(17) A provision of a law of a State or Territory is not "materially amended after commencement" under subsection (15) if:
(a) the provision as amended would be inconsistent with a provision of the Corporations legislation but for this section; and
(b) the amendment would not materially reduce the range of persons, acts and circumstances to which the provision of the Corporations legislation applies if this section applied to the provision of the State or Territory law as amended.
Part 1.1A - the general formula under s.5E
76 The judgment of Ashley J in Director of Public Prosecutions v Loo (2002) 42 ACSR 459 contains an analysis of some of the workings of Part 1.1A. As that analysis shows, the first step in applying the Part 1.1A provisions to a particular conflict between a State or Territory law and a Corporations Act provision is to determine the nature of the conflict. That task is assisted by resort to established principles of constitutional law concerning the interaction of State and Commonwealth laws.
77 In Telstra Corporation Limited v Worthing (1999) 197 CLR 61, the High Court emphasised that only one of the two tests enunciated by Dixon J in Victoria v Commonwealth (1937) 58 CLR 618 needs to be satisfied to cause s.109 of the Constitution to make a State law invalid to the extent of its inconsistency with Commonwealth law. The first test (in the nature of a direct collision test) involves the question whether the State law, if valid, "would alter, impair or detract from the operation of a law of the Commonwealth Parliament". The second test (the "cover the field test") turns upon the question whether it appears from the terms, nature or subject matter of the Commonwealth law that it was intended to operate as "a complete statement of the law governing a particular matter or set of rights and duties". If the answer to that question is "yes", any attempt by a State law to "regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent".
78 Section 5E is the leading provision in Part 1.1A of the Corporations Act. It says that the Commonwealth Corporations legislation (which, by virtue of s.5D(2), includes the Corporations Act) is not intended to exclude or limit the concurrent operation of any State or Territory law - unless "there is a direct inconsistency between the Corporations legislation and that law" as referred to in s.5E(4). The Commonwealth law thus contains its own explicit statement that it is not intended to be, according to Dixon J's formulation, a "complete statement of the law governing a particular matter or set of rights and duties". On the contrary, it is clear, at least so far as s.5E is concerned, that State and Territory laws may also regulate matters, rights and duties with which the Commonwealth law is concerned, provided that they do not do so in a way which involves "direct inconsistency". As Mason J pointed out in R v Credit Tribunal; ex parte General Motors Acceptance Corporation Australia (1977) 137 CLR 545, a legislative statement that a Commonwealth law is not intended to be an exhaustive and exclusive law makes the "cover the field" test irrelevant to the application of s.109, so that it operates only upon "direct inconsistency or collision, of the kind which arises, for example, when Commonwealth and State laws make contradictory provision upon the same topic, making it impossible for both laws to be obeyed". The term "direct inconsistency", as used in the concurrent operation provisions of s.5E, should be understood accordingly.
79 For State and Territory excepting provisions to survive under the Corporations Act, it is necessary for a law of the Commonwealth to accommodate them expressly by saying, in effect, that the sections of the Corporations Act with which particular State and Territory excepting provisions are otherwise inconsistent are to have effect subject to those State and Territory excepting provisions. Provided that a head of Commonwealth legislative power supports the accommodating provision itself, the result will be that that accommodating provision removes the inconsistency between the Commonwealth law's substantive provisions and the State and Territory excepting provisions. This will happen because the accommodating provision causes the Commonwealth law's substantive provisions to have the curtailed operation produced by the stipulation that they have effect subject to the State and Territory excepting provisions. There is then no occasion for the intervention of s.109.
Part 1.1A - the particular formula under s.5F
80 The general message in s.5E is reinforced by s.5F which, in sub-ss.(1) and (2), deals with the case where a provision of State or Territory law declares a matter to be an excluded matter for the purposes of s.5E in relation to the whole or some specified portion of the Corporations Act. In such a case, the Corporations Act itself causes direct conflict to be avoided by curtailing its own operation in a particular way designed to allow the relevant State or Territory law to operate without impinging upon the operation of the Commonwealth law. A Commonwealth law cannot cut across the Constitution by attempting to declare valid that which s.109 makes invalid: University of Wollongong v Metwally (1984) 158 CLR 447. But it can so define and mould its own operation as to forestall inconsistency of the kind with which s.109 is concerned. Section 5F of the Corporations Act is a defining and moulding provision of this kind.
81 The approach reflected in s.5F involves an express statement in the Corporations Act that certain of its provisions are not to apply "in" a particular State or Territory "to" or "in relation to" a particular "matter" (which, by virtue of s.5F(6), includes "act, omission, body, person or thing"). The classes of such matters are defined in two ways. The first class, already noticed, covers matters declared by a State or Territory law to be, in effect, excepted from the operation of one or more provisions of the Corporations Act (s.5F(1)). The second class covers matters, which a pre-existing provision of State or Territory law declares to be excepted from the operation of the pre-existing Corporations Law, that is, a former National Scheme Law (s.5F(4)). By force of s.5F(2), the provisions of the Commonwealth Corporations legislation identified in the relevant State or Territory law do not apply in that State or Territory in relation to a matter in the first class. By force of s.5F(4), provisions of the Corporations Act "corresponding" with those the subject of the exception in the pre-existing State or Territory law do not apply in the State or Territory in relation to matters in the second class. In each case, however, the non-application thus effected by the Commonwealth Corporations legislation may be denied or reversed by regulation made under that Corporations Law (s.5F(3) and (5)).
82 State and Territory provisions of the kind at issue in this proceeding may, in theory at least, be accommodated by s.5F of the Corporations Act in one of two circumstances: first, where the State or Territory legislation itself contains a declaration of the kind contemplated by s.5F(1) and (2); and, second, if, immediately before 15 July 2001, the State or Territory provision had the effect that the Corporations Law of that State or Territory (or some part or provision of it) did not apply to a matter identified in the cut-through provision. The second case is dealt with by s.5F(4).
83 One aspect of the s.5F(4) case must, however, be emphasised. For that section to cause a particular Corporations Act provision not to apply in a particular State or Territory to a particular matter, the position prevailing before 15 July 2001 must be found to have been such that not only a provision of the Corporations Law to which the Corporations Act provision corresponds did not apply to the matter by force of an excluding provision of the law of the State or Territory, but also the Corporations Law whose provision was made inapplicable by that excluding provision was the Corporations Law of the State or Territory of whose law the excluding or provision formed part. In light of this (and in anticipation of some issues arising in relation to s.5G), it is necessary to examine briefly, by way of digression, the general nature of provisions dealing with winding up of companies and administration of assets in winding up.
84 Immediately before 15 July 2001, the jurisdiction to make a winding up order under the Corporations Law was exercisable in respect of a "company": see, for example, ss.459A and 461. The Corporations Law of a particular State or Territory defined "company" for these purposes in such a way as to refer to a company registered under that particular Corporations Law. This was the effect of the s.9 definition of "company" - I leave to one side the winding up jurisdiction under Part 5.7 on the basis that exclusion of a "recognised company" from the definition of "registrable Australian body" (and hence, successively, from the definition of "registrable body" and the definition of "Part 5.7 body") meant that a winding up order could not be made under Part 5.7 of the Corporations Law of one State or Territory in respect of a "company" as defined by s.9 of the Corporations Law of another. It follows that when, before 15 July 2001, a court made a winding up order in respect of a company registered as such under the Corporations Law, it exercised jurisdiction under the particular Corporations Law from which the registration as a company derived. If the particular company was registered under the Corporations Law of New South Wales, then the winding up order was made under that Corporations Law, if the company was registered under the Corporations Law of the Australian Capital Territory, then the order was made under that Corporations Law and so forth. By virtue of s.588A and s.588B of the Corporations Law of each other State and Territory, the winding up order had effect and was recognised in that other jurisdiction and the liquidator's powers and functions were exercisable there for the purpose of winding up the company's affairs in the other jurisdiction. But these ancillary measures did not alter the fact that the winding up as such derived solely from and was governed solely by the Corporations Law of the State or Territory of the company's registration.
85 Where a winding up order was made under the Corporations Law of a particular State or Territory in relation to a company registered under that Corporations Law, it was s.555 of that Corporations Law and no other that laid down the general rule of proportionality in the application of the company's property in meeting debts and claims and it was likewise s.556 of that Corporations Law and no other that identified debts and claims to be afforded priority over other unsecured debts and claims and prescribed the order of their priority. It followed that, at the level of State and Territory legislation, a statutory provision purporting to modify these rules in relation to winding up would have been effective only if it was an enactment of the legislature by which the Corporations Law creating the rules had been enacted.
86 But what was the effect of a provision of, say, a Victorian workers compensation statute purporting to confer on a particular instrumentality created by that statute a right to enjoy and enforce a chose in action forming part of the property of a company to which the directive as to application of property in s.555 of, say, the Corporations Law of New South Wales applied? And what was the effect of a provision of Australian Capital Territory law purporting to both create and afford paramountcy to a right for an instrumentality created by Australian Capital Territory law to be paid a particular sum by the liquidator administering ss.555, 556 and 562A of the Corporations Law of Queensland in the winding up of a company registered under that Corporations Law? I see no basis upon which such a provision of Victorian or Australian Capital Territory Law would have been effective to bind the liquidator in question or to affect the property in question. This observation applies also to each other case in which the winding up generally was governed by the Corporations Law of one State or Territory and the special provision purporting to alter the incidence of ss.555, 556 and 562A of that Corporations Law was the creation of the legislature of another State or Territory.
87 The particular way in which each of s.5F(2) and 5F(4) operates in relation to provisions of the Corporations Act must now be noted. In each case, the subsection says that the Corporations Act (or the relevant provision or part of it) does not apply in the particular State or Territory to the particular matter. The wording differs slightly between ss.5F(2) and 5F(4). In the former, each paragraph says that the Corporations Act (or the relevant portion or provision of it) "does not apply in the State or Territory in relation to the matter", being the matter the subject of the declaration in a provision of State or Territory law referred to in s.5F(1). In s.5F(4), it is said that the Corporations Act (or the relevant portion or provision of it) "does not apply in the State or Territory to the matter …".
88 The concept is thus a dual concept of restriction of territorial application and restriction of application to subject matter. The effect of both s.5F(2) and s.5F(4) is to single out a particular "matter", being the "matter" identified by the State or Territory enactment, and to cause the territorial operation of the Corporations Act to be modified and restricted so that such application as it would otherwise have had "in" the relevant State or Territory "to" (or "in relation to") the particular "matter" is negated. As a corollary, such application as the Corporations Act has to or in relation to the particular matter that cannot be classified as application "in" the State or Territory is not negated.
89 Such a concept is no doubt meaningful in relation to Corporations Act provisions dealing with matters having clear territorial attributes. Section 911A, for example, says that a person who carries on a financial services business "in this jurisdiction" must hold a licence. Section 5F would undoubtedly accommodate a provision of, say, New South Wales law enabling a particular resident of New South Wales to carry on a financial services business in New South Wales even though unlicensed.
90 But the circumstances currently under discussion involve no such activity having or capable of having a territorial quality linked to a State or Territory. The question at issue concerns the operation of Corporations Act provisions directing the manner of application of the property of a company in the course of insolvent winding up and the order in which debts and claims are to be paid in such a winding up. By virtue of s.1378, the registration of the particular company under Part 2A.2 of the Corporations Law of a State or Territory existing immediately before commencement of the Corporations Act on 15 July 2001 became, on that day, the equivalent of registration under Part 2A.2 of the Corporations Act, with the result that the company was, at that point, taken to be "incorporated in this jurisdiction" (see s.119A(1)), although "registered", in the s.119A(2) sense, in the State or Territory under whose Corporations Law it was registered immediately before 15 July 2001 (see s.1378(4)). The concept of incorporation in "this jurisdiction" (being, according to the s.9 definition, the geographical area consisting of all the States, the Australian Capital Territory and the Northern Territory) can only mean that the company came to have on and after 15 July 2001, by force of the Commonwealth Act (which has the territorial coverage specified in its s.5 and is binding, by clause V of the covering clauses of the Constitution, on the courts, judges and people of every part of the Commonwealth), one indivisible existence as a body corporate throughout "this jurisdiction" without reference to any political or geographical subdivision of it. The concept is similar to the concept of intangible property created by Commonwealth law which is seen as locally situated in Australia at large and cannot be recognised as locally situated in any particular State or Territory: In re Usines de Melle and Firmin Boinot's Patent (1954) 91 CLR 42 at 49. The subsidiary notion of "registration" in s.119A(2) of the Corporations Act does not detract from this. Its purpose seems to be to supply a secondary territorial attribute by reference to which particular State or Territory legislation may operate by specific reference (see Note 3 to s.119A).
91 The directions in ss.555, 556 and 562A of the Corporations Act as to the application of assets and payment of claims in the winding up of a company that that Act itself causes to be incorporated "in this jurisdiction" and therefore to be a body corporate cannot be regarded as applying "in" any particular State or Territory "to" (or "in relation to") the "matter" of such application and payment. The directions apply "in" the whole of the area to which the Commonwealth Act's territorial operation extends. And they do so in a way that is geographically indiscriminate, so that, unless there is some clear provision to the contrary, a particular thing that must be done in obedience to them cannot be regarded as something to be done "in" one particular State or Territory rather than any other and an act of statutory compliance or implementation does not in any sense belong to one State or Territory rather than any other. The fact that a particular liquidator has his office in Sydney or Hobart, or that the bulk of the work in relation to a particular winding up is done in Adelaide or Perth does not mean that compliance with and implementation of ss.555, 556 and 562A take on some character identifiable with the particular State. Wherever relevant acts may be performed, effectuation of s.555, s.556 or s.562A occurs under and by virtue of the Corporations Act as it applies throughout the whole of its territorial reach.
92 Sections 5F(2) and 5F(4) can therefore produce no meaningful result so far as operation of State and Territory cut-through provisions in relation to due administration of ss.555, 556 and 562A of the Corporations Act is concerned. Even if s.5F(2) or s.5F(4) purported or appeared to produce the result that ss.555, 556 or 562A did not apply "in" a particular State or Territory "to" (or "in relation to") some "matter" identified in the cut-through provision, the section would in reality lead nowhere because application and administration of ss.555, 556 and 562A are not things in relation to which any Corporations Act provision applies in a territorially defined or territorially ascertainable way.
Part 1.1A - the particular formula under s.5G
93 Section 5G, like s.5F, deals with cases of direct conflict between a State or Territory law and a provision of the Corporations Act - or, more precisely, with provisions of State and Territory law that are not capable of concurrent operation with the Corporations Act. For s.5G to apply in relation to a particular State or Territory provision, however, that State or Territory provision (designated, in s.5G(3), merely a "State provision") must meet the conditions set out in the table in s.5G(3). The conditions applicable to a particular State provision depend on the classification of the provision according to the items in the first column of the table in s.5G(3). Before these s.5G(3) matters are examined in relation to the State and Territory cut-through provisions, it is appropriate to consider whether any provision of s.5G will, in any event, be able to secure their operation despite their incompatibility with the Corporations Act.
94 If it is found, via s.5G(3), that s.5G applies to the interaction between a provision of State or Territory law and a provision of the Corporations Act, it becomes necessary to determine whether and, if so, how the specific conflict resolution measures in s.5G apply. Several of those conflict resolution measures are concerned with particular subjects and, in the present context, may, for that reason alone, be at once discarded. They are s.5G(5) (instructions to directors), s.5G(6) (use of names), s.5G(7) (holding of meetings) and ss.5G(9) and 5G(10) (company constitutions). It is also necessary, in the present context, to discard s.5G(11) (dealing with "Other cases") since it adopts the s.5F approach of declaring that the Corporations Act "does not operate in a State or Territory". For reasons already discussed in relation to s.5F, non-application of the Corporations Act in a political and geographical subdivision of "this jurisdiction" can have no effect on the operation of ss.555, 556 and 562A of the Commonwealth Act and their requirements as to particular applications of company property and the affording of precedence to particular debts and claims in a particular winding up.
95 Remaining for consideration, therefore, are ss.5G(4) and 5G(8). Section 5G(4) deals with a case where a provision of a law of a State or Territory (necessarily, of course, a provision made relevant by s.5G(3)) "specifically authorises or requires" the doing of an act. In such a case, a provision of the Corporations legislation (including the Corporations Act) does not prohibit the doing of the act or impose a liability (whether civil or criminal) for doing it. The specific authority or requirement of State or Territory law is thus accommodated to the extent of removal of any prohibition or liability that would otherwise apply or arise under the Corporations legislation. It is not said, in any explicit way, that the State or Territory provision may be obeyed and given effect to despite a provision of the Corporations legislation that would otherwise stand in the way. But that, it seems to me, must be the effect of s.5G(4).
96 Section 5G(4) displaces the prohibition or liability that would arise from the Corporations Act to such an extent as to enable the authority conferred by State or Territory law to be exercised or the requirement imposed by State or Territory Law to be met. There is no geographical or territorial quality to the way in which Commonwealth law yields. If the State or Territory provision creates an authority or imposes a requirement, the prohibitions and liabilities imposed by the Commonwealth law contract to accommodate whatever is to be done in accordance with the State or Territory provision. And they do so as to the Commonwealth law's operation generally, without regard to its application "in" the particular part of Australia with which the State or Territory provision is concerned.
97 Section 5G(8) operates in a conceptually similar way. As relevant to a situation of the kind under discussion, that section says that the provisions of Chapter 5 of the Corporations Act (in which ss.555, 556 and 562A appear) "do not apply to a … winding up … of a company to the extent to which the … winding up … is carried out in accordance with a provision of a law of a State or Territory". The object upon which this part of s.5G(8) fixes is the winding up of a company. It recognises that a State or Territory provision made applicable by s.5G may affect the carrying out of such a winding up. Where such a State or Territory provision has such an effect, Chapter 5 of the Corporations Act has, in relation to the winding up, a modified operation. Its application to the winding up is denied or withdrawn so far as is necessary to allow the winding up to be carried out in accordance with the State or Territory provision. Use of the words "carried out" in relation to "winding up" recognise that winding up governed by the parts of Chapter 5 relevant to winding up is a process. The nature of the process was referred to by McPherson SPJ in Re Crust 'n' Crumbs Bakers (Wholesale) Pty Ltd [1992] 2 QdR 76 at 78:
"Winding up is a process that consists of collecting the assets, realising and reducing them to money, dealing with proofs of creditors by admitting or rejecting them, and distributing the net proceeds, after providing for costs and expenses, to the persons entitled. It is a process, comparable to an administration in equity, that begins or 'starts' with and order of the court. However it is not the court order itself that 'winds up' the company; the order does no more than direct that the company be wound up, which is then carried into effect by an officer of the court, the liquidator, who does the things that I have identified in order to liquidate the company's assets and wind up its affairs. In referring to 'winding up' or to the company being 'wound up', and to the manner and the incidents of doing so, s.601 therefore speaks not of proceedings aimed at obtaining an order of court to wind up the company but of the process that ensues from and follows such an order. Leaving aside the case of a successful appeal, winding up thus 'starts' when, and not before, an order to wind up is made appointing a liquidator."