Bell Group N.V. (In Liquidation) & Anor v State of Western Australia; W.A. Glendinning & Associates Pty Ltd v The State of Western Australia; Maranoa Transport Pty Ltd (in Liq) & Ors v State of Western Australia & Ors

[2016] HCATrans 78

[2016] HCATrans 078

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S248 of 2015

B e t w e e n -

BELL GROUP N.V. (IN LIQUIDATION) ARBN 073 576 502

First Plaintiff

MR GARRY TREVOR AS LIQUIDATOR OF BELL GROUP N.V. (IN LIQUIDATION) ARBN 073 576 502

Second Plaintiff

and

THE STATE OF WESTERN AUSTRALIA

Defendant

Office of the Registry
  Perth  No P63 of 2015

B e t w e e n -

W.A. GLENDINNING & ASSOCIATES PTY LTD (ACN 008 762 721)

Plaintiff

and

THE STATE OF WESTERN AUSTRALIA

Defendant

Office of the Registry
  Perth  No P4 of 2016

B e t w e e n -

MARANOA TRANSPORT PTY LTD (IN LIQ) (ACN 009 668 393)

First Plaintiff

ANTHONY LESLIE JOHN WOODINGS

Second Plaintiff

ANTONY LESLIE JOHN WOODINGS IN HIS CAPACITY AS TRUSTEE UNDER A DEED OF SETTLEMENT DATED 17 SEPTEMBER 2013 IN RESPECT OF THE INTERESTS OF BELL GROUP (UK) HOLDINGS LIMITED (IN LIQ) AND MARANOA TRANSPORT PTY LTD (IN LIQ) (ACN 009 668 393)

Third Plaintiff

and

STATE OF WESTERN AUSTRALIA

First Defendant

THE BELL GROUP LIMITED (IN LIQ) (ACN 008 666 993) AND ALBANY BROADCASTERS LIMITED (IN LIQUIDATION) AND AMBASSADOR NOMINEES PTY LTD (IN LIQUIDATION) AND BELCAP ENTERPRISES PTY LTD (IN LIQUIDATION) AND BELL BROS HOLDINGS LTD (IN LIQUIDATION) AND BELL BROS PTY LTD (IN LIQUIDATION) AND BELL EQUITY MANAGEMENT LTD (IN LIQUIDATION) AND BELL GROUP FINANCE PTY LTD (IN LIQUIDATION) AND BELL PUBLISHING GROUP PTY LTD (IN LIQUIDATION) AND DOLFINNE PTY LTD (IN LIQUIDATION) AND DOLFINNE SECURITIES PTY LTD (IN LIQUIDATION) AND HARLESDEN FINANCE PTY LTD (IN LIQUIDATION) AND INDUSTRIAL SECURITIES PTY LTD (IN LIQUIDATION) AND NEOMA INVESTMENTS PTY LTD (IN LIQUIDATION) AND TBGL ENTERPRISES LTD (IN LIQUIDATION) AND THE BELL GROUP LTD (IN LIQUIDATION) AND WANSTEAD PTY LTD (IN LIQUIDATION) AND WANSTEAD SECURITIES PTY LTD (IN LIQUIDATION) AND WAON INVESTMENTS PTY LTD (IN LIQUIDATION) AND WIGMORES TRACTORS PTY LTD (IN LIQUIDATION)

Second Defendants

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 5 APRIL 2016, AT 10.14 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, in the BGNV proceedings, I appear with my learned friend, MR A.A. D’ARCY, for the plaintiffs.  (instructed by Lipman Karas)

MR S. PENGLIS:   May it please the Court, I appear with my learned friends, MR A.K. SHARPE and MR B.C. GAUNTLETT, in the W.A. Glendinning proceedings.  (instructed by DLA Piper Australia)

MR C.G. COLVIN, SC:   May it please the Court, in the third matter I appear with my learned friends, MR J.C. VAUGHAN, SC and MR P.A. WALKER.  (instructed by Ashurst)

MR G.R. DONALDSON, SC, Solicitor‑General for the State of Western Australia:   May it please the Court, in matter S248 I appear with my learned friends, MR A.J. SEFTON and MS R. YOUNG, for the defendant, also for the defendant in P63 and for the first defendant in P4.  (instructed by State Solicitor’s Office (WA))

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia:   May it please the Court, I appear with MR J.A. WATSON, MR M.J. O’MEARA and MS Z.C. HEGER for the Attorney‑General for the Commonwealth intervening in each matter and also for the Commissioner of Taxation seeking leave to intervene in each matter.  (instructed by Australian Government Solicitor)

FRENCH CJ:   The Commissioner will have leave to intervene in each matter.

MR GLEESON:   May it please the Court.

MR M.G. SEXTON, SC, Solicitor‑General for the State of New South Wales:   If the Court pleases, I appear with my learned friend, MR S. ROBERTSON, for the Attorney‑General for New South Wales who intervenes in each of the proceedings.  (instructed by Crown Solicitor (NSW))

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia:   If the Court pleases, I appear with my learned friend, MR D.F. O’LEARY, on the instructions of the Attorney‑General for South Australia intervening in all three matters.  (instructed by Crown Solicitor (SA))

MR P.J. DUNNING, QC, Solicitor‑General of the State of Queensland:  May it please the Court, I appear with my learned friend, MR A.D. KEYES, for the Attorney‑General for Queensland intervening in each of the matters.  (instructed by Crown Law (Qld))

MR M.E. O’FARRELL, SC, Solicitor‑General for the State of Tasmania:   May it please the Court, I appear with my learned friend, MS S.K. KAY, for the Attorney‑General of Tasmania intervening.  (instructed by Crown Law (Tas))

MR R.M. NIALL, QC, Solicitor‑General for the State of Victoria:   May it please the Court, I appear with MS K.E. FOLEY for the Attorney intervening in each matter.  (instructed by the Victorian Government Solicitor)

FRENCH CJ:   Before we commence, Solicitor‑General for Western Australia, there is a reference in the plaintiff’s reply at paragraph 24 in the BGNV matter to a concession by the State at 196 in the State’s submissions in that matter beginning at “Other than as addressed above, the State concedes that” et cetera.  Just so that we can have a clear understanding of the direction down the track with the inconsistency argument in relation to the Corporations Act is concerned, can you just identify what is the “other than as addressed above” apart from Part 5.6?

MR DONALDSON:   Yes.  Your Honour, the position is that if the Bell Act provisions are not within the scope of 5F or within the scope of the various provisions of 5G, that is, that none of those provisions operate, then we accept that the Bell Act is inconsistent with the corporations legislation in its entirety.

FRENCH CJ:   All right, thank you.  Mr Walker, I might indicate also that we would not need to hear from you in‑chief on the question of standing.

MR WALKER:   May it please the Court.  Your Honours, I cannot say by way of anticipating that, but because we were resting on our written submissions you will not find a reference to that in the outline for our address.  Neither will you find a reference to what I will call, I hope not too breezily, the transitional provisions analysis with which exciting material we start our written submissions.

FRENCH CJ:   We all enjoyed reading it immensely.

MR WALKER:   Your Honours, the experience of rereading it, having settled it, is every bit as exciting.  That is also not referred to.  We rest on our written submissions in relation to that.  Could I, therefore, start immediately by going to the statute which has assembled such a large and variously divided Bar table, namely, what my learned friend has just called the Bell Act.  It is the Bell Group Companies – and then a telling parenthesis – (Finalisation of Matters and Distribution of Proceeds) Act 2015 (WA).  I will simply go from the beginning to the end of it.  There are some cross‑references that I will make as I do so.

In section 2, for example, you will see that the combined effect of subsection (2) and paragraph (1)(c) has the effect that some rather draconian criminally sanctioned prohibitions which are contained in this Act come into effect before the Act has been assented to, by way, one supposes, of an intention to prevent anticipatory action against the possibility of the Act being enacted.  It is, in particular, from the very beginning, therefore, that this is an Act which sets out the prohibited conduct of the kind which the liquidators would otherwise be entitled to undertake in relation to dealings with property. 

Could I, in the definitions, simply note the following matters without dwelling on them?  The reference to “Fund” is, of course, a reference to a very important part of the scheme.  You will see that it is the “WA Bell Companies Administrator Authority Fund established by section 16”.  ICWA is the current set of initials for the body continued in existence by the Insurance Commission of Western Australia Act 1986. Section 4(a) of that Act gives that entity the character of being the agent of the State. It has the status of the State. It has the immunities of the State and the privileges of the State.

Over the page, still in section 3, you will see a matter that you will have come across not only in the Act but in the written submissions, the PTICA is the agreement from Indemnification and Post Termination Inter‑Creditor Agreement, which racy title is a very important risk allocation and reward allocation provision for what I am going to call complex litigation funding, to which I will be coming fairly soon.

Still in section 3, “transfer day”, which is a very important concept, is by reason of paragraph 2(1)(d) “the day on which Part 3 comes into operation” is the day after assent. Assent was on 26 November last, which is why your Honours will have seen references to 27 November last throughout the materials.

So we come to the beginning of the substance of the matter in section 4 where the objects announce at the outset a character - if the objects, that is, have been manifested by the operative provisions of the statute - to this legislative scheme which explains, with great respect, the clarification of the concession by my friend, the Solicitor, in answer to the Chief Justice this morning.  The object is:

to provide a mechanism, that avoids litigation –

I interpolate that would mean litigation in relation to, for example, rejected proofs, I suppose –

for the distribution of funds . . . received by the liquidator . . . as a consequence of the Bell litigation and the settlement of it –

Your Honours are aware that they are, in aggregate, large sums indeed – in excess of $1 billion.  In section 4(b), something which might be called a sui generis, perhaps a tendentiously described “form of external administration”, is said to be one of the objects of the Act to provide.  You will note that the object says that the Act has an object to:

require that it –

that is that sui generis form of external administration –

be carried out only in accordance with the provisions of this Act -

and if, as we will submit, that is an object of the Act that is carried into effect by its operative provisions, that will be important for the argument under section 5G(8) of the Corporations Act which is part of the necessary stance of the State to prevent what would otherwise be section 109 inconsistency and I will be referring back to that character. 

This is an Act that seems to suppose what it is pleased to call a form of external administration - we dispute whether that is a correct use of that section 5G label - but it is to require that that external administration, so‑called, is to be carried out in accordance with the provisions of this Act.  That may be compared with the particular terms of 5G(8) to which I will be coming. 

In section 4(c), one sees that the notion what is called “appropriate compensation” which is a legislative policy judgment, is substituted for the rights‑based notion of a winding‑up which, but for this Act, would continue.  In terms of the rights basis, one sees a reference to so‑called creditors:

who funded the Bell litigation taking into account the funding provided and the associated risks assumed by them -

Now, that is one of the early textual indications that this is a statute to provide a means for repenting of bargains made to which I will be coming, bargains which the State understandably may regard as posing a risk of a very much smaller return than the State might have hoped.  In paragraph (d), that story then is continued to the objects because it is said that one of the objects of the Act is:

to reflect –

I think that ought to be read as meaning to provide a kind of response:

to reflect the circumstance that without the funding . . . in paragraph (c), the Bell litigation funds would not exist and the creditors . . . would have received no (or only nominal) dividends ‑

Paragraph (e) then says in relation to the kinds of circumstances ‑ they are called “uncertainties” in other contexts, perhaps understood as risks ‑ we submit this statute accepts were allocated by agreements, in particular the PTICA, that this object talks about the Act being one which will make reasonable provision for the distribution of the property having regard to the uncertainties.  So it stands alongside and in substitution for the binding obligations which would otherwise make the provision which had been agreed well in advance.

Paragraph (f) is the same kind of theme and one sees how that stands quite inconsistently, indeed in contradiction of, the rights based lodging of proofs, allowance or disputing of disallowance of proofs the observance of any stipulated priorities but then otherwise the pro rata distribution.  In place of that there is what is called the “reasonable provision for the satisfaction of liabilities owed to creditors” and then having regard to something which is alien to the conventional approach to a pro rata insolvent winding‑up, namely “the uncertainties existing as to the nature and extent of those liabilities”, quite opposite, if you like, from the system for admission to proof and testing of the allowance or disallowance of proof.  In paragraph (g), one continues the theme of revisiting a bargain because the object is:

to distribute the Bell litigation funds generally in accordance with the commercial substance –

So, generally in accordance with the commercial substance:

of the agreements –

and I should say those are called agreements, but section 26 abolishes them - I will be coming to that:

between the liquidator and the creditors who funded the Bell litigation, as made before the enactment of this Act -

Then in (h), no doubt to the relief of the populace, the object of the Act is:

to avoid further litigation that will waste the resources of the State and other persons and consume the Bell litigation funds.

One of the means of doing that is criminalising and certainly prohibiting litigation to enforce what would otherwise be rights; litigation by others, that is.  In section 5(1) there is a conventional but, given the particular aspects of this Court, noteworthy attempt to extend to bind the Crown so far as possible in all its capacities apart from in right of the State. 

In section 6, the first of several textual indications, explicit all of them, about this being a statute which, if I may use the relevant preposition, is to operate not just in WA but also out of WA, and just to anticipate, your Honours will understand from our argument that in relation to section 5F and section 5G(11), one of our points is that the argument against us is one which takes the critical expression word “in” in those provisions and makes it mean in and out, which cannot possibly be right. Certainly the statute declares from the beginning - see section 6 - that it is to be understood as operating both in and out of Western Australia so far as possible.

That theme is immediately picked up when one comes to the constituting provisions in relation to the authority in section 7.  One sees by subsection (3) that its legal capacity is expressly stipulated to be “both within and outside the State”, and in subsection (6) one sees that it “has the status, immunities and privileges of the State”.

In section 9, its functions are, in our submission, described, and again unless there is a gap in the Act whereby no powers are given to perform these functions, we say that section 9 is a sufficient description of a state of affairs which constitutes inconsistency with the Corporations Act, again explaining the concession clarified by my friend this morning.  Its functions are:

to connect, and realise or otherwise deal with, the property of the WA Bell Companies in accordance with the objects of this Act –

I have said enough about those objects and your Honours know enough about the winding‑up under the Corporations Act to see that those are matters which simply cannot co‑exist.  Paragraph (b) continues that clear state of affairs.  It says that a function of the authority is:

to administer each WA Bell Company until it is dissolved -

Now, there are two observations to make about that.  The administration, but for one probably immaterial exception, is of companies, all of whose assets will have been, if this Act were effective, transferred by dint of this Act to the fund – to the authority to be held in the fund.  In other words, this shorthand of administering a company does not have the meaning it might have in an ordinary company law context where it means controlling, for example, the disposition of a company’s property.  The property will cease to be the company’s.

So the exception to that – it is probably immaterial but I point it out – the exception to that, as your Honours will have seen from some of these provisions, is that shares in certain companies, certain categories of companies, held by these companies are not within the transferred property.  I will probably not refer to that again.  Paragraph 9(1)(c) as a function stands in distinction from what a liquidator does, or what an external administrator seized of the property of a company, say in insolvency, does on a winding‑up or administering the affairs of a company. 

It stands in contradiction because the function is to “administer, invest and manage the Fund” and I stress the fund is not any longer the companies’ property, and by the companies I mean the plural companies’ property because it is all aggregated as a pooling, it is now the authority’s money and as I shall show the Act has no future in store whereby it may go back to the companies.

In subsection (2) is another of the explicit in and out provisions.  Subsection (2) of section 9, the power to perform the functions is not only in Western Australia but also elsewhere, and that is immediately picked up by section 10, the powers provisions.  Quite apart from the generality of subsection (1) which plainly purports to empower things to be done outside Western Australia, in subsection (2) that is made explicit because the non‑exhaustive illustrations in subsection (2) are prefaced by the expression that “the Authority may, both within and outside the State”, so in and out of Western Australia.  One sees the intended substitution, contradictory substitution, in relation to what the authority is to do suggested by, among other things, the assimilated powers that you see in paragraph 10(2)(d).

FRENCH CJ:   Is the authority a kind of corporate suit for the administrator?

MR WALKER:   Yes.  The administrator in section 8 is not designated in section 8 by reference to what I might call his or her control of the authority but it is clear from later provisions ‑ ‑ ‑

FRENCH CJ:   Well, 7(5) says “The Authority is to be governed by the Administrator.”

MR WALKER:   “Governed by the Administrator”, and it is clear from other provisions to which I will come that the administrator has certain specific tasks, duties and discretions.  The Chief Justice asks me whether the authority is to be seen, as it were, as a corporate cloak or costume for the administrator and, in essence, yes.  The authority as a body corporate is effectively the State and subject to some purely technical accounting provisions to which I will come, fleetingly, in effect the property by this Act is taken by the State, the property of the company is taken by the State, and then certain steps are taken not only by the administrator but by the administrator together with other actors to whom I will come in relation to that fund.

In relation to the powers of the authority, we have looked but we cannot find anything that section 10(3) should alert the Court to.  I do not think it is going to make any difference.

I will pass over – not as unimportant but is not necessary for present argument – sections 11 to 15 and, thereby, come directly to the very important fund established by section 16.  It is to be “administered by the Authority” which is to be governed by the administrator – section 16(2) ‑ and it is to be comprised as subsection (3) stipulates.  Part 3, to which we will shortly come, is:

all money transferred to the Authority under Part 3 –

that is paragraph (a) of subsection (3) – plus, the realisation “of other property” which has been:

transferred to, or vested in, the Authority under that Part –

and we are looking forward, obviously, to section 22.

One sees that it is an accumulating fund – paragraph (b) of subsection (3) – and that there can be what I will call, “intra‑executive” transfers under paragraph (c).  They are picked up then by reason of the authorised outgoings from the fund, the first of those being paragraph 16(4)(a), and I do not need to say anything more about them.  Then, otherwise, one sees that this is a fund – again, one of the contradictions, or inconsistencies, with the Corporations Act, to which we have drawn attention in our written submissions, is the fact that the section 18 expenses that are to be paid out of what used to be the company’s property and is now the authority’s property is stipulated by paragraph 16(4)(b).

Then, 16(4)(c), what stand in place of but radically different from the distributions which would – if there is anything left in the cupboard – ordinarily flow as a matter of right following the lodging of proofs, the testing of allowance or disallowance, the application of any relevant priorities and then the pro rata ascertainment of entitlement.  That is all simply accomplished here by the authorised payment under section 44 to which I will come in due course.

Section 18, the expenses to which I have earlier referred, are comprehensive in their description and they include, you will see, in paragraph 18(1)(e):

expenses reasonably incurred by a liquidator . . . in complying with an obligation under this Act –

which, of course, is to do things which would either not be required by or, in every case that matters as we have written, be positively opposite to his or her duties as a liquidator.  One sees that there is a priority granted by subsection (2) of section (18).

I can pass over what I will call “indoor management” in Division 3 and, therefore, come to the very important Part 3, starting with section 22.  One sees that there is a statutory effect, that is, by dint of the legislation being enacted; one sees that there is a very important occurrence at the beginning of the transfer day, 27 November:

the following are transferred to, and vested in, the Authority by force of this section –

and we interpolate, certainly not – and we are here boxing at shadows bearing in mind what we have written about our friends’ position under 5G, particularly subsection (4) ‑ but one of the shadows we boxed at is, are they relying upon section 22 as being an act relevant for the analysis under 5G(4).  One of our short points is, if they are then that goes nowhere because this Act is not an act.  This is a capital “A” act, it is not a small “a” act.  Section 22 is a deed of the Western Australian Parliament and it has accomplished the transfer. 

It is by force of this section and one sees that it is comprehensive, with exceptions to which I have earlier referred that I will not need to dwell on much.  One sees that it is very comprehensive in terms of the change of ownership which is accomplished because it includes property held on trust by any of those companies and we will see very shortly what happens to those trusts.  In subsection (1)(b) it certainly includes anything beneficially owned by the companies and in paragraph (c), one sees a ringing of the changes on that in a way which emphasises the intended comprehensiveness.

Subsection (2) is a, what might be called, catch‑up provision, so that there is an always speaking and continuing effect as property becomes, if I may put it this way, available for a section 22 operation, so it will be subjected to it.  In subsection (3), one finds a corollary of that I need not dwell on and then in - I do not need to dwell on subsections (4) or (5).  Subsection (6) is of some significance, bearing in mind the dealings and history that brings the Commonwealth Solicitor‑General here to intervene by leave for the Commissioner.  There is the somewhat cagey drafting of:

To the extent to which a right to make a taxation objection . . . is property of a WA Bell Company –

that is not affected by subsections (1) and (2).  Subsection (8) is an extremely telling, explicit provision showing that this is certainly not an Act that can be read as applying only in Western Australia.  What might be called its most intrusive, substantive effect, section 22, is explicitly said to apply to property in or out of Western Australia.  Subsection (9) is a comprehensiveness and paramountcy provision of maximum attempted extent.

Subsection (10) is the provision I had earlier anticipated.  One sees that pesky details like encumbrances, trusts, equities or interests of any kind to which any of the property was subject immediately before the section 22 vesting are gone.  The property is freed from all of that.  So it is the abolition of trusts and it follows that though subsection (11) says:

The Authority has all the powers of an owner over property vested in it under this section -

it is hard to see it is anything other than the owner.  It has all the powers because it has been made the owner.  Furthermore, the administrator has something that may be slightly beyond the merely evidentiary power in relation to that ownership, see subsection (12), and the…..room that can be created by the administrator is one to which the administrator may or may not permit people to have access, subsection (13), and it may in any event be corrected, subsection (15).

Section 23 is misleadingly entitled “Notice to property holder”.  It really should be “Notice to former property holder,” because section 22 was operated without any of these notices being preconditions or part of the procedure, necessary in order to achieve the vesting or transfer.  But there is a notification process, set out in section 23.  One sees that one of the purposes for it is to apply criminal sanctions so as to compel cooperation in getting access to what are called records “relating to the property”.  It is a large obligation, which section 23(2) involves.

That is standing quite starkly differently from the relation of corporations or their offices to liquidators under a winding‑up.  It is a very large inconsistency.  Here is an obligation criminally sanctioned on the former owner of the property to “account for all dealings with the property by or on behalf of” its former owner.

There is then an obligation which the administrator is empowered to impose by the notice under subsection (2) so as to acquire what is called delivery of property – that is, it has been transferred or vested but if it is still, say, in the physical possession of some other person, there can be a criminally sanctioned obligation imposed by notice requiring it to be delivered, another of the obviously extremely or radically disparate obligations or aspects of the scheme, compared to the regime that applies in relation to winding‑up under the Corporations Act.

Section 24, which I will not spend much time on, is something of a puzzle.  One wonders why, contemplating the possibility that section 22 might not have been effective, it says:

If a transfer and vesting of property under section 22 is not, to any extent, fully effective ‑

I am not quite sure what it means, an extent of the effectiveness of a transfer or vesting.  One would think it is either a transfer or not, a vesting or not.  In any event, the parenthesis is a little puzzling:

(whether because a matter is governed by a law other than the law of the State ‑

That, at least, indicates the idea that those who drew this statute were contemplating potential – I will call it clash or conflict – with the provisions applying somewhere else, maybe inside the Federation, maybe outside the Federation.  It is certainly, again, a textual indication that this is not an Act designed to be confined in WA as to its effect.  In that case:

the Minister and the Authority are each empowered and required to take all practicable steps for the purpose of securing the effect sought to be achieved by that section.

It is like the perfection obligation found in private transactions but, unlike that, it is quite mysterious as to what exactly is being authorised by the legislature of Western Australia to be done by these members of the Executive of Western Australia.

FRENCH CJ:   The word “extent” might suggest a concern, among other things, about the operation of 109, I suppose – the extent of inconsistency.

MR WALKER:   It might.  There is that pro tanto flavour to the language but, as I say, it is very difficult to understand the idea of a less than complete transfer or less than complete vesting.  It has either been transferred, as the etymology of that very word would suggest, or it has not.

As to section 109 and its pro tanto effect, then it has either prevented section 22 from operating perhaps, with respect, if I can hypothesise this, certain property for certain reasons peculiar to that property or it has not.  So section 24 would appear to be urging in the face of a gale because section 24 cannot do anything about section 109.  So, as I say, it is a bit of a mystery.  You probably will not come back to it.

Now the treatment of liabilities, if I may simply put it this way, overall it is a transformative treatment.  They cease to be liabilities in the sense of any enforceability at all or any notion of any recognisable colour of right ‑ that is, the correlative right that makes something a liability.  In subsection (1) of section 25, again what I might call the incubus character of this scheme in relation to the pre‑existing Corporations Act windings‑up can be seen because the condition proposed is a liability was admissible to proof under Part 5.6 of the Corporations Act.

Just looking ahead to the section 5G(8) argument, what that makes clear is that this is certainly not an Act providing a State Act, providing for the winding‑up to be carried out in accordance with the State Act.  I will come back to develop that later but this is one of the provisions to which that argument specifically applies. 

Subsections (2) and (3) combined can be seen then to encompass by the description of that category post‑liquidation liabilities such as some of the income tax which you have heard about.  Subsection (4) is the next step in the story about these abolished trusts, to which I made reference in relation to paragraph 22(1)(a) and subsection 22(10) because you see under section 25(4) that the trust, like the encumbrance, equity or interest, “may be proved as a liability”.

We do not need to stay to consider some of the difficulties that that might involve in seeing a trust ‑ that is a set of obligations with respect to property ‑ as something which can be simply, as it were, proved as a liability, but one can envisage cases where, in the simplest of trusts that might ‑ I stress “might” ‑ prove workable.  In any event, one can see how at odds that is with what would happen in the winding‑up of a company that happened to be a trustee.

Subsection (5) is that which shows the transformative treatment of these liabilities:

No action, claim or proceeding of any nature arising out of, or relating to, a liability that may be proved in accordance with Part 4 Division 2 ‑

That, of course, means, it turns out, the only liability, so‑called, that may be proved:

No action . . . may, otherwise than in accordance with that Part ‑

to which we are going to come, and that leaves the matter in suspense, as it were, and the spoiler is there is nothing that can be done at all:

be made or maintained against ‑

And one sees the first two ‑ I will call them potential defendants, although it is hard to see how a fund could be a defendant ‑ those two are enough to cover the field; the owner, or the effective owner and the property, which was all the company’s property with the immaterial exceptions, all of that is freed of any possible “action, claim or proceeding”.

FRENCH CJ:   So looking forward a bit, the proving of a liability does nothing more than to open a gateway for the exercise of the discretions down the track.

MR WALKER:   Exactly.  Again, totally at odds with the whole informing central concept of a liquidation – a winding‑up I should say.  Now, at section 25(5)(b), (c) and (d), perhaps oddly but nonetheless displaying the intent of absolute comprehensiveness can be described as the money, that is (b); the entity, that is (c); and the officer or a relevant governing officer – the only relevant governing officer with practical powers at the time, that is paragraph (d).  So it really covers the field, so to speak. 

The cross‑reference here to which I made earlier reference about what actions are going to be permitted in accordance with Part 4, Division 2 is that subsection 72(2) rather suggests that it is nothing.  Section 26 is a very important provision justifying the way in which we have expressed ourselves in proposition 1 in my outline for address, particularly in paragraph 1 to which I will come in just a moment in relation to materials in the book.  But one sees that there is the removal from existence and history as binding obligations that imposing list, and they are very significant transactions. 

I just select at the moment those in paragraphs (b) and (i) for the purposes of the materials I will take you to.  They are gone.  Now, they come back.  There is a sort of zombie influence of them in later provisions to which I will come but certainly not in a way that produces what I might call a reflex, let alone in substance of the obligations in them.  That, if I may remind you, is what one looks forward to, assuming the Act fulfils the objects to which I draw attention.  In subsection (2), there is a possibility opened of a kind – one of the kinds that the Chief Justice asked me about:

Subsection (3) applies if an agreement made void by subsection (1) provided, according to its terms –

one wonders how else it could do it but anyhow:

provided, according to its terms, for the repayment in specified circumstances –

Now, it is a coy piece of drafting.  The “if” is peculiar because yes, some of those voided agreements very definitely did that as obviously the State well knew in legislating for this.  But on that condition, which certainly existed, then subsection (3) says that a “claim” ‑ now the claim is under something that has been avoided by subsection (1) but:

The claim that a person, according to the terms of the agreement, had to be repaid –

Can I stress the repayment that you see in subsections (2) and (3).  This is a reimbursement limb of these dealings, not what I will call the reward limb to which I will come in a moment.  That claim:

may be proved in accordance with Part 4 Division 2. 

Now, that is, with respect, hollow language indeed.  The claim is under a void agreement.  The proof bears no resemblance whatever to any of the aspects of proof which involves the rule of law, that is, a claim of right adjudicated by facts found and the application of law.  None of that occurs, as you will see in relation to so‑called proof in accordance with Part 4, Division 2.

We then have in section 27(1) the enacted function, if I can call it that, of the authority as the administrator of each company.  It is to be recalled, apart from those shares I noted as an exception, all the property of the companies has been taken.  It is not quite clear what it means then to be an administrator of those companies.  In particular, there is no task of getting in property.  It has all been transferred and vested.  There is maybe ad hoc attempts at achieving delivery; that is about all.

Section 28, to which we are about to come, perhaps gives some content to what it means to be the administrator.  In section 28 one sees some familiar language.  I stress in paragraph 28(1)(a) the reference to “the company’s property” will only be in cases to which it applies.  This exception provided for certain shares held by the company in other companies.  The affairs of the company are otherwise not affairs in any understandable sense; that is, they do not have to do with the company’s property.

Managing property – well, there is no property of these companies and it is difficult to understand what other affairs they could have.  The authority is entitled to “dispose of any of that property”.  Now, that sits oddly with what we have seen already.  It has the powers of an owner in relation to the fund which is comprised of the company’s former property.  In paragraph (d) there is a very large catch‑all to assimilate the powers of the administrator to those of the company or its officers “if the company were not under the administration of the Authority”.

Now, one can mischievously note, you mean if it was being wound up under Part 5.6 of the Corporations Act, and that is enough again to highlight that this just is impossible – impossible to sit alongside, without inconsistency, the Corporations Act, hence my friend’s concession.  In case the message was not got, section 28(2) ensures that there is no constraining overlaps; there is as large an expansion as possible.

In section 29, there is in its own terms the Bell Act’s sterilising of other persons’ functions or powers as an officer, subject only to the authority’s written approval or in order to exercise a power or duty under the Bell Act itself; again, an obvious cutting across of the Corporations Act.

The same is true, surely, of section 30(1) and the provisions that follow.  I do not need to dwell on that.  It is not clear, by the way, in section 31, given the breadth of the definition in subsection (1)(c) and (d), how one could possibly read section 31(3) as confined to Western Australia in accordance with the provisions I have earlier drawn to attention.  It would appear that that is something that the Act intends to operate outside of Western Australia.

Part 4 is, with respect, again misleadingly entitled “Completion of winding up of WA Bell Companies” and the submission I have just made by that comment is one which goes to our section 5G(8) argument, in particular, to which I have made reference earlier this morning.  This is not the completion of the winding‑up in any recognisable sense at all.  It is the truncation and interference with the winding‑up.  It is the substitution of something different. 

There is the important use of the word “creditor” in the last line of the pattern of provision of provisions that you find in section 32. It works in tandem with section 25, to which I have already referred, and each of these persons who in section 25 were permitted to prove in accordance with Part 4, Division 2, are said to be persons who are creditors – this part having effect as it that were true. This part has effect as if the person were a creditor. I should have drawn this to your attention in section 3 in the definitions. “Creditor” is defined to mean a person:

in relation . . . to whom, immediately before the transfer day, the WA Bell Company had a liability and includes –

and this is important for the ICWA matter – or the matter of ICWA:

includes a beneficiary of any trust –

and that is a difficult phrase:

of, or with respect to, a liability.

I will not tarry on it.  That is what they enacted.  No doubt my friend, the Solicitor, can explain what it means to have a trust of a liability.  In any event, we have been crude enough to read that as plainly intended, by categorical language, that is, by generic language, to capture the case with which they are concerned of ICWA which is a beneficiary, not a trustee, in relation to the subordinated bonds which are at the commercial bottom, as we point out in paragraph (1) of our outline, of all of this.  In section 32 you see in subsection (3)(a) by the expression:

of each WA Bell Company -

that one of the aspects of what I have called pooling is being accomplished and subsection (5) continues that endeavour.  Now, that of course is obviously at odds with the rights‑based, legally constituted analysis of the assets and liabilities of particular entities under Part 5.6 of the Corporations Act.  One sees in section 33 how this stands alongside and, as it were, seeks to dictate contrary to what Part 5.6 would require a liquidator to do - see section 33(1).

Now, section 34 is very important but is perhaps a little indirect in accomplishing its important role.  This is the proof lodgement provision or at least it is the only one that is available for that task.  The authority is obliged by subsection (1) to give certain persons thought to be creditors:

a notice requiring . . . within 30 days . . . full particulars of all liabilities of the company in relation to the person.

Then there is a beating of the bushes for that in subsection (2) and in subsection (4) there must be specified - it is a bit odd:

(a)       the manner in which a liability may be proved ‑

and then, thank goodness –

(b)       how that manner may be ascertained.

One would have thought perhaps it would be ascertained by looking at what was specified but in any event one sees that it is all very open in terms of what is to be done and that further provisions will provide further content as to the lack of any rights‑based notion at all. 

Section 34 is the provision that says you may prove.  You will recall the earlier references - section 25 - what they were entitled to do was to prove under Part 4, Division 2, so it is section 34 that does that.  Now, we come to that which really does contradict the rights‑based winding‑up under the Corporations Act.  In section 35, what is said to be the role of the authority is to:

(a)determine the property and liabilities . . . and report to the Minister on that . . . ; and

(b)make recommendations to the Minister –

Either contrary to or as an exception from a later provision of the Act that eliminates procedural fairness, section 36 provides for something of that kind.  I need not read its details.  One sees in section 36(6) that there is a fortnight to make a written submission in response to such a draft.  Then in section 37 in relation to this role that section 35 imposed, now there is the obligation in subsection (1) to:

determine the property and liabilities of each WA Bell Company.

Then there are mandatory matters to regard in subsection (2).  One sees they include the submissions - paragraph (e), as well as the catch up in paragraph (f) which, as your Honours appreciate, is not mandatory in the ordinary sense.

Subsection (3) is the first appearance of a provision which is then repeated at various junctures in the provisions that follow and uses a phrase normally found in trust deeds rather than in what I will call administrative law, but the intent is unmistakable, an absolute discretion.  Now, true it is, it is in determining the property and liabilities, but for reasons to which we will come it can be seen that those are not expressions that give anybody a justiciable claim to have an outcome other than that which has been determined by the authority, fraud and crime aside.  Section 38 then has at the juncture where there has been what it calls a final determination:

The Authority must report to the Minister on the property and liabilities of each WA Bell Company, as finally determined by it –

the authority.  That is a report to the Minister.  It must have recommendations under the provisions to which I am about to come.

FRENCH CJ:   Just going to 37 for a moment, the concept of determination means a decision, not an ascertainment of ‑ ‑ ‑

MR WALKER:   Not an adjudication.

FRENCH CJ:   ‑ ‑ ‑ liability and property, otherwise it would not work with the words “absolute discretion”.

MR WALKER:   It is not an adjudication according to law and, as we will find, there are not any of the trappings of an executive substitute for a judicial process of a kind which no doubt could, subject to jurisdictional error, be done by State legislation.  But it does not seem to have been done at all and, as the Chief Justice points out, all of this is governed by the so‑called absolute discretion which can only give meaning if it permits the authority to say, “Well, I hear what you say about your claim and I disagree with it”, and it turns out no reasons have to be given for that either.  In section 38, looking forward to what I call the “rewrite the bargain” point, you see in subsection (5) that:

A report under subsection (3) may contain a description of any contingencies and uncertainties –

We do not hesitate from saying this would appear to have no purpose other than propagandist.  The contingencies and uncertainties of litigation are – I was about to say fabled, but they are not fabled; they are true.  I mean, they are in our skins and litigation funding is one of the multifarious ways in which people or a system seeks to deal with it.  In any event, your Honours will see how it turns out.

In section 39 you will see that there is a mandatory recommendation, thought his too is a role or function – a mandatory recommendation by the authority to the Minister of:

the amount (if any) to be paid to a person, or the property (if any) to be transferred . . . in respect of the aggregate of all liabilities of all WA Bell Companies to that person as a creditor.

That is another of the poolings which of course is at odds with the pure stream approach that would happen in the liquidation of a number of companies under the Act, that is, under the Corporations Act.

One sees there in the discretion involved in all of this in subsection (2) one of the discretions is that the priority of each liability may be assessed by the authority in making a recommendation by echoing the provisions of what is otherwise the usurped Part 5.6.  There are mandatory regards, to which I draw attention, in paragraph (a).  I have said enough about them.  Paragraph (b) is looking forward to future dealings, future negotiations, one could be cynical enough for thinking that perhaps negotiations influenced by the existence and terms of this Act itself.  In any event, they have to be taken into account. 

They would be agreements of course not avoided by section 26, so it is difficult to understand exactly what the drafters had in mind in relation to that.  Non‑mandatory, that is, permitted considerations in paragraph (e), are beginning to again reveal the nature of the commercial ambition of the State here.  You are permitted to have regard – and this is in making recommendations for payments, if any.  I can pass over subparagraph (i).  You see subparagraph (ii):

the Authority’s assessment of the value of unliquidated liabilities –

Subparagraph (iii) are the recoveries, subparagraph (iv) is a bit difficult to get behind what is meant by “the relative importance of the satisfaction of that liability to the relevant creditor” - relative to what is quite puzzling but may not matter.  Subparagraph (v) is one which I confess, as a commercial lawyer, I cannot explain:

the detriment to a creditor of not receiving payment of any liability in full –

Enough said.  I think that means perhaps it permits the authority to say of a person he, she or it is already very rich and it will not much matter if something they are entitled to receive is not received at all or in full.  I do not know.  It is difficult otherwise to understand what it means.  It is certainly utterly at odds with a rights‑based pro rata approach obviously of a winding‑up under the Corporations Act.  Then looking behind the provision of consideration is the project in subparagraph (vi):

any amount paid by a creditor for the acquisition of, or of any interest in, a liability -

So somebody who had struck a keen bargain and bought for a small amount something which now, in the happy event of the settlement of the litigation, is worth a lot of money is going to have that as a permitted matter to be regarded by the authority in making a recommendation as to payment of that person, presumably along the lines of, “I don’t have to pay you much or anything because you hardly outlaid anything at all to get what before section 22 came along would have been a very large payout.”

Then, finally, there is a recommendation in relation to section 40, to which I am about to come.  In section 39(5) one sees how far away this is from either arbitrations or some expert determinations and certainly a judicial process – that is a comment rather than a defect.

In subsection (6), one sees in case the clue had not already been picked up that none of this is rights based, nothing can be compelled by reference to law or fact here.  The authority has again what is called an “absolute discretion” as to “quantification”, “amount recommended to be paid”, “priority to give” to it.

FRENCH CJ:   The draft report or the report that the authority makes, going back to 36 for a moment, on your submission that would need to contain nothing more than its determinations and its recommendations because it does not have to give reasons for either.

MR WALKER:   That is right, exactly so.  It could be largely tabular with very little prose, as it were, at all.  In section 39(7), one sees the possibility of a surplus, that is a surplus for the State:

Nothing in this section requires that the aggregate value of all money recommended to be paid –

or transfers to be equal to that “held by the Authority”.  Indeed, flying in the face of pro rata under the Corporations Act one has here – and priorities – one has here nothing requires the aggregate value of money to be paid or property to be transferred to equal the liabilities as determined.  Though the discretion is very large, you can say here are the liabilities I determine but in the next breath, second part of the report, I recommend that there be payments to meet 33 per cent of them and then to order priorities in a particular way, for example. 

Subsection (8), in case there was any doubt given subsection (6), there is no creation of “any right”.  That would presumably mean also any right to seek an order, say, in the nature of a mandamus to set about determination in a particular way.  Subsection (9) is in a form that you will see repeated.  I do not need to dwell on it; I am not quite sure what it adds except perhaps a tone of anxiety. 

But subsection (10) is a little puzzling.  It is what might be called a Project Blue Sky provision, that is taking the hint from this Court in Project Blue Sky.  It is set out expressly.  It perhaps renders even more difficult arguments of a kind to which Kirk might have applied otherwise but the depths of it probably do not need to be plumbed.

Section 40 now comes to those people most affected by all of this, those whose litigation funding rewards are sought to be disturbed by the process commencing in section 26 culminating in Part 4, Division 2 and in the discretions found in Part 4, Division 3:

Subsection (2) applies with respect to a creditor of any kind of a WA Bell Company who, before the transfer day, provided funding for, or an indemnity against costs or liability in relation to, the Bell litigation, whether directly or indirectly.

Now, the authority has a power under subsection (2) to recommend that an amount be paid, et cetera, “as compensation for providing that funding or indemnity”.  This is to be understood, of course, as standing in place of the stipulated price or reward, that is, the terms of the agreements that have been taken over.  There are mandatory regards under subsection (3) in making such a recommendation.  There are the objects of the Act, which would not bring comfort to the breasts of any such person; later agreements, we can pass over that; submissions; and then finally in paragraph (d), permitted considerations for regard and one sees that it includes the agreements including voided agreements in subparagraph (ii).  Then in subparagraphs (iii), (iv) and (v) of subsection (3)(d) you will see matters which plainly were the subject matter of the allocated risks and the allocated rewards by those very agreements. 

So you have extent of any risks - this is all in hindsight apparently – extent of any risks assumed, the extent of the benefit secured or detriment avoided, the extent of any benefits that may be received by the creditor, et cetera, from certain other places.

Subsections (4) and (5) means that this is final and that there is a netting off provision to be taken into account, no doubt for other ways in which the same person or entity may have a so‑called claim.  In subsection (6) there is the familiar absolute discretion.

FRENCH CJ:   That would not exclude reviewability of a jurisdictional error perhaps, for example, in the case of a limiting case where there is, let us say, a nil determination and nil recommendation indicative of a failure to address its task.

MR WALKER:   It is tempting, your Honour, to say no, it would not, but one has to deal with subsection (9).  One reading that one would not be surprised to hear advanced as an argument by Western Australia in such a hypothetical case would be that there is no right to be considered.  I am not sure.  Otherwise, what the Chief Justice suggests would appear in accordance with ordinary expectations of rule of law to apply.

FRENCH CJ:   Or at least the scope and purposes, constraint of some kind.

MR WALKER:   Yes, and then, as I say, subsections (8), (9) and (11) repeat the pattern I have already said enough about.  With income, to the very important section 41 and section 42, it suffices to deal with section 42, the final determination.  The Governor has a power to determine the amount to be paid and that is stipulated by section 42(3) to be:

in respect of the aggregate of all liabilities of all WA Bell Companies to that person as a creditor –

another of these pooling things at odds with winding‑up, and it:

may be by way of compensation for providing funding –

the provisions to which I have earlier gone.  In section 43(1) and perhaps in further answer to the Chief Justice there is a provision that dispenses the Governor from determining that:

any amount is to be paid to . . . any person on any account whatsoever.

In section 43(2), again the possibility of a surplus for the State:

the aggregate value of all money determined by the Governor to be paid -

et cetera.  There is nothing in the Act that requires that to be equal to that which the authority holds or even that which has been determined under 37 to be the liabilities.

The determination in subsection (4) again has no reasons.  Certain legislative safeguards are removed – subsection (5).  Subsection (6) repeats the same pattern.  Subsection (7) repeats another provision, to which I have made reference earlier.  Then, subsection (8) provides the quittance, or the acquittal, “On the making of the determination”.  I stress “On the making of the determination” – the payment is yet to happen.  It is conditional:

On the making of the determination . . . every liability of every WA Bell company to a person to whom nothing is to be paid and to whom no property is to be transferred . . . is, by force of this Act, discharged and extinguished.

On the face of it, that would appear to apply to the Commonwealth Commissioner of Taxation.  We then come to section 44 which is critical to the overall scheme.  People are notified of their success, subsection (1).  Then, subsection (3), there is no entitlement to have a payment, notwithstanding it has been determined by the Governor that it is to be paid – there is no entitlement unless a deed is supplied:

in the form approved by the Minister –

that has been:

executed to the satisfaction of the Authority –

that:

provides for the release or discharge of any person from any liability that the Minister considers appropriate.

In relation to the 42(2) people – see section 44(4) – that is the persons whom the Governor has determined are people to whom a payment et cetera should be made.  There is a timed discharge by subsection (5) after a quarter:

every liability . . . is, by force of this Act, discharged and extinguished –

and:

if the person has not given a duly executed deed . . . the determination –

that is, the determination that it is a person to whom money is to be paid:

ceases to have effect –

There will be discharge but you will not get your money if you have not given the deed.  That is the conditionality I referred to earlier.  Similar provision for the interim determination in subsections (6) and (7).

Section 45 shows again the uneasy relation of this to the Corporations Act.  I will not dwell on it further.  Part 5 looks ahead to, again, that which is at odds with both the taxation legislation and the corporations’ legislation.  When the fund is closed by the administrator certifying that all required payments have been made and six months have elapsed since the 42(2) – that is, final determination has been made:

Any money standing to the credit of the Fund when it is closed is to be credited to the Consolidated Account.

Now, that is just a change of accounts.  It does not really change the ownership.  It is Western Australia’s; has been all along.  To reinforce that, in section 48, afterwards, that is, anything that comes along after those events in section 46, that “is payable to or vests in the State” directly.  Subsection (2) makes it clear that in relation to Part 5, which is all the possible routes of surplus, that that is a receipt by the State “for its benefit absolutely and not on behalf of any other person or body”, freed, if you like, of all claims.

Section 47, which has not come into operation, you will find in the notes that follow the enacted form.  It is page 72 of the print we are using.  That looks forward to future events whereby “The Authority is abolished”, and again it shows that anything “vested in the Authority vests in the State”, et cetera.

Going back then to Part 6, we now come to the very important provisions about which we have made concessions in our written submissions as to what I will call compliance with the matters of form in relation to Part 1.1A of the Corporations Act. So, in section 51 you will see what I will call the section 5F matter:

Each WA Bell Company is declared to be an excluded matter for the purposes of the Corporations Act section 5F –

The exceptions do not matter for present purposes.  Then in section 52 – perhaps tentatively I submit that section 52(1) seems to be contemplating, that is:

if, and to the extent that, an excluded Corporations legislation provision has any application, as a law of the Commonwealth, in relation to a WA Bell Company.

Untangled and using the definition in section 50 which you will see defines that to mean a provision “that does not apply in the State, as a law of the Commonwealth” – I stress the word “in” – “because of section 51”, that is the 5F effect.  If it has any application, obviously it cannot be in WA or it would be contradicting its own definition, so it must be out of WA.  So section 52 is obviously intending to displace out of WA and that means that the reference in subsection (2) to section 5G could not possibly be to subsection (11) of section 5G; it could only be subsections (4) and (8).

Now, 52(2), as enacted, declares certain provisions but of course not others, not those not there set out.  Without labouring the point, the opening stanza in our written submissions is the means by which we argue that has misfired, because it has not captured what needs to be captured for certain of the windings‑up, and I will not labour that beyond the way in which we have written in our written submissions.

On my instructions there are no regulations to be looked at under section 53.  Section 54 is one of the provisions that I noted had an anticipatory effect, even before enactment, by retrospective criminal legislation, by reason of paragraph 2(1)(c).  Its terms are so broad that unless there was a reading down of a kind we do not understand or that have been attempted and which would give rise to invidious differences of opinion of how it should be accomplished, and thus suggesting it cannot be done, would include litigation.

“Scheme” is an ugly word for litigation, but a “course of action or course of conduct” or “action” is certainly an ordinary way to describe doing things which include litigating.  And if you litigate to say that this statute does not apply to you or is invalid, then that would appear to be caught by the idea of preventing the operation of the Act.  Certainly “the achievement of its objects”, subsection (2), that is criminal.

For the purpose of insuring the payment of tax the Commissioner shall have the same remedies against attachable property of any kind vested in or under the control or management . . . of any agent or trustee, as the Commissioner would have –

Now, of course, authority of this Court is to the effect that the provisions of the winding‑up provisions take precedence in relation to that right of attachable property in circumstances where the corporations legislation applies but if, as is contended and if the submissions we have advanced – this is 5F and 5G ‑ were not to be upheld and the Bell Act does take effect and the corporations legislation does not apply, then there is an ability of the Commissioner to attach property but that ability will be frustrated by the fact that the Bell Act takes all of the property out of the hands of the company and puts it in the hands of the authority.  Those are our submissions

FRENCH CJ:   Thank you, Mr Colvin.  The Court will now adjourn until 9.45 tomorrow morning for pronouncement of orders and 10.15 for the resumption of this matter.

AT 4.12 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 6 APRIL 2016