Deputy Commissioner of Taxation v Roger Crook and Associates Pty Ltd

[2005] FCA 450

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Roger Crook & Associates Pty Ltd
 ACN 009 218 044 [2005] FCA 450

CORPORATIONS – winding up – insolvency – service of application on company – whether service of notice of application on company is required – service of notice of application not required
STATUTORY INTERPRETATION  - statutory construction – approach to construction – use of extrinsic materials – ordinary meaning of words of provision in context and having regard to purpose – conflicting construction proposed in Explanatory Memorandum – Explanatory Memorandum inconsistent with plain words of statute – construction proposed in Explanatory Memorandum not adopted

Corporations Act 2001 (Cth) s 459P, s 459A, s 465A
Acts Interpretation Act 1901 (Cth) s 15AB(1)

Lane Cove Council v Geebung Polo Club Pty Ltd (Green as liq) and Others (No 2) 41 ASCR 15 cited
Gardner Smith Pty Ltd v Collector of Customs (Vic) (1986) 66 ALR 377 cited
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 cited
Barry R Liggins Pty Ltd v Comptroller-General of Customs& Ors (1991) 32 FCR 112 cited
Corporate Affairs Commission (NSW) v Yuill & Ors (1991) 172 CLR 319 cited
Bolton; Ex parte Beane (1987) 162 CLR 514 cited
Catlow v Accident Compensation Commission (1989) 167 CLR 543 cited
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 cited

DEPUTY COMMISSIONER OF TAXATION v ROGER CROOK & ASSOCIATES PTY LTD ACN 009 218 044
WAD 41 OF 2005

FRENCH J
18 APRIL 2005
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD41 OF 2005

IN THE MATTER OF:        ROGER CROOK & ASSOCIATES PTY LTD
  ACN: 009 218 044

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION PLAINTIFF
AND:	ROGER CROOK & ASSOCIATES PTY LTD ACN 009 218 044 DEFENDANT
JUDGE:	FRENCH J
DATE OF ORDER:	18 APRIL 2005
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The Plaintiff is not required to serve the Defendant with notice of the application in addition to the application itself.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD41 OF 2005

IN THE MATTER OF:        ROGER CROOK & ASSOCIATES PTY LTD
  ACN: 009 218 044

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION PLAINTIFF
AND:	ROGER CROOK & ASSOCIATES PTY LTD ACN 009 218 044 DEFENDANT

JUDGE:	FRENCH J
DATE:	18 APRIL 2005
PLACE:	PERTH

REASONS FOR JUDGMENT

Introduction

1. The Commissioner of Taxation seeks a winding up order against a company which is said to have failed to comply with a statutory demand to pay money due to the Commissioner under the provisions of the Taxation Administration Act 1953 (Cth). A question has arisen at an interlocutory stage whether the company is required to be served not only with the application itself but also with notice of the application. It is the kind of question which even lawyers find unappealing. Although the Explanatory Memorandum applicable to the relevant provisions of the Corporations Act 2001 (Cth) (the Act), s 465A, suggests otherwise, in my opinion the words of the section are clear. The section requires service of the application upon the company in respect of which the winding up order is to be sought. It does not require separate service of a notice of the application on the company.

   Procedural History

2. On 25 February 2005, the Deputy Commissioner of Taxation (the Deputy Commissioner) filed an application in this Court under s 459P of the Act. The application seeks an order that Roger Crook & Associates Pty Ltd be wound up in insolvency under the provisions of the Act and a liquidator be appointed.

3. In a supporting affidavit sworn 24 February 2005, Craig Andrew Bown, on behalf of the Deputy Commissioner, swore that as at 17 January 2005 the defendant was indebted to the Deputy Commissioner in the sum of $27,576.99 then due to the Commonwealth of Australia payable to the Commissioner of Taxation and recoverable by the Deputy Commissioner under the provisions of the Taxation Administration Act.  A notice of demand requiring payment of the sum was posted to the company on 17 January 2005.  The amount is said not to have been paid.

4. Service of the application and supporting affidavits together with a consent to appointment as liquidator was deposed to in an affidavit of Dalila Vellotti of the Australian Taxation Office.  It is said that on 10 March 2005, a copy of the originating application, supporting affidavits and consent were posted to the registered office of the defendant.  The same deponent also swore an affidavit stating that on 28 February 2005 a Form 519 was lodged with the Australian Securities and Investments Commission (ASIC) containing particulars of the winding up application.  Notice of the application was advertised in The West Australian newspaper on 18 March 2005.  A notice of appearance was filed on behalf of the company on 4 April 2005. 

5. On 5 April 2005, a Deputy District Registrar referred the application to a Judge for directions. The District Registrar raised the question whether the plaintiff had complied with the requirements of s 465A of the Act. Put shortly, the question is whether s 465A requires service of the notice of the application on the defendant.

   Statutory Framework

6. Chapter 5 of the Act contains provisions relating to external administration of companies.  Part 5.4 is entitled ‘Winding Up In Insolvency’.  Division 4 of that Part (s 459P-459T) concerns applications for orders to wind up a company in insolvency. 

7. Section 459P provides, inter alia:

   ‘(1)     Any one or more of the following may apply to the Court for a company to be wound up in insolvency:

   (a)      the company;

   (b)a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor);

   (c)a contributory;

   (d)a director;

   (e)a liquidator or provisional liquidator of the company;

   (f)ASIC;

   (g)a prescribed agency.

   ...

   (5)      Except as permitted by this section, a person cannot apply for a company to be wound up insolvency.’

8. Section 459A provides:

   ‘On an application under section 459P, the Court may order that an insolvent company be wound up in insolvency.’

9. Where an application is made under s 459P, the Court must presume insolvency if during or after three months ending on the day when the application was made the company failed to comply with a statutory demand (s 459C(2)(a)). Division 2 of Pt 5.4 deals with the service of statutory demands.

10. Part 5.4B is entitled ‘Winding Up In Insolvency Or By the Court’. Section 465A, the provision first appearing in that Part, provides:

    ‘A person who applies under section 459P, 462 or 464 for a company to be wound up must:

    (a)lodge notice in the prescribed form that the application has been made; and

    (b)within 14 days after the application is made, serve a copy of it on the company; and

    (c)advertise the application as prescribed by the rules.’

    The Question for Decision

11. The question which has arisen on the directions hearing in this matter is whether s 465A(b) of the Act requires the person applying for the company to be wound up to serve on the company a copy of the notice referred to in s 465A(a) or whether s 465A(b) refers simply to service of the application.

    The Construction of Section 465A

12. The construction of s 465A(b) must begin with a consideration of the ordinary meaning of its words read in their context and having regard to their apparent purpose. On that approach s 465A(b) requires service on the company of a copy of the application within fourteen days after the application is made. The ‘it’ referred to in s 465A(b) as a matter of ordinary grammatical construction refers to ‘the application’. Its construction as referring to the notice of application mentioned in par (a) is, in my opinion, strained and unnatural. Had it been intended that par (b) require a service of a copy of the notice on the company then it would have been a simple matter to make that clear by use of the words ‘serve a copy of the notice on the company’. Quite apart from what ordinary meaning and context demand, the purpose of requiring service of a notice on the company in advance of the application itself, notwithstanding that the application has been filed, is elusive.

13. The matter has not been the subject of any substantial judicial consideration probably because the answer, as a matter of common sense, is so obvious.  In Lane Cove Council v Geebung Polo Club Pty Ltd  (Green as liq) and Others (No 2) 41 ASCR 15, Barrett J said (at 20):

    ‘In the case of the application for a winding-up order, the service requirement arises under s 465A(b).  That section obliges the applicant to “serve” a copy of the application on the company within 14 days after the application is made.’ 

    His Honour’s statement was essentially descriptive. It did not respond to any contention about the construction of s 465A(b). Nevertheless, in my opinion, it is a correct description of what the section says.

14. The only basis for a contrary construction comes from the Explanatory Memorandum.  The Explanatory Memorandum to the Corporate Law Reform Bill l992, dealing with the proposed introduction of Part 5.4B stated, in par 728 and 732:

    728.Proposed Division 1 of Part 5.4B is a general Division. Proposed section 465A deals with the notice that is to be given of a winding up application.

    ...

    732.Proposed section 465A sets out the following notice requirements where a person applies under proposed sections 459P, 462 or 464 for the winding up of a company in insolvency:

    .the person must lodge with the ASC a notice in the prescribed form which states that the application has been made;

    .the person must serve a copy of this notice on the company within 14 days after the application has been made; and

    .the person must advertise the application as prescribed by the rules.’

15. The Acts Interpretation Act 1901 (Cth) requires construction of statutory provisions in a way that promotes the purpose or object underlying the statute whether or not it is expressly stated (s 15AA). Section 15AB(1) of that Act authorises reference to extrinsic material (including Explanatory Memoranda):

    ‘(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or

    (b)to determine the meaning of the provision when:

    (i)the provision is ambiguous or obscure; or

    (ii)the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.’

16. The resort to extrinsic material under s 15AB is not limited to the case where the words of the statute are ambiguous or obscure or where their ordinary meaning would lead to a result that is manifestly absurd or unreasonable – Gardner Smith Pty Ltd v Collector of Customs (Vic) (1986) 66 ALR 377. In CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408, Brennan CJ, Dawson, Toohey and Gummow JJ, said in their joint judgment:

    ‘... the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses “context” in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.’

    But extrinsic material cannot be used to contradict the meaning of the language of an Act of Parliament in its proper statutory context – Barry R Liggins Pty Ltd v Comptroller-General of Customs & Ors (1991) 32 FCR 112.

17. It is also necessary to bear in mind the provisions of s 15AB(3) of the Acts Interpretation Act:

    ‘In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:

    (a)the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; and

    (b)the need to avoid prolonging legal or other proceedings without compensating advantage.’

    Section 15AB(3) acknowledges the general proposition that people are entitled to expect that the law which binds them means what it says: Corporate Affairs Commission (NSW) v Yuill & Ors (1991) 172 CLR 319 at 340 (Gaudron J) and see Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518 (Mason CJ, Wilson and Dawson JJ):

    ‘The words of a minister must not be substituted for the text of the law.’

    See also Catlow v Accident Compensation Commission (1989) 167 CLR 543 at 550 (Brennan and Gaudron JJ) and Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 95 (McHugh J). The same considerations apply to the words of an Explanatory Memorandum as apply to the words of a minister.

18. In my opinion the explanation of s 465A(b) set out in the Explanatory Memorandum applies a construction of the words used by Parliament which is unnatural and strained and which serves no apparent useful purpose. In the circumstances the ordinary meaning of the words of the provision read in their context and having regard to their apparent purpose, must prevail. In my opinion, there is no separate requirement for service upon the company of notice of the application, as distinct from service of the application itself.

    Conclusion

19. Section 465A of the Act requires service upon a company, the subject of a winding up application, of a copy of the application. It does not require separate service of notice of the application.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Associate:
Dated:             18 April 2005

Counsel for the Plaintiff:	Ms T Kelly
Solicitor for the Plaintiff:	Australian Taxation Office, Legal Services Branch
Counsel for the Defendant:	Mr C Pruiti
Solicitor for the Defendant:	Norton & Smailes
Date of Hearing:	7 April 2005
Date of Judgment:	18 April 2005