Case: Australian Securities and Investments Commission v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240
Outcome: considered
is then necessary to consider whether the general terms of s 601EE(2) of the Act would extend to the granting of an injunction abrogating or suspending for a period of time McKinnon Road's right to rescind the sale contract. Although it is cast in general terms, s 601EE(2) must be read within the context of a provision for the winding up of a managed investment scheme. In Re Crust'N'Crumb Bakers (Wholesale) Pty Ltd [1992] 2 Qd R 76 at 78 McPherson SPJ described the concept of "winding up" as: "a process that consists of collecting the assets, realising and reducing them to money, dealing with proofs of creditors by admitting or rejecting them, and distributing the net proceeds, after providing for costs and expenses, to the persons entitled". In Mier v F N Management Pty Ltd (supra) Keane JA, with whom McMurdo P and Douglas J agreed, said at 98: "...where a statute makes reference, without more, to the 'winding up' of an entity, it is referring to the application of a procedure containing these essential characteristics [those described by McPherson SPJ] . It follows that s 601EE(2) must be read as empowering a court to make such orders as it considers appropriate in order to apply such a procedure to an unregistered managed investment scheme. It may also be accepted that the terms of the section allow for further orders to be made as needed so long as they are required for the 'due conduct and completion of the winding up'. The necessary corollary is that an order that could not reasonably be seen as advancing this procedure would not be authorised by s 601EE(2)." (Footnotes omitted) In Australian Securities and Investments Commission v Commercial Nominees of Australia Ltd (2002) 42 ACSR 240, Barrett J said at 243: "In relation to s 601EE(2) of the Corporations Act , I accept that the powers conferred upon the court are very broad. The concept of winding up, as it is applied by s 601EE to an unregistered managed investment scheme, is not the subject of any explanation or elaboration in the statute. It seems to me, as a matter of general principle, however, that what is contemplated is the realisation of assets of the scheme, discharge of liabilities and distribution of any surplus among beneficiaries or members in an appropriate way. So much is clearly implied by the expression 'winding up', the general meaning of which may be gathered from approaches taken to that general subject under statutes dealing not only with companies but also with partnerships. Those statutory approaches were built on foundations which pre-dated legislation in either area. Given that s 601EE(2) enables the court to make 'any orders it considers appropriate for the winding up of the scheme' (emphasis added), it must be accepted that the court has jurisdiction to settle or prescribe any aspect or element of the basis for winding up or the winding up process which it is necessary to supply because that element cannot be obtained from any other source. In this respect, it is noteworthy that the statute itself does not attempt to lay down the basis for or method of winding up. That is, to my mind, an indicator of intention that the court should be able to act in the comprehensive way I have outlined." In Re Stacks Managed Investments Ltd (2005) 54 ACSR 466, White J expressed some doubt about the range of orders which could be made under s 601EE(2) , but he did not express any conclusion on the scope of the Court's power under that section. He agreed (at 475) with the observations of Barrett J in Australian Securities and Investments Commission v Commercial Nominees of Australia Ltd (supra) that: "the power to make orders for the winding up, must extend to settling or prescribing any aspect or element of the basis of winding up or the winding-up process which cannot be supplied from other sources. Section 601EE(2) empowers the court to fashion the winding-up process." But White J appeared to accept that s 601EE(2) was a source of new powers not otherwise found in other provisions in the Act relating to the winding up of corporations or other entities. His Honour said at 478: "It [s 601NF(2)] authorises the making of directions of a kind which would be made in an administration suit for the purpose of settling the entitlements of members. But in my view, and notwithstanding the authorities under s 601EE(2) , the subsection does not authorise the court to confer additional powers upon a responsible entity to which third parties would be made subject, or to interfere with the rights which third parties would otherwise enjoy. The fact that the power is to give directions indicates that it is one to direct the responsible entity in how to perform its functions and obligations, not that it be the source of new powers. In this respect it differs from s 601EE(2)."