Loo v DPP

Loo v DPP - [2005] VSCA 161 - VSCA 2005 case summary — Zoe

[7]

Overview of the legislation governing the Issues in dispute before the trial judge

1 In recent years, Commonwealth and State parliaments have legislated to deprive those who commit offences against their laws of the profits generated by their criminal exploits. Such legislation is based on the general principle that crime "should not pay"; and that knowledge by criminals that the proceeds of their crimes may be confiscated by the State operates as a general deterrent to crime. In this State, the Confiscation Act 1997 enables the Director of Public Prosecutions to take action before the courts to "freeze" and recover assets alleged to be "proceeds of crime". Not infrequently, because corporations have been established to conceal such proceeds, disputes will arise as to priorities of entitlement to the assets of a corporation, where it is alleged that those assets represent proceeds of crime.

2 The point at issue in the proceeding from which the appeal emanates was whether the relevant provisions (ss.70, 72) of the Confiscation Act (Vic.) 1997 ("the Act") could operate consistently with the provisions of Chapter 5 of the Corporations Act 2001 (Cth.) (the "winding up provisions"); or whether the State provisions could not so operate with the Commonwealth provisions and thus, and to that extent, are invalid as a consequence of the impact of s.109 of the Constitution (Cth.). The circumstances which gave rise to this issue can be briefly described.

3 At material times - particularly 1997 and 1998 - the appellant Loo ("Loo" or "the appellant") was a trader in illegally acquired abalone. In February 1997, Loo procured the incorporation of a company Bow Ye Investments Pty. Ltd. ("Bow Ye") of which he was, between the date of its incorporation and its winding-up, the sole director, shareholder and secretary. Also, from the time of its incorporation, Bow Ye was the trustee of the Loo Family Trust, the trust having been established by deed dated 29 January 1997. Loo was the guardian and appointor named in the trust deed. Bow Ye was the registered proprietor of two properties which were at the centre of the dispute in the proceedings below. The first such property was 26 Calambeena Avenue, Oakleigh[1]; and the second was at 181 Exhibition Street, Melbourne[2]. The property at Calambeena Avenue had been acquired by Loo and his wife in February 1990, and appears to have been their matrimonial home, although the judge found that it had also been used by Loo in 1997/8 for the processing of abalone. In any event, that property was sold by Loo and his wife to Bow Ye in 1997 for the sum of $249,000; and in May 1997, Bow Ye acquired the property at 181 Exhibition Street for $275,000. It would appear, and the primary judge so found, that in March 1997 Loo had set up three bank accounts in names of persons he knew well or to whom he was related. Loo operated those accounts under notice of authority; and from March 1997 until June 1998, large sums of money passed through each account. The judge concluded, from the evidence before him, that the deposits into the accounts represented likely proceeds of sale of abalone. The judge also concluded, on the material before him, that funds on a large scale were available to Loo throughout 1997; a period during which "on the face of it, substantial unsecured loans were made to Bow Ye by off-shore individuals and a company with whom and which respectively [Loo] had links". His Honour identified three, or possibly four, unsecured creditors from Malaysia and Singapore who, at the time when Bow Ye went into liquidation (deemed to have commenced on 14 September 2000) claimed to be owed somewhere in the vicinity of $350,000. These creditors did not appear in the proceedings before the judge, despite being given notice in accordance with s.70 of the Act. The judge described the debts which they claimed as "dubious". The major assets of Bow Ye at the commencement of liquidation were the two properties which I have described. The value ascribed to them was approximately $500,000.

4 The Director of Public Prosecutions of Victoria ("D.P.P." or "the respondent"), having earlier sought and obtained a "restraining order" under Part 2 of the Act, later applied for a "pecuniary penalty order" ("P.P.O.") against Loo in the sum of $978,275 following Loo's conviction for various offences against the Fisheries legislation in this State. The D.P.P. had, accordingly, brought these proceedings against Loo and Bow Ye seeking a declaration, pursuant to s.70(1) of the Confiscation Act, that the aforesaid properties (over which the "restraining order" had previously been made) were available to satisfy the P.P.O. on the basis that those properties had been in the "effective control" of Loo at the date when the restraining order had been made. Before the trial judge, it was not in dispute between the D.P.P., on the one hand, and Loo and the liquidator of Bow Ye, on the other, that - at the relevant time - the properties had been "in the effective control" of Loo. Because sub-s. (2) of s.72 of the Confiscation Act (Vic.) provides that, in the event that the court makes a declaration under s.70(1) of the Act, there will arise "a charge" over all the property to which the declaration applies so as to secure payment of the P.P.O. for the benefit of the State, the issue arose before his Honour whether these provisions of the Act could operate consistently with the "winding up" provisions of the Corporations Act 2001 (Cth.). This issue brought into focus, in particular, the proper construction of Part 1.1A of the Corporations Act.

5 Part 1.1A of the Corporations Act (and specifically ss.5E, 5F and 5G) is the end product of co-operative measures, taken over many years, between the Commonwealth and State and Territory legislatures to prevent provisions of (inter alia) State legislation being rendered invalid as a consequence of inconsistent operation with the Corporations legislation of the Commonwealth[3]. Thus when, in 1990, the States agreed to adopt and apply the Corporations Act 1989 (Cth.) as their own Corporations Law (the "National Scheme legislation"), the authors of the scheme attempted to reduce the risk that a State would inadvertently pass a law implicitly repealing a provision of the Corporations law, by introducing a rule of statutory interpretation in the State's own applicable legislation. In Victoria, that "rule" was to be found in s.5 of the Corporations (Victoria) Act 1990 which provided, so far as relevant:

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In the course of the proceedings on 11 October 2000, Hedigan, J. was informed by counsel for the D.P.P. that the sum claimed as the basis for the pecuniary penalty order would be $978,275; that being the sum provable in relation to "forfeiture offences" as the benefits derived by Loo in relation to the offences proved.

13 His Honour, therefore, on 11 October 2000 ordered that Loo pay a pecuniary penalty pursuant to s.59 of the Act in the sum of $978,275; and made orders that certain property (but not the properties at Calambeena Avenue and Exhibition Street) be forfeited to the Minister pursuant to s.33 of the Act. Because an administrator had been appointed to Bow Ye on 14 September 2000, his Honour declined to make the declaration pursuant to s.70 of the Act; and the application for that declaration was adjourned in order for the parties to consider their respective positions and, in particular, whether an application for leave to proceed might be necessary under the relevant Corporations legislation.

14 By originating motion filed on 14 November 2000, the D.P.P. - pursuant to the provisions of s.440F of the then Corporations Law - sought leave to proceed with the application for the s.70 declaration. Before that application could be determined a meeting of creditors of Bow Ye, on 24 November 2000, resolved that the company be placed into liquidation. Pursuant to the provisions of the Law, the winding up of the company was deemed to have been commenced on the first day of the preceding administration; namely 14 September 2000.

15 On 1 December 2000 the originating motion seeking leave to proceed by the Director came before a Master of the Supreme Court who granted such leave; and on 6 March 2001 the D.P.P. filed an application seeking the declaration pursuant to s.70 of the Act; the earlier application having been discontinued.

16 The hearing of the application referred to in the preceding paragraph came before Ashley, J. on 14 November 2001. In accordance with sub-section (3) of s.70 his Honour ordered that the D.P.P. give notice of its application to certain persons who appeared to be creditors of Bow Ye (being the lenders to whom I have previously referred) and to persons who appeared to be beneficiaries under the Loo Family Trust of which Bow Ye was trustee. He then adjourned the application part heard for further hearing on 25 February 2002.

17 By a "Notice of Constitutional Matter" dated 20 February 2002, Loo gave notice that the application of the D.P.P. involved a matter under the Constitution or involving its interpretation within the meaning of s.78B of the Judiciary Act 1903. The matter, the subject of the Notice, was that:

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(i) Whether a statutory charge had arisen over the properties by reason of s.72(1) of the Act at the time of the making of the pecuniary penalty order securing payment of the proceeds of that order which had been made on 11 October 2000. It was common ground between the parties that such a statutory charge would confer upon the State the status of a secured creditor in the liquidation with the ability to "stand apart from the liquidation" and realize its secured asset. The concession so made did not become relevant because the trial judge found that s.72(1) of the Act did not create a charge over the properties (or the proceeds of sale thereof) at Calambeena Avenue and Exhibition Street because a charge created pursuant to s.72(1) does not attach to what might be called "effective control property". The circumstances giving rise to a charge under s.72(1) were, in the judge's view mutually exclusive from the circumstances giving rise to a charge under sub-section (2) of s.72. Accordingly, so his Honour found, a charge can only be created in respect of "effective control property" as at the date of the declaration made pursuant to s.70(1) of the Act; and that charge is the one referred to in s.72(2).[13]

(ii) The next question raised for his Honour's consideration was whether there was direct inconsistency between s.70(1) and 72(2) of the Act and Chapter 5 of the Corporations Act, or whether the two laws were capable of concurrent operation. His Honour found that it was unnecessary to decide those questions because of the way in which he thereafter dealt with the third question (see hereunder). Whilst his Honour refrained from expressing a final opinion upon the concurrency question, he did express the view that it was strongly arguable that to make the orders sought would give rise to an operational inconsistency between s.70 and s.72(2) on the one hand, and Chapter 5 of the Corporations Act on the other.

(iii) The final question in issue, and considered by the trial judge, was whether any potential for inconsistency was avoided by the operation of s.5G of Part 1.1A of the Corporations Act. Counsel for the D.P.P. had submitted that direct inconsistency was avoided through the operation of sub-sections (4), (8) and/or (11) of s.5G; and submitted that these sub-sections should be read either literally or expansively in the light of the overall intention of Part 1.1A. The learned judge found that sub-sections (4) and (8) of s.5G did not apply; but his Honour accepted that sub-section (11) of s.5G should be read literally or expansively and rejected the contention made by counsel for Loo that it should be confined by application of the eiusdem generis rule of statutory construction. His Honour concluded that, in its terms, sub-section (11) was capable of preserving the operation of ss.70 and 72 of the Act. Direct inconsistency was thereby avoided by operation of s.5G of the Corporations Act and, accordingly, he acceded to the making of the declaration sought; and made consequential orders in the form to which I have earlier referred.

The Issues on Appeal

20 The appeal has been brought in this Court by Loo alone, there being no representation on behalf of the Liquidator of Bow Ye as there had been before his Honour. As originally framed, the appeal brought into issue the third question to which I have referred in the preceding paragraph. The two original grounds of appeal took issue only with his Honour's interpretation of s.5G(11) together with his rejection of the argument that the sub-section should be interpreted eiusdem generis so as not to apply to ss.70(1) and 72(2) of the Act. However, by consent orders made on 8 September 2004, the Court of Appeal granted leave to Loo to amend his notice of appeal by adding a third ground as follows:

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The Scope of the Appeal, and the Provisions of the Corporations Act relevant to the arguments

22 The principal ground argued by counsel for Loo on this appeal was ground 3 which was the ground added by leave of this Court on 8 September 2004. It is in the terms to which I have referred in paragraph [20]. Insofar as this ground asserts that the trial judge "erred in determining" this matter, it overstates the fact. The fact was that the trial judge assumed that the provisions of the Act were "pre-commencement (commenced) provisions" on the basis of a concession made by counsel for Loo. The trial judge, accordingly, approached the issues before him on the basis that the "roll-back" provisions in s.5G(3) of the Corporations Act applied, to avoid direct inconsistency, provided that one or more of the succeeding sub-sections in s.5G applied. However the Solicitor-General who appeared in this Court for the D.P.P. regarded the question of the proper interpretation of the relevant statutory provisions as a matter of sufficient importance to warrant her consent to the additional ground, and, thus, consented to the ground being added. The Court is, accordingly, relieved of the burden of considering the applicability of the principles established by decisions in such cases as Metwally v. University of Wollongong (No.2)[14]; Coulton v.Holcombe[15], and Masters v. McCubbery[16].

23 Counsel for Loo submitted that ss.70 and 72 of the Act do not meet the conditions applicable to a "pre-commencement (commenced) provision" as set out in the Table annexed to s.5G(3) of the Corporations Act (Cth.) which were designed to avoid direct inconsistency between State and Commonwealth laws.

24 In order to consider this argument it is desirable to set out the relevant provisions of the Corporations Act. The provisions are contained in Part 1.1A of the Corporations Act which is, as I have already noted, calculated to reduce the area of potential conflict between State laws and the Corporations Act. The operative provisions for present purposes are s.5E, s5F and S5G. Relevantly, those sections provide as follows:-

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"Part 1.1A - Interaction between the Corporations legislation and State and Territory laws

5E Concurrent operation intended

(1) The Corporations legislation is not intended to exclude or limit the concurrent operation of any law of a State or Territory.

...

(4) This section does not apply to the law of the State or Territory if there is a direct inconsistency between the Corporations legislation and that law.

Note: Section 5G prevents direct inconsistencies arising in some cases by limiting the operation of the Corporations legislation.

...

5F Corporations legislation does not apply to matters declared by State or Territory law to be an excluded matter

(1) ... } (These sub-sections provide that the Corporations

legislation of the Commonwealth does not apply to

(2) ... } matters which are declared by a State law to be an

excluded matter)

(3) Subsection (2) does not apply to the declaration to the extent to which the regulations provide that that subsection does not apply to that declaration.

(4) By force of this subsection, if:

(a) the Corporations Law, ... of a State or Territory; or

(b) a provision of that Law;

did not apply to a matter immediately before this Act commenced because a provision of a law of the State or Territory provided that that Law, or that provision, did not apply to the matter, the Corporations legislation, or the provision of the Corporations legislation that corresponds to that provision of that Law, does not apply in the State or Territory to the matter until that law of the State or Territory is omitted or repealed.

...

(6) In this section:

matter includes act, omission, body , person or thing.

5G Avoiding direct inconsistency arising between the Corporations legislation and State and Territory laws

Section overrides other provisions of the Corporations legislation

(1) This section has effect despite anything else in the Corporations legislation.

Section does not deal with provisions capable of concurrent operation

(2) This section does not apply to a provision of a law of a State or Territory that is capable of concurrent operation with the Corporations legislation.

Note: This kind of provision is dealt with by section 5E.

When this section applies to a provision of a State or Territory law

(3) This section applies to the interaction between:

(a) a provision of a law of a State or Territory (the State provision); and

(b) a provision of the Corporations legislation (the Commonwealth provision);

only if the State provision meets the conditions set out in the following table:

______________________________________________________________

Conditions to be met before section applies [operative]

Item Kind of provision Conditions to be met

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(commenced) provision before this Act commenced, despite the

provision of:

(i) the Corporations Law of the State or

Territory (as in force at that time); or

(ii) the ASC or ASIC Law of the State or

Territory (as in force at that time);

that corresponds to the Commonwealth

provision; and

(b) the State provision is not declared to be one

that this section does not apply to (either generally or specifically in relation to the

Commonwealth provision) by:

(i) regulations made under this Act; or

(ii) a law of the State or Territory.

2 ...

3 ...

4 ...

5 ...

___________________________________________________________________________

Note 1: Item 1 - subsection (12) tells you when a provision is a

pre-commencement (commenced) provision.

Note 2: Item 1 paragraph (a) - For example, a State or Territory provision

enacted after the commencement of the Corporations Law might

not have operated despite the Corporations Law if it was not

expressly provided that the provision was to operate despite a

specified provision, or despite any provision, of the Corporations

Law (see, for example, section 5 of the Corporations (New South

Wales) Act 1990). Territory (as in force at that time); or (ii) the ASC or ASIC Law of the State or Territory (as

_________________________________________________________________________

State and Territory laws specifically authorising or requiring act or thing to be done

(4) A provision of the Corporations legislation does not:

(a) prohibit the doing of an act; or

(b) impose a liability (whether civil or criminal) for doing an act;

if a provision of a law of a State or Territory specifically authorises or requires the doing of that act.

(5) ...

(6) ...

(7) ...

External administration under State and Territory laws

(8) The provisions of Chapter 5 of this Act do not apply to a scheme of arrangement, receivership, winding up or other external administration of a company to the extent to which the scheme, receivership, winding up or administration is carried out in accordance with a provision of a law of a State or Territory.

(9) ...

(10) ...

Other cases

(11) A provision of the Corporations legislation does not operate in a State or Territory to the extent necessary to ensure that no inconsistency arises between:

(a) the provision of the Corporations legislation; and

[44]

Nevertheless, s.5F(3) gives to the Commonwealth a power to override, by regulation, a state's declaration of an excluded matter. Section 5G goes a step further because, as I have previously noted, its purpose is to allow State laws, which would otherwise be "directly inconsistent" with the Corporations Act, to prevail over that Act, or a provision thereof in circumstances defined by the section. The section is expressed in terms to have effect "despite anything else in the Corporations legislation" (s.5G(1)), but it does not apply where the provision of State law is capable of concurrent operation with the Corporations legislation, because in that case the operation of the State law is preserved by s.5E. Section 5G will, however, only apply where the relevant State provision satisfies the criteria of s.5G(3); and it is apparent from the terms of the sub-section that those criteria differ depending upon whether the State provision commenced before or after the commencement of the Corporations Act, namely on 15 July 2001. In general terms State provisions, which commenced before that date (as did ss.70 and 72 of the Confiscation Act (Vic.)), will only satisfy the conditions for the application of s.5G if the relevant provision of the State Act applied despite anything in the Corporations Law and there is no "overriding" Commonwealth regulation.

26 These last observations are a synthesis of the conditions which are required to be satisfied to enable the provisions of s.5G to apply to a "pre-commencement (commenced) provision" of a State Act (i.e. item 1 in the Table appended to s.5G(3)). In that respect it is instructive to note the remarks of Barrett, J. in the H.I.H. case[21] about the operation of these conditions. In order to make those remarks intelligible to the issues in this appeal, I will supplant references made by his Honour to the New South Wales legislation with references to the Victorian legislation which was identical to the legislation which his Honour was considering. His Honour said:

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"In the case of each State ..., the corresponding matters were dealt with by the jurisdiction's own corporations statute of 1990 (that is, the Corporations [Victoria] Act 1990 [Vic.], and correspondingly named Acts of the other States ...). In relation to the matters now under discussion, these Acts were uniform. Each caused the Corporations Law set out in s.82 of the Corporations Act 1989 (Cth.) to apply as a law of the State ... and stated that the Corporations Law, as so applying, might be referred to as the Corporations Law of the State ... . Each such Act contained a definition of 'applicable provision'. That term included, in relation to a jurisdiction, a provision of the Corporations Law of that jurisdiction. The provisions of the Corporations Law of the particular State were thus 'applicable provisions' of that jurisdiction. Sections 5 and 6 of the Corporations [Victoria] Act 1990 [Vic.] - which I quote to illustrate the corresponding working of each other Act were as follows:

5. This Act and applicable provisions of [Victoria] not to be affected by later State laws[22]

(1) An Act enacted ... after the commencement of this section is not to be interpreted as amending or repealing, or otherwise altering the effect or operation of this Act or the applicable provisions of [Victoria].

(2) Sub-section (1) does not affect the interpretation of an Act ... so far as that Act provides expressly for that Act ... to have effect despite a specified provision, or despite any provision, of this Act or the applicable provisions of [Victoria].

6. Operation of other [Victorian] Laws

Except as otherwise provided in this Act, nothing in this Act, or the applicable provisions of [Victoria] affects the operation after the commencement of this section of an Act enacted before that commencement ...

The 'despite' specification in condition (a) in the third column against item 1 in the table in s.5G(3) of the Corporations Act 2001 (Cth.) must be understood against the background of this pre-existing legislative scheme. For each State ... the provisions of the Corporations Law were, in general terms, to prevail over subsequent and inconsistent provisions of laws of the particular jurisdictions, unless expressly afforded precedence by legislation being ... in the case of a State ... a provision satisfying s.5(2) of the local corporations statute of 1990. Pre-existing and inconsistent provisions were dealt with differently. ... For the States ..., s.6 of each corporations statute of 1990 ceded continuing operation to pre-existing provisions generally, unaffected by Corporations Law provisions.

Returning to the conditions in the third column against item 1 in the table in s.5G(3) of the Corporations Act 2001 (Cth.), it will be seen that the second condition (condition (b)) entails the absence of any regulation made under the Act or any law of the particular State .. declaring the State ... provision in question to be one to which s.5G does not apply, either generally or specifically in relation to the corresponding provision of the Corporations Act 2001 (Cth.).

If a particular state ... provision is of the kind specified in the second column against item 1 in the s.5G(3) table and satisfies the conditions in the second (sic) column, the consequence is that s.5G applies to the interaction between the state ... provision and a provision of the Corporations Act itself."

[50]

It is, however, I think, clear from the text of his Honour's reasons that the parties were agreed that the relevant provisions of the Act were provisions within "item 1" of the table. The Act came into force on 20 December 1997, well before the commencement of the Corporations Act.

28 In the light of the foregoing, it is appropriate that I return to ground 3 of the appeal, that is, the ground which asserts that the provisions of s.5G of the Corporations Act do not apply to the relevant provisions of the Confiscation Act because those provisions did not meet the conditions prescribed in item 1 of the Table appended to s.5G(3). On the basis that the relevant provisions of the State Act (namely ss.70 and 72) are "pre-commencement (commenced) provisions" within the meaning of the first "item" in the Table (a fact as to which there is no dispute), it is submitted by appellant's counsel that condition (a) of "item 1" has not been met because the Confiscation Act provisions are not provisions which "operated, immediately before [the Corporations Act (Cth.)] commenced despite the provisions of the Corporations Law of Victoria that corresponded to [Chapter 5 of the present Corporations Act]". Counsel submits that there is no provision in the Confiscation Act which permitted the provisions of that Act to operate despite the provisions of the Corporations Law of Victoria. In particular, counsel referred to the provisions of s.5 of the Corporations (Victoria) Act 1990, which embodied the Corporations Law of Victoria when the Confiscation Act was enacted in December 1997. As I have previously noted, s.5 is the provision which, by sub-s.(1), says that Acts enacted after the commencement of the Corporations (Victoria) Act are not to prevail over the Corporations Law, unless an Act "provides expressly" that it should have effect despite the provisions of the Law (i.e. sub-s.(2)). Appellant's counsel submits that these provisions make it clear that condition (a) of "item 1" in the Table appended to s.5G of the Corporations Act cannot be met because there is no provision in the Confiscation Act which "provides expressly" for that Act, or any provision of it, to have effect despite any provision of the Corporations Law of Victoria. In other words, so it is submitted, ss.70 and 72 of the Confiscation Act are not provisions "which operated immediately before the commencement of the [Corporations Act 2001 (Cth.)] despite the provisions of the Corporation Law of Victoria that correspond to [Ch.5 of the Corporations legislation]" within the meaning of condition (a) of item 1 in the Table appended to s.5G of the Corporations Act. As Barrett, J. said in the HIH case[25], it is against the background of this pre-existing legislative scheme that the "despite" specification in condition (a) of the Table to Item 1 must be measured.

29 In response to the appellant's submissions, the Solicitor-General argued that ss.70 and 72 of the Confiscation Act do "expressly provide" that they will operate "despite" the provisions of Ch.5 of the Corporations Law. She submits that it is not necessary, in order to meet the requirement that a statute otherwise "expressly provides", that one Act should contradict another statutory provision directly and explicitly before the requirement is satisfied. She calls in aid the High Court decision in Rose v. Hvric [26] in which Kitto, Taylor and Owen, JJ. were considering whether the provisions of s.74(1) of the Justices Act 1958 (Vic.) empowered a Court of Petty Sessions, "except where otherwise expressly enacted" to impose a penalty for an offence (which had been done in that case) where the Act creating the offence authorized the Court to impose imprisonment for the relevant offence, but not a penalty. In that case the defendant had been convicted for the second time of an offence of selling liquor without a licence contrary to the provisions of s.154 of the Licensing Act 1958 (Vic.) which provided, relevantly, that the defendant "shall be liable for a second or any subsequent offence to imprisonment ... for a term of not less than 6 months nor more than 12 months". Their Honours said [27]:

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(i) It is the Confiscation Act which must "provide expressly" for that Act to have effect despite the provisions of the Corporations Law. That is so, as it seems to me, whether one has regard to the provisions of s.5(2) of the Corporations (Victoria) Act 1990 or the conditions prescribed in item 1 of the Table annexed to s.5G(3) of the Corporations Act. This proposition is re-enforced by s.5F(4). As it seems to me, there is nothing in the Confiscation Act which necessarily implied that ss.70 and 72 of that Act were to prevail over Ch.5 of the Corporations Law_[38]_.

(ii) In any event, the provisions of sub-s.(2) of s.553B of the Corporations Law do not, in my view, have sufficient specificity to demonstrate that ss.70 and 72 of the Confiscation Act "expressly provided" that they would operate despite the provisions of the Corporations Law, no matter what formula is provided for the meaning of those words. The words of s.553B(2), contained as they are within the "winding up" provisions of the Corporations legislation, presuppose that the P.P.O. has been made against the corporation; not against an individual. The words of s.553B(2) must take their meaning from the context of the legislation in which they appear. In this case it is the winding up of companies pursuant to Ch.5 of the Corporations legislation. Clearly the sub-section is not intending that "all P.P.O.'s" are admissible to proof against an insolvent company; nor - in accordance with the normal canons of construction of Statutes - could it be sensibly suggested that the words of sub-s.(2) of s.553B are capable of supporting an implication that the P.P.O.'s, of which the sub-section speaks, will include, in addition to those made against the company, those made against "any individual, whether director of the company or otherwise, who is found to be in effective control of the company's property".[39] There is nothing in the words of the sub-section which necessarily implies that the provisions of ss.70 and 72 of the Confiscation Act are to prevail over the relevant "winding up" provisions of the Corporations legislation of Victoria; nor in my view is there anything in the sub-section which could prevent s.5(1) of the Corporations (Victoria) Act 1990 from operating according to its tenor.

[67]

35 The other basis upon which the Solicitor-General submitted that ss.70 and 72 Confiscation Act "expressly provided" that they would operate despite Ch.5 of the Corporations Law was that the Confiscation Act provisions contemplated that orders could be made under the State Act that would bind a company in liquidation. That submission was premised on the proposition that the Confiscation Act contained various provisions which permitted restraining orders to be directed to "trustees", which term was defined to include an "official liquidator" within the meaning of the Corporations Law of Victoria, and empowered the Court to make orders "regulating the manner in which the trustee may exercise powers or perform duties under the restraining order". Again, in my view, there is nothing in this submission. Such provisions are not provisions which "expressly provide" that the Confiscation Act, or ss.70 and 72, are to have effect despite the provisions of Ch.5 of the Corporations Act. Furthermore, those provisions do not apply to a liquidator conducting a voluntary winding up; a matter which, as I understood her, the Solicitor-General conceded.

36 For these reasons, I am of the opinion that Dr. Bleechmore is correct in submitting that the conditions prescribed in item 1 of the Table in s.5G(3) of the Corporations Act have not been met, and that therefore s.5G does not apply to avoid any direct inconsistency between ss.70 and 72 of the Confiscation Act and the "winding up" provisions of the Corporations legislation. Accordingly, ground 3 of the appeal succeeds and it is unnecessary for me to consider whether the trial judge was correct in his interpretation of s.5G(11) of the Corporations Act (being grounds 1 and 2 of the Notice of Appeal). Nor is it necessary to consider whether his Honour's interpretation of sub-ss.(4) and (8) of s.5G are in error, as contended by the respondent in paragraphs 2 to 5 (inclusive) of its Notice of Contention dated 20 August 2004.

Concurrent operation of Corporations Act and Confiscation Act

37 The Solicitor-General submitted that, even if s.5G does not operate in the circumstances of this case, the relevant provisions of the Confiscation Act and the Corporations Act can operate concurrently within the meaning of s.5E of Part 1.1A which, as previously noted, provides:

[77]

40 In my opinion, his Honour was correct in this conclusion. Without the benefit of the "roll back" provisions in s.5G(3), there is a direct conflict between the relevant provisions of the Confiscation Act and the provisions of Ch.5 of the Corporations legislation of a type which would "alter, impair or detract from the operation of the law of the Commonwealth Parliament", to adopt the language of Dixon, J. in Victoria v. The Commonwealth[40]. Although, as I have previously remarked, the Corporations Act does not intend to "cover the field", there will still be relevant "inconsistency" if the provision of the State law, if valid, would alter, impair or detract from the operation of the Commonwealth law.[41] Alternatively, direct inconsistency will arise when the Commonwealth and State laws make contradictory provisions upon the same topic, making it impossible for both laws to be obeyed.[42] In my view, direct inconsistency would arise here between ss.70 and 72 of the State Act and ss. 555 and 556 of the Corporations Act if the effect of the State Act contended for by the respondent is correct. If ss.70 and 72 of the Confiscation Act operate in accordance with their natural meaning, they will clearly interfere with and detract from the operation of the provisions of Ch.5 of the Commonwealth law. Sections 555 and 556 of the Corporations Act create rights in the creditors of a company in liquidation who are entitled to have their debts and claims paid in accordance with the priorities provided for in s.556. Those rights will be adversely affected if the provisions of ss.70 and 72 of the Confiscation Act are permitted to operate according to their tenor because those provisions have the effect of creating a special class of secured creditor by means of a charge created after the commencement of the winding up.

41 The respondent's submission was that ss.70 and 72 do not alter or impair or directly interfere with the provisions of Ch.5 of the Corporations Act because those provisions create a secured interest in relation to the properties which were the subject of the restraining order, which ante-dated the commencement of the winding up. That submission implies that the effect of the operation of the provisions of the State Act will impact upon the payment of the debts of the unsecured creditors of the company in accordance with the priorities referred to in s.556 of the Corporations Act, but that such an effect is not necessarily inconsistent with the winding-up provisions. The respondent's submission is that the impact is warranted because the provisions of s.553B(2) of the Corporations Act apply in the circumstances of this case by making P.P.O's admissible to proof in a winding up whether or not the P.P.O. is made before or after the winding up is commenced. This submission was, in part, founded upon the same arguments, which I have already rejected, upon which the respondent relied in contending that s.553B(2) was an "express provision" which enabled the Confiscation Act to apply despite the provisions of the Corporations Law. The submission also depended for its validity upon a rejection of the reasons of the trial judge, which reasons, in my view, were sound. Furthermore, insofar as the submission was founded upon the proposition that it was the intention of s.553B(2) to apply to all P.P.O's made under proceeds of crime legislation whether made before or after the commencement of a winding up, it was, in part, based upon the provisions of s.82(3A) of the Bankruptcy Act which provided that an amount payable by the bankrupt under a P.P.O. is provable in bankruptcy. It is contended by the respondent that this section infers that a P.P.O. made after the commencement of bankruptcy is provable. That may or may not be so having regard to the provisions of sub-s.(1) of s.82 of the Act which provides that, in general, all debts and liabilities of the bankrupt "to which he or she was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable ...". These provisions, or provisions to like effect, are not to be found in the winding up provisions of the , and I share the doubts of the trial judge that a P.P.O. made after the date of the commencement of the winding up would fall within the relevant provisions of the Corporations legislation. In any event, that is an issue which does not have to be determined because, like the trial judge, it is my view that the provisions of has no direct application to the circumstances here being considered because the P.P.O. was made against the appellant, and not Bow Ye.

42 In accordance with these reasons, it is my opinion that ss.70 and 72 of the

Confiscation Act are operationally inconsistent with, and cannot operate concurrently with the winding up provisions in Ch.5 of the Corporations Act. The appeal should be allowed and, in lieu of the orders of the trial judge, there should be substituted an order that the application before him should be dismissed.

[82]

provisions of the Corporations Law relating to winding up. The difficulty with that submission, in my opinion, is that, even if "expressly" in s.5(2) included "by necessary implication", the provisions of the Corporations Law relating to winding up are not "specified". The collocation of "expressly" and "specified" in a sub-section directed to the interpretation of an Act cannot be overcome by any simple implication. There would have to be such intractable inconsistency between the relevant provisions of the Confiscation Act and the provisions of the Corporations Law relating to winding up as to imply the repeal pro tanto of the rule of interpretation in s.5.

49 The Solicitor-General's argument focused on s.553B(2) of the Corporations Law. (An argument based on the definition of "trustee" in the Confiscation Act was abandoned.) Section 553B(2) provided that an amount payable under a pecuniary penalty order of the kind in issue in these proceedings was "admissible to proof against an insolvent company". In my opinion, that referred only to a pecuniary penalty order made against the company, partly because that is the natural meaning of the words and partly because s.553B was a qualified exception to s.553, which enacted a general principle that debts payable by, and claims against, the company were admissible to proof against it.[45] The pecuniary penalty order with which we are concerned was made against the appellant personally.[46]

50 It is true that, in s.9 of the Confiscation Act, Parliament has disclosed an intention to pierce the corporate veil in relation to property subject to the effective control of a defendant, but much clearer language would have to be used to subordinate the claims of the unsecured creditors of a company in liquidation to a pecuniary penalty order not made against the company. [47]

51 For similar reasons, if the relevant provisions of the Confiscation Act were given the effect for which the respondent contends, they would alter, impair or detract from the operation of the provisions of the Corporations Act relating to winding up.[48] There would be "a direct inconsistency" within the meaning of s.5E(4) of the Corporations Act, so that that section, like s.5G, would not apply.

[89]

[10] It was conceded by all counsel before the judge that the Corporations Act 2001 was the applicable Commonwealth legislation for the "inconsistency" argument.

[11] "Effective control" has accordingly been interpreted as meaning "de facto control" or "control in fact" in the sense that it connotes control that is "practically effective"; or "control which enables the defendant to "treat the properties as his own" (Connell & Anor. v. Lavender (1992) 7 W.A.R. 9 at 21-3; D.P.P. v. Toro-Martinez (1993) 71 A.Crim.R. 326 at 331 per Kirby, P.; Logan Park Investments Pty. Ltd. & Ors v. D.P.P. (N.S.W.) [2002] FCA 690; (1994) 122 F.C.R. 1 at 3-4.)

[12] [2002] VSC 231

[13] This finding has not been challenged in this appeal.

[14] (1985) 60 A.L.R. 68 at 71.

[15] [1986] HCA 33; (1986) 162 C.L.R. 1.

[16] [1995] VICSC 209; [1996] 1 V.R. 635 at 648, 658-9, 668.

[17] Sections 13 and 15AB of the Acts Interpretation Act 1901 provide that no heading of a section, footnote or end note shall be taken to be part of the Act except to the extent provided by s.15AB of that Act.

[18] Supra at 630.

[19] Ford's Principles of Corporations Law, supra at 3206; HIH Casualty etc. (in liq.) & Ors. v. Building Insurers' Guarantee Corporation, supra at 642.

[20] Supra at 3207.

[21] At pp.648 ff, paras [98] ff.

[22] I have referred to these sub-sections in para.[5] of these reasons; but have repeated them to give meaning to the reasons of Barrett, J.

[23] Paragraph [52] of the reasons for judgment.

[24] At [58].

[25] Supra at 650, para [103].

[26] [1963] HCA 13; (1963) 108 C.L.R. 353

[27] At 357-8.

[28] At 358-9.

[29] See, for example, Public Service Association (N.S.W.) v. Industrial Commission of New South Wales (1985) 1 NSWLR 627; Director of Public Prosecutions v. Kanfouche [1992] VicRp 9; [1992] 1 V.R. 141 at 149-50; Chorlton v. Lings (1868) L.R. 4CP 374 per Willes, J. at 387.

[30] [2001] HCA 49; (2001) 207 C.L.R. 72

[31] [1993] 3 V.R. 45

[32] At 78.

[33] (1880) 5 App.Cas. 425

[34] (1868) L.R.4 C.P. 374.

[35] At 441.

[36] At 387.

[37] See also Healey v. Festini [1958] VicRp 36; [1958] V.R. 225. I should also note that the case of D.P.P. v. Kanfouche, supra, to which the Solicitor-General referred was also concerned with the provisions of a statute conferring appellate rights on a Court.

[38] Although the respondent did not specifically argue the point, the closest which, in my opinion, the Confiscation Act comes to "providing expressly" that it is to prevail over the Corporations legislation is to be found in the provisions of s.70, combined with the provisions of s.9. These provisions clearly intend to "enable the corporate veil to be pierced", and to create the fiction that he, who controls the company, controls its assets for the purpose of satisfying a P.P.O. However the creation of that statutory fiction falls a long way short, in my opinion, of amounting to an "express provision" that the Confiscation Act (and particularly ss.70 and 72) are to prevail over the provisions of Ch.5 of the Corporations legislation.

[39] A P.P.O. made against an individual in "effective control" of property is not enforceable because he is the owner of the property, but because of the position created by the statute that he is to be treated "as if the property were his".

[40] [1937] HCA 82; (1937) 58 C.L.R. 618. See also Telstra Corporation v. Worthing [1999] HCA 12; (1999) 197 C.L.R. 61 at 76-7.

[41] Telstra Corporation v. Worthing, supra, at 76-7; R. v. Credit Tribunal; ex parte G.M.A.C. [1977] HCA 34; (1977) 137 C.L.R. 545 at 563 per Mason, J.

[42] R. v. Credit Tribunal; ex parte G.M.A.C., supra, at 563.

[43] Sub-section (3A) of s.82 was repealed by the Proceeds of Crime ... Act 2002 (Cth.), Schedule 4; but was replaced by a sub-section in the following form:

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