A simulated engine failure after takeoff was initiated by retarding the left engine power lever to flight idle. A pronounced yaw to the left occurred and altitude could not be maintained. The engine did not respond to power lever movement so the crew initiated feathering action. A successful single engine climb out was accomplished from a very low level and the aircraft was recovered to Essendon Airport. Significant maintenance had been carried out prior to the incident. Both propellers had been overhauled and the engine fuel control units were modified. At the completion of the maintenance a successful and uneventful test flight had been carried out. An extensive investigation involving BASI, the operator, the CAA, the engine manufacturer and the propeller manufacturer, did not find the reason why the engine/propeller combination was not able to be controlled during this routine exercise. Although some minor discrepancies in engine and propeller control adjustments were noted, these were discounted as having any bearing on the incident. The aircraft has since been returned to service and is reported to be operating satisfactorily with no repeat of the problem.