In the matter of Skypac Aviation Pty Ltd (in liquidation)

[2019] NSWSC 291

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Skypac Aviation Pty Ltd (in liquidation) [2019] NSWSC 291

Hearing dates:

4 March 2019

Date of orders:

22 March 2019

Decision date:

22 March 2019

Jurisdiction:

Equity - Corporations List

Before:

Rees J

Decision:

Pursuant to rule 13.4(b) of the Uniform Civil Procedure Rules 2005, dismiss paragraphs 3 and 4 of the Amended Originating Process as against the First and Fifth Defendants.

 Plaintiffs to pay the First and Fifth Defendants’ costs of the Interlocutory Process filed on 12 February 2019.

Catchwords:

CORPORATIONS — Winding up — Commencement of Court-ordered winding up — Where company previously in administration — Application of Corporations Act 2001 (Cth) s 468(1) — Whether transaction made on section 513C day void — Transaction on section 513C day not void.

 

CIVIL PROCEDURE — Pleadings — Striking out — No reasonable cause of action or defence — Contested point of law — Narrow factual compass not in dispute — Whether appropriate to determine point of law on summary application — Determination made — Pleadings struck out.

  WORDS AND PHRASES — “Commencement of the winding up by the Court” — “section 513C day” —“disposition of property of the company … void”.

Legislation Cited:

Acts Interpretation Act 1901 (Cth), s 36(1)
Companies (New South Wales) Code, s 368
Companies (Western Australia) Code, ss 365, 368
Corporate Law Reform Act 1992 (Cth) and Explanatory Memorandum
Corporations Act 2001 (Cth) ss 9, 91, 105, 435C, 436A, 438A, 438B, 438C, 438D, 468(1), 513A, 513C, 588FE
Corporations Amendment (Insolvency) Act 2007 (Cth) and Explanatory Memorandum
Migration Act 1958 (Cth), s 135
Personal Property Securities Act 2009 (Cth), s 267
Uniform Civil Procedure Rules 2005 (NSW), r 13.4(b)

Cases Cited:

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27
Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529
Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529
Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1
Gatward v Kleem (1955) 72 WN (NSW) 354
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1946] HCA 69
In the matter of Carpenter International Pty Limited (Administrators appointed) (2016) 51 VR 190; [2016] VSC 118
Macquarie Health Corp Ltd v Federal Commissioner of Taxation (1999) 96 FCR 238; [1999] FCA 1819
Morgan v Union Shipping (NZ) Ltd [2001] NSWSC 325
National Acceptance Corp Pty Ltd v Benson (1988) 12 NSWLR 213
NRMA Insurance Ltd v AW Edwards Pty Ltd (1995) 11 BCL 200
Overflow FNQ Pty Ltd (in liq) v Austwide Consumer Products Pty Ltd [2018] 1 Qd R 172; [2017] QSC 76
Prowse v McIntyre (1961) 111 CLR 264
section 513A
SK Foods LP v SK Foods Australia Pty Limited (in Liquidation) (No 3) (2013) 214 FCR 543; [2013] FCA 526
Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28
Tio v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 126 FCR 185; [2003] FCAFC 53

Texts Cited:

Assaf & Ors., Voidable Transactions in Company Insolvency (LexisNexis Butterworths, 2015)
Companies and Securities Advisory Committee, Corporate Voluntary Administration (1998)

Category:

Consequential orders (other than Costs)

Parties:

Christopher John Palmer as the Liquidator of Skypac Aviation Pty Ltd (in liquidation) (First Plaintiff)
Skypac Aviation Pty Ltd (in liquidation) (Second Plaintiff)

  Australian Aircraft Management Pty Ltd (First Defendant)
Bankstown Aircraft Maintenance Pty Ltd (Fifth Defendant)

Representation:

Counsel: F. Carnovale (First and Fifth Defendants)

  Solicitors: Craddock Murray Neumann Lawyers (Plaintiffs)
Antunes Lawyers (First and Fifth Defendants)

File Number(s):

2018/312649

Publication restriction:

Nil

Judgment

1. HER HONOUR:   The liquidator of Skypac Aviation Pty Ltd (in liquidation) (Skypac) seeks to recover payments made by Skypac to five companies as being unfair preferences, uncommercial transactions or void dispositions. The first and fifth defendants, Australian Aircraft Management Pty Ltd and Bankstown Aircraft Maintenance Pty Ltd, seek to strike out the claim in respect of void dispositions on the basis that the payments were made the day that administrators were appointed to Skypac. Put shortly, the first and fifth defendants contend that any disposition of Skypac’s property made on the day that the winding up commenced was not made “after” the commencement of the winding up and is not, and cannot be, void within the meaning of section 468(1) of the Corporations Act 2001 (Cth) (the Act). For the reasons which follow, I agree.

Facts

2. On 29 September 2015, the Commissioner of Taxation filed an originating process seeking orders to wind up Skypac. On 15 October 2015, Skypac’s sole director resolved to appoint administrators under section 436A of the Act. The same day, Skypac made three payments to Australian Aircraft Management Pty Ltd totalling $16,891.16 and two payments to Bankstown Aircraft Maintenance Pty Ltd totalling $6,431.56. The liquidator says, and the first and fifth defendants agree, that Skypac was insolvent at the time it made these payments. On 19 November 2015, the Court appointed Christopher Palmer as liquidator to Skypac.

3. In December 2018, the liquidator sought to amend his claim against the five companies to include a claim under section 468(1) of the Act. In correspondence, the first and fifth defendants’ solicitors raised the issue which is now before the Court and formalised their position in a Defence and an Interlocutory Process filed on 12 February 2019.

Should this be determined on an interlocutory basis?

4. The first and fifth defendants seek to dismiss the relevant paragraphs of the amended originating process pursuant to rule 13.4(b) of the Uniform Civil Procedure Rules 2005 (NSW), which permits summary dismissal where “no reasonable cause of action is disclosed”.

5. The liquidator submits that the issue is not suitable for summary dismissal because it is clearly arguable that section 468 captures the payments made on 15 October 2015. The discretion of the Court to summarily dismiss a claim is to be sparingly invoked: Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1946] HCA 69. A claim will be summarily dismissed as disclosing no reasonable cause of action only where “the case is so clearly untenable that it cannot possibly succeed”: Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27; Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28, per French CJ and Gummow J at [25]. The liquidator submitted that the Court must form a view that the claim would fail if permitted to go to the trial such that it would be an abuse of process for the Court to allow the proceedings to continue: Ke Qin Ren v Hong Jiang (2014) 104 ACSR 149; [2014] NSWCA 388 at [49].

6. The first and fifth defendants submitted that the fact that the Court will have to determine a contested question of law is no bar to summary dismissal of a claim where, as here, the material facts are agreed and no further material evidence could emerge that might affect how the question of law is decided. Reliance was placed on Gatward v Kleem (1955) 72 WN (NSW) 354 per Walsh J at 357-8:

The jurisdiction is one which must be exercised with great caution, and a defendant is not to be deprived by means of a summary procedure, of the opportunity of litigating his case in the ordinary way before the ordinary tribunal if there is any chance that he may be able to provide evidence, which, if accepted, will have the result that the plaintiffs claim will be defeated in whole or in part, or that the defendant will establish a right to some set-off against the plaintiff's claim or to recover some amount from the plaintiff; see Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at pp 91, 92. But if it appears quite clear that the defendant cannot succeed and that there is no substantial question to be tried, then the pleas may be struck out to avoid the expense and delay which would be involved in matters being tried in the ordinary way. If the circumstances are such that the judge is required to decide questions of law in order to ascertain whether there is any chance of the defendant succeeding, it does not necessarily follow that he should refuse the application, if he, in his discretion, thinks it proper to dispose of those questions of law upon such an application; cf. Goddard v Polar Cream Pty Ltd (1946) 47 SR (NSW) 154, at pp 156, 157.

See also NRMA Insurance Ltd v AW Edwards Pty Ltd (1995) 11 BCL 200 per Kirby P at 8, Mahoney JA at 1; Morgan v Union Shipping (NZ) Ltd [2001] NSWSC 325 at [8]-[10], [26].

7. More recently, in SK Foods LP v SK Foods Australia Pty Limited (in Liquidation) (No 3) (2013) 214 FCR 543; [2013] FCA 526, Flick J was asked to reject a claim for summary dismissal as there was no authority for some of the propositions advanced. His Honour rejected that submission. At [115]:

[115]   An application for summary judgment may be entertained even if the questions raised for resolution involve some complexity: cf. Civil & Civic Pty Ltd v Pioneer Concrete (NT) Pty Ltd (1991) 103 FLR 196 at 215 per Asche CJ. The fact that a case may present complexity - either by reason of the law to be applied or the facts to be found - does not preclude an application being made for summary judgment. But caution must be exercised before entering summary judgment: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. …

[116]   A distinction nevertheless may be drawn between those cases where the complexity is founded in a factual dispute as opposed to the complexity being found in the legal principles to be applied or, as in this case, by an asserted lack of legal authority. …

[117]   Any absence of authority as to those legal principles will presumably be the same now as when any appeal from the present decision is resolved. Nor will the submissions be able to be better resolved at a final hearing than during the course of the present interlocutory hearing. …

8. It seems to me that the issue raised by the interlocutory process is suitable for consideration on an application for summary dismissal. The relevant facts are not in dispute and are of a very short compass. The facts will not change between now and the final hearing. The legal question is a matter of statutory construction based on those facts. As Spencer v Commonwealth suggests, an application for summary dismissal may be appropriate in such a case.

9. A relevant case management consideration is whether either party would seek leave to appeal against an interlocutory decision on this question, thereby delaying any final hearing. The first and fifth defendants undertook not to appeal until the conclusion of the substantive proceedings. The case management concern was thus partially abated, although as matters have turned out, their undertaking does not need to be called upon.

Section 468(1)

10. Section 468(1) of the Act provides: (emphasis added)

(1)   Any disposition of property of the company, other than an exempt disposition, made after the commencement of the winding up by the Court is, unless the Court otherwise orders, void.

11. The first question is: when did the winding up commence? Division 1A of the Part 5.6 of the Act, entitled “When Winding up Taken to Begin”, contains section 513A, which, relevantly to these facts, provides:

If the Court orders … that a company be wound up, the winding up is taken to have begun or commenced:

…

(b)   if, immediately before the order was made, the company was under administration - on the section 513C day in relation to the administration; …

12. Section 513C(b) relevantly provides:

The section 513C day in relation to the administration of a company is: …

(b)   otherwise - the day on which the administration began.

13. That the Division 1A definitions apply throughout the Act is confirmed by the Dictionary in section 9, which provides that:

“begin”, in relation to a winding up, has the meaning given by Division 1A of Part 5.6. …

“commence”, in relation to a winding up, has the meaning given by Division 1A of Part 5.6.

14. As Skypac was in administration immediately before the winding up was ordered by the Court, the winding up is taken to have begun on the section 513C day, being the day on which the administration began: section 513C(b). The administration of Skypac began when an administrator was appointed: section 435C(1)(a). As such, the parties agree that the administration began on 15 October 2015 and so too did the winding up, consistently with the approach of the Full Court of the Federal Court in Macquarie Health Corp Ltd v Federal Commissioner of Taxation (1999) 96 FCR 238; [1999] FCA 1819 at [100]-[104]. If one inserts this data into section 468(1), it becomes:

Any disposition of property of Skypac, other than an exempt disposition, made after 15 October 2015 is, unless the Court otherwise orders, void.

15. The next question is: do dispositions of property made “after 15 October 2015” include dispositions of property made on 15 October 2015. Section 36(1) of the ActsInterpretation Act 1901 (Cth) specifies how periods of time referred to in legislation should be calculated.

A period of time referred to in an Act that is of a kind mentioned in column 1 of an item in the following table is to be calculated according to the rule mentioned in column 2 of that item:

Calculating periods of time

Item	Column 1 If the period of time:	Column 2 then the period of time
1	is expressed to occur between 2 Days	includes both days
2	is expressed to begin at, on or with a specified day	includes that day
3	is expressed to continue until a specified day	includes that day
4	is expressed to end at, on or with a specified day	includes that day
5	is expressed to begin from a specified day	does not include that day
6	is expressed to begin after a specified day	does not include that day
7	is expressed to end before a specified day	does not include that day

… Example 6: If a decision is made on 2 August and a person has 28 days after the day the decision is made to seek a review of the decision, the 28‑day period begins on 3 August.

It seems to me that the period of time referred to in section 468(1) is of the kind mentioned in Item 6 and thus the period of time does not include the day on which the administration began.

16. The liquidator relies on section 105 of the Act, which provides:

Without limiting subsection 36(1) of the Acts Interpretation Act 1901, in calculating how many days a particular day, act or event is before or after another day, act or event, the first‑mentioned day, or the day of the first‑mentioned act or event, is to be counted but not the other day, or the day of the other act or event.”

This does not appear to me to assist, as section 468(1) does not require calculation of how many days one event is before or after another event, but simply when a relevant time period begins.

17. The first and fifth defendants relied on Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1965) 113 CLR 662, which considered the meaning of “from the date of delivery”. Per Barwick CJ at 667-8:

No doubt, generally where time is to be computed from a day, that day is excluded from the computation. The same is true of the computation as from a date, which is but a convenient abbreviation of the full expression, the day of the date.

… In my opinion, it does not usually have an inclusive but rather an exclusive or separatist quality. But unquestionably it may have either. Thus, the preposition derives its relevant quality from the context in which it is found, which includes the purpose which the document in which it is found is evidently designed to effect.

See also Owen J at 671, who noted that “from the date of” usually excludes the date itself where a period is fixed “from” a particular day for the doing of some act.

18. In Tio v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 126 FCR 185; [2003] FCAFC 53, the Full Federal Court considered section 135 of the Migration Act 1958 (Cth), which required the Minister to give “28 days after the notice is given” before cancelling a visa. Lindgren J noted at [17]:

In such contexts, the law takes no account of parts of a day, and therefore … the period is not measured as 28 twenty four hour periods from one instant of time to another instant of time: Prowse v McIntyre (1961) 111 CLR 264 at 277-287 per Windeyer J; Layton v Westpac Banking Corporation [2000] FCA 1752; Segal v Young [2001] NSWCA 141. Rather, the subsection requires that however the notice may be expressed, it allow a full period of 28 days ‘after’ or "from" the end of the day on which it is given, and expiring at the end of that period of 28 days, that is, at midnight on the 28th day.

See also Downes J at [64]. The defendants submitted that, in section 468(1) of the Corporations Act, the word “after” has the same operation: it excludes the day on which the winding up is taken to have commenced. The word “after” has the same effect as the word “from” usually has.

19. One of the authorities cited by Lindgren J was relied on by the liquidator, although I think when read fully, does not assist him. In Prowse v McIntyre (1961) 111 CLR 264, Windeyer J observed, at 280, that:

As has been said, the law in reckoning time by days ordinarily takes no account of fractions of a day. The result is that, whenever a period of days has to be computed from an act or event that occurs within the space of a day, a decision must be made whether to start the reckoning from the beginning or the end of that day. … [T]he question … is whether the day of commencement of a period … is to be included or excluded … As to that, there is no universal rule. Where it is not prescribed by statute … the answer depends upon context and circumstances.

20. The first and fifth defendants noted that section 588FE(2), (6) and (6A) of the Act provide that insolvent transactions, unfair loans and unreasonable director-related transactions made “on … the day when the winding up began” are voidable. A reading of section 468(1) which has the result that dispositions made that day were void would be inconsistent with section 588FE. Section 468(1) should be construed to operate harmoniously with section 588FE.

21. The position is not as straight-forward as submitted. Section 588FE, entitled “Voidable Transactions”, prescribes different time periods for different transactions and depending upon the relation-back day which applies to the particular circumstance: (emphasis added)

(2)    [An insolvent] transaction is voidable if: …

(b)   it was entered into, or an act was done for the purpose of giving effect to it:

(i)   during the 6 months ending on the relation-back day; or

(ii)   after that day but on or before the day when the winding up began.

(2A)   [A voidable transaction when company under administration before being wound up] is voidable if: …

(c)   the transaction was entered into, or an act was done for the purpose of giving effect to it, during the period beginning at the start of the relation-back day and ending:

(i)   when the company made the special resolution that it be wound up voluntarily; or

(ii)   when the Court made the order that the company be wound up …

(3)   [An uncommercial] transaction is voidable if: …

(b)   it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day.

(4)   [A related party] transaction is voidable if: …

(c)   it was entered into, or an act was done for the purpose of giving effect to it, during the 4 years ending on the relation-back day.

(5)   [A creditor defeating] transaction is voidable if: …

(c)   the transaction was entered into, or an act done was for the purpose of giving effect to the transaction, during the 10 years ending on the relation-back day.

(6)   The transaction is voidable if it is an unfair loan to the company made at any time on or before the day when the winding up began.

(6A)    [An unreasonable director-related] transaction is voidable if: …

(b)   it was entered into, or an act was done for the purposes of    giving effect to it:

(i)   during the 4 years ending on the relation-back day; or

(ii)   after that day but on or before the day when the winding up began.

22. Here, the relation-back day is the day on which the application to wind up the company was filed: Item 2 of section 91. The relation-back day is 29 September 2015, which is obviously not the same as the section 513C day of 15 October 2015.

23. Subsections 588FE(3), 588FE(4) and 588FE(5) concern transactions which occurred in differing periods “ending on the relation-back day”, that is, 29 September 2015. These subsections do not intersect with the operation of section 468(1) and need not be considered further.

24. Subsection 588FE(6) uses different but perhaps more emphatic language in respect of timing. An unfair loan to a company is voidable if it is made “at any time on or before the day when the winding up began”. Here, the day when the winding up began is the section 513C day of 15 October 2015. Item 2 of section 36(1) of the Acts Interpretation Act clarifies that a period beginning on a day includes that day. So unfair loans made at any time on or before 15 October 2015 are voidable, which supports a construction of section 468(1) that does not also make such loans void.

25. Subsections 588FE(2)(b) and 588FE(6A)(b) provide that an insolvent transaction or unreasonable director-related transaction is voidable if it occurred in either of the following periods:

1. In subsection.(i), during a period “ending on the relation-back day”, that is, 29 September 2015. As this period does not intersect with the operation of section 468(1), it need not be considered further.

2. In subsection.(ii), after the relation-back day but “on or before the day when the winding up began”. Here, subsection.(ii) means the period after 29 September 2015 but on or before 15 October 2015 and including 15 October 2015.

Under subsections 588FE(2)(b)(ii) and 588FE(6A)(b)(ii), an insolvent transaction or unreasonable director-related transaction which occurred on 15 October 2015 is voidable. This is consistent with a reading of section 468(1) that does not also make such transactions void.

26. This brings us to subsection 588FE(2A) (and, in the same terms but relating to Deeds of Company Arrangement, subsection (2B).) These subsections were introduced by the Corporations Amendment (Insolvency) Act 2007 (Cth) to apply the voidable transaction provisions to transactions effected during a voluntary administration that preceded a winding up: Explanatory Memorandum at [7.197]-[7.203]; Assaf & Ors., Voidable Transactions in Company Insolvency (LexisNexis Butterworths, 2015) at [8.12]. As the Companies and Securities Advisory Committee explained in Corporate Voluntary Administration (1998), the fact that transactions effected during a voluntary administration then fell outside the voidable transaction provisions created an opportunity for abuse as companies could enter into uncommercial transactions during the administration or, particularly, under a Deed of Company Arrangement, when the company remained in the control of the directors: Chapter 8. These provisions have not been the subject of judicial consideration.

27. Subsection 588FE(2A) defines the period of time relevant to voidable transactions for companies in administration before being wound up as “beginning at the start of the relation-back day and ending … when the Court made the order that the company be wound up”. The fact that the subsections were added several years after the initial subsections may explain the different turn of phrase. The wording is more consistent with examining the precise time on the day on which the impugned transaction occurred, however, the introduction of these subsections was not intended to make the precise timing of events on a given day significant, but rather to ensure that the voidable transaction remedies applied where a company had been in administration before being wound up.

28. Here, the period under subsection 588FE(2A) begins at the start of 29 September 2015 and ends on 19 November 2015. Relevant transactions occurring in this period are voidable. But section 468(1) has an overlapping operation and may, it seems to me, have the result of rendering a transaction which is voidable under subsection 588FE(2A) as void. This does not favour either the defendants’ or the liquidator’s construction of section 468(1), but does illustrate that section 588FE can give rise to different permutations and combinations such that more than one provision of the Act may apply to the same transaction with differing results.

29. The liquidator relied on In the matter of Carpenter International Pty Limited (Administrators appointed) (2016) 51 VR 190; [2016] VSC 118 where Cameron J considered whether creditors of a live cattle export business, Carpenter International Pty Ltd, held a security interest in cattle before administrators were appointed to the company. Some creditors had registered their interest on the day that the administrator was appointed, before the time when the administrator was appointed on that day. The case turned on the construction of section 267 of the Personal Property Securities Act 2009 (Cth) which provided: (emphasis added)

Scope

(1)   This section applies if:

(a)   any of the following events occurs:

…

(ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise);

…

and

(b)   a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies:

…

(ii)   in the case of any other company or body corporate — when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise);

Security interest vested in grantor

(2)   The security interest held by the secured party vests in the grantor immediately before the event mentioned in paragraph (1)(a) occurs.

30. The company argued that section 267(1)(b)(ii) focused on the day of the administrator’s appointment, not the time at which it occurred on a given day, but her Honour did not agree having regard to the plain and ordinary language of the statute and that the section should be construed consistently with other provisions of the Act: at [165]-[166]. I respectfully agree with her Honour’s conclusions, and note that the section referred to the security interest being perfected by a “time” and “when, on a day” the administrator was appointed. It seems to me quite clear from the section, and the nature of the legislation itself, that it was envisaged that creditors may register a security interest on the day that an administrator was appointed, as long as it was registered before the time on that day when the administrator was appointed. As Cameron J explained more fully at [159]-[164]:

[159] Carpenter submitted, and I agree, that s 513C focuses on the day of appointment. Section 513C(b) provides that the ‘section 513C day in relation to the administration of a company is ... the day on which the administration began’. But this does not mean that the administration begins at the first moment on the day the administrators are appointed. Section 435C(1)(a) of the Act provides that the ‘administration of a company begins when an administrator of the company is appointed under section 436A, 436B or 436C’.

[160] Section 267(1)(b)(ii) does refer to ‘day’ three times. In my opinion, the focus of the section is on the ‘event’. The event is described as the event that causes a day to become a s 513C day. The day that becomes the s 513C day is the day on which the event occurs. The s 513C day is the day on which the administration began. Pursuant to s 435C(1)(a), the administration begins when an administrator is appointed. The ‘event’ referred to in s 267(1)(b)(ii), which is the focus of the provision, is therefore the appointment of the administrators.

[161] It is to be noted that s 435C(1)(a) of the Act and s 267(1)(a)(ii) and (1)(b)(ii) of the PPSA all focus on the event of the administrator being appointed.

[162]   Further, it seems one of the references to ‘day’ in s 267(1)(b)(ii) is there to clarify the reference to the ‘event’. The words ‘on a day’ in s 267(1)(b)(ii) are used to avoid expressing the section in terms such as ‘when the event occurs by virtue of which the day on which the event occurred is the s 513C day for the company’. The words ‘on a day’ are used to make it clear that ‘the day’ refers to the day on which the event occurs. The event is the event that turns ‘the day’ into a s 513C day. That event is the appointment of administrators.

[163]   What Parliament did do was enact a provision that refers to ‘when ... the event occurs’, and describe that event by reference to its effect under s 513C. Given the emphasis in s 267(1)(b)(ii) is on the event of the administrators being appointed, I consider that a security interest will vest under s 267(2) if it is unperfected, (in common parlance) at the time when the administrators are appointed.

[164]   I take further support for this construction from the vesting time in s 267(2). Under s 267(2), vesting occurs immediately before the event in s 267(1)(a) occurs. Here, the event in s 267(1)(a) is the appointment of an administrator. In my view, immediately before the appointment of the administrator means immediately before the particular time the administrator is appointed. Accordingly, vesting under s 267(2) takes place immediately before the time the administrator is appointed. Construing s 267(1)(b)(ii) as referring to security interests that are not perfected at the time administrators are appointed is consistent with the vesting time in s 267(2).”

31. The liquidator submits that the event that turns a day into a section 513C day is the appointment of an administrator. Section 468, like section 267, focuses on an event, that is, the commencement of the winding up, which is when administrators are appointed to a company pursuant to section 435C(1)(a). Accordingly, dispositions made after the appointment of the administrators are void dispositions. I agree, but the submission does not address the key question, which is what is meant by “after” in section 468. As Carpenter International illustrates, much turns on the precise language of the provision being construed.

32. In Overflow FNQ Pty Ltd (in liq) v Austwide Consumer Products Pty Ltd [2018] 1 Qd R 172; [2017] QSC 76 at [20], Henry J considered obiter that a similar construction may apply to section 588FL(7) of the Act, which provides: (emphasis added)

(7) In this section:

“critical time”, in relation to a company, means:

(a)   if the company is being wound up – when, on a day, the event occurs by virtue of which the winding-up is taken to have begun or commenced on that day under section 513A or 513B; or

(b)   in any case – when, on a day, the event occurs by virtue of which the day is the section 513C day for the company.

Having regard to the plain language of the section, I agree that it would appear that the section permits reference to the particular time on a given day when determining the “critical time”. The language of section 468 is different.

33. The liquidator relied on Guthrie as liquidator of Transconsult Australia Pty Ltd v Chandler (1991) 5 ACSR 387, where Owen J considered a precursor to section 468, being section 368 of the Companies (Western Australia) Code. At that time, section 365(2) of the Code provided: (emphasis added)

… the winding up shall be deemed to have commenced at the time of the filing of the application for the winding up.

34. In that case, on 16 February 1989 a creditors’ petition was filed. The company had written a cheque which was presented on 16 February 1989. A winding up order was later made. It was unclear whether the cheque was received before or after the creditors petition was filed, and the parties proceeded on the basis that the cheque was received after the creditors’ petition was filed. His Honour proceeded accordingly and did not construe section 368(1), which provided:

Any disposition of property of the company … made after the commencement of the winding up by the Court is, unless the Court otherwise orders, void.

35. See likewise National Acceptance Corp Pty Ltd v Benson (1988) 12 NSWLR 213 per Priestley JA at 220-221, based on identical provisions of the Companies (New South Wales) Code. But the language of section 365, including the reference to “the time of the filing of the application for the winding up”, has disappeared from the Act. The Explanatory Memorandum does not shed any light on the reason for the different wording in sections 513A, 513B and 513C, enacted by the Corporate Law Reform Act 1992 (Cth).

36. The liquidator submitted that section 468 should be read consistently with sections 437A to 437D. Section 437A provides that, while a company is under administration, the administrator has control of the company’s business, property and affairs and may carry on that business and manage that property and those affairs. The administrator does so as the company’s agent: section 437B. Former section 437C provided, “while a company is under administration, a person (other than the administrator) cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer or provisional liquidator of the company.” The liquidator submitted that the appointment of the administrator means the cessation of the director’s powers to deal with the property and only the administrator is thereafter entitled to deal with the company’s property. This submission does not compel a different construction from that which appears from the Act as construed consistently with the ActsInterpretation Act 1901 (Cth) and general case law as to the meaning of “after”.

37. It seems to me that the defendants’ submissions are correct. A disposition of property on the day that the winding up commences is not made “after” the commencement of the winding up and is not, and cannot be, void within the meaning of section 468(1) of the Corporations Act 2001 (Cth).

ORDERS

38. For these reasons, the Court makes the following orders:

1. Pursuant to rule 13.4(b) of the Uniform Civil Procedure Rules 2005, dismiss paragraphs 3 and 4 of the Amended Originating Process as against the First and Fifth Defendants.

2. Plaintiffs to pay the First and Fifth Defendants’ costs of the Interlocutory Process filed on 12 February 2019.

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Decision last updated: 25 March 2019