DPP v Italiano & Anor

Ruling: Leave is not required under s 500(2) for the Director of Public Prosecutions (Vic) to bring a criminal prosecution against SKM Services Pty Ltd.

1. I have been asked to rule on whether the prosecution of this matter against SKM Services Pty Ltd ('SKM') is stayed by operation of s 500(2) of the Corporations Act 2001 (Cth) ('the Act').
2. The question was alternatively put to the Court as;

whether or not the Director of Public Prosecutions for the State of Victoria requires the leave of the Supreme Court to commence or continue a prosecution of a company in liquidation.[1]

1. SKM is charged with a number of offences against the Environmental Protection Act 1970 (Vic).
2. On 13 July 2017, a fire broke out within a rubbish heap at 90 - 110 Maffra Street in Coolaroo, Victoria. The rubbish heap covered 25,000 square meters and spread across multiple holding yards and was made up of materials such as paper, plastics, scrap metal, glass and food scraps. The fire was brought under control approximately 48 hours after it began however continued to burn for several days and was only extinguished 10 days later.
3. At the relevant time, it is alleged that SKM Services was a proprietary company operating a recycling business at the Coolaroo address with Mr Robert Italiano ('Mr Italiano') as the sole director.
4. On 20 November 2019, SKM underwent voluntary liquidation and joint liquidators Mr Stone and Mr Franklin were appointed pursuant to a creditors' resolution for its voluntary winding up.[2]

1. S 500 is in Chapter 5 Part 5.5 of the Act which concerns the voluntary winding up of companies. It provides:

(1) Any attachment, sequestration, distress or execution put in force against the property of the company after the passing of the resolution for voluntary winding up is void

(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

(3) The Court may require any contributory, trustee, receiver, banker, agent, officer or employee of the company to pay, delivery, convey, surrender or transfer forthwith or within such time as the Court directs to the liquidator any money, property of the company or books in his, her or its hands to which the company is prima facie entitled. (emphasis added).

(c) the Federal Circuit and Family Court of Australia (Division 1);

(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.

1. In addition to s 500(2), ss 440D and 471B were identified by the Applicant as relevant to the statutory construction exercise.
2. S 440D is in these terms:

(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

(a) With the administrator's written consent; or

(b) With the leave of the Court and in accordance with such terms (if any) as the Court imposes.

(a) A criminal proceeding; or

(b) A prescribed proceeding.

Stay of proceedings and suspension of enforcement process

While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

(a) A proceeding in a court against the company or in relation to property of the company; or

(b) Enforcement process in relation to such property;

Except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

1. S 500(2), s 471 B and s 440D operate to stay certain proceedings. S 471B concerns compulsory liquidation while s 500(2) deals with companies under voluntary liquidation. S 440D provides for proceedings to be stayed during the administration of a company and expressly excludes criminal proceedings.

1. Ms Slocum on behalf of SKM submitted that the word 'action' in s 500(2) should be interpreted in an expansive rather than exclusionary way such that it is not limited by the following words 'or other civil proceeding'. She relied on s 440D which expressly excludes criminal proceedings and submitted that had the legislature intended to exclude criminal proceedings from the operation of s 500(2), they could have, and would have, employed a similar expression.
2. Ms Slocum referred to the cases of Josef[3] and Cowie[4] which adopted constructions of s 500(2) antithetical to the one she proposed on behalf of SKM. She argued that neither decision is binding on me and the basis upon which each concluded that leave is not required in order to commence or continue criminal prosecutions against a company in liquidation is plainly wrong. Ms Slocum conceded that the principle of judicial comity applied, but that it was nonetheless open to me to adopt SKM's construction of s 500(2) if I found that both Josef and Cowie were wrongly decided.
3. She submitted Justice Schmidt in Josef erred in assessing the broader language contained in s 471B to conclude s 500 excludes criminal proceedings. She also submitted Schmidt J erred in refusing to find the express carve out in s 440D(2) necessarily implies an intention by Parliament to include criminal prosecutions in 500(2). Her Honour further erred by drawing a distinction between compulsory and voluntary liquidations in informing her interpretation of s 500, submitting the Act does not relevantly differentiate, and therefore there is no logical rationale for interpreting s 500(2) more narrowly than s 471B.
4. Although she identified that should leave be required pursuant to s 500(2), it is not the task of this Court to determine the leave application itself, Ms Slocum submitted that there are compelling reasons for denying leave in this case. She submitted that the proceedings are at a relatively early stage and that to date, the Liquidator has been unfunded and has not had access to Company records or books to determine the strength of the case against SKM, and the extensive costs required to defend a criminal trial are likely to dissipate funds that would otherwise be earmarked for the payment of creditors.

1. Mr Mandy S.C., on behalf of the Respondent, argued that s 500(2) excises the commencement and pursuit of criminal proceedings from the moratorium created by the section. In support of this interpretation of s 500(2), Mr Mandy argued that the Applicant's construction of the section necessarily fetters the discretion of the Director of Public Prosecutions ('DPP'), and that such an outcome could not have been intended by Parliament given the significance attached to prosecutorial independence.

1. The principles of statutory construction have recently been restated by the Court of Appeal in Waters v Diesel Holdings Pty Ltd:[5]

The starting point in any exercise of statutory construction is the text of the provision. However, the text is to be considered in light of its context and purpose. Context includes the legislative context, because the meaning of a provision must be determined by reference to the entire Act. Identification of the statutory purpose may appear from an express statement in the statute or by reference to, or inference from, its language. Discernment of purpose may be aided by reference to any relevant extrinsic materials, in particular those that identify the mischief to which it is directed. Consideration of purpose is further reinforced by s 15AA of the Acts Interpretation Act 1901 (Cth), which provides as follows: > > > > In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.

1. The task of statutory construction begins and ends with the plain text itself.[6] Courts are restrained from construing provisions in a way that departs from their natural and ordinary meaning in the absence of a clear parliamentary intention.[7]
2. Ms Slocum submitted that a necessary function of statutory construction is to give effect to every word in a provision.[8] Ms Slocum submitted that the word "action" has a legal meaning distinct from its ordinary meaning and it has historically been interpreted to apply to both criminal and civil proceedings.[9]
3. She submitted that the phrase "or other civil proceeding" in s 500(2) is expansive, not exclusionary. It gives context to the word "action" since "action" has a broader definition than "proceedings", the latter confined to hearings in a courtroom.
4. The Prosecution submitted that I need to assign a meaning to the word "other" in the phrase "other civil proceeding" and that logically leads to a narrower construction than the one advanced by SKM.
5. Where the language of a statute is ambiguous, it is instructive to regard the heading of the section.[10] Section 500 is headed 'Execution and Civil Proceedings'. The phrase 'execution' has both legal and non-legal definitions, and generally refers to the exercising of a power.[11] The word 'and' in the heading denotes a connection between 'execution' and 'civil proceedings'.
6. As Ms Slocum has argued that Josef and Cowie were wrongly decided, it is necessary to analyse the reasoning in each.
7. Josef concerned an application by the NSW Workcover Authority to commence criminal proceedings against a company in liquidation. The prosecution contended that s 500(2) was no bar to the commencement of a prosecution against a company in liquidation.[12] Schmidt J, after considering the relevant principles of statutory construction, found that s 500(2) excluded criminal proceedings from the moratoria it created. This finding was based largely on a comparison between the language of s 500(2) and the broader language of s 471B. Her Honour referred to the framing of s 471B which stays the commencement or pursuit of proceedings in a court against a company in liquidation and reasoned that had the legislature intended to stay criminal proceedings in s 500(2) it would have used similar language.
8. Schmidt J also examined the prohibition created by s 440D of the Act which explicitly carves out an exception for criminal proceedings from the prohibition. Schmidt J concluded that the need to specifically exclude criminal prosecutions from the moratoria in s 440D supports the construction that the legislature meant the phrase 'a proceeding in court' in subsection (1) to include criminal proceedings such that it needed to make explicit provision for the exclusion of criminal proceedings in subsection (2). [13]
9. Ms Slocum's argument is the obverse to her Honour's findings on these sections: she says that had the legislature intended to carve-out an exception for criminal proceedings in s 500, it would have adopted the language of s 440D.
10. Schmidt J rejected this alternative construction of the section as impractical. On the alternative analysis, the phrase "or other civil proceedings" would have 'no work to do' given both civil and criminal proceedings would be captured by the preceding word 'action'.[14] This offends the principle that Parliament intended each word in the legislation to have effect.[15] It would also result in section 500(2) replicating s 471B which cannot have been Parliament's intention.[16] Schmidt J reasoned that the words "no action or other civil proceeding" in s 500(2) were words of limitation in contradistinction to the words "a proceeding in a court" used in s 471B. This limitation excludes criminal prosecutions from the reach of s 500(2).[17]
11. Schmidt J also compared the phrase "civil proceeding" (undefined in the Act) with that of 'civil matter', defined in section 9 to mean "a matter other than a criminal matter" in concluding that only s 471B intended to include criminal prosecutions within its moratoria.[18]
12. Her Honour also reviewed the predecessors of s471B but found that if the constructions of those predecessors were applied to sections 471B or 500(2) it would result in an "unwarranted departure from the ordinary meaning of the words there used" and she declined to adopt those constructions.[19]
13. In Cowie a prosecution was commenced against a company in liquidation for breaches of the Environmental Protection Act 1986 (WA). Originally brought under s 471B of the Act, the Prosecutor sought to amend his application to seek leave under s 500(2) following the defendant company being placed into voluntary liquidation.[20]
14. Acting Master McDonald reviewed the analysis in Josef and adopted Schmidt J's construction of the two provisions.[21] His Honour also considered the subsequent caselaw which dealt with this issue. The cases he identified either declined to resolve the question of whether leave is required,[22] or considered s 471B only.[23]
15. McDonald AMheld that, to the extent that s 471B extends to criminal prosecutions, the difference in language between that section and s 500(2) supports the view that criminal prosecutions are excluded from s 500(2).[24] In obiter, McDonald AM speculated that one explanation of the differences in drafting may be that companies should be prevented from evading prosecution by going into voluntary liquidation, but conceded he was provided no authority or materials to suggest this is the case.[25]
16. After oral argument concluded, I had the case of R v Keydane Pty Ltd[26] circulated with an invitation to engage in a further discussion if the parties sought to be heard in relation to it. The offer was not taken up. The case concerned a prosecution by the Queensland Work Health and Safety Prosecutor against a company in voluntary liquidation. In the course of listing the proceedings for trial an issue arose as to whether leave was required under s 500(2).[27]
17. In deciding that leave was not required, District Court Judge Fantin concluded that the word "action" in s 500(2) is limited to civil proceedings.[28] Her Honour also considered Josef and a number of subsequent single judge decisions which have adopted Schmidt J's analysis of s 500(2).[29]
18. Her Honour also considered the impact of s 471B on the construction of s 500(2), and surveyed the authorities which consider the construction of s 471B and its predecessors as well as the differences in operation between the two sections to conclude that, whatever the appropriate construction of s 471B, that section is not determinative of the correct interpretation of s 500(2).[30]
19. This case comprises a recent review of the authorities. The Prosecutor in that case was a regulatory body not the DPP. Nevertheless, the construction of s 500(2) accords with Josef. It is not binding, but the survey of recent relevant cases was helpful.
20. This court is being asked to find that the reasoning in these cases is plainly wrong. I note that Schmidt J's approach has been adopted by courts across jurisdictions in addition to those already referred to in this Ruling.[31] I further note that Her Honour's Ruling was not the subject of appeal and no intermediate appellate authorities or High Court decisions critical of Josef were identified by SKM.
21. Central to the argument impugning Josef is the criminal prosecution exception in s 440D. As noted earlier, Schmidt J held that this carve out implied that Parliament intended that there be a difference between ss 471B and 500(2).[32] It was submitted by Ms Slocum that, in keeping with the principles in Project Blue Sky, the fact that such a carve out is not also present in either s 471B or 500(2) means that Parliament intended criminal prosecutions to be captured by these two sections.[33] All three sections operate as statutory stays through various processes of administration or insolvency. Ms Slocum conceded in oral submissions that she was unable to locate a legislative or parliamentary explanation for the differences in the framing of these sections.[34]
22. She took me to the case of Gunns Finance v Correy,[35] a decision of the Victorian Supreme Court which appears to treat the considerations under s471B and 500(2) as coterminous.[36] At paragraph 64 of that judgement, Associate Justice Derham remarked:

The provision pursuant to which the defendant requires leave will be determined by the nature of the liquidation to which the plaintiff and GPL are subject. In this case, as previously noted, it appears that both the plaintiff and GPL are subject to a creditors' voluntary winding up. This means that the relevant provision is s 500(2) of the Act. However, for the purposes of the defendant's application here, it is of no consequence. This is because the two provisions are in similar terms. The authorities concerning the purpose of, and the considerations relevant to granting leave under, s 471B, are relevant to the purpose of, and the considerations relevant to granting leave under, s 500(2).[37]

23. This case concerned civil proceedings, and the court there did not need to consider whether either section operated to stay criminal prosecutions. Given their context, the comments made by Associate Justice Derham in that case appear to be confined to civil proceedings.
24. S 440D(1) bars a proceeding in court against companies in liquidation without leave of the court but subsection (2) exempts criminal prosecutions from this prohibition. There is no such exemption in s 471B and the use of the phrase 'a proceeding in court' in that section appears to capture both criminal and civil proceedings under that section's moratoria.[38] In contradistinction, s 500(2) does not adopt the phrase 'a proceeding in court'' and limits itself to 'action(s) or civil proceeding(s)'.[39] Had the legislature intended s 500(2) to have the same effect as s 471B, and therefore include criminal proceedings within its moratoria, it is assumed that the legislature would not have drafted this section to include this specific phrase but would have used the language of s 471B. The alternative view - proposed by SKM and rejected in Cowie[40] - would result in two sections with the same purpose, reach and function albeit framed differently. That would be anomalous. I agree with Schmidt J's reasoning. It is not plainly wrong.
25. The headings of each of these sections supports this conclusion. Both ss 440D and 471B use the phrase 'proceedings' in their headings. Section 500 uses the phrase 'civil proceedings.' This distinction must have been intended by the legislature.
26. The final aspect of the construction of a statute is to consider its purpose.
27. Section 500's predecessor, s 500 of the Corporations Act 1989 (Cth) provides:

(1) Any attachment, sequestration, distress or execution put in force against the property of the company after the commencement of a creditors' voluntary winding up is void.

(2) After the commencement of the winding up, no action or other civil proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

(3) The Court may require any contributory, trustee, receiver, banker, agent or officer of the company to pay, delivery, convey, surrender or transfer forthwith or within such time as the Court directs to the liquidator any money, property or books in his, her or its hands to which the company is prima facie entitled.[41]

1. Although not identical, sub-section (2) of the old Act and sub-section (2) of the current Act both use the phrase, "no action or other civil proceeding." The Explanatory Memorandum accompanying the 1988 Bill says this about section 500:

Cl.500: Execution and Civil Proceedings > > 1645. After the commencement of the creditor's voluntary winding up, any attempt by a creditor to enforce a remedy by proceeding against the property of the company will be void and civil proceedings will only be able to be commenced against the company with the leave of the Court.[42]

2. The purpose of s 500(2)'s predecessor section articulated by the 1988 Memorandum is to limit the commencement of civil proceedings by creditors once a winding up has commenced. There is little scope for inferring that the legislators then contemplated staying criminal prosecutions also.
3. The 2001 explanatory memorandum provides a statement of purpose in relation to Chapters 1 to 6C and Chapters 9 and 10 as 'largely cover[ing] the formation of companies and corporate regulation as well as machinery and transitional matters.'[43] It does not refer to section 500. It provides no guidance in illuminating Parliament's intention as to the reach of s 500(2).
4. In oral argument there was a dispute between the parties as to whether, under the SKM's proposed interpretation, s 500(2) has the effect of judicially supervising the discretion of the DPP to commence or maintain criminal prosecutions. The answer to this question is relevant to the determination of the section's purpose.
5. Mr Mandy argued that if s 500(2) applied to criminal prosecutions it would prevent the DPP from bringing prosecutions against companies in liquidation unless the Supreme Court or Federal Court granted leave to prosecute. That, he said, would undermine the DPP's independence. He argued that the only fetter to the DPP's discretion to initiate a prosecution is the preconditions that she must first satisfy herself that there are reasonable prospects of conviction and that the prosecution is in the public interest.
6. Ms Slocum distinguished the DPP's discretion to prosecute on the one hand from its ability to use the Court on the other. She argued that the discretion of the DPP to prosecute is left unfettered by the Court applying s 500(2). She conceded that the ability of the DPP to use the courts to advance a prosecution is, however, affected until leave is granted for this use.[44] Accordingly, the crux of her submission was that if the DPP was empowered to conduct criminal prosecutions in front of a court it would not be prevented from doing so by the operation of s 500(2).[45] It would simply be prohibited from commencing or pursuing a prosecution in a court (emphasis added).
7. Criminal prosecutions are conducted through the courts. They start with filing a charge sheet, summons, information or Indictment with the relevant court Registry.[46] If the DPP is prohibited from doing so until the court grants leave, the DPP is prevented from exercising her discretion to prosecute subject to the court's leave.
8. Ms Slocum alternatively submitted that the operation of s 500(2) to stay a criminal proceeding does not in fact fetter the discretion of the DPP, because in many cases leave is granted by the Court after a perfunctory review of the merits or viability of the proposed action. She referred to the common practice in other jurisdictions of employing a 'tick box' process in granting leave.[47] This submission ran counter to SKM's written submissions which argued that there are compelling reasons for denying leave and which invited me to conclude that leave is unlikely to be granted in this case.[48] I was not taken to any examples of a criminal prosecuting authority applying for or obtaining leave from either the Supreme Court or the Federal Court. No instance of the DPP seeking such leave was brought to my attention.
9. The Respondent argued that a grant of leave is not automatically conferred under s 500(2). The Supreme Court could refuse it. If it did, it would constitute a fetter on the DPP's discretion to pursue criminal charges. Parliament cannot have intended this consequence.
10. Mr Mandy argued that the DPP's independence to pursue prosecutions which she has determined are in the public interest and have reasonable prospects of success is impervious to review. Were leave required before criminal proceedings against a company in liquidation proceeded, the DPP's independence would be undermined and her decision to prosecute would be open to review by a judge charged with the task of assessing the merits of the case. The legislature cannot have intended s 500(2) to operate as a check on the DPP's authority to prosecute.
11. In support of this argument, Mr Mandy took me to a number of High Court, authorities which stand for the proposition that it would impugn the integrity of the judicial process if courts influenced the independence of a prosecuting body to commence or pursue criminal charges.[49]
12. Mr Mandy referred the court to the Constitution Act 1975 (Vic) which establishes the role of the DPP.[50] He argued that Parliament, by establishing the role of the DPP, and prescribing her powers, intended to safeguard the independence of her office.
13. He argued that the discretion of the DPP to prosecute the elderly, the infirm and the intellectually impaired is not subject to oversight and it would be anomalous for the DPP's discretion to be fettered when pursuing charges against companies in liquidation, but no other class of accused person.
14. In response, Ms Slocum noted that in bail decisions, the strength of the Prosecution's case is weighed by the decision-maker and that may involve judicial consideration of the viability of a prosecution and the likelihood of conviction. To that might be added committal proceedings when an assessment is made by a Magistrate of the viability of charges, assessments made by judges in response to applications for permanent or conditional stays and No Case applications.
15. However, none of these examples operates as a bar to the commencement of a criminal prosecution and none involves a review of the DPP's decision to commence criminal proceedings, save that a stay for abuse of process may involve imputations against the decision to proceed against an accused. Each involves an assessment of a criminal prosecution which has already commenced. Decisions to permanently or conditionally stay a prosecution are subject to appellate review. A magistrate's decision to discharge post-committal does not stay the laying of a direct Indictment. The one exception is the upholding of a No Case application which is not amenable to appeal,[51] but the test is a stringent one and made only after the prosecution has led all the evidence it has judged relevant and admissible in support of its case.[52]
16. The argument that the DPP's discretion to prosecute should be unfettered and impervious to review is subject to the caveat that Parliament is capable of refining, limiting and extinguishing the powers it has conferred on her office. In other words, the DPP's discretion to prosecute is unfettered to the extent that Parliament says so.[53] The question then becomes whether in this instance Parliament has seen fit to do so, explicitly or impliedly.
17. Ms Slocum submitted that there are sound policy reasons for such moratoria extending to criminal proceedings. She took me to the cases of Re Rhondda Waste Disposal Ltd[54] and Frankice (Golders Green) v Gambling Commission[55] which identify these policy reasons, noting that these cases dealt with legislation which used considerably broader language than that used in s 500(2). The legislation considered by those two cases concerned companies under administration rather than liquidation. Again, therefore, s 440D is the closest analogue we have. There are bound to be sound policy reasons for seeking to limit the litigation a company in administration needs to fight as it struggles for viability. Those considerations do not extend to companies in liquidation, save arguably the access to detailed financial information.
18. Ms Slocum then submitted that Schmidt J in Josef failed to apply the purposive approach to interpretation required by Project Blue Sky. She argued that had Her Honour analysed the purposes of the relevant sections of the Act she would have concluded that s 500(2) encompasses criminal prosecutions.[56] The purpose of s 500(2) was identified as overseeing the litigation brought against insolvent companies to avoid oppressive, wasteful or duplicitous actions which risk dissipating funds that would otherwise be available to meet creditors calls.
19. During oral argument Ms Slocum amplified the factors a court is to consider in determining an application under s 500(2) as:
    • giving effect to the statutory policy of ensuring the assets are distributed rateably amongst all creditors;
    • preventing a company in liquidation from being subjected to expensive litigation;
    • Ensuring the liquidators time and resources are not diverted into defending claims against the company in court when the Act provides for other mechanisms for the efficient resolution of claims against the Company; and
    • assessing the quantum and seriousness of any claim, the complexity of the legal and factual issues involved and, if proceedings have already been commenced, the stage to which those proceedings may have progressed.[57]
20. Mr Mandy argued that these objectives are unambiguously aimed at regulating civil litigation, but do not contemplate criminal prosecutions. The incongruity of assessing the question of leave to prosecute through this prism points against a conclusion that s 500(2) was intended to include criminal prosecutions.
21. Mr Mandy submitted that the purpose and objectives of the Act undermine the interpretation advanced by SKM. The purpose of the Act is to regulate the way companies are incorporated and managed, and to define the rights and obligations of shareholders and companies in relation to each other. To the extent that the Act is concerned with the regulation of private rights of shareholders and related entities, it was submitted that such purposes are distinguishable from the public interest in prosecuting wrongdoers. Accordingly, the purposes of the Act make it unlikely that it was intended to govern or regulate this public interest. I was not provided any authority or material by the Respondent in support of these submissions.
22. That argument needs to be set against the language of s 440D which explicitly deals with criminal proceedings.
23. S 440D regulates companies in administration whereas ss 471B and 500 regulate companies in liquidation. To the extent that the interpretation of s 500(2) is informed by an analysis of the express exclusion of criminal proceedings from the moratoria in 440D(1), it is instructive to note the differing status and objectives of companies in administration on the one hand and those in liquidation on the other.
24. Foxcroft v The Ink Group Pty Ltd[58] concerned an ex-employee seeking reinstatement or compensatory and exemplary damages against a company under administration. In refusing to grant the employee leave under s 440D, Young J noted:

The provisions of Pt 5.3A, as exemplified in sections such as 437C, 437F, 440C and 440D, provide that there shall be a complete freeze of proceedings against the company during the administration so that the administrator can have time to assess the situation, and the company's creditors have an opportunity to work out the net position and adopt an attitude under s 439c which will be in their common interest. To allow one creditor or potential creditor to proceed would not only take the administrator's attention from what he needs to do under the division in a relatively short period of time, but it would also involve costs in running the legal action on behalf of the administrator, as well as perhaps giving the claimant some advantage over the other creditors or potential creditors.[59]

25. Young J identified the purposes of the sections in the Corporations Act which deal with companies in administration in this way:

A company in administration is seeking to continue to trade and is, in accordance with s 435a, seeking to maximise the chance of it remaining in business. A company in liquidation is one where the liquidator is seeking not to trade but to realise the company's assets as soon as possible for the best price, in order to be able to distribute the net available funds to the creditors and in some circumstances, the members.[60]

26. This statement has been adopted in a number of subsequent single judge decisions.[61]
27. A distinction might be drawn on the basis of these observations between the sections regulating companies in administration and those in liquidation. To the extent that it illuminates the question of whether leave is required to institute criminal proceedings pursuant to s 500(2) it might be argued that s440D contemplates criminal proceedings against a company which continues to trade, continues to exist in the marketplace. The public utility of holding such an entity to account for breaches of the law arguably outstrips the utility of pursuing a company which has ceased to trade and no longer operates in the marketplace. No argument was advanced by either side on this point.
28. One of the earliest statements of purpose relating to s 471B's predecessors I could locate is Thompson v Mulgoa Irrigation.[62] There, Manning J stated:

All that [s 471B] means is that a company in liquidation is not to be harassed and its assets wasted by unnecessary litigation, and the leave of the Court is therefore required as a safeguard. Before any action can be brought or continued against a company, the Court must investigate the intended litigation.[63]

29. In Re Sydney Formworks,[64] an employee of a company commenced common law proceedings against the company after its winding-up had been ordered. In reviewing the case law relating to earlier British legislation and its Australian equivalents, McLelland CJ in Eq came to the conclusion that the intention of the section was to:

...ensure that the assets of the company in liquidation will be administered in accordance with the provisions of the Companies Act and that no person will get an advantage to which, under those provisions, he is not properly entitled, and to enable the Court effectively to supervise all claims brought against the company which is being wound up.[65]

30. I was referred by SKM to Re Gordon Grant and Grant Pty Ltd.[66] Here, the full bench of the Queensland Supreme Court was asked to consider whether leave should be granted for a lessor to commence proceedings for non-payment of rent and other damages against a company which was in the late stages of liquidation. This question was governed by the legislative predecessor to s 471B.
31. In analysing the purpose of the moratoria on bringing proceedings against companies in insolvency, McPherson J departed from the approach of McClelland CJ in Eq, noting that in Australia it is rare that proceedings against insolvent companies confers a priority of advantage on a litigating creditor.[67] Instead, his Honour held that the purpose of such sections was to prevent a multiplicity of actions which would be expensive, time consuming and possibly unnecessary.[68] McPherson J also noted that the effect of these sections was that a claimant was required to lodge a proof of debt unless they could show good reason to commence litigation instead.[69]
32. Since Re Gordon Grant, cases considering the history of these provisions have adopted this characterisation of s 471B.[70] The cases analyse ss 471B and 500(2) as brakes against capricious or unmeritorious civil litigation, obliging the court to supervise civil claims to ensure the funds available to meet creditors calls is not needlessly dissipated.
33. This interpretation is fortified when one looks at the criteria for granting leave under either section. The enquiry a court must undertake before granting leave is reducible to interrogating the commercial viability or efficiency of one method of repayment or asset recovery over another.[71] Viewed in this light, such a criterion is an awkward lens through which the merits of a criminal prosecution can or could be assessed.
34. The purpose of s 500(2) which emerges from a review of the extrinsic material relating to its predecessor section and cases discussed above supports the meaning of the section gleaned from a prosaic analysis of the grammar, syntax, punctuation and heading of the section.

1. In my view, s 500(2) excludes criminal proceedings from the class of proceedings it stays, subject to leave. I have come to that conclusion by analysing the purpose of the section and its predecessor as revealed by the 1988 Explanatory Memorandum, the text and heading of the section and the mischief it aims to cure, namely the needless dissipation of a straitened company's funds in costly litigation. I note that the English authorities to which I was referred considered the ambit of language which was markedly broader than that employed by s 500(2) and their subject matter was companies in administration and not companies in liquidation. I am unpersuaded that Schmidt J in Josef erred in her analysis and I am not persuaded that Cowie was wrongly decided.
2. Leave is not required for the Prosecution to bring criminal proceedings against SKM.
3. Having found leave is not required under the Act, it is unnecessary for me to decide whether there is an inconsistency between the Act and various pieces of Victorian legislation such that it would enliven s 109 of the Australian Constitution.

[1] Director of Public Prosecutions (Vic), 'Outline of Submissions on Behalf of the DPP Responding to a Question of Law Raised by the Accused Company' Submission in DPP v Italiano; DPP v SKM Services Pty Ltd, CR-21-00539; CR-21-00540, 7 March 2024, [1].

[2] Affidavit of Jason Stone sworn on 4 December 2023 [1], Exhibit "AC-1.1", page 3.

[3] Workcover Authority (NSW) (Inspector Maltby) v Josef & Sons Contracting Pty Ltd (in liq) [2002] NSWIRComm 226 (Schmidt J) ('Josef').

[4] Cowie v GD Pork (In liq) [2022] WASC 301; (2022) 164 ACSR 631 (AM McDonald) ('Cowie').

[5] [2024] VSCA 77 [43] (Walker JA, Ferguson CJ and Ginnane AJA agreeing) (citations omitted).

[6] E.g., Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, 519 [39] (the Court).

[7] E.g., Masson v Parsons [2019] HCA 21; (2019) 266 CLR 554, 572 [26] (Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ).

[8] E.g., Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 382 [71] (McHugh, Gummow, Kirby and Hayne JJ) ('Project Blue Sky'). See also Northern Land Council v Quall [2020] HCA 33; (2020) 271 CLR 394, 424 [61] (Kiefel CJ, Gageler and Keane JJ).

[9] E.g., Bradlaugh v Clarke [1883] 8 App Cas 354, 361; Re Carter Smith; Ex Parte Taxation Commissioners [1908] NSWStRp 49; (1908) 8 SR (NSW) 246, 248 (Street J); Ketchell v Wynch [2001] QCA 391; (2001) 164 FLR 460, 467 (Thomas JA, Davies and Williams JJA agreeing).

[10] E.g., Berenguel v Minister for Immigration and Citizenship [2010] HCA 8; (2010) 84 ALJR 251, 253-254 [15] 255 [26] (The Court); Victoria v Intralot Australia Pty Ltd [2015] VSCA 358 [60] (Breach and Kyrou JJA, Cavanough AJA).

[11] Encyclopaedic Australian Legal Dictionary (online at 5 June 2024) 'Execution'; Concise Australian Legal Dictionary (5th ed, 2014) 'Execution'; The Macquarie Dictionary (3rd ed, 2002) 'Execute'; The Merriam Webster Dictionary (1994) 'Execute'.

[15] Project Blue Sky (n 12) 382 [71].

[22] Cowie v Perth Demolition Co Pty Ltd [2019] WASC 476 [14] (Allanson J) ('Cowie v Perth Demolition').

[23] Tate v Aarjets Pty Ltd (atf the Jurgholme Trust) [2010] QCA 243 [4] (McMurdo P, Muir and Fraser JA agreeing) ('Tate').

[26] [2023] QDC 39 (Fantin DCJ) ('Keydane').

[31] E.g., Orr v LakeCoal Pty Ltd [2019] NSWDC 178 [11] (Russell SC DCJ); Burwood Council v Pan Pac Investments Pty Ltd (No 2) [2019] NSWLEC 29 [13], [20] (Pain J); Keydane (n 32) [31]; SafeWork NSW v Miller Logistics Pty Ltd [2024] NSWDC 58 [5] (Russell SC DCJ).

[33] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 47 [8]-[27].

[34] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 52 [17] - 53 [17].

[35] Gunns Finance Pty Ltd (in liq) v Correy [2015] VSC 385 (Derham AsJ).

[38] Tate (n 29) [4]; Cowie v Perth Demolition (n 28) [12].

[41] Corporations Act 1989 (Cth) s 500, as repealed by Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth) sch 1 (item 2).

[42] Explanatory Memorandum Volume 2, Corporations Bill 1988 (Cth) 440 - 441 [1645].

[43] Explanatory Memorandum, Corporations Bill 2001 (Cth) 9 at [5.5].

[44] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 15, [7] - 16 [11].

[45] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 15 [29] - [31].

[46] ss 6(1), 160(1) Criminal Procedure Act 2009 (Vic) ('CPA').

[47] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 21 [13]-[16], 91 [16]-[17].

[48] SKM Services Pty Ltd, 'Accused's Submissions Concerning Preliminary Question' Submission in DPP v Italiano; DPP v SKM Services Pty Ltd, CR-21-00539; CR-21-00540, 26 February 2024, [24].

[49] Barton v The Queen [1980] HCA 48; (1980) 147 CLR 75, 94-5 (Gibbs ACJ and Mason J); Maxwell v The Queen [1996] HCA 46; (1996) 184 CLR 501, 513-4 (Dawson and McHugh JJ), 534 (Gaudron and Gummow JJ); Director of Public Prosecutions (SA) v B [1998] HCA 45; (1998) 194 CLR 566, 579 [21] (Gaudron, Gummow and Hayne JJ).

[50] See generally Part IIIA.

[51] E.g., R v Wood [1974] VicRp 16; [1974] VR 117 (Winneke CJ, Gillard and Nelson JJ); R v Vasic [2005] VSCA 38; (2005) 11 VR 380 (Vincent and Nettle JJA, Cummins AJA).

[52] CPA (n 49) s 226.

[53] Such as through the Public Prosecutions Act 1994 (Vic); Director of Public Prosecutions Act 1983 (Cth) or any other piece of legislation.

[54] [2001] Ch 57 ('Re Rhondda Waste').

[55] [2010] EWHC 1229 (Ch) ('Golders Green').

[56] Transcript of Proceedings, DPP v Italiano; DPP v SKM Services Pty Ltd (County Court of Victoria CR-21-00539; CR-21-00540, Judge Kelly, 21 March 2024) 66 [2]-[10].

[57] Citing Re W.W Property Development Pty Ltd (in liq) [2022] VSC 606 [14] (Garde J) ('Re W.W Property Development').

[58] (1994) 15 ASCR 203 (Young J).

[61]State of Queensland v Walter Construction Group [2005] QSC 241 [14] (Wilson J); Modcol v National Buildplan Group [2013] NSWSC 380 [16] (McDougall J); Pybar Mining Services Pty Ltd v Challenger Gold Operations Pty Ltd [2018] SASC 156 [13] (Doyle J); Chen v Blockchain Global Ltd [2022] VSC 93 [14] (Attiwill J).

[62] Thompson v Mulgoa Irrigation Co Ltd (1893) 4 BC (NSW) 33.

[64] Re Sydney Formworks Pty Ltd (in liquidation) [1965] NSWR 646 (McLelland CJ in Eq).

[66] [1983] 2 Qd R 314 (Campbell CJ, Sheahan and McPherson JJ) ('Re Gordon Grant').

[70] E.g., Commonwealth v Davis Samuel Pty Ltd (No 5) (2008) ACSR 336, 337-338 [6]-[11] (Refshauge J); DSG Holdings Australia Pty Ltd v Helenic Pty Ltd (2014) 99 ASCR 121, 133 [55] (Leeming JA, Meagher JA and Bergin CJ in Eq agreeing); Zervas v Burkitt [2019] NSWCA 112 [15] (Gleeson JA).

[71] See, e.g., Re W.W Property Development (n 67) [14]; Re Soar Aviation Aircraft Holdings Pty Ltd (in liq) and Gobel Aviation Pty Ltd (in liq) [2022] VSC 812 [18] (Hetyey AsJ).