In the Matter of Deeral Aboriginal & Torres Strait Islanders Corporation (Subject to Deed of Company Arrangement) & The Application of Ian David Jessup, Deed Administrator of Deeral Aboriginal and Torres Strait..
[1996] FCA 865
•30 SEPTEMBER 1996
CATCHWORDS
CORPORATIONS LAW - whether Part 5.3A of the Corporations Law is incorporated in Aboriginal Councils and Associations Act 1976 - validity of appointment of a voluntary administrator - validity of subsequent Deed of Company Arrangement
INTERPRETATION - meaning of “compromise or arrangement” in s 62 Aboriginal Councils and Associations Act 1976 - which parts of Corporations Law does s 62 refer to
Aboriginal Councils and Associations Act 1976 (Cth) ss 62, 51, 63, 64, 5, 59, 60, 60A, 61, 61A, 71
Corporations Law ss 436A(1), 447C, 435C(2), 436A(1), 436B(1), 436C(1), 436E(1), 436F, 437A, 437D, 439C, 411, 414
Acts Interpretation Act (1901) Cth s10A
Re International Harvester Co of Australia Pty Ltd (1953) VLR 669 Refd
Gurney v Grimmer (1932) 38 Com Cas 7 Cons
In the Matter of Deeral Aboriginal and Torres Strait Islanders Corporation (Subject to Deed of Company Arrangement) and The Application of Ian David Jessup, Deed Administrator of Deeral Aboriginal and Torres Strait Islanders Corporation (Subject to Deed of Company Arrangement)
No QG 3013 of 1996
Kiefel J Brisbane 30 September 1996
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
No QG 3013 of 1996
IN THE MATTER OF:
DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
THE APPLICATION OF:
IAN DAVID JESSUP
DEED ADMINISTRATOR OF DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
JUDGE MAKING ORDER: Kiefel J
DATE OF ORDER: 30 September 1996
WHERE MADE: Brisbane
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The appointment of the applicant as the voluntary administrator of Deeral Aboriginal and Torres Strait Islanders Corporation is declared valid.
The Deed of Company Arrangement executed on 22 May 1996 by the Deeral Aboriginal and Torres Strait Islanders Corporation and the applicant pursuant to a resolution of corporations’ creditors on 1 May 1996 is declared valid.
Note:Settlement and Entry of Orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
No QG 3013 of 1996
IN THE MATTER OF:
DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
IN THE APPLICATION OF:
IAN DAVID JESSUP
DEED ADMINISTRATOR OF DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
CORAM:Kiefel J
DATE:30 September 1996
PLACE:Brisbane
REASONS FOR JUDGMENT
The Deeral Aboriginal and Torres Strait Islanders Corporation (the “Deeral Corporation”) was incorporated in 1983 under Part IV of the Aboriginal Councils and Associations Act 1976 (Cwth) (which I shall refer to as the “Aboriginal Associations Act”). On 27 March 1996 the Deeral Corporation’s Governing Committee resolved that Mr I B Jessup be appointed voluntary Administrator pursuant to s 436A(1) of the Corporations Law (“the Law”) and s 62 of the Aboriginal Associations Act. This application concerns the extent to which particular provisions of the Law relating to deeds of company arrangement (Part 5.3A) are incorporated in the Aboriginal Associations Act.
Following the appointment of the Administrator two meetings of creditors of the Deeral Corporation were called. At the second meeting the creditors resolved to
accept a Deed of Company Arrangement. The terms of it are not presently relevant. There is no suggestion that, subject to the question whether such a deed could be entered into, it is not of benefit to the Corporation. The Registrar of Aboriginal Corporations, an officer appointed by the Minister under the Aboriginal Associations Act, however raised concerns as to the validity of the Administrator’s appointment and in consequence the Administrator applies for declarations as to the validity of his appointment and of the following Deed of Company Arrangement, which was executed on 22 May 1996. Such a procedure is contemplated by s 447C of Part 5.3A of the Law.
By order of Cooper J the Registrar of Aboriginal Corporations was given leave to participate in the proceedings as amicus curiae.
The Aboriginal Councils and Associations Act
Part IV of the Aboriginal Associations Act provides for the incorporation of aboriginal associations under the Act by the Registrar and for matters relating to the management and control of them. There is no restriction upon the objects of such an association which may, it appears from various provisions in the Act, include trading for a profit. It is of some importance in this case to observe, in connection with the role of the Registrar, that an association incorporated under the Act is managed by a Governing Committee, that it owns property and is able to borrow monies and charge its property with repayment (with respect to the latter see s 51).
Although the Registrar might require more information than is usual with respect to a company (to which feature I shall return), there is nothing to indicate that an incorporated aboriginal association has other than a usual relationship with its members and creditors. And each of them and the incorporated association may apply to wind it up (see ss 63,64).
It is in this setting that s 62 provides:
“62 Subject to this Act, the provisions of the Corporations Law that relate to compromises or arrangements between companies and their creditors apply, so far as they are capable of application and subject to such modifications, adaptations and exceptions (if any) as are prescribed, to and in relation to Incorporated Aboriginal Associations ...”.
The reference to the “Corporations Law” in place of the previous reference to the Companies Act was inserted by amendments taking effect in December 1992.
The function of the Registrar of Aboriginal Corporations is, by s 5, said to be principally to maintain registers, to advise and to arbitrate in disputes. Some provisions of Part IV however provide for a level of supervision which, whilst no doubt relevant to the two latter functions, suggests the Registrar has an additional role. For example, the Registrar is able to require financial statements (s 59) and the examination of documents (by an authorised person on the Registrar’s behalf) which might disclose any irregularity (s 60). The Registrar has power to give notice requiring compliance with the Act where a suspicion of irregularity is held (s 60A), and may also apply to the Court for injunctions in that respect (s 61). To this point one may conclude that the Registrar’s role is therefore a combination of advice and assistance, dispute resolution and supervision at least with respect to irregularities in the financial affairs or the operation of the company.
The Registrar is also expressly authorised to apply to wind up an incorporated association where the Registrar holds a particular opinion, or where an Administrator, appointed by the Registrar under s 71, has recommended that course: see s 62A. Section 71 appears in Part V of the Act which is entitled “Investigation and Administration of Aboriginal Corporations”. The submissions made by the Registrar focus to an extent upon apprehended effects on the continued operation of this Part and in particular s 71.
Under the Part the Registrar’s supervision is extended to investigation and if necessary assumption of control of the company by an Administrator appointed by the Registrar where there are grounds for doing so. Those grounds listed in s 71(2) refer to circumstances where an incorporated aboriginal association has traded at a loss for a period of time; to failures of the Governing Committee to comply with the Act, the regulations or the corporation’s rules and to explain that failure; to Committee members having acted in their own interests or to a situation where it is seen to be in the interests of members of creditors, or in the public interest, that the appointment be made.
The Corporations Law
Part 5.3A (“Administration of a Company’s Affairs With a View to Executing a Deed of Company Arrangement”) provides, as the title suggests, for the administration of a company which has, as its usual conclusion, the execution of a Deed between it and its creditors which makes provision for some arrangement by which the company may continue to operate and which might involve some concession or compromise on the part of the creditors. Alternatively the creditors might instead resolve that the administration end or that the company should be wound up: s 435C(2). Other outcomes are also provided for in sub-s (3). Either a company, a liquidator or a chargee may appoint an Administrator: see respectively ss 436A(1), 436B(1) and 436C(1).
The procedure envisaged by Part 5.3A, which was introduced on 23 June 1993, may permit a simple and efficient resolution of questions concerning a company’s future where it is experiencing financial difficulty. In the meantime a company might gain some respite from claims. The administrator appointed is required to convene a meeting of the company creditors. At that meeting a committee is appointed (s 436E(1)) and it then consults with the administrator and receives reports from the administrator. But the administrator assumes control of the company (ss 436F, 437A) and may deal with company property: s 437D. Whilst the administrator conducts investigations and reports, it is the meeting of creditors which decides the company’s future: see Div. 5 and in particular s 439C which provides for the resolution as to the three outcomes I have referred to above.
The other provision of the Corporations Law to which the submissions referred were those contained in Part 5.1. These provisions were central to the Registrar’s submissions concerning s 62 of the Aboriginal Associations Act. Both these provisions and those in Part 5.3A are contained in Chapter 5 which is headed “External Administration”. Part 5.1 is entitled “Arrangements and Reconstructions”. By s 411, the Court may order that a meeting of creditors be convened to consider a “compromise or arrangement” proposed between a company and its creditors or any class of them. The proposal, if carried by the requisite majority and approved by the Court, then binds all creditors or the relevant class of them: s 411(4). The procedure may be used to effect a compromise of claims by creditors or to facilitate reconstructions and amalgamations of companies (s 413). And it is used in connection, in some circumstances, with the acquisition of shares: s 414.
One might observe that in each of Parts 5.1 and 5.3A an arrangement with creditors may be effected. Such arrangements may likely involve the giving of some concessions on the part of creditors. The procedure by which this is reached differs. And whilst commonly applied in the past to companies in financial difficulties, Part 5.1 may be used for other purposes. A view that a company is or may become insolvent is the sole catalyst for the speedy resolution of the question as to the company’s future. The only focus of Part 5.3A is that financial difficulties are being experienced and some decision needs to be made.
The Submissions for the Registrar
Section 62 Aboriginal Associations Act
The Registrar submits that the terms of s 62, set out above, do not to refer to arrangements such as those effected at the conclusion of the Part 5.3A process, and that it ought to be read as restricted to the phrase “compromise or arrangement”, which appears in Part 5.1 and which formed part of the Law at the time when the Aboriginal Associations Act was last amended. A difficulty in that submission is that s 10A of the Acts Interpretation Act 1901 (Cwth) reverses the presumption that a reference to legislation is one to legislation in the form it took at the date the referring legislation was made. Now, in the absence of a clear contrary intention, subsequent amendments are incorporated: see Pearce and Geddes “Statutory Interpretation in Australia” 3rd ed [6.19]. Section 10A (a) provides:
“10A. Where an Act contains a reference to a short title or other citation that is or was provided by the law of a State or Territory for the citation of a law of that State or territory as originally enacted or made, or as amended, then, except so far as the contrary intention appears:
(a)the reference shall be construed as a reference to that law as originally enacted or made and as amended from time to time; and
¼”
One would think that the relevant inquiry, with respect to s 62, is then narrowed to one as to whether Part 5.3A contains provisions relating to “compromises or arrangements between companies and their creditors ¼”. And that might be thought to be susceptible to a ready answer, for it has as its object the making of some such agreement and particular provisions, such as s 439C(a), specifically provide for the entry into an arrangement of that kind.
The Registrar however submitted that the word “the provisions of the Corporations Law that relate to compromises or arrangements ¼” can only refer to Part 5.1. That conclusion is said to be reached because it is only in that Part that one finds the phrase “compromises or arrangements”. The short answer to that seems to be that the section does not say that it refers to Part 5.1 and the procedures thereby provided. It seeks to incorporate two subjects, compromises and arrangements, as dealt with in the Law. The Registrar however submitted that there are a number of factors from which it must be inferred that it is only Part 5.1 which is referred to.
It was submitted that, as is clear enough, the phrase “compromises or arrangements” appears throughout Part 5.1 but appears nowhere in Part 5.3A. It was also pointed out that the latter Part deals with administrations and not with arrangements. It was not clear to me whether it was thereby intended to suggest that the two Parts deal with different subject matter and by that process to exclude the operation of Part 5.3A. But for the reasons given above I do not think it can be said that Part 5.3A has nothing to say with respect to arrangements between a company and its creditors, as contemplated by s 62.
Considerable reliance was placed by the Registrar upon the phrase “compromises or arrangements” as a composite one. But, with respect, that seems to state the desired conclusion and not a reason for it. The reference in that phrase, to the two topics of compromises and arrangements is, by the disjunctive “or”, clearly to each of them. Whilst one may assume there is likely to be considerable overlap between the two concepts and that some agreements may be capable of description as both a compromise and an arrangement, one cannot assume that the phrase in s 62 comprehended that they would always be the same. Whilst the meaning of “arrangement” in this context is very wide (see Re International Harvester (1953) VLR 669, 672) and might include mutual concessions, which is to say “compromises”, there is some basis for concluding that where the two words ‘compromise” and “arrangement” are used together, it is considered that there will be transactions which are one, but not the other: see Gurney v Grimmer (1932) 38 Com Cas 7.
The essence of the Registrar’s argument is that some presumption must arise because an identical phrase is found in Part 5.1. In some cases this may have some force. I have stated my view above that the reference should however be taken to refer to the two topics, which that Part certainly dealt with. Such an approach would not preclude reference to later amendments in other parts of the law dealing with them. And, I consider, it is supported by the evident purpose of s 62 considered in the background of the other provisions of the Aboriginal Associations Act dealing with incorporated associations’ ability to carry on business and to create the relationship of debtor and creditor. It must have been intended, by s 62, to permit them to address problems which arise and to enter into arrangements in the same way as other corporations. And, as I shall later refer in more detail, there is nothing in the Act to suggest that the procedures to be made available and the powers to invoke them were intended to be limited.
The other point which arose in argument was whether the whole of Part 5.3A could be said to have regard to arrangements with creditors since it is only at the conclusion of that process that an “arrangement” was actually brought into being. This may be understood to follow the Registrar’s submission, earlier referred to, that the Parts deal with different matters. It was submitted for the applicant that, as the title to that Part clearly suggests, the object of the whole process is to make an
arrangement although it may be that in some circumstances that is not the outcome. It seems to me that one must conclude that the provisions of Part 5.3A do “relate” to arrangements with creditors within the meaning of s 62 of the Aboriginal Associations Act. The fact that such arrangements lie, for some time, in prospect and that other steps need be taken to reach the objective does not, in my view, prevent the necessary connexion arising. And it is noteworthy that in any event the provisions in Part 5.1, which are said to be the certain subjects of s 62, also concern proposals which may or may not result in arrangements actually being effected.
The Registrar’s Functions: s 71
The other main contention advanced by the Registrar was that one ought interpret s 62 to preserve the Registrar’s functions under Part V and in particular that to appoint an Administrator under s 71. How this was to be achieved, as a matter of construction, was not gone into.
Another way of approaching the matter, it was submitted, was to conclude by reference to those functions of the Registrar that the “contrary intention”, for the purposes s 10A Acts Interpretation Act, had been shown. This submission requires some further analysis. It seems to me that it requires a conclusion either that the Registrar was intended to be the sole repository of the power to appoint an Administrator to an incorporated association or that his power to do so was never to be cut across in any way and was to remain available at all times. In the result I am unable to accept either submission.
A reference to the duties and obligations of the Registrar under the Aboriginal Associations Act does not support these contentions. The Registrar’s powers or duties do not require, and the Act does not envisage, anything approximating day to day control of an incorporated association, in which case the appointment of another Administrator might be seen to involve some conflict. And it could not be assumed that the circumstances, outlined above, which are considered to warrant the appointment of an Administrator by the Registrar are likely to occur regularly or often.
The Registrar’s powers are not expressed, as they could have been, to take precedence over the rights of any other person, or class of person, to appoint someone to take control of the company for particular purposes. The Governing Committee, and not the Registrar, is responsible for the incorporated association’s operations and financial dealings, and decisions made by it may result in the creation of creditors and of secured creditors. And the association’s members have an interest in its financial position. Nowhere are the abilities of those persons, to apply for or to obtain necessary remedies or relief arising out of their dealings with the company, restricted by the Act. Such rights, for instance those arising by contract, would include those of a holder of a charge to appoint a receiver. And the Act itself recognises the right of the incorporated association, its creditors and its members to seek to have it wound up. As the applicant also pointed out, if Part 5.1 is incorporated by s 62, as the Registrar contends, an administrator of a scheme may be appointed under s 411(9), and that person would have powers similar to those of a receiver. These are strong indicators of the maintenance of usual commercial relations and are contrary to any
view which would limit them or the means by which any problem arising from them might be resolved by procedures made available by relevant laws.
It follows, in my view, that it must not have been intended that the Registrar have the exclusive function of appointing an Administrator of an incorporated association. A consequence of a Part 5.3A Deed Administrator being appointed will as the Registrar submitted, have different results, for instance with respect to offices in the corporation. By s 73, on appointment of a Administrator under s 71, they are automatically vacated. That provision was obviously made to facilitate the Registrar’s tasks. The existence of such a provision says nothing about the question of exclusivity of appointments and involves no relevant conflict. What it provides for will simply not occur where an administrator is appointed for other purposes.
Conclusion
There is, in my view, no reason to doubt that the reference in s 62 of the Aboriginal Councils and Associations Act 1996 to provisions in the Corporations Law relating to compromises and arrangements includes arrangements contemplated by Part 5.3A.
On the view that I have taken of the matter it is not necessary to have regard to the extrinsic material provided which, in any event, I consider to be of little assistance in construing the Act.
I propose to make the declarations sought.
I certify that this and the preceding twelve pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.
Associate
Date:30 September 1996
Counsel for the applicant: Mr R N Chesterman QC
Solicitors for the applicant: Dunhill Madden Butler
Counsel for the respondent: Ms E M O’Reilly
Solicitors for the respondent: Australian Government Solicitor
Date of Hearing: 3 September 1996
Place of Hearing: Brisbane
Place of Judgment: Brisbane
Date of Judgment: 30 September 1996
0
0
0