Re The Dominion Insurance Company of Australia Ltd

The Dominion Insurance Company of Australia Ltd was the subject of an external administration process, specifically a scheme of arrangement. The dispute arose over the remuneration of the Scheme Administrator. The dispute was heard in the Federal Court of Australia. The central legal issue was whether the court had the authority to modify the scheme of arrangement due to a failed mechanism for determining the Scheme Administrator's remuneration. Additionally, the court had to decide whether, based on the true interpretation of the scheme documents, the Scheme Administrator was entitled to remuneration calculated according to their own firm's cost structure. The court also considered whether the failure of the mechanism to determine the remuneration amount could be rectified using the slip rule, and whether the Scheme Administrator was entitled to payment from the combined scheme funds without recourse to specific funds.

The court found that the Scheme Administrator was entitled to reasonable remuneration, or alternatively to quantum meruit, as the mechanism for determining the amount of remuneration had failed. The court held that it had the power to amend the scheme of arrangement to reflect this. The court also determined that, on a true construction of the scheme documents, the Scheme Administrator was not entitled to remuneration calculated by reference to their own firm's cost structure. However, the court found that the failure of the mechanism to determine the remuneration amount could be remedied by the slip rule. Lastly, the court concluded that the Scheme Administrator was entitled to payment out of the combined scheme funds without recourse to specific funds.

The final orders of the court were that the Scheme Administrator was entitled to reasonable remuneration, or alternatively to quantum meruit, and that the failure of the mechanism to determine the remuneration amount could be rectified by the slip rule. Furthermore, the Scheme Administrator was entitled to payment from the combined scheme funds without recourse to specific funds. The court's decision provided clarity on the remuneration of Scheme Administrators in the context of a failed mechanism for determining remuneration and the availability of the slip rule in such circumstances.