Lunn v Cardiff Coal Company (No 3) - [2003] NSWSC 789

NEW SOUTH WALES SUPREME COURT

CITATION: Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789

CURRENT JURISDICTION: Equity Division
Corporations List

FILE NUMBER(S): 5095/02

HEARING DATE{S): 13/08/03

JUDGMENT DATE: 29/08/2003

PARTIES:
William Herbert Lunn - Plaintiff
The Cardiff Coal Company - Defendant

JUDGMENT OF: Barrett J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:
Mr B.W. Rayment QC/Mr M.A. Ashurst - Plaintiff

SOLICITORS:
Hewitts Commercial Lawyers - Plaintiff

CATCHWORDS:
CORPORATIONS - winding up - joint stock company incorporated by statute - whether body to which Div 6 of Pt XII of Companies (New South Wales) Code applies - whether body having more than 5 members - ascertaining membership where most persons on register acknowledged or presumed dead - whether relevant Code provisions continue in force - whether winding up order is in respect of matter "arising before" 1 January 1991 - necessity for facts warranting winding up to exist both before 1 January 1991 and when order made - whether plaintiff has liability making him a contributory and therefore competent applicant

ACTS CITED:
Cardiff Coal Company's Incorporation Act of 1863
Companies (Application of Laws) Act 1981, ss.6, 11
Companies (New South Wales) Code, Div 6 of Pt XII, ss. 363, 366(2),469, 470, 471
Companies and Securities (Interpretation and Miscellaneous Provisions) (Application of Laws Act) 1981
Companies and Securities (Interpretation and Miscellaneous Provisions) (New South Wales) Code, s.9
Corporations Act 2001 (Cth), s.9
Corporations (Ancillary Provisions) Act 2001
Corporations (New South Wales) Act 1990, ss.84, 85
Corporations (Queensland) Act 1990 (Qld), s.42
Corporations (Victoria) Act 1990, s.42
Wills Probate and Administration Act 1898, s.61B(7)

DECISION:
Entitlement to winding up order pursuant to Companies (New South Wales) Code established

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

FRIDAY, 29 AUGUST 2003

5095/02 – WILLIAM HERBERT LUNN v THE CARDIFF COAL COMPANY (NO 3)

JUDGMENT

Background

This is the third attempt by Mr Lunn to obtain an order of this court that the Cardiff Coal Company be wound up. The previous attempts encountered jurisdictional problems. Two alternative propositions as to jurisdiction were advanced: first, that the Cardiff Coal Company is a “Part 5.7 body” as defined by s.9 of the Corporations Act 2001 (Cth) and therefore susceptible to winding up by order of the court under s.583 of that Act; and, second, that this court, in the exercise of general equitable jurisdiction, has power to make an order for the winding up of the Cardiff Coal Company. I concluded that neither of these jurisdictional bases for the making of a winding up order had been established: see Lunn v Cardiff Coal Company (2002) 171 FLR 430 (20 December 2002) and Lunn v Cardiff Coal Company (No 2) [2003] NSWSC 25 (10 February 2003).
Mr Lunn now acknowledges, through Mr Rayment QC, who, leading Mr Ashhurst of counsel, appeared on the most recent occasion, that the court’s inherent jurisdiction cannot be the source of the relief he seeks and that some statutory warrant for the making of a winding up order (other than Part 5.7 of the Corporations Act) must be shown. It was submitted by Mr Rayment that power to make such an order in respect of the Cardiff Coal Company is conferred by s.470 of the Companies (New South Wales) Code, as continued in force by s.85 of the Corporations (New South Wales) Act 1990.
Section 470 of the Companies (New South Wales) Code is, so far as relevant, in the following terms:
“470(1)Subject to this Division, a body to which this Division applies may be wound up under this Part, and this Part applies accordingly to such a body with such adaptations as are necessary, including the following adaptations:
(a)The principal place of business of such a body in the State shall, for all the purposes of the winding up, be deemed to be the registered office of the body;
(b)no such body shall be wound up voluntarily under this Part;
(c)the circumstances in which the body may be wound up are as follows:
(i)if the body has been dissolved, has ceased to have a place of business in the State, has a place of business in the State only for the purpose of winding up its affairs or has ceased to carry on business in the State;
(ii)if the body is unable to pay its debts;
(iii)if the Court is of opinion that it is just and equitable that the body should be wound up; …”.
The expression “body to which this Division applies” takes its meaning from s.469, the relevant part of which is:
“469(1)This Division applies to the following bodies:
(a)….
(b)a partnership, association or other body (whether corporate or unincorporated) that consists of more than 5 members.”
The references in ss.469 and 470 to “this Division” are references to Division 6 of Part XII of the Code. The reference in s.470 to “this Part” is a reference to Part XII of the Code.
If a winding up order in respect of the Cardiff Coal Company is to be made pursuant to s.470(1), two threshold questions will have to be answered favourably to Mr Lunn before the merits of the matter are addressed. The first question is whether the Cardiff Coal Company is, as referred to in s.470(1), “a body to which this Division applies”. The second question (which only arises if the first is answered in the affirmative) is whether the relevant provisions of the Code remain in force today in such a way as to be a source of jurisdiction for the court to make a winding up order.

“A body to which this Division applies”

The question whether the Cardiff Coal Company is, in terms of s.470(1), “a body to which this Division applies” must be approached by reference to the company’s founding instruments. Section 1 of an Act of the Parliament of New South Wales 27 Victoria assented to on 30 December 1863 (which may be cited as the Cardiff Coal Company’s Incorporation Act of 1863) enacted as follows:
“Such and so many persons as have already become or at any time or times hereafter shall and may in the manner provided by and subject to the rules regulations and provisions contained in the said deed of settlement become proprietors of shares of or in the capital for the time being of the said Company shall (subject nevertheless to the conditions regulations and provisions hereinafter contained) be one body politic and corporate in name and in deed by the name of the Cardiff Coal Company and by that name shall and may sue and be sued by any persons whether members of the said corporation or not and shall and may implead and be impleaded in all Courts whatsoever at law or in equity and may prefer lay and prosecute any indictment information and prosecution against any person whomsoever for any stealing embezzlement fraud forgery or other crime or offence and in all indictments informations and prosecutions it shall be lawful to state the money and goods effects bills notes securities or other property of the said Company to be the money goods effects bills notes securities or other property of the said corporation and to designate the said Company by its corporate name whenever for the purpose of any allegation of an intent to defraud or otherwise howsoever such designation shall be necessary and the said corporation shall have perpetual succession with a common seal which may be altered varied and changed from time to time at the pleasure of the said corporation.”
The reference to “the said deed of settlement” is a reference to a deed of settlement dated 1 October 1862 referred to in the preamble to the Act. The reference to “the said Company” is a reference to the joint stock company referred to in the preamble as having been “established in the Colony of New South Wales under and subject to the rules regulations and provisions contained in” that deed of settlement.
As to the first element of the question whether the Cardiff Coal Company is, in terms of s.470(1) of the Code, “a body to which this Division applies”, there can be no doubt that, because the Act of 1863 makes the proprietors for the time being and from time to time of shares in the capital of the joint stock company established by the deed of settlement “one body politic and corporate”, the body so created is “a … body (whether corporate or unincorporate)”. It remains, therefore, to consider whether the body “consists of more than 5 members”, that being a situation that must be found to exist as at the date of the application: Re Bolton Benefit Loan Society; Coop v Booth (1879) 12 ChD 679.

A body “that consists of more than 5 members”

The expression “that consists of more than 5 members” is used in s.469(1)(b) of the Code in relation to each of “partnership”, “association” and “other body”. The section therefore has in contemplation a general concept of membership involving a person’s inclusion in or adherence to the particular partnership, association or body. It must, I think, be accepted that criteria of membership in and recognition as a member under the constitution or rules of the partnership, association or body will play a significant part in determining who the “members” are for the purposes of s.469(1)(b). I say this because, while the Code does refer to the circumstances in which someone becomes a “member” of a company incorporated by registration under its own provisions (see ss.35(4) and 35(8)), it does not give any guidance as to the nature of membership of any other type of body.
In the light of s.1 of the Cardiff Coal Company’s Incorporation Act of 1863, it must be accepted that the “members” of the body corporate at a particular time are the persons who are then the “proprietors of shares of or in the capital for the time being of the said Company” (that is, the joint stock company established by the deed of settlement). It is those persons who are made “one body politic and corporate”. They are the corporators. The Act of 1863 contains one provision that assists in determining who are the proprietors of shares at any time. Section 10 is in the following terms:
“The share register of the said Company shall at all times be prima facie evidence to show who are the proprietors for the time being of the capital thereof and the number of shares held by each proprietor.”
In s.4, the Act also defines the nature of shares:
“The capital or joint stock for the time being and all the funds and property of the said corporation and the several shares therein and the profits and advantages to be derived therefrom shall be and be deemed personal estate and be transmissible accordingly subject to the regulations of the said deed of settlement.
It is also necessary to refer to certain provisions of the deed of settlement. Those relevant to the question of proprietorship of shares (reproduced in exactly the form in which they appear in the deed as tendered to the court, without any attempt to correct errors) are as follows:
“1THE several persons parties to these Presents shall and will whilst holding shares in the Capital of the Company be and continue a Joint Stock Company or Partnership for the express object of carrying on the business thereof under the name style and title of THE CARDIFF COAL COMPANY subject to the Agreements and Provisions herein contained from the day of the date of these presents until the said Company shall be dissolved under the provisions in such behalf herein contained and they the several parties hereto shall at all times so long as they shall continue Proprietors of the Company advance the interests of the same to the up most of their power
…
11AS between the Proprietors of the several shares and their respective real and personal Representatives the said Capital and all the funds and property of the Company and the share and shares of each proprietor shall be deemed personal Estate and be transmissible as such and there shall not be benefit of survivorship among the Proprietors in respect of the said Capital funds and property
12One hundred shares in the capital of the Company shall belong to and be the property of each of the said persons parties hereto of the first and second parts who shall have certificate of the said shares and an acknowledgement that the same have been fully paid up by each of the said parties respectively and the allotment of such shares shall be deemed equivalent to a payment by the said Company to the said parties of the said sum of Thirteen thousand pounds for the purchase of the said Mines as aforesaid
13The Company shall not be bound in any manner by any Trusts or equitable interests affecting any shares of the Capital standing in the name of any person or to take Notice of any such Trusts or equitable Interests but the receipts of the proprietor in whose name the shares shall stand in the Books of the Company shall notwithstanding and such Trusts or equitable interests and notice thereof to the Company be good and sufficient discharge for the money which may become payable by the Company in respect of the shares standing in the name of such proprietor and the Company shall not be bound to see to the application of the money paid upon such receipt and a transfer of the shares by such Proprietor shall all when complete be binding and conclusive against all persons claiming by virtue of such trusts or equitable interests whether or not the Company have had notice of such trusts or equitable interests Provided however that when the Company shall have had such Notice it shall be in the discretion of the Board of Directors to refuse to sanction any such transfer and to require the concurrence of the person or persons so claiming And in case such sanction shall be refused then any Deed or Instrument whereby a transfer of such shares shall be attempted shall be wholly inoperative And Provided also that when the Company shall have had such notice it shall in like manner be in the discretion of the Board of Directors refuse to pay any Dividend or bonus to the legal proprietor without the concurrence of the persons claiming in respect of such trusts or equitable interests
14No Legal a next of Kin or cestiuque trust claiming under the Will of any deceased proprietor shall as such become a proprietor of any shares of the said Capital but in all cases where legales or next of Kin of deceased a proprietor or cestiuque trusts shall be come entitled to or interests in any such shares the executors or administrators of such deceased proprietors or to procure some other persons to become proprietors in respect therefore
15The husband of any female Proprietor or the executor or administrators of any deceased proprietors or the committee of any Lunatic Proprietor may on notice in writing to the head office of the Company for the time being and production of satisfactory evidence of title either elect to become a proprietor in respect of the shares to which he shall be entitled in either of these capacities or procure any other person to become a proprietor in respect of such shares but the Trustees or assignees of any Insolvent or Bankrupt Proprietor shall not be entitled to become a Proprietor in respect of the shares of such Insolvent or Bankrupt Proprietor but shall procure some other person to become a Proprietor in respect thereof Provided always that no person shall be entitled to receive any dividends or other profits which shall be declared on the shares of such female deceased Lunatic Insolvent or Bankrupt proprietor occurring after him or her marriage death commission of Lunacy Insolvent or Bankruptcy until some person shall have become a proprietor in respect of such shares and the person who shall ultimately become a Proprietor in respect of such shares shall be entitled to such last mentioned dividends and profits and the full right and interest of and in such shares And provided further that if no person shall become a proprietor in respect of such shares within the period of two years from the date of such marriage death or Commission of Lunacy respectively then the rights herein reserve to such husband executor administrator or committee respectively shall cease and determine and it shall be lawful for the Board of Directors to sell the said shares by public auction and proclaim the proceeds together with the interest and dividends which shall have a accrued previously to such sale until the person legally entitled thereto shall establish his claim to the satisfaction of the Board of Directors and such person shall not be entitled to claim interest on the amount so retained And if no person shall have become proprietors in respect of the shares of such bankrupt or Insolvent proprietor within the period of three months after Bankruptcy or Insolvency of such Bankrupt or Insolvent proprietor it shall be competent to the Board of Directors if they shall think fit to sell the said last mentioned shares by Public Auction and the net proceeds of such sale shall in such case be paid over by the Board of Directors to the said Trustee or assignee for the benefit of the said Insolvent or Bankrupt
16All persons claiming any shares by transmission or claiming a right to procure another person to be a proprietor according to the provisions of the last preceding Clause shall before he shall be recognized as a proprietor of such shares or before he shall be permitted he procure another person to become a proprietor as the case may require and every Guardian Committee of a Lunatic or other person claiming a right to act in a representative character on behalf of a proprietor shall before he shall be permitted to become a proprietor or receive any Dividends or transfer any shares or exercise any of the rights and privileged conferred by this Deed authenticate such transmission or right by a Declaration in writing setting forth the material facts which Declaration shall be made and signed by some credible person before some Justice of the Peace or Actuary Public and shall be subject to the consideration and approval of the Board of Directors
17If such transmission be by virtue of the marriage of a female proprietor the declaration shall contain a Copy of the Register of such Marriage or other particulars of the celebration thereof and shall declare the identity of the Wife with the holder of such shares and if such transmission have taken place by virtue of any testamentary instrument or by intestacy the probate of the will or the Letter of Administration or an Official Extract therefrom shall together with such declaration be produced to the Secretary of the Company and if such right be claimed in consequence of insolvency or bankruptcy or of any appointment as a Guardian or as a Committee of a Lunatic a Certificate signed by the Commissioner of Bankrupts or Insolvents or the Master in Equity as the case may require shall together with such declaration be produced and left with the Secretary And if such right be claimed by virtue of any power of Attorney the power of Attorney shall be so produced and left and upon such a production and the due execution of these presents in either of the cases aforesaid the shares shall be transferred in the books of the Company to the name of the person entitled to become a proprietor in respect thereof
18Subject to the provisions and restrictions herein contained and to the approbation of the Board of Directors every separate share in the said Capital but not any fractional part of a share shall be transferable and assignable by the proprietor of such share to any other person as fully and effectually as any other interest is by law assignable so as such assignment and transfer be made in such in a manner and form as the Board of Directors shall from time to time settle and determine and the execution thereof be duly attested to the satisfaction of the said Board Provided that a Body Corporate shall hold any shares in the said Capital Provided also that no shares shall be transferred after any call shall have been made by the board of directors until the amount such call in respect of such shares with the Interest due thereon if any shall have been paid
19ON the completion of the transfer of any share and the execution of this deed or a duplicate thereof by the person to whom the same shall be transferred the previous holder of such shares shall as between the proprietors be exonerated and released from all claims demands obligations and liabilities in respect of such shares and from all further observance and performance of any Covenants Conditions stipulations or Agreements herein contained or which may be contained in any supplementary deed by law or regulation of the Company And the person to whom such transfer shall be made shall have the same privileges and be subject to the same liabilities as the original proprietor
20Every Deed or Instrument of transfer and every other Deed or Instrument in writing on which the right of any proprietor may be founded or an attested Copy of every such last mentioned deed or instrument of transfer shall be deposited and kept at the Office of the Company and no such Deed or Instrument of transfer shall be valid or effectual until so deposited But every such proprietor shall be entitled at all times by writing under his hand to require the same to be produced and shown forth to himself or to such person he shall require in payment of all reasonable costs and charges attending the production and showing forth of the same
21Every person to whom any original new or forfeited shares shall be allotted or assigned or to whom any shares shall be transferred shall within six Months after the date of such allotment assignment or transfer execute this Deed or a Duplicate thereof unless he shall have previously executed it in respect of shares held by him at the date of such Allotment assignment or transfer in which case such execution shall take effect in respect of the newly acquired shares of such person and shall apply to the same fully and effectively notwithstanding that such person shall afterwards sell and transfer the Shares in respect of which he originally executed the Deed and in default of such execution within the time limited the shares in respect of which default shall have been made shall be absolutely forfeited to the Company PROVIDED nevertheless that the Board of Directors may if they think fit upon the application of the party to whom such Allotment assignment or transfer shall have been made discharge the shares from forfeiture and restore the same or any part thereof to such proprietor on such terms as the Board of Directors may think proper and in the event of such discharge the forfeiture shall upon such execution of this deed or a duplicate thereof as aforesaid be held not to have accrued and the rights and liabilities of the proprietor making default shall be deemed not to have been in anywise affected PROVIDED ALSO that in the case of a transfer of shares the transferor shall until such execution of this Deed by the transferee or until such forfeiture of his shares transferred be deemed and taken to be the continuing proprietor of the same except only as against the transferee and in respect of the receipt of dividends and the disposal of the shares
22All shares forfeited in pursuance of any provision herein contained shall in a reasonable time after such forfeiture in the discretion of the Directors be disposed of by public sale or private Contract to such persons as may be willing to accept the same and to execute these presents and thereupon a transfer of assignment of such shares shall be made by the direction of the Board to the purchaser thereof by the Secretary of the Company or by such Director as the Board of Director may appoint PROVIDED nevertheless that it shall be lawful to withhold any such forfeited shares from immediate sale and to retain the same for reasonable time in every case in which it is hereby made competent to the Board of Directors to discharge such forfeiture and in which they shall think it probable that an application for such discharge will be made by the proprietor or late proprietor and that it would be proper to discharge the same upon such application being made and in case of forfeiture for non payment of Calls the proceeds arising from any such sale shall be applied in payment of the calls in respect whereof default shall have been made and the surplus thereof if any after deducting the expenses of such sale shall be placed to the credit of such defaulter with the Company
…
26The name and place of abode of every proprietor with the number of shares held by him shall from time to time be entered in a Book to be kept for the purpose to be called the ‘Share Register’ and every proprietor who may change his name or place of abode or being a female shall in any and the assignee or trustee of every proprietor who shall become bankrupt or insolvent and the committee of every proprietor who shall be duly found a Lunatic and the executor or administrator of every proprietor who shall die shall immediately upon and after any of the said events leave a written notice at the head office of the Company stating his or her name or new name and place of abode and when a female proprietor shall have been married then the name and place of abode of her husband And the Share Register shall be open together the inspection of the several proprietors at all reasonable times”

Who are the members of the Cardiff Coal Company?

The share register maintained by the Cardiff Coal Company under clause 26 of the deed of settlement is in evidence. It shows that entries were made on 22 occasions other than to recognise transfers, there having apparently been 22 allotments of shares. Those 22 entries – and, in each case, subsequent entries in respect of the shares the subject of the original entry – were as follows:
1.100 promoters shares entered in the name of James Lindsay on 1 October 1862: transferred to Geo L Lindsay in 1909; recorded as “Est G L Lindsay” in 1911; transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
2.100 promoters shares entered in the name of John Wood on 4 November 1885: transferred to J R Wood in 1910; transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
3.100 promoters shares entered in the name of Andrew Kirkaldy on 1 October 1862: transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
4.100 promoters shares entered in the name of John Barton on 1 October 1862: transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
5.100 promoters shares entered in the name of James Lunn on 23 September 1885: transferred to L Blackwood in 1916; transferred to Belmont Colliery Company Proprietary Limited on 6 April 1938.
6.100 promoters shares entered in the name of Alexr Henderson on 1 October 1862: transferred to Agnes Henderson in 1909; transferred to “A W Henderson & Ors” in 1916.
50 promoters shares entered in the name of Richd Henderson on 1 October 1862: transferred to C Henderson in 1909; transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
8.100 promoters shares entered in the name of Robt Elliott on 1 October 1862: transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
9.100 promoters shares entered in the name of George Hutchison on 1 October 1862: transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
10.300 promoters shares entered in the name of Jane Darvall on 29 July 1885: transferred to A W Darvall in 1900; recorded as “Est A W Darvall” in 1910; transferred to L Blackwood in 1917; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
11.25 promoters shares entered in the name of Michael Fenwick on 7 January 1863: transferred to Thos Fenwick in 1909.
12.25 promoters shares entered in the name of Geo Stone on 24 April 1863: transferred to Geo Stone and R Stone in 1909; transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
13.100 promoters shares entered in the name of L E Threlkeld on 1 October 1862: recorded as “Est L E Threlkeld” in 1909.
14.175 subscribers shares entered in the names of A W Allen, G B Allen, R C Allen and M Allen on 4 November 1885: transferred to L Blackwood on 6 April 1938; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
15.150 subscribers shares entered in the name of Jane Darvall as to 100 on 1 July 1885 and as to 50 on 29 July 1885: transferred to A W Darvall in 1900; recorded as “Est A W Darvall” in 1910; transferred to L Blackwood in 1917; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
16.25 subscribers shares entered in the name of Josiah Mullens on 13 March 1863: transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
17.50 subscribers shares entered in the name of E Apps Smith as to 25 on 13 March 1863 and as to a further 25 on 26 May 1863.
18.100 subscribers shares entered in the name of E A Murray on 29 July 1885: transferred to L Blackwood in 1916; transferred to Belmont Colliery Pty Limited on 6 April 1938.
19.50 subscribers shares entered in the names of Elizabeth Bell and Richard Holdsworth on 23 September 1885: transferred to L Blackwood in 1917; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
20.50 subscribers shares entered in the name of J C Tucker as to 10 on 11 September 1863 and as to 40 on 8 April 1864: transferred to C C Tucker in 1909; transferred to L Blackwood in 1916; transferred to Belmont Colliery Proprietary Limited on 6 April 1938.
21.50 subscribers shares entered in the name of Geo A Lloyd on 20 April 1886: recorded as “Est G A Lloyd” in 1910.
22.25 subscribers shares entered in the name of Thos S Bollard in 1863 (no date): transferred to Wm Bullard in 1909; recorded as “Est Wm Bullard” in 1938.
There is, in addition, an entry in respect of William Herbert Lunn, the present plaintiff, relating to 100 promoters shares shown as transferred from Belmont Colliery Proprietary Limited “per order of Hulme J dated 6th Sept 1996”.
Based on the foregoing analysis, the persons now appearing in the share register as holders of shares are:
A.William Herbert Lunn, the present plaintiff, whose name was entered in the register in 1996.
B.Belmont Colliery Proprietary Limited, the name of which was entered in the register in 1938.
C.“Est Wm Bullard”, under an entry made in 1938.
D.“A W Henderson & Ors”, under an entry made in 1916.
E.“Est G A Lloyd”, under an entry made in 1910.
F.            “Thos Fenwick”, under an entry made in 1909.
G.           “Est L E Threlkeld”, under an entry made in 1909.
H.           “E Apps Smith”, under entries made in 1863.
No doubt or difficulty arises in relation to the first two entries (A and B), so far as the message appearing on the face of the register is concerned. Mr Lunn is living and has been recognised by order of the court as having the status of a holder of 100 promoters shares. Belmont Colliery Proprietary Limited, being itself a body corporate, must be presumed to exist in the absence of evidence that it has been dissolved.
In relation to items C, E and G (recording “Est”, or the estate of a deceased person), the entries seem to recognise no more than the death of the person named as holder in an earlier entry. In the case of “Est Wm Bullard”, it appears that Wm Bullard himself went on to the register in 1909, so that it should be inferred that he died some time between 1909 and 1938. In the case of “Est G A Lloyd”, the corresponding inference is that death occurred between 1886 and 1910. In the case of “Est L E Threlkeld”, the inference is that death occurred between 1862 and 1909.
Item D – “A W Henderson & Ors” – is presumably intended to indicate that several persons were the holders of the parcel of shares concerned. But there is no way of knowing how many “Ors” there were or, indeed, that there were any identifiable holders other than A W Henderson. The only safe course is, I think, to recognise that A W Henderson was entered as a holder in 1916.
Item H (“E Apps Smith”), taken at face value, indicates that a person who became a member 140 years ago is today a member. Principles discussed by Dixon J in Axon v Axon (1937) 59 CLR 395 at 404-5 amply justify the inference that E Apps Smith is no longer living. Item F, taken at face value, indicates that a person who became a member 94 years ago is today a member. Bearing in mind that the disability of infancy subsisted in 1909 until age 21, the virtually irresistible likelihood is that the “Thos Fenwick” registered in 1909 was born before 1889. He, by reference to the same principles, should be presumed to be now dead.
In summary, therefore, the register contains the names of two persons (Mr Lunn and Belmont Colliery Proprietary Limited) clearly now in existence, three persons (Bullard, Lloyd and Threlkeld) acknowledged upon the face of the register to have died, two persons (Apps Smith and Fenwick) who, for reasons stated, should be presumed to be dead and one person (Henderson) who, if he became a shareholder at age 21, must be either more than 108 years old or dead.

Share register entries recognising holdings of persons now dead

With the register in this state and giving full effect to the prima facie position dictated by s.10 of the Act of 1863, it will be possible to say that there are more than five (that is, at least six) members of the Cardiff Coal Company only if it is correct to regard as a member today either persons known or presumed to be dead (being so many of Bullard, Lloyd, Fenwick, Threlkeld and Apps Smith as are necessary to bring the number to six) or some successor of each such person. This leads to the question whether a deceased holder of shares in a company of this kind is properly regarded as a member.
A person no longer in existence is not a member of anything. In the case of an unincorporated association such as a club, there can be no doubt that the death of a person who is a member means that he or she is no longer a member; likewise in the case of a partnership, although rights of property will devolve upon the deceased’s partner’s legal personal representative. By analogy, it might be expected that upon the death of a member of a company, the membership of that person would come to an end, but with his or her shares passing to the legal personal representative who thereby attained a position from which the legal personal representative might claim membership and be admitted accordingly. Such a sequence of events seems to be envisaged by the deed of settlement of the Cardiff Coal Company. Clause 11 (like s.4 of the Act of 1863) says that shares are personal property and transmissible accordingly. By clause 14, a legal personal representative, next of kin or beneficiary claiming under the will of a deceased proprietor is not, by virtue of that position, a proprietor but is required by clause 26 to give notice to the company, and upon the observance of certain formalities, may become a proprietor (or cause someone else to become a proprietor) pursuant to clauses 16 and 17.
Any impression thus created that the legal personal representative of a deceased proprietor is not to be regarded as himself a proprietor until recorded as such requires reconsideration in the light of the judgment of Dixon J (sitting alone and exercising the original jurisdiction of the High Court) in A L Campbell & Co Pty Ltd v Federal Commissioner of Taxation (1951) 82 CLR 452. Dixon J began his analysis by observing:
“But the case of the registered shareholder who dies has caused a difficulty which company law has not found it possible to solve by adopting the simple position that there is no shareholder in respect of the shares, no shareholder because the person who is registered is dead and the transmittee is not registered.”
Dixon J then referred to a case involving circumstances that had arisen before the (English) Companies Act 1862 in which the status of a deceased shareholder had arisen. Because of parallels between the form of organisation in that case and that of the Cardiff Coal Company, it is appropriate to look at the case in detail. It is In re Agriculturist Cattle Insurance Co (Baird’s Case) (1870) LR 5 Ch App 725.
Baird’s case concerned a joint stock company that was not incorporated. The provisions of its deed of settlement were in many ways similar to those of the Cardiff Coal Company’s deed. In particular, it was provided that the executors or administrators of deceased shareholders should not, in that capacity, be holders of shares or entitled to receive dividends which should remain in suspense until someone became the holder of the relevant shares. It was also provided that legal personal representatives might become shareholders themselves or procure someone else to become shareholders, subject to production of the relevant probates and letters of administration. The matter in issue was the status of the executrix of the will of a deceased shareholder and, in particular, her liability as a contributory in consequence of a winding up that commenced after the shareholder’s death.
Sir W M James LJ referred to the general law of partnership under which a person ceases to be a partner on death and cannot be under any liability in respect of subsequent dealing and transactions of the surviving partners. But, as his Lordship observed, partnerships are based on mutual trust and confidence of each partner in the skill, knowledge and integrity of each other, so that a partner’s executor cannot claim to succeed the partner unless the other partners consent. Joint stock companies were seen as standing on a different footing:
“A joint stock company is not an agreement between a great many persons that they will be co-partners, but is an agreement between the owners of shares, or the owners of stock, so that they or their duly recognized assigns, the owners of the shares for the time being, whoever they may be, shall be and continue an association together, sharing profits and bearing losses. No shareholder in a joint stock company is, in the legal sense of the word, any more a partner than the owner of bank stock is; he may not have the same limit of liability, but in every other respect he is the same; he has the same right to take part in public meetings of the body, he has the same right to elect or remove directors, he has the same right to vote for or against the resolutions of the body, he has the same right to such dividends as may be declared, and he has the same right to dispose of his share as a separate and distinct piece of property, and no other rights in or over the association, its assets, or its transactions, and if he is liable under any contracts or obligation, or in respect of any act of the body, it is not because they are the contracts, obligations, or acts of his partners or partner, but because they are the contracts, obligations, and act of the quasi body corporate (under present legislation the actual body corporate), by its properly constituted agents. It may be, and generally is, no doubt, that the agents, the directors, are shareholders, and in that sense partners, but it is certain that there may be a board of directors perfectly competent to bind the whole body, although every one of them may have disqualified himself by parting with every share.”
The significance of this form of organisation in case of the death of a party was then stated:
“Starting then, with this view of the relation which exists between the associates in a joint stock adventure, the presumption is that the death of a shareholder makes not the slightest difference, either in right or liability; that the executor of a deceased shareholder, who succeeds in point of property to the share, takes it (of course in his executorial character) on exactly the same terms and conditions as every other owner of a share – equal benefit, equal liability; and the deed has therefore to be scrutinized, not to see whether it gives or creates such equal benefit and liability, but whether it takes away the one or releases the other.”
Turning to the deed of settlement before him, Sir W M James LJ said, in relation to executors, as distinct from living members:
“The only difference made with respect to executors is that, although they are talked of throughout as ‘holders of shares’, they are talked of as only having a right to become ‘shareholders’, and they are not actually to receive dividends, or to exercise any right in respect of their shares until they shall have either got themselves or procured other persons to become formally registered as shareholders, having duly bound themselves by covenant to the articles of association.
The object of these provisions is so plain, so reasonable, so natural, that it is impossible to draw from them any implication adverse to the conclusions to be drawn from the nature of the association or the rest of the deed. The dead shareholder remains – that is, his estate remains – a member, but the association would of course like something more than a dead man or an estate; they would like a living member, actually bound by personal covenant like all the others, and so they put this pressure on the executors: ‘You cannot actually draw out the property, you cannot vote, you cannot exercise any other right’; but they do not forfeit the shares, they do not absorb them, they do not even suspend the dividends; the share remains untouched, all dividends declared are declared upon the executor’s share like all others; whenever he chooses to deal with the shares the dividends are there for him, and if the company were to be wound up and to wind up prosperously and not disastrously, those dividends would have to be paid to the executor before any distribution of capital, and in the final distribution of capital the executor’s share would be credited with the same quota as every other holder’s share. It appears to me, therefore, that on every principle of equity, as well as on the plain construction of the deed, it is impossible to draw any distinction between the dead shareholder’s estate and the living shareholders’, as to the extent and measure of liability.”
In A L Campbell & Co Pty Ltd (above), Dixon J went on to review a number of other cases concerning the consequences of the death of shareholders in companies and continued:
“I have dealt at length with the foregoing cases because they show, as it appears to me, that when statutory provisions and articles attaching rights or privileges and liabilities or duties to shares employ for the purpose the expressions ‘member’ or ‘shareholder’ they are not to be construed as excluding the shares of a deceased registered member because there is no personal representative who is on the register. If the appellant company had declared a dividend as on 30th June 1946 it would have been bound to include the shares of the deceased and to appropriate a sum representing the dividend on those shares for payment to a properly constituted representative of her estate. Article 86 of the articles of association enables the directors to declare a dividend to be paid to the members in proportion to amounts paid up on the shares held by them respectively. But the authorities to which I have referred show that the use of the word ‘member’ would not exclude her estate from the dividend.”
It seems to me that this extended concept of “member” must be applied to the Cardiff Coal Company, with the result that it must be recognised that some person is a “member” by virtue of the shares appearing in the share register in respect of each of “Est Wm Bullard”, “Est G A Lloyd” and “Est L E Threlkeld”, as well as the shares appearing in respect of each of “E Apps Smith” and “Thos Fenwick” who, for reasons stated, must be presumed dead. There is no evidence as to the identity of the legal personal representative of any of these persons or, indeed, that there was a grant of probate or letters of administration. Nor is there evidence of devolution upon persons entitled upon intestacy including, perhaps, the Crown pursuant to s.61B(7) of the Wills Probate and Administration Act 1898. But none of that matters. The relevant point, for present purposes, is that there must exist some person or entity who, in accordance with the principles discussed in Baird’s case and A L Campell & Co Pty Ltd is capable of establishing in relation to each parcel of shares such a claim as will warrant the person’s being regarded as a “member” of the Cardiff Coal Company.
For that reason, I consider that, so far as the position shown in the share register is concerned, the company must be regarded as a body that “consists of more than 5 members” as referred to in s.469(1)(b) of the Companies (New South Wales) Code.
The position thus derived from the register must, however, be examined in the light of findings made in proceedings which culminated in the judgment of the Court of Appeal (Handley JA, Sheller JA and Sheppard AJA) in Savage v Lunn (unreported, NSWCA, 9 March 1998). It is unnecessary to recite those findings in detail. It is sufficient to note that it was held both at first instance and on appeal that certain transfers of shares and other documents material to the pattern of ownership reflected on the face of the register before 1996 were forged, although by whom and to what extent was not established. It was on that basis that the 1996 order that Mr Lunn be recorded as a proprietor was made.

For present purposes, however, I do not need to delve into those matters. If the transfers to Belmont Colliery Company Proprietary Limited in 1938 or those to L Blackwood in 1916 (or both) were (or were dependent on) forgeries and are void, the only consequence in relation to the shares in question is that the register is subject to rectification. Other persons – probably successors of persons now dead – would be entered. The position is therefore no different from that pertaining in relation to the several persons now dead (or presumed to be dead) currently named in the register.
Whatever may have been the true position in relation to forgeries and their effect, the conclusion remains that the Cardiff Coal Company today has more than five members and is, in terms of s.470 of the Companies (New South Wales) Code, “a body to which this Division applies”.

The continuing effect of s.470 of the Companies (New South Wales) Code

Having determined that the Cardiff Coal Company is a body to which Division 6 of Part XII of the Companies (New South Wales) Code applies, I proceed to the question whether the provisions of the Code have continued in operation in such a way as to be the source of a power for the court to make a winding up order.
The Companies (New South Wales) Code was created by the Companies (Application of Laws) Act 1981 which, in s.6, enacted that the provisions of the Companies Act 1981 (Cth), other than ss.1, 2, 3 and 4, applied, as if amended as set out in Schedule 1 and subject to and in accordance with the Companies and Securities (Interpretation and Miscellaneous Provisions) (Application of Laws Act) 1981, as laws of New South Wales. Section 11 of the Companies (Application of Laws) Act 1981 empowered the Minister to authorise the publication of a document containing the provisions of the Commonwealth Act so applied and provided that that document might be cited as the “Companies (New South Wales) Code”.
The Companies (New South Wales) Code was, by s.84 of the Corporations (New South Wales) Act 1990, designated one of the “co-operative scheme laws” for the purposes of that Act. Section 85, as enacted in 1990, was as follows:
“85(1) [Continued operation of Codes] This section provides for the national scheme laws of this jurisdiction to supersede the co-operative scheme laws, which are to continue to operate of their own force only in relation to:
(a)matters arising before the commencement of this section; and
(b)matters arising, directly or indirectly, out of such matters,
in so far as the national scheme laws do not deal with those matters.
85(2)[National scheme law prevails] Where a co-operative scheme law is inconsistent with a national scheme law of this jurisdiction, the national scheme law prevails and, to the extent of the inconsistency, the co-operative scheme law does not operate.
85(3) [Meaning of inconsistency] For the purposes of subsection (2), a co-operative scheme law is inconsistent with a national scheme law if it would be inconsistent within the meaning of section 109 of the Constitution of Commonwealth of Australia if the national scheme law were an Act of the Commonwealth.”
The present form of s.85, following amendment by the Corporations (Ancillary Provisions) Act 2001, is as follows:
“85. National scheme laws prevail over co-operative scheme laws
(1)This section provides for the national scheme laws of this jurisdiction to supersede the co-operative scheme laws, which are to continue to operate of their own force only in relation to:
(a)matters arising before the commencement of this section, and
(b)matters arising, directly or indirectly, out of such matters,
in so far as the national scheme laws or the Corporations legislation do not deal with those matters.
(2)Where a co-operative scheme law is inconsistent with a national scheme law of this jurisdiction, the national scheme law prevails and, to the extent of the inconsistency, the co-operative scheme law does not operate.
(3)For the purposes of subsection (2), a co-operative scheme law is inconsistent with a national scheme law if it would be inconsistent within the meaning of section 109 of the Constitution of the Commonwealth of Australia if the national scheme law were an Act of the Commonwealth.
(4) In this section:
‘Corporations legislation’ means the Corporations legislation to which Part 1.1A of the Corporations Act 2001 of the Commonwealth applies.”
The reference in s.85 to “the commencement of this section” is a reference to 1 January 1991. The references to a “national scheme law” is a reference the Corporations (New South Wales) Act itself, the Corporations Law of New South Wales and the ASC Law of New South Wales.
The effect of s.85, as it now exists, is to cause the Companies (New South Wales) Code, as one of the “co-operative scheme laws”, to continue in operation of its own force only in relation to a “matter” that “arose” before 1 January 1991 (but only to the extent that the “national scheme laws” and the Corporations Act 2001 (Cth) do not “deal with” the matter), as well as in relation to a matter “arising, directly or indirectly, from” such a matter. Leaving aside the question whether a “national scheme law” or the Corporations Act 2001 (Cth) operates in a relevant way, it follows that it will be open to the court to make a winding up order in respect of the Cardiff Coal Company by reference to s.470 of the Companies (New South Wales) Code if, in so doing, it is dealing, pursuant to and in accordance with the Code, with a “matter” that “arose” before 1 January 1991 or a “matter” arising directly or indirectly from such a matter.

“Matters arising”

The meaning of “matters arising before” 1 January 1991, for the purposes of s.85 of the Corporations (Victoria) Act 1990 (corresponding with the New South Wales section), was considered by McLelland J in National Australia Bank Ltd v Australian Securities Commission (1991) 4 ACSR 453. His Honour held that reinstatement of the registration of a company that had been deregistered and dissolved under the Companies (Victoria) Code in 1990 was a “matter arising, directly or indirectly, out of” a matter “arising before” 1 January 1991, so that the 1990 deregistration and dissolution represented a matter of the latter kind. The prior deregistration and dissolution constituted the relevant matter arising before 1 January 1991. The same approach to the same subject matter was taken under the present form of s.85 by Senior Master Mahony in City West Water Ltd v Mr D Investments Pty Ltd (2002) 43 ACSR 622.
Deregistration and dissolution of a company, are of course, a readily identifiable composite event, clearly fixed in time. There is no such definitive event in the present case. The submission made by Mr Rayment on behalf of Mr Lunn is that the relevant “matter” is the collection of factual circumstances justifying the making of a winding up order. I defer, for the moment, any examination of what those circumstances are (or are said to be) in this particular case. At this stage, I address only the question whether, if a given set of circumstances warranting winding up can be shown to have existed before 1 January 1991 in relation to a body to which Division 6 of Part XII of the Code applies, the making of a winding up order can be said to be justified by that Division, as continued in force by s.85, by the existence of those circumstances.
The first thing to be said about this is that it would have to be shown that the circumstances in question existed not only before 1 January 1991 but also at the time of the winding up order. Continuity would be necessary in order for it to be said that there existed both a “matter” of the kind with which s.85 is concerned and grounds for the making of the order at the time it was made. But, in any event, can the existence of the particular set of circumstances or state of affairs (or, perhaps more accurately, its having come into existence) before 1 January 1991 properly be said to be a “matter arising” before that date?
In both Acton Engineering Pty Ltd v Campbell (1991) 31 FCR 1 and Avamure Pty Ltd v Fletcher Jones & Staff Pty Ltd (1996) 22 ACSR 256, consideration was given to the meaning of “civil matters arising under the Corporations Law”, appearing in, respectively s.42 of the Corporations (Queensland) Act 1990 (Qld) and s.42 of the Corporations (Victoria) Act 1990 (Vic). In the first case, Lockhart J (with whom Black CJ and Davies J agreed) said:
“The word ‘matter’ is of wide import. In my opinion a matter arising under the Corporations Law is ‘a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy’: see Fencott v Muller (1983) 152 CLR 570 at 603, per Mason, Murphy, Brennan and Deane JJ. See also Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Crouch v Commissioner for Railways (Qld) (1985) 159 CLR 22 at 37-38, per Mason, Wilson, Brennan, Deane and Dawson JJ; and J Quick & RR Garran, The Annotated Constitution of the Australian Commonwealth, p 765.”
That meaning of “matter”, for the purposes of the corresponding provision, was accepted by the Victorian Court of Appeal in Avamure.
In Fencott v Muller (1983) 152 CLR 570, referred to in both the cases I have just mentioned, it was also said of “matter” that it “does not mean a legal proceeding, but rather the subject matter for determination in a legal proceeding”. The appropriateness of this approach to s.42 of the Corporations (Queensland) Act 1990 (Qld) was also accepted by the Queensland Court of Appeal in Enterprise Sheet Metal Pty Ltd v Queensland Steel and Sheet Pty Ltd [1995] 1 QdR 511. Furthermore, the view was expressed by Shepherdson J in Matthews v Ross Nielson Investments Pty Ltd [1998] 2 QdR 255 that those approaches to the meaning of “matter” were appropriate also in the context of the Queensland equivalent of s.85 of the Corporations (New South Wales) Act.
In that context, of course, the word “arising” is used, in relation to “matter”, not to indicate an origin or source (“arising from”) but in a temporal sense (“arising before”). But, in light of the broad meaning given to “matter”, it should be accepted, in relation to s.85, that a “matter” will properly be said to “arise” at the time when circumstances come into existence which would ground some action (whether or not a legal proceeding) under or by reference to a provision of the Companies (New South Wales) Code. It is the existence and content of the circumstances, coupled with the susceptibility of the circumstances to be affected by or dealt with under the Code, that seems to me to make them a “matter” that is not only one “arising before” 1 January 1991 but also one in respect of which the Code can “continue to operate” as referred to in s.85 of the Corporations (New South Wales) Act. It follows that, if circumstances came into existence before 1 January 1991 and were circumstances upon or in relation to which a provision of the Companies (New South Wales) Code was capable of operating, there existed, at that time, a matter of the kind referred to in s.85.
On this basis, I am of the opinion that if there existed, before 1 January 1991, a set of circumstances or state of affairs that would have formed the basis for the making of a winding up order in relation to the Cardiff Coal Company at that time, the set of circumstances or state of affairs is properly regarded as a “matter arising” before 1 January 1991 for the purposes of s.85.

Is the “matter arising” otherwise dealt with?

From this point, it is necessary to address the next question posed by s.85, namely, whether the “national scheme laws” or the Corporations Act 2001 (Cth) can be said to “deal with” a “matter” of the kind to which I have just referred. This question may be disposed of briefly. In my first judgment (Lunn v Cardiff Coal Company (2002) 171 FLR 430), I concluded that there is no provision of the Corporations Act under which a winding up order in respect of the Cardiff Coal Company may be made; also that the Corporations Law of New South Wales contained no such provision.
For the purposes of s.85 of the Corporations (New South Wales) Act, therefore, it must be concluded that the “matter” consisting of the collection of circumstances existing before 1 January 1991 and warranting the making of a winding up order (assuming such circumstances actually to have existed) is a “matter” not dealt with by either the Corporations Law of New South Wales or the CorporationsAct 2001 (Cth).

Overall conclusion on s.470

The Cardiff Coal Company has been shown to be “a body to which this Division applies”, as referred to in s.470 of the Companies (New South Wales) Code. In addition, I am satisfied that if there existed, before 1 January 1991, circumstances warranting the making, by reference to s.470, of a winding up order in relation to the Cardiff Coal Company, those circumstances are to be regarded as constituting a “matter” of the kind referred to in s.85(1)(a) of the Corporations (New South Wales) Act.
It follows from these conclusions that s.470 of the Code is today a source of jurisdiction for the making of a winding up order in respect of the Cardiff Coal Company, subject to one important proviso: any order must, of necessity, be sourced in or proceed from the “matter” that arose before 1 January 1991. This means that, for a winding up order to be made, it must be clearly seen that the order is a response to and based on the circumstances that were in existence before 1 January 1991. That is necessary as a matter of jurisdiction. In addition, and as a matter of proper exercise of jurisdiction, it must also be clearly seen that the making of the order is justified by the circumstances existing when it is made. It was not submitted on behalf of Mr Lunn – indeed, it was acknowledged that it could not be submitted – that the court could today make an order with respect to a “matter” pre-dating 1 January 1991 and warranting the making of the order at that time unless that basis for the making of the order continued to exist at the time of its making.

The application for winding up

With the jurisdictional aspect thus disposed of, I must turn to the substance of Mr Lunn’s claim for an order under s.470 of the Companies (New South Wales) Code for the winding up of the Cardiff Coal Company.
The application is advanced on the ground stated in s.470(1)(c)(iii). That section says that a relevant body may be wound up under Part XII of the Code “if the Court is of opinion that it is just and equitable that the body should be wound up”. The reference to “the Court” is, by virtue of s.9 of the Companies and Securities (Interpretation and Miscellaneous Provisions) (New South Wales) Code (which is itself a “co-operative scheme law” and, it seems to me, is, for present purposes, also continued in force by s.85 of the Corporations (New South Wales) Act), a reference to “the Supreme Court of New South Wales”. A winding up order will therefore be justified if this court, having regard to circumstances existing before 1 January 1991 and still existing today, forms such an opinion.
Before turning to that question, I should say something briefly about the way in which s.470 works. It does not, in direct terms, empower the court to make a winding up order. It merely says that a body of the relevant kind “may be wound up under this Part” (being the whole of Part XII which includes Division 2, “Winding Up by the Court”), and that “this Part applies accordingly to such a body with such adaptations as are necessary”, plus the particular adaptations in s.470(1)(a) to (c). That, it seems to me, must mean that the court can make a winding up order under Division 2 of Part XII in respect of a body to which Division 6 of Part XII applies in the same way as if the body were a company to which Division 2 of Part XII had direct application. While adaptations are mentioned in s.470, there is no explicit power for the court to make orders effecting or decreeing such adaptations. Some of the distinct features of this particular form of winding up were mentioned by McLelland J in Re David Jones Mutual Aid Society (1984) 9 ACLR 130.

Mr Lunn’s standing

Under Division 2 of Part XII, competent applicants for a winding up order in respect of a company include “a contributory”: see s.363(1)(c). The term “contributory” is, by s.5(1), given a special meaning in relation to “a body corporate to which Division 6 of Part XII applies”. I have already indicated that the Cardiff Coal Company is a “body” to which Division 6 of Part XII applies. That, plus the fact that the Cardiff Coal Company’s Incorporation Act of 1863 clearly makes it a body corporate, means that the Cardiff Coal Company is “a body corporate to which Division 6 of Part XII applies”. That being so, a person will properly be regarded as a “contributory” of the Cardiff Coal Company if the person is within subparagraph (i) or (ii) of paragraph (b) of the s.5(1) definition of “contributory”:
“(i)a person who is a contributory by virtue of section 471; and
(ii)before a final determination of the persons who are contributories by virtue of sub-paragraph (i) – a person alleged to be such a contributory.”
Attention is thus directed to s.471(1) which is in the following terms:
“On a body to which this Division applies being wound up, every person -
(a)who is liable to pay or contribute the payment of -
(i)any debt or liability of the body;

any sum for the adjustment of the rights of the members among themselves; or
(iii)the costs and expenses of winding up; or
(b)where the body has been dissolved in the place in which it was formed or incorporated – who immediately before the dissolution was so liable,
is a contributory and every contributory is liable to contribute to the property of the body all sums due from him in respect of any such liability.”

The question whether Mr Lunn occupies such a position in relation to the Cardiff Coal Company must be determined by the company’s constitutive documents. Section 12 of the Cardiff Coal Company’s Interpretation Act of 1863 is as follows:
“In the event of the assets of the corporation being insufficient to meet its engagements the shareholders shall in addition to the amount of their subscribed shares in the capital of the said corporation be responsible to the extent only of a sum equal to the amount of their said shares.”
By imposing this limit, s.12 recognises that the shareholders of the Cardiff Coal Company are liable to meet the engagements of the company. If it were not so, the limit would be meaningless. Having regard to s.12, each shareholder is, in terms of s.471(1)(a)(i) of the Companies (New South Wales) Code, a person “who is liable to pay or contribute the payment of … any debt or liability of the body”.
Mr Lunn, who is undoubtedly a shareholder, is accordingly a “contributory” of the Cardiff Coal Company with status accordingly under s.363 of the Code to apply for a winding up order.

The just and equitable ground

I may say at once in relation to s.470(1)(c)(iii)that, having regard to circumstances existing today, I am satisfied that it is just and equitable that the Cardiff Coal Company be wound up. I said as much in my first judgment: (at [33]). The reason for that conclusion was also stated (at [5]):
“The company has, for many years, been dormant. As a result of proceedings instituted in 1989, orders were made in 1996 for the appointment of a receiver of the property of CCC. This occurred in circumstances where it appeared that, in or about 1917, persons best described as interlopers had, through forged transfers, ostensibly come to hold shares and they or their successors had also purportedly been appointed directors. Under CCC's deed of settlement, only proprietors of shares may be appointed as directors. As a result of the proceedings to which I have referred, it was established that there were, in reality, no directors validly in office. As a consequence, Hulme J, by order made on 6 September 1996, appointed Mr A E Lewis of Ferrier Hodgson, Newcastle, to be receiver. Mr Lewis continues in that office and, when these proceedings came before me on Monday last, I made, on Mr Lunn's application, an order approving the receiver's remuneration for the period 1 July 1998 to 30 June 2002 in the sum of $23,119.10.”

The company’s situation is one in which, to use words found at page 158 of the fourth edition (1999) of McPherson’s The Law of Company Liquidation, it has become “impossible for it to carry on business owing to the failure of its internal constitution to function in an effective manner”. This is not a case of deadlock. It is, rather, a case of constitutional and administrative vacuum, with one person only recognisable as a shareholder, no directors in office and no apparent prospects of the election or appointment of directors. There is an analogy here with the circumstances in CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) 38 ACSR 245, but with the case for intervention by winding up order being even stronger in this case because there is really no one who can make the company operate effectively.
Because of the jurisdictional basis of the present application it is necessary, as I have said, that the circumstances warranting winding up (that is to say, what I have called the constitutional and administrative vacuum) be not only seen to exist now but also be found to have been in existence before 1 January 1991. The situation I described in my first judgment existed before 1 January 1991. There has, of course, been one recognisable change in the interim: Mr Lunn has, through legal proceedings, established his claim to be a shareholder and has been recorded in the register accordingly. Otherwise, however, matters relating to untraceability of members and non-existence of any board of directors or administrative organs remain today in the state in which they existed immediately before 1 January 1991. The subsequent recognition of Mr Lunn’s status has done nothing to change the essential complexion which then existed.
It was, immediately before January 1991, just and equitable that the Cardiff Coal Company be wound up. It remains today just and equitable that it be wound up.

Conclusion

Mr Lunn has succeeded in making out a case for the grant of the principal relief sought in his amended originating process filed on 13 August 2003 as further amended in the course of the hearing on that day, namely, an order the Cardiff Coal Company be wound up on the just and equitable ground pursuant to Part XII of the Companies (New South Wales) Code. The fact that I have previously dismissed a winding up application does not, I think, make it necessary that I formally allow re-opening, given that the relief sought and refused on that occasion was not framed in terms of Part XII of the Companies (New South Wales) Code. Nevertheless, and for the sake of good order, it will be appropriate to set aside the order of dismissal made by me herein on 20 December 2002, which order has not been entered.
For the avoidance of doubt as to the sufficiency of preliminary steps and having regard to the clear circumstances of irretrievable breakdown within this company, all notices and steps referred to in s.367(2)(b) of that Code should be dispensed with.
Mr Lunn seeks the appointment of Mr Allen E Lewis, the current court appointed receiver, as liquidator. I accept that Mr Lewis is a suitable appointee, subject to one formal or procedural matter. Mr Lewis is said to be an official liquidator, which I take to mean that he has been registered by the Australian and Securities Investments Commission as referred to in s.1283 of the Corporations Act 2001 (Cth). In the present proceedings, the court’s power to appoint a liquidator derives from s.372 of the Companies (New South Wales) Code which refers to the appointment of an “official liquidator” as recognised by that Code being, in terms of the s.5(1) definition, “a person registered as an official liquidator under section 21 or deemed to be registered as an official liquidator under this Code”. Furthermore, s.417(1) of the Code says that a person shall not act as a liquidator of a “company” (which, by virtue of an adaptation directed by s470(1), must in this case encompass the Cardiff Coal Company) unless the person is a “registered liquidator” (defined by s.5(1) by reference to registration under certain subsections of s.20 of the Code) or holds a registration in relation to the particular company under s.20(3) of the Code. Registration under the various provisions of the Code is registration by the National Companies and Securities Commission.
It is not clear to me that the need for Mr Lewis to be shown to hold these qualifications under legislation long superseded has been appreciated. It may be that he does hold them, in which event appropriate evidence should be tendered. Alternatively, it may be that there is a need for some formal step to be taken by the Australian Securities and Investments Commission, exercising the residuary jurisdiction of the National Companies and Securities Commission, to allow the court to appoint Mr Lewis consistently with s.372 of the Code and to allow him to accept and exercise the functions of liquidator consistently with s.417(1) of the Code. I intend to stand the application over for a short time to allow this essentially procedural matter to be addressed.
Having mentioned the Australian Securities and Investments Commission, I should also record that I asked Mr Rayment whether that body had been notified of the present application. He responded by leading brief evidence from Mr Hewitt, his instructing solicitor, that discussions had taken place with Mr Zek Patra, a senior solicitor with the Commission, who had said that the matter had nothing to do with the Commission because it is outside its jurisdiction.

Disposition of proceedings

Mr Lunn has made out an entitlement to the following orders:
1.That the order of dismissal made in these proceedings on 20 December 2002 be set aside.
2.That the Cardiff Coal Company, being the company referred to in and incorporated by The Cardiff Coal Company’s Incorporation Act of 1863, be wound up on the just and equitable ground pursuant to Part XII of the Companies (New South Wales) Code.
Before pronouncing those orders and appointing a liquidator, however, I shall require clarification on Mr Lewis’ status under the Code. It will also be appropriate that I be informed whether orders under s.367(2)(b) of the Code will be sought and, if so, their terms. I shall stand the application over so that these matters may be addressed.
I note that the matter of costs is dealt with by s.366(2) of the Companies (New South Wales) Code. Mr Lunn will no doubt let me know on the next occasion if he seeks any specific order as to costs.

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LAST UPDATED: 29/08/2003