The Judgment Below
28The primary judge rejected the appeal against the adjudication of the proof of debt. He accepted at [15] that whatever the definition of "creditor" might be in any particular DOCA, a DOCA has binding force only by virtue of s 444D(1) Corporations Act . That section provides:
"A Deed of Company Arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the Deed under paragraph 444A(4)(i)".
29Section 444A(4)(i) states that a DOCA must specify:
"The day (not later than the day when the administration began) on or before which the claims must have arisen if they are to be admissible under the deed."
30The DOCA in the present case in clause 1.1 defined "Claims" as meaning:
"all actions, claims, suits, causes of action, arbitrations, debts, costs, demands, verdicts and judgments at law or in equity under any statute whether certain or contingent, present or future, ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before the Appointment Date."
It defined "Creditor" as meaning "a person who has a Claim against the Company." It defined "Appointment Date" as meaning "1 October 2009" . That was the date on which the voluntary administrators had been appointed.
31The judge accepted that a claim under s 106 IR Act which is unadjudicated as at the "relevant date" was not provable. This was because that claim did not seek to enforce any existing right obligation or liability, but merely to invoke the Commission's jurisdiction under s 106 IR Act to create a new right as from the date of the Commission's order and to give a remedy for breach of that newly created right. Thus, the judge concluded that the liquidators had been correct in rejecting the proof of debt.
32The judge held that the Court had power to make an order under s 447A of the type for which the Respondent contended. In particular, the judge held at [27] that 447A(1) conferred power:
"... to vary the operation of s 444D(1) and s 444A(4)(i) so that the Deed Administrators are able to admit to proof under the DOCA Ms Suttons' claim under s 106 IRA , notwithstanding that that claim was not, as at the Appointment Date, specified in the DOCA, a claim or debt of the nature that could have been proved in the winding up of the company."
He further held that it was appropriate, in the exercise of the Court's discretion, for that power to be exercised.
33The amended originating process had sought an order that the Respondent be admitted as a creditor in the sum of $330,000. However, by the time of the hearing that claim had evidently been modified. The judge recorded, at [36]:
"... the parties have not, in this application, sought the Court's determination of the proper amount to be admitted, if any."
34At [35] the primary judge explained the order that he proposed as one that:
"... while requiring the Deed Administrators to admit Ms Sutton's proof under the DOCA as an admissible claim, will not require them to admit that claim in any amount, or at all. The administrators will have to adjudicate on the proof. If they reject it as bound to fail or as excessive, a suitable means of determining any resulting dispute is available."
35His Honour went on to say, at [37]-[38]:
"If the order under s 447A(1) which I propose is made, the Deed Administrators reject Ms Sutton's claim in the Proof of Debt, in whole or in part, then Ms Sutton can appeal to this Court under s 1321 Corporations Act for determination of the amount of the claim which should be admitted, if any. That would not, however, be a satisfactory course. This Court would have to stand in place of the Industrial Relations Commission in deciding whether Ms Sutton has made out a claim for relief under s 106 IRA and, if so, what compensation she should receive. It is far more appropriate that the Industrial Relations Commission, rather than this Court, exercise that specialised jurisdiction.
Accordingly, if it becomes necessary to adjudicate further upon the Deed Administrators' rejection of Ms Sutton's Proof of Debt in whole or in part, leave should be granted to Ms Sutton under s 440D(1)(b) to continue with the IRC proceedings."
36His Honour did not, at the time of delivering judgment, make any orders. Rather, he stood the matter over to enable Short Minutes to be brought in.
37The orders his Honour made on 8 September 2010 were:
"1. An order pursuant to s 4471(1) of the Corporations Act (the Act), Part 5.3A of the Act is to operate in relation to the first defendant and the Deed of Company Arrangement dated 1 February 2010 (the DOCA) so that a 'creditor' is deemed to include the plaintiff for the purposes of Part 5.3A and Ms Sutton's claim is deemed to have arisen no later than 1 October 2009.
2. An order that the defendants be required to admit proof of debt to be lodged by the plaintiff under the DOCA as an admissible claim, which is to be adjudicated by the second and third defendants.
3. An order that the first defendant pay one half of the plaintiff's application for an order under s 447A(1) Corporations Act , there being no order as to the costs of the other issues in the proceedings."
38We have been informed, without objection, that after the decision in the court below Ms Sutton lodged a proof of debt. The administrators have not yet adjudicated on it, because they have obtained from ASIC an extension of the time within which they must adjudicate on that proof to within 29 days after the decision is given in this appeal.
Relevant Provisions of the Corporations Act
39Various interacting provisions of the Corporations Act must be taken into account. Provisions specifically relating to voluntary administration and the entry of a DOCA are contained in Part 5.3A, which runs from s 435A to s 451D.
40Section 435A provides:
"The object of this Part is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b) if it is not possible for the company or its business to continue in existence-results in a better return for the company's creditors and members than would result from an immediate winding up of the company." (emphasis added)
41Section 439A(1) requires a voluntary administrator to "convene a meeting of the company's creditors " . Section 439C provides that at that meeting the creditors may resolve, inter alia, that the company execute a DOCA.
42Section 444A(4) identifies matters that a DOCA must specify. They include:
"(b) the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors' claims;
...
(d) to what extent the company is to be released from its debts ;
...
(h) the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed;
(i) the day (not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the deed." (emphasis added)
43Section 444D(1) provides:
"A deed of company arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i)." (emphasis added)
44Notwithstanding this repeated use of "creditor" and "claim" , neither Part 5.3A of the Corporations Act , nor the interpretation provisions contained in Part 1.2 of that Act contains any definition of "creditor" or "claim" .
45Two provisions appearing in Part 5.6 Corporations Act , which is entitled "winding up generally" , are also relevant.
46Section 553(1) provides:
"Subject to this Division [Proof and ranking of claims] and Division 8 [Pooling], in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company." (emphasis added)
47Section 553E provides:
"Subject to this Division and to section 279, in the winding up of an insolvent company the same rules are to prevail and be observed with regard to debts provable as are in force for the time being under the Bankruptcy Act 1966 in relation to the estates of bankrupt persons (except the rules in sections 82 to 94 (inclusive) and 96 of that Act), and all persons who in any such case would be entitled to prove for and receive dividends out of the property of the company may come in under the winding up and make such claims against the company as they respectively are entitled to because of this section." (emphasis added)
Leave to Cross-Appeal and Extension of Time?
48The basis upon which Mr Williams sought leave to cross-appeal was to challenge the primary judge's decision that Ms Sutton was not a "creditor" within the meaning of s 444D(1) Corporations Act , or within the definition of "creditor" in the DOCA. Those questions are logically anterior to whether it was appropriate for the primary judge to make an order under s 447A requiring that Ms Sutton be treated as though she were a creditor. Indeed, if in truth Ms Sutton were a creditor, such an order under s 447A would not be necessary. Further, determining whether Ms Sutton was a "creditor" within the meaning of s 444D or the DOCA depends upon many of the same cases and statutory provisions as enter into a consideration of whether the order under s 447A should have been made. As will later appear, I have decided that it is appropriate to grant leave to appeal, to enable the question of whether the order under s 447A should have been made to be examined. That the cases and statutory provisions would need to be examined in any event for the purposes of the appeal itself supports granting leave to cross-appeal.
49While the application for leave to cross-appeal, and for the necessary extension of time, was filed on 25 May 2011, many months out of time, it was obviously prompted by the course that argument on the appeal took. In my view, it is appropriate to grant the extension of time that is sought, and to grant leave to cross-appeal.
50Dealing with the issues in a logical order requires that the cross-appeal be considered before the appeal.
Was Ms Sutton a "Creditor" With a "Claim"?
51Mr Williams submits that Ms Sutton was a creditor entitled to prove under the DOCA. He submits that Ms Sutton's claim fits comfortably within the definition in the DOCA of "Claims" as including "... claims... under any statute, whether certain or contingent, present or future, ascertained or sounding only in damages, the circumstances giving rise to which occurred ... before the Appointment Date" . He submits that she has a claim under a statute (namely, the IR Act ), and all the facts upon which her claim to an order under s 106 IR Act depended had occurred well before the Appointment Date. He accepts that, had the DOCA not intervened, she would have received an order entitling her to the payment of money only upon the IRC determining that she should be given relief under s 106 IR Act , quantifying or otherwise identifying that relief, and making orders to give effect to those determinations. However, he submits that, notwithstanding that, her situation is no difference in substance to that of a person with a claim for damages against a company under a statutory provision such as the Trade Practices Act , concerning which liability and quantum are not foregone conclusions. Such a claim, he submits, is a "claim" within the meaning of the DOCA, and its value is capable of being assessed. The value of Ms Sutton's claim can likewise be assessed.
52Mr Williams accepts that, whatever the definition of "creditor" might be in the DOCA, the DOCA has binding force on creditors only by virtue of s 444D(1) of the Act. Section 444D(1) depends on the notions of "creditors" and "claims" , neither of which words, as I have said, are defined for the purpose of Part 5.3A. He submits that the decision in Brash Holdings v Katile Pty Ltd [1996] 1 VR 24 makes clear that, for the purposes of Part 5.3A, the words "creditor" and "claim" have, at the least, the same meaning that they have in s 553.
53In Brash Holdings v Katile Pty Ltd the Appeal Division of the Supreme Court of Victoria (Brooking, J D Phillips and Hanson JJ) held, at 34:
"The words of s 444D(1), 'arising on or before the day...', do not, with respect, support the conclusion ... that the subsection does not comprehend future or contingent debts or claims.
In short, we think that whatever the ambit of the words of s 553, the same will be so in relation to s 444D. It is true that s 553 uses two expressions, 'debts' and 'claims', while s 444D(1) speaks only of 'claims'. But Pt 5.3A as a whole, and especially s 444A(4), suggests that 'claims' is used as a single expression to cover what s 553 divides into 'debts' and 'claims' and that it is both 'debts' and 'claims' in the s 553 sense in respect of which creditors may be bound by the deed."
54Their Honours also said, at 36:
"... we consider that a deed of company arrangement, if entered into by any of the appellants, will, by virtue of s 444D(1) of the Corporations Law bind, so far as concerns all debts and claims hereinafter mentioned, all those persons who on the day specified in the deed had debts or claims that would have been provable in the winding up of the company under s 553 if the 'relevant date' mentioned had been the day specified in the deed."
55The legislation under consideration in Brash was the Corporations Law . However, in the form that the Corporations Law had at the date of the decision in June 1994 the provisions to which their Honours referred did not differ materially from the correspondingly numbered provisions of the present Corporations Act .
The Rival Submissions
56It is common ground between Mr Williams and Mr Newlinds that the meaning of "claim" in s 553 also applies in s 444D. Mr Williams submits that claims under s 106 IR Act against a company fall within s 553(1) as "claims against the company (present or future, certain or contingent, ascertained or sounding only in damages) being ... claims the circumstances giving rise to which occurred before the relevant date" . Mr Newlinds disputes that undetermined litigation seeking an order under s 106 IR Act falls within s 553.
57Mr Williams also submits that even if Ms Sutton's claim under s 106 does not fit within s 553, it nonetheless counts as a "claim" for the purposes of Part 5.3A. His argument on that topic is put in two ways. One is that he submits that Brash does not preclude an argument that creditors under Part 5.3A include, but are not limited, to those persons who have a relevant claim under s 553. Alternatively, he submits that Brash is either wrong or has been wrongly applied and a creditor for the purposes of s 444D should not be confined to those who meet the criteria in s 553.
Nature of the Rights of an Applicant under Section 106 IR Act
58At 1 October 2009 (the date BEA was placed in voluntary administration), s 105 IR Act provided:
"(1) In [Part 9 - Unfair contracts]:
contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument.
unfair contract means a contract:
(a) that is unfair, harsh or unconscionable, or
(b) that is against the public interest, or
(c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or
(d) that is designed to, or does, avoid the provisions of an industrial instrument."
59Section 106 IR Act is in Part 9 Division 2 of IR Act , which runs from s 106 to s 109A. At 1 October 2009 s 106 provided:
"(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.
(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.
...
(3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.
...
(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case.
(6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss."
60Section 108 IR Act is a most unusual provision concerning standing, that bears upon the nature of the power that the Commission exercises under s 106. Section 108 is one of the indications that the power the IRC exercises under s 106 is an arbitral rather than a judicial power - see [66] below. At 1 October 2009 it provided:
"An order may be made under this Division on the application of:
(a) any party to the contract, or
(b) any person who, but for the making of such an order, would be a party to the contract, or
(c) an industrial organisation of employers whose members employ persons working in the industry to which the contract relates, or
(d) an industrial organisation of employees whose members are employed in the industry to which the contract relates, or
(e) an association registered under Chapter 6 of which a party to the contract is a member,
and not otherwise."
61Section 88F Industrial Arbitration Act 1940 was a predecessor of s 106 IR Act , in terms not relevantly different to those of s 106 IR Act . This Court has considered the nature of a claim made under s 88F, or s 106, on several occasions.
62Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 was an application by a franchisor for an order in the nature of prohibition to prevent the Industrial Commission from hearing an application under s 88F. The application under s 88F had been brought by certain petrol retailers who contended that the franchise agreements under which they operated were unfair. One basis on which the franchisor sought prohibition was that the operation of s 88F on these particular agreements was excluded under s 109 of the Australian Constitution because to that extent s 88F was inconsistent with the Petroleum Retail Marketing Franchise Act 1980 (Cth) (" the Federal Act "). Another basis was that the franchise agreements in question were not ones "whereby" the franchisees "perform work in any industry" , and thus the Commission did not have jurisdiction under s 88F to deal with them.
63One of the reasons Mahoney JA gave for refusing prohibition, at least at that stage, because s 88F was inconsistent with the Federal Act, was, at 461-2:
"Section 88F does not, by its own operation, create any rights or obligations. Its function is to grant jurisdiction to the Industrial Commission. That jurisdiction involves, inter alia, two things: it may categorise, as I have described it, a particular arrangement as 'unfair', 'harsh or unconscionable', 'against the public interest' or otherwise as falling within the subpars (a) to subpar (e) of s 88F(1); and, secondly, it may declare void the whole or part of such an arrangement and make an order for payment of money or otherwise as set out in the section. It is only if and in so far as that power is exercised that rights or obligations arise by virtue of s 88F.
Therefore, essentially the claim made by Majik in this case is that the possibility of such an order being made creates an inconsistency under s 109 with the Federal Act. At the present stage of the Commission's proceedings, Majik cannot, of course, claim that an order made by it does in fact create a relevant conflict or inconsistency with the operation of the Federal Act: its claim is and must be that it is possible an order will be made which will create such an inconsistency with the Federal Act and that that possibility gives rise at this stage to an inconsistency which prevents s 88F operating to grant jurisdiction in the present matters to the Commission."
64Part of the reasoning of Handley JA for concluding that s 88F was not shown at the time of the application for prohibition to be inconsistent with the Federal Act was, at 467:
"Section 88F confers jurisdiction on the Commission to avoid or vary contracts and to make consequential orders for the payment of money. The effect of legislation which in terms does no more than confer jurisdiction on a court to grant particular relief was considered in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141. Latham CJ said (at 155):
'... A right is created by the provision that a court may make an order, and such a provision also gives jurisdiction to the court to make the order. The fact that the court may not be bound to make an order, but may exercise a discretion, does not alter the effect of such a provision .... Such a provision gives a new jurisdiction to the court and ... if the court exercises its discretion in favour of the applicant, a new right to the applicant.'
Similarly Dixon J (at 165-166) said in reference to such a provision:
'... it must be taken to perform a double function, namely to deal with substantive liabilities or substantive legal relations and to give jurisdiction with reference to them. It is not unusual to find that statutes impose liabilities, create obligations or otherwise affect substantive rights, although they are expressed only to give jurisdiction or authority....'
Section 88F therefore creates substantive rights and since proceedings under the section comprise a suit or action (see Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 at 560) there is every reason for concluding that it gives rise to rights of action. But even if that is not so the section clearly confers another 'remedy' on these applicants which is within s 24(1)."
65The other member of the Bench on that occasion, Kirby P, said nothing that bears upon the present topic. Mr Williams points out that at 447, Kirby P agreed with the reasons of Handley JA for why "no error [had] been shown in the finding by the Commission that it had jurisdiction to hear and determine the applications" , that would warrant relief "at this stage" . However, that remark relates to Handley JA's reasons why the claim made in the Industrial Commission was not outside the scope of the jurisdiction conferred by s 88F. It did not relate to the reasons why there was no inconsistency between s 88F and the Federal Act, a topic concerning which Kirby P gave his own reasons.
66The Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 case to which Handley JA referred was one where two people who had acted as house-parents brought an action under s 88F against the Minister for Child Welfare. A provision of the Child Welfare Act 1939 said that "no suit or action shall lie against the Minister" if the Minister has acted in good faith and with reasonable care. The Minister sought prohibition, contending that that section deprived the Industrial Commission (as it then was) of jurisdiction to hear the action against him. Prohibition was refused on the basis that the section could give the Minister a defence if its conditions were made out, but it did not operate to deprive the Commission of jurisdiction. Kirby P at 549 and McHugh JA at 560 both accepted that the proceedings in the Commission were a "suit or action" . However, McHugh JA at 559-560 made clear that it was a suit or action of an unusual kind:
"A further indication that the proceedings are not an ordinary suit or action is that the power conferred by s 88F is arbitral, not judicial power. Even before the amendments made in 1985 an industrial union of employees could invoke the jurisdiction of the Commission under s 88F: Federated Miscellaneous Workers' Union of Australia, New South Wales Branch v Wilson Parking (NSW) Pty Ltd [1978] 1 NSWLR 563. That a stranger to a contract can obtain an order that the contract is void is itself an indication that the Commission is not exercising judicial power in an ordinary suit or action. Moreover, I think that the Commission can exercise its power under s 88F in a case where, although the contract was not unfair or harsh or unconscionable or against the public interest at the time of its making, subsequent events have made it so. The jurisdiction of the Commission to void or vary a contract, independently of the circumstances which existed at the time of its making, indicates conclusively in my opinion that the power conferred by s 88F is not an exercise of judicial power: cf R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361. It is a further indication that the Commission does not hear a suit or action as those expressions are ordinarily understood.
But despite the nature of the proceedings under s 88F and the matters to which I have referred, it is difficult to resist the conclusion that the proceedings are an 'action'. 'Action' is a generic term and includes every sort of legal proceeding unless the context indicates a more restricted meaning: Re Carter Smith; Ex parte Commissioners of Taxation (1908) 8 SR (NSW) 246 at 248; 25 WN (NSW) 92."
67Fisher v Madden [2002] NSWCA 28; (2002) 54 NSWLR 179 concerned a company to which a receiver had been appointed, and in relation to which a DOCA had been entered. The plaintiff, an employee of the company, was dismissed because she was redundant. The dismissal occurred after the appointment of the receiver, but before any voluntary administrator had been appointed, or before any DOCA entered. She brought proceedings under s 106 IR Act , seeking that her contract of employment be varied to entitle her to a payment of money by reason of being dismissed. Section 433(3) Corporations Law required a receiver to accord priority of payment to "any debt or amount that in a winding up is payable in priority to other unsecured debts pursuant to paragraph 556(1) ... (h)."
68Section 443(9) Corporations Law provided:
"For the purposes of this section, the references in Division 6 of Pt 5.6 to the relevant date shall be read as references to the date of the appointment of the receiver, or of possession being taken or control being assumed, as the case may be."
69Section 556(1)(h) referred to "retrenchment payments payable to employees of the company" . Unlike some of the other paragraphs in s 556(1), s 556(1)(h) set no temporal limit on when a retrenchment payment had to be payable, or on where in time fell the period of service in relation to which a provable employee benefit was calculated. The lack of temporal limitation was confirmed by s 556(2) which provided:
" retrenchment payment , in relation to an employee of a company, means an amount payable by the company to the employee, by virtue of an industrial instrument, in respect of the termination of the employee's employment by the company, whether the amount becomes payable before, on or after the relevant date."
70Subject to a presently irrelevant exception, s 554 Corporations Law provided:
"(1) The amount of a debt or claim of a company (including a debt or claim that is for or includes interest) is to be computed for the purposes of the winding up as at the relevant date."
71Before the Commission had determined her claim, the receiver made application to the Equity Division of the Supreme Court for directions under s 424 of the Corporations Law . The first instance judge made a declaration that any liability of the company to pay Ms Fisher any sum arising out of any orders made by the Commission
"... not being a liability which arose out of the terms of [Ms Fisher's] contract of employment as it existed, in respect of any liability for redundancy payments at the date of termination of employment, and in respect of other liabilities, at the date of appointment of the receiver, would not be a liability entitled to payment in priority under s433(3)(c) of the Corporations Law ."
72Ms Fisher appealed to the Court of Appeal. Her appeal was dismissed. Meagher JA said, at [12]-[13]:
"There was a tendency in Mr Neil's submissions to treat Miss Fisher as if she already possessed a claim, or at least a right to an order. This is not the case. Section 106 does not of itself confer any rights or obligations on anyone. Not only does she not have a right to a quantifiable order, she does not have a right to an order at all. She has the right to apply for an order, nothing more. As Mahoney JA (at 461) said in Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443:
'Section 88F [the predecessor of s 106] does not, by its own operation, create any rights or obligations. Its function is to grant jurisdiction to the Industrial Commission.'
The narrowness of her right is further emphasized when one considers whether it is a 'contingent' debt or claim within s553. The word 'contingent' is a slippery word. In the field of real estate, Fearne's Contingent Remainders (a book which Baron Parke took with him on his honeymoon) describes a contingent remainder as a remainder limited so as to depend on an event or condition, which may never happen or be performed, or which may not happen or be performed until after the determination of the preceding estate. Even in the case of such a contingent remainder, one always knows the nature of the preceding estate and the nature of the contingent remainder, which might or might not come into existence. In cases other than real estate, life is more precarious still. In Federal Commissioner of Taxation v Gosstray [1986] VR 876 at 878 Tadgell J said:
'An attempt to formulate a universally applicable definition of a contingent debt or of a contingent creditor is difficult, and probably not very useful having regard to the variety of contingent claims that may properly be the subject of proof. A contingent creditor, like an elephant, is rather easier to recognize than to define. The following statement by Pennycuick J. In Re William Hockley Ltd [1962] 1 WLR 555, at 558; [1962] 2 All ER 111, is well known: 'The expression "contingent creditor" is not defined in the Companies Act , but must, I think, denote a person towards whom under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date.' In Re Gasbourne Pty Ltd [1984] VR 801 at 837, Nicholson J said that he did not regard that description as exhaustive, and with respect I would not disagree. In Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455, at 459 Kitto J, having observed that not much assistance is to be gained from observations to be found in reported cases as to the import of the word "contingent" in the context now being considered, regarded what Pennycuick J had said as being "perhaps rather a definition of a 'contingent or prospective creditor'". Kitto J did, however, consider that the importance of the words of Pennycuick J "for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen".'
It follows, I think, that even at today's date, one cannot accurately categorise Miss Fisher's rights (if any) as a 'contingent' debt or claim. She has the bare right to make a claim, nobody knowing whether it will succeed or not, or if so in what amount, or subject to what terms or conditions. And if that be her position today, it was so much the less substantial before the appointment of the receiver. Moreover, if that difficulty were overcome, one has to face the additional problem that just because a claim or debt is a contingent debt or claim for the purposes of s 553 in a winding up, it does not necessarily follow that it has priority under s 556, dealing with priority of debts in a receivership. None of the debts referred to in s 556 which does deal with receivers is in the last bit contingent."
73Sheller JA (with whom Beazley JA agreed) regarded it as important that s 556(2) required a retrenchment payment to be an "amount payable". That involved, he held at [42] "an existing obligation, [in respect of which] the company may or will become subject to a present liability upon the happening of some future event or at some future date" .
74At [44] Sheller JA said:
"In the present case at the relevant date [the company] was under no existing obligation to pay a sum of money by way of a retrenchment payment to Ms Fisher immediately or on a future event. Ms Fisher had only a right to take proceedings in the Industrial Relations Commission to vary the contract to that end."
75He went on to quote the passages that I have quoted at [63] and [64] above from the judgments of Mahoney JA and Handley JA in Majik Markets , and concluded, at [46]:
"However Ms Fisher's right under s106 of the Industrial Relations Act be categorised, her right to invoke the jurisdiction of the Industrial Relations Commission did not until such time as an order was made create any obligation on Dataflow to make a retrenchment payment to her. Moreover, even if the Industrial Relations Commission declared the contract unfair, varied it ab initio and ordered Dataflow to make a retrenchment payment to Ms Fisher, it remains true that at the relevant date of Mr Madden's appointment no amount for retrenchment payment had become payable before, on or after the relevant date."
76Colley v Futurebrand FHA Pty Ltd [2005] NSWCA 223; (2005) 63 NSWLR 291 arose when a new s 108A was introduced into Chapter 2 Part 9 Division 2 of the IR Act . It provided that an application could not be made under that Division if the application related to contract of employment under which a remuneration package that exceeded a particular sum of money was paid or received during the 12 months before the application was made, or (in the case of a contract that had been terminated) the 12 months before the contract was terminated. The question at issue was whether s 108A applied in relation to contracts of employment that had been entered before s 108A came into operation, but that were terminated after it came into operation. The dismissed employee had a remuneration package that exceeded that sum. However the employee contended that s 108A did not apply to the contract in question because of the provisions of s 30(1)(c) Interpretation Act 1987 . Under s 30(1)(c) the amendment of an Act does not "affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act" .
77Handley JA (Giles JA agreeing) said at [13]:
"Section 106 does not confer defined rights on a party to an unfair contract of the relevant kind ( Fisher v Madden as Receiver and Manager of Dataflow Computer Services Pty Ltd (2002) 54 NSWLR 179 at 184, 193-194). In terms it does no more than confer jurisdiction on the Commission to grant particular relief. The effect of legislation in this form was considered in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141."
78He then set out the same passages from the judgments of Latham CJ and Dixon J as he had set out in Majik Markets at 467 and that I have set out at [64] above. Handley JA continued, at [15]:
"Such legislation is a modern illustration of Sir Henry Maine's statement that substantive law may be secreted in the interstices of procedure. See also Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 at 461, 467; Fisher v Madden (at 193). As Meagher JA said in the last case (at 183 [12]):
'[12] ... Section 106 ... does not of itself confer any rights or obligations on anyone. Not only does [the appellant] not have a right to a quantifiable order, she does not have a right to an order at all. She has the right to apply for an order, nothing more.'"
79Handley JA also said, at [30]-[33]:
"Given that the only right expressly conferred by s 106 is a right to apply to the Commission for specific relief, a would be applicant, as Meagher JA said in Fisher v Madden (at 183 [12]) 'has the right to apply for an order, nothing more'. Even if the contract is unfair and an experienced practitioner could give some estimate of the likely order, there is, as Meagher JA said (at 183 [12]), no 'right to a quantifiable order'. The claimant had no ascertainable right or entitlement defined by reference to past facts similar to the rights to compensation in Hamilton Gell v White [1922] 2 KB 422 and Resort Management Services Ltd v Noosa Shire Council [1997] 2 Qd R 291, the right to the hardship allowance in Chief Adjudication Officer v Maguire [1999] 1 WLR 1778, or the land rights claim in New South Wales Aboriginal Land Council v Minister Administering the Crown Lands (Consolidation) Act and the Western Lands Act (1988) 14 NSWLR 685.
The filing of an application under s 106 causes a right to accrue because the applicant acquires ( Esber v The Commonwealth (1992) 174 CLR 430; Gerrard v Mayne Nickless Ltd (1996) 135 ALR 494) a legally enforceable right to have the Commission hear and determine the application according to law. This is a new right, different from a mere right to take advantage of the section.
There is no other act or event which can convert the general right to take advantage of s 106 into an accrued or acquired right. This is not a case where a right or entitlement automatically accrues or is acquired on an event such as an unfair dismissal, the injurious affection of land ( Resort Management Services Ltd ), the giving of a notice to quit ( Hamilton Gell v White ), or an illness causing a special disability ( Chief Adjudication Officer v Maguire ).
Until an application under s 106 is made, the right under that section can fairly be characterised as a mere right to take advantage of the section, to use the language of Lord Herschell LC ( Abbott v Minister for Lands [1895] AC 425 at 431), and an abstract rather than a specific right to use the language of Atkin LJ ( Hamilton Gell v White at 431)."
80In the result, the claimant was not protected by s 30(1)(c) from the limitation of the Commission's jurisdiction bought about by s 108A(1).
"Claims" Under Section 553(1)
81The present form of s 553 Corporations Act derives from amendments made in 1992 to the Corporations Law , following some recommendations of the Harmer Report. In Environmental & Earth Sciences Pty Ltd v Vouris [2006] FCA 679; (2006) 230 ALR 119 Graham J set out at [43]-[53] details of how the law concerning the debts that were provable in a winding up had stood immediately before the 1992 amendments that gave effect to the Harmer Report, the changes made by those 1992 amendments, and the relevant provisions of the Harmer Report, the Explanatory Memorandum relating to the 1992 amendments, and the Second Reading Speech relating to those amendments. His Honour's thoroughness makes it unnecessary for me to repeat the task. Paras [43]-[53] of Vouris should be regarded as notionally included in this judgment.
82Several cases have considered what is a "claim" within the meaning of s 553(1). In this section of the judgment I will extract relevant parts of those cases, without further analysis.
83Sons of Gwalia Ltd (subject to deed of company arrangement) v Margaretic [2007] HCA 1; (2007) 231 CLR 160 held that a shareholder who had purchased shares in the company as a result of misleading and deceptive conduct by the company had an action for damages that was provable in the winding up of the company. The company in question had entered a DOCA, one of the terms of which provided that the deed fund would be distributed in the same order of priority as would apply if the company were being wound up ([139]). Hayne J recorded at [142]-[143] that the applicant's claim had been made on the basis that there had been a contravention of s 52 of the Trade Practices Act 1974 (Cth), s 1041H of the Corporations Act 2001 , s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth), and "at common law or in equity, in respect of fraud, misrepresentation or other acts or omissions" . One issue in the case was whether this claim was provable in the DOCA. Another issue was whether, if the claim was provable, it was postponed under s 563A until all debts owed to or claims made by persons otherwise than as members of the company, had been satisfied.
84The proceedings were brought to test the entitlement of shareholders in the position of the plaintiff to claim under the DOCA. The case was argued on the assumption that the plaintiff could show one or more of the alleged contraventions of statute, and the consequential damage asserted ([9]). Thus only the statutory causes of action were of any importance in the High Court. In the High Court the argument proceeded upon a basis that a liability for unliquidated damages was capable of being a debt within the meaning of s 563A ([10], [119]). It was not stated that there was any corresponding assumption concerning whether a claim for unliquidated damages fell within s 553. When such damages were the only remedy that Mr Margaretic claimed it was of central importance to the case whether his claim fell within s 553, so that appears to have been a matter that was implicitly decided.
85Hayne J considered a specific problem about whether the claims were provable within the meaning of s 553(1). That problem concerned whether the circumstances giving rise to the claim had occurred before "the relevant date" . In that particular DOCA "the relevant date" was the day on which the administrators had been appointed. The problem arose because the misleading and deceptive conduct that was relied upon had occurred before the appointment of the administrators, but the loss or damage:
"... was not apparent to [Mr Margaretic] before the appointment of administrators. The extinction of value could be said to have arisen because of the administrators' appointment." ([170])
Hayne J continued, at [171]-[172]:
"What is meant, in s 553, by 'debts or claims the circumstances giving rise to which occurred before the relevant date'? How does that expression apply in the present matters? Those questions have not previously been considered by this Court, or by any Australian intermediate court. (But see McDonald v Federal Commissioner of Taxation (2005) 58 ATR 418; Environmental & Earth Sciences Pty Ltd v Vouris (2006) 152 FCR 510.)
In construing the temporal limit that is imposed by s 553, it is important to recognise the generality of other expressions used in s 553 in defining what debts and claims are to be admissible to proof. The section speaks of ' all debts payable by, and all claims against, the company'. It amplifies those expressions by the parenthetical reference: 'present or future, certain or contingent, ascertained or sounding only in damages'. If the words of the section were not wholly sufficient (as they are) to indicate an intention to define provable claims very widely, the Report of the Australian Law Reform Commission on the General Insolvency Inquiry (the Harmer Report), read with the Explanatory Memorandum for the Bill that became the 1992 Act, puts the point beyond any doubt. The Harmer Report (Australia, The Law Reform Commission, General Insolvency Inquiry , Report No 45 (1988), vol 1, p 315 [774]) identified a basic aim of insolvency laws as being 'to deal comprehensively with all of the debts and liabilities of the insolvent' and said that, '[i]n the case of a company, the aim is to deal with all the claims against a company so that its affairs can be fully wound up or so that it can resume trading' (emphasis added). The Harmer Report concluded (Report No 45 (1988), vol 1, p 315 [777]) that '[t]he categories of claims which are admissible should be as wide as possible so that the financial affairs of the insolvent are dealt with comprehensively'. Otherwise, as the Harmer Report pointed out (Report No 45 (1988), vol 1, p 315 [777]), 'if the creditors are unable to make their claims in the insolvency, they are unable to recover at all (unless they have a basis for action against either directors of the company or a guarantor of the company's debts or unless the winding up is stayed)'. The Explanatory Memorandum (Explanatory Memorandum, Corporate Law Reform Bill 1992 (Cth), para [849]) for the Bill that became the 1992 Act said that the reforms embodied in the new provisions of ss 553-553E 'reflect[ed] the recommendations of the Harmer Report'." (emphasis in original)
86He went on to hold that the circumstances giving rise to Mr Margaretic's claim occurred before the administration began. The nature of the misleading and deceptive conduct of which the applicant complained was that the company had breached the continuous disclosure requirements of its stock exchange listing. The damage that Mr Margaretic asserted arose because he had thus purchased shares in ignorance of significant financial information, the effect of which was that the shares were worth less than the price at which he had purchased them.
87At [174] Hayne J said:
"... Mr Margaretic's claim is not a future or contingent ( Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455 at 459 per Kitto J; National Bank of Australasia Ltd v Mason (1975) 133 CLR 191 at 200 per Barwick CJ) claim or debt. It is a present and, he would say, a certain claim. If not ascertained, and the better view may well be that his claim is now ascertained, it is a claim sounding in damages."
88Hayne J's application of principle to the facts of the case was, at [175]-[176]:
"... had Mr Margaretic known what he now says are the relevant facts before SOG appointed administrators (assuming for the purposes of argument that his allegations are true) he would have had complete causes of action against SOG for identical relief under the various statutory provisions upon which he now relies. And the claims he could then have made would not have been contingent or future claims; they would have been present claims for damages representing the difference between what he had outlaid in buying the shares and the true value of what he bought as determined by a properly informed market. The appointment of administrators so soon after Mr Margaretic bought his shares reveals that the shares he bought would have been judged by a properly informed market to be worthless when he bought them and accordingly, he suffered loss when he bought the shares ( HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 654-659 [28]-[40]). Contrary to the submissions of ING, renouncing his shareholding, whether by selling the shares to a third party or rescinding the contract with the vendor, was not a necessary step in his claiming that loss.
It follows that, although the agreed facts demonstrate that the appointment of administrators reduced the value of Mr Margaretic's shares to zero, his claim is one the circumstances giving rise to which occurred before the administrators' appointment. Had the facts upon which Mr Margaretic now relies been known then, they would have been known to the whole market, not just him, and he would have had the same claim he now makes ( HTW Valuers (2004) 217 CLR 640 at 657-658 [37]). His knowledge of the relevant facts bears only upon whether he makes a claim; his knowledge of those facts does not bear upon whether he has a claim. His claim is of a kind that is within s 553 of the 2001 Act." (emphasis in original)
89Gummow J held that Mr Margaretic's claims were provable under s 553(1) and agreed generally with the reasons of Hayne J ([45]-[46]). Heydon J at [261] and Crennan J at [265], likewise agreed with Hayne J. Thus, his Honour's reasoning on this topic is supported by a majority in the High Court.
90Hayne J's citation of Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455 and National Bank of Australasia Ltd v Mason (1975) 133 CLR 191 shows that those cases remain relevant in the construction of s 553. Engwirda Construction concerned who was a "contingent creditor" within the meaning of s 221 of the Companies Act 1961-1964 (Qld). That section conferred standing to petition for a winding up order. The decision held that a builder was a "contingent creditor" concerning a claim to be paid an amount it asserted was due under a building contract, notwithstanding that its entitlement to be paid was dependent upon obtaining either an architect's certificate to that effect, or a decision to that effect in an arbitration that was required under a Scott v Avery clause. Kitto J (with whom Barwick CJ and Windeyer J both agreed) said, at 459:
"Not much assistance is to be gained, I think, from observations that are to be found in reported cases as to the import of the word 'contingent', and I shall refer to one only. In In re William Hockley Ltd , Pennycuick J suggested as a definition of 'a contingent creditor' what is perhaps rather a definition of 'a contingent or prospective creditor', saying that in his opinion it denoted 'a person towards whom, under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date'. The importance of these words for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen . A building contract creates, as soon as it is entered into, an obligation upon the building owner to pay the contract price, either as a whole upon a future event or, more usually, by progress and final payments each of which is to be made on a future event. The event or events may not happen, but if and when one of them does happen the building owner, by force of the contractual obligation, must pay the builder a sum of money. It is, I think, nothing to the point that the event may be complex, as where the payment is agreed to be made when the whole or some part of the work has been done to the satisfaction of an architect as expressed in a certificate or to the satisfaction of an arbitrator as expressed in an award: the building owner is bound from the time the contract is made to pay money to the builder upon a contingency; and that in my opinion makes the builder a contingent creditor of the owner." (emphasis added)
91National Bank of Australasia Ltd v Mason considered a guarantee of "all monies which are now owing or which may from time to time hereafter be owing to the Bank ... whether contingently or otherwise" . The guarantor, the principal debtor and the Bank were sued. The contention of the plaintiff in that litigation was that the guarantor had deposited three cheques into the principal debtor's account, which the Bank had collected, and that that depositing and collection was a conversion of the cheques. Before that litigation had been decided, and at a time when the principal debtor owed no money to the Bank, the guarantor sought a discharge of a mortgage that he had given in support of the guarantee. The court held that the guarantor was entitled to a discharge of the mortgage. Barwick CJ said, at 200:
"In my opinion, the possibility that the company will have to pay to the appellant the amount paid by it to the payees of the cheques cannot be regarded as moneys 'owing contingently'. Nor, in my opinion, can that amount be properly described as a contingent liability of the company. That description is not satisfied by the fact that money may become owing upon the occurrence of some event. There must be some present obligation to pay out of which the money may become due. The stress is upon the word 'owing', which imports some existing obligation though it may be imperfect until an event within its purview occurs."
92Edwards v Attorney General [2004] NSWCA 272; (2004) 60 NSWLR 667 concerned applications by the corporate trustee, and its directors, of a trust that had been established for the purpose of medical research into asbestos related diseases. The principal assets of the trustee were shares in two companies that had formerly been subsidiaries of a company in the James Hardie Group, and that had become subsidiaries of the trustee. The two subsidiaries had been involved in the supply of asbestos, and had been subject to numerous claims for injury and death caused by asbestos. They regularly paid out substantial sums to meet judgments and settlements of claims against them. Actuarial evidence suggested that claims would continue to be made, that there would be sufficient funds to pay all the judgments obtained in the next year or so, but that the assets of the subsidiaries would be exhausted well before many of the asbestos related claims were formulated or adjudicated upon ([43]). Mr David Jackson QC had recently been appointed to enquire into various matters including the adequacy of the funds available to the trustee. The trustee sought judicial advice about whether it was justified in refraining for applying for the appointment of a provisional liquidator to its subsidiaries until Mr Jackson's findings were known. The directors of the trustee sought an order under s 1318 Corporations Act , that they be relieved from any liability they might have, in their capacity as director of the trustee or the two subsidiaries, arising out of the payment by those companies of their debts as they fell due including debts arising in respect of claims made for asbestos related liabilities.
93Young CJ in Eq (as his Honour then was), with whom Spigelman CJ and Mason P agreed generally said, at [58]-[60]:
"On current authority, persons injured through exposure to asbestos manufactured or supplied by Amaca or Amaba do not have a completed cause of action until damage is suffered and that usually involves manifestation of the disease: Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14; 13 ANZ Insurances Cases 61-596. Indeed, some of the future claimants could be in the more extreme category where the people concerned have not yet been exposed to the asbestos such as home renovators doing future renovations or may even be people not yet born who might be involved in demolishing an asbestos ridden building somewhere in 2030. No-one can currently know the identity of the future claimant.
This type of liability must be distinguished from the case of a contingent creditor. A contingent creditor is a person to whom a corporation owes an existing obligation out of which a liability on its part to pay a sum of money will arise in a future event, whether that event be one which must happen or only an event which may happen: Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1970] ALR 173; Re International Harvester (Aust) Ltd (1983) 7 ACLR 415 at 416 ; 1 ACLC 700 at 703. Again, the liabilities in this case must be distinguished from the case of a prospective creditor, a prospective creditor being one who is owed a sum of money not immediately payable but which will certainly become due in the future either on some date which has already been determined, or on some date determinable by reference to future events: Stonegate Securities Ltd v Gregory [1980] Ch 576; [1980] 1 All ER 241; Re Simionato Holdings Pty Ltd; Cmr of Taxation v Simionato Holdings Pty Ltd (1997) 15 ACLC 477.
The distinction is vital because while contingent or prospective creditors are taken into account in assessing solvency, possible future claims that might crystallise are not. The great probabilities are that if Amaca and Amaba were to go into provisional liquidation now, then the only claims that would be paid by the liquidator would be those which have crystallised and, after paying the doubtless heavy expenses of liquidation, there would be a distribution of surplus funds to the shareholder [Medical Research and Compensation Foundation] which would be used for the purpose of the alleged charitable fund. The future creditors would get nothing and this may very well be the case even if the claim matured the day after the liquidation commenced."
94Lam Soon Australia Pty Ltd v Molit (No 55) Pty Ltd (1996) 70 FCR 34 is a decision of the Full Court of the Federal Court of Australia (von Doussa, O'Loughlin and Lehane JJ). It arose when a company that operated a loss-making business in certain leased premises, and also operated certain other profitable businesses, entered a DOCA. The DOCA proposed that all non-associated creditors at the date of appointment be paid in full, but that the lessor be paid an amount equal to the amount it would receive as a dividend arising from its entitlement to be paid rent in the future if the company were to go into liquidation. The court rejected a contention that the lessor was not bound by the DOCA concerning the rent that would arise under the lease in the future. Their Honours at 41-42 considered whether the lessor's entitlement to be paid rent during the remainder of the lease term was a "claim arising on or before the day specified" with in the meaning of s 553:
"There can be no doubt that where a financier has, before a company becomes subject to administration under Pt 5.3A, lent money to it on the security of a mortgage of its property, the claim of the financier for the principal sum lent, and its claim for interest, are 'claims arising on or before the day specified' in the deed (assuming, of course, as seems to be customary, that the day so specified is the day on which an administrator was appointed). That is so even if the contract of loan provides that payments are to be made by instalments, over a substantial period. Equally, there can be no doubt that those claims would, if the company were wound up, be provable in its liquidation (the test which Brash v Katile held to be applicable); and certainly the claims to both principal and interest are to be regarded, at the day specified in the deed, as present rather than future property (see, eg McLeay v IRC (1963) 9 AITR 265; Shepherd v Commissioner of Taxation (Cth) (1965) 113 CLR 385) and it is no misuse of language to describe them as claims which have arisen on or before that day. Indeed, any other conclusion would apparently exempt from the restrictions in s 444E any creditor of the company whose debt was contractually payable later than the specified day: such a conclusion is hardly consistent with the statutory object. To return to the mortgage loan: if the terms of the contract provide that upon the appointment of an administrator, or if an instalment of principal or interest is not paid, the lender may require immediate payment of the total sum outstanding and if the lender, after an administrator is appointed or after a deed is entered into, actually does so, that does not eliminate the claim which arose on or before the specified day and cause a different claim to arise in its place. It simply quantifies the claim and brings forward the due date for its payment.
So much may be thought so obvious as not to require mention. These matters were, however, to some extent canvassed in argument and they form, we think, a useful introduction to a consideration of the statutory treatment of a claim to rent payable in the future under a lease. It is apparent from what we have already said that if on the true construction of subs 444D(1) the position of a lessor was substantially different from that of a mortgagee, that might be thought a result somewhat at odds with the expressly stated object of Pt 5.3A and certainly at odds with the apparent assimilation of the positions of lessors and mortgagees by the other subsections of ss 444D and 444F. Clearly enough a claim under an existing lease for rent payable in the future is an existing right, not a mere expectancy: if authority is needed, Shepherd provides it. There is thus in our view no misuse or straining of language in saying of a claim to rent payable after the specified day under a lease in existence on the specified day that it is a claim which has arisen on or before that day. Once that is accepted, it is in our view no less such a claim if the amount payable in respect of it becomes ascertained or crystallised, either in accordance with the terms of the lease itself or as damages at law, in circumstances where after the appointment of the administrator (whether before or after a deed of company arrangement is entered into) the lease is terminated by the lessor in exercise of a contractual right to do so or upon acceptance by the lessor of a repudiation by the lessee."
95After consideration of whether, if a lease has not been disclaimed, the lessor is disentitled from proving in the lessee's winding up for rent until it has become due and payable, their Honours continued at 43-44:
"A good deal of the difficulty in this area of the law has resulted, we think, from a tendency to consider together claims for future rent and claims for possible breaches of covenant and to treat both as 'contingent' or 'future'. ...
To suggest that because a contract might be, but has not yet been, repudiated means that an existing contractual obligation to pay money in the future should be treated as giving rise not even to a contingent claim but to a claim 'which might never arise' seems to us, with respect, simply wrong. It would apply equally, in principle, to a mortgage debt or terms sale. In truth, there is in each case an existing right; in each case it does not follow, because the right will bear fruit in the future when money is required to be paid, and may be defeasible in certain events, that it is not a claim which has arisen. A question may arise as to the valuation of the claim: in the case of a winding-up that question will be answered by reference to s 554A; in the case of a deed of company arrangement, it may be answered by reference to the terms of the deed.
'Future breaches of covenant' may be quite another matter. No doubt it is true, for example, that the right of a lessor under an existing covenant to keep leased premises in repair is an existing right or claim which may in theory have a value. A right to sue for damages for a particular future breach of that covenant, however, is we think, looked at before the breach occurs, not even a contingent claim: it is a mere expectancy and could not be the subject of proof."
Is an Undetermined Application under Section 106 IR Act a "Claim" under Section 553 Corporations Act ?
96In Silbermann v One.Tel Ltd [2002] NSWSC 295; (2002) 167 FLR 274 Gzell J refused to grant leave under s 500(2) Corporations Act to permit s 106 IR Act proceedings to be brought by directors against a company that was being wound up. The directors had held credit cards that they used to discharge expenses incurred on behalf of the company. The order that they sought in the IRC was one that would remedy what they contended was an unfair aspect of their contract with the company, namely that it failed to provide a complete indemnity against the liability that they had to the issuers of the credit cards.
97Gzell J considered the extent to which the 1992 amendments to s 553 had made a difference to the pre-existing law. He said, at [14]:
"I reject the submission that the 1992 amendments effected a widening of the term 'claims.' In this respect, the language is the same. The difference is that both debts and claims are now defined in terms that the circumstances giving rise to them occurred before the date on which the winding up is taken to have begun. It may be thought that those words add little to the concept of debts and claims in the earlier legislation. After all, if a debt or claim depends upon an obligation on the part of a company on the date upon which the winding up is taken to have begun, it must have arisen from circumstances which occurred before that date."
98After consideration of Majik Markets and Fisher v Madden , he held that the directors did not have a "future claim admissible to proof against the [liquidators]" ([18]).
99In Buckingham v Pan Laboratories (Australia) Pty Ltd [2004] FCA 597; (2004) 136 FCR 102 Jacobson J refused leave under s 500(2) Corporations Act to enable some former employees of a company in liquidation to continue proceedings under s 106 IR Act . He followed the decision of Gzell J in One.Tel , and at [81] expressed the view that the conclusion reached by Gzell J was "plainly correct" . Jacobson J gave his own additional reasons for dismissing the application at [83]-[86]:
"The principle which underlies the whole of the law of insolvency is that upon the making of a winding up order the rights of all parties, including creditors, crystallise. The assets of the company are to be realised and distributed rateably among the creditors then existing. ...
[In Commercial Banking Co of Sydney Ltd v George Hudson Pty Ltd (in Liq) (1973) 131 CLR 605] Menzies J said at 613:
'It is a deeply rooted principle of company law that, when liquidation has commenced, one creditor should not be assisted by the court to improve its position vis-a-vis other creditors.'
It would be inconsistent with these fundamental principles for a claim under s 106 of the IR Act to be characterised as a ' future claim ' which may be admitted to proof in a winding up. The section gives the Commission a wide discretion to alter, retrospectively, substantive rights and liabilities. In Fisher at [5] Meagher JA described the Commission's powers as malleable. The power which is conferred would, if exercised, permit the Commission to alter retrospectively the rights of existing creditors which have already crystallised on liquidation. The power to alter those rights would flow from a finding of unfairness in a claim made by a person to whom no obligation is owed at the relevant date. It cannot have been the intention of the legislature that a claim to the exercise of such a jurisdiction would be a future claim admissible to proof against the company under s 553(1) of the Act.
It is not to the point that the circumstances giving rise to the claim, that is to say, the employment of the applicants, occurred before the relevant date. The question is whether the claim is a future one in the sense referred to in s 553(1). For the reasons set out above, it is not."
100Mr Williams submits that both Buckingham and One.Tel are incorrectly decided, and should be overruled.
101Mr Williams also submits that the position of Ms Sutton in bringing her litigation seeking a statutory remedy under s 106 IR Act is no different to that of Mr Margaretic in relying on the various statutory remedies that he invoked.
102In my view there is a very significant difference. Section 82 Trade Practices Act provided:
"A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part ... V ... may recover the amount of loss or damage by action against that other person...".
Once the misleading or deceptive conduct has occurred, s 82 imposes on the person who engaged in that conduct a legal obligation to pay the consequent loss or damage. The company involved in Sons of Gwalia was under such an obligation by reason of the operation of the Trade Practices Act at the time the DOCA was adopted. By contrast, in the present case at the time the DOCA was adopted BEA was under no legal obligation to Ms Sutton by reason of the operation of the IR Act .
103Mr Margaretic also relied on statutory remedies other than under the Trade Practices Act . Section 1041I Corporations Act gives a remedy for breach of s 1041H of that Act, and s 12GF ASIC Act gives a remedy for breach of s 12DA of that Act, each of which is cast in analogous terms to the remedy s 82 Trade Practices Act gives for breach of s 52 of that Act. If, as the High Court presupposed for the purposes of the litigation, the company in Sons of Gwalia had breached s 1041H and s 12DA before the adoption of the DOCA the company would likewise have been under a statutory liability to Mr Margaretic for the loss or damage he suffered in consequence of those breaches.
104There is one sense in which Ms Sutton had a claim at the time that the administrators were appointed. In that sense, she had a claim because she had litigation on foot in the Industrial Relations Commission, in which she was claiming an order from the Commission.
105However, just because something is a " claim" in one sense of the word does not mean necessarily mean that it is a " claim" within the meaning of s 553. The particular shade of meaning that " claim" has in s 553 can be ascertained from the purpose of the section. That purpose is that all the legal obligations to which a company is subject should be ascertained, and each of them valued as at a common date, so that those obligations can be taken into account in a winding up or other administration that is under way. Someone has a " claim" within the meaning of s 553 if he or she has a basis, founded on an existing legal right, for asserting a right to participate in the division of the assets of the company. Ms Sutton did not have one of those.
106In Majik Markets , Handley JA recognised that the former s 88F created substantive rights. However, as recognised in the passage that Handley JA quoted from the judgment of Latham CJ in Ex parte Barrett , the substantive right that the section created is one that arises when the Commission exercises its discretion in favour of applicant. When McHugh JA, in Minister for Youth and Community Services said that the power conferred by s 88F is not an exercise of judicial power he was drawing attention to the power not being one that depended upon the ascertainment and enforcement of existing rights of the parties. The judgments in Fisher v Madden all proceed on the basis that an applicant for an order under s 106 has nothing more than a right to take proceedings, that did not arise from any existing legal obligation of the defendant in those proceedings, and did not result in there being any legal obligation of the defendant in those proceedings until such time as the Commission had made an order. In Colley v Futurebrand Handley JA recognised that the filing of an application under s 106 resulted in the applicant acquiring a legally enforceable right to have the Commission hearings determine the application according to law, and that that was a new right, different from the right to take advantage of the section. Ms Sutton had rights of that kind at the commencement of the administration, because by that time she had already begun proceedings in the Commission. However, those rights were not ones that resulted in her having any legal entitlement to participate in the division of the assets of the company.
107That Ms Sutton does not have a " claim" within the meaning of s 553 is also consistent with the decisions of the High Court in Engwirda Constructions and Mason , with the decision of this court in Edwards v Attorney General , and with the exposition of provable claims in the Full Court of the Federal Court in Lam Soon . Each of those decisions required that there be an existing legal obligation that a company owed at the relevant date to someone before that person has a "claim" that is provable in the winding up of the company.
108The trial judge in the present case was right in concluding that Ms Sutton did not have a " claim" . There is no occasion to overrule the decisions in One.Tel and Buckingham .
Analogy with Claims for Costs?
109A claim for costs in litigation has some similarity to a claim for an order under s 106 IR Act . Section 98 Civil Procedure Act 2005 confers on the court a discretion as to costs. Though s 98 provides that that conferring of discretion is subject to rules of court, the rules under UCPR do not take that discretion away. UCPR 42.1 provides a default rule that costs will follow the event unless the court otherwise orders, but that default rule is itself applicable only 'if the court makes any order as to costs" .
110Some first instance decisions have held that when a plaintiff brings an action alleging that a company has committed a legal wrong, but no order for costs has been made against the plaintiff before a DOCA becomes operative, the plaintiff has a "claim" within the meaning of s 553 for the costs it has incurred up to the commencement of the DOCA. That is because an entitlement to costs could arise out of or be "an incident of" an obligation of the company in, say, tort or contract, that existed before the DOCA became operative, or by reason of the company having suffered a judgment for damages for breach of a statutory obligation before the DOCA became operative: McCluskey v Pasminco Ltd [2002] FCA 231; (2002) 120 FCR 326 at [39]-[44]; Environmental & Earth Sciences Pty Ltd v Vouris at [99].
111Those cases are to be contrasted with other first instance cases have held that there is no provable claim for the costs of a winding up application if an order for costs has not been made before a DOCA becomes operative: FAI Workers Compensation (NSW) Ltd v Philkor Builders Pty Ltd (1996) 20 ACSR 592; Expile Pty Ltd v Jabb's Excavations Pty Ltd [2004] NSWSC 284 at [27]-[37]; McDonald v Commissioner of Taxation [2005] NSWSC 2; (2005) 187 FLR 461. The explanation for that result, given in Philkor and followed in Expile , is that s 466 Corporations Law (and, now, Corporations Act ) requires a person who issues a winding up summons to prosecute those proceedings at his or her own cost. Thus the possibility of the costs order being made is not a contingent claim because there is no pre-existing obligation of the company to which it may become subject on the happening of a future event or at some future date. An additional explanation given in Expile at [34] is that a claim for damages depends upon the company's wrongdoing, while a winding up summons depends upon a company's insolvency, and a company which becomes insolvent does not, by that circumstance alone, commit a legal wrong against anyone. Nor is an application for the costs of bringing winding up proceedings a future claim. As Palmer J said in Expile at [37]:
"A future claim is distinguishable from a contingent claim in that, while both are founded on an obligation existing as that the commencement of the winding up or the deed of company arrangement a future claim will arise at some times thereafter while a contingent claim that may arise. A typical example of a future claim is a claim for rent which will become due in the future under a lease which is in existence at the commencement of the winding up..."
112Suppose that the company whose winding up is being sought owes no relevant pre-existing legal obligation. In such a situation, the prospect that a costs order might be made cannot be either a contingent claim or a future claim. It is precluded from being so by the absence of a relevant pre-existing legal obligation. Of course, in the common situation where the winding up of the company is sought on the basis of failure to comply with a statutory demand, the company owes a legal obligation of one kind to the applicant. That obligation is the debt that is the reason why the applicant is a creditor and thus has standing to bring the application. Further, the non-payment of the existing debt in response to a statutory demand can in the absence of other evidence provide adequate proof of insolvency. However, the fact that a company owes a debt does not mean that it has an obligation, even prospectively or contingently, to pay the costs of its creditor obtaining a winding up order. Hence, the legal obligation inherent in the debt is not a relevant pre-existing legal obligation, so far as payment of the costs of a winding up application is concerned. Analogously, if Ms Sutton had been in a legal relationship with BEA as either an employee or an independent contractor, and had brought proceedings under s 106 IR Act seeking to improve the terms of her contract, the legal obligations that BEA owed to her under her existing contract would not be relevant legal obligations, concerning whether she had a provable claim relating to the alteration of contract that she was seeking from the IRC.
113In Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 the High Court considered a situation where judgment for damages was given against a man before he became bankrupt, and an order for costs arising from that litigation was made against him after the bankruptcy. The Court held that the costs so ordered were not provable in his bankruptcy. The joint judgment of Gleeson CJ, Gummow, Hayne and Crennan JJ stressed, at [2], that the decision essentially turned upon the construction of s 82 Bankruptcy Act 1966 (Cth). Their Honours also observed at [9], that under section 82 "the classes of provable debts are narrower than those encompassed by s 553 of the Corporations Act 2001 (Cth) as regards corporate insolvency."
114Even so, there are some aspects of the judgment of the plurality that expound the nature of costs awards in a way that does not depend upon the text of s 82. At [35] their Honours rejected the proposition that exposure to an adverse costs order arose from an obligation incurred prior to the bankruptcy. Similarly at [37] their Honours rejected the proposition that exposure to an adverse costs order is "incidental" to liability for the underlying judgment debt. This rejection was accompanied by a footnote that referred to McCluskey , preceded by a "cf". I suspect that that indicates disapproval of McCluskey .
115There is a strong analogy, in my view, between the position of a litigant who seeks but has not yet obtained an order under s 106 IR Act , and that of a person who seeks but has not yet obtained an order for the costs of seeking a winding up order. In each case, whether an order will be made is an exercise of discretion, and that discretion does not arise from any legal right that the applicant has (beyond the bare right to seek the order) before the order is actually made. Until the order is made, the applicant does not have a "claim" that falls within the meaning of s 553.
116Even if I am wrong in thinking that the High Court in Foots has rather delphically disapproved of the type of reasoning shown by McCluskey , the present case is not one where any order that Ms Sutton might have obtained any Industrial Relations Commission arose out of or was an incident of any obligation that the company owed to her before the DOCA became operative.
117This consideration of the position concerning costs orders confirms, by analogy, the conclusion to which I have already come, namely, that Ms Sutton did not have a " claim" within the meaning of s 553.
118It is impermissible to use the Corporations Regulations as an aid to construction of the Corporations Act (D C Pearce and R S Geddes, Statutory Interpretation in Australia , 7 th ed (2011) at [3.41] and the cases there cited). However, I mention that s 445A(5) Corporations Act provides that the DOCA is taken to contain certain "prescribed provisions" except so far as the DOCA provides otherwise. One of the "prescribed provisions" is clause 8(1) of Schedule 8A of the Corporations Regulations . That clause provides:
"Subdivisions A, B, C and E of Division 6 of Part 5.6 of the Corporations Act apply to claims made under this deed as it references to the liquidator were references to the administrator of this deed."
119Section 553 appears in subdivision A of Division 6 of Part 5.6. Even if clause 8(1) cannot be used to construe the Act, clause 8(1) provides an additional reason for construing the DOCA so that the claims provable under it are those that would be provable under s 553. That is so notwithstanding that the definition of "Claims" in the DOCA is cast in language that is arguably wider than that of s 553.
Can a "Claim" Under Part 5.3A not be a "Claim" Within Section 553?
120Mr Williams points out that the decision in Brash was given, as the court records, "as a matter of great urgency" (at 25). He points out that the submission that counsel made to the Victorian Appeal Division, and that the court eventually upheld, was that the word "creditors" in s 444D(1):
"... should be read as extending to all those who had a claim against the company arising on or before that date, whether the claim be 'present or future, certain or contingent, ascertained or sounding only in damages' (as described in s 553(1) of the Corporations Law ...)" (at 28)
121That submission does not ask that the court definitively decide the furthest extent of the meaning of "creditors" in s 444D(1), only that it decide that that meaning extends as far as the meaning of people with "claims" within the meaning of s 553.
122He also points out that, in the course of their reasoning at 32, their Honours said that the reasoning they had been considering to that point:
"... provides compelling reasoning for supposing that 'the creditors' upon whom such powers are conferred are not substantially different from 'the creditors' mentioned in relation to voluntary winding up in Pt 5.5 of the Law. It may be that under Pt 5.3A 'the creditors' have greater power as regards the initiation of the winding up of the company than they do under Pt 5.5; but that only provides more, rather than less, reason for supposing that 'the creditors' are not substantially different under the two Parts." (emphases added)
123I accord no weight to the decision in Brash having been delivered urgently. It is still a decision of an intermediate appellate court. In any event, it is very carefully reasoned, and the decision was reserved for over a week.
124I accept that the specific submission that counsel put to the Appeal Division did not in terms require that their Honours decide whether "creditor" and "claim" in s 444D(1) went any wider than a meaning of those words in s 553. Likewise it could be said that their Honours were considering a quite particular factual question, concerning whether a DOCA could bind landlords who had leased real estate to the company in question, concerning payments of rent and outgoings that would fall due under those leases after the DOCA was entered. However, the reasoning that led their Honours to the conclusions that I set out at [53] and [54] above was not limited by reference to the particular submission that had been put, nor was it dependent upon any aspects of that particular factual situation. Rather, their Honours' conclusion arose from a detailed examination of the terms of the relevant provisions of Part 5.3A and its relationship to the provisions of the Corporations Law relating to claims provable in a winding up. If a court actually decides a case by concluding that a broad proposition is the law, and by applying that broad proposition to the facts of the case, the broad proposition is part of the ratio decidendi of the case.
125It is true that, part way through their reasoning, the reasoning process they had engaged in to that point enabled their Honours to conclude that the "creditors" in Part 5.3A were not substantially different to those referred to in Part 5.5. In June 1994, when Brash was decided, Part 5.5 of the Corporations Law related to voluntary winding up. It ran from s 490 to s 512, and thus was not the Part in which s 553 is to be found. Part 5.5 of the present Corporations Act likewise relates to voluntary winding up, and runs from s 490 to the (now repealed) s 512. Later in their reasoning, in the passages that I have set out at [53] and [54] above, their Honours expressed themselves quite unambiguously, and without any of the imprecision involved in saying that one thing is not substantially different to another, when they said " whatever the ambit of the words of s 553 the same will be so in relation to s 444 D" .
126Mr Newlinds submits that it is not open to me to decide that Brash has left open the possibility of a "claim" and "creditor" in s 440D being wider than the meaning of those terms in s 553, because of the decision of the High Court in International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151. That litigation arose when Ansett went into administration, then adopted a DOCA. IATA had for many years operated a Clearing House system, with rules that member airlines contracted to observe. If airline A sold and issued a ticket for services to be provided by airline B, airline A gave a credit for the cost of that service to a centrally operated fund. When airline A provided a service concerning which airline C had sold the ticket, airline A was entitled to claim on the fund. The fund thus enabled setting off of claims between the many airlines that were its members. The question at issue in IATA v Ansett was whether the deed administrators were entitled to claim directly against other airlines for the cost of services that the other airlines had booked, but Ansett had provided. At [42] Gummow, Hayne, Heydon, Crennan and Kiefel JJ said:
"... on 2 May 2002 the Deed was executed as provided in s 444B. Thereupon, and by force of ss 444D and 444G, the Deed bound Ansett, its officers and members, the administrators, and certain creditors of Ansett. This class of creditors included those with claims against Ansett where the circumstances giving rise to the claims occurred on or before 12 September 2001. Authorities including Hoath v Comcen Pty Ltd (2005) 53 ACSR 708 at 711-712 [17] indicate that these claims must also still have been current on 2 May 2002, the date of execution of the Deed. Further, and this follows from the construction given s 444D in Brash Holdings [1996] 1 VR 24, the claims are those which would have been admissible to proof under s 553 in a winding-up of Ansett if the circumstances giving rise to the claims had occurred before 12 September 2001 ." (emphasis added)
127Mr Newlinds submits that the last sentence of this paragraph shows the plurality deciding that the claims provable under the deed are equivalent to those that would have been admissible to proof under s 553. I accept that that is a fair reading of the words.
128I have some doubt about whether that sentence is part of the ratio of IATA v Ansett , as the decision turned upon who owed money to whom on a proper construction of the rules of the Clearing House. Even so, as a seriously considered dictum of the High Court, I should follow it: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [134], [147].
129Further, this reading of Brash has been explicitly accepted by the Full Federal Court in Lam Soon . Von Doussa, O'Loughlin and Lehane JJ, in discussing Brash , said at 40:
"The Court proceeded to hold explicitly that the expression in s 444D(1), 'claims arising on or before the day specified in the deed', should be read as having the same content as the expression 'debts or claims the circumstances giving rise to which occurred before the relevant date' in s 553 of the [ Corporations Law ] and thus (at 34) as comprehending future or contingent debts or claims.
It was not suggested that we should decline to follow that decision. Given what was said by the High Court in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492, and given also that we are far from persuaded that the decision of the Appeal Division was plainly wrong - with respect, we think it was right - in our view we should follow the decision and apply it." (emphasis added)
130The phrase "the claims are those" in IATA v Ansett , and the phrase "read as having the same content as" in Lam Soon do not admit of the possibility that the class of claims under s 444D(1) is any wider than that of claims under s 553.
131There is a difference in terminology between s 444D(1) and s 553(1) as the former refers to "claims arising on or before the day specified in the deed" while the latter refers to "claims the circumstances giving rise to which occurred before the relevant date" . Treating the claims that fall within s 444D(1) as coextensive with those that could fall under s 553(1), as IATA v Ansett and Lam Soon require, has the effect that this difference in terminology does not result in any difference in substance.
132Brash has been referred to in various other decisions of intermediate courts of appeal, but not in a way that deals directly with whether there is a relationship of identity between the "claims" in s 444D(1) and the "claims" in s 553: Australasian Memory Pty Ltd v Brien (1998) 45 NSWLR 111 at 138-145; MYT Engineering Pty Ltd v Mulcon Pty Ltd (1997) 140 FLR 247 at 276; Joseph Khoury & Sons v Zambena Pty Ltd [1999] NSWCA 402; (1999) 217 ALR 527 at [22]; Ansett Australia Ground Staff Superannuation Fund Pty Ltd v Ansett Australia Ltd [2003] VSCA 117; (2003) 176 FLR 393 at [12]; Something Better Pty Ltd & Terry v Pyramid Building Society (in liq) [1996] 2 VR 352 at 358 (reversed on appeal, though not on this point, in Pyramid Building Society (in liq) v Terry (1997) 189 CLR 176); GM and AM Pearce & Co Pty Ltd v RGM Australia Pty Ltd [1998] 4 VR 888 at 893-894; Surber v Lean [2000] WASCA 380; (2000) 23 WAR 445 at [67]; City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130; (2009) 179 FCR 243 at [32]-[33], [79], [135]-[137]. I do not find in those decisions anything that suggests there might not be the relationship of identity between the " claims" in s 444D(1) and the " claims" in s 553. I also recognise that Brash has been applied without any hint of reluctance or criticism by many first instance judges. First instance judges are required to follow a decision of an intermediate appellate court, but there is no obligation to follow it happily.
133The core meaning of "creditor" is a person to whom a debt is owing. That can be confirmed by recourse to dictionaries. It has a subsidiary and specialised meaning in relation to accounting, concerning the type of entries that are made on the credit side of an account. A contingent creditor is not a creditor in either of these senses of the term. Rather, such a person is someone who might, in some circumstances, become a creditor. It would not be appropriate accounting treatment to enter an estimate of the amount for which he or she might become a creditor on the creditor side of a conventional set of accounts. The contingent liabilities of a corporation need to be disclosed in its accounts, if those accounts are to give a true and fair view of the affairs and financial position of the corporation. However, that is done by a note to the accounts, and does not mean that a contingent creditor actually is a "creditor" in the ordinary meaning of the word. The decision in Brash was, in effect, that a reading of Part 5.3A Corporations Act in the light of the Act as a whole required an extended meaning of "creditor" to be recognised in Part 5.3A, namely that it is a person who has a " claim" within the meaning of s 553. If the meaning of " creditor" in Part 5.3A is to be extended even further, there must be a sound reason, based in construction of the statute, for doing so.
134Mr Williams submits that there is such a reason. He submits that the scheme, purpose and scope of Part 5.3A requires a meaning of "creditor" that is even wider than that which Brash accorded it. He submits that the Harmer Report in Chapter 16 advocated a "fresh start" philosophy for insolvent companies. He submits that the scheme provided for in Part 5.3A is about insulating the insolvency of the company from the consequences of allowing creditors to take action against them, and that this requires creditors with contingent claims to be recognised as creditors. He submits that if Ms Sutton is not a "creditor" for the purpose of the DOCA, she has neither the benefit nor the burden of the DOCA, and can continue her action against the company. He submits that such a result is inconsistent with the purpose of Part 5.3A to afford the company a fresh start following its administration.
135Further, he submits that recognising the claim of a claimant under s 106 IR Act , would, commercially, be no different to recognising the claim of a person who asserts a tort action against the company, who asserts that they have contractual rights that in some circumstances might mature into a liability (such as a guarantee), or that they have a claim for damages under the Trade Practices Act .
136These arguments differ radically from the type of argument that succeeded in Brash . Brash involved a meticulous examination of numerous provisions of the Corporations Law , and considered their interaction. Mr Williams' arguments invoke no such textual considerations.
137The "scheme, purpose and scope" of Part 5.3A that he invokes is itself not based in the text of the statute. Section 435A ([40] above) makes an explicit statement of the object of Part 5.3A. Ms Sutton does not fall within para (a) of that statement of objectives, because the DOCA has no effect on the company or its business continuing in existence - the company has at all relevant times been little more than a shell, and its business had already been sold, before the company entered voluntary administration pursuant to a management buyout ([21] above). She would only fall within para (b) of the statement of objectives if "creditor" in Part 5.3A has a wider meaning than in s 553 - which is the very thing that Mr Williams is seeking to demonstrate.
138I accept that s 435A does not exhaustively state every legislative purpose that is to be taken into account in the application of the provisions of Part 5.3A ( Vero v Kassem [2011] NSWCA 381 at [81]-[82]). However, any purpose that is to be read into Part 5.3A must be found somewhere within the statute. No specific source has been suggested to us.
139The relevant provisions of the Harmer Report are set out in Environmental & Earth Sciences v Vouris at [51], and I will not repeat them here. I will put to one side any concerns about whether the Harmer Report " is capable of assisting in the ascertainment of the meaning of the provision " , as s 15AB Acts Interpretation Act 1901 (Cth) requires must be the case before extrinsic material can be relied on as an aid to construction (cf Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 280 at [12], [16], [168], [172]; Preston v Commissioner for Fair Trading [2011] NSWCA 40 at [170]-[174] concerning the analogous New South Wales provision). Statements such as that at [779] of the Harmer Report, that " categories of admissible claims should be as wide as possible" are at too high a level of generality to provide assistance. They beg the question, as wide as possible to achieve what?
140There was somewhat greater precision in the statement at [777] of the Report that the "categories of claim which are admissible should be as wide as possible so that the financial affairs of the insolvent are dealt with comprehensively" . However, that statement involves an understanding of what are the "financial affairs" of an insolvent corporation. That expression could not refer to every transaction or practice in which a corporation engages that might produce financial effects. If a corporation were to become insolvent and cease trading, that might cause significant financial harm to someone who regularly supplied goods or services to the corporation, and who could no longer look to the business of the corporation as a source of profit. However unless there is actually a supply contract in place, rather than the habit or practice of dealing, those harmful consequences are not part of the "financial affairs" of the corporation, in the relevant sense. If the corporation has called for tenders, but becomes insolvent before it awards a contract following on the tendering process, any expectation that a tenderer had of profit from a contract is not part of the "financial affairs" of the corporation. That is so even if the tender that a tenderer submitted was a very good one, that on objective criteria would have had a high chance of success if the corporation had continued to carry on business. Similarly, suppose that Ms Sutton's claim to be entitled to an order in the IRC could have been shown to be one that would have had a high prospect of success if it had proceeded to judgment (an exercise that was not attempted). Even if this were the case, before the Commission had given judgment, Ms Sutton's assertion of an entitlement to an order from the commission was not sufficient to make her claim part of the "financial affairs" of BEA, or to make her a creditor within the meaning of Part 5.3A.
141Another reason that the Harmer Report gives at [777] for the categories of claim being wide is that "it also favours creditors, since if the creditors are unable to make their claims in the insolvency, they are unable to recover at all" . That does not provide a reason for the scope of admissible claims being any wider than those of "creditors" as expounded in Brash .
142Mr Williams' argument that the claim of a claimant under s 106 IR Act is commercially no different to the claims of various other claimants who are not actually owed a debt, such as a person with an undetermined claim for damages under the Trade Practices Act , is not disposed of by the reasons I gave at paras [101]-[103] above. Those reasons relate to a difference in legal analysis, not to a difference in commercial effect. However, there would be very many people who might as a matter of fact suffer financial harm as a consequence of a corporation becoming insolvent. The examples I have given of the regular supplier to the corporation, and the hopeful tenderer, are just two of a multitude of relationships that there might be between a person who in fact is likely to suffer financial loss as a result of the insolvency of a corporation, and the corporation itself. But why should mere foreseeability of loss, as a result of a corporation ceasing to carry on business, be regarded as giving the person who might suffer the loss an entitlement that the law should recognise to share in the divisible assets of the corporation? In the law of tort, there needs to be more than the foreseeability of financial loss to a person before there is any legal obligation to take reasonable care not to cause such loss.
143Identification of someone as a "creditor" confers on them various legal rights under Part 5.3A. Without being exhaustive, a creditor is entitled to attend meetings of the company's creditors under ss 436E and 439A, and to vote at those meetings. The administrator is required to investigate the affairs of a company under s 438A and then to form an opinion about which course of action is in the interests of the company's creditors. If the creditors resolve that the company should execute a DOCA, then s 444A(4)(b) requires that the DOCA specify the property of the company that is to be available to pay creditors' claims. Section 444A(4)(h) requires the DOCA to specify the order in which proceeds of realising that property are to be distributed amongst creditors bound by the deed. It is as a result of the vote of the creditors that a decision is made whether a DOCA will be entered. Under s 444D, creditors are bound by the terms of the DOCA. Under s 445C, the creditors have power to pass a resolution terminating a DOCA. Various of the court's powers in relation to the operation of a voluntary administration or a DOCA are to be exercised by reference to what is in the best interests of the company's creditors - ss 437F(4), 445D(a)(ii), 445D(1)(c), and 445D(1)(f). I see no reason of text or policy for regarding the class of "creditors" who are accorded these legal rights as extending to people who otherwise have no legal rights against the company, but rather an expectation that in fact they would have benefited from the continued existence of the company. Further, a voluntary administrator has an obligation to give notice of the first meeting of creditors to as many of the company's creditors as reasonably practicable (s 436E(3)(a)). The Court has an obligation to make various decisions by reference to the interests of the creditors as a whole. These obligations would either be extremely difficult or impossible to perform if "creditors" extended to people who had no legal rights at all against the company.
144In all these circumstances, I do not accept that the class of "creditors" under Part 5.3A extends any wider than the class of people with a "claim" under s 553. The primary judge was right in concluding that Ms Sutton was not a "creditor" within the meaning of Part 5.3A.
145The cross-appeal should be dismissed.