844.

Copies of documents relevant to the above are below:

Application by LMIM and its liquidators for indemnity for expenses from the assets of the FMIF

On 16 May 2016, LMIM as Responsible Entity of the FMIF and the Liquidators of LMIM (Mr Park and Ms Muller of FTI), filed an Application (“the Application“) for orders concerning payment of certain costs and expenses for which LMIM claims indemnity from the assets of the FMIF.

David Whyte applied to the Court for Directions as to whether he is justified in, amongst other things, responding to the Application by raising certain matters, including the ‘clear accounts’ rule. On 30 May 2017, Burns J directed that Mr Whyte is justified in raising the clear accounts rule, in response to the Application, in relation to certain identified claims against LMIM.

The Application was heard on 19 and 20 June 2017 and the decision was reserved. Judgement was delivered on 17 October 2017 and a copy of the judgement is included below.

The Application and supporting Affidavits, the orders of Burns J, the affidavits to be relied upon by Mr Whyte in response to the application and the judgement are below:

Important Notice to Members

On 15 March 2018, the Australian Securities and Investments Commission, on my application, issued instrument 18-0166 under subsections 111AT(1) and 601QA(1) of the Corporations Act 2001 granting LM Investment Management Limited (in liquidation) (receivers and managers appointed), in its capacity as responsible entity of the LM First Mortgage Income Fund (receiver appointed) (“FMIF”) an exemption from compliance with its obligations under:

  1. the disclosing entity provisions in Part 2M.3 of the Act in relation to a financial year or half year of the FMIF;
  2. section 601HG of the Act in relation to a financial year of the FMIF.

The exemption applies during the period ending on 16 March 2020. A notice explaining the instrument of relief and a copy of the instrument can be found below.

Court Application by the Liquidators of the Responsible Entity of the LM First Mortgage Income Fund (‘LMIF’) on residual powers and remuneration

TAKE NOTICE that John Richard Park and Ginette Dawn Muller, the liquidators of LM Investment Management Limited (in liquidation) (receivers and managers appointed)(LMIM) ACN 077 208 461, the responsible entity of the FMIF, and LMIM have applied to the Supreme Court of Queensland in proceeding no. 3508 of 2015 for directions and orders in relation to the extent of their powers and responsibilities as such liquidators and in respect of their remuneration as such liquidators, in relation to the winding up of the FMIF and LMIM.

The Notice to the Members of the LM First Mortgage Income Fund (Receivers and Managers Appointed) (Receiver Appointed) with respect to that Application together with a copy of the application and supporting material can be found below.

A Further Amended Originating Application (“the Further Application”) has been filed in the Supreme Court of Queensland proceeding 3508 of 2015, by LM Investment Management Limited (In Liquidation) (“LMIM”), and the liquidators of LMIM, John Park and Ginette Muller. The Further Application seeks orders concerning (among other things) the remuneration of Mr Park and Ms Muller.

The Further Application was heard on 22 February 2016 and 14 March 2016. The decision was reserved and judgement was delivered on 17 October 2017.

A copy of the Further Application and other material in relation to the proceedings, the Notice to members of the FMIF about the Further Application and a copy of the judgement are available below.

Further documentation will be uploaded to this website as it becomes available.

Appointment of Court Appointed Receiver

Pursuant to an Order of the Supreme Court of Queensland on 8 August 2013, David Whyte of BDO was appointed Receiver of the LM First Mortgage Income Fund (‘FMIF’) and to take responsibility for the winding-up of FMIF in accordance with its constitution. A copy of the Court Order and Judgement is available below.

Sealed order of the Supreme Court of Queensland on 21 August 2013 (381 kB)
Judgement of Justice Dalton delivered on 8 August 2013 (2.6 MB)

On 20 December 2013 the Queensland Supreme Court made orders in relation to the costs of these proceedings. It ordered that:

  1. Trilogy Funds Management Ltd pay 7% of LM Investment Management Ltd (in Liquidation) (Receivers and Managers Appointed) (“LMIM”) costs of the proceeding; and
  2. LMIM is to be indemnified from the FMIF only to the extent of 20% of its costs of the proceeding.

LMIM also gave an undertaking that it would not seek from the FMIF any costs of or incidental to the investor meeting convened by notice dated 26 April 2013.

A copy of the order is available below:

As advised in our reports to investors, FTI appealed the above decision. This matter was heard by the Court of Appeal on 28 November 2013 with the decision to dismiss the appeal being handed down on 6 June 2014. A copy of the judgement in this respect is available below:

Judgment of Justice Fraser & Justice Gotterson & Justice Daubney delivered on 6 June 2014 (7.1 MB)

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