Roy v Riverland Fruit Co-Operative Limited (in Liquidation) - [2006] SASC 116

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ROY v RIVERLAND FRUIT CO-OPERATIVE LIMITED (IN LIQUIDATION)
Judgment of Judge Withers a Master of the Supreme Court
21 April 2006
CORPORATIONS - WINDING UP - LIQUIDATORS - RIGHTS AND POWERS - IN WINDING UP BY COURT
Power of liquidator of a co-operative to examine - application of Part 5.9 of Corporations Act to liquidators of co-operatives.
Corporations Act 2001 s 596A, s 596B; Co-operatives Act 1997 s 223, referred to.

ROY v RIVERLAND FRUIT CO-OPERATIVE LIMITED (IN LIQUIDATION)
[2006] SASC 116
Civil

JUDGE WITHERS. By summons issued on 21 December 2001 the plaintiff applied for a winding up order in respect of Riverland Fruit Co‑operative Limited (Receivers and Managers Appointed). The application was made under Sections 459A and 459P of the Corporations Act (“CA”) and Sections 309 and 311 of the Co-operatives Act 1997 (“Co-op Act”). On 22 January 2002 the Court made the following order:
1.The plaintiff be granted leave pursuant to Section 459P(2) of the Corporations Act to apply for the winding up of Riverland Fruit Co-operative Limited (Receivers and Managers Appointed).
2That RIVERLAND FRUIT CO-OPERATIVE LIMITED (RECEIVERS AND MANAGERS APPOINTED) (the ‘Co-operative’) be wound up by this Court under the provisions of the Corporations Act.
A liquidator was appointed. The liquidation appears to have continued without significant Court involvement until 2005 when several applications for directions were issued and resolved.
By application filed on 7 October 2005 the liquidator sought examination orders against certain persons pursuant to the provisions of Section 596B of the CA. Part 5.9 Division 1 of the CA contains Sections 596A to 597B, all of which relate to the power of liquidators (among others) through the Court to examine various persons about the conduct of a corporation’s examinable affairs and the process involved in those examinations. Those sections refer specifically to corporations rather than to companies. The powers are available to liquidators of any corporate bodies that fall within the description of corporations used in the CA – see Section 57A.
Section 596B is as follows:
596B(1)    [Grounds for discretionary examination] The Court may summon a person for examination about a corporation’s examinable affairs if:
(a)an eligible applicant applies for the summons; and
(b)the Court is satisfied that the person:
(i)    has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or
(ii)     may be able to give information about examinable affairs of the corporation.
596B(2)This section has effect subject to section 596A.
Orders were made for the examination of those persons and pursuant to Section 596C that the affidavit of the liquidator in support of the application be sealed and not be available for inspection except insofar as the Court ordered.
By Notice for Specific Directions filed on 24 November 2005 representatives of the proposed examinees applied as follows:
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.
Consequential orders were sought. The proposed examinees’ application first came before the Court on 7 December 2005 when the application for access to the affidavits of the liquidator filed in support of the examinations was listed for argument on 21 December 2005. On the day preceding that date the solicitors for the proposed examinees gave notice to the solicitors for the liquidator of their intention to seek to argue as a preliminary point that by reason of the interaction of the Co-op Act and the CA the Court had no power to make orders for examination under Part 5.9 of the CA. At the hearing on 21 December 2005 and following discussion I allowed counsel for the proposed examinees to make submissions in support of that preliminary point and then adjourned the matter to provide time for counsel for the liquidator and the liquidator to consider those submissions and to respond. Counsel for the liquidator responded on 30 January 2006. As the matter was complex I allowed counsel for the proposed examinees 7 days in which to file a written reply. That reply was filed by leave on 13 February 2006 and on 20 February 2006 pursuant to leave earlier given the liquidator filed a written response.
The argument advanced on behalf of the proposed examinees is that Riverland Fruit Co-operative Limited (In Liquidation) (RFC) is a co-operative initially registered under the Co-operatives Act 1983 and by the operation of Schedule 4 of the Co-operatives Act 1997 a co-operative under that Act. By reason of the interaction of the CA and the Co-op Act a liquidator of a co-operative is not vested with the powers in Division 1 of Part 5.9 of the CA to conduct examinations. For that reason the examination orders made by the Court ought to be discharged.
The examinees’ counsel began by referring to Section 5F of the Corporations Act which reflects in part arrangements reached between the States and Territories and the Commonwealth to enable the passage of a valid Commonwealth Corporations Act following the High Court decision in The State of New South Wales v The Commonwealth of Australia (1990) 169 CLR 482. Section 5F(1) is as follows:
5F(1) Subsection (2) applies if a provision of a law of a State or Territory declares a matter to be an excluded matter for the purposes of this section in relation to:
(a)the whole of the Corporations legislation; or
(b)a specified provision of the Corporations legislation; or
(c)the Corporations legislation other than a specified provision; or
(d)the Corporations legislation otherwise than to a specified extent.
Subsection (2) of Section 5F then goes on to provide legislation complementary to subsection (1). Subsection (2) reads as follows:
5F(2) By force of this subsection:
(a)none of the provisions of the Corporations legislation (other than this section) applies in the State or Territory in relation to the matter if the declaration is one to which paragraph (1)(a) applies; and
(b)the specified provision of the Corporations legislation does not apply in the State or Territory in relation to the matter if the declaration is one to which paragraph (1)(b) applies; and
(c)the provisions of the Corporations legislation (other than this section and the specified provisions) do not apply in the State or Territory in relation to the matter if the declaration is one to which paragraph (1)(c) applies; and
(d)the provisions of the Corporations legislation (other than this section and otherwise than to the specified extent) do not apply in the State or Territory in relation to the matter if the declaration is one to which paragraph (1)(d) applies.
Section 5F then provides for regulations to be able to impact on the degree or otherwise to which the Corporations legislation is to apply in a particular State or Territory.
Sections 5E and 5G of the Corporations Act are designed to facilitate concurrent operation of the Corporations legislation with any law of a State or Territory and to avoid any issues of inconsistency between the Corporations legislation and State and Territory laws. In particular Section 5G(8) provides in relation to external administration as follows:
5G(8) External administration under State and Territory laws. The provisions of Chapter 5 of this Act do not apply to a scheme of arrangement, receivership, winding up or other external administration of a company to the extent to which the scheme, receivership, winding up or administration is carried out in accordance with a provision of a law of a State or Territory.
Turning now to the Co-operatives Act 1997, Section 9(1) of that Act provides:
9.(1) A co-operative is declared to be an excluded matter for the purposes of section 5F of the Corporations Act in relation to the whole of the Corporations legislation other than to the extent specified in subsection (2).
Accordingly South Australia has taken the approach contemplated by Section 5F(1)(d) of the Corporations Act. Subsection (2) of Section 9 of the Co-op Act then sets out a number of provisions which are not excluded to co-operatives. Its introductory words are as follows:
(2) Subsection (1) does not exclude the application of the following provisions of the Corporations legislation to co-operatives to the extent that those provisions would otherwise be applicable to them:
…
None of the sub-paragraphs (a) to (m) thereafter set out are relevant to the power to examine under Part 5.9 of the CA.
Section 10 of the Co-op Act provides for regulations to be able to declare “any matter relating to co-operatives to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to any excluded Corporations legislation provisions or provisions (with such modifications as may be specified in the declaration)”. The Corporations (Ancillary Provisions) Act 2001 (SA) is an Act to facilitate transitional arrangements relating to the implementation in this State of the then new Commonwealth Corporations legislation and ASIC legislation. There are no regulations relevant to this matter.
Section 11 of the Co-op Act provides:
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:
…
This section contemplates other provisions of the Co-op Act creating exceptions to the general exclusion in Section 9(1) of that Act and incorporates into such exceptions some modifications of general application. Subsection (e) of Section 11(1) is as follows:
(e)provisions which are not relevant to co-operatives or which are incapable of application to co-operatives are to be ignored;
Thus the scheme of the Co-op Act is that provisions of the CA are not to apply to co-operatives in South Australia unless their application is expressly directed by the Co-op Act. I am reinforced in that view in that when the Co-op Act 1997 was originally enacted it included a Section 12 which read:
Effect of amendments to adopted provisions of Corporations Law
12.(1) A provision of the Corporations Law that is adopted by or under a provision of this Act so applies as in force from time to time.
(2) If a group of provisions of the Corporations Law is adopted by or under a provision of this Act (whether by application of a Part or other division of the Corporations Law or otherwise), and the Corporations Law is amended so as to insert new provisions in that group of provisions, the new provisions form part of the group of provisions so adopted.
That section was repealed by Section 32 of the Statutes Amendment (Corporations) Act No 23 of 2001 as part of a general revision of Division 4 of Part 1 of the Co-op Act. After that amendment there was no longer any automatic application to co-operatives of CA additions to applied provisions of the CA. Rather the South Australian Parliament reserved to itself the right to expressly decide whether any additions to a group of applied CA provisions were to apply to co-operatives. An example of this process is Section 223A of the Co‑op Act which in 2002 applied to co-operatives a new Chapter 5 Part 5.8A of the CA.
Examinees’ Arguments
The proposed examinees argued that the winding up provisions in the Co‑op Act are contained in Division 3 of Part 12 (ss 309-317). No provision is therein made for examinations by liquidators. Instead the Co-op Act provides for examinations only by inspectors or investigators appointed by the Corporate Affairs Commission which is responsible for the administration of the Act (see Sections 383-422). Under the provisions of the Co-op Act (without the impact of any applied Corporations legislation) liquidators do not have power to examine persons as do CA liquidators. They asserted that position to be historically consistent with the winding up of insolvent co-operatives.
Section 309 of the Co-operatives Act 1997 provides for methods of winding up co-operatives. It is as follows:
309. (1) A co-operative may be wound up voluntarily or by the Supreme Court or on a certificate of the Commission.
(2) In the case of a winding up voluntarily or by the Supreme Court, the co-operative may be wound up in the same manner and in the same circumstances as a company under the Corporations Act may be so wound up.
Section 311 which deals with the application of the CA to a winding up is as follows:
311. The winding up or deregistration of a co-operative, or a deregistered co-operative, are declared to be applied Corporations legislation matters for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to the provisions of Parts 5.4, 5.4A, 5.4B, 5.5, 5.6, 5A.1 and 9.7 of the Corporations Act, subject to such modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.
The examinees point out that Section 311 does not contain any reference to Part 5.9 of the Corporations Act which Part contains the examination powers of liquidators. They describe it as a “stark” omission.
It is only Section 223 of the Co-op Act that may specifically refer to provisions in Part 5.9 Division 1 of the CA. That section provides as follows:
Application of Corporations Act concerning officers of co-operatives
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 344, 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.
Sections 596A and 596B fall within that range of applied provisions, namely Sections 589 to 598. However the proposed examinees argue that this provision does not assist the liquidator to access the examination powers under those sections as they are excluded by the modification in Section 223(a) where it provides that “a reference in those provisions to a company is to be read as a reference to a co-operative”. Because Sections 596A and 596B refer to corporations and not to companies, whereas the other parts of the referred sections (other than Sections 597 and 598) refer to companies – see Sections 589, 590, 591, 592, 593, 595 and 596, a proper construction leads to the conclusion that those two sections do not fall within the ambit of CA provisions applied by Section 223.
Counsel for the proposed examinees argued that the South Australian Parliament has carefully identified the provisions it wants applied in respect of insolvent co-operatives and those provisions do not include Part 5.9 Division 1 of the CA which refer to “corporations” rather than “companies”. This is the heart of the argument advanced on behalf of the proposed examinees and the real point of difference between the parties.
Counsel for the proposed examinees also referred to Section 333 of the Co‑op Act 1997 as an example of a contrasting modification. Section 333 of the Co‑op Act is as follows:
Application of Corporations Act with respect to insolvent co-operatives
333. 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 the provisions of Part 5.7B of the Corporations Act, subject to the following modifications:
(a)those provisions are to be read as if a co-operative were a company;
(b)a reference in those provisions to any provision of section 286 of the Corporations Act is to be read as a reference to the equivalent provisions of the regulations under section 233 of this Act;
(c)such other modifications (within the meaning of Part 3 of the Corporations (Ancillary Provisions) Act 2001) as may be prescribed by the regulations.
The wording of the modifying provision in Section 333(a) is different to that used in Section 223(a) where the wording is:
a reference in those provisions to a company is to be read as a reference to a co-operative;
It was argued that the latter words have the consequence that if there is not a reference to a company within the particular CA provision then it does not apply to a co-operative. Arguably the Section 333 modification is broader in its application and would make it more difficult to argue that section within the nominated group that referred to corporations rather than companies were to be excluded. In my view it is more likely that the outcome is the same but it is not necessary for me to decide that for the purposes of this matter.
The proposed examinees argued that the Co-op Act has its own scheme of investigation of the affairs of a co-operative and that the supervision and inspection powers contained in Division 1 of Part 15 operated in place of the powers of a liquidator to investigate officers or other persons in relation to co‑operatives in liquidation. The supervision and inspection powers in Sections 383 to 422 in Part 15 of the Co-op Act do give broad powers to the Corporate Affairs Commission to appoint inspectors and to conduct investigations for a broad range of purposes. Those inspectors have wide powers and there are penalties for those who fail to comply with the requirements of an inspector – see Section 392. But providing inspectors with wide powers of enquiry to enable them to make a report to the Corporate Affairs Commission does not of itself mean that liquidators do not have powers of inquiry or examination. Those matters are not mutually exclusive. Such powers might well be used in respect of inquiries and investigations into solvent co-operatives as well as co-operatives that are insolvent. Counsel for the examinees was not able to proffer any explanation why the liquidator of a co-operative should be deprived of the power to examine save to say that in South Australia co-operatives had always been treated differently from companies.
Liquidator’s Arguments
In responding counsel for the liquidator said that it was common ground that Section 5F of the CA permits the State legislation to exclude the operation of the CA, and that Section 9(1) of the Co-op Act excluded the whole of the Corporations legislation other than to the extent specified within Section 9(2) or as otherwise applied in the Act or by regulations.

He submitted that a co-operative in any event falls within the definition of a corporation as a body corporate – see Section 57A of the Corporations Act. The examination powers of Sections 596A and 596B are made broadly available to liquidators of corporations which includes liquidators of companies, body corporates and unincorporated bodies – Section 57A. Accordingly, the modifying provisions of Section 223 of the Co-op Act do not exclude the application of Sections 596A and 596B notwithstanding that there is no specific reference to a company within those provisions. The provisions in Chapter 5 Part 9 Division 1 of the CA therefore apply to co-operatives as bodies corporate and the modifying provisions of Section 223 do not affect that. While that argument might explain why it was unnecessary for the Co-op Act to make reference to corporations in the modifying provision to Section 223 it cannot in my view in itself have the effect of applying a CA provision to a co-operative.
Further the liquidator argued that Section 309 of the Co-op Act provided that a co-operative was to be wound up in the manner that a company was wound up under the CA. Reference was made to the liquidator’s functions and in particular it was suggested that a basic or fundamental function of a liquidator was the power to examine. This was the liquidator’s most effective means of obtaining information from persons not prepared to co-operate with him or her. It was accepted that Parts 5.4, 5.4A, 5.4B, 5.5 and 5.6 (namely Sections 459A to 581) were picked up by Section 311 of the Co-op Act. The liquidator argued that it was clear that Part 5.7 of the CA which deals with the winding up of bodies other than companies was properly not part of the legislation applied to co-operatives because a co-operative did not fit within the description of a Part 5.7 body. The liquidator noted that various other provisions of the winding up sections of the CA were applied, eg Part 5.7B by Section 333 of the Co-op Act, Part 5.8 by Section 223 of the Co-op Act, and Part 5.8A (Sections 596AA to 596AI) by Section 223A of the Co-op Act which came into force by reason of the Co-operatives (Miscellaneous) Amendment Act 2002.
However, importantly the liquidator argued that the whole of Part 5.9 (Sections 596A to 600) of the CA was applied by the combined effect of Section 223 of the Co-op Act which applied Sections 596A to 598 (Divisions 1 and 2) and Section 318 of the Co-op Act which applied Section 600 (Division 3). Because it was so applied there was no need to include it in the provisions applied by Section 311.
The liquidator placed reliance on the provisions of Section 309(2) of the Co-op Act and the words therein that a co-operative “may be wound up in the same manner and in the same circumstances as a company under the Corporations Act may be so wound up”. He said that Section 311 of the Co-op Act specifically picked up Part 5.4B of the CA which included Section 477(2) of that Act. Section 477(2) generally provides powers to a liquidator to bring or defend legal proceedings on behalf of the company and inter alia amongst others to “do all such other things as are necessary for winding up the affairs of the company and distributing its property”. It was argued that Section 477(2) therefore gives a Court appointed liquidator recourse to the examination process. It was suggested that a similar power was granted to a liquidator in a voluntary winding up by Section 506(1)(b) contained in Part 5.5 of the CA and applied by Section 311 of the Co-op Act. Section 506(1)(b) is as follows:
506(1) The liquidator may:
(b) exercise any of the powers that this Act confers on a liquidator in a winding up in insolvency or by the Court; …
Hence powers available to liquidators under other sections of the CA were to be applied to a liquidator under the Co-op Act by necessary implication. I reject that particular argument. It is inconsistent with the provisions of Division 4 of Part 1 of the Co-op Act as amended in 2001. In my view unless the Co-op Act specifically applies a CA provision then it has no application.
The liquidator argued that the distinction relied upon by the proposed examinees between company and corporation insofar as it prohibited any access by the liquidator to the examination powers of ss 596A and 596B was specious. The liquidator said that Section 223(a) did no more than provide that any references to a company in Sections 589 to 598 of the CA were to be read as references to a co-operative. It was suggested that sections of the CA that referred to companies and which are imported to the Co-op Act require the importing provision to have a modification like that of Section 223(a). It was argued there is no need for it when the CA section refers to corporations.
Section 5G(8) of the Corporations Act was not of relevance because it only applied to liquidations “to the extent to which the … winding up … is carried out in accordance with a provision of a law of a State or Territory”. The liquidator’s counsel argued the winding up of this co-operative (RFC) was not being carried out pursuant to the law of a State or Territory. Rather the effect in particular of Sections 309(2), 223, 311, 318 and 333 of the Co-operatives Act made it clear that the winding up of this co-operative was being carried out in accordance with the CA.
In any event the examination powers in Sections 596A and 596B of the Corporations Act were expressly picked up by Section 223 of the Co-operatives Act and references to “corporations” in Sections 596A and 596B must be read as a reference to a co-operative “because a co-operative is a corporation”.
He further argued that there were four ways in which the Co-op Act applied CA provisions. The first way was one of simple adoption of the Co-op Act provision. The second was adoption with modification. The third was not by adoption but rather by redrafting in effect a sibling provision. The fourth method was a double adoption in the sense that the adoption of one provision necessarily involved the adoption of another and in that regard he referred to the provisions of Section 477 and Section 506 of the CA which were adopted by the Co-op Act which he said necessarily led to a liquidator being vested with the examinations power. I reject the argument of double adoption. In my view the language of the Co-op Act is against that.
One of the submissions put to me by the liquidator is that it would be a startling outcome if the liquidator of a co-operative was to be deprived of the powers to examine persons normally available to a liquidator under the CA and yet have all of the obligations and functions otherwise of a liquidator under the CA. I have some sympathy for that submission. Sections 477 and 506, which set out the powers of liquidators, are specifically adopted by the Co-op Act. Similarly, Section 536 of the CA, which provides for the supervision of liquidators, is adopted by the Co-op Act by Section 311 and also by Section 339(2) which relates to a person appointed to administer a compromise or arrangement for a co-operative and is modified as if:
(a) the appointment were an appointment as a liquidator of the co-operative; …
Discussion
It is fair to say that the language of the applying provisions of the Co-op Act could well lead to confusion. The Co-op Act seeks to apply CA legislation in a number of provisions with different modifications or no modifications.
·Section 145A relates to the application of CA provisions regarding disclosure documents and securities. It applies Sections 716(2), 722, 723(2), 724(1)(a) and (2)(a) and 734. There is no modifying reference to companies.
·Section 209(8) applies Part 2D.6 of CA which includes Sections 206A to 206HA, all of which refer to corporations. There are no modifying provisions.
·Section 223, which is the focus of this matter, has a modifying provision in that “a reference to a company is to be treated as a reference to a co-operative”. The sections to which it applies include sections that specifically apply to companies and sections which specifically apply to corporations.
·Section 223A has the same modifying provision as 223(a). It applies Chapter 5 Part 5.8A.
·Section 258 applies provisions relating to disclosure requirements for securities and debentures, fund-raising and prohibited conduct. It too uses modifying provisions:
(a) … as if a co-operative were a company; and
(b) a reference … to a corporation includes a reference to a co-operative;
·Section 258A applies Sections 722 and 734 of the CA in relation to monies held in trust and restraints on advertising. There are no modifying provisions in relation to companies or corporations.
·Section 261 applies Section 124(1)(b) relating to the power to issue debentures and Section 563AAA as to redemption of debentures with a modifying provision “as if a co-operative were a company”.
·Section 311 applies Parts 5.4, 5.4A, 5.4B, 5.5, 5.6, 5A.1 and 9.7 of the CA. Those sections relate to companies. There are no modifying provisions.
·Section 318 applies Part 5.3A, which is the voluntary administration provisions of the CA which contains Sections 435A to 451D and Part 5.9 Division 3 which contains Sections 600A to 600F. There is a modifying provision that the matters are to be applied “as if a co-operative were a company”.
·Section 333 applies Part 5.7B (Sections 588D to 588I) relating to the recovery of property and portable transactions with a modifying provision “as if a co-operative were a company”.
·Section 339(2) applies Section 536 of the CA relating to the supervision of liquidators to persons administering a compromise or arrangement with no modifying provisions.
·Section 354 applies Part 9.7 of the CA, being Sections 1339 to 1343A relating to the management of unclaimed property by ASIC.
Accordingly, there are provisions within the Co-op Act that apply provisions of the CA -
(1)that relate to corporations without any modification;
(2)that relate to companies without any modification;
(3)that have a modification phrase “a reference to a company is to be taken as a reference to a co-operative”;
(4)that have a modification phrase “as if a co-operative were a company”;
(5)that have a modification phrase “a reference to a corporation includes a reference to a co-operative”.
I note that in Section 209(8) of the Co-op Act it was not regarded as necessary to have recourse to modifying provisions where the applied provision referred to corporations. Similarly no modifying provisions were used in Section 311 where the applied CA provisions related to companies.
In my view the structure of the Co-op Act clearly indicates that unless a provision of the CA is specifically applied by a provision in the Co-op Act or by regulations then it is of no application.
The only provision within the Co-op Act that can result in the application to co-operatives of Sections 596A and 596B of the CA is Section 223. If the modifying provision of Section 223 excludes that application then in my view Sections 596A and 596B would not apply. Similarly neither would Section 597, which relates to the conduct of examinations referred to in Sections 596A and 596B. Nor would Section 598 which relates to the making of orders against a person concerned with a corporation. I think this is the key to the proper construction of Section 223. It is highly unlikely that Parliament intended the modifying provision of Section 223(a) to exclude provisions contained within Sections 589 to 598 that relate to corporations when the last three of those provisions, namely Sections 596A to 598 all relate to corporations. That makes no sense. If that had been Parliament’s intent then it would have confined the range of provisions applied to Sections 589 to 596. The “corporations” sections do not fall within the middle of the sections nominated to apply but rather at the very end of the group. As Jordan CJ said in Hall v Jones (1942) 42 SR (NSW) 203 at 208:
… a Court is entitled to pay the Legislature the not excessive compliment of assuming that it intended to enact sense and not nonsense.
There would be no sense at all in apparently applying Sections 596A to 598 and then immediately cancelling the application of those provisions by use of a modification.
I note that the definition of “modification” in The New Shorter Oxford English Dictionary relevantly includes “… The action or an act of making changes to something without altering its essential nature or character; partial alteration; …”. When defining the word “modify” the learned editor included “… Make partial or minor changes to; alter without radical transformation”. In my view Parliament has used that approach of “partial or minor changes … without radical transformation” in Section 223(a). The modifying provision is for the purpose of clarification, not limitation or exclusion, or to use the words of the definition, “radical transformation”.
The most acceptable construction of Section 223 is that the modifying provision in Section 223(a) means precisely what it says, namely that in those sections where there is a reference to a company the word “company” is to be changed effectively to the word “co-operative”. That does not exclude the application of sections within the range of provisions applied that refer to corporations. Such a finding is consistent with the application of Section 477(2) and Section 506(1) of the CA to co-operatives.
I have taken into account both the oral and written submissions of counsel. While I may not have referred to an argument specifically raised, I have taken all into consideration.
In summary, it is my view that unless a provision of the CA is specifically applied by the Co-op Act then it is an excluded provision pursuant to Section 9(1) of that Act. In those circumstances the only section within the Co-op Act that can apply the examination powers contained in Part 5.9 Division 1 of the CA is Section 223. For the reasons foregoing I am satisfied that the modifying provision in Section 223(a) does not have the effect of excluding from the applied provisions Sections 596A-F, 597 and 598. Accordingly, the application by the proposed examinees to discharge the examination summonses is refused. I certify fit for counsel. I will hear the parties as to costs. I note in the material put before the Court that each party had suggested to the other that the position was so clear that indemnity costs should be ordered. That is not a view with which I presently agree.