Re Margart Pty Limited (in liq); Hamilton v Westpac Banking Corporation (1984) 9 ACLR 269

Re Country Stores Pty Limited (1987) 2 Qd R 318

Re Ravi Nominees Pty Limited (1993) 10 ACSR 599

Sheahan v Air Con Serve Pty Limited [1995] SASC 5193; (1995) 18 ACSR 165

Re Leslie Homes (Australia) Pty Limited (1984) 8 ACLR 1020

Bayley v National Australia Bank [1995] TASSC 13; (1995) 16 ACSR 38

Re Mal Bowers Macquarie Electrical Centre Pty Limited (in liq) (1974) 1

Sowman v David Samuel Trust Ltd (1978) All ER 616

All Benefits Pty Limited v Registrar General (1993) 11 ACSR 269

Mr B.A.J. Coles QC with Mr J.K. Chippindall, instructed by M.D. Nikolaidis and Co, appeared for the appellant.

Mr R.B.S. MacFarlan QC with Mr A.J.L. Bannon, instructed by Australian Government Solicitor, appeared for the respondent.

1. That the appeal be dismissed.

2. That the appellants pay the respondent's costs of the

appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

SHEPPARD J In this matter I have had the opportunity of reading the judgments to be delivered by the other members of the Court. I am substantially in agreement with the judgment of Lindgren J but wish to make some comments of my own.

2. Firstly, I respectfully agree with his Honour's conclusion that property was disposed of by means of the payments which are in question and that that property consisted of the six cheques. This was not a matter in question. As his Honour says, this is an assumption upon which the separate question which we have to consider proceeds. There was no submission that there was no disposition of property and, in my view, any such submission, if made, would have failed. I wish to say, however, that I have not found it necessary to embark upon the detailed consideration of this matter undertaken by his Honour. My agreement with his conclusion is unqualified because I do not think there is any room for doubt about it, not because I have, for myself, followed through the implications of the various authorities referred to in his judgment. Their significance is, in my respectful opinion, for another day.

3. Leaving aside for the moment the specific matter to which the separate question is addressed, I am of opinion that it is possible to approach the underlying problem which this case raises for decision in either of two ways. No matter which is followed, the result, in my opinion, will be the same. I am in respectful agreement with the remarks of Helsham CJ in Eq in Re Margart Pty Limited (in liq); Hamilton v Westpac Banking Corporation (1984) 9 ACLR 269. Helsham CJ in Eq there said (at 273):

"What lies behind the section (s.368 of the Companies (NSW)

Code) is the prevention of the improper alienation and

dissipation of the company's property. I do not believe it was

intended to reach out to transactions by which a secured

creditor receives assets covered by his security at a time when

he was entitled to have them.

To hold otherwise would mean that assets covered by a fixed

charge, or their monetary equivalent, could not with impunity be

taken by or paid to the person having the benefit of the charge

at any time after the commencement of the winding up. Anything

done by the company or a receiver to pay the chargee or transfer

assets to the chargee would be void. No bank or other person

holding a charge under which moneys had become payable could

take payment without the precaution of obtaining what is known

as a validating order. I do not believe that s.368 was intended

to operate in that way.

Perhaps this conclusion is only another way of stating that

retrieval of property the subject of a charge by a chargee when

he is entitled to have it is not to be categorised as a

disposition of the property of the company within the meaning of

s.368."

"Although not necessary to say so for the purposes of this

decision, I realise that it may impinge upon the situation where

a receiver has been appointed under a floating charge and he

sets about selling the company's assets the subject of the

charge, after default in payment, or otherwise going about the

things he is permitted to do to enable the chargee to get paid.

Usually, as is the case under the terms of the equitable

mortgage here, in doing so he is expressly made the agent of the

company. Can his acts be designated as dispositions of the

property of the company, so as to make void any of them done

after the commencement of the winding up, giving no title to a

purchaser, and leaving the receiver at risk unless he obtains a

validating order? If my views are correct, the answer would be

no. This would not mean that the company is without redress

against the mortgagee; it would have, through the liquidator,

whatever remedies that might be available to it as mortgagor,

for example, if there were a sale at a gross undervalue. And it

could recover any excess over the amount due to the chargee as

money due to the company. It would only mean that the receiver

could go about his business without the knowledge that

everything he did to realise the assets covered by the charge

was void, and that every payment to the bank or chargee of the

proceeds of his realisations was likewise void ...

I take the view that the phrase 'any disposition of the property

of the company' in the context of s.368 relates to something

done with property that the company is free to deal with. I do

not think that there is a disposal of property of the company

when there is a dealing by someone who is really someone other

than the company and who has the right to say how it is to be

dealt with, and whatever interest the company has in that

property gives it no control of management over the property nor

power to interfere."

4. The important words are those which I have emphasised, namely, that the disposition caught by the section relates to something done with property that the company is free to deal with. Here, in my opinion, on the facts as we have them, including particularly the various powers conferred by the two charges, the dealings by the receivers which are in question were plainly within the powers conferred by the charges. The fact that a liquidator of the company was appointed did not affect the receiver's position because the company was not free to deal with the property.

5. That, to my mind, is the simplest and most direct way of approaching this matter. But such an approach assumes that the facts I have stated were as found by the primary judge. In fact they were, but they were not found for the purpose of dealing with the matter in the way that I prefer. They were found for the purpose of enabling the separate question to be answered. That question asked whether the property disposed of by means of the payments described in the pleadings was property of the company within the meaning of s.468 of the Law. The primary judge answered the question by saying that the payments made by the receivers to the Commonwealth of Australia did not constitute dispositions of property of the company within the meaning of the section. At first sight it appears that his Honour has not answered the question which was asked. That is a matter to which I shall return. But what his Honour's answer does do is to emphasise, correctly in my opinion, the need to look at the question at issue in context. One is not assisted by any answer that does not put the matter in its proper setting. This his Honour has done by saying that the payments did not constitute dispositions of property within the meaning of the section.

6. Counsel for the appellant endeavoured to turn the emphasis of what needed to be addressed away from the context by concentrating on the word "property" in the section. He relied, of course, upon the wide definition of that term in the dictionary in s.9 of the Corporations Law. I agree that the definition is wide enough to cover all property in which the company has an interest including property in which it has a legal but not a beneficial interest. However, the terms of s.9 open with the words, "Unless the contrary intention appears". In my opinion, the legislature could not have intended s.468 to encompass property in which the company did not have a beneficial interest or property in which it might or might not have a beneficial interest depending upon the outcome of a realisation of a company's assets. The real value, in given circumstances, of an equity of redemption provides an example.

7. There is, in my opinion, no indication in the legislation that the legislature intended to bring about a situation which would tend to undermine the confidence of secured creditors in the effectiveness of their securities in cases where there was a winding up. That is the very circumstance in which a secured creditor needs to have a valid and enforceable security. There would not be much point in having a security over the undertaking of a company if the receiver, by reason of a winding up, were prevented from paying a creditor who might, if an indebtedness were not paid, take action which could lose the company, and thus the secured creditor, one of its assets. The primary judge dealt extensively with the practical commercial problem which would arise if the submissions now made by the appellant were acceded to. I respectfully agree with everything that the primary judge said about this and with what has been said about it also by Helsham CJ in Eq in Margart and by Lindgren J in his judgment in this case. One would need it to pause for a long time before reaching the conclusion that the outcome should be as contended for by the appellant.

8. In this regard it is apposite to refer to the judgment of Mason and Wilson JJ in Cooper Brookes (Wollongong) Pty Limited v The Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320-321. In a well known passage, their Honours said (at 321):

"...when the judge labels the operation of the statute as

'absurd', 'extraordinary', 'capricious', 'irrational' or

'obscure' he assigns a ground for concluding that the

legislature could not have intended such an operation and that

an alternative interpretation must be preferred. But the

propriety of departing from the literal interpretation is not

confined to situations described by these labels. It extends to

any situation in which for good reason the operation of the

statute on a literal reading does not conform to the legislative

intent as ascertained from the provisions of the statute,

including the policy which may be discerned from those

provisions."

9. This may not be a case in which it is necessary to have resort to that principle of statutory interpretation because it seems clear enough to me that the legislature could not have intended the definition of "property" in s.9 to apply in circumstances such as this in relation to the operation of s.468 of the Law.

10. I am therefore in agreement that the appeal should be dismissed. I have considered whether his Honour's seeming failure to answer the question asked warrants the course of sending the matter back to be fully tried. I have reached the conclusion that there is no occasion for this. Once one understands that what his Honour did was to answer the question whether the payments in question were property of the company in the context of s.468, it becomes clear that his Honour did answer the question. On the facts before him the payments were not dispositions of property of the company within the meaning of s.468 of the Law.

LINDGREN J I have had the benefit of reading a draft of the Reasons for Judgment of Sackville J. I gratefully adopt his Honour's account of "The Facts" and of "The Judgment Below".

2. On the hearing of the appeal, the question was raised by the Court and debated at some length, whether the separate question procedure had been appropriate in the circumstances. As will appear, I have come to the view that it was, because the company in question had no beneficial interest, in the sense of an interest which would have been available in the winding up of the company, in the property in question and sub-s 468 (1) of the Corporations Law ("the Law") is addressed exclusively to such beneficial proprietary interests of a company.

3. At the outset it is important to appreciate the limited nature of the case as pleaded. The only case sought to be made by the applicants before the trial judge was a case under s 468 of the Law. The application was headed "APPLICATION UNDER SECTION 468 OF THE CORPORATIONS LAW". By para 1 of the application, the following declaration was sought:

"A declaration that payments made on the dates set out in the

Schedule to the Statement of Claim hereto constituted

dispositions of property of the Second Applicant after the

commencement of winding up of the Second Applicant and

accordingly were void against the Applicant pursuant to the

provisions of Section 468 (1) of the Corporations Law."

4. Paragraphs 2 and 3 of the application sought orders for repayment and for payment of interest respectively.

5. The statement of claim comprised the following seven brief paragraphs:

"1. The First Applicant was and continues to be Liquidator

of the Second Applicant having been appointed as such Liquidator

by Order of the Supreme Court of New South Wales on 13th May

2. The Second Applicant was at all material times a Company

duly incorporated.

3. The winding up of the Second Applicant commenced on 21st

March 1991.

4. The Respondent was at all material times the body to whom

the Second Applicant was liable to pay fees in respect of its

television liecnces (sic) pursuant to the provisions of the

Television Licence Fees Act 1964 of the Commonwealth.

5. On the dates particularised below the Second Applicant paid

or caused to be paid to the Respondent from its own moneys the

sums set out in the said particulars.

6. Such payments were dispositions of the property of the

Second Applicant made up at the commencement of the winding up

of the Second Applicant by the Supreme Court of New South Wales

and accordingly are void by reasons of the provisions of Section

468 of the Corporations Law.

7. The Applicant claims the relief set out in the attached

Application."

6. The schedule to the statement of claim gave particulars (dates and amounts) of six payments totalling $24,332,317.77.

7. The defence and cross claim of the respondent to the appeal and below ("the Commonwealth") admitted that the first appellant/first applicant ("Mr Wiley") was appointed liquidator of the second applicant/second appellant ("UTS") on 13 May 1991; that UTS was liable to pay fees in respect of its television licences to the Commonwealth; that at all relevant times the Australian Broadcasting Tribunal ("ABT") acted as the Commonwealth's agent for the collection of such television licence fees; and that on the dates set forth in the schedule to the defence there were delivered to the Commonwealth or to the ABT cheques drawn in favour of the ABT in the sums set forth in the schedule (apart from a minor difference in the date of one payment, the particulars were the same as the particulars in the schedule to the statement of claim). Sub-paragraphs 3 (c), (d) and (e) of the defence, were as follows:

"As to paragraphs 5 and 6 of the Statement of Claim, the

Respondent:

(a) ...........................................;

(b) ...........................................;

(c) says that with the exception of the cheque delivered on 15

October 1991 (which was a Westpac Banking Corporation Bank

cheque) each of those cheques was drawn on an account maintained

at the Sydney Office of Westpac Banking Corporation under the

name and style 'United Telecasters Sydney Limited (Receivers and

Managers Appointed) James Millar and Robert G. Dunn (Receivers

and Managers) Receivers and Managers Account';

(d) denies that such payments constituted dispositions of the

property of the Second Applicant for the purposes of section 468

of the Corporations Law or at all;

(e) denies that such payments are void by reasons of the

provisions of section 468 of the Corporations Law or at all;

..."

Otherwise the defence denied or did not admit the allegations in the statement of claim.

8. The Commonwealth's cross claim was to become relevant only if, contrary to the Commonwealth's denial, the payments were dispositions of property of UTS within the meaning of sub-s 468 (1). In that event, the cross claims sought:

"An order pursuant to section 468 (1) of the Corporations Law

that the dispositions of property comprised by the Payments (the

payments referred to in paras 5 and 6 of the statement of claim

and para 3 of the Defence) be not void".

9. No doubt the form of that order was settled by reference to the words "unless the Court otherwise orders" in sub-s 468 (1) but truly the order sought was an order provided for in sub-s 468 (3) validating the making of the supposed dispositions of property of UTS.

10. There was no agreed statement of facts before the trial judge. His Honour said:

"The evidence in the case is rather sparse, but the primary

facts are agreed between the parties." (1995) 131 ALR at 713

11. His Honour noted that the evidence was constituted by an "agreed bundle of documents" (ibid at 714).

30 June 1990 End of the period in respect of UTS's gross

earnings for which, the subject licence fees were payable.

14 September 1990 Date of appointment of receivers and

managers.

27 September 1990 Date on which receivers and managers opened

bank account at Westpac.

January 1991 Month in which the licence fees for the year ended

30 June 1990 became payable.

21 March 1991 Date of filing of the summons in the Supreme

Court of New South Wales seeking an order for the winding up of

UTS, and therefore the date of the commencement of the winding

up (see former s 465 and present ss 1382 and 1383 of the

Corporations Law).

13 May 1991 Date on which UTS was ordered to be wound up by the

Supreme Court of New South Wales and Mr Wiley was appointed its

liquidator.

13 June 1991 First payment. $2,000,000.00

26 June 1991 Second payment. $1,000,000.00

25 July 1991 Third payment. $1,000,000.00

28 August 1991 Fourth payment. $1,000,000.00

27 September 1991 Fifth payment. $1,000,000.00

15 October 1991 Sixth and final payment. $18,332,317.77

$24,332,317.77

13. Although the licence fees became payable in January 1991, that is to say, during the receivership, they were 1989-1990 licence fees payable on the gross earnings of UTS declared by it for that year and they became payable in the following January by the operation of statutory provisions.

"Each of the payments with which this case is concerned was made

after the commencement of the winding up of UTS and from funds

generated from the carrying on by the receivers of its business

in accordance with the terms of the charges." ((1995) 131 ALR at

715.)

15. The bank account on which the cheques for the first five payments were drawn was an account at the 341 George Street Branch of Westpac Banking Corporation ("Westpac"). (Westpac was also the chargee which appointed the receivers and managers.) The account had been opened by the receivers and managers on or about 27 September 1990, that is to say, shortly after their appointment on 14 September, and was styled:

"UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS AND MANAGERS

APPOINTED) JAMES M MILLAR AND ROBERT G DUNN (RECEIVERS and

MANAGERS) - RECEIVERS AND MANAGERS CASH MANAGEMENT

16. The five cheques were signed under the following:

"For and on behalf of

United Telecasters Sydney Limited ACN 000 395 102

(Receivers and Managers appointed)

James M Millar and Robert G Dunn

(Receivers and Managers)

Receivers and Managers Account".

17. The sixth and final payment of $18,332,317.77 was paid by a bank cheque drawn by Westpac in favour of the ABT.

18. It is clear from the agreed bundle of documents that whatever property may have been disposed of by the payments, was disposed of by the drawing of cheques as outlined and the deposit of them to the credit of a bank account. As noted earlier, the payee was the ABT. It is common ground that the ABT acted as the Commonwealth's agent to collect payment of the fees. The trial judge noted that it was not clear whether the cheques were paid to the ABT as agent for the Commonwealth or to the Commonwealth itself but that it was agreed that nothing turned on this. His Honour thought the better view to be that the payments were made to the Commonwealth. The Commonwealth issued a receipt for all six payments. For convenience, I will refer to the Commonwealth as possessor and holder of the cheques and will generally ignore the role of the ABT.

19. In view of the trial judge's unchallenged statement that each payment was made from funds generated from the carrying on by the receivers of UTS's business in accordance with the terms of the charges, it must be taken that all cheques involved the debiting of a credit balance in the account to which I have referred. The credit balance represented an indebtedness of Westpac to UTS.

20. On 9 September 1994 a judge of the Court ordered pursuant to O 29 r 2 that the following question be decided separately from and before any other question in the proceedings:

"Whether the property disposed of by means of the payments

described in the defence and cross claim herein was property of

UTS within the meaning of s. 468(1) of the Corporations Law".

21. It is important to note that the question asks not whether the property disposed of was the property of UTS in a general or abstract sense but whether it was the property of UTS "within the meaning of s 468 (1) of the Corporations Law."

22. The question posed by sub-s 468 (1) relevant to the circumstances of this case is whether the drawing, delivery, depositing, collecting and honouring of the six cheques effected a "disposition of property of the company" within the meaning of sub-s 468 (1). The question assumes (a) that the drawing, depositing, collecting and honouring of the cheques effected dispositions of property, (b) that the identity of the property disposed of is known, and (c) that the only issue to be resolved is whether that property is "property of the company" within the meaning of the sub-section.

23. If the first two assumptions do not give rise to difficulty, it may be appropriate that the separate question be answered, and will be so if it can be concluded that sub-s 468 (1) is directed only to proprietary interests of a kind which UTS did not have.

24. The trial judge did not answer the question "yes" or "no". He answered with a statement that the six payments, which he particularised with dates differing a little in some instances from those in the statement of claim and cross-claim, "did not constitute dispositions of property of UTS within the meaning of s 468 (1) of the Corporations Law". Consistently with this result, his Honour subsequently (on 17 November 1995) ordered that the application be dismissed and that Mr Wiley and UTS pay the Commonwealth's costs.

25. Of course, a decision that the property disposed of by the six cheque transactions was not "property of the company" within the meaning of sub-s 468 (1) would necessarily lead to the ultimate conclusion expressed in the trial judge's statement. It is clear to my mind that the reason why his Honour held that the six payments did not constitute dispositions of property of UTS within the meaning of sub-s 468 (1) was his holding "that s 468 applies only to property in which the company has a beneficial interest and only to the extent of that interest" ((1995) 131 ALR at 718), "that a disposition of property for the purposes of s 468 must be (of) property 'in which the company has a beneficial interest'" (ibid at 719 - citations omitted), and that "s 468 is directed to dispositions of the property of the company in which it has a beneficial interest and to the extent of that interest" (ibid).

26. I turn now to the two assumptions to which I have referred. The delivery of all six cheques was accompanied by a vesting of title to those pieces of paper in the Commonwealth. As possessor of the cheques, the Commonwealth, or its agent ABT, would have been entitled to sue for damages for conversion of them, their value being treated as their face amounts; if authority is needed, see the cases cited in Balkin and Davis, Law of Torts (Butterworths, 1991) at 74, fn 69. The orders comprised in the cheques were not assignments of parts of the indebtedness of Westpac to its customer; Cheques and Payment Orders Act 1986 ("the CPO Act"), s 88, which re-states the previous law as recognised in Hopkinson v Forster (1874) LR 19 Eq 74. Rather, each cheque, except the bank cheque, was a mandate satisfying the following definition of "cheque" found in s 10 of the CPO Act:

"10.(1) A cheque is an unconditional order in writing that--

(a) is addressed by a person to another person (being a bank);

(b) is signed by the person giving it; and

(c) requires the bank to pay on demand a sum certain in money.

(2) An instrument that does not comply with sub-section (1), or

that orders any act to be done in addition to the payment of

money is not a cheque."

27. The bank cheque for $18,332,317.77 did not satisfy the statutory definition. However, s 5 of the CPO Act has the effect that many of the Act's provisions apply to bank cheques as they do to private cheques. Sub-section 67 (1) is one of those provisions. It is as follows:

"67(1) Where a cheque is duly presented for payment, the drawee

bank shall either pay or dishonour the cheque as soon as is

reasonably practicable and, if the drawee bank fails to do so,

then, unless it has become aware of a defect in the holder's

title or that the holder has no title to the cheque, the drawee

bank--

(a) may not dishonour the cheque; and

(b) is liable to pay the cheque to the holder."

28. The sub-section gives the holder a statutory cause of action against the drawee bank, that is to say, Westpac in the case of all six cheques. The statutory cause of action does not signify that property has passed but is relevant to the value of the cheques in the hands of a holder.

29. The tendering and acceptance of the five private cheques and the bank cheque constituted conditional payments, as the following passage from National Australia Bank Ltd v K D S Construction Services Pty Ltd (1987) 163 CLR 668 makes clear:

"Generally speaking, when a cheque is given in payment of a

debt, it operates as a conditional payment. The payment is

subject to a condition that the cheque be paid on presentation.

If it is dishonoured the debt revives. Although it is sometimes

said that the remedy for the primary debt is suspended, the

suspension is no more than a consequence of the conditional

nature of the payment: Tilley v Official Receiver in Bankruptcy

((1960) [1960] HCA 86; 103 CLR 529, at pp 532-533, 535-536, 537). The

condition is a condition subsequent to that, if the cheque is

met, it ranks as an actual payment from the time it was given.

Subject to non-fulfilment of the condition subsequent, the

payment is complete at the time when the cheque is accepted by

the creditor: Thomson v Moyse ((1961) AC 967, at p 1004)." (at

30. In the present case all cheques were duly honoured. Once this happened, there was a reduction in the credit balance of the relevant bank account at Westpac by $24,332,317.77 and a commensurate increase in the Commonwealth's funds. Then the cheques were a spent force, lost their value to the Commonwealth and in any event would no longer sustain an action by it for conversion: Charles v Blackwell (1877) 2 CPD 151 (CA).

31. In Re Loteka Pty Ltd (1989) 15 ACLR 620 ("Loteka"), McPherson J had to answer the question whether the honouring of cheques drawn by a company when its account at the bank was in credit involved a disposition of the company's property to the bank. His Honour held that it did not. In obiter dicta he said this:

"Like Street CJ in Eq in Re Mal Bower (Re Mal Bower's

Macquarie Electrical Centre Pty Ltd (in liq) (1974) 1 NSWLR 254)

I consider that any disposition of company property is in favour

of the creditor or other person to whom the cheque is paid. In

my respectful opinion, however, the true reason for concluding

that there is a disposition of company property in favour of the

'stranger' (who, for present purposes, I will assume to be a

creditor) is not that his acceptance of the cheque amounts to

conditional payment of a debt due to him, but that the drawing

and delivery of the cheque involves the transfer to him of

ownership of a chattel that until that moment was vested in the

company. The form on which the cheque is written is a piece of

paper that belongs to the company. It is drawn by completing

and signing it, and issued by delivering it to the creditor with

the intention of passing ownership in it. It may seem odd that

the law should view a cheque or other bill of exchange which is

a valuable instrument as a mere chattel; but there is no doubt

that it is so regarded. See Embiricos v Anglo-Austrian Bank

(1951) 1 KB 677, affirming (1904) 2 KB 870, where the court

applied to a cheque the rule that transfer of a movable that can

be touched is governed by the lex situs. The same attitude

underlies the rule enabling the owner of a cheque to recover

damages for its conversion. It has long been settled law that

the person entitled to a cheque can sue for damages for its

conversion: see A L Underwood Ltd v Bank of Liverpool (1924) 1

KB 775 at 791. In such a case the true character of the chattel

is recognised in the measure of compensation awarded, which, in

general, is the face value of the cheque. See Morison v London

County and Westminster Bank Ltd (1914) 3 KB 356 at 364-5, 379,

where Phillimore LJ explained this result by saying that,

'though the plaintiff might at any moment destroy the cheques

while they remained in his possession, they are potential

instruments whereby the sums they represent may be drawn from

his bankers, and, if they get into any other hands than his, he

will be the loser to the extent of the sum they represent'. In

so far as a chose in action is involved, it is an assignment of

that chose to the creditor and not the bank.

From all this it follows that when on the dates listed above the

company in this case drew cheques and issued by delivering them

to the creditors whose names are specified on that list, it

thereby transferred the property in a chattel that was an

instrument having a value equal to the amount for which it was

drawn. Of course, the value of each cheque was dependent upon

there being funds in the account of the company available to

meet it; but, as it turned out there were, and the cheques were

met by the Bank. It seems to me, therefore, that, although

there was a disposition of property of the company, it took

place not when the cheques were paid but on the date or dates on

which each cheque was issued; and that the disponee in each case

was not the Bank but the particular creditor in whose favour the

cheque was drawn and delivered. Consistently with the decision

in Re Mal Bower's MacQuarrie (sic) Electrical Centre Pty Ltd it

is therefore only against those creditors as disponees, and not

against the Bank, that the disposition of company property is

avoided by the operation of s 368 (1)." (at 626-627)

32. This analysis was followed in Tasmanian Primary Distributors Pty Ltd v R C and M B Steinhardt Pty Ltd [1994] TASSC 20; (1994) 13 ACSR 92 (Tas/Underwood J). In Perkins v Bendale Timbers Pty Ltd [1994] SASC 4462; (1994) 13 ACSR 1 (SA/FC) the property disposed of by a payment by cheque drawn on a credit balance in the company's bank account was referred to (at 3), as "the proceeds" of the cheque. There was no issue in that case as to the precise identity of the property disposed of. With respect, in my opinion McPherson J's analysis in Loteka is correct.

33. The provision now found in sub-s 468 (1) must have been intended to have scope for operation in cases where a company makes payment by cheque, thereby reducing the amount standing to its credit in its bank account. The view that the property disposed of in such a case is the property in the cheques as tangible property can be accommodated to the provision. If the provision applies at all in the present case, it avoids dispositions of six cheques having a value of $24,332,317.77. Of course, it would not answer the liquidator's demand for the Commonwealth to return the now worthless cheques, any more than that it would satisfy a liquidator's demand on a disponee who had received other valuable tangible property then destroyed it for that disponee to return the worthless remains. The avoidance of the disposition which sub-s 468 (1) works requires, in a case of payment by cheque, that the payee make restitution of the benefit obtained at the cost of the company. The amount of that benefit and cost is the amount of the cheque.

34. In the result, I think that at least the two assumptions to which I referred earlier present no difficulty in the answering of the separate question. The question for separate decision correctly assumed that property was disposed of by means of the payments. That property was the six cheques. The only contentious issue is whether they were the property of UTS "within the meaning of s 468 (1)". These words quoted from the question for separate decision emphasise that it will be permissible to take into account the statutory context in which the expression "the property of the company" appears and the purpose of sub-s 468 (1). It will also be necessary to consider closely the precise nature of the respective interests, rights and duties of the relevant parties in respect of the cheques.

WAS THE PROPERTY DISPOSED OF BY MEANS OF THE SIX PAYMENTS "THE PROPERTY OF THE COMPANY" WITHIN THE MEANING OF SUB-S 468 (1)?

35. Neither the word "disposition" nor the expression "property of the company" is defined in the Law. The term "property" is defined in the "dictionary" in s 9 of the Law to mean, "unless the contrary intention appears",

"any legal or equitable estate or interest (whether present or

future and whether vested or contingent) in real or personal

property of any description and includes a thing in action;"

36. The definition is clearly wide enough to encompass the six cheques and any proprietary interest in them. The critical question is whether a contrary limiting intention appears.

The position as between the receivers and managers and UTS

37. The property of a mortgagor does not vest in a receiver upon his appointment, either at law or in equity, and so the position of a receiver is to be contrasted with, for example, that of a trustee: Re Sartoris' Estate (1892) 1 Ch 11 at 22 (Lindley LJ with whom Bowen and Fry LJJ agreed); Re Sacker (1888) 22 QBD 179 at 183 (Lord Esher MR), 185 (Fry LJ); M Wheeler and Co Ltd v Warren (1928) Ch 840 (CA) at 844 (Lord Hanworth MR); West Street Property Pty Ltd v Jamison (1974) 2 NSWLR 435 (NSW/Jeffrey J) at 438-439; Re Scottish Properties Pty Ltd (1977) 2 ACLR 264 (NSW/Needham J) at 271. The position may be less clear in particular sets of circumstances in relation to the ownership of property acquired in the course of the activities of a particular receiver and manager.

38. Paragraph 421 (1) (a) of the Law requires "a controller of property of a corporation" (defined in s 9 to mean inter alia, "a receiver, or receiver and manager, of that property") to open and maintain one or more accounts with an Australian bank or banks, bearing

"(i) the controller's own name; and

(ii) in the case of a receiver of the property - the title

'receiver'; and

(iii) otherwise - the title 'controller'; and

(iv) the corporation's name;"

39. The terms of this provision might suggest that the name of the controller, rather than that of the corporation, is required to appear first and that the receiver is to be the repository of legal title to the "money" in the account from time to time. In Sheahan v Air Con Serve Pty Ltd (1995) 18 ACSR 165 (SA/FC) ("Sheahan"), a bank account was styled "A R Campbell Receiver and Manager of T O'Connor and Sons Pty Ltd (Receiver And Manager Appointed)". The issue before the Court was not whether payments made out of the account effected dispositions of the property of the company within the meaning of sub-s 468 (1) of the Law, but whether such payments were payments "made by the company" within the meaning of sub-s 565 (1) of the Law dealing with undue preferences. Doyle CJ noted that in opening the account in the manner mentioned, the receiver had complied with s 421. The Chief Justice, with whom Duggan and Nyland JJ agreed, said this:

"It is clear that upon crystallisation the debenture holder has

an equitable interest in the property charged. For present

purposes I do not consider it necessary to identify with any

precision the nature of the equitable interest.

However, the money deposited in the bank is money the legal

title to which is vested in the receiver and manager, and the

chose in action represented by the moneys once deposited

likewise is the legal property of the receiver. As the receiver

is the agent for the company, he does not hold funds in the bank

account for the debenture holder: O'Donovan, Company Receivers

and Managers, para 11.110. The same applies to tangible assets

of the company the subject of the charge. The title to such

assets remains in the company after the appointment of a

receiver, although the receiver is now empowered to deal with

such assets: O'Donovan, para 8.90. The effect of the debenture

is that the receiver is the agent for the company, and

ordinarily in making a payment he will do so as an agent for the

company. Prima facie the making of a payment is the act of the

company. It likewise seems to be clear law that a receipt of

money by the receiver is not a receipt by the appointor of the

receiver. The indebtedness of the companies to the bank was not

reduced by the amount of the moneys received by the receiver:

O'Donovan, para 11.110. Indeed, interest on the moneys owed to

the bank continues to run until a payment is made by the

receiver to the bank: O'Donovan para 11.110. The entitlement of

the bank to demand a payment depends upon the adequacy of the

funds in the hands of the receiver to meet claims having

priority to those of the bank: O'Donovan paras 11.600, 11.670.

All of this suggests that the fact that the payment is made by

the receiver from moneys in his hand resulting from the

realisation of assets covered by the debenture does not of

itself mean that the payment is not a payment made by the

company. The payment is made by the receiver as agent for the

company, using funds to which he has the legal title, being

funds in which the bank has an equitable interest but not an

interest which gives it in any sense an unqualified power of

control or disposition." (at 174-175)

40. The Commonwealth submitted that the account at Westpac was that of the receivers and managers rather than that of UTS. This submission was made in support of a submission that the "money" standing to the credit of the account, that is to say, the chose in action constituted by the indebtedness of Westpac, also belonged to the receivers and managers rather than to UTS. The submission seems to imply a submission that the property in the cheques drawn on the account was also that of the receivers and managers rather than that of UTS. If these submissions were to be accepted, it would follow that the cheques were not the property of UTS.

41. It was not suggested that the receivers and managers had a beneficial interest in any of these forms of property. Intervention by a chargee aside, the choice in cases of the present kind is usually between two views: that the property is that of the company itself, albeit acting and holding through the agency of receivers and managers; and that title is held by the receivers and managers as trustees for the company. Again, ordinarily the former view will be the appropriate one. But either view must necessarily be understood to be subject to the effect of the fixed charge.

42. Because of the conclusions which I reach below that sub-s 468 (1) is directed only to beneficial interests (interests that would be available in the winding up) and that UTS had no such interest in the cheques or, for that matter, in the business or in the indebtedness of Westpac represented by the credit balance in the bank account, the difference between the two views would be inconsequential for the purposes of decision in the present case. However, certain considerations make it clear that the better view is that the property, such as the cheques, was the property of UTS, subject, again, to the effect of the fixed charge. The form of application for the opening of the account at Westpac and the form of the signature of the five private cheques both commence with the name of UTS. The business being carried on by the receivers and managers from which the money in the bank account was derived was clearly property of UTS. It was UTS which held, prior to and during the receivership, the relevant licences pursuant to which that business was carried on.

43. All the forms of property mentioned were subject to the equitable interest of Westpac as chargee and it is to the position as between UTS and Westpac as chargee that I must now turn.

44. It is common ground that the two charges crystallised no later than 14 September 1990 when the receivers and managers were appointed. The deeds of charge were expressed as charges over, inter alia, all future assets of UTS. Accordingly all six cheques, including the bank cheque, immediately upon coming into existence became property of UTS subject to a fixed charge in favour of Westpac as chargee and to Westpac's resultant proprietary interest in them: Halsbury's Laws of Australia, para (120-12550), p 227,212; Re Otway Coal Co Ltd [1953] VicLawRp 74; (1953) VLR 557 (O'Bryan J) at 571; N W Robbie and Co Ltd v Witney Warehouse Co Ltd (1963) 3 All ER 613 (CA) at 621 (Russell LJ); Stein v Saywell [1969] HCA 16; (1969) 121 CLR 529 at 546 (Barwick CJ); Ferrier v Bottomer [1972] HCA 11; (1972) 126 CLR 597; Lyford v Commonwealth Bank of Australia [1995] FCA 1261; (1995) 13 ACLC 900 (FCA/R D Nicholson J) at 905. Upon coming into existence, the cheques were the subject of an equitable assignment to Westpac: Biggerstaff v Rowatt's Wharf Ltd (1896) 2 Ch 93 at 105-106; George Barker (Transport) Ltd v Eynon (1974) 1 WLR 462 at 467; West Street Properties Pty Ltd v Jamison (1974) 2 NSWLR 435 (NSW/Jeffrey J) at 438-439. At all material times, including the times of the making of the six payments, the amount owed to Westpac secured by the two deeds of charge far exceeded the value of UTS's undertaking and assets subject to the charges. Accordingly, at all relevant times UTS had no beneficial interest in the six cheques.

45. The nature of Westpac's interest as chargee under its fixed charge is determined by the terms of its deeds of charge and by the general law. By the terms of the two deeds of charge, UTS had undertaken, upon request by Westpac, to execute and deliver blank transfers and other documents "for more satisfactorily mortgaging, assuring or securing to (Westpac) the Mortgaged Property (defined to mean 'all assets and undertaking of (UTS) ... charged or mortgaged ...')" (cl 5.1); Westpac was entitled to exercise all or any of the powers, rights, authorities, discretions or remedies exercisable by the receivers and managers notwithstanding their appointment (cl 7.5); Westpac was entitled to apply all monies received by the receivers and managers as it might in its discretion decide, and in the absence of such an exercise of discretion, in payment of inter alia certain amounts and then in payment to Westpac itself towards satisfaction of the secured monies (cl 10.1); and UTS, for valuable consideration and by way of security, appointed each "Authorised Officer" (as defined) of Westpac severally its attorney to do all things which UTS was obliged to do under or in relation to the deeds of charge or which Westpac or the receivers and managers were under the deeds or any law, authorised or empowered to do (cl 14.2).

46. It is difficult to imagine "more empowering" terms from Westpac's viewpoint. Westpac was entitled, at will, to appropriate to itself the credit balance from time to time in the bank account and the six cheques. The monies in the bank account were to be applied, in the absence of an exercise by Westpac of its discretion under cl 10.1, in payment of, inter alia, any outgoings that the receivers and managers or Westpac might think fit to pay (para 10.1 (b)). The receivers and managers here saw fit to pay outgoings in the form of the outstanding licence fees. In view of the extent and qualities of Westpac's beneficial interest in UTS's undertaking and assets, it is not conceivable that they would have been restrained from doing so.

47. The Commonwealth relied heavily upon Re Margart Pty Ltd (in liq); Hamilton v Westpac Banking Corporation (1984) 9 ACLR 269 (NSW/Helsham CJ in Eq) ("Margart"). In that case no receiver was appointed but after a winding up summons was filed the company made payments to a chargee, again Westpac. The company was wound up. Helsham CJ in Eq held that the word "disposition" in the expression "disposition of property of the company" in s 368 of the Companies Code (the forerunner of s 468 of the Law) did not include:

"the process by which a person with a beneficial interest in the

property obtains that property, or the proceeds of its

realisation, from the company at a time when he is entitled to

have it." (at 272)

"In all reality a person would not normally be described as

disposing of his property when he hands it over to another to

whom he had previously promised to deliver it on the happening

of a certain event when that event occurs. This is only another

way of stating in legal terms the proposition that the word

'disposition', when used with reference to property, normally

has the meaning of connoting a change in the beneficial

ownership of an asset by transfer or other type of dealing."

(also at 272)

48. It will be observed that these passages address the notion of a "disposition", not the notion of "the property of the company", in the statutory provision.

49. Margart was followed in Re Ravi Nominees Pty Ltd (1993) 10 ACSR 599 (WA/White J), another case of a handing over mortgaged property to the mortgagee. The principle applied was that it is not a "disposition" to hand over property to a person who had obtained a beneficial interest in it prior to the commencement of the winding up. Margart was applied in Re Country Stores Pty Ltd (1987) 11 ACLR 385 (Qld/Williams J) in which there was a post-commencement completion of a pre-commencement contract which had caused the beneficial interest in company property to pass at the date of contract. Similarly, though without reference to Margart, it was held in All Benefit Pty Ltd (in liq) v Registrar General (1993) 11 ACSR 578 (WA/Master Burley) that a transfer by a former trustee to a new trustee was not caught by sub-s 468 (1) of the Law, the reason given being that property held on trust does not form part of the "property of the company".

50. In all of these cases, there was no change in beneficial ownership of the property in question. In the present case there was such a change. There was a "disposition" of all the property in the cheques to the Commonwealth. The legal and beneficial interests of UTS and Westpac ceased to exist when the Commonwealth's title came into being. The question raised by the present case is whether the expression "the property of the company" as used in sub-s 468 (1) is satisfied in circumstances in which a company has no beneficial interest in property disposed of.

51. In Margart, Helsham CJ in Eq, went further than he was required to do to decide the case before him, and touched upon this "broader" question. Having held that there was no "disposition", his Honour added this:

"Although not necessary to say so for the purposes of this

decision, I realise that it may impinge upon the situation where

a receiver has been appointed under a floating charge and he

sets about selling the company's assets the subject of the

charge, after default in payment, or otherwise going about the

things he is permitted to do to enable the chargee to get paid.

Usually as is the case under the terms of the equitable mortgage

here, in doing so he is expressly made the agent of the company.

Can his acts be designated as dispositions of the property of

the company, so as to make void any of them done after the

commencement of the winding up, giving no title to a purchaser,

and leaving the receiver at risk unless he obtains a validating

order? If my views are correct, the answer would be no. This

would not mean that the company is without redress against the

mortgagee; it would have, through the liquidator, whatever

remedies that might be available to it as mortgagor, for

example, if there were a sale at a gross undervalue. And it

could recover any excess over the amount due to the chargee as

money due to the company. It would only mean that the receiver

could go about his business without the knowledge that everthing

(sic) he did to realise the assets covered by the charge was

void, and that every payment to the bank or chargee of the

proceeds of his realisations was likewise void. As I have said,

in the present case it is not necessary to decide this.

I take the view that the phrase 'any disposition of the property

of the company' in the context of s 368 (a predecessor of s 468

of the Law) relates to something done with property that the

company is free to deal with. I do not think that there is a

disposal of property of the company when there is a dealing by

someone who is really someone other than the company and who has

the right to say how it is to be dealt with, and whatever

interest the company has in that property gives it no control of

management over the property nor power to interfere. The

control, which in the words of Barwick CJ, Mason and Jacobs JJ

(FCT v Barnes [1975] HCA 61; (1975) 133 CLR 483 at 492) enables a receiver

appointed under a floating charge 'to reduce the assets and

undertaking of a company into a fund out of which a particular

debt or in some cases all the debts of the company, secured and

unsecured, are to be paid if the fund so far extends' hardly

seems consonant with avoidance of his actions as being

dispositions of property of the company if he acts (see also DCT

v AGC (Advances) Ltd (1984) 1 NSWLR 29). The fact that it has

been deemed necessary by separate statutory provision

specifically to declare void any attachment, sequestration,

distress or execution put in force against the property of the

company after the commencement of the winding up by the court,

may tend to lend support to this view (s 368(3))." (at 273-274)

(emphasis supplied)

52. His Honour referred to his view contained in the passage just quoted as a "tentative" one.

53. This broader proposition of Helsham J in Margart dealing with dispositions to third parties was not expressed by reference to a notion of "beneficial proprietary interests" of the company, although his Honour's reference to "property that the company is free to deal with" comes close to it. But there was support for a proposition expressed in those terms prior to the trial judge's statement of it in the present case: see O'Donovan, "The Interaction of Winding Up and Receivership" (1979) 53 ALJ 264 at 267; All Benefit Pty Ltd (in liq) v Registrar-General, (supra) at 580; Sheahan v Air Con Serve Pty Ltd, unreported, 14 November 1994, SA/Master Burley, at p 10; McPherson, The Law of Company Liquidation (3rd ed, 1987) at 167; O'Donovan, Company Receivers and Managers, para (13,140) at p 4834.

54. With respect, I agree with the trial judge that sub-s 468 (1) operates only in respect of property in which the company has a beneficial interest, in the sense of an interest which would be available in the winding up, and to the extent of that interest. Two considerations point to this construction: the provision's purpose and the practical inconvenience of the competing construction.

55. The provision has a long lineage: see the English Companies Acts of 1862, s 153; 1929, s 173; 1948, s 227; and 1986, s 127, and the Companies Acts of the Australian States such as the Companies Act 1936 (NSW), s 213, the Companies Act 1961 (NSW), s 227; and the Companies Code, s 368. The purpose of the provision is to prevent disposition of property which would otherwise be available for distribution to creditors in a winding up; (Re Wiltshire Iron Co; Ex parte Pearson (1868) LR 3 Ch App 443 at 446; McPherson at 167). Only beneficial interests are so available (cf Ford and Austin's Principles of Corporations Law (7th ed 1995) para (27.190); McPherson, The Law of Company Liquidation (3rd ed 1987) at 311 and cases cited in fns 12 and 13).

56. According to the competing construction urged on behalf of the liquidator, from the commencement of the winding up every disposition of company property by a receiver (except a disposition in good faith with the consent of an administrator (see para 468 (2) (aa))) is ineluctably void unless an order under sub-s 468 (3) validating it is made. It is difficult to accept that the legislature intended to put such an obstacle in the way of the administration of receiverships. It is no answer, in my view, to say, as was submitted, that liquidators can be expected not to challenge most dispositions by receivers: proposing disponees would not be content to deal with receivers on that basis. Nor is it an answer to observe that often the property disposed of or its monetary equivalent, once recovered by the liquidator, will be subject to the security under which the receiver was appointed (cf Bayley v National Australia Bank Ltd [1995] TASSC 13; (1995) 16 ACSR 38 (Tas/Wright J)).

57. It must now be considered how, if at all, the intervention of a winding up affects a chargee's equitable interest and, in particular, how it affects the power of a receiver and manager to dispose of property of the company. The learned trial judge addressed this question at some length by reference to authorities and academic commentary. The view which has come to be accepted is that a winding up order brings about a termination of a receiver's authority to act as agent of the company only to a limited extent: his authority to incur debts or liabilities provable in the winding up is at an end but not his authority, as the company's agent, to dispose of company property: Visbord v The Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354 ("Visbord") at 382 (Williams J); Sowman v David Samuel Trust Ltd (1978) 1 WLR 22 (Goulding J) at 30A-D; Re Obie Pty Ltd (No 2) (1983) 8 ACLR 574 (Qld/Thomas J) at 579-580; Re Leslie Homes (Aust) Pty Ltd (1984) 8 ACLR 1020 (NSW/McLelland J) at 1023; Dale Park Pty Ltd (receiver and manager appointed) v Roads Corporation [1994] VicRp 74; (1994) 2 VR 524 (Gobbo J) at 534. Statements in some of the cases that liquidation terminates the authority of a receiver and manager as agent of the company to carry on its business should be treated with caution and as being directed against a carrying on of the company's business "so as to create debts provable against the unmortgaged assets of the company" (Visbord, supra, at 382).

58. It is important to distinguish between the proprietary and in personam aspects of the relationship between the receiver and manager on the one hand and the liquidator and unsecured creditors on the other hand. Whatever the nature of any obligation owed by the former to the latter and whatever the concomitant rights of the latter against the former, they do not detract from the position that the proprietary interest of the chargee lies outside the winding up (Re Landmark Corporation Ltd (in liq) and the Companies Act (1968) 88 WN (Pt 1) (NSW) 195 (Street J)) and that the bundle of rights constituting the chargee's interest remains intact. The position was expressed as follows by Goulding J in Sowman v David Samuel Trust Ltd (supra):

"All the principal authorities in my opinion lead to the

same conclusion, which I will put in my own words as follows.

Winding up deprives the receiver, under such a debenture as that

now in suit, of power to bind the company personally by acting

as its agent. It does not in the least affect his powers to

hold and dispose of the company's property comprised in the

debenture, including his power to use the company's name for

that purpose, for such powers are given by the disposition of

the company's property which it made (in equity) by the

debenture itself. That disposition is binding on the company

and those claiming through it, as well in liquidation as before

liquidation, except of course where the debenture is vulnerable

under section 95 or section 322 of the Companies Act 1948 or is

otherwise invalidated by some provision of law applicable to the

winding up.

The view of the authorities which I have just stated is also

fatal, I think, to Mr. Monckton's alternative submission that

the sale by the receiver is a disposition of the company's

property avoided by section 227 of the Companies Act 1948. In

truth the rights and powers given by the debenture are

themselves property, but not property of the company, and if

they are not extinguished by the fact of winding up, their

enforcement or exercise is not within the scope of section 227

at all." (at 30A-D)

(See too Barrows v Chief Land Registrar, unreported, Whitford J, "The Times", 20 October 1977).

59. In my view, because no beneficial interest of UTS, in the sense of an interest which would have been available in the winding up of UTS, was disposed of, sub-s 468 (1) does not apply. Whether the particular receivers and managers, in paying the licence fees, acted in breach of duty is beside the point. If they did, any remedy lies against them personally and is not the proprietary remedy founded on sub-s 468 (1) of the Law for which the present application was brought.

SACKVILLE J This is an appeal, by leave, from an answer given by a judge of this Court, Lockhart J, to a question ordered to be tried separately from other issues in the proceedings. The judgment of the trial judge is reported: Wiley as liquidator of United Telecasters Sydney Ltd (recs and mgrs apptd) (in liq.) v Commonwealth of Australia (1995) 131 ALR 712.

2. The case illustrates, in my view, the difficulties that sometimes attend the formulation of questions for separate determination, notwithstanding the best intentions of the parties and, for that matter, the Court. For reasons that will be explained, I am of the opinion that the question asked was not one that was appropriate for separate determination.

3. Mr Wiley, the liquidator of United Telecasters Sydney Ltd (Receivers and Managers Appointed) (In Liquidation) ("UTS"), commenced proceedings in the Court to recover payments totalling $24,332,317.77 made to the Commonwealth. The receivers and managers of UTS ("the receivers") were appointed to the company on 14 September 1990. An order for the winding up of UTS was subsequently made, on 13 May 1991, appointing Mr Wiley as liquidator. The payments to the Commonwealth were made out of funds held by the receivers in an account maintained by them and were in respect of licence fees due by UTS under the Television Licence Fees Act 1964 (Cth) ("the 1964 Act").

4. The liquidator claims that the payments which were made after the date of the winding up order, constituted dispositions of property of UTS made after the commencement of the winding up and were therefore void under s.468(1) of the Corporations Law. That sub-section provides as follows:

"Any disposition of property of the company, other than an

exempt disposition, and any transfer of shares or alteration in

the status of the members of the company made after the

commencement of the winding up by the Court is, unless the Court

otherwise orders, void."

5. Pursuant to Federal Court Rules, O.29, r.2, a judge (other than the trial judge) ordered that the following question be decided separately from and before any other question in the proceeding:

"Whether the property disposed of by means of the payments

described in the Defence and Cross-Claim herein (that is, the

payments to the Commonwealth), was property of (UTS) within the

meaning of section 468(1) of the Corporations Law."

6. There are at least two assumptions that underlie the separate question. First, it assumes that property was "disposed of", by means of the payments made to the Commonwealth. It is not clear from the terms of the question whether it was meant to imply that, if the property dealt with (to use a neutral term) by means of the payments to the Commonwealth was "property of the company", there was necessarily a "disposition of property of the company" within the meaning of s.468(1). Secondly, the question assumes that the phrase "disposition of the property of the company", as used in s.468(1), can be analysed by considering two distinct questions, namely,

. whether there has been a disposition of property; and

. whether what has been disposed of is "property of the

company".

7. The trial judge did not answer the question "yes" or "no". Rather, his Honour gave the following order:

"The said payments made by the receivers and managers of (UTS)

to the Commonwealth of Australia did not constitute dispositions

of property of UTS within the meaning of s.468(1) of the

Corporations Law."

8. This answer is not, in terms, confined to whether the property disposed of was "property of (UTS)", within the meaning of s.468(1) of the Corporations Law. Rather, the answer states that the payments did not constitute "dispositions of property of (UTS) within the meaning of s.468(1) of the Corporations Law".

9. It will be necessary to return to the significance of the trial judge answering the question in this way. However, I shall first refer to the relevant legislation and briefly explain the factual background.

10. Section 468(1) of the Corporations Law, the terms of which have been quoted earlier, has antecedents going back to s.153 of the Companies Act 1862 (Eng): see In re Wiltshire Iron Company; ex parte Pearson (1868) LR 3 ChApp 443. More recent predecessors include s.227(1) of the Uniform Companies Acts 1961 and s.368(1) of the Companies Code 1981.

11. In its present form, s.468(1) does not apply to an "exempt disposition". The statutory concept of an "exempt disposition" was introduced into the Companies Code in 1985: see, for example, Companies (NSW) Code, s.368(1A). That phrase is now defined by s.468(2), in relation to a company that the Court has commenced to wind up, to mean:

"(a) a disposition made by the liquidator, or by a provisional

liquidator, of the company pursuant to a power conferred on him

or her by:

(i) this Law; or,

(ii) rules of the Court that appointed him or her; or

(iii) an order of the Court; or

(aa) a disposition made in good faith by, or with the consent

of, an administrator of the company; or

(ab) a disposition under a deed of company arrangement executed

by the company; or

(b) a payment of money by an Australian bank out of an account

maintained by the company with the Australian bank, being a

payment made by the Australian bank:

(i) on or before the day on which the Court makes the order

for the winding up of the company; and

(ii) in good faith and in the ordinary course of the banking

business of the Australian bank."

12. Dispositions by the receiver of a company are not included within the phrase "exempt disposition".

13. Section 468(1) itself contemplates that the Court has power to order that a disposition of the company's property, made after the commencement of the winding up, be validated. The power applies in a wide variety of circumstances and the courts have established general guidelines that assist in the exercise of the judicial discretion conferred by the sub-section: see Jardio Holdings Pty Ltd v Dorcon Constructions Pty Ltd [1984] FCA 247; (1984) 3 FCR 311 (FCA/FC); Tellsa Furniture Pty Ltd (In Liquidation) v Glendave Nominees Pty Ltd (1987) 9 NSWLR 254 (NSW CA); Sheahan (liquidator) and Magill Constructions Holdings Pty Ltd v Workers Rehabilitation and Compensation Corporation (1991) 58 SASR 119 (S Ct SA/FC). The Court also has power, where an application for winding up has been filed, but a winding up order has not yet been made, to validate prospectively a disposition of property by the company: s.468(3)(a).

14. The word "disposition" in s.468(1) is not defined in the Corporations Law. However, the word "property" is given a wide definition by s.9:

"'property' means any legal or equitable estate or interest

(whether present or future and whether vested or contingent) in

real or personal property of any description and includes a

thing in action".

15. This definition applies unless the contrary intention appears.

16. On 23 January 1990, UTS executed two deeds of charge as mortgagor in favour of Westpac Banking Corporation ("Westpac"), as agent for three banks identified as Westpac, Citibank Ltd and Commonwealth Bank of Australia. The first deed related to the property of UTS in New South Wales, while the second related to property outside that State. The two deeds were in substantially the same terms. As his Honour said, it is necessary to refer only to the terms of the first charge.

17. UTS charged all its right, title and interest in the undertaking and all its assets, both present and future (cl.2). The charge was expressed to be a first charge, and to be a fixed charge as to certain real and leasehold property, marketable securities, book debts and other specified assets (cll.3.1 and 3.2(a)). It was expressed to be a floating charge as to all other assets (cl.3.2(b)) and provided for crystallisation of the charge in certain circumstances (cl.3.4). However, it was not disputed that, insofar as the charge was a floating charge, it crystallised no later than the date of appointment of the receivers on 14 September 1990.

18. The charge contained the usual provision that any receiver was to be the agent of UTS and that UTS alone was to be responsible for the receiver's acts and defaults (cl.7.2). The charge also specifically provided that the power to appoint a receiver could be exercised notwithstanding that, at the time when the deed became enforceable, an order may have been made for the winding up of UTS (cl.7.4(a)) and that a receiver appointed in those circumstances may not, or may not in some respects, act as the agent of UTS (cl.7.4(b)).

19. Although his Honour referred only briefly to the receiver's express powers under the charge, it is convenient to set out the relevant terms of cl.7.3:

"7.3 In addition to any powers granted by law, and except to

the extent specifically excluded by the terms of his

appointment, every Receiver shall without the need for any

consent on the part of the Mortgagor have power to do anything

in respect of the Mortgaged Property that the Mortgagor could

do, including (without limitation):

(a) (to take possession and collect): to take possession of,

collect, manage and get in all or any of the Mortgaged Property;

...

(c) (to carry on business): to carry on or concur in carrying

on any business of the Mortgagor in relation to the Mortgaged

Property;

...

(e) (to maintain and improve the Mortgaged Property): to do

anything which the Mortgagor might do for the protection or

improvement of all or any of the Mortgaged Property or for

obtaining income or returns from all or any of the Mortgaged

Property (including, without limitation, by effecting insurance

and repairs or pulling down, dismantling or scrapping any

property);

...

(g) (to sell):

(i) to sell or concur in selling (whether or not the Receiver

shall have so taken possession) any of the Mortgaged Property;

...

(j) (to compromise): to make or accept any arrangement or

compromise;

...

(y) (incidental power): to do anything incidental to the

exercise of any other Power.

All of the above paragraphs shall be construed independently.

None limits the generality of any other.

Any dealing under any such Power shall be on such terms and

conditions as the Receiver thinks fit."

20. UTS held television licences and was required to pay licence fees to the Commonwealth pursuant to the Television Licence Fees Act 1964 (Cth). The trial judge found, and there appears to be no dispute, that the fees payable by UTS in respect of the year ended 30 June 1990 fell due upon service of a notice of assessment issued by the Australian Broadcasting Tribunal, which occurred on 4 January 1991. This was after the date of the receiver's appointment (14 September 1990), but before the filing of the summons for the winding up of UTS (21 March 1991) or the making of the winding up order by the Supreme Court of New South Wales (13 May 1991).

21. On 11 December 1990, prior to the assessment being issued, Mr Millar, one of the two receivers jointly and severally appointed by Westpac, wrote to the Minister. Mr Millar submitted in the letter that the amount due for licence fees in January 1991, relating to the year ended 30 June 1990, should be frozen as at 14 September 1990 and treated equally with all unsecured amounts owed prior to that time. In a letter of 29 January 1991, the receiver elaborated on this submission, contending that the freezing of the fees would be consistent with "principles of equity".

22. The Minister's reply of 27 February 1991 accepted that licence fees ranked equally with other unsecured debts for payment. However, the letter continued as follows:

"You would be aware, however, that there are provisions in

the Broadcasting Act 1942, in relation to the licensing powers

of the Australian Broadcasting Tribunal, concerning delay or

failure to pay licence fees, and to the financial capability of

licensees.

...

I note in this regard that the Network TEN licences are

currently subject to renewal inquiries by the Tribunal.

I would also draw your attention to s.123A of the Broadcasting

Act which provides for penalties of 20 percent per annum to

apply to unpaid licence fees after a period of two months after

the due date for payment, calculated from the due date, unless

remitted by the Minister....

Your letter of 29 January 1991 indicates that you are not

requesting the Commonwealth to write off the legal liability for

licence fees. Having regard to possible implications of a delay

or failure to pay licence fees in terms of the licensing

provisions of the Broadcasting Act, you may wish to consider a

reasonable time-frame in which you would be able to finalise

payment of the fees. As you will appreciate, your agreement to

such an arrangement would also be one issue relevant to my

consideration of any remittance of accrued penalties."

23. In a letter dated 15 April 1991, the receiver proposed that the outstanding licence fees, then thought to total about $21 million, be paid by monthly instalments of $1 million. The receiver pointed out to the Minister that the banks which had appointed him were concerned that any television licence fees paid to the Commonwealth, in respect of the period prior to 14 September 1990, might be recoverable by a liquidator as an undue preference. In view of this concern, the receiver sought assurances from the Commonwealth that, in the event of the liquidator recovering any instalments paid as a preference, the Commonwealth would not take action to recover the outstanding licence fees.

24. On 6 June 1991, the Minister stated that, "in general terms", he considered the proposal for payment of outstanding licence fees by instalments "to be reasonable". However, the Minister noted the authority to approve payment by instalments rested with the delegate of the Minister for Finance. The Minister also refused to give the undertakings sought by the receiver.

25. On 12 June 1991, the delegate duly conveyed his approval of the proposal that Northern Star Holdings Ltd ("NSH"), the parent company of UTS, pay outstanding licence fees of $22,575,463.41 by monthly instalments of $1 million, commencing as from April 1991. If NSH ceased to be the holding company of UTS and other companies in the group holding licences, all outstanding fees would become due. On 17 June 1991, Mr Millar, in his capacity as receiver and manager of NSH, accepted the delegate's terms and forwarded to the Department of Transport and Communications a cheque for $2 million for the first two monthly instalments. The cheque, which was dated 13 June 1991, was drawn on an account with Westpac designated as follows:

"UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS and MANAGERS

APPOINTED) JAMES M MILLAR AND ROBERT G DUNN (RECEIVERS and

MANAGERS) - RECEIVERS AND MANAGERS ACCOUNT".

26. The Department forwarded the cheque to the Australian Broadcasting Tribunal, which acted as the Minister's agent for the assessment and collection of fees.

27. As his Honour found, subsequent payments were made to the Commonwealth in accordance with the agreed terms. A final payment was made on 15 October 1991, in consequence of the sale of the broadcasting assets of companies within the NSH Group to a third party. The last payment was made by bank cheque. The following is a schedule of payments made by the receivers, as found by his Honour:

DATE PAID AMOUNT

13 June 1991 $ 2,000,000.00

26 June 1991 $ 1,000,000.00

25 July 1991 $ 1,000,000.00

28 August 1991 $ 1,000,000.00

27 September 1991 $ 1,000,000.00

15 October 1991 $18,332,317.77

$24,332,317.77

(Note: The first cheque was dated 13 June 1991, but not sent until 17 June 1991. However, nothing turns on this.)

28. Each of these payments was made after the winding up order was made, but during the currency of the receivership. The receivership was subsequently terminated.

29. The liquidator's statement of claim is brief. After dealing with the liquidator's appointment and the winding up order, it continues as follows:

"5. On the dates particularised (UTS) paid or caused to be paid

to the Respondent from its own moneys the sums set out in the

... particulars.

6. Such payments were dispositions of the property of (UTS)

made up at (sic. - after) the commencement of the winding up of

(UTS) by the Supreme Court of New South Wales and accordingly

are void by reasons of the provisions of Section 468 of the

Corporations Law."

30. It appears that no particulars were ever sought as to the facts and circumstances which were alleged to have constituted the payments "dispositions of property of (UTS)".

31. In substance, the Commonwealth's defence denied that the payments constituted dispositions of the property of UTS for the purposes of s.468(1) of the Corporations Law. Thus the parties were at issue, not merely as to whether the payments involved property of UTS, but whether there was a "disposition of property" of UTS within s.468(1).

32. The Commonwealth cross-claimed for an order pursuant to s.468(1) that the dispositions of property (should they be held to be such) "be not void". The cross claim is relevant only if, contrary to the Commonwealth's denial, the payments constituted dispositions of the property of UTS for the purposes of s.468(1) of the Corporations Law.

33. The trial judge noted that the authorities were replete with statements that a winding up order terminates the agency of a receiver acting under a debenture to bind the company. However, these statements did not affect the receiver's power to hold and dispose of the company's property comprised in the debenture "for such power is given by the disposition of the company's property which is made in equity by the debenture itself". His Honour expressed agreement with the observations of McLelland J in Re Leslie Homes (Aust) Pty Ltd (1984) 8 ACLR 1020 (S Ct NSW), at 1023. These were to the effect that the receiver's agency remains after the winding up order, but the receiver's authority as agent to bind the company is necessarily limited so as to be consistent with the appointment of the liquidator and the winding up of the company.

34. The trial judge expressed the view that it is inconsistent with the winding up and the powers of the liquidator for a receiver to act as the company's agent so as to create liabilities provable in the winding up. Otherwise the receiver's agency to bind the company continues unimpaired. In particular, the receiver can continue after the winding up to get in and realise the company's assets and take proceedings to recover assets within the description of "mortgaged property" in the debenture deed.

35. With that background, his Honour turned to s.468(1) of the Corporations Law. The reported cases established that s.468(1) applies only to property in which the company has a beneficial interest and only to the extent of that interest. In support of this proposition he quoted from the judgment of Helsham CJ in Eq., in Re Margart Pty Ltd (in liq.); Hamilton v Westpac Banking Corporation (1984) 79 FLR 330 (S Ct NSW). In the context of a discussion of the recent decision of the Full Court of the Supreme Court of South Australia in Sheahan v Air Con Serve Pty Limited [1995] SASC 5193; (1995) 64 SASR 258 (S Ct SA/FC), the trial judge identified the question for determination in the present case as whether a

"payment (which) is made from funds in the hands of the receiver

and subject to the debenture... constitutes a 'disposition of

property' of the company for the purposes of s.468(1)" (emphasis

added).

36. It is to be noted that in this passage the trial judge does not confine the question for determination to whether what was disposed of by means of the payment was "property of the company".

"In my opinion s.468 is directed to dispositions of property

of the company in which it has a beneficial interest and to the

extent of that interest.

It would also, as counsel for the Commonwealth contended,

correctly in my opinion, lead to odd, if not extraordinary

results if this were not the law. It would follow that people

could not safely deal with a receiver after the commencement of

the winding up of a company. The receiver's power to dispose of

property the subject of the charge to third parties would cease

upon the filing of the summons to wind up the company, assuming

that a winding up order is subsequently made. It would be

hollow consolation to the recipient of the funds that he could

apply to the Court for an order validating the disposition. A

transaction contravening s.468 is unlikely to be validated by

the Court unless it was made in the ordinary course of the

carrying on of the company's business or otherwise for the

company's benefit."

38. The trial judge then rejected the liquidator's submission that only dispositions of property made by a receiver to the mortgagee itself (as distinct from dispositions of property to third parties) are outside the scope of s.468(1):

"How can it conceivably be said that there is some impropriety

in the disposition by a receiver of the company's property

covered by the charge, and pursuant to the powers conferred upon

him by the charge, in discharge of obligations of the company

incurred necessarily to protect the company's business (by

ensuring the preservation of the television licence), and

therefore the interests of the secured creditor?"

39. Finally, his Honour answered the separate question for determination in the manner already indicated. The effect of the answer was that the liquidator's claim failed.

40. In the last extract taken from the trial judge's reasons, his Honour has clearly assumed that the receivers had made the payments to the Commonwealth

. pursuant to the powers conferred on them by the charge; and

. in discharge of obligations of the company incurred

necessarily to protect the company's business, by ensuring the

preservation of the television licences held by UTS or the NSH

Group.

41. It is understandable why his Honour made these assumptions. It does not appear to have been suggested to his Honour that there was any issue as to whether the payments were necessarily made by the receiver to protect UTS's business, even though the point was not conceded by the liquidator on the pleadings. Indeed, when the issue was raised during argument on the appeal, Mr Coles QC, who appeared with Mr Chippendall for the liquidators, at first said that there was no dispute about the assumption underlying his Honour's observations. However, he resiled from this position and maintained that there was a live issue between the parties as to whether the payments by the receivers to the Commonwealth were truly necessary to preserve the television licences held by UTS (or the NSH Group) and whether the payments were authorised by the terms of the charges. This was a matter which he said would need to be pursued at the "second stage" of the proceedings.

42. Since there has been no trial of all the issues raised by the pleadings, I think that there is no alternative but to accept Mr Coles' statement that, insofar as the Commonwealth's case rests on the proposition that the payments were necessary to retain the relevant television licences, the appropriate findings of fact to sustain that proposition have not yet been made. Thus if the Commonwealth must make good that proposition (or some variation of it) to succeed, it will be necessary for a trial to take place to ascertain whether the appropriate findings of fact should be made on the evidence presented.

43. In my opinion, it was not appropriate to formulate a question for separate determination in this case, at least in the terms incorporated in the order made pursuant to Federal Court Rules, O.29, r.2. That question, it will be recalled, focussed on whether the property disposed of was "property of (UTS)", within the meaning of s.468(1) of the Corporations Law. There are two reasons for concluding that the question was not appropriate for separate determination. The first is that the question, as asked, assumes that the language in s.468(1) ("any disposition of property of the company") can usefully be broken up into discrete components, for the purpose of construing the sub-section. I do not think that this assumption provides a sound basis for the task of construing the sub-section. The second is that the separate question diverts attention from what I think is the critical question, which cannot be resolved until findings of fact are made. I shall deal with each of these reasons in turn.

44. The assumption that s.468(1) can be broken up into its component parts has a certain logical plausibility. If what is disposed of is not "the property of the company", the terms of s.468(1) cannot be satisfied. But the authorities have not sought to construe s.468(1) by analysing the meaning of the sub-section's component parts, as though they were discrete and unrelated elements. Rather, they have interpreted the statutory language as a whole, having regard to the objectives of the legislation. This approach, in my view, is in keeping with modern techniques of statutory construction.

45. The point can be illustrated by one of the leading cases, Re Margart, relied on by the trial judge. In that case, a debt to a bank was secured by an equitable charge over the assets of the company. A summons to wind up the company was filed on 12 May 1983 and the winding up order was made on 16 June 1983. After 12 May 1983, the proceeds of the realisation of certain of the company's assets were credited to an account with the bank. The liquidator claimed that the payments made by the company to the bank, after the commencement of the winding up, were caught by s.368(1) of the Companies (NSW) Code, the predecessor to s.468(1). Helsham CJ in Eq. approached the case on the basis that the moneys paid to the bank were subject to a floating charge at the time of payment.

46. Helsham CJ in Eq. found in favour of the bank. The first step in his reasoning was the proposition that property the subject of a floating charge is nonetheless covered by the charge (at 333). Thus, from the commencement of a floating charge, the chargee has an immediate and continuing equitable charge over the charger's assets. Secondly, his Honour accepted that a chargee has a beneficial interest in the property the subject of the charge (at 334). Thirdly (at 334):

"whatever meaning the word "disposition" may have when used

in the phrase 'any disposition of property of the company' in

s.368, it does not include the process by which a person with a

beneficial interest in the property obtains that property, or

the proceeds of its realisation, from the company at a time when

he is entitled to have it. In all reality a person would not

normally be described as disposing of his property when he hands

it over to another to whom he had previously promised to deliver

it on the happening of a certain event when that event occurs.

This is only another way of stating in legal terms the

proposition that the word 'disposition', when used with

reference to property, normally has the meaning of connoting a

change in the beneficial ownership of an asset by transfer or

other type of dealing."

47. Helsham CJ in Eq. went on to say that this conclusion was in accord with the rationale underlying the sub-section. As Cairns LJ had said (at 446-447) in Re Wiltshire Iron Co, in relation to s.153 of the 1862 Act, it is a

"wholesome and necessary provision, to prevent, during the

period which must elapse before a petition can be heard, the

improper alienation and dissipation of the property of a company

in extremis."

"What lies behind the section is the prevention of the

improper alienation and dissipation of the company's property.

I do not believe it was intended to reach out to transactions by

which a secured creditor receives assets covered by his security

at a time when he was entitled to have them.

To hold otherwise would mean that assets covered by a fixed

charge, or their monetary equivalent, could not with impunity be

taken by or paid to the person having the benefit of the charge

at any time after the commencement of the winding up. Anything

done by the company or a receiver to pay the chargee or transfer

assets to the chargee would be void. No bank or other person

holding a charge under which moneys had become payable could

take payment without the precaution of obtaining what is known

as a validating order. I do not believe that s.368 was intended

to operate in that way.

Perhaps this conclusion is only another way of stating that

retrieval of property the subject of a charge by a chargee when

he is entitled to have it is not to be categorised as a

disposition of the property of the company within the meaning of

s.368. If this be so it does not affect the present case; the

result is the same. The liquidator is not able to recover from

the bank the money paid to it by the company." (Emphasis added.)

49. The particular issue decided by Helsham CJ in Eq. in Re Margart was whether moneys paid by a company to a chargee, after commencement of the company's winding up, were caught by the predecessor to s.468(1) of the Corporations Law. The trial judge in the present case cited the observations in Re Margart to support the conclusion that s.468(1) applies only to property in which a company has a beneficial interest and to the extent of that interest. However, it is significant, in my view, that the judgment in Re Margart does not focus on the specific words "property of the company", as used in the sub-section. Rather, Helsham CJ in Eq. approached the question of construction by considering the entire phrase "any disposition of the property of the company" in its context, having regard to the objections of the legislation.

50. Helsham CJ in Eq. went on to consider the situation where a receiver disposes of assets to third parties. Although not part of the ratio of the case, these comments are important (at 335-336):

"Although not necessary to say so for the purposes of this

decision, I realise that it may impinge upon the situation where

a receiver has been appointed under a floating charge and he

sets about selling the company's assets the subject of the

charge, after default in payment, or otherwise going about the

things he is permitted to do to enable the chargee to get paid.

Usually, as is the case under the terms of the equitable

mortgage here, in doing so he is expressly made the agent of the

company. Can his acts be designated as dispositions of the

property of the company, so as to make void any of them done

after the commencement of the winding up, giving no title to a

purchaser, and leaving the receiver at risk unless he obtains a

validating order? If my views are correct, the answer would be

no. This would not mean that the company is without redress

against the mortgagee; it would have, through the liquidator,

whatever remedies that might be available to it as mortgagor,

for example, if there were a sale at a gross undervalue. And it

could recover any excess over the amount due to the chargee as

money due to the company. It would only mean that the receiver

could go about his business without the knowledge that

everything he did to realise the assets covered by the charge

was void, and that every payment to the bank or chargee of the

proceeds of his realisations was likewise void. As I have said

in the present case it is not necessary to decide this.

I take the view that the phrase "any disposition of the property

of the company" in the context of s.368 relates to something

done with property that the company is free to deal with. I do

not think that there is a disposal of property of the company

when there is a dealing by someone who is really someone other

than the company and who has the right to say how it is to be

dealt with, and whatever interest the company has in that

property gives it no control or management over the property nor

power to interfere."

51. This analysis also focuses on the entire phrase "any disposition of the property of the company" and not any particular component of that phrase.

52. The language used by Helsham CJ in Eq. in Re Margart has been followed in other Australian cases: Re Country Stores and Tandrio Pty Ltd (1987) 2 Qd R 318 (S Ct Qd/Williams J), at 326-327; Re Ravi Nominees Pty Ltd (1993) 10 ACSR 599 (S Ct WA/White J), at 604. It is consistent with the reasoning of Goulding J in Sowman v David Samuel Trust Ltd (In Liq.) (1978) 1 WLR 22 (Ch.D/Goulding J), at 30, which was referred to with approval in Atkins v Mercantile Credits Ltd (1986) 4 ACLC 125 (NSW CA), at 131. See also Re Leslie Homes (Aust.) Pty Ltd (1984) 8 ACLR 1020 (S Ct NSW/McLelland J).

53. In my opinion, the approach adopted by Helsham CJ in Eq. is the appropriate way to undertake the task of statutory construction. As McHugh JA said in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 (NSW CA), in the context of a discussion of the purposive approach to statutory construction at (423-424):

"If the objects and purposes of a statute and the means of

their achievements are not declared, they can only be determined

by examining the statute as a whole. The ordinary meanings of

the individual words together with any statutory definitions

will invariably indicate what those objects, purposes and means

are. The cumulative weight of their core meanings will indicate

the general purpose or purposes of the statute. But when the

statute has been read as a whole and its purpose determined, the

prima facie meaning of a provision must, if necessary, give way

to the construction which gives effect to the statutory object

or purpose. The meaning of a legislative provision is not

necessarily the sum of the meanings of its constituent elements:

cf Exxon Corpn v Exxon Insurance Consultants International Ltd

(1982) Ch 119 at 144. Words may give colour to each other,

modifying their primary meaning, and causing the whole provision

to have its own unique meaning. Likewise the general objects

and purposes of the statute will give colour to the individual

words, phrases and provisions sometimes modifying their ordinary

meanings."

54. The fact that his Honour dissented as to the result in that case does not detract from the force of his remarks. See also K and S Lake City Freighters Pty Ltd v Gordon and Gotch Pty Ltd [1985] HCA 48; (1985) 157 CLR 309, at 315, per Mason CJ; Busby v Chief Manager, Human Resources Department, Australian Telecommunications Commission (1988) 20 FCR 463 (FCA/FC), at 468; Director-General of the Department of Corrective Services v Mitchelson (1992) 26 NSWLR 648 (NSW CA), at 653-654, per Kirby P.

55. I do not mean to suggest that there will not be cases where it is appropriate to concentrate attention upon particular words within a broader phrase used in legislation. However, I think that very considerable caution should be exercised before such a course is followed.

56. The trial judge relied principally on the proposition that s.468(1) is directed only to dispositions of property of the company in which it has a beneficial interest and to the extent of that interest. I do not doubt that this proposition is a correct statement of the law. It gives effect to the policy underlying the sub-section. This construction explains, for example, why the transfer of a company's property to a third party, after the commencement of the winding up, is not caught by s.468(1) if the transfer takes places pursuant to a specifically enforceable contract entered into prior to the winding up: Re Country Stores, at 327. It also explains why payment of the proceeds of realising the company's assets, to a chargee who is entitled to the payment, is not within s.468(1). In that case, as Helsham CJ in Eq. pointed out, there is in substance no change in the beneficial ownership of the asset.

57. It is, however, considerably more difficult to analyse the application of s.468(1) to payments to third parties simply by asking whether the company has a beneficial interest in the property transferred. Helsham CJ in Eq. did not approach the question in this way in Re Margart. His Honour said that s.468(1) does not apply where there is a dealing by someone who has the right to say how the property is to be dealt with and "whatever interest the company has in that property gives it no control or management over the property nor power to interfere". Far from framing the principle by reference to whether the company does or does not have a beneficial interest in the property transferred, the formulation in Re Margart assumes that the s.468(1) can apply even where the company does have a beneficial interest, albeit one that in the circumstances (such as default under the terms of a charge) does not permit it to control or manage the property or interfere with the chargee's actions. A person may have a beneficial interest in property, yet not be entitled to control or manage it, or to prevent another person disposing of the property. For example, a registered proprietor of real property, who is in default under a mortgage, may be powerless to prevent a sale by the mortgagee (assuming the mortgagee acts in accordance with its obligations as a mortgagee exercising a power of sale). Yet the proprietor retains a beneficial interest in the land pending the sale.

58. It seems to me that the central question in the present case, which involves a payment by receivers to a creditor of the company in respect of pre-receivership debts, is not whether the company had a beneficial interest in the bank account maintained by the receivers or in the cheques drawn by the receivers (including the bank cheque used to make the final payment). Rather, it is whether the payments were authorised by the terms of the charge. If so, I do not think that the payments should be regarded as "disposition(s) of property of the company", for the purposes of s.468(1). This is consistent with the observations of Goulding J in Sowman v David Samuel Trust Ltd (1978) 1 WLR 22, at 30.

59. I think that the difficulty in focussing on whether a company had a beneficial interest in the payments made to a third party by the receiver is illustrated by the circumstances of the present case. Where a company operates a bank account, the relationship between the company and bankers "lies essentially in contract": Weaver and Craigie, The Law Relating to Banker and Customer in Australia (2nd ed 1990), para.2511. The classic statement of the incidents of the relationship is that of Atkin LJ in Joachimson v Swiss Bank Corporation (1921) 3 KB 110 (CA), at 127, approved in National Australia Bank Ltd v K.D.S. Construction Services Pty Ltd [1987] HCA 65; (1987) 163 CLR 668, at 676. If the company's account is in credit, the bank is a debtor of the customer who has a legal chose in action, comprising the right to recover from the bank the credit balance in the account: Croton v The Queen [1967] HCA 48; (1967) 117 CLR 326, at 330, per Barwick CJ.

60. It is true, as Mr MacFarlan pointed out, that payments from a bank account do not transfer the customer's legal chose in action to the payee. Rather, the credit balance of the customer with the bank is diminished to the extent of the payment. But, having regard to the objectives of s.468(1), as stated in Re Margart, it seems to me that a payment from the company's funds, to which the company is entitled under contractual arrangements with its bankers, involves "property of the company" for the purpose of s.468(1). If it were otherwise, a payment by a receiver out of the company's funds in favour of a third party, by means of a cheque drawn on a bank account, would never be caught by s.468(1): see Sheahan v Air Con Serve, at 271, per Doyle CJ.

61. Mr Coles pointed out that the trial judge made no finding as to whether, at any given time, the realisable assets of UTS were exceeded by its debts and, if so, the extent of the deficiency. But even if it be assumed that there was a substantial deficiency, at least at the time of payment to the Commonwealth, that does not, in my view, detract from the proposition that the funds paid to the Commonwealth were "property of the company". The fact that the banks had an equitable interest in the funds is not inconsistent with UTS retaining a proprietary interest in the fund. More than one beneficial or proprietary interest may co-exist in relation to the same asset. UTS at least had the right, as against the receiver, to maintain an action for account and to restrain the improper exercise of powers under the charge: Kerr on Receivers and Administrators (17th ed 1989), 342-343. Of course, the commercial value of those rights may have been negligible, or even nil. But this does not mean that UTS's rights did not exist, nor that they did not constitute property for the purposes of s.468(1).

62. Furthermore, if the existence of a beneficial interest in property depends on whether the company's realisable assets are exceeded by its debts at any given time, the application of s.468(1) to a payment to a third party will depend on the valuation of assets and liabilities at the date of the payment. Since valuations (and values) can fluctuate wildly, this principle is hardly calculated to induce certainty in commercial transactions.

63. The trial judge did not make findings as to whether the payments made by the receivers were authorised by the terms of the charge. It is true that his Honour implied that the payments were made in discharge of obligations necessarily incurred to protect the company's business and were therefore authorised by cl.7 of the deed of charge. Also, it may well be the case that, in view of the correspondence, the liquidator would have considerable difficulty in establishing that the payments by the receivers were outside the terms of the charge. Nonetheless, because of the terms of the separate question and the course the trial took, the critical findings of fact were not made. I do not think that the matter should be disposed of by making findings on appeal concerning the scope of cl.10 of the deed of charge. No arguments were put, either to the trial judge or to this Court, as to the construction of cl.10 or its applicability to the payments made by the receivers.

64. The Commonwealth argued that the payments made from the account maintained by the receivers did not constitute property of the company, for the purposes of s.468(1), because the receivers held the legal title to those funds, to the exclusion of UTS. This was said to be so, notwithstanding that the receivers were the agents of UTS. Although I have formed the view that the proceedings should be remitted for a trial on all issues it is appropriate to express a view on this issue.

65. In my opinion, the Commonwealth's argument cannot be sustained, having regard to the documentary evidence. The account was maintained under the style

"UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS and MANAGERS

APPOINTED) JAMES M MILLAR AND ROBERT G DUNN (RECEIVERS and

MANAGERS) - RECEIVERS AND MANAGERS ACCOUNT."

66. This is how one might expect an account to be opened and maintained by a receiver who is acting as agent of the company and who has no legal or beneficial interest in the account: Lightman and Moss, The Law of Receivers and Companies (2nd ed 1994), 171. It might be difficult in some circumstances to ascertain whether a receiver is acting as agent for the company or on his or her own account: cf Sheahan v Air Con Serve Pty Ltd, at 177 ff, per Doyle CJ. However, in this case no such difficulty arises.

67. In the result, the order made pursuant to Federal Court Rules, O.29, r.2, that the question previously referred to be determined separately from and prior to any other question in the proceedings, should be set aside. The proceedings should be remitted to a judge of the Court for determination of all issues raised by the pleadings. The costs of the appeal and of the proceedings before the trial judge should be costs in the cause.