Banerjee v Commissioner of Police

In *Banerjee v Commissioner of Police*, the New South Wales Court of Appeal considered a question of constitutional law concerning the potential inconsistency between state legislation regulating the security industry and Commonwealth legislation governing corporate insolvency. The dispute arose when a company, having entered voluntary administration under Part 5.3A of the *Corporations Act 2001* (Cth), faced the mandatory revocation of its security industry licence under the *Security Industry Act 1997* (NSW) and the *Security Industry Regulation 2016* (NSW). The applicants argued that these state provisions prevented the company from carrying on its primary business while under administration, thereby creating an inconsistency with the Commonwealth Act.

The central legal issue before the Court of Appeal was whether the operation of the relevant provisions of the *Security Industry Act* and its accompanying Regulation, which mandated the revocation of a company's security licence upon entering voluntary administration, was inconsistent with Part 5.3A of the *Corporations Act*. This question was framed under section 109 of the Commonwealth Constitution, which provides that where a state law is inconsistent with a law of the Commonwealth, the Commonwealth law shall prevail and the state law shall, to the extent of the inconsistency, be invalid or inoperative.

The Court of Appeal reasoned that the purpose of Part 5.3A of the *Corporations Act* was to provide a framework for the restructuring of companies in financial distress, which necessarily included the possibility of administrators carrying on the company's business. However, the Court found that the *Security Industry Act* and Regulation did not, in fact, prevent the company from entering voluntary administration or prevent administrators from carrying on the business. Instead, the state laws merely stipulated that a company could not operate as a security business without a valid licence, and that such a licence would be automatically revoked upon the company entering administration. The Court concluded that this did not frustrate the purpose of the Commonwealth legislation, nor did it impose an additional obligation or prohibition that conflicted with the *Corporations Act*. Therefore, there was no inconsistency for the purposes of section 109 of the Constitution.

The Court answered the referred question in the negative, finding no inconsistency between the state and Commonwealth legislation. Consequently, the relevant provisions of the *Security Industry Act* and Regulation were not invalid. The proceedings were remitted to the Equity Division, and the applicants were ordered to pay the Commissioner's costs.