State Bank of South Australia (Transfer of Undertaking) Act 1994

The Act directly affects several groups. First, SBSA and each SBSA subsidiary lose the assets and liabilities that are transferred; they cease to be liable for transferred liabilities (s 5(6)). Second, BSAL acquires the transferred assets and liabilities and becomes the obligor or obligee in place of SBSA. Third, customers of SBSA whose accounts, contracts, or securities are transferred become customers of BSAL; their banker-customer relationship continues with BSAL (s 7(b)). Fourth, employees of SBSA or an SBSA subsidiary may be transferred to BSAL by order of the Treasurer, and such a transfer does not affect remuneration, continuity of service, or leave entitlements (s 14). Fifth, third parties who deal with SBSA or BSAL after the transfer are affected by the modifications to property rights; s 10(3) validates a dealing by either SBSA or BSAL despite the dealing party possibly not being entitled to the property, unless the third party has actual notice of the deficiency of title or acts fraudulently. Sixth, registering authorities (the Registrar of Titles and others) are obliged to register or record transfers on application by BSAL (s 9). Seventh, counterparties to contracts, leases, securities, and litigation are affected because their legal relationships are automatically novated without their consent; the Act overrides standard contractual terms that might prohibit assignment or change of control (s 15 and s 16). The economic effect is that the State of South Australia offloads part of a banking business into a private company, and Western Australia’s legal system is used to enforce that transfer without the usual costs of negotiating individual assignments. The compliance burden falls most heavily on BSAL, which must apply for registration of many assets, take possession of documents, and manage the transition. Customers and counterparties bear the risk of dealing with an unfamiliar entity, though the Act attempts to minimise disruption through transitional provisions. Employees lose any right to claim redundancy or compensation for the change of employer (s 14(3)), which is a cost imposed on them for the benefit of the corporatisation process.

The Act creates a set of duties and rights that flow from the transfer order. The Treasurer of Western Australia has the power to make, vary, or revoke a transfer order before it takes effect, but only with the concurrence of the South Australian Treasurer (s 5(1) and (4)). The Treasurer also has the power to transfer staff (s 14). The South Australian Treasurer has the power to fix the conditions of transfer (s 6) and to issue conclusive certificates as to whether an asset or liability is a transferred asset or liability (s 13). Registering authorities are under a duty to register or record the transfer of assets and to register instruments executed by BSAL even if BSAL is not yet registered as proprietor (s 9). BSAL has the right to possession of documents that are entirely referable to a transferred asset or liability and access to copies of mixed documents (s 7(e)). BSAL also has the right to enforce securities, exercise rights under leases, ratify contracts, and execute instruments in its own name or the name of the transferor (s 7(d), (i), (j), (m)). Customers and counterparties have the right to continue their relationships with BSAL as if no transfer had occurred, including rights of set-off (s 7(b)). SBSA or an SBSA subsidiary has the right to lodge a caveat under the Transfer of Land Act 1893 (WA) in respect of land that is not transferred, to prevent BSAL from dealing with it (s 11). Persons dealing with SBSA or BSAL are under no duty to inquire whether property is a transferred asset; their transactions are valid even if the dealing party lacks title, provided they do not have actual notice of the deficiency and do not act fraudulently (s 10). The right to re-transfer assets or liabilities back to SBSA is given to the Treasurer with the concurrence of the South Australian Treasurer (s 12). The Act does not confer any private right of action on affected parties; it explicitly provides that nothing done or allowed under the Act constitutes a breach of contract, a breach of duty of confidence, a civil or criminal wrong, or a ground to terminate an agreement (s 16). This effectively removes the usual legal remedies that counterparties would have if an assignment or change of control breached their contracts.

The Act does not create any criminal offences or civil penalties for non-compliance. Its enforcement mechanism is primarily the conclusive effect of the transfer order and the South Australian Treasurer’s certificate. If a person fails to comply with a duty imposed by the Act, the remedy is likely to be an application to a court for an order compelling compliance. For example, if a registering authority refuses to register a transfer, BSAL could seek judicial review or an order for specific performance under s 9, which says the authority “must” register or record. Similarly, if a third party with actual notice of a title deficiency deals with property in a way that defeats the transfer, the validating provisions of s 10(3) do not apply (s 10(4)), and BSAL may need to bring an action to assert its rights. The Act overrides other laws (s 15), so any inconsistent legislation cannot be used to obstruct the transfer. The practical enforcement risk is low because the transfer is automatic and self-effectuating; the main cost is the burden on BSAL to ensure that registration and documentation are completed. For employees, s 14(3) specifically excludes any right to damages or compensation, so an employee who is transferred cannot bring a claim for redundancy or unfair dismissal based on the transfer itself. The certificate of the South Australian Treasurer under s 13 is to be accepted in legal proceedings as evidence of the matter certified; this simplifies proof but also limits the ability of a party to challenge the characterisation of an asset or liability. The absence of a penalty regime means that the Act relies on the force of its own provisions and the threat of court orders to ensure compliance, rather than on a regulatory agency.

Section 15 provides that the Act has effect “despite the provisions of any other law.” This is a sweeping overriding clause that subordinates all inconsistent WA legislation, whether state or Commonwealth, to the transfer mechanism. The effect is that contractual prohibitions on assignment, statutory restrictions on dealing with Crown property, and registration requirements that would normally delay or block a transfer are all superseded. Section 16 reinforces this by declaring that nothing done or allowed under the Act constitutes a breach of an Act or other law, a breach of contract, a breach of a duty of confidence, a civil or criminal wrong, a termination of an agreement, or a release of a surety. This means that the transfer itself cannot give rise to liability for SBSA, BSAL, or any officer involved. The Act specifically interacts with the Transfer of Land Act 1893 (WA) through s 11, which allows SBSA to lodge a caveat to protect non-transferred land. The Act also interacts with the Corporations Law because BSAL is a public company formed under that law; the transfer of assets and liabilities occurs outside the usual Corporations Law mechanisms for schemes of arrangement or asset sales. The South Australian Act is the primary source of the conditions and timing; the WA Act is supplementary and only applies to property located in or governed by WA law, or to legal proceedings in WA. The definition of “corresponding law” in s 3 contemplates that other states or territories may pass similar laws, and the WA Act’s transitional provisions (s 7) apply to transfers under those laws as well. For example, if another state enacted a law providing for transfers between SBSA and BSAL, that law would be a “corresponding law” and the WA Act’s provisions would treat those transfers as effective in WA. This creates a network of state legislation that collectively gives force to the national corporatisation of SBSA’s banking operations.

The Act was enacted as Act No. 25 of 1994, received Royal Assent on 23 June 1994, and commenced on the same day (s 2). According to the compilation table reproduced in the Act, there has been only one reprint: Reprint 1 as at 18 January 2008. No amending Acts are listed. This suggests that the Act has remained unchanged since its original enactment. The Act is a one-off enabling statute designed to facilitate a specific transaction (the corporatisation of SBSA and transfer of its banking business to BSAL) that occurred within a defined transfer period. Once the transfer period ended and the appointed day passed, the Act’s substantive powers (to make transfer orders) likely expired. The Act remains on the statute books but is spent in practical terms; no further orders can be made because s 5(2) and s 12(2) require orders to be made within the transfer period, which is defined by the South Australian Act and would have elapsed long ago. The absence of amendment history reinforces that the Act was intended to have a limited operational life. However, transitional provisions such as s 7 (construing documents, continuing legal proceedings) have ongoing effect for the life of the transferred assets and liabilities. The Act also continues to govern the effect of the transfers that were made; for example, the construction of old documents referring to SBSA still requires reference to s 7(a). The staleness of the Act does not mean it is irrelevant; it still governs the legal consequences of the historical transfer. For a practising lawyer dealing with an asset that was transferred in 1994, this Act may be the key to understanding who the current obligor is.

The text of the Act does not cite any litigation. It is a compilation of the legislation only, with no reference to cases. Based on the Act’s design, litigation is likely to be rare because the Act provides a conclusive certificate mechanism (s 13) and validation of transactions (s 10) that discourage challenges. The overriding effect of s 15 and the exclusion of liability in s 16 further narrow the grounds on which a party could sue. However, potential disputes could arise over whether a particular asset or liability was in fact transferred; the South Australian Treasurer’s certificate is conclusive evidence, but parties might challenge the certificate on grounds of fraud or jurisdictional error (although s 13 says the certificate is to be accepted “in the absence of proof to the contrary” in relation to authenticity, not correctness). A third party with actual notice of a title deficiency might argue that s 10(4) preserves their right to challenge the transaction. There may also be litigation about the application of the Act to property that was not clearly within the scope of a transfer order. Because the Act is a state law, any litigation would be in Western Australian courts. The Act does not create a private right of action, so any proceedings would be based on general law claims (conversion, breach of contract, etc.) with the Act as a defence or a sword. Without any reported cases in the source, it is reasonable to assume that the Act achieved its purpose without major dispute. The economic incentives for litigation are low because the Act’s validating provisions give certainty and the cost of challenging a transfer would likely exceed the benefit for most counterparties.

Several provisions in the Act can trap an unwary practitioner. First, the Act validates transactions by either SBSA or BSAL with property even if the dealing party is not entitled to it, unless the counterparty has actual notice of the deficiency of title or acts fraudulently (s 10(3) and (4)). This means a purchaser from SBSA after the transfer could get good title to what is now BSAL’s property, provided the purchaser does not actually know that the asset had been transferred. The onus is on the party challenging the transaction to prove actual notice or fraud. Conversely, a purchaser from BSAL after a re-transfer could similarly obtain good title to property that should have gone back to SBSA. Due diligence cannot rely on mere suspicion; only actual knowledge defeats the validation. Second, s 7(i) permits BSAL to exercise rights to possession or use of property under a lease without giving rise to liability on the part of SBSA for parting with possession contrary to the lease terms. This overrides typical lease covenants against assignment or subletting. A lessor who did not consent to the transfer cannot claim damages or termination. Third, s 7(m) allows BSAL to execute instruments discharging, surrendering, or dealing with a transferred asset in the name of the body corporate from which it was transferred. This means a document signed by BSAL in the name of SBSA is valid, even though BSAL is a separate legal entity. This could cause confusion for third parties who think they are dealing with SBSA. Fourth, s 8 automatically redirects standing payment orders from an account at SBSA to the corresponding account at BSAL. A customer who wanted to stop payments to the old account must redirect instructions to BSAL; otherwise, payments will continue to go to BSAL. Fifth, the conditions of transfer are fixed not by the WA Act but by the South Australian Treasurer under the South Australian Act (s 6). A party affected by the transfer must consult the South Australian Act and any orders made under it to understand precisely what terms apply, such as whether any warranties or indemnities were given. Sixth, the staff transfer provisions (s 14) expressly exclude any right to damages or compensation. An employee who is transferred cannot claim redundancy even if the new employer is less creditworthy or has different policies. The only protection is that remuneration and leave entitlements must not be affected, but the employee loses the right to negotiate a severance package. Seventh, the Act’s overriding effect (s 15) and the exclusion of liability (s 16) mean that standard contractual provisions that might otherwise allow a counterparty to terminate or demand renegotiation are rendered void for this transaction.

Compliance with the Act is largely the responsibility of BSAL and the relevant government officers, but several steps are necessary for different parties. For BSAL, the primary compliance task is to apply to the Registrar of Titles and any other registering authority to register or record the transfer of assets and liabilities (s 9(1)). BSAL must also take possession of documents that are entirely referable to transferred assets and arrange access to mixed documents (s 7(e)). BSAL should execute any necessary instruments of discharge, surrender, or transfer in its own name or in the name of SBSA (s 7(m)). It must honour negotiable instruments, cheques drawn on transferred accounts, and credit or debit cards as if it had issued them (s 7(f), (g), (h)). BSAL should also update its systems to reflect the continuance of the banker-customer relationship and ensure that standing payment orders are redirected (s 8). For SBSA or an SBSA subsidiary, compliance involves identifying property that is not transferred and, if it is land under the Transfer of Land Act 1893, lodging a caveat to prevent BSAL from dealing with it (s 11). SBSA must also cooperate with BSAL in providing access to documents. For the WA Treasurer, compliance is limited to ensuring that any transfer order is made within the transfer period and with the concurrence of the South Australian Treasurer, and that any conditions fixed by the South Australian Treasurer are observed. For employees who are transferred, the employer (SBSA) and BSAL must ensure that the transfer does not affect remuneration, leave, or continuity of service (s 14(2)). No redundancy or compensation is payable (s 14(3)). For third parties dealing with SBSA or BSAL in relation to property that may have been transferred, the safest course is to obtain a certificate from the South Australian Treasurer under s 13 confirming whether the property is a transferred asset. However, s 10(1) and (2) provide that a person is not obliged to enquire, so a third party who chooses not to inquire is generally protected (except if they have actual notice of a title deficiency or act fraudulently). A third party who wants certainty should request a certificate. The most practical compliance burden falls on BSAL to manage the extensive registration and documentation process within the transfer period, and on the registering authorities to act promptly on applications.