Norman, in the matter of The Executors and Trustees of the Deceased Estate of McFarlane v McFarlane

In the matter of The Executors and Trustees of the Deceased Estate of McFarlane v McFarlane, the dispute arose following the death of McFarlane, a business advisor and chartered accountant who operated under the name "McFarlanes" in South Australia. McFarlane died in a motor vehicle accident on 16 June 2008, leaving a significant number of creditors who were unlikely to be fully compensated due to the lack of assets in his estate. The Trustee, Bruce Carter, appointed under the Bankruptcy Act 1966, was tasked with identifying and realising the assets of McFarlane’s estate, which included two properties at Stirling and Kapunda. It was determined that the estate had unsecured creditors in excess of $21 million and relatively few uncharged assets to meet these liabilities.

The primary legal issues before the court were whether McFarlane operated a managed investment scheme that required registration under the Corporations Act 2001 and whether the scheme was in contravention of section 601ED(5) of the Act. The plaintiff, one of the creditors, sought a declaration to this effect and an order for the winding up of the scheme pursuant to section 601EE of the Act. The court had to determine if the scheme was indeed unregistered and if the winding up order was warranted under the circumstances.

The court found that McFarlane did operate a managed investment scheme that required registration, but it was not registered as required by section 601ED(5) of the Act. The court held that the Trustee had the clear authority to order the winding up of the scheme under section 601EE. The range of orders available to the court was unrestricted, and the court was satisfied that the orders made were appropriate given the circumstances. The court noted the Trustee's efforts in identifying and realising the estate’s assets, including the sale of McFarlane’s principal residence, which did not fully discharge the outstanding mortgage debt, leading to further interest liabilities.

The final orders made by the court included a declaration that McFarlane operated a managed investment scheme requiring registration and that it was not registered, as well as an order for the winding up of the scheme. The court’s decision was based on the clear statutory authority and the need to protect the interests of the creditors, particularly those who had deposited funds with McFarlane for investment.