Re: Riverland Fruit Co-Operative (in Liq) - [2006] SASC 302

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
Re: RIVERLAND FRUIT CO-OPERATIVE (IN LIQ)
[2006] SASC 302
Judgment of The Full Court
(The Honourable Justice Debelle, The Honourable Justice Sulan and The Honourable Justice Layton)
29 September 2006
CORPORATIONS - WINDING UP - LIQUIDATORS - RIGHTS AND POWERS - IN WINDING UP BY COURT
Co-operatives - whether s 596A and s 596B of the Corporations Act 2001 (Cth) apply to co-operative registered under the Co-operatives Act 1997 (SA) - whether s 223 of the Co-operatives Act 1997 makes s 596A and s 596B applicable to co-operatives - held, s 596A and s 596B apply - appeal dismissed.
Acts Interpretation Act 1915 (SA) s 16; Australian Financial Institutions Commission Act 1992 (Qld); Companies (South Australia) Code s 541, s 542; Corporate Law Economic Reform Programme (Audit Reform and Corporate Disclosure) Act 2004 (Cth); Corporations Act 2001 (Cth) s 5F, s 9, s 57A, s 468(1), s 471A, s471B, s 513A , s 513B, s 588FE, s 588FF, s 589, s 590, s 592, s 596, s 596A, s 596B, s 596C, s 598, s 1307; Corporations Law s 9, s 11AZA, s 57A, s 66A; Corporations (Ancillary Provisions) Act 2001 (SA) s 14, s 15, s 16(1), s 16(3); s 14, s 15, s 16(1), s 16(3) s 76; Co-operatives Act 1997 (SA) s 9, s 11, s 21, s 223, s 223A, s 265, s 311, s 318, s 333, Sch 4, Sch 5; Co-operatives Act Amendment Act 1984 (SA); Co-operatives (Miscellaneous) Amendment Act 2002 (SA) s 33; Financial Institutions (Applications of Laws) Act 1992 (SA); Financial Institutions (Queensland) Act 1992 (Qld); Statutes Amendment (Corporations) Act 2001 (SA) s 40; Supreme Court Act 1935 (SA) s 49(1); Treasury Legislation Amendment (Application of Criminal Code) Act 2001 (Cth), referred to.
Spedley Securities Ltd (in liq) v Bond Corporation Holdings Pty Ltd (1990) 19 NSWLR 729; Re Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd (1987) 12 ACLR 475; Re New Tel Ltd (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176; Re Quintex Group Management Services Pty Ltd (in liq) [1997] 2 Qd R 91, considered.

RE: RIVERLAND FRUIT CO-OPERATIVE (IN LIQ)
[2006] SASC 302
Full Court: Debelle, Sulan and Layton JJ
DEBELLE J.

The question in this appeal is whether the provisions of s 596A and s 596B of the Corporations Act 2001 (Cth), which prescribe a procedure by which a court may summon a person to be examined on a corporation’s examinable affairs, apply on the winding up of a co-operative registered under the Co-operatives Act 1997.
A Co-operative is Wound Up
Riverland Fruit Co-operative Ltd (in liq) (“Riverland”) is a co-operative which was initially registered under the Co-operatives Act 1983. That Act was repealed by the Co-operatives Act 1997 which came into operation on 1 December 1997. By reason of para 4 of the transitional provisions in Schedule 5 of the Co-operatives Act 1997, a co-operative is deemed to be a co-operative registered under the 1997 Act. All subsequent references to the Co-operatives Act in these reasons are references to the 1997 Act unless the contrary is expressly stated. On 22 January 2002 Riverland was wound up by order of this court and a liquidator appointed.
Orders For Examination
On 7 October 2005 the liquidator applied for an order for the issue of a summons to examine four persons pursuant to s 596B of the Corporations Act 2001 (Cth) (“the Corporations Act”). Orders were made for the examination of Messrs G.W. Sims, P.E. Sims, R.E. Sims and J.H. Warwood. For convenience, I will refer to those four persons as the “proposed examinees”. In addition, orders were made pursuant to s 596C of the Corporations Act that the affidavit of the liquidator filed in support of the application be sealed and not be available for inspection except so far as the court orders.
Application to Set Aside Orders is Dismissed
On 18 November 2005 summonses were issued for the examination of the proposed examinees. On 24 November 2005 the proposed examinees applied for an order permitting them to have access to the affidavit of the liquidator and for an order discharging the summons for examination or, in the alternative, varying the scope of that summons. The application was in these terms:
1.That the respondents and their legal advisers have access to the affidavit or affidavits relied upon by the liquidator, Mr George Divitkos, in obtaining the leave of this Court to issue the summonses for examination and production of documents against each of the respondents and dated 18 November 2005.
2.That the summonses for examination and production of documents dated 18 November 2005 issued against each of the respondents be discharged.
3.Alternatively, that the scope and ambit of the said summonses for examination and production of documents dated 18 November 2005 be varied.
So far, the proposed examinees have prosecuted only para 2 of that application. Thus, it is only para 2 of the application which is relevant for present purposes.
The application was heard by a Master of this court. The proposed examinees contended that the orders for examination should be discharged because the court had no jurisdiction to make orders for examination under s 596A and s 596B of the Corporations Act. That contention was founded on the contention that the Co-operatives Act has not made s 596A and s 596B of the Corporations Act apply to a co-operative so that a liquidator of a co-operative registered under the Co-operatives Act is not vested with the powers in Division 1 of Part 5.9 of the Corporations Act to conduct examinations. The Master held that s 223 of the Co-operatives Act makes s 596A to s 598 of the Corporations Act applicable on the winding up of a co-operative. He therefore refused the application to discharge the summonses for examination. The proposed examinees appealed from that order to a judge of this court who referred the appeal to the Full Court pursuant to s 49(1) of the Supreme Court Act 1935.
The determination of the question turns primarily on the meaning and effect of s 223 of the Co-operatives Act. It is necessary also to consider the terms of the Corporations (Ancillary Provisions) Act2001 (SA), one of the measures enacted in 2001 to enable the Corporations Act to come into operation in this State.
Corporations (Ancillary Provisions) Act
The Corporations (Ancillary Provisions) Act is one of the statutes enacted by the South Australian Parliament to enable the Corporations Act 2001 (Cth) to apply in South Australia. Shortly stated, ss 14 and 15 of the Corporations (Ancillary Provisions) Act enable a provision in a State statute to declare, among other things, part of the Corporations Act to apply as if it were part of the law of South Australia. Section 16 of that Act provides, among other things, for modifications to the provisions of the Corporations Act which are declared to be applied as part of the law of South Australia. For present purposes, it is necessary to refer only to the following provisions of s 16:
16.(1) This Part operates to apply a provision of the Corporations legislation, or of an Act, regulations or other instrument forming part of the Corporations legislation, as a law of the State subject to the following modifications:
(a)such modifications as may be specified by or under the law containing the declaratory provision;
(b)a reference to ASIC is (unless a function under an applied law is conferred on ASIC as referred to in section 17) taken to be a reference to –
(i)the Minister administering the declaratory provision or such other person (or person belonging to a class of person) as may be specified by the regulations (whether generally or in relation to a particular applied law); or
(ii)such other person as may be specified by or under the declaratory provision;
(c)a reference to the Gazette is a reference to the South Australian Gazette;
(d)a reference to the Minister is a reference to the Minister administering the declaratory provision;
(e)a reference to this jurisdiction is a reference to South Australia;
(f)such other modifications as are necessary or that are prescribed by the regulations made under this Act, whether generally or in relation to a particular applied law.
The modifications will, therefore, be those prescribed by the provision declaring the relevant provisions of the Corporations Act to be applied as part of the law of South Australia or such other modifications as are necessary. Regard should also be had to s 16(3) which is in these terms:
(3)Except as provided by subsection (1), definitions and other interpretation provisions of the Corporations legislation, or of the Act, regulations or other instrument forming part of the Corporations legislation, relevant to the applied law are taken also to apply to the matter that is the subject of the declaratory provision.
There is nothing in s 16(1) which qualifies the operation of s 16(3) in relation to any of the issues in this appeal. Section 16(3) expressly authorises the use of the definitions contained in the Corporations Act. The importance of s 16(3) will soon become apparent.
The State Legislation
The Parliament in South Australia may also declare a matter to be an excluded matter for the purposes of the Corporations Act and related legislation: see s 5F of the Corporations Act. Section 9 of the Co-operatives Act declares that a co-operative is an excluded matter for the purposes of s 5F in relation to the whole of the Corporations Act except to the extent specified in s 9(2). It is not necessary for this appeal to stay with s 9(2). Section 11 of the Co-operatives Act then spells out how that Act may declare provisions of the Corporations Act to apply to a co-operative pursuant to the provisions of the Corporations (Ancillary Provisions) Act.
Section 11 of the Co-operatives Act provides that, if that Act declares the Corporations Act is to be applied, that provision will apply subject to the modifications listed in s 11. Section 11 was in these terms in 2001:
11.(1) If a provision of this Act declares a matter to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 (the declaratory provision) in relation to any provisions of the Corporations legislation (the applied provisions), the declaratory provision is taken to specify the following modifications to the applied provisions:
(a)a reference to a constitution is to be read as a reference to the rules;
(b)a cross-reference to another provision of the Corporations Act is, if that cross-reference is not appropriate (because, for example, the provision cross-referred to is not among the applied provisions), to be read as a cross-reference to the equivalent provision of this Act;
(c)a reference to the Gazette is to be read as a reference to the South Australian Gazette;
(d)a reference to the Commonwealth is to be read as a reference to the State;
(e)provisions which are not relevant to co-operatives or which are incapable of application to co-operatives are to be ignored;
(f)modifications directed by the Commission under subsection (2).
(2) The Commission may, by order published in the Gazette, give directions as to the modifications that are necessary or desirable for the effectual operation of applied provisions.
(3) This section has effect subject to any specific requirements of provisions of this Act that apply provisions of the Corporations Act.
In 2002, s 11 was amended to add para (ba) in these terms:
(ba) a reference to the Australian Securities and Investments Commission, however referred to, is to be read as a reference to the Corporate Affairs Commission;
The amendment is immaterial for present purposes. It is clear that s 11(3) proceeds on the footing that other provisions of the Co-operatives Act may apply the Corporations Act and those provisions may prescribe other modifications. As the Master observed, the scheme of the Co-operatives Act is that the provisions of the Corporations Act do not apply to co-operatives in South Australia unless they are made to apply by the Co-operatives Act.
When enacted in 1997, the Corporations Law was in operation. Section 223 of the Co-operatives Act was in these terms:
223.(1) The provisions of sections 589 to 598 and 1307 of the Corporations Law are adopted by this section and apply to and in respect of a co-operative in the same way as they apply to and in respect of a company.
(2)     Those provisions apply with any modifications that are prescribed and as if –
(a)a reference in those provisions to a company were a reference to a co-operative; and
(b)a reference in those provisions to the Australian Securities Commission were a reference to the Corporate Affairs Commission; and
(c)the reference in section 591 to section 289 were a reference to the equivalent provisions of the regulations under section 233 of this Act.
In 2001, s 223 was repealed and a new section substituted in its place. The amendment was effected by s 40 of the Statutes Amendment (Corporations) Act 2001 which came into operation on 15 July 2001. The Corporations Act came into operation on the same day. The new s 223 was in these terms:
223.A co-operative is declared to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to sections 589-598 and 1307 of the Corporations Act, subject to the following modifications:
(a)     a reference in those provisions to a company is to be read as a reference to a co-operative;
(b)     a reference in those provisions to ASIC is to be read as a reference to the Commission;
(c) such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.
A further amendment was made to s 223 by s 33 of the Co-operatives (Miscellaneous) Amendment Act 2002. The amendment did no more than to insert s 344 of the Corporations Act as an additional provision of that Act which was to apply to co-operatives. The Co-operatives (Miscellaneous) Amendment Act 2002 did not come into operation until 1 July 2003.
The Relevant Legislation
The order winding up Riverland was made on 22 January 2002. That last amendment in 2002 is a change in the substantive law. The substantive law which regulates a winding up is the law in force at the date of the order winding up Riverland. That is a necessary consequence of s 16 of the Acts Interpretation Act 1915. That conclusion is consistent with the fact that a resolution or an order to wind up a company as a general rule commences on the date of the resolution or of the order: s 513A and s 513B of the Corporations Act. The relevant date in relation to a winding up is the date on which the winding up is deemed to have begun: s 9 of the Corporations Act. From the date of the resolution or the order, the liquidator is the governing mind of the company. The powers of its directors and officers are suspended: s 471A of the Corporations Act. Other rights are determined by the date of the winding up. The relation-back day for the purposes of s 588FE and s 588FF is determined by reference to that date: s 9 of the Corporations Act. Any disposition of the property of the company after the date of the winding up is void in the absence of an order of the court to the contrary: s 468(1), and court proceedings against a company cannot commence or continue after that date except by leave of the court: s 471B. For these reasons, the amendment in 2002 is to be ignored. That fact has no bearing on the outcome of this appeal.
Sections 596A and 596B
It is necessary also to note the provisions of the Corporations Act. That Act came into operation on 15 July 2001. Sections 596A to 598 were amended by the Treasury Legislation Amendment (Application of Criminal Code) Act 2001 (Cth) (the Act No 117 of 2001), which came into operation on 15 December 2001. Thus, on 22 January 2002, when the order winding up Riverland was made, s 596A and 596B were in the terms as amended by the Act No 117 of 2001. For the purposes of this appeal, nothing turns on those amendments. In 2004, s 596A was again amended but not in any material respect.
Sections 596A to 598B provide for examinations of persons about a corporation’s examinable affairs. Those sections do not in terms expressly refer to a co-operative. However, reference both to s 9 and to s 57A of the Corporations Act as they existed on 22 January 2002, the date of the winding up of Riverland, discloses that the terms of those sections are capable of applying to a co-operative. Section 9 of the Corporations Act then as now states that “corporation” has the meaning given by s 57A of the Act and s 57A was expressed in these terms:
57A (1)     Subject to this section, in this Act, “corporation” includes:
(a)    a company; and
(b)any body corporate (whether incorporated in this jurisdiction or elsewhere); and
(c)an unincorporated body that under the law of its place of origin, may sue or be sued, or may hold property in the name of its secretary or of an officer of the body duly appointed for that purpose.
57A(2)     Neither of the following is a corporation:
(a)an exempt public authority;
(b)a corporation sole.
A co-operative is neither an exempt public authority nor a corporation sole. Section 57A was amended by the Corporate Law Economic Reform Programme (Audit Reform and Corporate Disclosure) Act 2004 so that the words “office holder” were substituted for the word “officer” in s 57A(1)(c). Plainly, the amendment is of no consequence for present purposes. With that amendment, s 57A remains in the same form today.
Reference to “corporation” Include a Co-operative
With those statutory provisions in mind I turn to consider the arguments. The liquidator contends that, as s 223 of the Co-operatives Act expressly makes s 589 to s 598 of the Corporations Act applicable to a co-operative, it follows that s 596A to s 598 must also apply. The proposed examinees contend that s 223 does not assist because by reason of s 223(a) it picks up only those provisions in s 589 to s 598 which refer to a company. As s 596A to s 598 do not refer to companies but to corporations, they contend that those sections do not apply to the winding up of a co-operative.
The argument of the proposed examinees misconceives the operation and effect of s 223. Section 223 states in unequivocal terms that s 589 to s 598 of the Corporations Act apply to a co-operative. Although s 596A and s 596B refer to examinations of persons about a corporation’s examinable affairs, those provisions plainly apply with equal force to a co-operative because “corporation” is defined by s 57A to include any body corporate, that is to say, the word “corporation” includes a body corporate. A co-operative is a body corporate: s 21 of the Co-operatives Act. The provisions of s 596A to s 598, therefore, directly apply to a co-operative.
Although s 57A is not made to apply to co-operatives either by s 223 or by any other provisions of the Co-operatives Act, it is legitimate to have regard to it because provisions such as s 9 and s 57A provide a definition of terms used in the Corporations Act. Those definitions are provided for the clear purpose of assisting a proper understanding of the operation of the Corporations Act. They are a dictionary of terms used in the Act. It is proper, therefore, to have regard to s 9 and to s 57A in order to know to what s 596A and s 596B refer when they speak of “a corporation’s examinable affairs”. In addition, the terms of s 16(3) of the Corporations (Ancillary Provisions) Act expressly authorise the use of the definitions in the Corporations Act. There can be no doubt that the effect of s 223 is to make s 596A to s 598 of the Corporations Act relating to examinations about a corporation’s examinable affairs apply on the winding up of a co-operative.

In ss 590, 592, 596 and 1307 the word “company” not “corporation” is used. The definition of “company” in the Corporations Act does not include a body corporate. It is, therefore, necessary for s 223 also to provide for modifications to be made if those sections are to apply to a co-operative. Unless the Co-operatives Act provided that whenever the word “company” appeared it should be read as a reference to a co-operative, those sections could have no operation. Thus ss 590, 592, 596 and 1307 would not apply to co-operatives but for the provisions of s 223(a). It is for that reason that s 223 provides that modifications are to be made and that a reference to a company is to be read as a reference to a co-operative.
Mr Livesey QC, who appeared for the proposed examinees, contended that the effect of s 223 was intended to make only those provisions which referred to companies applicable to a co-operative so that s 596A and s 596B were excluded. He relied in particular on the expression “subject to the following modifications” and subparagraph (a) of s 223. Mr Livesey contended that, as the word “company” does not appear in s 596A to s 598, those provisions do not apply to a co-operative. The argument flies in the face of the clear and express direction in the opening words of s 223 that s 589 to s 598 apply to a co-operative. The argument also misconceives the effect of the phrase “subject to the following modification” in s 223. That provision is intended to modify words which appear in the specified sections of the Corporations Act which are made to apply to a co-operative. Its purpose is not to exclude any of the specified sections from applying to co-operatives. The modifications to which s 223 refers are the terms in which the various sections of the Corporations Act are expressed. They are not modifications of the sections of the Corporations Act which are applicable to co-operatives except to the extent that the words “company” and “ASIC” change whenever those words appear in the specified sections. That is the plain meaning of the words used in s 223.
That conclusion is reinforced by the fact that ss 596A to 598 refer to corporations. If Parliament had intended that those sections of the Corporations Act should not apply because they refer to corporations, it would have been entirely unnecessary for s 223 to refer to them, that is to say, if Parliament had not intended to include those sections, it would have omitted them from the terms of s 223. Thus, the expression “subject to the following modifications” is not a provision which further limits the sections of the Corporations Act which apply. Instead, it simply modifies particular words used in some of the specified sections. That expression has been included in s 223 in the knowledge that expressions used in the specified sections of the Corporations Act do not always apply to a co-operative. The draftsman has recognised that it is necessary to alter words in the specified sections of the Corporations Act. In the case of s 223, its purpose is to alter the words “company” and “ASIC” wherever those words appear in the specified sections of the Corporations Act and replace them with the words “co-operative” and “the Commission”.
All of Chapter 5 Made Applicable
The conclusion that s 223 picks up s 596A and s 596B and the other provisions of Division 1 and 2 of Part 5.9 is further reinforced by examining the other provisions of Chapter 5 of the Corporations Act that are made to apply to a co-operative by the Co-operatives Act. When s 223 is read with ss 311, 318 and 333 of the Co-operatives Act, it will be noticed that the Co-operatives Act picks up all of the provisions of the Corporations Act which regulate the external administration of corporations except Part 5.1, Part 5.2 and Part 5.7 of the Corporations Act. Part 5.1 provides for arrangements and reconstructions and, in general, is not readily applicable to a co-operative. In any event, Division 1 of Part 12 of the Co-operatives Act deals with mergers of co-operatives. Part 5.2 of the Corporations Act regulates receivers and other controllers of property of a corporation. Section 265 and Schedule 4 of the Co-operatives Act provide for receivers and other controllers of the affairs of a co-operative so that there is no occasion to apply provisions of the Corporations Act to co-operatives. Part 5.7 provides for winding up of bodies other than companies and by its terms does not apply to co-operatives. Part 5.3A of the Corporations Act provides for the administration of a company’s affairs. Section 318 of the Co-operatives Act provides that Part 5.3A of the Corporations Act applies to co-operatives. Section 318 also picks up Division 3 of Part 5.9 of the Corporations Act. Section 311 makes Parts 5.4, 5.4A, 5.4B, 5.5 and 5.6 of the Corporations Act apply to co-operatives. Section 333 of the Co-operatives Act makes Part 5.7B of the Corporations Act apply to co-operatives. Thus, the Co-operatives Act picks up every aspect of the external administration of corporations which is not expressly provided for in the Co-operatives Act. Given that every other part of Chapter 5 is picked up by the Co-operatives Act other than those which are unnecessary, it would be very odd, to say the least, if only Division 1 and 2 of Part 5.9 were not picked up and made to apply to the Co-operatives Act.
The importance and utility of the examination process in s 596A and s 596B serve to support that last conclusion. The compulsory examination procedure provided by Part 5.9 performs at least two important public purposes. One is to enable the liquidator to gather information which will assist him in the winding up and so protect the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connection with the affairs of the corporation. See Mason CJ in Hamilton v Oades (1989) 166 CLR 486 and Spedley Securities Ltd (in liq) v Bond Corporation Holdings Pty Ltd (1990) 19 NSWLR 729 and the cases there cited. A third purpose may be to enable the public to know how corporations are being managed and to achieve the deterrent effect of public examination: Re Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd (1987) 12 ACLR 475 at 478; Re New Tel Ltd (in liq); Evans v Wainter Pty Ltd (2005) 145 FCR 176. In the nature of things, liquidators when they are appointed labour under the particular disability of not knowing as much about the affairs of the corporation as former directors and others and they often cannot obtain reliable information about suspicious transactions: Re Quintex Group Management Services Pty Ltd (in liq) [1997] 2 Qd R 91 at 94-95. The examination process is intended to assist in overcoming that disability. The power to gather information and evidence to assist in the winding up is of great utility to liquidators seeking to recover property of the company and to set aside preferential payments pursuant to s 588FF of the Corporations Act. There are obvious reasons why Parliament would intend that the power to order examination should form part of co-operatives legislation.
These are sufficient reasons to decide the appeal. Out of deference to Mr Livesey’s arguments, I add the following.
Legislative History of Co-operatives Act
Mr Livesey QC sought to support his submission by relying on the legislative history of the co-operatives legislation and on the meaning of “corporation” in s 57A of the Corporations Law in 1997 when the Co-operatives Act came into operation. In 1997 the combined effect of s 57A and s 66A of the Corporations Law excluded a co-operative from the definition of a corporation in the Corporations Law. I will not attempt to set out the detail of the legislative provisions I have examined to satisfy myself of that fact. They are detailed and involve several enactments. It is sufficient to note that s 57A(4) excluded an exempt body as defined in s 66A of the Corporations Law from the definition of a corporation. Section 66A(3) provided:
(3)A body corporate, other than a financial institution, is an exempt body in relation to South Australia if, and only if:
(a) it is not a company for the purposes of section 9 of the Corporations Law of South Australia; and
(b) it is incorporated by or under a law of South Australia other than that Law or a corresponding previous law.
A co-operative is not a financial institution as defined: see s 9 and s 11AZA of the Corporations Law in 1997 and the Financial Institutions (Applications of Laws) Act 1992 (SA) and the Financial Institutions (Queensland) Act 1992 (Qld) and the Australian Financial Institutions Commission Act 1992 (Qld). A co-operative is not a company and is incorporated under a law other than the Corporations Law. It is therefore an exempt body. Mr Livesey contended that, as a co-operative is not a corporation, s 596A and s 596B did not apply to a co-operative.
The argument seeks to prove too much. An examination of the Co-operatives Act 1983 and of the Co-operatives Act 1997 shows that at all times, a liquidator of a co-operative had power to apply to the court pursuant to s 596A and s 596B and their legislative predecessor s 541 of the Companies (South Australia) Code to examine persons concerning the affairs of a co-operative. In 1983 the legislative predecessor of s 596A and s 596B then in force was s 541 of the Code. Section 76 of the Co-operatives Act 1983 expressly applied ss 541 and 542 of the Code to a co-operative in these terms:
76.Sections 541 and 542 of the Companies (South Australia) Code shall apply with such adaptations, exclusions, additions and modifications as may be prescribed in relation to a registered co-operative.
It will be noticed that the legislative technique was to make s 541 apply with such adaptations or modifications as may be prescribed. It seems that no modifications were prescribed. However, in 1984 the Co-operatives Act Amendment Act 1984 amended s 76 to read:
76.Sections 541 and 542 of the Companies (South Australia) Code extend, with such modifications as may be necessary for the purpose or as may be prescribed, to registered co-operatives as if a registered co-operative were a corporation as defined in the Code.
Section 541 therefore applied with such modifications as were necessary. Section 76 is a very clear expression of an intent to make s 541 apply to a co-operative.
When the 1997 Act came into operation a similar technique was used to that which had formerly existed in s 76 of the Co-operatives Act 1983. Section 223 in its 1997 form has been quoted at an early stage in these reasons. By 1997, s 596A and s 596B had replaced s 541. It will be noticed that in 1997 s 223 provided, among other things, that s 589 to s 598 were adopted and applied to and in respect of a co-operative in the same way as they applied to and in respect of a company. The provisions of ss 596A and 596B of the Corporations Law applied to a company by virtue of the fact that the definition of “corporation” included a company: see s 57A of the Corporations Law. As the specified sections also included references to a company, s 223(2) provided in effect that references to a company should be read as references to a co-operative. That remained the position until 2001 when the definition of “corporation” was changed. Thus, if reference is to be had to the legislative history of the co-operatives legislation, the provisions to which reference should be made are those special provisions which expressly invest liquidators of a co-operative with power to apply to the court for an order to summons a person for examination rather than to general provisions such as definition sections. That is an obvious application of the maxim that provisions in legislation which deal specifically with a topic prevail over general provisions in that legislation.
The Context in Which s 223 Appears
Mr Livesey QC also submitted that the context in which the provisions relating to examination appear in the Co-operatives Act indicated that it was not intended to include the examination process prescribed by s 596A to s 598. Section 223 appears in Part 9 of the Co-operatives Act. Part 9 deals with management and administration of companies. Its provisions concern such matters as the election of directors of a co-operative, transaction of business by the board of directors, remuneration of directors and other officers of the co-operative, and the duties and liabilities of directors, officers and employees of the co-operative. The provisions relating to administration and winding up of a co-operative appear later in Division 3 of Part 12 of the Co-operatives Act. The context in which s 596A to s 598 appear in the Co-operatives Act is curious but not so unusual that it supports Mr Livesey’s argument. Section 596A requires the court to summon a person for examination who was an officer of the corporation in the two years preceding the making of the winding up order. If the requirements of s 596A are satisfied, the court has no discretion but to make the order. That fact assists in understanding why the provision appears in this context. In addition, s 596B invests the Court with a discretion to order any person to be examined. By that means the Court may in appropriate circumstances order a former officer of the corporation or an officer of the corporation who falls outside the definition in s 596A to be examined. That is a further explanation for the fact that the examination provisions appear in Part 9 of the Co-operatives Act. It might have been more appropriate if these provisions had appeared in Part 12 of the Act but the fact that they appear in Part 9 is understandable.
Mr Livesey QC referred to the fact that s 223A of the Co-operatives Act dealing with employees’ entitlements replicates what is already contained in Part 5.8A of the Corporations Act which comprises s 596AA to s 596AI of that Act. That fact, he submitted, is an indicator that s 223 is not intended to make all of the sections between s 589 and s 598 apply to a co-operative. The argument must fail. On 21 January 2002 s 223A was not included in the Co-operatives Act. It was not introduced until the Co-operatives (Miscellaneous) Amendment Act 2002 came into operation on 1 July 2003. As it was enacted after the date on which the winding up order was made, it has no present application: s 16 of the Acts Interpretation Act. In any event, it is apparent from the second reading speech that s 223A was enacted out of abundance of caution. The Attorney-General described the reasons for introducing s 223A in these terms:
A new provision will make it transparent that provisions of the Corporations Act dealing with employee entitlements apply to co-operatives. The object of the provision is to protect entitlements of a co-operative’s employees from agreements and transactions that are entered into with intention of defeating the recovery of those entitlements.
See Hansard, House of Assembly, Tuesday 9 July 2002 at p637. It is clear that Parliament was intending to do no more than make assurance doubly sure. Mr Livesey’s contention must therefore fail.
Relevance of Powers of Investigators and Inspectors
Mr Livesey QC also contended that it is unnecessary to make Part 5.9 apply to co-operatives because ss 383 to 422 of the Co-operatives Act provide a scheme for the investigation of the affairs of a co-operative. Investigators and inspectors appointed under those provisions have broad powers and those powers are equally applicable to solvent and insolvent co-operatives. There are several reasons why that argument fails. First, inspectors and investigators are appointed by the Corporate Affairs Commission (“the Commission”), whereas examinations under ss 596A and 596B are ordered on the application of the liquidator. Secondly, the Commission may not be willing to appoint an inspector or investigator to investigate questions which the liquidator seeks to examine or, if willing, is not prepared to incur the expense of an inspection or investigation. In addition, the functions and purpose of an examination under Part 5.9 are often different from that of an inspection or investigation. The liquidator may be seeking information on a specific topic. An inspection or investigation may not necessarily be directed to the same issues as the liquidator which is to examine. While investigations and inspections and examinations under s 596A and s 596B are not mutually exclusive, generally speaking, the liquidator has a different purpose from an inspection or investigation ordered by the Commission. Finally, the Corporations Act provides for both investigations and the power of a liquidator to apply under Part 5.9 for an examination. The capacity of a liquidator to seek an examination exists in addition to the powers of an investigation vested in ASIC. There is no reason why a similar régime should not exist in the case of a co-operative.
Conclusion
For all of these reasons, s 596A and s 596B of the Corporations Act apply on the winding up of a co-operative registered under the Co-operatives Act. The appeal must, therefore, be dismissed.
SULAN J: I would dismiss the appeal. I agree with the reasons of Debelle J.
LAYTON J: I would dismiss the appeal for the reasons given by Debelle J.