Background
Over 125 investors contributed more than $6 million to an arrangement known as “Mt Lion Farm,” marketed as a vehicle to access organic food, receive financial returns, and obtain a fractional share in Australian farmland. Investors paid funds through an online platform called Bricklet, which in turn paid those funds to Family Farm Management Pty Ltd (FFM). Bricklet maintained a private register—the Australian Property Co-Ownership Register—recording each investor’s holding of one or more “Bricklets,” each said to represent a 1/140th fractional interest in the farm. That register carried no formal legal title to land. In December 2022, FFM used the pooled investor funds to purchase farmland at 789–886 Lynches Creek Road, Lynchs Creek, New South Wales, and has since operated a farm on the property.
Ten plaintiff investors, having contributed just under $600,000 among them, commenced proceedings in July 2025 alleging that Mt Lion Farm constituted an unregistered managed investment scheme in breach of the Corporations Act 2001 (Cth). They issued notices under s 601MB of the Act purporting to void their investment contracts, and sought orders winding up the scheme under s 601EE. FFM initially did not oppose the relief, but after changing solicitors it opposed the entire application and filed a summary judgment motion.
Two interlocutory applications were heard on 11 June 2026: FFM’s application for summary judgment (on the basis that the plaintiffs lacked standing) and the plaintiffs’ application to amend their originating application to add an alternative claim for just and equitable winding up of FFM itself under s 461(1)(k) of the Corporations Act.
The Court’s Holding
Wheatley J dismissed FFM’s summary judgment application. FFM’s argument proceeded on the hypothesis that—assuming (without accepting) that Mt Lion Farm was a managed investment scheme—the plaintiffs’ own s 601MB notices had the effect of voiding their contracts ab initio, thereby ending their status as “members” of the scheme and stripping them of standing under s 601EE(1)(c). The Court found this argument too complex and novel to resolve summarily. In particular, the interaction between the voiding effect of s 601MB(3) and the definition of “member” (as a person holding an “interest,” being a right to benefits, whether enforceable or not) raised questions of statutory construction that were unsuitable for determination without a full hearing on the merits. The Court also noted the obvious tension in FFM’s approach: the very purpose of s 601EE is to enable members to wind up an unlawfully unregistered scheme, and resolving the novel standing question on a hypothetical factual premise was an inappropriate use of the summary judgment process.
The Court granted the plaintiffs leave to amend their originating application to include the alternative claim for just and equitable winding up of FFM under s 461(1)(k). Wheatley J was satisfied the proposed amendments were not untenable or groundless, noting that significant factual disputes—including whether Mt Lion Farm was a managed investment scheme, whether the plaintiffs had day-to-day control, and the effect of the 601MB notices—permeated the whole proceeding and could only be resolved at trial. Costs of both applications were reserved.
Key Takeaways
- Summary judgment is inappropriate where a defendant’s standing argument depends on a hypothetical premise (accepting the plaintiff’s own legal characterisation for the purpose of defeating it) and raises novel questions of statutory construction under the Corporations Act.
- The definition of “member” under s 9 of the Corporations Act—a person holding an “interest,” being a right to benefits whether actual, prospective, contingent or unenforceable—is broad enough that the question of whether issuing a s 601MB voiding notice extinguishes membership status requires full trial consideration.
- Amendments to add an alternative just and equitable winding up claim under s 461(1)(k) will be permitted where the underlying factual matrix is already before the court and the amendments are not clearly untenable.
- The legislative purpose of s 601EE—enabling members to wind up unlawfully unregistered schemes—is a relevant contextual factor that weighs against summarily denying standing at an interlocutory stage on a hypothetical basis.
Why It Matters
This decision is a practical reminder of the limits of the summary judgment mechanism in complex managed investment scheme litigation. Where a defendant’s standing argument requires the court to adopt a hypothetical legal characterisation of the very scheme in dispute—one the defendant itself denies—and then resolve novel questions about the interplay between statutory voiding notices and membership definitions, the threshold for summary dismissal will not be met. Practitioners advising scheme operators facing winding up applications should be cautious about deploying standing arguments that presuppose the plaintiff’s case in order to defeat it.
The case also highlights the growing use of online fractional property platforms such as Bricklet and the legal uncertainties they generate. Where pooled investor funds are used to acquire assets managed by a central operator, with investors holding entries on a private register rather than registered title, the characterisation question under s 9 of the Corporations Act—particularly the “day-to-day control” element—is likely to generate further litigation as regulators and courts grapple with novel investment structures.