Inspector Belley v Freight Rail Corporation

Inspector Belley v Freight Rail Corporation - [2002] NSWIRComm 281 - NSWIRComm 2002 case summary — Zoe

[20]

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. …

[21]

(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.

[23]

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.

[42]

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.

[52]

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.

[64]

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.

[71]

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.

[74]

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).

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