Allan, D.N. v The National Companies & Securities Commission

[1986] FCA 202

Re: DUDLEY NORMAN ALLAN
And: THE NATIONAL COMPANIES AND SECURITIES COMMISSION; ALAN DAVIDSON SMITH (as
Commissioner for Corporate Affairs)
No. WA G25 of 1986
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION
Toohey J.

CATCHWORDS

Administrative Law - Judicial Review - objection to competency - decision under s.417(6)(b) of Companies (Western Australia) Code - whether a decision to which the Administrative Decisions (Judicial Review) Act applies in terms of s.3 of the Act

Administrative Decisions (Judicial Review) Act 1977 ss.3, 7, Schedule 1 para.(m)

Companies (Western Australia) Code s.417

Companies (Application of Laws) Act 1981 (W.A.) ss.4, 6, 10

National Companies and Securities Commission (State Provisions) Act 1980 (W.A.) s.4(2)

National Companies and Securities Commission Regulations reg.11A

HEARING

PERTH

#DATE 23:5:1986

ORDER

The objection to competency is allowed.

The application is dismissed.

The applicant pay the respondents' costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This application under the Administrative Decisions (Judicial Review) Act 1977 illustrates the complexities that may arise in the relationship between federal and state legislation.

1. Part XII of the Companies (Western Australia) Code ("the Code") deals with the winding-up of companies. Division 4 of Pt 12 contains provisions applicable to every mode of winding-up. Within div.4 lies s.417 which is concerned with the disqualification of liquidators.

2. Frederick H. Booth & Son (W.A.) Pty. Ltd. is a company in liquidation. Dudley Norman Allan, the applicant, was appointed liquidator of the company on 21 December 1983. Mr. Allan has not acted as liquidator because of a contention that he is disqualified from doing so by reason of sub-s.417(2) of the Code. The basis of the contention, as I understand it, is that he has been an officer of the company because he was its receiver. Sub-section 417(6) reads:
   
   

"For the purposes of sub-section (2), a person shall be deemed to be an officer or auditor of a company if -

(a) he is an officer or auditor of a related corporation; or

(b) except where the Commission, if it thinks fit in the circumstances of the case, directs that this paragraph shall not apply in relation to him - he has, at any time within the immediately preceding period of 2 years, been an officer, auditor or promoter of the company or of a related corporation".

1. It was common ground that "the Commission" referred to in para.417(6)(b) is the National Companies and Securities Commission ("the Commission") established by the National Companies and Securities Commission Act 1979 of the Commonwealth. The term is not defined in the Code itself but is so defined in s.4 of the Companies (Application of Laws) Act 1981 of Western Australia. Section 6 of the latter Act applies the provisions of the Companies Act 1981 of the Commonwealth as laws of Western Australia and, as will appear, constitutes that Act as the Code. There is no doubt as to the identity of the Commission in any of this legislation.

2. Mr. Allan has sought from the Commission a direction that para.(b) shall not apply to him, thus permitting him to continue as liquidator of the company. The Commission has made no decision on the matter; indeed it is not clear that it has given the matter any consideration. The application before the Court is founded on s.7 of the Judicial Review Act on the ground that there has been a failure to make a decision. Section 7, as with ss.5 and 6, relates to "a decision to which this Act applies", an expression defined in s.3 in these terms:
   
   

"... a decision of an administrative character made, proposed to be made, or required to be made, as the case may be (whether in the exercise of a discretion or not) under an enactment, other than a decision by the Governor-General, or a decision included in any of the classes of decisions set out in Schedule 1".

1. The respondents have objected to the jurisdiction of the Court to entertain this application on the ground that the decision which it is said the Commission or the other respondent, the Commissioner for Corporate Affairs, failed to make does not fall within s.3. This objection is being determined as a preliminary matter.

2. The respondents did not dispute that a decision made under para.417(6)(b) is a decision of an administrative character. And counsel for the respondents said that, for the purpose of dealing with the objection, his clients accepted that such a decision would be made under "an enactment". But, said counsel, such a decision fell within para.(m) of schedule 1 to the Judicial Review Act and could not be reviewed under that Act. The paragraph reads:
   
   

"(m) decisions of the National Companies and Securities Commission made in the performance of a function, or the exercise of a power, conferred, or expressed to be conferred, upon it by any State Act or a law of the Northern Territory".

1. The respondents' submission may be summed up in this way:
   
   1. A direction under para.417(6)(b) of the Companies (Western
   

Australia) Code is a decision of the Commission.

1. Sub-section 45(1) of the National Companies and Securities

Commission Act empowers the Commission to delegate to an authority of a state or territory, or an officer of a state or territory or of such an authority, any functions or powers that are conferred or expressed to be conferred on it by or under any Act or state Act. The distinction between "Act" and "state Act" is of course a distinction between federal and state enactments.

1. Any act or thing done in exercise of such a delegation is, by

reason of sub-s.45(6) of the National Companies and Securities Commission Act and subject to a qualification to be mentioned later, "has the same force and effect as if it had been done by the Commission".

1. Sub-section 4(2) of the National Companies and Securities

Commission (State Provisions) Act 1980 of Western Australia reads:

"The Commission shall perform the functions and exercise the powers conferred or expressed to be conferred on it by or under an Act in accordance with the Agreement and shall comply in all respects with the provisions of the Agreement that are applicable to it in the performance of such functions and the exercise of such powers".

1. The agreement in question is that made 23 December 1978

between the Commonwealth and the states. Sub-clause 32(1) of the agreement reads:

"Subject to this Agreement, the functions of the National Commission to be established by the Commonwealth Acts shall be to have and to exercise, subject only to directions from time to time of the Ministerial Council, responsibility for the entire area of policy and administration with respect to company law and the regulation of the securities industry".

1. The Commission's functions and powers are expressed to be

those conferred on it by an Act, in accordance with the agreement.

1. Section 6 of the Companies (Application of Laws) Act 1981 of

Western Australia applies the provisions of the Companies Act 1981 of the Commonwealth as laws of Western Australia. Section 10 of that Act empowers the relevant state minister to authorize the publication of the provisions of the Commonwealth Act. The document so published may be cited as the Companies (Western Australia) Code and once published applies as a law of Western Australia by reason of s.6 of the Act.

1. As a consequence of this legislative structure, a decision by

the Commission under para.417(6)(b) of the Code is necessarily a decision of the Commission made in the performance of a function or the exercise of a power conferred upon it by a state Act viz. the Code.

1. In my view these submissions are well founded. Counsel for the applicant did not challenge the suggested relationship and effect of the various legislative provisions. He took his stand on the proposition that para.(b) does not confer a power on the Commission but rather assumes the existence of such a power. Put another way, para.(b) deals with the consequences of a direction and is not the source of power to give such a direction.

2. If that submission is right, the question must then be asked - what is the source of the Commission's power to direct that para.(b) shall not apply to a person? Counsel's answer was that the power is to be found in sub-cl.32(1) of the agreement to which reference has already been made. The submission was that the Commission exercises its functions in the area of company law and securities by reason of that sub-clause.

3. The submission may well be right as far as it goes but it does not afford an answer to the case presented by the respondents. The fact is that the Commission performs its functions and exercises its powers (the language of sub-s.4(2) of the National Companies and Securities Commission (State Provisions) Act) because the Companies (Application of Laws) Act applies the provisions of the National Companies and Securities Commission Act. It is true that sub-s.45(6) of that Act provides that anything done in the performance of a function or the exercise of a power by a person to whom that function or power has been delegated by the Commission, while having the same force and effect as if it had been done by the Commission, is not to be taken to have been done by the Commission "for the purposes of any prescribed Act". But only one such Act has been prescribed viz. the Ombudsman Act 1976 of the Commonwealth. See National Companies and Securities Commission Regulations reg.11A.

4. Thus, in so far as a decision may be made under para.417(6)(b) of the Code by the Commissioner for Corporate Affairs pursuant to a delegation by the Commission, whatever is done has the same force and effect as if it had been done by the Commission itself.

5. It follows that a decision made under para.417(6)(b) of the Code is a decision made in the performance of a function or the exercise of a power conferred on the Commission by a state Act and that is so whether the decision be made by the Commission or by the Commissioner for Corporate Affairs.

6. The objection to competency is well founded and the application must be dismissed with costs.