R v Keydane Pty Ltd (in liq)

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DISTRICT COURT OF QUEENSLAND

CITATION:

R v Keydane Pty Ltd (in liq) [2023] QDC 39

PARTIES:

THE KING

v

KEYDANE PTY LTD

ACN 070 041 468 (in liquidation)

(defendant)   
FILE NO:

1 of 2023

DIVISION:

Criminal

PROCEEDING:

Application

ORIGINATING COURT:

District Court of Queensland

DELIVERED ON:

10 March 2023

DELIVERED AT:

Cairns

HEARING DATE:

7 March 2023; further authorities provided 8 March 2023

JUDGE:

Fantin DCJ

ORDER:

Orders made on 9 March 2023:

1.   Leave to proceed is not required.

2.   I will hear from the prosecution as to further orders.

3.   Listed for review on 24 April 2023 at 9am.

CATCHWORDS:

CRIMINAL LAW – PROCEDURE – CORPORATIONS - COMMENCING PROCEEDINGS – health and safety prosecution against a company in voluntary liquidation – creditors’ voluntary winding up - whether leave to proceed required pursuant to s 500(2) Corporations Act2001 (Cth)

LEGISLATION:

Corporations Act 2001 (Cth), s 58AA, s 471B, s 491, s 493, s 500, s 533B

Work Health and Safety Act 2011 (Qld), s 31

CASES:

Awada Linknarf Ltd (in liq) (2002) 55 NSWLR 745; [2002] NSWSC 873

Burwood Council v Pan Pac Investments Pty Ltd (No 2) [2019] NSWLEC 29

Cowie v GD Pork Pty Ltd (in liq) [2022] WASC 301

Ford Motor Co of Australia Ltd v Tallevine Pty Ltd (in liq) [2021] NSWSC 1192

Orr v LakeCoal Pty Ltd [2019] NSWDC 178

QNI Resources Pty Ltd & Ors v Park & Ors (2016) 116 ASCSR 321; [2016] QSC 222

RA Ringwood Pty Ltd v Lower [1968] SASR 454

Re Linc Energy Ltd (in liq) [2017] 2 Qd R 720; [2017] QSC 53

Tate v Aarjets Pty Ltd ATF The Jurgholme Trust & Anor [2010] QCA 243

Workcover Authority of New South Wales (Inspector Maltby) v Josef & Sons Contracting Pty Ltd (in liq) (2002) 118 IR 259; [2002] NSWIRComm 226

Worksafe Western Australia Commissioner v Australian Countertop Pty Ltd (in liq) [2014] WASC 413
COUNSEL:

B Ballard (solicitor) for the prosecution.

No appearance for the defence.
SOLICITORS:

Office of the Work Health and Safety Prosecutor for the prosecution.
No appearance for the defence.

Background and issue

  1. In this proceeding, a question has arisen about whether leave to proceed is required pursuant to s 500(2) of the Corporations Act2001 (Cth) (‘CA’) to commence or continue a criminal prosecution against a defendant company in voluntary liquidation pursuant to a creditors’ voluntary winding up.

  2. I have decided that the answer is no. On 9 March 2023 I made orders. These are my reasons.

  3. The defendant, Keydane Pty Ltd (trading name Jungle Surfing Canopy Tours), is charged on indictment with an offence of reckless conduct – category 1 pursuant to s 31 of the Work Health and Safety Act 2011 (Qld) as follows:

    Between the ninth day of June 2018 and the twenty-third day of October 2019, at Cape Tribulation in the said State, KEYDANE PTY LTD held a duty pursuant to section 19(2) of the Work Health and Safety Act 2011 and, without reasonable…

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Details
Case
[2023] QDC 39
Decision Date

CaseChat Overview and Summary

In the matter of R v Keydane Pty Ltd (in liq), the defendant company faced a health and safety prosecution while in the process of a creditors' voluntary winding up. The primary issue before the court was whether the leave of the court was required to proceed with the prosecution, pursuant to section 500(2) of the Corporations Act 2001 (Cth). The defendant, Keydane Pty Ltd, was in the process of winding up and had informed the prosecutor that it would not defend the charge. The liquidator also highlighted that under section 533B(1) of the CA, penalties or fines imposed by a court in respect of an offence against a law would not be recoverable against the insolvent company. Despite this, the prosecutor argued that the prosecution should proceed to serve the purposes of public interest, general deterrence, and denunciation.

The court considered the statutory framework, particularly sections 471B and 500(2) of the CA, which provide for the stay of proceedings and suspension of enforcement processes against companies in liquidation. The court recognised the distinction between winding up in insolvency, by the court, and voluntarily, and noted that the requirement for leave to proceed was not limited to civil proceedings. The court also examined previous decisions on the matter, including conflicting authorities on whether leave was required under section 471B for criminal proceedings. Ultimately, the court found that leave was not required to commence or continue the criminal prosecution in this case.

The court's reasoning was based on the understanding that section 500(2) applied to voluntary liquidation and was distinct from section 471B, which applied to compulsory liquidation. The court agreed with the reasoning and conclusions of Schmidt J in Inspector Maltby, finding that leave was not required in this case. The matter was listed for review on 24 April 2023 at 9am, with the court to hear from the prosecution regarding further orders.

Orders

Orders of the court

Orders made on 9 March 2023:

1. Leave to proceed is not required.

2. I will hear from the prosecution as to further orders.

3. Listed for review on 24 April 2023 at 9am.

Background

Background to the litigation

On 7 March 2023 the defendant again did not appear. The prosecutor sought a trial date and informed the Court that the defendant was in liquidation. He submitted that leave to proceed was unnecessary. I invited further submissions on that issue, by reference to authority, and evidence with respect to the defendant’s status. The matter was stood down to later that day to enable that to occur. When it resumed, the prosecutor relied upon an affidavit exhibiting documents relating to the defendant’s status, referred me to a number of single judge decisions from other jurisdictions, and made oral submissions. Later that day, by leave, he provided by email to my associate some further decisions.Relevant facts On 30 March 2020 at a general meeting of the members of the defendant, it was resolved that the defendant company be wound up and that John Goggin be appointed liquidator. The notice of appointment as liquidator was expressed to be pursuant to s 491(2)(b) of the CA. Since then, the company has been administered under a creditors’ voluntary winding up. It has not been deregistered. I was not informed of the history of the matter pre-indictment. It appears that in the Magistrates Court the company had been legally represented by a law firm appointed by the company’s insurer. That arrangement has now been terminated by the insurer. On the limited information available to me, I do not know whether the question of leave to proceed was ever raised in the Magistrates Court. On 7 February 2023 the liquidator informed the prosecutor that he did not intend to defend the charge on the company’s behalf. The liquidator also noted that pursuant to s 533B(1) of the CA, penalties or fines imposed by a court in respect of an offence against a law are not admissible to proof against an insolvent company. This means that if the prosecution proceeds and the defendant company is convicted and fined, no fine would be recoverable against the insolvent company. I interpolate that questions of the utility or otherwise of the prosecution are matters for the prosecuting authority, not the Court. The prosecutor submitted that, notwithstanding no penalty may be paid, pursuing such a prosecution and the recording of a conviction (if the charge were proved), would be in the public interest and would serve the purposes of general deterrence and denunciation. There is no related proceeding on indictment in this Court charging an officer (including a director) of the defendant company.Statutory framework In ch 5, External Administration, the CA distinguishes between winding up in insolvency, by the Court, and voluntarily. Part 5.4B relates to winding up in insolvency or by the Court (which does not apply here). It contains s 471B which provides:471B Stay of proceedings and suspension of enforcement processWhile a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:(a) a proceeding in a court against the company or in relation to property of the company; or(b) enforcement process in relation to such property;except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I am persuaded by, and respectfully agree with, the reasoning and conclusions of Schmidt J in Inspector Maltby with respect to s 500(2). As a result, I find that leave is not required to commence or continue the criminal prosecution in this case.Conclusion and orders Leave to proceed is not required. I will hear from the prosecution as to the orders sought. The matter is listed for review on 24 April 2023 at 9am.

Ratio Decidendi

Legal Principle Established

For the purposes of this decision, it is unnecessary to consider in detail the proper approach to the exercise of the discretion conferred on the Court to grant leave to proceed.[2] In short, this and other cognate sections confer on the Court a supervisory jurisdiction. In deciding such an application the Court is concerned to protect companies in liquidation from being harassed by unnecessary litigation. The Court is also concerned to assist in the orderly administration of companies in liquidation by requiring claimants to adopt the ordinary procedure of lodging a proof of debt for their claim unless a claimant can demonstrate some good reason why departure from that procedure is justified in the claim advanced.[2]Recently summarised in QNI Resources Pty Ltd & Ors v Park & Ors (2016) 116 ACSR 321; [2016] QSC 222 by Bond J (as his Honour then was) at 331-2 [45]-[51]. Consideration Read alone, on its face s 500(2) appears to apply only where proceedings of a civil nature are pending against a company. It refers to ‘no action or other civil proceeding’. This phrase by itself connotes that the word ‘action’ is confined to a proceeding which is a type of ‘civil proceeding’. The wording of s 500(2) can be contrasted with that in s 471B; ‘a proceeding in a court’, which does not contain any restriction on the nature of the proceeding against the company. There are conflicting authorities on whether leave is required under s 471B for criminal proceedings. In Worksafe Western Australia Commissioner v Australian Countertop Pty Ltd (in liq)[3] it was held that s 471B applies to both civil and criminal proceedings, and leave was required to commence or continue with criminal prosecutions.[4] In RA Ringwood Pty Ltd v Lower[5] ('Ringwood') the Full Court of the Supreme Court of South Australia considered an earlier provision, s 263(2) of the Companies Act 1962 (SA), which was not identical to either s 471B or s 500. It used the phrase ‘action or proceedings’. The majority view was that that phrase in s 263(2) was restricted to a civil proceeding and did not apply to any criminal prosecutions. Ringwood was applied by the Queensland Court of Appeal in Tate v Aarjets Pty Ltd ATF The Jurgholme Trust & Anor[6] (‘Tate’) where McMurdo P said (Muir and Fraser JJA agreeing) that leave was not required under s 471B to commence or continue criminal proceedings. In Tate there was no discussion of the change in language between s 471B and its predecessor, and no reasons for adopting Ringwood were given. There is a useful recent summary of the various decisions on s 471B in Burwood Council v Pan Pac Investments Pty Ltd (No 2).[7][3][2014] WASC 413.[4]Ibid [8]-[9] (cited with approval in Orr v LakeCoal Pty Ltd [2019] NSWDC 178).[5][1968] SASR 454. [6][2010] QCA 243.[7][2019] NSWLEC 29 Pain J. Section 471B (which applies to compulsory liquidation) performs quite differently to s 500(2) (which applies to voluntary liquidation) so any conflict in the authorities with respect to s 471B is not determinative of the construction of s 500(2), which is the relevant provision here.