Commissioner of Taxation v Yeo as Liquidator of Ready Kit Cabinets Pty Ltd

1. The appeal be dismissed.
2. The appellant pay the respondents' costs as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 This appeal involves a single issue. The issue is whether payments made by the company, Ready Kit Cabinets Pty Ltd (in liquidation) (RKC) to the appellant, the Commissioner of Taxation (the Commissioner), were entered into or done on behalf of RKC "by, or under the authority of the administrator(s)" of a deed of company arrangement as provided for in subs 588FE(2B)(d)(i) of the Corporations Act 2001 (Cth) (the Corporations Act). 2 The primary judge held that the payments were not entered into or done on behalf of RKC "by, or under the authority of the administrator" of the deed of company arrangement as provided for in subs 588FE(2B)(d)(i), with the consequence that the payments were liable to be set aside as voidable unfair preferences: Yeo, in the matter of Ready Kit Cabinets Pty Ltd (in liq) v Deputy Commissioner of Taxation [2020] FCA 632. 3 The Commissioner contends that the primary judge was in error in circumstances where the making of the payments was specifically contemplated and required by subcl 6.1(d) of the deed of company arrangement executed on 11 December 2013 by RKC, its director and the respondents, as the deed administrators (the DOCA). According to the Commissioner, the fact that the making of the payments was specifically contemplated and required by subcl 6.1(d) of the DOCA, and that it was the DOCA which by subcl 4.1(a) vested control and management of RKC in its director, necessarily means that the payments were made on behalf of RKC by or under the authority of the administrators of the DOCA. According to the respondents (the former administrators of the DOCA and now the liquidators of RKC), to the contrary, the primary judge was correct in concluding that while subcl 4.1(a) of the DOCA returned control and management of RKC to the director, the payments were made by the director under his own authority in managing RKC. 4 We consider that the primary judge's conclusion was correct for the reasons which he gave. 5 There was no dispute about the relevant facts identified in the primary judge's reasons (referred to below as PJ). 6 Item 61 of RKC's constitution provides: Management Vested in Directors The management of the Company's business is vested in the directors who shall exercise all the powers of the Company as are not required to be exercised by the Company in general meeting PROVIDED that the directors may not dispose of the Company's main undertaking or approve the transfer of a controlling share interest in the Company without the approval of a general meeting previously given. No such resolution of a general meeting shall be retrospective in its effect. 7 The first and second respondents were appointed as joint and several administrators of RKC pursuant to the Corporations Act on 29 October 2013: PJ [8]. 8 The first meeting of the RKC's creditors was convened and held on 7 November 2013: PJ [10]. 9 At the second meeting of creditors held on 22 November 2013 a resolution was passed (by the chairperson, Mr Yeo, exercising his casting vote there having been a deadlock between creditors voting in number and value) that RKC should execute a deed of company arrangement: PJ [12]. 10 The DOCA was executed on 11 December 2013 by RKC, each of RKC's then administrators as deed administrators, and the director of RKC pursuant to a resolution of creditors of 22 November 2013: PJ and [13]. 11 Relevant provisions of the DOCA include the following: Recital H: This Deed binds all Creditors of RKC pursuant to Section 444D of the Corporations Act and RKC, all officers and members of RKC, and the Administrators pursuant to Section 444G of the Corporations Act. 2.2 As is provided in section 444G of the Act [the Corporations Act], it is acknowledged that this Deed binds the Company, its officers and members and the Administrators. 3.1 The Administrators are hereby appointed Joint and Several Administrators of this Deed. 3.2 In exercising the powers conferred by this Deed and carrying out the duties arising under this Deed, the Administrators are taken to act as agent for and on behalf of RKC. 4.1 Upon the commencement of this Deed and during the term of this Deed: (a) the management and control of RKC's day to day business affairs shall revert to the Director, subject to the limitations in this Deed and subject to the rights and powers of the Administrators under clause 6 of this Deed; … 6.1 Notwithstanding clause 4.1, RKC and the Director covenant and undertake that for the duration of the term of this Deed RKC: (a) will not sell, transfer or otherwise dispose of any of the Business Assets, or pledge or charge the Business Assets, except in accordance with the terms of the Deed or in the ordinary course of its business or with the prior written consent of the Administrators; (b) will keep proper books and records in accordance with Section 286 of the Act and shall deliver up to the Administrators those books and records, or any part of them, at the request of the Administrators; (c) will cause Financial Statements to be prepared from time to time, but at least upon request by the Administrators prior to the Date of Termination. RKC will deliver to the Administrators promptly on completion a copy of all Financial Statements prepared for or on its behalf; (d) will comply with all taxation laws in ensuring lodgement of any required Business Activity Statements together with any other returns or information required under the taxation laws (from time to time) and payments of amounts due from the Appointment Date to the Australian Taxation Office within the prescribed time limits; (e) will pay Employees' normal entitlements accruing from the Appointment Date on the normal course of trading, excluding superannuation; (f) will pay Employees' superannuation entitlements accruing from the Commencement Date in the normal course of trading; (g) will keep adequately insured all property and undertakings and risks of the Company and shall provide to the Administrators upon request Certificates of Currency evidencing the insurance position; (h) will immediately and fully inform the Administrators should any event occur or seem likely to occur which will materially affect [the Company's] ability to comply with the terms of this Deed; (i) will not change in any material particular [sic] the business in which it is engaged or the way in which the business is conducted without first giving to the Administrators adequate written notice of such change, so that the Administrators may consider the effect such change may have on this Deed; (j) will not increase beyond the level payable at the Commencement Date any salary, wage, fee or commission or any other benefit paid to the Director or any Related Party Creditor without the Administrator's written consent; and (k) forfeits the right to appoint a further Voluntary Administrator during the Moratorium Period. 6.2 If RKC does sell the Business Assets (with the Administrators' consent), then it agrees to pay to the Administrators the balance at that time of any monies payable by the Director into the Fund in accordance with clause 8.1(d) of this Deed from the sale proceeds. 6.3 In support of clause 6.2, RKC hereby grants in favour of the Administrators a PPSA Security Interest in all present and after-acquired property owned by RKC (including but not limited to Intellectual Property, Plant and Equipment and Stock) and acknowledges that the Administrators are entitled to lodge a financing statement on the Personal Properties [sic] Securities Register, and hereby authorises them to do so. 6.4 Within seven (7) days of the date on which the Administrators make a written request for it to do so, or within such further time as the Administrators may agree to in writing, RKC will execute a PPSA Security Agreement in such a form as the Administrators may reasonably require to perfect their Security Interest referred to in clause 6.3, failing which RKC will be in default of its obligations pursuant to this Deed and the provisions of clause 16 shall apply. 7.1 For the purpose of the administration of this Deed, the Administrators shall have each of the powers set forth in the Prescribed Provisions, the Act, the Regulations and otherwise at law. 8.1 There shall be a Fund established … into which the following monies will be paid: … (d) The sum of $120,000.00 by way of 36 equal monthly payments … . 13.1 Between the Appointment date and the Date of Termination of this Deed … there is a moratorium on Creditors enforcing their debts or claims as at the Appointment Date against RKC. 14.1 Upon the Administrators having paid to the Creditors their full entitlements under this Deed, then: (a) the balance remaining of all Debts they had … ; and (b) all debts or claims, present or future, actual or contingent, due or which may become due by [the Company] …, shall be extinguished … . 16.2 Notwithstanding any other provision contained herein, RKC and/or the Director shall be deemed to be in default of the performance of this Deed for the purposes of clause 16.1 in the event that: (a) an instalment to be paid by RKC to the Deed Administrator pursuant to clause 8.1(d) is not paid by its due date, and remains unpaid seven (7) days after the date on which notice of the failure to pay is deemed to have been given to the Director in accordance with clause 20, in which event, the default shall occur at midnight on the 7th day after notice is deemed to have been given; or (b) RKC fails to lodge any document it is required by law to lodge with the Australian Taxation Office within seven (7) days of the date on which RKC was to have lodged the document, in which event the default shall occur at midnight on the 7th day after the date on which the lodgement was due; or (c) RKC fails to make a payment ii is required to pay to the Australian Taxation Office within seven (7) days of the date on which the payment was to have been made in which event the default shall occur at midnight on the 7th day after the date on which the payment was due. 16.4 The parties agree that if this Deed is terminated pursuant to clause 16.1 or 16.2, RKC shall be wound up pursuant to Regulation 5.3A.07 of the Corporations Regulations 2001 (Cth) and the Administrators shall be appointed Liquidators of RKC. 16.5 … the claims of a Creditor shall, in the case of the termination of this Deed prior to the payment to such Creditor of its full entitlement under this Deed, be extinguished only to the extent of the payment actually made by the Administrators to such Creditor. 21.1 RKC, the Director and the Administrators shall execute such Deeds and other documents and do such acts and things as may be necessary or expedient to implement this Deed. 12 Between 11 December 2013 and 5 July 2017, RKC was returned to the management and control of the director and continued to trade: PJ [16]. 13 RKC made payments to the Commissioner totalling $304,772.15 in discharge of its tax liabilities while RKC was subject to the DOCA: PJ , [3] and [17]. 14 On 5 July 2017, a meeting of creditors was convened (being the sixth adjournment of the meeting with the consent of the Deputy Commissioner of Taxation) pursuant to s 445F of the Corporations Act at which creditors resolved to terminate the DOCA and that the deed administrators become the liquidators of RKC: PJ [17]. 15 The estimate of unsecured outstanding debts owed by RKC upon liquidation is $652,676.49 (excluding the payments if voidable): PJ [19]. 16 As the primary judge noted, relevant provisions of the Corporations Act include: 435A The object of this Part [Pt 5.3A]… 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. 444D (1) 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). 444G A deed of company arrangement also binds: (a) the company; and (b) its officers and members; and (c) the deed's administrator. 588FA (1) A transaction is an unfair preference given by a company to a creditor of the company if, and only if: (a) the company and the creditor are parties to the transaction (even if someone else is also a party); and (b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company; even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency. (1) For the purposes of subsection (1), a secured debt is taken to be unsecured to the extent of so much of it (if any) as is not reflected in the value of the security. 17 The key provision, s 588FE(2B), was inserted by the Corporations Amendment (Insolvency) Act 2007 (Cth): PJ [27]. It provides as follows: (2B) The transaction is voidable if: (a) the transaction is: (i) an uncommercial transaction of the company; or (ii) an unfair preference given by the company to a creditor of the company; or (iii) an unfair loan to the company; or (iv) an unreasonable director-related transaction of the company; and (b) the company was subject to a deed of company arrangement immediately before: (i) the company resolved by special resolution that it be wound up voluntarily; or (ii) the Court ordered that the company be wound up; and (c) the transaction was entered into, or an act was done for the purpose of giving effect to it, during the period beginning at the start of the relation-back day and ending: (i) when the company made the special resolution that it be wound up voluntarily; or (ii) when the Court made the order that the company be wound up; and (d) the transaction, or the act done for the purpose of giving effect to it, was not entered into, or done, on behalf of the company by, or under the authority of: (i) the administrator of the deed; or (ii) the administrator of the company. … (Emphasis added). 18 The primary judge, with whose reasoning we agree, considered that: (1) the relevant focus is not whether the payments were made under the DOCA, but whether they were made under the authority of the administrators of the DOCA: PJ [47]; (2) the fact that the administrators of the DOCA did not make the payments or instruct anyone else to make the payments is not determinative: PJ [47]; (3) the responsibility to make the payments was on RKC and its director as covenanted in subcl 6.1(d) with the consequences of default set out in subcl 16.2(c): PJ [49]; (4) the powers of directors of a company, which are suspended upon appointment of administrators, are revived upon the entering into of a deed of company arrangement: Deputy Commissioner of Taxation v Foodcorp Pty Ltd (1994) 13 ACSR 796 at 798; see also Cargill International SA v Solid Energy New Zealand Limited (subject to deed of company arrangement) [2016] NZHC 1817 at [43]: PJ [51]; (5) the DOCA does not empower the deed administrators to conduct the managerial affairs of RKC such as the making of the payments: PJ [53]; (6) subcl 4.1(a) of the DOCA expressly returns management of the day-to-day business affairs of RKC to the director and the payments were made by the director from his own authority in managing RKC: PJ [54]; (7) while subcl 4.1(a) of the DOCA provides that the director's own authority is "subject to the rights and powers of the [deed administrators] under clause 6 of this Deed", there are in fact no rights or powers granted in cl 6 that might affect, override or supersede the director's own authority to make the payments; or to support the submission that the director was acting under an authority or power granted to the deed administrators. In fact, cl 6 indicates the responsibility for the payments was effectively upon RKC and the director: PJ [55]; (8) it cannot be the position that all transactions carried out (even by a director if permitted) during the operation of the DOCA are carried out by or under the authority of the deed administrators. Even transactions contemplated or required to be undertaken by the DOCA cannot be necessarily said to be made on behalf of RKC under the authority of the deed administrators, when the DOCA contemplates and requires itself the entry into of some transactions on behalf of RKC by the director with no involvement by the deed administrators: PJ [57]; (9) cl 21.1 of the DOCA is of no assistance to the Commissioner. Under cl 21.1 of the DOCA there was no need for the deed administrators to do any act in order to give effect to, or expedite RKC's obligations to comply with all taxation laws (as provided for in subcl 6.1(d) of the DOCA) and the power or authority of the director to effect the payments: PJ [58]; (10) RKC had an obligation to make the payments by operation of taxation laws and the director did in fact make the payments on RKC's behalf. This may have been done during the currency of, and as contemplated and required by, the DOCA, but not under the authority of the deed administrators: PJ [59]; and (11) there are always dangers in interpreting legislation by reference to reports that may have given rise to the implementation of such legislation, but which may not be wholly incorporated into such legislation. Resort to the Legal Committee of the Companies and Markets Advisory Committee, Corporate Voluntary Administration Report, June 1998 (CAMAC June 1998 report) and the Legal Committee of the Companies and Markets Advisory Committee, Issues in External Administration, November 2008 (CAMAC November 2008 report) fall within this category, and the Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth) (the Explanatory Memorandum) takes the matter no further: PJ [63]. 19 While he did not consider the extrinsic material to be of assistance the primary judge nevertheless observed as follows at PJ [64]: (1) Prior to the enactment of sub-s 588FE(2B) certain transactions which might otherwise be voidable were not voidable when made while a company was under a deed of company arrangement and then subsequently wound up: see Explanatory Memorandum at [7.197]-[7.198]; CAMAC June 1998 Report at [8.2]. (2) There was an opportunity for abuse, including in respect of unfair preferences, 'in particular, where directors who resume control of a company under a deed of company arrangement pay creditors whose debts they have personally guaranteed in preference to other creditors': CAMAC June 1998 Report at [8.2]. (3) The CAMAC June 1998 Report adopted a modified 'first policy option' via the following analysis: (a) the first policy option was that all transactions that take place during the course of a voluntary administration (including a deed of company arrangement) that precedes any form of court or voluntary winding up be subject to the voidable transaction provisions (at [8.11]); (b) it was considered that the first policy option would make it unnecessarily difficult for an administrator or deed administrator to carry on the business of the company (at [8.12]); (c) the Committee considered that the first policy option might be restricted to payments by a company that had been returned to the control of its directors under a deed of company arrangement (at [8.13]). The Committee then considered arguments for and against that modification. In summary, the argument against was that such modification would encourage companies to be left in the control of the more expensive insolvency practitioner; and the argument for was that where control of companies is returned to directors, the usual voidable transaction regime ought apply (at [8.13]); (d) the Committee ultimately recommended the modified first policy option (at [8.15]) as outlined in [8.18], including that 'transactions by company directors under a deed of company arrangement which are not authorised by the deed administrator would be subject to the voidable transaction provisions'; (e) the analysis and recommendations in the CAMAC November 2008 Report confirmed they distinguished 'administrator initiated' transactions from 'officer initiated' transactions: (at [4.2]; see also Company Receivers and Administrators [James O'Donovan, Westlaw, Company Receivers and Administrators (online at 7 May 2020)] at [52.1400]); and (f) sub-s 588FE(2B) was intended by Parliament to remove potential for abuse by a director in the situation where control of the company is returned to the director under a deed of company arrangement in circumstances where the voidable transaction provisions did not apply. 20 We do not accept the Commissioner's submission that the primary judge's approach is unduly restrictive. The primary judge did not say that the concept of "by or under the authority" of the deed administrators required active involvement of the deed administrators in the actual making of the payments. See to the contrary PJ [47]. The issue was (and is) one of the relevant source of authority for the acts done to give effect to the making of the payments to the Commissioner. The answer depends on determining the appropriate level of abstraction at which the inquiry is undertaken. 21 It may be accepted that by entering into the DOCA the deed administrators authorised all of its terms including subcl 4.1(a) (by which control and management of RKC reverted to the director) and subcl 6.1(d) (requiring RKC and its director to comply with all taxation laws and make payments to the Australian Taxation Office as required). In this sense, it may be said that the deed administrators "authorised" subcl 4.1(a) and subcl 6.1(d). But authorising the provisions of the DOCA is not the same as authorising the acts done to give effect to the making of the payments to the Commissioner. Once control and management had reverted back to the director by operation of subcl 4.1(a) of the DOCA, the source of authority for the making of the payments was the director exercising his powers of control and management re-vested in him by subcl 4.1(a) of the DOCA. The powers which reverted to the director were those vested in him by item 61 of RKC's constitution which were re-enlivened by subcl 4.1(a) of the DOCA. That, is by subcl 4.1(a) of the DOCA, control and management of RKC reverted back to its director. By subcl 6.1(d) of the DOCA, RKC and the director were required to do that which they were otherwise obliged by law to do - comply with all taxation laws. But control and management having reverted back to the director by subcl 4.1(a) of the DOCA and subcl 6.1(d) constituting a covenant by RKC and the director to the deed administrators to comply with taxation laws, including by making the tax payments as required, the source of authority for the acts done to give effect to the making of the payments to the Commissioner was necessarily the reinstated powers of the director under item 61 of RKC's constitution. 22 To inquire further, as to the source of authority for the reversion back of the powers of control and management in the director (subcl 4.1(a) of the DOCA) is otiose. The relevant inquiry as to the source of the authority for the making of the payments has been answered. The acts were not done on behalf of RKC by or under the authority of the deed administrators. They were done on behalf of the company by and under the authority of the director as the person with the control and management of the company at the time of the payments. 23 In this analysis, which we consider to be to the same effect as that of the primary judge, the fact that RKC and the director covenanted with the deed administrators to make the payments under subcl 6.1(d), under pain of the sanction for breach in subcl 16.2(c), does not mean that the payments were made other than by or under the authority of the director of RKC, to whom control and management of the company had reverted. See PJ [49] and [55]. 24 It may be accepted that where a company is subject to a deed of company arrangement it is the terms of the deed and the provisions of the Corporations Act which bind the parties and define their rights, obligations and powers (MYT Engineering Pty Limited v Mulcon Pty Limited [1999] HCA 24; (1999) 195 CLR 636 at [25] and Scott & Ors v Port Hinchinbrook Services Limited & Ors [2017] QSC 92; (2017) 320 FLR 46 at [25]). It may equally be accepted that management and control of RKC only reverted back to the director by reason of subcl 4.1(a) of the DOCA and that the payments could only be made by the director because of this fact. The difficulty for the Commissioner is this fact having occurred (thereby changing the status of RKC from a company under administration to a company subject to the DOCA), the result was that, subject to the terms of the DOCA, the director was exercising his powers of management and control in the making of the payments because of the DOCA by or under his own authority, not by or under the authority of the deed administrators. 25 It is not necessary to resort to principles of contractual interpretation (to which the respondents referred, in distinguishing between the covenant to pay in subcl 6.1(d) and the actual making of the payments) to reach this conclusion. Interpreted as it must be, as a statute (see In the matter of Antqip Hire Pty Limited (subject to deed of company arrangement) (in liquidation) [2020] NSWSC 487 at [68] and [70]), the provisions of this DOCA do not support the Commissioner's contention. 26 We do not agree with the Commissioner's submission that because the DOCA contemplated and authorised the making of the payments as a requirement of the return of control and management of RKC to its director, it necessarily follows that the payments were made under the authority of the deed administrators. As we have said, we consider that this approach involves too high a level of abstraction for the task at hand. Subsection 588FE(2B)(d)(i) of the Corporations Act excludes from the voidable transaction provisions acts done on behalf of the company by or under the authority of the deed administrators. If, as in the present case, the payments were made by and under authority of the director as the person with the control and management of RKC, even if pursuant to a provision of the DOCA into which the deed administrators had authorised entry, it cannot be said the payments were made by or under the authority of the deed administrators. 27 It may be accepted that "context in its widest sense and the purpose of the statute informs the interpretative task throughout": R v A2 [2019] HCA 35; (2019) 373 ALR 214 at [124]. We do not understand the primary judge to have adopted a different approach: see PJ [28]. In common with the primary judge, we do not see that the extrinsic materials upon which the Commissioner relied (and which were analysed by the primary judge at PJ [64] as not assisting the Commissioner's case) provide any support for the Commissioner. 28 First, cl 7.200 of the Explanatory Memorandum does not purport to define an "uncommercial transaction". It leaves that to the Corporations Act. Otherwise cl 7.200 merely repeats the language of subs 588FE(2B)(d) of the Corporations Act ("transactions done by or under the authority of the …deed administrator"). Contrary to the Commissioner's submission cl 7.200 of the Explanatory Memorandum does not say that any transaction contemplated and required by a deed of company arrangement was intended to be outside the scope of a potentially voidable transaction. 29 Second, the CAMAC June 1998 report takes the matter no further. As the primary judge said at PJ [56] it may be accepted that recommendation 51 in the CAMAC June 1998 report provides that transactions performed by or with the authority of an administrator or a deed administrator, even if in fact performed by the directors, were to be excluded from the voidable transaction regime for the policy reasons outlined at [8.12] and [8.13] of the CAMAC June 1998 report. As the primary judge said at PJ [56], however, this cannot mean that all transactions carried out (even by a director if permitted) during the operation of the DOCA are carried out by or under the authority of the deed administrators. We do not agree with the Commissioner that the practical consequence of this interpretation is that the voidable transaction provisions will necessarily apply to transactions that are specifically contemplated and required by a deed of company arrangement as a requirement of the return of control and management to the directors. Nor do we agree that this will necessitate leaving control of the company in the hands of a costly insolvency practitioner contrary to the stated policy concern in [8.13] of the CAMAC June 1998 report. 30 The outcome in the present case is a result of the provisions of this DOCA. As the primary judge said at PJ [56], even transactions contemplated or required to be undertaken by the DOCA cannot be necessarily said to be made on behalf of RKC under the authority of the deed administrators, when the DOCA contemplates and requires itself the entry into of some transactions on behalf of RKC by the director with no involvement by the deed administrators. Contrary to the Commissioner's submission, by this we do not consider that his Honour was requiring, as a pre-condition to the satisfaction of subs 588FE(2B)(d)(i), the active involvement of the deed administrators in the actual making of the payments. The point his Honour was making was merely that subcl 6.1(d) of the DOCA required the director to make the payments pursuant to the director's own control and management of RKC re-vested in him by subcl 4.1(a) which was insufficient to make the payments ones made by or under the authority of the deed administrators. 31 Third, as the primary judge said at PJ the analysis and recommendations in the CAMAC November 2008 report distinguished "administrator initiated" transactions from "officer initiated" transactions: at [4.2]. 32 We do not accept that the primary judge's approach fails to achieve one of the objects of Pt 5.3A of the Corporations Act as specified in s 435A, to maximise the chance of the company, or as much as possible of its business, continuing in existence. As we have said above, the outcome in the present case turns on the application of the statutory provision to the particular factual circumstances including, most importantly, the particular provisions of the DOCA. The primary judge's approach does not mean that no act done by a director pursuant to a provision of a deed of company arrangement is capable of satisfying the terms of subs 588FE(2B)(d)(i). It means only that the making of the payments in the present case, pursuant to the provisions of this DOCA, is not within the scope of subs 588FE(2B)(d)(i). 33 We do not consider that s 451C of the Corporations Act should lead to a different conclusion. It should not be assumed that s 451C (which provides that a payment made, transaction entered into, or any other act or thing done, in good faith, by, or with the consent of, the administrator of a company under administration is valid and effectual for the purposes of the Act and is not liable to be set aside in a winding up of the company) dictates the proper construction of subs 588FE(2B)(d). That is, it should not be assumed that because s 451C uses the words "by, or with the consent of, the administrator" it necessarily follows that the words used in subs 588FE(2B)(d) ("by, or under the authority of" the administrator of the deed or the administrator of the company) must mean something more expansive. The former provision is concerned with the role of the administrator in the transaction (the transaction must be by or with the administrator's consent). The latter provision is concerned with the source of authority for the transaction (the transaction must be by or under the authority of the deed administrator or the administrator. The concepts operate independently. Footnotes 749 and 755 of the CAMAC June 1998 report, on which the Commissioner relied (which refer to the operation of s 451C), if anything, tend to support the independent operation of the provisions in accordance with their terms. 34 Otherwise: (1) the fact that the making of the payments was the "price to be paid" as part of the compromise represented by the DOCA does not mean that the making of the payments should be taken to have been by or under the authority of the deed administrators. This fact explains entry into the DOCA. It does not determine the application of subs 588FE(2B)(d)(i) to the facts of the present case including, in particular, to the terms of the DOCA; (2) the fact that the Commissioner voted against the DOCA but was then bound by the DOCA because the deed administrators voted in favour of it and was thus compelled to continue in a relationship with RKC cannot be material to the outcome in the present case. The payments either were or were not made on behalf of RKC by or under the authority of the deed administrators. As the respondents also submitted, the Commissioner is never able to choose with whom the Commissioner has a relationship and is always at risk of unfair preferences (save for s 588FG); and (3) the primary judge's construction does not offend the "golden rule" of seeking to avoid absurdity. As the respondents submitted, a preference claim should only be brought if it enlarges the potential dividend for creditors. 35 For these reasons, none of the three grounds of appeal upon which it is said that the primary judge erred can be sustained. The appeal should be dismissed with costs. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Jagot, Davies and Markovic .