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Re Rubicon Asset Management Ltd

Re Rubicon Asset Management Ltd

Case [2009] NSWSC 1068 8 October 2009

Winding Up & Liquidation

Corporate Governance

Fiduciary Duty

Corporate Law & Governance

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Reported Decision:
74 ACSR 346
77 NSWLR 96

New South Wales

Supreme Court

CITATION: Rubicon Asset Management Limited [2009] NSWSC 1068

HEARING DATE(S): 17 September 2009

JUDGMENT DATE :
8 October 2009

JURISDICTION: Equity Division

JUDGMENT OF: McDougall J at 1

DECISION: See paragraphs [72] to [77] of the judgment.

CATCHWORDS: COMPANIES - managed investment schemes - winding up - whether just and equitable - where responsible entity insolvent - whether to order winding up be paid for from funds held by responsible entity - scope of power to make directions about winding up - whether discretionary reasons not to make order sought.

LEGISLATION CITED: Corporations Act 2001

CATEGORY: Principal judgment

CASES CITED: Australian Securities and Investments Commission v ABC Fund Managers Ltd (No.3) [2001] VSC 397
Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd (No.3) [2004] 1 Qd R 591
Australian Securities and Investments Commissions v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240
Australian Securities and Investments Commission v Knightsbridge Managed Funds Ltd [2001] WASC 339
Australian Securities and Investment Commission v Takaran Pty Ltd (No.2) (2002)
43 ACSR 334
Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567

PARTIES: Rubicon Asset Management Limited (Administrators appointed) (First Plaintiff)
Michael Andrew Owen (Second Plaintiff)
Paul Andrew Billingham (Third Plaintiff)

FILE NUMBER(S): SC 3678/09

COUNSEL: C R C Newlinds SC / R C A Higgins (Plaintiffs)
A G Bell SC / J Hynes (National Australia Bank)
M P Cleary (Shinsei Bank)

SOLICITORS:
Clayton Utz (Plaintiffs)
Minter Ellison (National Australia Bank)
Corrs Chambers Westgarth (Shinsei Bank)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

8 October 2009

3678/09 RUBICON ASSET MANAGEMENT LIMITED (ADMINISTRATORS APPOINTED)

: The first plaintiff (RAML) is the responsible entity of the following managed investment schemes:

(1) Rubicon America Trust (RAT);

(2) Rubicon Europe Trust I (RET I);

(3) Rubicon Europe Trust II (RET II);

(4) Rubicon Japan Trust (RJT); and

2 RAML is in administration. It, and its administrators Messrs Michael Andrew Owen and Paul Andrew Billingham, seek orders for the winding up of each of those schemes, and ancillary orders. There is no doubt that in each case that a ground has been made out for the winding up of the scheme. However, RAML cannot do so, and Messrs Owen and Billingham will not be involved, unless RAML can use its own assets, to the extent necessary, to meet the costs and expenses of the windings up. There is a question as to whether the Court can make such an order, in circumstances where RAML is insolvent and its liabilities appear substantially to exceed its assets.

3 Although notice of the application was given to the Australian Securities and Investments Commission (ASIC), to investors in the schemes and to creditors, only two (secured) creditors have appeared. They are National Australia Bank Limited (NAB), which holds charges over the assets of RET I and RET II, and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Rubicon Asset Management Ltd

Details

AGLC: Re Rubicon Asset Management Ltd [2009] NSWSC 1068
Case: [2009] NSWSC 1068
Decision Date: 8 October 2009

CaseChat Overview and Summary

In the case of Re Rubicon Asset Management Ltd, the court was asked to determine whether it was just and equitable to wind up a managed investment scheme. The responsible entity, Rubicon Asset Management Ltd, had become insolvent and was unable to meet its financial obligations. The court was tasked with deciding whether the costs of winding up the scheme could be paid from the funds held by the responsible entity. Additionally, the court had to consider the scope of its power to make directions about the winding up of the scheme and whether there were discretionary reasons not to make the order sought.

The legal issues before the court were significant and complex. The court had to interpret the relevant statutory provisions concerning the winding up of managed investment schemes and the power to make directions. The primary question was whether the court had the authority to order that the costs of winding up be paid from the funds held by the insolvent responsible entity. The court also needed to assess whether there were any discretionary reasons that might prevent it from making the order sought by the liquidators.

In delivering its decision, the court considered the statutory framework and the principles of equity that underpin the just and equitable winding up provisions. The court held that it had the power to make directions about the winding up of a managed investment scheme and that this power included the authority to order that the costs of winding up be paid from the funds held by the responsible entity. However, the court also recognised that this power was discretionary and that there might be circumstances where it was not appropriate to make such an order. In this case, the court found that there were no discretionary reasons that precluded it from making the order sought by the liquidators, and it directed that the costs of winding up be paid from the available funds held by the responsible entity.

The final orders of the court were that the winding up of Rubicon Asset Management Ltd’s managed investment scheme was to proceed, and the costs of winding up were to be paid from the available funds held by the responsible entity. This decision provides clarity on the court's powers and discretion in relation to the winding up of managed investment schemes, ensuring that liquidators can recover costs from the responsible entity where appropriate.

Orders