Shepard v Downey

Shepard v Downey involved a dispute over the winding up of a managed investment scheme (MIS) under the Corporations Act 2001. The respondents, who were receivers of a debtor company, applied to the court to wind up two registered MISs on the basis that the responsible entity was unable to perform its functions. The applicants argued that the receivers lacked standing to apply for the winding up order and that the court should not appoint a liquidator without first determining the ownership of the scheme property. The primary focus was on whether the receivers had the requisite standing and whether the court could appoint a liquidator to wind up the MISs without resolving the ownership disputes.

The legal issues in the case centred on the standing of the receivers to apply for the winding up of the MISs, the circumstances under which a liquidator could be appointed in place of the responsible entity, and the court's discretion to deal with non-scheme property when winding up a scheme. The applicants contended that the receivers had no standing to apply for the winding up, and that the court should not appoint a liquidator without first resolving the ownership of the scheme property. The applicants also argued that the court should not exercise its power under section 601ND(2) of the Corporations Act 2001 to deal with non-scheme property without first determining ownership of the scheme property. The court had to determine whether the receivers had standing to apply for the winding up order and whether it should appoint a liquidator without resolving the ownership disputes.

The court found that the receivers had standing to apply for the winding up of the MISs as they had a sufficient proprietary interest in the property of the debtor company. The court held that it could appoint a liquidator in place of the responsible entity under section 601NF(1) of the Corporations Act 2001, even if the ownership of the scheme property was in dispute. The court also found that it had the discretion to deal with non-scheme property under section 601ND(2) of the Corporations Act 2001, and that it could make orders terminating the scheme documents and vesting the scheme property in the liquidator. The court made orders winding up the registered MISs, appointing a liquidator, terminating the scheme documents, and vesting the scheme property in the liquidator.

In summary, the court held that the receivers had standing to apply for the winding up of the MISs, that it could appoint a liquidator in place of the responsible entity, and that it had the discretion to deal with non-scheme property when winding up a scheme. The court made orders winding up the registered MISs, appointing a liquidator, terminating the scheme documents, and vesting the scheme property in the liquidator.