Deputy Commissioner of Taxation v Mackay Easy Build Garages and Sheds Pty Ltd

[2001] QSC 317

SUPREME COURT OF QUEENSLAND

CITATION:

Deputy Commissioner of Taxation v. Mackay Easy Build Garages and Sheds Pty Ltd [2001] QSC 317

PARTIES:

DEPUTY COMMISSIONER OF TAXATION
(Applicant)

and

MACKAY EASY BUILD GARAGES AND
SHEDS PTY LTD ACN 076 789 574
(Respondent)

FILE NO/S:

S 837 of 2000

DIVISION:

Trial division

PROCEEDING:

Application for winding up

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

31 August 2001

DELIVERED AT:

Townsville

HEARING DATE:

27 August 2001

JUDGE:

Cullinane J

ORDER:

Order the winding up of the company.  Order in terms of the draft initialled and placed with the file.

COUNSEL:

D Bennett for the applicant
D Turnbull for the respondent

SOLICITORS:

Australian Government Solicitor for the applicant
Rea Sockhill Solicitors for the respondent

1. This is an application by the Deputy Commissioner of Taxation for an order winding up Mackay Easy Build Garages and Sheds Pty Ltd (MEBG).

1. The application has been adjourned on a number of occasions by the consent of the parties. The reason for the adjournment was that the company had by a notice under s.78 of the Judiciary Act 1903 raised issues which were the same as those raised in an action pending in the High Court of Australia.

1. The issues arose from the judgment of the High Court in R v. Hughes (2000) 171 ALR 155. In summary form the issue raised is whether the purported incorporation of companies including MEBG by the Australian Securities Commission was constitutionally valid.

1. No application was made to set aside the statutory demand but no point is taken about this.

1. The Solicitor General, Mr Bennett QC who appeared for the Applicant, whilst not conceding that MEBG had not been lawfully been brought into existence,  contended that the enactment recently of legislation by the States and the Commonwealth involving a reference of powers by the States to the Commonwealth overcame the suggested difficulty and that there is no longer any issue as to the incorporation of MEBG.  I was told that the pending action in the High Court is not now to proceed.

1. Counsel for the company, Mr Turnbull, advanced an argument that the legislation upon which the commissioner relied, namely the Corporations (Administrative Actions) Act 2001 was beyond the power of the Queensland Legislature in that it purported to confer validity retrospectively on the Australian Securities Commission to incorporate companies. An alternative argument developed was that some of the essential steps upon which the application to wind up depended, namely the issue of a valid assessment and the giving of a statutory demand were not validated retrospectively by the legislation.

1. It was accepted that if the court concluded that serious issues were raised by MEBG concerning the Corporations (Administrative Actions) Act 2001 the issues that were raised between the parties prior to the enactment of the recent legislation would require the dismissal of the application or perhaps its adjournment.

1. It is desirable that I set out the relevant parts of the legislation under consideration. 

1. Section 5 of the Corporations (Administrative Actions) Act 2001 provides as follows:

“Legal effect of invalid administrative actions

Every invalid administrative action has, and is deemed always to have had, the same force and effect for all purposes as it would have had if –

(a)        it had been taken, or purportedly taken, by a State authority or officer of the State; and

(b)        the relevant function or power had been duly conferred on that authority or officer".

Invalid administrative action is defined in s.3 in the following terms:

“invalid administrative action” means an administrative action of a Commonwealth authority or an officer of the Commonwealth taken, or purportedly taken, at or before the commencement time –

(a)   pursuant to a function or power conferred, or purportedly conferred, by or under a relevant State Act (the “relevant function or power”); and

(b)     in circumstances where the relevant function or power could not have been conferred on the authority or officer by a law of the Commonwealth the operation of which in the relevant respect was based on the legislative powers of the Parliament of the Commonwealth (including, for example, circumstances where the authority or officer was, or purportedly was, under an express or implied duty to perform the function or exercise the power);

that was invalid because of the circumstances referred to in paragraphs (a) and (b), whether or not it was also invalid on any other ground".

1. Section 7 provides: 

“Registration or incorporation of companies

Without affecting the generality of sections 5 and 6, it is declared that those sections extend to the registration or incorporation, or purported registration or incorporation, of companies by, or consequent on administrative action taken or purportedly taken by, Commonwealth authorities or officers of the Commonwealth at or before the commencement time".

1. Section 6 declares the rights and liabilities of persons in the following terms:

“Rights and liabilities declared in certain cases

(1)Without affecting the generality of section 5, the rights and liabilities of all persons are, by force of this Act, declared to be, and always to have been, for all purposes the same as if –

(a)        every invalid administrative action had been taken, or purportedly taken, by a State authority or officer of the State; and

(b)        the relevant function or power had been duly conferred on that authority or officer.

(2) A right or liability conferred or affected by subsection (1) –

(a)        is exercisable or enforceable; and

(b)        is to be regarded as always having been exercisable or enforceable;

as if it were a right or liability conferred or affected by (or arising from) an administrative action of a State authority or officer of the State on which or on whom the relevant function or power had been duly conferred.

(3) Any act or thing done or omitted to be done at or before the commencement time under or in relation to a right or liability conferred or affected by subsection (1) –

(a)        has the same effect, and gives rise to the same consequences, for the purposes of any written or other law;  and

(b)        is to be regarded as always having had the same effect, and given rise to the same consequences, for the purposes of any written or other law;

as if it were done, or omitted to be done, to give effect to, or under the authority of, or in reliance on, an administrative action of a State authority or officer of the State on which or on whom the relevant function or power had been duly conferred.

1. I should also mention s.8(1) on which some considerable reliance was placed by Mr Turnbull:

”This Act to apply to administrative actions as purportedly in force from time to time

(1)   the purpose of this section is to ensure that this Act operates to give to an invalid administrative action that has subsequently been affected by another action or process no greater effect that it would have had if the administrative action, or any other relevant administrative action, had not been invalid on constitutional grounds (arising from the circumstances referred to in paragraphs (a) and (b) of the definition “invalid administrative action” in section 3).

1. The legislative scheme adopted in this Act is, I accept, similar to and indistinguishable in principle from that considered by the High Court in The Queen v. Humby; ex parte Rooney (1973) 120 CLR 231.

1. In that case the Commonwealth Parliament had conferred jurisdiction in matrimonial causes on State supreme courts.  Certain of these powers were exercised by persons who were not members of the court and thus had no power to make the orders which they purported to make.

1. The Commonwealth, to overcome the problem, enacted legislation in the following terms:

“5.      (1.)      Subject to the next succeeding sub-section, this section has effect in any case in which, before the commencement of this Act –

(a)        an officer of the Supreme Court of a State; or

(b) a commissioner within the meaning of section 53 of the Supreme Court Act, 1935 of the State of South Australia or of that Act as amended,

purported to make a decree (in this Act referred to as “the purported decree”) –

(c) in a matrimonial cause within the meaning of the Matrimonial Causes Act;

(d)        under the Third Schedule to that Act;

(e)        under provisions made by the rules as mentioned in section 107 of that Act;

(f)         under section 108 of that Act; or

(g)        in any other proceedings under that Act.

(2.)       This section does not have effect in a case in which, after the making

of the purported decree but before the commencement of this Act –

(a)where the purported decree was made by an officer referred to in paragraph (a) of the last preceding sub-section – the Supreme Court of which the officer concerned was an officer has, whether upon an appeal of otherwise, made a decree setting aside, or in substitution for, the purported decree; or

(b)where the purported decree was made by a commissioner referred to in paragraph (b) of that sub-section – the Supreme Court of South Australia has, whether upon an appeal or otherwise, made a decree setting aside, or in substitution for, the purported decree.

(3.)       The rights, liabilities, obligations and status of all persons are, by force of this Act, declared to be, and always to have been, the same as if –

(a)in the case of a purported decree made by an officer of the Supreme Court of a State other than a purported decree to which the next succeeding paragraph applies – the purported decree had been made by the Supreme Court of that State constituted by a single Judge;

(b)in the case of a purported decree made by an officer of a Supreme Court of a State, being a decree that was varied on appeal by the Supreme Court of that State constituted by a single Judge – the purported decree as so varied had been made by the Supreme Court of that State as so constituted; and

(c)in the case of a purported decree made by a commissioner referred to in paragraph (b) of sub-section (1.) of this section – the purported decree had been made by the Supreme Court of South Australia constituted by a single Judge.

(4.)       All proceedings, matters, decrees, acts and things taken, made or

done, or purporting to have been taken, made or done, under the Matrimonial Causes Act or any other law (whether of the Commonwealth or of a State or Territory of the Commonwealth) in relation to a party to the proceedings in which the purported decree was made are, by force of this Act, declared to have the same force and effect after the commencement of this Act, and to have had the same force and effect before the commencement of this Act, as they would have, or would have had, if the purported decree had been made as mentioned in the last preceding sub-section".

1. It was in that case contended that the effect of this legislation was to attempt to confer retrospectively the judicial power of the Commonwealth on an officer who was not a member of a State court.

1. Mason J (as he then was) dealt with the matter at pages 248 and 249:

“But s.5, as it seems to me, does not so provide. Section 5(3) says that the rights, liabilities, obligations and status of persons affected “are, by force of this Act, declared to be, and always to have been, the same as if” the purported decree or order had been made by the Supreme Court or a judge of that Court (as the case may be).  It is the sub-section itself which defines the rights of the parties and it does so by reference to what their rights would have been had the decree or order been made, not by an officer, but by the court. Sub-section (4) then gives to a purported decree the same effect. Sub-section (4) gives the decree an operation which it would not have had otherwise.  In that sense it may be said that the decree is “validated”; it has a valid operation whereas before it had none. But the sub-section does not attempt to validate the decree as a judicial determination. It lacked that character when it was pronounced and it does not acquire that character merely because the statute attributes to it the effect it would have had, had it been a judicial determination".

1. In Re: Macks; ex parte Saint (2000) 176 ALR 545, the High Court was concerned with legislation enacted by the various State courts in the wake of the judgment of the High Court in Re: Wakim; ex parte McNally (1999) 198 CLR 511 striking down the cross vesting legislation.

1. I will not set out the relevant legislation which seems to me to take the same form as the legislation in Re: Humby (supra) and the legislation under consideration here.

1. The question with which the High Court had to concern itself in that case was whether the legislation was invalid because it was inconsistent with certain Commonwealth legislation.  However the Chief Justice described the nature of the legislative scheme and its effect at page 551 in paragraphs 14 and 15:

[14] The scheme of the remedial legislation was evidently modelled on legislation, which arose out of a similar form of necessity, held to be valid by this court in R v. Humby; Ex parte Rooney. That case concerned legislation made necessary by the decisions in Kotsis v Kotsis and Knight v Knight, which held that orders in matrimonial causes purportedly made by certain officers of state Supreme Courts were made without jurisdiction, because the jurisdiction which they purported to exercise could not lawfully be exercised by them. Following those decisions, it became necessary to deal with the rights, liabilities, obligations and status of persons affected by such orders. The Matrimonial Causes Act 1971 (Cth) was enacted. It applied in any case in which an officer of a state Supreme Court had made a purported decree, judgment or order. Section 5(3) provided that “[t]he rights, liabilities, obligations and status of all persons are ... declared to be, and always to have been, the same as if...the purported decree had been made by the Supreme Court of that State constituted by a [judge]”. This court rejected an argument that such a provision was an interference with judicial power and infringed Ch III of the Constitution.

[15] Central to the reasoning of the court was the conclusion that the legislation did not purport to validate decrees but, rather, established, as was within legislative competence, rights, liabilities, obligations and status of persons. Historically, divorce was commonly effected by private Act of Parliament. The Parliament’s power to make laws with respect to divorce extends to power to dissolve a particular marriage. It has power to declare that the rights and liabilities and status of persons whose marriages were purportedly but ineffectively dissolved by a person acting without jurisdiction are to be as if the dissolution had been by a person with jurisdiction.  Similarly, it may be observed, the parliaments of South Australia and Queensland have power, by legislative enactment, to wind up particular companies, or to declare that the rights and liabilities of persons in respect of an ineffective winding-up order will be the same as if a winding-up order had been made by a person with jurisdiction to do so.

1. It seems to me that the argument advanced by Mr Bennett QC must be correct. The State Parliament, having power to do so, has enacted legislation, the effect of which is to ascribe all of the consequences of incorporation to the actions of the ASC.  Section 9 which describes the mischief sought to be cured and the aims which the legislation seeks to achieve does not in my view affect this conclusion.

1. I therefore reject the argument that the legislation purports to confer power or an obligation retrospectively on the part of the ASC to incorporate.  The argument, it seems to me, is the very argument rejected in Humby.

1. As to the second argument it seems to me that the effect of the legislation must be to create statutory rights and liabilities which in all respects are the same as if the companies concerned had always been validly incorporated.  It follows from this that the steps taken by the applicant must be regarded as having been taken in respect of an entity which is to be treated in all respects as though it had at the time corporate personality. 

1. In my view then, the second argument should also fail.

1. Finally, it was contended that on discretionary grounds the winding up application ought to be refused since it would be unfair to MEBG to make such an order when at the time the assessment was made and the statutory notice given the company arguably did not exist.

1. I was initially attracted to this argument but on the other hand there is nothing in the material before me to suggest that there is any challenge on the merits to the commissioner’s claim nor is there anything to suggest that the response of MEBG  to the statutory notice was in any way determined or influenced by the existence of the constitutional issues.

1. Whilst MEBG was at first inclined to seek a longer adjournment of the matter, unfortunately the issues were fully argued and I do not think any further adjournments would serve any purpose.

1. In these circumstances I think the appropriate order to make is to order the winding up of the company.

1. I make an order in terms of the draft initialled and placed with the file.