Inspector Belley v Freight Rail Corporation

Freight Rail Corporation (Sale Act 2001 (NSW) s 3 s 5 s 9 s 12 s 15: Schedule 1 cl 2 cl 3 cl 5 Industrial Relations Act s 154 LEGISLATION CITED : Occupational Health and Safety Act 1983 s 6 s 15(1) s 17(1)(a) Occupational Health and Safety Act 2000 s 123 State Owned Corporations Act 1989 (NSW)) Transport Administration Act 1988 (NSW) s 19G Alcan Australia Ltd, ex parte Federation of Industrial Manufacturing Engineering Employees (1994) 123 ALR 193 at 200 and [1994] 68 ALJR 626 at 631 Barras v Aberdeen Steam Trawling and Fishing Co [1933] AC 402 at 446, per Lord Mcmillan Byrne v Garrison (1965) VR 523 at 528 Centro Latino Americano de Commercio Exterior SA v Owners of the Ship "Kommunar" [1997] 1 Lloyd's Rep 8 D'Emden v Pedder (1904) 1 CLR 91 at 110, Fowler v Taylor [1957] VR 593 at 595 Flaherty v Girgic (1986-87) 162 CLR at 594 Knecevic v Markovic (1985) 5 FCR 219 MGH Plastic Industries Pty Ltd v Zickar (1994) 34 NSWLR 617 at 621F Pillar v Arthur [1912) 15 CLR 18 at 22, 25, 29-30, Platz v Osborne (1943) 68 CLR at 141, 146, 146-7 CASES CITED : Project BlueSky v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 ff Public Service Association of New South Wales v Industrial Commission of New South Wales (1985) 1 NSWLR 627 Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1951-52) 85 CLR at 174 Queen v Reynhoudt (1962) 107 CLR 381 State Rail (NSW) v WorkCover Authority (2000) 102 IR 218 at 231ff The Herron II, Koufas v Czarnikow Ltd [1967] 3 All E R 686 at 694 Winter v The Inland Revenue Commission [1961] 3 All ER 855 at 858 WorkCover Authority of New South Wales (Inspector Belley) v Rail Infrastructure Corporation (2001) 111 IR 442 WorkCover Authority of NSW (Inspector Gilbert) v Energy Australia (formerly Sydney Electricity) (1998) 85 IR 99 WorkCover Authority of New South Wales v Rail Infrastructure Corporation (2001) 111 IR 42 WorkCover Authority of New South Wales v The Sydney Market Authority (1997) 82 IR 134

HEARING DATES: 09/26/2002 DATE OF JUDGMENT: 10/24/2002

PROSECUTOR: Ms L McManus of counsel SOLICITORS: Ms H Cameron Legal Services Branch WorkCover Authority of NSW

DEFENDANT: FreightCorp LEGAL REPRESENTATIVES: Dr C Birch SC SOLICITORS: Mr D Cross Allens Arthur Robinson

RESPONDENT ON THE MOTION: Pacific National Mr P Wood of counsel SOLICITORS: Mr S Burns Ebsworth & Ebsworth

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Matter Nos. IRC 5176 and 5178 of 2000 Inspector Gabrielle Belley v Freight Rail Corporation Prosecutions under s 15(1) of the Occupational Health and Safety Act 1983 INTERLOCUTORY JUDGMENT [2002] NSWIRComm 281

A PROSECUTION COMMENCED 1 In October 2000, Inspector Belley made application for orders seeking to commence two prosecutions against the defendant pursuant to the provisions of s 15(1) of the Occupational Health and Safety Act 1983 ("the Act").

The two prosecutions arose from a fatal injury to an employee in the performance of shunting duties at the Trangie Rail Yard on 27 October 1998. 2 At the time of the accident and at the time proceedings were commenced under the Act, the Freight Rail Corporation ("the defendant corporation") was a statutory corporation formed pursuant to the provisions of the Transport Administration Act 1988.

3 Inspector Belley had also commenced proceedings under s 17(1)(a) of the Act against the Rail Access Corporation, which was ultimately pursued against the Rail Infrastructure Corporation in its capacity as successor to the interests of the Rail Access Corporation following certain statutory amendments. A plea of guilty was entered by the defendant and the judgment on that plea was dealt with in December 2001 (WorkCover Authority of New South Wales (Inspector Belley) v Rail Infrastructure Corporation (2001) 111 IR 442).

4 By August 2002, the defendant corporation in the present matters had raised its concern that, as a result of the sale of the corporation, it was no longer the proper defendant: it nominated as the proper defendant the purchaser, namely, National Rail Consortium (SSL) Pty Ltd (later known as "Pacific National"). The defendant corporation by notice of motion effectively sought to be removed from the proceedings as the defendant: the relevant notice of motion sought the following substantive orders: 1. That pursuant to the Order signed by the Treasurer of New South Wales on 19 February 2002 under section 12 of the Freight Rail Corporation (Sale) Act 2001 (NSW) ( the Act) and sub-clauses 3(c) and (e) of Schedule 1 of the Act: (a) these proceedings are taken to be proceedings pending against National Rail Consortium (SSL) Pty Ltd ACN 099 150 688 of Level 8, 309 Kent Street, Sydney, New South Wales; and (b) all references to the defendant in any documents filed in these proceedings or in any orders made by the Commission in these proceedings shall be read as a reference to National Rail Consortium (SSL) Pty Ltd ACN 099 150 688 of Level 8, 309 Kent Street, Sydney, New South Wales. 2. In the alternative, a declaration pursuant to section 154 of the Industrial Relations Act 1996 (NSW) that the proper defendant to these proceedings is National Rail Consortium (SSL) Pty Ltd ACN 099 150 688 of Level 8, 309 Kent Street, Sydney, New South Wales.

THE LEGISLATIVE FRAMEWORK 5 On the hearing of the motion, the evidence was that, at the time of commencement of the proceedings, the defendant was a State owned corporation (within the meaning of the State Owned Corporations Act 1989 (NSW)), constituted by s 19G of the Transport Administration Act 1988 (NSW) and trading under the name of "FreightCorp". In that capacity, the defendant conducted a rail freight business in New South Wales and elsewhere. On 31 January 2002, the Treasurer of New South Wales entered into an agreement for and on behalf of the defendant corporation whereby the rail freight business of the defendant was sold to Pacific National. The sale was authorised by the Freight Rail Corporation (Sale) Act 2001 (NSW)("the Sale Act"). The Act provided in s 12 for the Treasurer to issue an Order to effect the transfer of assets, rights and liabilities to the purchaser. Such an order was to be read in conjunction with Schedule 1 of the Act. On 19 February 2002, the Treasurer signed such an Order, a copy of which was before the Court. The Act also provided for the Treasurer to issue an Order excluding assets, rights and liabilities from the sale. On 19 February 2002, the Treasurer signed such an Order: a copy of that Order was also in evidence before the Court.

6 It was the defendant's contention that the s 12 Order read in conjunction with Schedule 1 of the Act had the effect of transferring the defendant's criminal liability, including the liability relating to these proceedings, to the purchaser, Pacific National.

7 It was submitted that, subsequent to the making of the Order under s 12 and pursuant to s 15(1) of the Sale Act, the defendant ceased to be a State owned corporation and was converted to a corporation sole constituted by the Treasurer. That conversion had been brought about by a proclamation made by the Governor on 20 February 2002 to the effect that s 53 and Schedule 3 of the Act would commence. These provisions were said to have the effect of repealing s 19G of the Transport Administration Act 1988 (NSW). Upon the repeal of that provision, s 15(1) of the Sale Act became effective.

8 Although relevant for other purposes, the uncontested evidence before the Court was that the defendant corporation held none of the records or other documents that were said to bear upon the matters relevant to the proceedings under the Occupational Health and Safety Act - all such documents had been transferred to Pacific National as a consequence of the sale. Further, the defendant corporation no longer employed any persons and, in particular, did not now employ any of the individuals who were involved in the accident which was the subject of the proceedings.

9 The Freight Rail Corporation (Sale) Act 2001 commenced on 13 July 2001 (except for s 53 and Schedule 3). That Act empowered the Treasurer of New South Wales to effect a sale of the freight rail business in one of three ways: by sale of that business undertaking to the purchaser (as defined), referred to as a direct transfer; the conversion of FreightCorp to a company and sale of that company by transfer of shares in the company to the purchaser; or, by transfer of the business undertaking to a company and sale of that company by transfer of the shares in the company to the purchaser (s 5). The sale method adopted was a direct transfer of FreightCorp's undertaking to the purchaser.

10 The relevant provisions of the Sale Act were said to be as follows: Section 3 defined "business undertaking" of FreightCorp to mean: "all the assets, rights and liabilities of FreightCorp". "Excluded undertaking" was defined to mean: "… any assets, rights or liabilities of the business undertaking of FreightCorp that are excluded from the sale under this Act pursuant to Section 9. "FreightCorp's purchaser" was defined to mean: (a) "when the sale of FreightCorp is under Part 3 (Sale method 1 - direct transfer of undertaking to purchaser) - the purchaser to whom the assets, rights and liabilities that comprise the business undertaking of FreightCorp are transferred under that Part … "Liabilities" was defined to mean: "all liabilities, debts and obligations (whether present or future and whether vested or contingent). Section 9 was headed "Parts of business undertaking may be excluded from sale" and provided as follows: (1) The Treasurer may by order in writing exclude assets, rights and liabilities of the business undertaking of FreightCorp from sale under this Act. (2) The Treasurer may by order in writing transfer any assets, rights or liabilities excluded from sale under this Act to the Crown, the Ministerial Holding Corporation or any other public authority. Schedule 1 (Transfer of assets, rights and liabilities) applies to such an order. (3) The Treasurer may, by further order under this section, further transfer any assets, rights or liabilities previously transferred under this section. Section 11 was headed "Agreements for Sale" and, so far as is relevant, provided: (1) The Treasurer is authorised to enter into agreements for or in connection with the sale of the business undertaking of FreightCorp to a purchaser and for that purpose the Treasurer may act for and on behalf of FreightCorp. Section 12 was entitled "Orders for transfer of assets, rights and liabilities" and provided: The Treasurer may by order in writing transfer to the purchaser any assets, rights and liabilities that comprise the business undertaking of FreightCorp. Schedule 1 (Transfer of assets, rights and liabilities) applies to such an order. Section 15 was entitled "Dissolution or conversion of FreightCorp after sale" and provided, so far as is relevant, as follows: (1) On the repeal of section 19G (Establishment of FRC as statutory State owned corporation) of the Transport Administration Act 1988 FreightCorp ceases to be a State owned corporation under the State Owned Corporation Act 1989 and: (a) is dissolved unless paragraph (b) applies, or (b) is converted to a corporation sole constituted by the Treasurer if the business undertaking of FreightCorp immediately before the repeal of section 19G includes any special lease. (2) On the dissolution or conversion of FreightCorp by this section, any assets, rights and liabilities of FreightCorp become the assets, rights and liabilities of the Crown, except any special lease or any sublease or sub-leases of the property to which a special lease applies. …

(5) If FreightCorp is converted to a corporation sole: (a) it has and may exercise such functions as may be necessary or convenient to enable it to exercise its rights and discharge its obligations under or in connection with a special lease or any sublease of the property to which a special lease applies, and (b) section 43A (General audit of former statutory bodies) of the Public Finance and Audit Act 1983 applies as if FreightCorp had been abolished, and (c) the corporation sole is taken for all purposes (including the rules of private international law) to be a continuation of, and the same legal entity as, FreightCorp as it existed before its conversion to a corporation sole. Section 27 was entitled "Agreement for Sale" and provided: The Treasurer may enter into and carry out on behalf of the State an agreement for the sale of the business undertaking of the sale company to a purchaser by means of the sale of the shares in the sale company. Part 6 dealt with the results of the sale and contained s 43 which was headed "Transfer of staff (sale method 1 or 3)" and, so far as is relevant, provided: (1) When the sale of FreightCorp is under Part 3 (Sale method 1 - direct transfer of undertaking to purchaser), the employees of FreightCorp immediately before the sale date are transferred on the sale date to the employment of FreightCorp's purchaser and FreightCorp's purchaser is their new employer for the purposes of this section. Section 45 was headed "Proceeds of Sale" and provided: (1) The proceeds of the sale of FreightCorp are to be paid into the Consolidated Fund. (2) There may be deducted from any proceeds of sale before payment into the Consolidated Fund such amount as the Treasurer approves to meet the expenses reasonably incurred in connection with the operation of this Act. Section 49 was entitled "Act binds Crown" and provided: This Act binds the Crown in the right of New South Wales and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities.

11 Schedule 1 to the Act dealt with transfer of assets, rights and liabilities. Clause 2 of Schedule 1 was headed "Determinations by Treasurer as to assets, rights and liabilities of FreightCorp" and provided: For the purposes of the making of a transfer order, the Treasurer may determine whether or not particular assets, rights or liabilities comprise the business undertaking of FreightCorp at a particular time, and such a determination is conclusive as to the matters determined. Clause 3 was headed "Vesting of assets, rights and liabilities in transferee" and provided: (1) When any assets, rights or liabilities are transferred by a transfer order, the following provisions have effect (subject to the transfer order): (a) the assets vest in the transferee by virtue of this clause and without the need for any conveyance, transfer, assignment or assurance, (b) the rights and liabilities become, by virtue of this clause, the rights and liabilities of the transferee, (c) all proceedings relating to the assets, rights or liabilities pending by or against the transferor are taken to be proceedings pending by or against the transferee, (d) any act, matter or thing done or omitted to be done in relation to the assets, rights or liabilities by, to or in respect of the transferor is (to the extent that the act, matter or thing has any force or effect) taken to have been done or omitted by, to or in respect of the transferee (e) a reference in any Act, in any instrument made under any Act or in any document of any kind to the transferor or a predecessor of the transferor is (to the extent that it relates to those assets or liabilities but subject to the regulations), to be read as, or as including, a reference to the transferee. Clause 5 was headed "Consideration for vesting" and provided - A transfer order may specify the consideration for which a transfer to which it applies is made and the value or values at which assets, rights or liabilities are transferred .

12 In evidence were two Orders made by the Treasurer under the Sale Act on 19 February 2002. The Order made under s 12, so far as is relevant to the present proceedings, provided as follows: C. TRANSFER OF ASSETS, RIGHTS AND LIABILITIES TO THE PURCHASER C1. Pursuant to section 12 of the Act, but subject to clauses C2 and C3, all of the Assets, Rights and Liabilities of FreightCorp as in existence immediately prior to the Completion are transferred to the Purchaser with effect from Completion. C2. Notwithstanding clause C1, the followings Assets, Rights and Liabilities of FreightCorp are not transferred to the Purchaser pursuant to this Order: (a) any Assets or Rights of FreightCorp that, as at the time immediately prior to Completion, are Excluded Assets; (b) any Liabilities of FreightCorp that, as at the time immediately prior to Completion, are Excluded Liabilities; (c) any Assets, Rights or Liabilities of FreightCorp that are excluded from sale under the Act by an order made by the Treasurer pursuant to section 9(1) of the Act in the form annexed to this Order where such order is made prior to Completion. C3. An Asset, Right or Liability is not transferred to the Purchaser pursuant to this Order to the extent that: (a) the transfer would be ineffective; or (b) the transfer would be effective but the Sale Agreement nevertheless provides that the Assets, Right or Liability is not to be transferred to the Purchaser at Completion . It was stated that the reference in Clause C2 to "Excluded Assets" and "Excluded Liabilities" was a reference to the matters dealt with under those headings in the sale agreement. The Order under s 9(1) of the Sale Act was in the following terms: C . EXCLUSION OF ASSETS, RIGHTS AND LIABILITIES FROM SALE. C1. Pursuant to section 9(1) of the Act, but subject to clause C2, the following Assets, Rights and Liabilities of FreightCorp are excluded from sale under the Act (and so do not form part of the business undertaking of FreightCorp for the purposes of Part 3 of the Act): (a) any Assets or Rights of FreightCorp that, as at the time prior to completion, are Excluded Assets; (b) any Liabilities of FreightCorp that, as at the time of immediately prior to completion, are Excluded Liabilities; (c) all the interests, rights and liabilities of FreightCorp in and associated with: (i) the land in Lot 3 in Deposited Plan 1006861 at Enfield together with all rail infrastructure, fixtures and other improvements situated on the land including track work, sidings and fences (but excluding any infrastructure, buildings and improvements owned by FreightCorp within the "Administration Area" and all fixtures located within, connected to or associated with those buildings and the wagon repair siding adjacent to the "Administration Building" within the "Administration Area"); and (ii) the land in Lot 201 in Deposited Plan 1007128 at Port Kembla together with all rail infrastructure, fixtures and other improvements situated on the land including track work, sidings and fences. C2 Notwithstanding clause C1, all of the interests (whether present, future, vested or contingent) of FreightCorp in, and all of the rights, powers, privileges, immunities, liabilities, debts and obligations (whether present, future, vested or contingent) of FreightCorp under, the EBL Subleases are not excluded from sale under the Act pursuant to this Order (although such is excluded from sale under the Act pursuant to the operation of section 14(1)(a) of the Act) and so do not form part of the business undertaking of Freightcorp for the purposes of Part 3 of the Act (and, in particular, for the purposes of section 15(1)(b) of that Act). THE DEFENDANT'S ARGUMENT 13 Against this background, the defendant corporation submitted: (i) the plain or literal meaning of s 12 and the relevant provisions of Schedule 1 included within the term "liabilities" FreightCorp's criminal liability, which was therefore effectively transferred; (ii) reading s 12 and Schedule 1 in the context of the whole Act confirms that those provisions apply to FreightCorp's criminal liability; (iii) reading s 12 and Schedule 1 as extending to criminal liability is more consistent with the policies underlying the Occupational Health and Safety Act and the Sale Act and the Court should prefer that construction of the Act which operates most rationally and harmoniously with the principles governing the criminal liability of corporations. (iv) it was submitted that the crucial term was "liabilities" which, by virtue of s 12 and Schedule 1 Clause 3(1)(b), the Treasurer was authorised to transfer to the purchaser. It was noted that "liability" and "liabilities" were words which may extend to both criminal and civil responsibilities ( Byrne v Garrison (1965) VR 523 at 528). It was not doubted that the context may indicate that only civil liability is intended to be covered by the term ( Fowler v Taylor [1957] VR 593 at 595). In Fowler , Dean J found that liability had been used only in the civil sense but noted that the word "liable" appeared in conjunction with the terms "action, claim or demand", all of which usually related to civil liability.

14 Reference was made to the judgement of Hungerford J in WorkCover Authority of NSW (Inspector Gilbert) v Energy Australia (formerly Sydney Electricity) (1998) 85 IR 99. That case dealt with the transfer of liabilities between corporations following a restructuring of the electricity industry in New South Wales. In that case, Hungerford J concluded that the words "liabilities" appearing in the Sydney Electricity Act extended only to civil liability. It was submitted that there were substantial differences between the legislation considered by Hungerford J and the terms used in the Sale Act. If that was not so, it was submitted that the judgment of Hungerford J was wrong.

15 It was said that in Energy Australia Hungerford J applied similar reasoning to that of Dean J in Fowler v Taylor, noting that many of the other provisions of the relevant sections and the schedule of the Electricity Act were apt only to apply to matters of a civil nature. However, it was submitted that in both Acts the term "liabilities" was unqualified and was not found in conjunction with any similar terms denoting matters of a civil nature such as "claims", "demands" or "actions". It was submitted that, although assets and rights are also referred to in s 12 and Clause 3 of Schedule 1 of the Sale Act and are largely of a civil nature, there were no analogous concepts in the criminal field to that of assets. There was no reason therefore not to give the term "liabilities" its most general meaning. Further, Schedule 1, Clause 3(1)(c) referred to "all proceedings" relating to assets, rights or liabilities. This was again a term of broad scope which could include criminal proceedings. It was submitted that it was significant for the operation of Clause 23 that "liabilities" was defined to include "all liability", including present or future, vested or contingent. These were words of great generality and, on any literal or plain meaning of the term, criminal liabilities were picked up. It was clear that civil liabilities were also caught but that of itself was no reason to read down the word "liabilities".

16 On an overall consideration of the Sale Act, the defendant corporation submitted that the definition of "business undertaking" and "excluded undertaking" suggested that the business undertaking was to include all the liabilities of the corporation: those to be excluded were to be specifically excluded using the mechanisms of the Act such as an order under s 9 and the discretion conferred on the Treasurer in Clause 2, Schedule 1. Clause 2, Schedule 1 was consistent with an approach to the Act which would accord the terms "assets", "rights" and "liabilities" the widest potential application, leaving it to be determined administratively whether some particular liability ought to be excluded.

17 The Sale Act empowered the Treasurer to effect the sale of the whole of the undertaking of the defendant corporation although the sale, in accordance with the Sale Act, could be brought about in a number of ways as chosen at the discretion of the Treasurer (s 5). If the sale had been achieved by conversion of the corporation to a company limited by shares then, it was submitted, the responsibility for defending a prosecution and paying a fine would in a practical sense, pass to the purchaser. However, the defendant corporation argued that the technical form in which the sale was affected should not determine where the incidence of criminal liability ultimately fell. It was noted that, in WorkCover Authority of New South Wales (Inspector Gilbert) v Energy Australia (1998) 85 IR 99, Hungerford J considered some similar statutory provisions dealing with the transfer of liabilities from one corporation to another as part of the restructuring of the electricity Industry in New South Wales. His Honour concluded in that case that the word "liabilities" appearing in the Sydney Electricity Act extended only to civil liabilities. The defendant corporation submitted that there were substantial differences between that legislation considered by Hungerford J and the Sale Act. If that proposition was not accepted it was submitted that Hungerford J erred. It was said that a number of matters in the Schedule to the Electricity Act related principally to civil matters and that appeared to influence Hungerford J in coming to the conclusion that the reference to "liabilities" was a reference to civil liabilities only.

18 The fact that there are a number of provisions dealing with civil liabilities should not determine the issue. Because of the complex nature of civil liabilities, it was likely that there would be a need for a variety of provisions to deal with those matters compared with criminal liability. The number of such matters should not be a test of whether "liabilities" is used in a broad or narrow sense. Reliance was placed on the joint judgment in Project BlueSky v Australian Broadcasting Authority (1998) 194 CLR 355 at 381ff (McHugh, Gummow, Kirby and Hayne JJ): A legislative instrument must be constructed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while retaining the unity of all of the statutory provisions. The word "liabilities" in the Sale Act is cast in the most general of terms permitting the purchaser of the business to be placed in the same position as FreightCorp prior to the sale excepting only specific exclusions as determined by the Treasurer.

19 Under s 42 of the Sale Act, the original staff of the defendant corporation was transferred to the purchaser who was deemed to be its new employer. On conversion of the defendant corporation from a State owned corporation to a corporation sole constituted by the Treasury, any person who held office as a director immediately prior to conversion ceased to do so without compensation (s 15(4)). Thus, the personnel and corporate culture that may be found deficient in the present case if a conviction results, have now largely become the personnel and corporate culture of the purchaser. A conviction of the corporation sole would not further the general policies of the Occupational Health and Safety Act nor would the conviction of that corporation mark legal disapproval of the conduct which the company's agents and controllers caused or permitted to occur. A penalty against the company marks such a disapproval and hopefully deters those officials and the officials of other companies from causing or permitting corporations to commit similar conduct in the future (see, for example State Rail (NSW) v WorkCover Authority (2000) 102 IR 218 at 231ff).

20 It was relevant that, had the defendant corporation not been maintained as a corporation sole, it would have been dissolved and if the word "liabilities" did not encompass criminal liability the result would have been that, on dissolution, the current prosecution would abate. Giving a narrow construction to the word "liabilities" meant that it was largely fortuitous as to whether or not the present prosecution was maintainable after the sale. Such an approach would not give effect to any harmonious goal that might rationally have been furthered by the Sale Act.

21 A supplementary submission made by the defendant corporation centered on FreightCorp continuing as a corporation sole and the effect of s 15(2) of the Sale Act whereby, on conversion of the corporation, any assets, rights and liabilities of FreightCorp became the assets, rights and liabilities of the Crown, except any special lease or sub-lease etc. It was submitted that, if the term "liabilities" did not extend to criminal liability then a number of anomalous and impractical consequences arose. It would appear, for instance, that the only things left in the defendant corporation after the sale were various leases. If the defendant corporation's criminal liability remained, it was said to have no money to satisfy those liabilities because all of its assets, barring the specified leases, had been transferred to the Crown. It was presumed, for any fine to be paid, that amount might have to be levied in a fresh appropriation which would need to be passed by Parliament to "put it in funds". This result would contradict what appears to be the plain intendment of s 15(2) that, after conversion, the only liabilities residing in the corporation would be those under specified leases.

22 Further, it was submitted, if the criminal liability remained with the defendant corporation after the sale, that liability had been transferred to the Crown. It was then submitted that the prosecution would need to be commenced against the State of New South Wales and, as there was no provision which deemed the current prosecution to be continued as a prosecution against the State of New South Wales, the prosecution would have to be dismissed and any fresh prosecution against the State of New South Wales would be out of time. Thus, the prosecution would be frustrated if the word "liabilities" included only civil liability.

23 The defendant corporation then raised a further difficulty. While it was accepted that s 6 of the Occupational Health and Safety Act binds the Crown in the right of New South Wales and its other capacities, it was another step altogether to conclude that the Act binds the Crown so as to render liable for criminal prosecution a corporation sole, the only function of which was to be the repository of rights in regard to certain specified leases and which is constituted by the Treasurer of New South Wales. It should not be concluded that the corporation sole is an emanation of the Crown rendered liable to criminal prosecution by s 6 of the Act.

PACIFIC NATIONAL'S ARGUMENT 24 As a respondent to the defendant corporation's notice of motion Pacific National opposed the orders sought. It was pointed out that the workplace accident, the subject of the proceedings, had occurred on 28 October 1998 but that it was not until 31 December 2001 that Pacific National was incorporated pursuant to the laws of Victoria. Further, it was not until 31 January 2002 that the Treasurer of New South Wales (on behalf of FreightCorp and Pacific National) entered into a sale agreement pursuant to which Pacific National agreed to buy the business undertaking of FreightCorp.

25 Pacific National submitted that it was not possible for a company, after it had allegedly committed an offence, to enter into an agreement whereby it could transfer its alleged criminal liability to the other contracting parties. Criminal liability was not assignable by agreement: it was not akin to an asset, a debt or a civil liability. It was therefore important to note that Pacific National was not and was not deemed by the Sale Act to be the same legal entity as FreightCorp after the sale.

26 The defendant corporation's argument was not assisted by the terms of Clause 3(1) (c) of Schedule 1, which make provision for the continuation of proceedings against the purchaser of the business undertaking of FreightCorp. That provision was itself limited by reference to "assets, rights or liabilities" - if "liabilities" was limited to civil liabilities, then the reference to "proceedings" was similarly limited to civil proceedings.

27 Pacific National submitted that the decision of Hungerford J in Energy Australia provided a persuasive guide to the construction of the word "liabilities" in a statute such as the Sale Act. The issues in Energy Australia were the same as those in the present case and the same approach should be followed. The factual situation, involving the transferring of assets and liabilities to a new entity, were identical while the statutory provisions were "almost identical in material aspects". As in Energy Australia, it was accepted that the word "liabilities" was apt to embrace both criminal and civil responsibility - how the term was to be construed depended on the statutory context in which it was used. In the Sale Act, "liabilities" was defined in s 3 to mean "all liabilities, debts and obligations (whether present or future and whether vested or contingent)". The definition was said to be exhaustive and not inclusive and the term "liabilities" must take its colour from its association with the words "debts and obligation" - these were terms typically, if not solely, used to describe civil matters and an identical definition was used in Clause 8 of Schedule 3 of the Electricity Act. There was also an almost identicality of provisions in the legislation of the Energy Act and ss 3,9,12,42 and 44 and Clause 5 of Schedule 1 and Schedule 2 of the Sale Act.

28 It was also put that the approach to the dissolution of the Sydney Market Authority found in WorkCover Authority of New South Wales v The Sydney Market Authority (1997) 82 IR 134, and the approach in WorkCover Authority of New South Wales v Rail Infrastructure Corporation (2001) 111 IR 42 were supportive of the submissions of Pacific National in the present matter.

29 Reliance was also placed on the provisions of s 123 of the Occupational Health and Safety Act 2000. It was said that the section, in essence, provided that criminal proceedings against a Government corporation could be continued despite the dissolution of that Government corporation provided that the successor was also a Government corporation. Pacific National relied on that statutory provision in support of the following submissions: (a) the section unambiguously made provision for the transference of criminal liability, unlike the provisions of the Sale Act; (b) had Parliament intended to transfer criminal liability under the Sale Act it could easily have followed the formula in s 123, as opposed to adopting the apparently routine method which had been held in two prior cases not to transfer criminal liability; (c) Parliament only considered it appropriate to transfer criminal liability where the successor corporation was a "Government corporation" as defined, which was not the case here.

30 Pacific National raised further matters for consideration. The terms of the defences available under s 53 of the 1983 Act (s 28 of the 2000 Act) were noted in order to assert that, if Pacific National by operation of the Sale Act, had become the proper defendant in the prosecution, then it had a complete defence. It was not reasonably practicable for Pacific National to comply with the relevant provisions of the Occupational Health and Safety Act - in fact, it was impossible. Pacific National did not exist until three years after the accident and did not exist when the prosecution against FreightCorp commenced. That result demonstrated that Parliament did not intend to transfer criminal liability under the Sale Act. The person referred to in s 53 (and s 28 of the new Act) must be the same person who was prosecuted for the offences against s 15(1).

31 This difficulty did not arise if the defendant corporation retained criminal liability. Under s 15 of the Sale Act, when FreightCorp was converted to a corporation sole, it was taken for all purposes to be a continuation of and the same legal entity as FreightCorp as existed before its conversion to a corporation sole. The fact that, as an employer, FreightCorp was no longer engaged in a particular line of business in which an employee was injured was no reason not to prosecute the employer.

32 Pacific National raised the following difficulties: (a) A prosecution under the 1983 or 2000 Act must be brought within a two year time limit. Parliament cannot have intended in the Sale Act to have transferred criminal liabilities and at the same time to have "annihilated the limitations of defence". There was no such difficulty with the prosecution continuing against FreightCorp. (b) It was inherently unlikely that Parliament would have wished to transfer criminal liability to the private purchaser of the business of FreightCorp. If criminal liability was routinely transferred to the private enterprise successor of Government entities, privatisation of these entities may grind to a halt. Nor could the purposes of the Occupational Health and Safety Act be advanced by the prosecution of "innocent purchasers". It was also contrary to the full facts as identified in the WorkCover Compliance and Prosecution Policy to continue the prosecution against Pacific National. That policy identified four factors to be considered in the course of deciding to prosecute, namely, the degree of culpability of the alleged defendant, often demonstrated when there has been a wilful repetition of the offence by an employer, supervisor or worker. These considerations had no application to Pacific National, which had no involvement in the accident. (c) There were procedural and discretionary objections as well. The defendant corporation had sought to have Pacific National substituted as the defendant in the prosecution rather than having the charge against it summarily dismissed. The prosecutor, importantly, had not sought to prosecute Pacific National and there was no rule permitting the Commission or the Supreme Court to substitute a third party for an existing defendant in a criminal prosecution. The resort to the Commission's declaratory jurisdiction in s 154 of the Industrial Relations Act was also inappropriate. No such declaration "of right" could be made as sought, namely, a declaration that another entity was the proper defendant in criminal proceedings.

33 Counsel for the prosecutor adopted the submissions made on behalf of Pacific National. It was pointed out that the prosecutor made no application for the substitution of Pacific National as the proper defendant in the proceedings.

DELIBERATION 34 As indicated above, the parties referred to three judgments arising in prosecutions under the Occupational Health and Safety Act in which consideration was given to the extent to which criminal liability continued to exist following re-organisation as reflected in new or amending legislation. The Sydney Market Authority case, decided in 1997, involved the dissolution of the Authority. In that case, it was accepted that, if the charges against that defendant were not fully disposed of by the sale date then they would abate and effectively lapse - there would be no defendant to meet them, in much the same way as would occur on the death of a natural person with unresolved criminal charges against that person (82 IR at 135). In that case, the Court was dealing with a motion to expedite the hearing of the charges under the Occupational Health and Safety Act against the Authority before the Authority was dissolved. While rejecting that motion, Hungerford J drew attention to s 13(2) of the Sydney Market Authority (Dissolution) Act which was in the following terms: On the dissolution of the Sydney Market Authority, the assets, rights and liabilities (if any) of the Sydney Market Authority become the assets, rights and liabilities of the Crown. His Honour noted the right of the Minister under s 8(2) to exclude certain assets, rights or liabilities from sale, thus noting that the legislature had seen it as fit and appropriate to make provision of a transitional nature for civil matters but had not expressly or by necessary implication made provision for matters of a criminal nature. His Honour thought that, in any event, such a provision would be surprising "having in mind the very nature of criminal liability, although the defendant could have been kept in existence for the sole and explicit purpose of the finalisation of any criminal charges against it". (at 137)

35 In Energy Australia (1998) 85 IR 99 there was an initial plea of guilty to a breach of s 15(1) of the Occupational Health and Safety Act 1983 in circumstances where the statutory corporation was not the employer at the time of the offence. The defendant in the proceedings had no prior convictions but the prosecutor sought to rely on earlier convictions of the predecessor corporation. This move ultimately led to the withdrawal of the plea of guilty by the defendant, with Hungerford J concluding that Energy Australia was not the proper defendant to the charge because, on the dissolution of Sydney Electricity and the repeal of the Sydney Electricity Act, the charge abated and effectively lapsed: Sydney Electricity ceased to exist and there was no statutory provision to enable the prosecutor to continue proceedings against the same legal entity. The transfer of all of the liabilities of Sydney Electricity to another entity, MetNorth Energy, was restricted to the transfer of civil liabilities and not criminal liabilities (at 118).

36 In reaching this conclusion, his Honour accepted that the ordinary rule was that, on the dissolution of a defendant statutory corporation to a criminal charge, the charge abates and effectively lapses because there would be no continuing legal person in existence against which the proceedings could be maintained. Where the legislature, however, created a successor statutory corporation then whether any criminal liability of the former body could be assumed by the new body would depend upon the terms of the statute affecting the dissolution of one and the creation of the other. His Honour thought that if the legislature, by express enactment, provided that the original and the successor bodies were one and the same legal person then it would follow that an undetermined criminal charge against the former would continue against the latter unaffected by the fact that the former was indeed dissolved (at 113).

37 His Honour relied upon the judgment of Colman J in Centro Latino Americano de Commercio Exterior SA v Owners of the Ship "Kommunar" [1997] 1 Lloyd's Rep 8, a civil action, citing the conclusion "that if the person who owns the vessel to be proceeded against is a different person from the person who was the owner or charter of the vessel at the time when its claim arose or who was in possession or control of it at that time, the proceedings cannot be brought". Of significance was the reasoning of Colman J that the wholesale transference of assets and liabilities does not of itself avoid the consequence of the difference in the legal nature of the entities concerned. What was needed was a legislative provision expressly stating that the bodies involved in the transference were the same legal person.

38 In this decision, Hungerford J accepted that the natural meaning of the word "liability" was apt to embrace both criminal responsibility and civil responsibility citing Byrne v Garrison but noting that, whether, in any particular case, the "liability" referred to so extends depended upon the statutory context in which it was used (Fowler v Taylor). In particular, his Honour accepted that the use of the word "liabilities" in the legislation there under consideration occurred in a context which limited the scope of the liabilities concerned to civil liabilities. His Honour was satisfied that to give the word "liabilities" a meaning that including criminal responsibility would be to interpret the word contrary to the context in which it appeared. It is clear, therefore, that the issue was determined by his Honour primarily as a matter of statutory construction.

39 The judgment in WorkCover Authority v Rail Infrastructure Corporation entered into this field of transference of criminal liability between statutory corporations in only a limited way. In that case, a question arose where two existing corporations amalgamated to form a new statutory corporation. The statutory corporation which was charged, prior to amalgamation, had no prior convictions but the other amalgamating corporation did have prior convictions: submissions were made as to whether or not it was appropriate to treat the defendant as having no prior record in such circumstances. The provisions of the amalgamating legislation transferred the assets, rights and liabilities of the two previous corporations to the newly created corporation. As Hungerford J had found in Energy Australia, such a provision alone would be insufficient to transfer criminal liability from the previous corporation to the newly created corporation. This statutory scheme, however, went further and declared that the new statutory corporation was taken for all purposes to be a continuation of and same legal entity as the previous two corporations which were amalgamated to form the new corporation. That type of provision was found by Hungerford J in Energy Australia as being effective to transfer criminal liability to the new statutory corporation: his Honour's approach in that regard was followed and applied.

40 In Energy Australia, Hungerford J accepted that the natural meaning of the word "liability" was apt to embrace both criminal responsibility and civil responsibility, citing Byrne v Garrison. There are other authorities which support this proposition. In The Herron II, Koufas v Czarnikow Ltd [1967] 3 All E R 686 at 694, Lord Reid described "liable" as a "very vague word" and in Winter v The Inland Revenue Commission [1961] 3 All ER 855 at 858, he stated: No doubt the words "liability" and "contingent liability" are more often used in connection with obligations arising from contract than with statutory obligations. In relation to dictionary meanings, the word "liable" is said to also mean "responsible; subject to liability". In this sense, the word is usually confined to civil contexts in American E (nglish) but in British E(nglish) it is used in criminal as well as civil contexts (a Dictionary of Modern Legal Usage, 2nd ed, Garner; Oxford University Press 1995).

Black' Law Dictionary (5th ed, West) says that the word "liability" is a broad legal term, citing Mayfield v The First National Bank of Chattanoonga, Tenn. C.C.C. Tenn., 137 F2d 1013, 1019).

41 In Knecevic v Markovic (1985) 5 FCR 219, the Full Federal Court gave consideration to provisions of the Crimes Act 1900 (NSW) and whether a certain provision barred civil as well as criminal proceedings for the same cause. In the course of tracing the statutory history of the provision, Lockhart and Neaves JJ stated: The words "shall not be liable to any other proceedings for the same cause" are no more apt to describe criminal than civil proceedings. The word "liable" is itself apposite to both kinds of proceedings. Indeed, s 401, which is plainly limited to barring criminal proceedings, uses the words "is not afterwards liable to prosecution for the same cause". Section 556 on the other hand uses the word "proceedings" not "prosecution", the latter being appropriate only to criminal proceedings. Nor is the word "offence" used in Section 556 or, for that matter, in Section 401. The word "offence" is appropriate to only criminal proceedings; "cause" is equally applicable to both criminal and civil and proceedings … (at 230 - 231). Earlier in the joint judgment, their Honours noted that the language used by the legislature in certain provisions was of the widest import and capable of encompassing civil proceedings even though the provision appeared in a statute dealing with criminal law: that fact alone was not sufficient to give the provisions a more limited application than the width the language supported. Interestingly, their Honours pointed to a developing statutory history where, in the provisions under consideration, the legislature ultimately included the words "civil" and "criminal" in the section to make it clear that both classes of liability were covered. 42 As noted in Energy Australia, the word "liable" was considered by Dean J in Fowler v Taylor. There his Honour stated: The charges are laid under section 36 of the Police Offences Act 1928, which provides: Every person who unlawfully assaults any other person shall be liable on conviction to a penalty of not more than ten pounds. The word 'liable' is thus used, as it frequently is, as meaning criminal responsibility. The Crimes Act 1928 in many places speaks of an offender being liable to imprisonment. But I do not think the protection afforded by section 392 of the Health Act 1928 extends to criminal responsibility. The word 'liability' is found in association with the words 'action, claim or demand', all of which relate to civil liabilities. This colours the sense in which the word 'liability' is used in the section upon the principle expressed in the maxim noscitur a sociis. Further, I think if the section had been intended to give protection from criminal responsibility, it would have been clearly so stated.

43 While the Sale Act provided as an option the dissolution of FreightCorp that was not the option chosen and so there was no dissolution of the statutory corporation and an abatement of the prosecution, as occurred in the Sydney Market Authority's case. The Sale Act does not make a provision, as found in the Rail Infrastructure case, whereby an existing statutory corporation is merged to create a new statutory corporation to carry on the undertaking which is deemed to be a continuation, in every respect, of the previous corporate entity. Thus, the prosecution commenced against FreightCorp cannot simply continue against Pacific National as the statutory continuation of FreightCorp. The issues raised by the notice of motion in this case are therefore to be determined by a search for the legislative intention in the provisions facilitating the sale of the assets and liabilities of FreightCorp to Pacific National.

44 The Sale Act is described as an act that provides for the sale of the business undertaking of the Freight Rail Corporation and for other purposes. While s 3 defines "business undertaking" of FreightCorp as meaning all the assets, rights and liabilities of FreightCorp, "liabilities" was defined to mean all liabilities, debts and obligations (whether present or future and whether vested or contingent). In this collection of words, the context suggests civil liabilities. The curious approach of defining "liabilities" as meaning "all liabilities" by itself may suggest both criminal and civil liabilities, but the context of the words "debts and obligations (whether present or future and whether vested or contingent") suggests otherwise. It would have been simple at this point for the legislature to have said "liabilities" means all liabilities whether criminal or civil. The legislature's approach to this statute is not without its significance, having regard to previous privatisation schemes which had been considered by the Court prior to the introduction of the Sale Act.

45 Section 5(1) permits the business undertaking of FreightCorp (meaning all the assets, rights and liabilities of the Corporation) to be sold to a purchaser in accordance with the Act. The normal meaning of the term "business undertaking" would not immediately bring into consideration a corporation's criminal liability arising from the operation of that business undertaking. The definition of "business undertaking" in s 3 of the Sale Act gives no indication that those words should be read in any different way.

46 There is nothing in s 9(1), dealing with the exclusion of parts of the business undertaking from sale, and s 12 whereby the Treasurer may make orders transferring to the purchaser any assets, rights and liabilities comprising the business undertaking, which suggests that the word "liabilities" includes criminal liability. Bearing in mind that, in these sections the operation of the Act is framed by reference to the "business undertaking" of FreightCorp, what I have said earlier about the term "business undertaking" in my view colours and gives context to the meaning of the word "liabilities" in ss 9 and 12. Similarly, there is nothing leading to a contrary view about s 15(2) whereby, on the conversion of FreightCorp to a corporation sole, "any assets, rights and liabilities" of the corporation becomes assets, rights and liabilities of the Crown excepting a special lease or any sub-lease of the property to which a special lease applies. Notwithstanding the use of the word "any", the context here, importantly making special mention of leases, confirms the civil nature of the liability being dealt with by the provision.

47 Section 15(5)(c) is also of significance. In this section, the Sale Act provides that, if FreightCorp becomes a corporation sole, then it is taken for all purposes (including the rules of private international law) to be a continuation of and the same legal entity as FreightCorp as it existed before its conversion to a corporation sole. Senior counsel for the defendant corporation suggested that this provision flowed from the need for FreightCorp to maintain its interest in certain leases and sub-leases and that was the only purpose for this provision. While it may be conceded that preserving the corporation's interests in various leases may have been facilitated by this provision, there is nothing about s 15(5)(c) itself which points to that result being the only purpose for the provision. The defendant corporation argued that there was a logic in construing the Act so that both criminal and civil liability were transferred to the purchaser but there was an illogicality or anomaly flowing from treating the Sale Act as dealing with the transference of only the civil liabilities or the retention of the civil liabilities of FreightCorp. The importance of s 15(5)(c) is, in my view, the continuance of FreightCorp as the same legal entity as existed before conversion - that is, for the purposes of this prosecution the corporation sole is taken to be the same legal entity that was charged with these offences under the Occupational Health and Safety Act. There is no illogicality or anomaly flowing from such an approach. Indeed, this is the precise formula identified by Hungerford J in Energy Australia as being effective in transferring criminal liability.

48 Clause 2, Schedule 1, dealing with the transfer of assets, rights and liabilities, permits the Treasurer, for the purposes of making a transfer order, to determine whether or not particular assets, right or liabilities comprise the business undertaking of FreightCorp at a particular time. There was no evidence that the Treasurer had determined that the potential criminal liability of FreightCorp arising out of this prosecution was to comprise the business undertaking of FreightCorp. Clause 2 is otherwise consistent with the word "liabilities", in association with "assets" and "rights", referring only to civil liability.

49 Some attention was paid during the argument to the operation of Clause 3 of Schedule 1. Where assets, rights or liabilities were transferred by a transfer order, the rights and liabilities became, by virtue of the clause, the rights and liabilities of the transferee. In addition, Clause 3 (1)(c) provided that "all proceedings" relating to the assets, rights or liabilities pending by or against the transferor were taken to be proceedings pending by or against the transferee. As noted in Knezvic v Markovic, the word "proceedings" does not differentiate a criminal prosecution - the word "prosecution" clearly identifies the criminal nature of a liability dealt with by a statutory provision but that word has not been used by the legislature. This provision operates so that if "liabilities" is properly construed in the Sale Act to mean only civil liabilities then any proceedings in relation to such liabilities would be taken to be proceedings pending by or against the transferee. Similarly, Clause 3(1)(e) provides that a reference in any instrument under any Act or any document of any kind to the transferor or a predecessor of the transferor is to be read as "including a reference to the transferee". Again, this provision is made in relation to the transfer of "assets, rights or liabilities" by order under the Sale Act - the context continues the civil nature of such liabilities.

50 Clause 5 of Schedule 1 deals with consideration for vesting and provides that the transferor may specify the consideration for which a transfer to which it applies is made and the value or values at which assets, rights or liabilities are transferred. This provision does not seem appropriate to extend to criminal liabilities: the idea of valuing a criminal liability is not only novel but in context appears to be unwarranted. The giving of a value to a liability of a business undertaking is understandable. Valuing the possible liability of a criminal prosecution, including a prosecution under the Occupational Health and Safety Act, for the purposes of transferring the liability to another entity, is a strange concept, and one strange enough to warrant a specific and clear provision to achieve such a result. In addition, the provision is said to deal with consideration for vesting: "vesting" refers to transferring legal rights or interests, or refers to legal ownership (Butterworths Australian legal Dictionary); "vested" and "contingent" are terms ordinarily opposed in reference to interests in an estate (A Dictionary of Modern Legal Usage, 2nd Ed); "vested" means fixed, accrued, settled, absolute - having the character or given the rights of absolute ownership (Black's Law Dictionary, 5th Ed).

This clause, in my view, confirms the civil nature of the term "liabilities" when referred to in the Sale Act.

51 Consideration then needs to be given to the orders made by the Treasurer in February 2002 under s 9 and s 12 of the Sale Act. As earlier indicated the s 9 order in Clause C1 excluded from the sale "any liabilities of FreightCorp that, as at the time immediately prior to completion, are Excluded Liabilities". The order under s 12 in Clause C1 transferred "all the assets, rights and liabilities of FreightCorp" to the purchaser except under Clause C2 "Excluded Liabilities". The reference to "excluded liabilities" in the s 9 and s 12 orders was a reference to those matters set out in the Sale Agreement which had been entered into a few weeks prior to the making of the orders under the Sale Act. The s 12 Order Clause in C3, inter alia, did not transfer a "liability" to the purchaser where "the transfer would be ineffective".

52 Certain parts of the Sale Agreement were tendered, including Schedule 2, which set out the "excluded assets" and Schedule 3, which set out the "excluded liabilities". The excluded assets identified 22 separate matters and dealt with loans, payments, rights against officers and former officers, directors' reimbursement insurance, rights under the agreement itself, rights arising under deeds or arrangements with named corporations, rights under hedging agreements relating to fuel or interest rate contracts, tax assets, rights against shareholders of FreightCorp, certain nominated land, insurance rights, superannuation rights, access to the proceeds from certain sales and agreements, rights against any officer or employee of former officer employee of FreightCorp and the recovery of stamp duty.

53 In a similar vein, the excluded liabilities dealt with 15 nominated liabilities covering: loans and other financial accommodation; liabilities of the corporation under the sale and related agreements; liabilities in relation to deeds and arrangements with nominated corporations; liabilities under a specified purchase agreement including any contract change orders made under that agreement; liabilities arising under a purchase agreement with nominated corporations; liabilities under hedging agreements relating to fuel or interest rate swap contracts; obligations of FreightCorp to pay any tax equivalents; all contributed equity reserves and retained earnings of FreightCorp for the year ended 30 June 2001; FreightCorp's accrued liability with respect to employees while members of defined benefit superannuation schemes; liabilities to pay stamp duty in connection with the transfer of railway leasehold land; liabilities in relation to indemnity to certain directors; liabilities under the US lease shortfall funding agreement of December 1994; any liability to pay emoluments to directors of FreightCorp; liability of FreightCorp to indemnify officers or former officers of FreightCorp; and, any liability of FreightCorp to pay additional stamp duty in relation to the Rail Access Agreement of July 1996 as varied in June 1998. 54 A consideration of the matters set out in Schedules 2 and 3 of the Sale Agreement and picked up in the s 9 and s 12 orders made by the Treasurer in February 2002 confirm that they substantially deal with contractual matters and other arrangements properly described as civil in nature. Pacific National's submission that criminal liability cannot be transferred under civil, contractual arrangements was accepted by the defendant corporation. The provisions of Clause 3C(c) of the s 12 order made under the Sale Act by the Treasurer may well be operative to prevent the transfer of such a liability if it would be ineffective: an attempt to contractually transfer criminal liability to the purchaser raises this issue. In light of the conclusion that I have reached in relation to the construction of the Sale Act, this is a question which I need not finally determine, although there is force in the parties' contention that such a transference is not possible.

55 During the course of argument, the defendant corporation sought to rely upon those parts of the sale agreement which dealt with certain warranties. In particular the defendant sought to rely on Clause 9.1 whereby FreightCorp gave warranties in favour of the purchaser as at the date of the agreement and Clause 9.5, which precluded the purchaser from bringing a claim for breach of any warranty principally on the basis that the claim is based on any matter or circumstance referred to in or capable of being derived from the disclosure material. The tender of that part of the sale agreement dealing with warranties was objected to by Pacific National on the basis that it was irrelevant.

56 Objection was not taken to Clause 4 of Schedule 1 to the sale agreement. That clause is headed "Litigation" and in paragraph (a) states that, to FreightCorp's knowledge, as at the date of the agreement, FreightCorp was not engaged in any prosecution, litigation or arbitration proceedings as plaintiff, defendant, third party or in any other capacity in respect of the business. In relation to prosecutions, that part of the sale agreement was erroneous. However, there was no evidence as to the material in the hands of the purchaser as "disclosure material" as contemplated by Clause 9.5 of the sale agreement.

57 The defendant, in arguing in support of the admission of this material, pointed out that the s 9 and s 12 orders under the Sale Act were made on 19 February 2002 and the Agreement for Sale had been made on 31 January 2002. It was then submitted that the existence of the warranty in Schedule 1 Clause 4 of the agreement regarding prosecution and the potential to avoid a claim by disclosing a prosecution, assisted in rebutting any inference that the Treasurer, when executing the s 9 and s 12 orders, could not have had criminal prosecutions in contemplation as something affected by the transfer. In my view, this material tells against the submissions urged by the defendant corporation especially as to the effect of the orders made under s 9 and s 12 of the Sale Act. It appears from Clause 4 of Schedule 1 of the Sale Agreement that the defendant corporation erroneously thought that it was not involved in any prosecution as defendant or in any other capacity when, in fact, it was at the time of the agreement a defendant in these very proceedings. That fact may suggest that, when the s 9 and s 12 orders were made by the Treasurer, it formed no part of his consideration, as to the content of the "liabilities" being excluded or transferred, that there was any present or potential criminal liability. In one sense, that is consistent with the provisions of the Sale Act as I have construed them in the preceding paragraphs. Ultimately, this may be a matter of little consequence but if it does have any consequence at all it operates against the submissions put forward by the defendant corporation.

On another view, these clauses dealing with warranties may be of marginal relevance but, having regard to the breadth and scope of the concept of relevance in s 55 of the Evidence Act, and in all the circumstances, I am disposed to admit that part of the Sale Agreement dealing with warranties.

58 Approaching the Sale Act on the terms used throughout that statute, I am of the view that the words "liability" and "liabilities" are used only in reference to civil liabilities and do not operate so as to extend to criminal liability.

59 Counsel for Pacific National also drew attention to the fact that the scheme of the Sale Act followed quite closely the privatisation schemed considered by Hungerford J in Energy Australia. Senior counsel for the defendant corporation noted that, while there were similarities, there were important differences: only in the Sale Act was there a definition of "business undertaking" and "excluded undertaking"; the Sale Act provided in s 9 for parts of the business undertaking to be excluded; and there was no equivalent to Clause 2 of Schedule 1 permitting the Treasurer to determine assets, rights and liabilities.

60 In Public Service Association of New South Wales v Industrial Commission of New South Wales (1985) 1 NSWLR 627 at 640F, Kirby P stated: There is a presumption, useful in statutory interpretation, that where a provision of legislation has been passed upon by authoritative decisions of the courts and is later re-enacted, Parliament can be taken, in the absence of a clear intention to the contrary, to know and accept the interpretation given to the legislation. Priestley JA adopted the same approach in MGH Plastic Industries Pty Ltd v Zickar (1994) 34 NSWLR 617 at 621F. Pearce and Geddes, in the 5th edition of their valuable work "Statutory Interpretation in Australia", cite numerous courts adopting this presumption (at [3-44]), which had recently been restated and applied by a unanimous High Court bench of seven justices in Alcan Australia Ltd; ex parte Federation of Industrial, Manufacturing Engineering Employees (1994) 123 ALR 193 at 200 (and [1994] 68 ALJR 626 at 631). However, at paragraph [3.44] the learned authors cast doubt on the value of this rule. It seems clear from the discussion in Pearce and Geddes that the mere consolidation of statutes would provide a far weaker basis for the operation of the presumption. Apart from consolidation of statute, there has been strong criticism based on the artificiality of the presumption in the modern legislative context. The High Court's recent judgment in Alcan Australia was a particular example of the value of the presumption because of a long standing judicial construction and legislative history of the statutory provision being considered: in that case, the provision had been re-enacted in almost identical terms and the latest re-enactment of the provision had been preceded by a report of a committee of review that had recommended a different course of action from that adopted by the Parliament in the amending Act, and recourse to the Second Reading speech indicated that the Government had not accepted the committee's recommendation on the matter. It was this combination which was said to reinforce the presumption that Parliament had not intended to overturn the decision interpreting the words which it had re-enacted.

61 In Alcan, the High Court stated that there was abundant authority for the proposition that, where Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the meaning already "judicially attributed to [them]", citing Barras v Aberdeen Steam Trawling and Fishing Co [1933] AC 402 at 446, per Lord Mcmillan and also D'Emden v Pedder (1904) 1 CLR 91 at 110; Pillar v Arthur (1912) 15 CLR 18 at 22, 25, 29-30; Platz v Osborne (1943) 68 CLR at 141, 146, 146-7. The court did note criticism of the presumption in three cases: In Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1951-52) 85 CLR at 174, three members of the court stated that the presumption should not prevail where the Court considered the construction given to the words to be erroneous; in the Queen v Reynhoudt (1962) 107 CLR 381, Dixon CJ (at 388) rejected mere consolidation of a statutory provision which had been considered by the courts as raising the presumption, but also observed that the mechanics of law-making no longer provided the presumption with the foundation in probability which the doctrine was supposed once to have possessed; and, thirdly, in Flaherty v Girgic (1986-87) 162 CLR at 594, three members of the court repeated the criticism in Salvation Army and Reynhoadt - although conceding some limited role for the presumption, the circumstances of the case were regarded as not justifying its application.

62 While there might be some validity in the attacks on the presumption based upon the artificiality of presuming Parliament knows and understands the various rulings that courts have made in construing legislation before Parliament re-enacts it, there is not quite the same strength to that argument where Parliament deals with statutes administered by specialist tribunals or where there is a legislative history of frequent review and amendment. In the present case, there are grounds for considering Parliament's approach to privatisation legislation as constituting an area where Parliament would more closely scrutinise the form of legislation which had been the subject of rulings by the courts.

63 Although it is accepted that there are differences between the legislation dealt with by Hungerford J in Energy Australia, the basic format of that legislation is repeated in the Sale Act. As earlier referred to in Fowler v Taylor, the word "liability" was found in association with the words "action, claim or demand" and thus was held to be a reference limited to civil liability. In the legislation dealing with the dissolution of the Sydney Market Authority, the words "assets, rights and liabilities" were held to denote civil rights and obligations. In the Sydney Electricity Act reference was made to the transference of "rights and liabilities". The Statute also contained provisions to the same effect as Clause 3(1) (c), (d) and (e). These provisions were held to "relate more to civil law". The Energy Legislation (Miscellaneous Amendment) Act also had provisions indistinguishable from Clause 3(1)(c), (d) and (e) of the Sale Act - provisions which, in context, were held to be liabilities limited in scope to civil liabilities. When the legislature chose the collection of words "assets, rights and liabilities" in the Sale Act in: defining "business undertaking" and "excluded business undertaking" in s 3; specifying the operation of s 9 and s 12 Orders; fixing the matters transferred to the Crown on conversion under s 15(2); referring to the effect of a transfer order in Schedule 1, Clause 3(1)(b); setting the value of liabilities under Schedule 1, Clause 5 - there is no reason to conclude that it was doing something significantly different to the approach described by Hungerford J in Energy Australia as dealing with civil, not criminal matters. Further, when the Sale Act defined "liabilities" (as used in the sections referred to above), as meaning "all liabilities, debts and obligations (whether present or future and whether vested or contingent)" the civil nature of the provision is confirmed: for example, a "contingent liability" is a term used in connection with obligations arising from contract ( Winter v Inland Revenue Commission).

64 In oral submission, senior counsel for the defendant corporation accepted that: (a) under general principles, it would be expected that FreightCorp would remain criminally liable after the sale; and (b) the Sale Act remained "cryptic", in that it did not specify "liability" in terms embracing both criminal and civil liability. The submission made was that specific provisions of the Sale Act nevertheless transferred criminal liability to the purchaser. It was said that the main argument for this effect rested on the proper construction and operation of s 12 of the Sale Act - this provision was said to be "crucial" to the defendant corporation's argument. The identified specific provisions relied upon by the defendant corporation as demonstrating a legislative intent to transfer FreightCorp's criminal liability to the purchaser were: (a) section 15(2) used the word "any" liability - it included everything, including criminal liability, which, on conversion to a corporation sole, became liabilities of the Crown; (b) section 15(5)(c), in effect, showed that only special leases remained with the corporation sole - everything else, including criminal liability, was either transferred to the purchaser or to the Crown. (c) schedule 1, Clause 3 operated so that any proceedings relating to liabilities were taken to be proceedings against the transferee; and (d) the terms of the s 12 Order (Clause C1) transferred the liabilities of FreightCorp - there was no reason to read that order as excluding criminal liability. The list of excluded liabilities found in the Sale Agreement did not exclude criminal liability.

65 I can find nothing in the provisions of the Sale Act (not found in the Energy case) which would require a different construction. The inclusion in the Sale Act of provisions relating to excluded assets, excluded liabilities and the power of the Treasurer to determine what were assets and liabilities seems to take the matter no further - all these provisions operate effectively if limited to civil assets, rights and liabilities. If, as suggested for the defendant corporation, these provisions were chosen by the legislature to indicate that criminal liabilities were included and in order to differentiate the legislation from that dealt with in the Sydney Market Authority case and the Energy Australia case, these provisions were a very indirect and indefinite method to achieve such a result. If the legislature had proceeded as suggested by the defendant corporation, then it needed to take but one small further step, namely, to include criminal liability in the definition of "liabilities" in s 3. The fact that this step was not taken speaks strongly against the propositions urged on behalf of the defendant corporation.

66 I have reached the conclusion that the Sale Act does not deal with the criminal liability of FreightCorp by considering the various terms used in their context and on an overall consideration of the Sale Act. This view is confirmed and separately supported by the application of the presumption that, where a provision of legislation has been passed upon by an authoritative decision of a court and is later re-enacted, Parliament can be taken in the absence of a clear intention to the contrary, to know and accept the interpretation given to the legislation. I should make it clear that I have considered the defendant corporation's submissions concerning the Crown as the proper defendant only in the context of the construction argument.

67 In my view, the re-enactment of basically the same privitisation legislation in the Sale Act as found in earlier cases is sufficient to give weight to the presumption that Parliament has accepted the previous rulings and does not wish to depart from them. After the judgments of this Court in Sydney Marketing Authority and Energy Australia, if Parliament had intended that the criminal liability of FreightCorp should be transferred to the purchaser, the Court is entitled to expect that new legislation would have spelt out that consequence with some clarity and particularity. The Courts should not be reduced to an investigation of nuances in a statute using general language when attempting to establish whether criminal liability has been transferred: nor should the Courts be left in the position of attempting to draw inferences from the Sale Agreement in order to clarify this important operation of the Sale Act.

ORDERS 68. For the reasons I have identified, the defendant's Notice of Motion is dismissed. The defendant is to pay the costs incurred on the motion by Pacific National and WorkCover as agreed or, if necessary, as assessed by the Court.

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