(ii) a provision of a previous law of the
Territory with which sub-section 418(1) corresponds;
(iii) a provision of a law
of a
participating State or participating Territory that corresponds
with sub-section 418(1); or
(iv) a provision of a
previous law of a participating State or
participating Territory with which a provision of the kind referred
to in sub paragraph
(iii) corresponds, reported or lodged a report
with respect to, a matter relating to the ability of the company to
pay its
unsecured creditors."
14. By s. 562A(1)(c)-
"A person may be taken to be a relevant person
in relation to a company that is
or was a 'relevant company' if
and only if, the person was a director of the company at any time
during the period of 12 months
ending on the date of the
commencement of the winding up of the company."
15. Prior to the enactment of s. 562A, s. 562 was in
force as part of the
Companies Code in all States and the Australian Capital Territory but not in
the Northern Territory. S. 562
sets out various circumstances in which the
Court may disqualify a person from acting as director or promoter of or from
being in
any way (whether directly or indirectly) concerned in or taking part
in the management of a corporation for a period not exceeding
5 years. That
in turn stems from s. 374H of the 1961 uniform companies enactments. That
section was never enacted in the earlier
Northern Territory legislation and
therefore only came into force per s. 562 in the Northern Territory on 1 July
1986. However, s.
562 is expressly stated to have retrospective operation.
See s. 562(3)(b).
16. Both s. 374H and its successor s. 562 required the
Commission to satisfy
the Court as to certain matters before an order prohibiting a person from
acting as director etc. could be
made. The significant change wrought by s.
562A was that in the circumstances set out in that section it is not necessary
for the
Commission to apply to the Court for such a prohibition. The
Commission, upon serving the appropriate notices, and giving the person
concerned an opportunity to be heard, and unless satisfied it is not
appropriate to do so, may of its own motion prohibit a person
from acting as
director etc. for a period not exceeding 5 years, except with leave of the
Court. This section is not expressly stated
to have retrospective operation
but some of the provisions (e.g s. 562A(1)(b) (ii) and (iv)) are only
consistent with an intention
that events occurring before the enactment of the
section can be relied upon to determine whether a company is a "relevant
company".
Those sub-sections expressly refer to "a previous law".
17. Furthermore s. 562A(1)(b) provides that a company shall be taken to
be a
relevant company at a particular time if, and only if, within the period of 7
years ending at that time a liquidator has (under
certain provisions
subsequently discussed) "reported or lodged a report with respect to a matter
relating to the ability of the company
to pay its unsecured creditors". Such
phraseology may, and indeed until the section has been in force for over 7
years, often necessarily
will, import events happening before the commencement
of the section.
18. In Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 at 267 Dixon C.J. said:-
"The general rule of the common law is that a statute
changing the law ought not, unless the intention
appears with
reasonable certainty, to be understood as applying to facts or
events that have already occurred in such a way
as to confer or
impose or otherwise affect rights or liabilities which the law had
defined by reference to the past events.
But, given rights and
liabilities fixed by reference to past facts, matters or events,
the law appointing or regulating the
manner in which they are to
be enforced or their enjoyment is to be secured by judicial remedy
is not within the application
of such a presumption. Changes made
in practice and procedure are applied to proceedings to enforce
rights and liabilities,
or for that matter to vindicate an
immunity or privilege, notwithstanding that before the change in
the law was made the accrual
or establishment of the rights,
liabilities, immunity or privilege was complete and rested on
events or transactions that were
otherwise past and closed.".
19. In the present case the question is whether the provisions of s. 562A, or
those parts of it relevant
to the present enquiry, come outside the general
rule stated above.
20. Section 562A has been carefully considered by the Supreme
Court of
Victoria (O'Bryan J.) in Nicholas v Commissioner for Corporate Affairs
(Victoria) (1986) 10 ACLR 792; and on appeal to the Full Court, affirming His
Honour's decision at [1988] VicRp 40; 11 ACLR 801.
21. O'Bryan J., after reviewing the authorities said this at 10 ACLR 799:-
"Section 562A is concerned with a person's fitness to
be a director or promoter of a corporation or to be in any way,
directly
or indirectly, concerned in or taking part in the
management of a corporation; sub-s (3). This concern is for the
present
and future protection of the public, to protect the public
from persons whose past conduct in relation to a dissolved company
has been reported on adversely by the liquidator.
The amending section is clearly concerned with present fitness.
To determine
present fitness necessarily requires one to have
regard to past facts. Not surprisingly, therefore, the
legislature has prescribed
past facts as relevant criteria. A
corporation that has been dissolved is affected by the section. A
relevant company is
one in respect of which a liquidator has
reported or lodged a report etc pursuant to s.418(1). A relevant
person is a person
who was a director at any time within 12 months
of the winding up. The words underlined mean, prima facie, that
past events
are relevant to the operation of sub-s (3).
The new offences created by sub-ss (5) and (6) apply only if a
person contravenes
a notice served under sub-s (3) or a notice
served under a provision of a law that corresponds with sub-s (3).
Sub-section
(3) does not of itself impose a penalty for past
conduct, but operates to disqualify as
presently unfit from being a director
etc persons whose past
history make them unsuitable in the public interest. In this
respect s562A operates prospectively."
22. On appeal the Full Court agreed with the reasoning of O'Bryan J. I would
respectfully refer to and adopt the reasoning of O'Bryan
J. and the Full Court
on this point and in particular refer to the observations of Fullagar J. at 11
ACLR 811-812:-
"But the point to be made, which is I think of
fundamental importance in the present case, is that the so-called
rule against
retrospectivity is neither more nor less than a rule
of construction, with its fundamental concomitant that the
doctrine can
have no application at all where the words used are
such that they simply do not admit of a construction which will
avoid 'retrospectivity'.
In all the decided cases which have been
brought to our attention in the present case, where the question
arose whether the
statute was to be permitted to have a
retrospective effect, the statute was couched in language which
was readily susceptible
of a construction which avoided
retrospectivity. In my opinion the statute in the present case is
couched in language which
is not readily susceptible of the
last-mentioned construction, with the result that the "rule
against retrospectivity" has
no application".
23. That, however, does not conclude the matter in this case, because it must
be shown that the companies in question
here are relevant companies and the
plaintiffs relevant persons. This becomes a matter of some difficulty in the
Northern Territory
where the earlier Territory legislation did not stem from
the 1961 Uniform Companies Actwhich had been adopted in the other States
and
the Australian Capital Territory. For, while s. 562A allows events to be
considered which have taken place before the date of
the enactment of the
section, those events can be only those which can be fitted into the framework
of one or more of the sub-paragraphs
(i) to (iv) of sub-section 1(b).
24. Do any of those sub-sections apply here? Obviously not sub-paragraph
1(b)(i) because there
is no evidence that the liquidator of the companies
under consideration has made any report under sub-section 418(1). Nor
presumably
could he have done so since a winding up commenced before July 1
1986 continues under the provisions of the N.T. Companies Act.
See s. 35(1)
of the N.T. Companies (Application of Laws) Act No. 13 of 1986 (previously
quoted). It is no doubt for this reason
that the Notice served on the
plaintiffs refers to s. 306(3) of the Territory Companies Act 1978 as an
alternative.
25. Sub-paragraph
(ii) refers to "a provision of a previous law of the
Territory with which sub-section 418(1) corresponds". "The Territory" is
defined
in the Commonwealth Companies and Securities (Interpretation
andMiscellaneous Provisions) Act 1980 which I will call "the Commonwealth
Act") as, "the Territory accepted by the Commonwealth pursuant to the Seat of
Government AcceptanceAct 1909 and described in the
Second Schedule to that Act
and includes the Jervis Bay Territory". This is distinct from the definition
of "Territory" which is
defined as "a Territory referred to in s. 122 of the
Constitution". Hence the Territory does not there mean the Northern
Territory.
26. If those interpretations remained, sub-paragraph (ii) would
not apply
here, since the only report upon which the defendant relies was one made under
a previous law of the Northern Territory;
- certainly not under a previous law
of the Australian Capital Territory. But the matter does not end there
because the Northern
Territory Companies and Securities (Interpretation and
Miscellaneous Provisions) (Applications of Laws Act) 1986 specifically affects
the above definitions. (I will refer to that Act as "the Territory Act").
- By s. 8 of the Territory Act, "the provisions of
the Commonwealth Act
(other than sections 1, 2, 3, 4 and 5) apply -
(a) as if amended as set out in Schedule 1; and
(b)
subject to and in accordance with this Act,
as laws of the Territory".
Section 3 of the Territory Act defines "Commonwealth
Act" as
meaning the Companies and Securities (Interpretation and Miscellaneous
Provisions) Act 1980 of the Commonwealth as amended and in force
for the time being."
- Schedule 1 of the Territory Act provides that "the provisions
of the
Commonwealth Act apply as if -
...
- In s. 9 of the Commonwealth Act ... (ZE) for
the definition of "the Territory"
or"the Australian Capital
Territory" there were substituted the following:
"the Australian Capital Territory" means the Territory
accepted
by the Commonwealth pursuant to the Seat of Government Acceptance
Act 1909 of the Commonwealth and described in the Second Schedule
to that Act, and includes the Jervis Bay Territory;
"the Territory"
means the Northern Territory of Australia;"
- By s. 5 of the Northern Territory Companies (Application of Laws) Act
"the Companies and Securities (Interpretation and Miscellaneous Provisions)
(Application of Laws) Act 1981 applies to the; Companies (Northern Territory)
Code." See also s. 6.
- I interpolate here that the reference to "Code" rather
than "Act" does
not in these circumstances have any significance to the application of the
legislation - see the remarks of Martin
J. already quoted, and in the
definition of "Code" in the Northern Territory Companies and Securities
(Interpretation and Miscellaneous
Provisions) (Application of Laws) Act 1986:
"Code" is therein defined as, the provisions of an Act passed
by the Parliament
of the Commonwealth pursuant to the Agreement as
in force for the time being, being provisions applying, by reason
of an Act
passed by the Legislative Assembly pursuant to the
Agreement, as laws of the Territory" (Emphasis added).
- By this rather
circuitous route one now comes back to sub-paragraph (ii)
of s. 562A(1)(b) of the Code and the expression "a provision of a previous
law
of the Territory with which sub-section 418(1) corresponds" can be read as
referring to a previous law of the Northern Territory.
The exercise then
becomes simply to determine whether s. 306(3) of the Northern Territory
Companies Act 1978 corresponds with s.
418(1) of the Code.
- For completeness however, and lest I should be wrong in my interpretation
of sub-paragraph (ii), I have
examined sub-paragraphs (iii) and (iv); and I
come to the conclusion that, although sub-paragraph (iii) would not apply
here, sub-paragraph
(iv) does; so that either under sub-paragraph (ii) or
sub-paragraph (iv) the same exercise may be undertaken.
- (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 shall
- (d) forthwith lodge with the Commission a
report with respect to the matter and state in the report whether
he proposes
to make an application for an examination or order
under section 541; and
(e) furnish the Commission with such information,
and give to
it such access to and facilities for inspecting and taking copies of
any documents, as the Commission requires."
- There are provisions in the earlier Northern Territory Act which bear
similarities to s. 418(1). They are s. 306(2) and (3)
of that Act. As
previously mentioned, the Notices issued by the Commissioner for Corporate
Affairs refer specifically to s. 306(3)
of the Northern Territory Act. The
Notices claim that the companies are "relevant companies in that under s.
418(1) of the Companies
(N.T.) Code (or s.306(3) of the Companies Act 1978 as
the case may be)", a liquidator has reported within a 7 years period ... that
the companies may be unable to pay their unsecured creditors more than 50
cents in the dollar."
- Sub-sections (2) and (3) of
s. 306 of the 1978 Act read as follows:-
"(2) If it appears to the liquidator, in the course
of a voluntary winding up, that
any past or present officer, or
any member of the company has been guilty of an offence in
relation to the company for which
he is criminally liable, he
shall forthwith report the matter to the Attorney-General and
shall, in respect of information
or documents in his possession or
under his control which relate to the matter in question, furnish
the Attorney-General with
such information, and give to him such
access to an facilities for inspecting and taking copies of any
documents, as he may
require.
(3) If it appears to the liquidator, in the course of a winding
up, that the company which is being would up will
be unable to pay
its unsecured creditors more than 50 cents in the dollar, the
liquidator shall forthwith report the matter
in writing to the
Registrar and shall furnish the Registrar with such information,
and give to him such access to and facilities
for inspecting and
taking copies of any document, as the Registrar may require."
- Now there are some obvious differences between
those sub-sections and s.
418(1) of the Code. Both s. 306(2) of the Act and s. 418(1)(a) of the Code
impose upon a liquidator a
duty to report if any past or present officer or
member of the company has been guilty of an offence. S. 306(2) restricts that
to
the case of a voluntary winding up, whereas s. 418(1) speaks of windings up
generally. Under s. 306(2) the liquidator must report
to the
Attorney-General. Under s. 418(1) he must report to the Commission. S.
306(2) casts on the liquidator a duty to report if
any officer or member of a
company is suspected of a criminal offence in relation to the company. S.
418(1) extends the class to
contributories of the company. S. 306(2) speaks
of "an offence in relation to the company for which (a person) is criminally
liable".
S. 418(1) refers to "an offence under any law of the Commonwealth or
of a State or Territory in relation to the company."
- Turning
to a comparison between s. 306(3) and s. 418(1) the former
sub-section casts on the liquidator a duty to report if it appears a company
being wound up willbe unable to pay its unsecured creditors more than 50 cents
in the dollar. S. 418(1)(c) casts that duty upon
the liquidator if it appears
that the company being wound up maybe unable to pay its unsecured creditors
more than 50 cents in the
dollar.
In Sackville-West v Viscount Holmesdale (1870) LR 4 HL 543 the House of
Lords was called upon to construe in a will certain expressions such as "to
correspond as far as may be practicable"
and "to correspond as nearly as may
be". Lord Cairns at p 576 said:
" 'To correspond' does not usually or properly mean 'to be
identical
with', but 'to harmonize with' or 'to be suitable to' ".
46. In this he was in disagreement with Lord Hatherly L.C.
who said, at p
557:-
"I cannot admit that the proper meaning of
'corresponding' is 'harmonizing with', or 'being suitable to'.
I
think such meaning is secondary only. A foot-mark 'corresponds'
with the foot when it has been made by it. A copy of an
instrument corresponds with the original when the wording and
paging, and, if possible, the handwriting agree."
47. His was
the dissenting judgment, and though it can at once be
acknowledged that the word may well in some contexts have the exactitude which
he suggests, I would be more inclined to the broader interpretation espoused
by Lord Cairns, and (although this is no doubt somewhat
subjective) I am
confident that in common parlance the word is used more generally in what Lord
Hatherly refers to as its secondary
meaning. Furthermore, if the intent of s.
562A(1)(b) was to confine that sub-section to exact counterparts of s. 418(1),
it would
have been a simple exercise to use an expression such as "sub-section
418(1) or a provision in the same terms", and this has not
been done.
48. In the context of s. 562A one must, I think, read it in the broader
sense.
49. This is also more consistent with
the obvious policy of s. 592A which is
concerned with "past history as an indication of present fitness" (per
Fullagar J. in Nicholas
v Commissioner for Corporate Affairs [1988] VicRp 40; (1987) 11 ACLR
801 at p 812). It becomes a relevant matter that a company has been the
subject of a report by a liquidator in circumstances similar
to those set out
in s. 418(1); since the concern is for "the present and future protection of
the public" (per O'Bryan J. at first
instance in Nicholas v Commissioner for
Corporate Affairs 10 ACLR 792 at 799).
50. In my view and despite the differences I have noted between s. 306(2) and
(3) of the earlier Northern Territory Act
and s. 418 (1) of the Code in
general terms these provisions in the Act and the Code clearly correspond.
Most of the differences
are no more than necessary changes to bring the
earlier sub-sections into line with the provisions of the Code without in any
way
destroying the general intent. Thus, for instance, the requirement that
the liquidator should report to the Attorney-General or
the Registrar has been
replaced with a requirement that the liquidator should report to the
Commission. That in no way alters the
objectives in either legislation. Nor
do the other differences affect the general thrust of the legislation. At
most s. 418(1)
does no more than give the liquidator somewhat wider powers
than he had under s. 306(2) and (3); but to the same ends.
51. In my
view therefore the companies in the present case are "relevant
companies"; and, since each plaintiff was a director of the relevant
companies
at a time during the period of 12 months ending on the date of the
commencement of the winding up of the companies, he
or she is therefore a
"relevant person". The Commission therefore is properly empowered to act
under s. 562(A)(2) and serve on each
of them, as it has done, a notice to show
cause why a notice under sub-section (3) should not be served on them.
52. The provisions
of s. 562A do not contradict or cut across the provisions
of s. 35 of the Northern Territory Companies (Application of Laws) Act
(previously referred to). The companies concerned can continue to be wound up
under the earlier Act without s. 562A affecting that
process in any way.
53. Mr Stirk has valiantly tried to distinguish Nicholas v Commissioner for
Corporate Affairs by submitting
that the words "the commencement of the
winding up of the company" in s. 562A(1)(c) must refer to the commencement of
a winding up
which took place under the Code. He submits that that point was
not decided in the above case and, indeed, he contends that certain
remarks of
Fullagar J. support his argument. The passage he relies on appears at 11 ACLR
p 815 and it is this:-
"These considerations
were in the course of argument
put to Mr Beaumont and, in the course of his reply, he further
contended that, in s562A(2),
the requirement that the person
served 'is' a relevant person must be construed as if the person
is required to achieve the
status of a relevant person on or after
commencement of the new section. But this contention, which I
would accept as literally
correct, does not extricate his client
from his difficulty because, by s562A(1)(c), he becomes a relevant
person on or after
commencement of the new section by reason of
having been a director of a company 'at any time during the period
of 12 months
ending on the date of the commencement of the winding
up of the company', that is to say, by reason of events described
in
such a way that they do not admit of a construction which
excludes the happening of past events as criteria of the section's