Australian Securities and Investments Commission v Drury Management Pty Ltd (In Liq)

Drury Management Pty Ltd was in liquidation and two companies, Ransom House Pty Ltd and Drury Management Investment Scheme, were also wound up. Ian David Jessup was appointed as receiver of the investment scheme and liquidator of the two companies. He applied to the Court for approval of his remuneration for his work in these capacities. The Australian Securities and Investments Commission contested the application, arguing that the Court’s approval was only required for the remuneration as receiver of the investment scheme and not for his work as liquidator of the companies. The central issue before the Court was whether the same mechanism for approval of remuneration applied to the liquidatorship of the companies as applied to the receivership of the investment scheme.

The Court held that the winding up of the companies was incidental and inevitable to the winding up of the investment scheme. Since the receiver was appointed in respect of the investment scheme, the Court held that he had the authority to seek its approval for remuneration in respect of his work as liquidator of the companies. The Court found that the winding up of the companies was a necessary consequence of the winding up of the investment scheme, and that the same mechanism for approval of remuneration should apply to both roles. The Court approved the remuneration claimed by the applicant and ordered that the costs of the application be paid by the receiver from the proceeds of the investment scheme or the companies.

The Court’s decision clarifies the scope of the receiver’s authority to seek approval of remuneration in respect of work performed as liquidator of companies that are wound up as part of the winding up of a managed investment scheme. The Court’s approval of remuneration as liquidator of the companies, in addition to its approval of remuneration as receiver of the investment scheme, ensures that the receiver is fairly compensated for his work in both capacities. The Court’s order that the costs of the application be paid by the receiver from the proceeds of the investment scheme or the companies ensures that the costs of the application do not fall on the estates of the companies or the investment scheme.