Manfal Pty Ltd (In Liquidation) v Trade Practices Commission

[1991] HCATrans 64

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth	No P42 of 1990
B e t w e e n -
MANFAL PTY LTD (In Liquidation)

Applicant

and

TRADE PRACTICES COMMISSION

First Respondent

FREDERICK ARTHUR LILLEY,
RICHARD ARTHUR LILLEY,

GEOFFREY NEIL HATCH, RUSSELL

HOWTON and KEVIN DENNIS

ANTONOVICH

Second Respondents

Application for special

leave to appeal

BRENNAN J
DAWSON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 8 MARCH 1991, AT 9.32 AM

Copyright in the High Court of Australia

Manfal 1 8/3/91

MR W.W. CALDWELL, QC: If the Court pleases, I appear with

MR B. DHARMANANDA, for the applicant. (instructed

by Mallesons Stephen Jaques)

MR C.J. CARR: If the Court pleases, I appear with my learned friend, MRS. BHOJANI, for the first

respondent. (instructed by Australian Government

Solicitor)

MRS M.A. YEATS: If it please the Court, I appear on behalf

of the Attorney-General for the State of Western

Australia, intervening in support of the grant of

special leave. (instructed by the Crown Solicitor

for Western Australia)

BRENNAN J: Yes, Mrs Yeats. Mr Carr, the Court would be

advantaged if we heard you first.

MR CARR:  Your Honours, before I pass up my short outline of

submissions, perhaps I could make the two main

points why we say special leave, with all due

respects, should not be granted in this

application.

The first point is that the law has been

changed since the Full Federal Court gave its

decision. The Commonwealth has now, by its own

Act, submitted itself to the corporations law of

Western Australia so that, in terms of future

relevance, the decision in the court below is of

academic interest, and I would like to develop that

in a moment.

The second point it that, if one applies the

principles laid down by this Court in Dao, then all

that was decided in the court below turned on the

application of section 109 of the Constitution. In

Dao Your Honours will recall, which involved the

joint questions initially or thought to involve

section 109 and then section 64 of the

Judiciary Act, the Court said no, you do not get

down to section 64 of the Judiciary Act until you

have dealt with section 109. If there is an

inconsistency then the offending State law does not

apply and we say that is the second reason that

this case below simply decided that point, that the

Western Australian section was inconsistent with

the Commonwealth law and was struck down by

section 109. We say that decision was correct or

not attended by sufficient doubt to justify, with

all due respect, special leave.

Those are the two main points. I have other

points. Could I pass up my outline please,

Your Honour.

BRENNAN J: Yes, Mr Carr.

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MR CARR:	Your Honours, could I start at the beginning by

taking you to page 5. The middle of page 5 of the

application book conveniently sets out section 358

of the former Companies Code on which the applicant

relied in this matter, and in comparable, if not

identical, well certainly not identical, but

similar in comparable terms, section 358 of the

Companies Act 1981 can be found at page 123 of the

application book in quotation marks at about

line 32:

This part binds the Crown in right of the
Commonwealth, in right of a State, or in right

of a Territory.

Of course, that section of the Commonwealth Act applied only in the Australian Capital

Territories. That was the position as at the time

this case was decided in the court below, Your

Honours. The Commonwealth Parliament then passed

the Corporations Act 1989, which was the subject of

the challenge in New South Wales and the

Commonwealth last year, and then the Commonwealth

passed late last year the Corporations Legislation

Amendment Act 1990, which is quite a terrifyingly

thick piece of legislation. We have extracted

portions of it and I would seek leave to pass up.

Could I take Your Honours to - - -

BRENNAN J:	Has this Act been proclaimed to come into force?
MR CARR:	I am instructed it has, yes, Your Honour.

BRENNAN J: Yes.

MR CARR:  - - - and in particular to the sections commencing

at 17 in Part 4. This is page 9 of this print:

Corporations Law of the Capital Territory

Corporations Law - 17.(1) Chapter 5 (except Part 5.8) of the

and that is the part which we are concerned about -

of the Capital Territory binds the Crown in

right of the Commonwealth, of each of the

States, of the Capital Territory, of the

Northern Territory and of Norfolk Island.

(2) To avoid doubt, Chapter 7 of the

Corporations Law of the Capital Territory does

not bind -

Manfal 8/3/91

That, I would submit, is irrelevant for today's

purposes, as would probably be the whole of 17 by

way of background, but section 18:

Corporations Law of other jurisdictions

18. Chapter 5 (except Part 5.8) of the

Corporations Law of each jurisdiction other

than the Capital Territory -

and jurisdiction is defined in section 4 to include

the various States -

binds the Crown in right of the Commonwealth,
of the Capital Territory and of Norfolk

Island.

And, in our respectful submission, that quite
clearly is Commonwealth law, submitting the

Commonwealth to the jurisdiction of the -various

States, the application of Part 5.8 of the

Corporations law of the various States can now no

longer be in doubt.

DAWSON J: Well, the question still arises in this case,

does it not?

MR CARR:	Yes, it certainly does, Your Honour.
DAWSON J: And it is a question of some importance.	I myself

find some difficulty in understanding how you ever get to inconsistency. The Corporation in question

is a creature of the Western Australian statute, is

it not?

MR CARR:	Yes, Your Honour.
DAWSON J:	And the incidence of its corporate personality

are dependant upon the Western Australian

legislation.

MR CARR: True, Your Honour.
DAWSON J:	If it is to be wound up, and that was the process

which was started by the appointment of a

liquidator, then some of those incidents are

withdrawn, but that simply means that it is a

lessor corporate personality, as provided for by

the law which gives it its personality. It is not

a question of binding the Crown; it is a question

of what you are dealing with.

MR CARR: It is there, in our submission, that the

inconsistency comes in. The Trade Practices Act

lays down a scheme, a code, a comprehensive code,

of how it is going to be enforced, either by the -

Manfal 8/3/91

DAWSON J: It says you can sue persons for certain things,

but the question is, what is the person here?

McHUGH J:  You cannot sue a person who does not exist and

the Trade Practices Act does not make up a person

that you can sue.

MR CARR:  No, Your Honour. It does not cease to exist

because the provisional liquidator has been

appointed.

DAWSON J: Well, it ceases to have some of the instance

which it previously had as an artificial person.

McHUGH J: It qualifies its legal personality.

MR CARR: Well, we would suggest that if there is that

qualification in terms of the effect of the

Trade Practices Act that that would just underscore

the inconsistency, but of course, if we are getting

down to that level - - -

DAWSON J: But there is no inconsistency at all. I mean,

let us assume that the liquidation proceeds and the

company is wound up. You are not suggesting the

Trade Practices Act would keep it in existence for

the purposes of the action in the Federal Court,

are you?

MR CARR:  No, Your Honour, if the winding up concluded to

the extinction of the company.

DAWSON J: Well, that process has begun and certain

instances of its personality have now been

withdrawn. Where is the inconsistency?

MR CARR:  The liquidator will have and has several millions

in his hands and the Trade Practices Commission, in

accordance with the powers conferred by its Act, is

taking steps authorized by the Federal Act, by the

Trade Practices Act, to secure compensation for

those persons wronged and named in the application,

who are entitled to compensation under

section 87(1A) of the Trade Practices Act.	We say
the inconsistency arises there.

DAWSON J: Well, you must carry it right through to logical

conclusion and you would say that a winding up

order would be inconsistent.

MR CARR:  I do not think, with all due respect, we have to

go that far, Your Honour.

DAWSON J: Well you do, to test the argument.

MR CARR:  The argument arises purely at the stage where the

process of winding up has commenced and at that

Manfal 8/3/91

stage the Commonwealth wishes, I am repeating

myself, to establish certain legal rights, as part

of the moneys to be handled by - - -

DAWSON J: Yes, but it could only establish them against a

litigant that exists.

MR CARR: Well certainly sir, the litigant exists - - -

DAWSON J:	And it amounts to this, that the State law can give corporate personality and can take it away.
MR CARR:	The stage at which the proceedings are brought,

that the money is there; the liquidator holds the

funds and the Commonwealth is asserting on behalf

of the persons entitled to compensation, rights to

that money. The fact that the corporation might

later cease to exist, the liquidator having

discharged his duties under the State Act and

distributed the money, in my respectful submission,

does not affect our argument that we have the

superior right to bring the proceedings and secure

the money.

BRENNAN J:  It may be, assuming an argument which we have

not yet heard, that if the proposition put to you

by my brother Dawson is the proposition for which

the other side of the bar table would contend, it

would be an important question, would it not, to

determine whether the corporate personality is

affected by the commencement of a winding up.

MR CARR:  Oh yes, Your Honour. If we get to the stage where

you ignore the change in the law and concentrate on

the importance of this particular case in future

cases, and we are getting into the question of

whether the section 109 point was decided or

whether sufficient doubt attends the decision on

the section 109 point in the court below, then all

I can say is that they decided it correctly and in accordance they applied obviously the correct

principles, of whether it was a direct

inconsistency or covering the field test, and if
the doubt arises, then it is because of the

application of those principles, whether there was,

in fact, a covering of the field, bringing the

Part 5 of the Code into conflict. So I would not

be taking up the Court's time further at that

stage.

BRENNAN J: Yes.

DAWSON J:  No one seems yet to put the suggestion I was

putting to you yet; perhaps that is because it is

not a valid point, but - - -

Manfal 6 8/3/91

MR CARR: It has never been a problem in these matters. It

has not been raised, in matters of this type, in

the courts below. No, it has not been put -

McHUGH J: It raises the question, whether there is a person

who can be sued?

MR CARR:  I hesitate to repeat myself, Your Honour, but we

say that there is. We are concerned - the course of the winding up, which is under the supervision of the Supreme Court, granted that is under the

Supreme Court supervision, but in that course,

before the company is dead, we have a statutory

duty to enforce the Trade Practices Act, not just

to enforce the Act, but to recover some of those

moneys, whether to rank equally in the winding up

or not, which it probably will due to the

Crown Debts Priority Act 1981 - - -

BRENNAN J: Well, your proposition is a simple one. There

is a person, a corporate person albeit. You say

that the State Act qualifies the liability of that

person to be sued; confers an immunity; the

Commonwealth Act strips it away and there is

inconsistency between the two.

MR CARR:  Thank you, Your Honour, I gratefully adopt that.

BRENNAN J: But that is your proposition, is it?

MR CARR: It is, yes. It was what I was trying to make,

yes, Your Honour.

BRENNAN J:  And you say that if the amending legislation

comes into effect, that question will fade into

history?

MR CARR:  Yes, Your Honour.

BRENNAN J: That in itself raises some interesting problems

perhaps, but we will then accept your concession

for the purposes of this argument.

MR CARR:  Yes, Your Honour. I have a duty to take you to

Part 2 - doubtless somebody else will if they are

called on - but Part 2 starts at page 2 of the

print. In section 4 of the amending Act, the

draftsman attempts to say what the Part does, and

the problem is this, that he says:

This Part changes the Principal Act -

which one line above is defined as "the

Corporations Act 1989" -

from an Act relying on the corporations and

other powers, and intended to apply of its own

Manfal 7 8/3/91

force throughout Australia, into a law for the

government of the Australian Capital Territory

in relation to corporations, securities, the

futures industry and some other matters.

I think the words "in relation to" must govern the

"some other matters". Then it could well be said

that that makes the Corporations Act itself apply

simply to the Australian Capital Territory. We

would say, no. We would say that section 18, to which I took Your Honours a moment ago, is quite clearly on the Commonwealth statute back book as a

Commonwealth Act relying on whatever Commonwealth

powers there are and it makes it quite clear that

the Commonwealth submits to the application of the

corporations law of whatever State jurisdiction.	I
thought I had better draw Your Honours' attention
to that.

DAWSON J:	What does subsection (1) mean?
MR CARR:	I have been grappling with that, Your Honour, but

I think it reflects, as the explanatory memorandum explains, that instead of the corporations law being a law for the whole of Australia, because of the doubts which arise from this Court's decision

in New South Wales v Commonwealth, they will go

back to the old way of enacting a corporations law of the ACT and then each State can pick it up, but

we say that - - -

DAWSON J:  But a law is a law, and if in looking at the

section you are entitled to rely on a power, you

are entitled to rely on it. It looks more like a

political statement than anything else.

MR CARR:  Yes, Your Honour, well the primary submission

stands stands, but I thought I should draw

Your Honours' attention to Part 2 all the same, which would be against me.

BRENNAN J:  Does section 18, to which you have drawn our

attention, raise any problem as to whether the

Commonwealth law can declare the State law to have an operation which would not be accorded to that

State law by the Constitution?

MR CARR:  I think the answer to that is no, Your Honour,

perhaps if there is direct inconsistency, but if

there is the inconsistency only of the type of the

covering the field type, then the answer is yes

BRENNAN J:  I was not thinking so much of inconsistency. I

was thinking of the proposition that the

corporations law of each jurisdiction, that is a

State law, binds the Crown in right of the

Commonwealth. Now, it may be that that is

Manfal 8/3/91

effective to, as you say, submit the Crown in right
of the Commonwealth to the operation of State law,
but it is not quite expressed in that way, is it?

It is expressed in terms of what the State law does.

MR CARR: Well, putting aside my comments about the

inconsistency, if the question were, say, a matter

of Crown immunity, to use the shorthand, then our

submission would be that there has been such a

submission by the wording of section 18 in itself.

DAWSON J: Well then, does the State law become applied as a

Commonwealth law by virtue of this section?

MR CARR:  Your Honour, I think the State law is probably not

totally irrelevant, but superfluous, as far as

whether the Commonwealth is bound by the

corporations law of the State. The

Commonwealth Act, section 18, does that of itself; it does not have to pick up the equivalent section in the Western Australian Code, but it -

BRENNAN J:  Does it come to this though, Mr Carr, that

unless one is able to say with some confidence that
the operation of section 18 is such as to make the

present problem one of mere historical interest,

one would have to grant special leave in this case?

MR CARR:  Not quite, Your Honours, unless also the Court

had sufficient doubts as to the actual application

of section 109 by the judges in the court below,

because we say it is essentially a section 109

case. But if Your Honours took both those steps,

we would then say, as I say in that outline, that

they also correctly applied it. Assuming that

there were no inconsistencies - if Your Honours

felt sufficient doubt that there were no

inconsistency, then looked at the applications or

the non-applications of section 64 and 79 of the

correctly applied the test, but of course the first	Judiciary Act, then we would say that the judges
judges findings on inconsistency, so I do not think
of those sections was perhaps affected by the we get down to that level then, of course, it has
all the hallmarks, unfortunately, of a special
leave grant.

BRENNAN J: Thank you, Mr Carr. We need not trouble you,

Mr Caldwell and Mrs Yeats.

The Court are of the opinion that this is a

case which is fit for the grant of special leave

and special leave will be granted accordingly.

AT 9.53 AM THE MATTER WAS ADJOURNED SINE DIE

Manfal 9 8/3/91