Oreb v Australian Securities and Investments Commission

Federal Court of Australia (Full Court)|2017-03-24|Before: Gleeson JJ

Background to the appeal 6 The appellants were formerly directors of four corporations which are now in liquidation. They resigned from their directorships of the corporations on 10 May 2012. 7 Voluntary administrators were appointed to the corporations on 26 February 2013, approximately 9.5 months after the appellants resigned as directors. On 11 April 2013, about 11 months after the appellants' resignations, each of the corporations was placed into liquidation pursuant to special resolutions of creditors under s 439C of the Act. 8 Between 23 July 2014 and 16 October 2014, the liquidators of the corporations provided reports to ASIC for each corporation pursuant to s 533(1) of the Act, stating that each of the corporations will be unable to pay its unsecured creditors more than 50 cents in the dollar. 9 The primary judge refused to grant the appellants relief on the basis of her Honour's conclusions that: (1) the phrase "was wound up", as it appears in s 206F(1)(a)(ii), relevantly meant the date on which the company is placed into liquidation and the winding up begins (at [64]); and (2) the temporal requirement in s 206F(1)(a)(ii) does not apply to the lodgement by the liquidator of a report under s 533(1) (at [68]).

Legislative framework 10 Section 206F is found in Pt 2D.6 of the Act, which deals with the disqualification of persons from managing corporations. 11 Within Pt 2D.6, s 206B provides for automatic disqualification, ss 206C and 206D confer powers of disqualification on the Court, for contravention of civil penalty provisions and for insolvency and non-payment of debts respectively, and s 206E confers a power of disqualification on the Court for repeated contraventions of the Act. Section 206EAA confers upon the Court a power of disqualification where a person is relevantly disqualified under the law of a foreign jurisdiction. Sections 206EA and 206EB deal, respectively with the effect of disqualification under the Competition and Consumer Act 2010 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act"). 12 Section 206F relevantly provides: Power to disqualify (1) ASIC may disqualify a person from managing corporations for up to 5 years if: (a) within 7 years immediately before ASIC gives a notice under paragraph (b)(i): (i) the person has been an officer of 2 or more corporations; and (ii) while the person was an officer, or within 12 months after the person ceased to be an officer of those corporations, each of the corporations was wound up and a liquidator lodged a report under subsection 533(1) (including that subsection as applied by ss 526-35 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006) about the corporation's inability to pay its debts; and (b) ASIC has given the person: (i) a notice in the prescribed form requiring them to demonstrate why they should not be disqualified; and (ii) an opportunity to be heard on the question; and (c) ASIC is satisfied that the disqualification is justified. … (Emphasis added.) 13 Section 533(1) provides: (1) If it appears to the liquidator of a company, in the course of a winding up of the company, that: (a) a past or present officer or employee, or a member or contributory, of the company may have been guilty of an offence under a law of the Commonwealth or a State or Territory in relation to the company; or (b) a person who has taken part in the formation, promotion, administration, management or winding up of the company: (i) may have misapplied or retained, or may have become liable or accountable for, any money or property of the company; or (ii) may have been guilty of any negligence, default, breach of duty or breach of trust in relation to the company; or (c) the company may be unable to pay its unsecured creditors more than 50 cents in the dollar; the liquidator must: (d) as soon as practicable, and in any event within 6 months, after it so appears to him or her, lodge a report with respect to the matter and state in the report whether he or she proposes to make an application for an examination or order under section 597; and (e) give ASIC such information, and give to it such access to and facilities for inspecting and taking copies of any documents, as ASIC requires. (Emphasis added.) 14 Both parties relied on s 206D as forming part of the context in which s 206F is to be construed. Section 206D relevantly provides: Court power of disqualification - insolvency and non-payment of debts (1) [Court may disqualify person] On application by ASIC, the Court may disqualify a person from managing corporations for up to 20 years if: (a) within the last 7 years, the person has been an officer of 2 or more corporations when they have failed; and (b) the Court is satisfied that: (i) the manner in which the corporation was managed was wholly or partly responsible for the corporation failing; and (ii) the disqualification is justified. (2) [Where corporation fails] For the purposes of subsection (1), a corporation fails if: … (h) the corporation is wound up and a liquidator lodges a report under subsection 533(1) (including that subsection as applied by section 526-35 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006) about the corporation's inability to pay its debts. Note: To satisfy paragraph (h), a corporation must begin to be wound up while the person is an officer or within 12 months after the person ceases to be an officer. However, the report under subsection 533(1) may be lodged by the liquidator at a time that is more than 12 months after the person ceases to be an officer. Sections 513A to 513D contain rules about when a company begins to be wound up. (Emphasis added.) 15 The expression "was wound up" is not used in the Act, except in s 206F(1)(a)(ii). However, there are other provisions in the Act which use the language of potential relevance to understanding that expression. In particular, s 509, which concerns the de-registration of a company, provides for steps to be taken "(a)s soon as the affairs of the company are fully wound up". Section 601AB(2) also provides that ASIC may decide to deregister a company if the company "is being wound up" and ASIC has reason to believe that: (a) the liquidator is no longer acting; or (b) the company's affairs "have been fully wound up" and a return that the liquidator should have lodged is at least six months late; or (c) the company's affairs "have been fully wound up under Part 5.4" and the company has no property or not enough property to cover the costs of obtaining a court order for the company's deregistration. 16 Section 439C(c) provides for the resolution by creditors "that the company be wound up" (see also s 461(1)(a)). Sections 459A and 459B provide that the court may make an order that a company "be wound up" and s 459P sets out who may apply to the court for a company "to be wound up" in insolvency. 17 Other provisions refer to winding up as a process. For example, s 468A refers to "the commencement of the winding up by the Court" and ss 471A and 471B apply "[w]hile a company is being wound up". By s 489EA, ASIC may order "the winding up of a company".

Legislative history 18 The primary judge set out the legislative history of s 206F at [12] to [15] of her Honour's reasons. It is unnecessary to repeat that legislative history. In particular, her Honour noted that s 206F was inserted into the Corporations Act 1989 (Cth) ("Corporations Law"), which was in force prior to the Act, by the Corporate Law Economic Reform Program Act 1999 (Cth) ("CLERP Act"). It replaced s 600 of the Corporations Law, which was repealed by the CLERP Act. Before its repeal, s 600 was in the following terms: 600 Commission may order persons not to manage corporations (1) For the purposes of this section: … (b) a relevant body is a section 600 body at a particular time if, and only if, within the period of 7 years ending at that time, a liquidator of the body has, under: (i) subsection 533(1); or (ii) a previous law corresponding to subsection 533(1); reported, or lodged a report with respect to, a matter relating to the ability of the body to pay its unsecured creditors; and (c) a person shall be taken to be a relevant person in relation to a relevant body that is or was a section 600 body if, and only if, the person was a director of the body at any time during the period of 12 months ending on the day of the beginning of the winding up of the body. (2) The Commission may give to a person who is a relevant person in relation to 2 or more relevant bodies that are, at the time of service, section 600 bodies a notice in writing requiring the person to show cause why the Commission should not serve on the person a notice under subsection (3). (3) Where the Commission: (a) has served on a person a notice under subsection (2); and (b) has given the person an opportunity of being heard in relation to the matter; the Commission shall, unless it is satisfied that it is not appropriate to do so, serve on the person a notice in writing prohibiting the person, for such period not exceeding 5 years as is specified in the notice, from managing a corporation. (4) Where: (a) the Commission has served a notice under subsection (2) on a person who is a relevant person in relation to 2 or more relevant bodies that were, at the time of service, section 600 bodies; and (b) those 2 bodies have at any time been related to each other, or any of those bodies has at any time been related to any other of those bodies, as the case may be; the Commission shall have regard to that fact in considering whether or not it is appropriate to serve on the person a notice under subsection (3). (5) A person who is subject to a section 600 notice (whether served before or after the commencement of this section) must not, without the leave of the Court, manage a corporation. (6) Section 91A defines what, for the purposes of this section, constitutes managing a corporation.

Principles of statutory interpretation 19 The primary judge correctly identified the relevant principles of statutory interpretation at [30] to [35] of her Honour's reasons. 20 Questions of statutory construction are determined by reference to the text, context, purpose and history of the relevant Act: see, for example, Military Rehabilitation and Compensation Commission v May [2016] HCA 19; (2016) 331 ALR 369 at [10]; Mok v Director of Public Prosecutions (NSW) [2016] HCA 13; (2016) 330 ALR 201 at [102]. Questions of statutory construction cannot necessarily be resolved merely by resort to the literal meaning of the statutory language: cf. Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission [2016] NSWCA 298; (2016) 116 ACSR 473 at [77]. 21 The primary judge correctly accepted (at [31]) that the task of statutory construction begins with a consideration of the text itself and that a court must construe the words used in a statute in accordance with their ordinary and natural meaning and the accepted rule that a court will have regard to the context in which words appear and their purpose. Her Honour referred to the following statement of Hayne, Heydon, Crennan and Kiefel JJ in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47]: This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. (Footnotes omitted.) 22 At [32], the primary judge cited the following statement of the plurality of the High Court in Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664 at [22]-[23], quoting from Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503 at [39]: Statutory construction involves attribution of meaning to statutory text. As recently reiterated: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text." So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. (Footnotes omitted.) 23 Objective discernment of statutory purpose is integral to contextual construction. The requirement of s 15AA of the Acts Interpretation Act 1901 (Cth) that "the interpretation that would best achieve the purpose or object of [an] Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation" is in that respect a particular statutory reflection of a general systemic principle. The passage in Consolidated Media Holdings continued: Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself. 24 The primary judge also cited (at [34]) the following passage from the decision of the majority of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [78]: However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. In Statutory Interpretation, Mr Francis Bennion points out: "The distinction between literal and legal meaning lies at the heart of the problem of statutory interpretation. An enactment consists of a verbal formula. Unless defectively worded, this has a grammatical meaning in itself. The unwary reader of this formula (particularly if not a lawyer) may mistakenly conclude that the grammatical meaning is all that is of concern. If that were right, there would be little need for books on statutory interpretation. Indeed, so far as concerns law embodied in statute, there would scarcely be a need for law books of any kind. Unhappily this state of being able to rely on grammatical meaning does not prevail in the realm of statute law; nor is it likely to. In some cases the grammatical meaning, when applied to the facts of the instant case, is ambiguous. Furthermore there needs to be brought to the grammatical meaning of an enactment due consideration of the relevant matters drawn from the context (using that term in its widest sense). Consideration of the enactment in its context may raise factors that pull in different ways. For example the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with." … (Footnotes omitted.) 25 At [35], the primary judge said: In some circumstances a court may adopt a construction to avoid an unreasonable or anomalous consequence. In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 Mason and Wilson JJ at 320 noted that "mere inconvenience of result" in itself is not a ground for departing from the natural and ordinary sense or meaning of the language read in its context. However, their Honours also observed that there are "cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute".

Appellants' submissions 26 The appellants' principal criticism of the primary judge's approach was that it assumed a legislative intention that s 206F should confer on ASIC a wide power of disqualification, which was not borne out by the language of the provision. The appellants contended that the primary judge engaged in an impermissible exercise of "repair" or amendment of s 206F, effectively to reinstate s 600 of the Corporations Law (set out above), in circumstances in which there were not sufficient criteria to justify a departure from the ordinary meaning of the language of s 206F. They referred to the following statement in Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 at 215: It can hardly be right to construe a statute, particularly one as apparently complete as the Australian Securities Commission Act 1989 by reference to its precursors, thereby concluding that because it omits an expression from an otherwise clear provision, that clear provision means something not apparent on its face. 27 The appellants also referred to the following passage of the reasons of Gageler and Keane JJ in Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, said, at [65] and [66]: [65] Statutory construction involves attribution of legal meaning to statutory text, read in context. "Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning ... But not always." Context sometimes favours an ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words. Implicit words are sometimes words of limitation. They are sometimes words of extension. But they are always words of explanation. The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair. [66] Context more often reveals statutory text to be capable of a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural. The choice between alternative meanings then turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies. (Footnotes omitted.)

Consideration 28 The operation of s 206F has previously been considered by Full Courts in Murdaca v Australian Securities and Investments Commission [2009] FCAFC 92; (2009) 178 FCR 119 and Culley v Australian Securities and Investments Commission [2010] FCAFC 43; (2010) 183 FCR 279. In Murdaca, at [101], the Court set out the following relevant propositions: (1) Subsection 206F(1) comprises, in ascending order of importance: (a) a trigger mechanism (the conditions, filters or gateway) embodied in subs (1)(a) (stage 1); (b) a procedural fairness requirement (the giving of a show cause notice and an opportunity to be heard): subs (1)(b) (stage 2); and (c) a merits decision captured in the requirement that ASIC be satisfied that disqualification is justified: subs (1)(c) read with s 206F(2) (stage 3). (2) ASIC's power to disqualify a person from the management of corporations must be exercised for the purposes for which it was granted. Those purposes are the protection of all those persons who deal with corporations from the consequences of the actions of those corporate officeholders who, either through incompetence or dishonesty or a combination of the two, bring about the failure of corporations and thus cause loss to others (Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at [47]-[50] (151-155)) and the maintenance of professional management standards in the public interest (Visnic v Australian Securities and Investments Commission [2007] HCA 24; (2007) 231 CLR 381 at [11] (385) and [26] (388)). (3) Section 206F does not give reports prepared by liquidators pursuant to s 533 of the Act any particular status or weight. ASIC may approach the exercise of its power of disqualification under s 206F(1)(c) in any way it thinks fit, subject to complying with s 206F(1) and s 206F(2) and subject to respecting and applying the principles referred to in (2) above. (4) Section 206F is an alternative to court action that ASIC may commence under Pt 2D.6. It is meant to be a quick and cheap alternative to court action. The merits consideration by ASIC is intended to take place only once in the process - not at two stages. The preconditions provided for in ss 206F(1)(a) and (b) are jurisdictional requirements which must be satisfied before ASIC's power to disqualify under s 206F is enlivened. 29 In Culley, at [31], the Full Court concluded from the terms of s 206F and its location in Pt 2D.6 of the Act that the Parliament had been concerned to strike a balance between competing interests which their Honours identified as follows: [32] The section reflects on the one hand, the interest of the public in the existence of a facility for removing from the pool of managers those who are, or have been, officers of two or more corporations which have been wound up for inability to pay their debts. As a result, the public and the market are afforded a measure of protection from those who, as was said in Murdaca … at 143: either through incompetence or dishonesty or a combination of the two, bring about the failure of corporations and thus cause loss to others (Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at [47]-[50]). In the same passage, their Honours discerned in s 206F a concern with "the maintenance of professional management standards in the public interest (Visnic v Australian Securities and Investments Commission [2007] HCA 24; (2007) 231 CLR 381 at [11] and [26])." [33] On the other hand, the legislature has recognised the need for corporate officers not to be exposed to disqualification as a result of corporate failures separated by an inordinate length of time. In our view, the concern, which we have imputed to Parliament, to strike a balance between these competing interests has been accommodated by fixing in s 206F(1)(a) a "window" of seven years within which two or more corporate collapses must occur in order for an officer involved in them to be at risk of disqualification from managing any other corporation. 30 The appellants accepted that an important objective of the disqualification provisions in the Act is to protect the public interest by preventing persons from managing a corporation whose past conduct is indicative of a lack of fitness to do so. 31 Mr Lancaster SC, senior counsel for the appellants, submitted that, in construing s 206F, the Court should take into account the serious consequences of exercise of the s 206F power which, he argued, meant that clear language would be required to give the power a broader rather than a narrower construction. Conversely, Dr Donaghue QC, senior counsel for ASIC, argued that, on the appellants' construction, the legislative scheme would have "very large gaps" in respect of directors who resign their position as officers of a corporation far enough from the liquidation, so that the liquidation cannot go from start to finish inside 12 months.

First issue: meaning of "was wound up" 32 Mr Lancaster SC emphasised the use of the past tense in the expression "was wound up", arguing that these words meant that the winding up "has occurred". Mr Lancaster SC submitted that the ordinary meaning of the words "was wound up", being a reference to a process in the past tense, is to refer to a point in time at which the process has been completed. 33 Dr Donaghue QC submitted that there are at least two available interpretations of the words used. Once there is that choice, the answer to the choice is not grammar; it is a reference to coherence with the statutory policy and objects of the statutory regime. The two available interpretations identified by Dr Donaghue QC are: (1) the corporation was fully wound up (being the appellants' contention); or (2) the corporation was placed into liquidation by either a court order, or by the resolution of members or creditors (ASIC's contention). 34 Dr Donaghue QC argued that it is an ordinary use of language to describe the event of a resolution or order that a corporation be wound up in the past as the relevant corporation having been wound up. He referred to the following instances of courts using the language of "was wound up" to describe the commencement of a winding up: (1) In Visnic at [6], Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ said: The plaintiff had been a director of fourteen companies which had been wound up with the appointment of liquidators. (2) In Murdaca at [10], North, Kenny and Foster JJ said: On 12 November 2004, AAMIC was wound up by order of the Supreme Court of Victoria and Mr Colin Nicol was appointed as liquidator of that corporation. The appellant was a director of AAMIC as at the date it was wound up. 35 We do not accept that the only ordinary meaning of "was wound up" as it appears in s 206F is the meaning identified by Mr Lancaster SC. In our view, those words are not unduly strained by giving them the meaning chosen by the primary judge. 36 The use of the words "was wound up" to refer to the event that marked the commencement of the winding up process is not unnatural in the context of s 206F(1)(a), which is concerned with the identification of past events as preconditions to the exercise of the s 206F power. Nor is it inconsistent with references to points in the process of winding up a corporation in the Act as a whole. 37 Further, the juxtaposition of the requirement that each of the relevant corporations "was wound up" and the requirement for the lodgement of s 533(1) report is a textual indicator that the first requirement will be satisfied as a past event that occurred before the second requirement. On the appellants' interpretation, the first requirement can never be satisfied before the second requirement. Mr Lancaster SC conceded that a s 533(1) report could not be lodged after the completion of the winding up process. 38 The primary judge's interpretation is consistent with the legislative purpose of s 206F. As Dr Donaghue QC observed, it makes common sense that the legislature would require a nexus between a person's role in a corporation and the time that the corporation goes into liquidation for the purpose of a disqualification power. The primary judge's interpretation provides a fixed point in time upon which s 206F can operate, being a time that appears to be reasonably connected to whether an officer should be held responsible for a corporation's failure. 39 In contrast, the time between being an officer and the conclusion of a winding up does not appear to be related to whether that person should be disqualified from managing a corporation. The time of the conclusion of a winding up is necessarily uncertain, depending upon the events of the winding up process which are unrelated to the question whether an officer should be disqualified. Further, there is no single event signifying that a company is fully wound up. As Mr Lancaster SC put it, it is a question of fact. The meaning of the expression "fully wound up" under different legislation was explained by James LJ in Re London and Caledonian Marine Insurance Company (1879) 11 Ch D 140 at 144 as follows: ... when the liquidator has done all that he can to wind up the company, when he has disposed of the assets as far as he can realize them, got in the calls as far as he can enforce them, and paid the debts as far as he is aware of them, and has done all that he can do in winding up the affairs, so that he has completed his business so far as he can, and is functus officio. 40 As the primary judge also noted, at [45] to [47] of her Honour's reasons, a company may still have the legal status of "being wound up" even when it is "fully wound up" in the sense of its affairs being fully wound up: Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Limited [2010] NSWSC 1369; (2010) 80 ACSR 670. These matters highlight the absence of an identifiable legislative purpose to support the appellants' construction. 41 Further, the appellants' construction tends to defeat the purpose of s 206F, set out in [28] above, by preventing ASIC from taking action until after the relevant corporations are fully wound up. The appellants did not identify any reason why such an impediment to the exercise of ASIC's power was consistent with the legislative purposes of the Act, particularly in the context of a requirement of lodgement of a s 533(1) report (and the time stipulations in s 533(1) by which such a report is required to be lodged promptly). As Dr Donaghue QC submitted, on the appellants' construction, a director could not be disqualified following the lodgement of a s 533(1) report because of a delay in the completion of the winding up process, a matter which might be wholly outside of the control of the liquidator. The existence of other disqualification powers, albeit powers conferred upon the Court rather than ASIC, does not justify a restrictive interpretation of ASIC's power where the language of s 206F does not require that result. 42 In our view, there was no error in the primary judge's observations about the limited application of s 206F on the appellants' construction. In particular, her Honour was correct in her practical observations (at [47]) that s 206F would be unlikely to apply to an officer who resigned in the lead up to a winding up and (at [50]) that logical consequences of the appellants' interpretation are to delay action under s 206F and to reduce the pool of officers who might be otherwise subject to s 206F. Each of these matters supported her Honour's conclusion (at [50]) that, on the appellants' construction, the protective purposes of s 206F will not be achieved or will be significantly diminished if they can only be exercised after the relevant companies are fully wound up. These are matters telling strongly against the appellants' construction, where there is an alternative that promotes the legislation's protective purpose. 43 The appellants' construction requires the word "fully" to be read into s 206F(1)(a)(ii), given that the expression "fully wound up" has been used elsewhere in the Act (in ss 509 and 601AB). In contrast, the primary judge's interpretation is congruent with the use of the words "is wound up" in s 206D, as the primary judge explained at [54] of her Honour's reasons. Section 206D(2)(h) provides that a corporation fails if the corporation "is wound up" and a liquidator lodges a report under s 533(1). In Visnic, at [33] and [38], Kirby J noted the clear similarity between the language of ss 206D and 206F, containing "virtually identical criteria, directed to the same outcome". 44 It is clear enough that when the plain English reader performs the mental gymnastics of converting the present tense of the eight alternatives in s 206D(2) into the past tense needed to understand the meaning of "failed" for the purposes of s 206D(1), "is wound up", in s 206D(2)(h), is used in the same sense as "was wound up" in s 206F(1)(a)(ii), namely a winding up process has commenced in relation to the company. 45 This provides an indication that the Parliament intended the expression "was wound up" in both s 206D(2) (converted to past tense) and s 206F(1)(a)(ii) to refer to the well-known order or decision that a company "be wound up" that is referred to repeatedly in the Act as the event that commences the process of winding up rather than, as the appellants argued, to the little used concept of the winding up having been finalised. 46 The note to s 206D(2) makes it clear that the description "the corporation is wound up" in s 206D(2)(h) refers to the beginning of the winding up. The parties agreed that the note forms part of the text of the Act, which must be interpreted having regard to its content: One.Tel Limited (in liq) v Rich [2005] NSWSC 226; (2005) 190 FLR 443 at [54]. By reason of s 5C of the Act, it is the Acts Interpretation Act 1901 (Cth) as in force on 1 January 2005 that applies to the Act. 47 The appellants invoked the note and s 206D(2)(h) read together as a "very powerful contextual indication" that s 206F does not have the meaning found by the primary judge: "[w]here the statute wished to provide for the expanded operation, it did so expressly in the note that is part of the Act and is to be read with s 206D(2)(h)". We do not accept that the note operates to give the words "is wound up" a meaning that they would not otherwise have. In our view, the note illustrates that the words "the corporation is wound up" refer, particularly in the context that they must be converted into past tense to work with s 206D(1), to the commencement of the winding up process. Read in that way, the note confirms that the words "the corporation was wound up" may refer to the fact that a winding up process has commenced in relation to the company. 48 Both parties contended that the legislative history to s 206F provided support for their construction of the words "was wound up". 49 The primary judge's interpretation is consistent with the language of the statutory predecessors to s 206F. At [59] of her Honour's reasons, the primary judge referred to the Explanatory Memorandum to the Corporate Law Economic Reform Bill 1999 (Cth) which implemented the insertion of s 206F into the Corporations Law. The relevant passage of the Explanatory Memorandum states: [2.12] The reforms are being implemented through changes to the Corporations Law. In addition, a plain English rewrite is being undertaken of the relevant areas of the Corporations Law. This will make the law more user friendly and reduce compliance costs for corporations and market participants. 50 At [60], the primary judge referred to s 15AC of the Acts Interpretation Act 1901 (Cth), which deals with changes of style. Section 15AC provides: Where: (a) an Act has expressed an idea in a particular form of words; and (b) a later Act appears to have expressed the same idea in a different form of words for the purpose of using a clearer style; the ideas shall not be taken to be different merely because different forms of words were used. 51 At [61], the primary judge accepted that the extrinsic materials surrounding the introduction of s 206F disclose no intention to make a policy change that would confine or restrict the circumstances in which ASIC can take action against directors, including any change that would prevent ASIC from taking action until after a company was fully wound up. 52 The appellants relied upon the principle that drafting style aside, statutory language re-enacted in an altered form after it has acquired a settled judicial meaning must be taken to have a different meaning: Baini v The Queen [2012] HCA 59; (2012) 246 CLR 469 at [43] (Gageler J), citing Amalgamated Wireless (A/asia) Ltd v Philpott [1961] HCA 31; (1961) 110 CLR 617 at 624. Mr Lancaster SC argued that s 206F reflects a deliberate decision to effect a significant restructure and recasting of the previous provision. He submitted that even if the Court was to find that there is an apparent narrowing of ASIC's disqualification power by s 206F, in comparison with s 600 of the Corporations Act, there is no reason to think that was not a legislative choice. 53 The drafting of s 206F falls short of the claim in the Explanatory Memorandum that the change from an earlier, easy to comprehend, section was "a plain English rewrite" that "will make the law more user friendly and reduce compliance costs for corporations and market participants". The English is profoundly obscure and utilises a concept "was wound up" that does not relate to well understood expressions that companies legislation had employed for years. Since most users of provisions such as this are likely to be lawyers and regulators, user friendly drafting would have been better employed in expressing the legislative idea with words that had an accepted clear meaning. 54 The refrain in explanatory memoranda that legislation in the form of the over 2,500 page long Corporations Act, replete with massive and over complex verbiage, is "user friendly" is patent nonsense. Professionals and judges must navigate tortuous, mind-numbingly detailed, cascading provisions to ascertain the meaning that the Parliament, supposedly, had in mind when enacting these telephone books, at huge cost to the community. Principles-based drafting would enable the elucidation of legislative intention much more effectively and also be likely to be user friendly and to reduce cost. 55 On balance, and in the absence of any indication in the extrinsic materials that s 206F should not be construed as an attempted "plain English rewrite" of the previous legislation, we conclude that the statutory predecessors provide support for the primary judge's construction for the reasons given by her Honour.

Second issue: time for lodgement of s 533(1) report 56 The appellants submitted that the statutory text is clear on this point. They submitted that the words "while the person was an officer, or within 12 months after the person ceased to be an officer" qualify the expression "was wound up" as well as the words "a liquidator lodged a report under s 533(1) … about the corporation's inability to pay its debts". They argued that there is no semi-colon after the expression "was wound up" that might warrant a conclusion that the words "a liquidator lodged a report under s 533(1) … about the corporation's inability to pay its debts" are to be read disjunctively. The natural meaning of this instance of the use of the word "and" is conjunctive. 57 The appellants also observed that s 206F does not include a note to the effect contained in s 206D, that the report under s 533(1) may be lodged by the liquidator at a time that is more than 12 months after the person ceases to be an officer. 58 The appellants argued that the absence of such a note is consistent with the evident purpose of s 206F, being that clear cases, where there is an absence of complexity that might delay the filing of a s 533(1) report, are to be dealt with under s 206F. 59 The appellants referred to the primary judge's conclusion (at [69] of her Honour's reasons) that, to construe s 206F(1)(a)(ii) as imposing a time limit for lodgement of a s 533(1) report "would impose a constraint on s 533(1) that is not in the section itself and would be inconsistent with that section which regulates the requirement and preparation of such reports". The appellants disputed that their construction either gives rise to an inconsistency with s 533(1), or operates as a "constraint" on that provision. Rather, they contended, it simply limits the circumstances in which the s 533(1) report will enliven the power in s 206F (provided that the other preconditions are satisfied). 60 Contrary to the appellants' submissions, in our view, the "and" in s 206F(1)(a)(ii) separates the two preconditions that are contained in that paragraph, so that the lodgement of a relevant s 533(1) report at any time will satisfy the second precondition. That is, it is not necessary that a s 533(1) report be lodged "while the person was an officer, or within 12 months after the person ceased to be an officer of" the relevant corporations. 61 This interpretation gives the word "and" a conjunctive effect without requiring that the words "while the person was an officer, or within 12 months after the person ceased to be an officer of" the relevant corporations apply to both preconditions in s 206F(a)(ii). 62 It is an interpretation that is consistent with the evident purpose of the second precondition in s 206F(a)(ii), namely, the identification of a circumstance (the lodgement of a s 533(1) report) that might warrant the exercise of a disqualification power. The function of a s 533 report is to alert ASIC to potential problems with particular corporations, and to do so promptly after the potential problems have been identified by the liquidator: Murdaca at [105] and [114]. 63 Conversely, there is no evident purpose for restricting the power in s 206F to circumstances in which a s 533(1) report is lodged while a person is an officer or within 12 months after the person ceased to be an officer of a relevant company. Such a restriction is not required in order to permit s 206F to apply in relation to clear cases warranting disqualification. Further, it would prevent the power from being exercised in circumstances where, through no fault of a liquidator (and perhaps due to a lack of cooperation from the relevant officer), he or she is unable to lodge a s 533(1) report until more than 12 months after the person ceased to be an officer of a relevant company. Moreover, the appellants' construction leads to absurd results: cf. Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7; (2000) 199 CLR 321 at 338 ([34]-[38]). If the person had resigned, say, 364 days before the commencement of the winding up, the liquidator would have no time at all to prepare and lodge a s 533 report. It cannot have been the intention of the Parliament to limit the s 206F power in that manner. 64 We do not accept that the absence of a note of the kind that appears in s 206D provides any substantial support for the appellants' interpretation. 65 Finally, the statutory predecessor provision (s 600(1) of the Corporations Law) did not impose any limit on the disqualification power by reference to the timing of the s 533(1) report. As explained above, we do not accept that the change of language from s 600(1) to s 206F requires or warrants a conclusion that the Parliament intended to introduce the timing restriction contended for by the appellants in the context of the "plain English rewrite" objective of the amendment.

Conclusion 66 The appeal must be dismissed. The appellants should pay ASIC's costs of the appeal. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Rares, Davies and Gleeson.

Corporate Law Economic Reform Program Act 1999(Cth)

Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission [2016] NSWCA 298; (2016) 116 ACSR 473 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Re London and Caledonian Marine Insurance Company (1879) 11 Ch D 140 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531 Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664 Visnic v Australian Securities and Investments Commission [2007] HCA 24; (2007) 231 CLR 381 Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213

THE COURT: 1 The appellants appealed from the primary judge's decision dismissing their application for judicial review of the conduct of the respondent ("ASIC") in issuing notices to each of the appellants, requiring them to show cause why they should not be disqualified from managing corporations for a period of up to five years: Oreb v Australian Securities and Investments Commission [2016] FCA 321. 2 In summary, the appeal concerned the statutory preconditions that must be satisfied under s 206F(1)(a)(ii) of the Corporations Act 2001 (Cth) ("Act") before ASIC can exercise its administrative power to disqualify a person from managing a corporation. Section 206F empowers ASIC to disqualify a person from managing corporations for up to five years in certain circumstances. 3 The show cause notices were dated 21 July 2015 and were expressed to be based upon records of ASIC showing that the appellants were, or had been, officers of four corporations that had been wound up, in respect of which a liquidator had reported, under s 533(1) of the Act, that each corporation may be unable to pay its unsecured creditors more than 50 cents in the dollar. 4 The appellants contended that the statutory preconditions in s 206F had not been met and are incapable of being met because they had ceased to be officers of the four corporations more than 12 months before: (1) the liquidators of those corporations lodged reports with ASIC under s 533(1) of the Act, stating that the respective corporation would be unable to pay its unsecured creditors more than 50 cents in the dollar; and (2) each corporation was fully wound up. 5 The central questions on the appeal were: (1) What is the meaning of the expression "each of the corporations was wound up" in s 206F(1)(a)(ii)? (2) Does s 206F(1)(a)(ii) require a liquidator's report under s 533(1) of the Act to be lodged while the person was an officer of the relevant corporation or within 12 months after the person has ceased to be an officer of that corporation?

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