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.

The Application was heard on 19 and 20 June 2017 and the decision has been reserved.

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 and supporting Affidavits, the orders of Burns J and the affidavits to be relied upon by Mr Whyte in response to the application are 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 the parties are awaiting judgment.

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

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

Public Examination

On 17 November 2014, the Court appointed Receiver, David Whyte (David Whyte) filed an application in the Supreme Court of Queensland to conduct a PE in relation to the audits undertaken of the FMIF. The application was granted on 27 November 2014 and the summonses were issued on 30 January 2015.

On 6 March 2015, the auditors filed an application in Court to discharge the summonses against them and to defer the production of the documents to a date following the hearing. The auditors argued that David Whyte did not have the power to conduct the PE.

David Whyte opposed the auditors application on the grounds that he has the power to conduct a PE and on the basis ASIC has granted him Eligible Applicant status to do so. The first day of the PE was on 16 March 2015 when the examinees (certain directors and former staff of LMIM and the auditors) produced a small quantity of documents. Consent orders were also made that day allowing the auditors more time to produce the remaining documents in three tranches on 2, 16 and 30 April 2015.

On 15 May 2015, the Supreme Court of Brisbane dismissed the auditors application to set aside the PE summonses. A copy of the court order can be found below.

As a consequence of the delay in the auditors producing all of the documents pursuant to their summonses, the examinees were examined under oath between 15 and 25 June 2015. Certain documents were not produced by the auditors before the commencement of the June examinations. These documents were mainly emails between the auditors and certain directors and staff of LMIM. The auditors have now produced 4 tranches of these emails.

On 14 September 2015, David Whyte filed a further application in the Supreme Court of Queensland to examine a further three parties as a result of additional investigations and knowledge gained from the PE.

David Whyte obtained further Court dates from 19 to 30 October 2015 to continue the public examinations of the examinees and the additional examinees, which will largely be focused on the compliance plan audits and finalising matters arising from the June examinations.

FMIF Receiver’s Court Application for the replacement of Controllers – 15 September 2014

An application has been made to the Supreme Court of Queensland in relation to approval of the proposed appointment of Mr Whyte and Mr Fielding of BDO as PTAL’s agents in dealing with the retirement village assets. The proposed appointment will limit duplication of costs and replace LM Investment Management Pty Ltd (Receivers and Managers Appointed)(In Liquidation) as controllers of these assets. A copy of the application and supporting affidavit can be found below:

At the hearing on 15 September 2014, the court directed that the Court Appointed Receiver was justified in arranging the appointment of David Whyte and Andrew Fielding of BDO as Controllers of five retirement villages to replace LM Investment Management Pty Ltd (Receivers and Managers Appointed) (In Liquidation). A copy of the order made on 15 September 2014 can be found below: