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Greylag Goose Leasing 1410 Designated Activity Company v P.T. Garuda Indonesia Ltd [2022] NSWSC 1623 (28 November 2022)

Last Updated: 28 November 2022

JUDGMENT

1. HIS HONOUR: On 15 August 2022, the two plaintiff companies (together Greylag Goose), which are incorporated in Ireland, sued out of this Court an Originating Process seeking an order (the proceeding) that the defendant (Garuda), an Indonesian corporation and the national airline carrier of that country, be wound up in insolvency pursuant to s 583(c)(i) or (ii) of the Corporations Act 2001 (Cth) (the Corporations Act).
2. On 22 September 2022, Garuda filed a Notice of Motion seeking a declaration that the Court has no jurisdiction over Garuda in respect of the subject matter of the proceeding and an order setting aside the Originating Process.
3. On 10 October 2022, Black J listed the Motion for hearing on 23 November 2022 and fixed the winding up application tentatively for hearing on 14 and 16 December 2022, if jurisdiction is established.
4. Garuda invokes s 9 of the Foreign States Immunities Act 1985 (Cth) (the Immunities Act) which provides:

9 General immunity from jurisdiction

Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding.

5. Sections referred to below are, unless otherwise stated or indicated by the context, sections of the Immunities Act.
6. By s 22, the immunity given by s 9 applies to a separate entity of a foreign State as it applies in relation to the foreign State.
7. Section 3(1) defines separate entity in relation to a foreign State, relevantly, to mean:

... a natural person (other than an Australian citizen), or a body corporate or corporation sole (other than a body corporate or corporation sole that has been established by or under a law of Australia), who or that:

(a) is an agency or instrumentality of the foreign State; and
(b) is not a department or organ of the executive government of the foreign State.

8. Section 3(3) provides:

(3) Unless the contrary intention appears, a reference in this Act to a foreign State includes a reference to:

(a) a province, state, self‑governing territory or other political subdivision (by whatever name known) of a foreign State;
(b) the head of a foreign State, or of a political subdivision of a foreign State, in his or her public capacity; and
(c) the executive government or part of the executive government of a foreign State or of a political subdivision of a foreign State, including a department or organ of the executive government of a foreign State or subdivision;

but does not include a reference to a separate entity of a foreign State.

9. It is common cause, for present purposes, that Garuda is a separate entity because it is an agency or instrumentality of the Republic of Indonesia.
10. Garuda is a foreign company which is registered under Division 2 of Pt 5B.2 of the Corporations Act. Part 5.7 of that Act makes provision for the winding up of such bodies.
11. Section 14 of the Immunities Act provides:

14 Ownership, possession and use of property etc.

(1) A foreign State is not immune in a proceeding in so far as the proceeding concerns:

(a) an interest of the State in, or the possession or use by the State of, immovable property in Australia; or
(b) an obligation of the State that arises out of its interest in, or its possession or use of, property of that kind.

(2) A foreign State is not immune in a proceeding in so far as the proceeding concerns an interest of the State in property that arose by way of gift made in Australia or by succession.

(3) A foreign State is not immune in a proceeding in so far as the proceeding concerns:

(a) bankruptcy, insolvency or the winding up of a body corporate; or
(b) the administration of a trust, of the estate of a deceased person or of the estate of a person of unsound mind.

12. Greylag Goose’s answer to Garuda’s immunity claim is that s 14(3)(a) applies to exclude Garuda’s immunity because the proceeding concerns the winding up of a body corporate, namely Garuda. Garuda is indisputably a body corporate.
13. Its contention entails reading the words “a body corporate” as referring to, or including reference to, the foreign State (or separate entity) referred to in the chapeau of s 14(3) itself. Greylag Goose argues that the use of the indefinite article before “body corporate” indicates an intention on the part of the legislature that the body corporate could be anyone including the foreign State (comprehending also a separate entity).
14. Garuda’s primary riposte is that on the proper construction of s 14(3), the foreign State (or separate entity) referred to in the chapeau is not, and cannot be, the body corporate referred to in subsection (a).
15. Its secondary answer is that, on their proper construction, the words “proceeding... concerns... the winding up” means a proceeding in which a winding up order has already been made. Put another way, the section contemplates a proceeding in a winding up, not the application to wind up itself. It argues that s 14 as a whole concerns proceedings in which the foreign State has an interest or liability connected with property in Australia and that, consistent with this, subsection (3) is directed to proceedings about such interests or liabilities in a bankruptcy, insolvency or winding up. It relies on the heading to s 14 which refers to “ownership, possession and the use of property”. It argues that the suggestion that the legislature intended to empower the Court to wind up a foreign State or a body corporate which is a separate entity of a foreign State is radical.
16. Greylag Goose’s response is that the heading to s 14 includes the abbreviation “etc.” which indicates that more than ownership, possession and use of property was intended to be covered. They put that there are good policy reasons why a body corporate which is functioning in Australia and incurring debts should be susceptible to the winding up laws of this country.
17. For the reasons which follow, I uphold Garuda’s primary submission.
18. There was no debate about the principles that apply to the construction of legislation.
19. In Corporate Affairs Commission (NSW) v Yuill [1991] HCA 28; (1991) 172 CLR 319 at 346 (Yuill), McHugh J cited, with approval, Lord Radcliffe’s statement in Attorney-General (Canada) v Hallet & Carey Ltd [1952] AC 427, 449 that "the paramount rule remains that every statute is to be expounded according to its manifest or expressed intention." His Honour went on to say at that:

The first step in the process of statutory construction is the ascertainment of the ordinary grammatical meaning of the legislative provision in question. However, ascertaining the ordinary grammatical meaning of a legislative provision is only the first step in the process of statutory construction, for the object of that process is to ascertain the meaning which Parliament intended. The grammatical meaning of a provision is not always the meaning which Parliament intended the statute to have. For the purpose of ascertaining the statutory or legal meaning of an enactment, it is necessary to take into account various rules of construction which Parliament is presumed to have intended to be used to ascertain the meaning of its legislation. The application of these rules often results in the statutory or legal meaning being different from the grammatical meaning of an enactment. Thus, it is a rule of construction that the purpose of the legislation must be taken into account in determining the statutory meaning of one of its provisions. The application of this rule may have the effect of modifying the grammatical meaning of the provision. Likewise, it is a rule of construction that, in the absence of a clear contrary indication, legislation is not to be interpreted as abolishing basic common law rights and privileges. The application of this rule may require the reading down of the literal meaning of general words in an enactment.

20. In Yuill, at 331, Dawson J observed that “[i]n determining the intention of the legislature, that is to say, the intention which is revealed by the words used by the legislature, it is permissible to look to the general purpose or object of the legislation”; see too Brennan J at 332 and Gaudron J at 339-340.
21. Grammatically and literally, the words “a proceeding insofar as the proceeding concerns... the winding up of a body corporate” in s 14(3) are susceptible to the reading that the proceeding concerns the winding up of any body corporate, including the foreign State or separate entity whose immunity the section removes.
22. But in my view, this is not a sensible way to read them. Rather, the words of the chapeau to s 14(3) refer to the object of the immunity (the foreign State or separate entity as the case may be) whereas the body corporate referred to in s 14(3)(a) is not the object of the immunity but someone different, namely the body corporate the winding up of which the proceedings concern.
23. Greylag Goose’s construction imports to the legislature an unlikely intention to refer to the same person in two different ways. Its construction is also tortuous because, in effect, it requires it to operate against Garuda even though, when practically read, the provision says Garuda has no immunity in winding up proceedings against a body corporate. The presence of the indefinite article is against Greylag Goose’s construction, not in favour of it. There would have been more force in Greylag Goose’s argument if the definite article had been used.
24. I consider that had the legislature intended to suscept the foreign State or separate entity to a winding up by this Court, where no other exception to the immunity provided by the Immunities Act applies, it would clearly have said so. In my view, the section does not have this in mind.
25. One significant consequence of upholding Greylag Goose’s construction is that it would logically follow that s 14(3) removes the immunity of natural persons who fall within the definition of foreign State (such as the head of a foreign State) or separate entity so that they could be bankrupted in Australia in circumstances where no other exception to the immunity provided by the Immunities Act (such as in relation to commercial transactions – see [34] below) applies. There is no warrant to assume that the section would operate differently with respect to natural persons as opposed to bodies corporate. This, I consider, adds force to a construction that the bankruptcy, insolvency or winding up in question is not that of the foreign State or separate entity itself.
26. It is not necessary to examine what are the outer reaches of the operation of s 14(3). It suffices to observe that it would operate at least with respect to recovery of property belonging to a corporation being wound up, to judicial determination of alleged voidable transactions within Pt 5.7B of the Corporations Act to which the foreign State or separate entity was party, and to make the foreign State or separate entity amenable to have to attend compulsory examination.
27. I would, however, not uphold Garuda’s secondary contention.
28. In support of it, Garuda draws attention to the commentary to s 14 in the Explanatory Memorandum for the Bill which became the Immunities Act that:

Sub-cl. (3) removes the immunity of foreign States in bankruptcy and related proceedings and in proceedings concerning trusts or the administration of deceased estates.

29. However, the relational word “concerns” has wide operation and is one of a general application: Minister of State for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273, 289, 302 (Mason CJ and Deane J); see too Adeang v The Nauru Phosphate Royalties Trust (Unreported, Supreme Court of Victoria, 8 July 1992) where Hayne J (as his Honour then was) expressed a view obiter, consistent with this, with respect to s 14(3)(b). A proceeding for a winding up order is as much one which concerns the winding up as is the same proceeding after a winding up order has been made.
30. I do not consider that the heading provides any assistance with respect to the constructional choice to be made here.
31. If the body corporate referred to in s 14(3)(a) was Garuda, it would have no immunity with respect to the proceeding.
32. I note that the Court was referred to, and each side sought to pray in aid of its position:
    • passages in the Australian Law Reform Commission Report 24 on Foreign State Immunity (1984);
    • sections of corresponding legislation in the United Kingdom and the United States;
    • policy considerations said to underly the Immunities Act; and
    • precepts of private international law.
33. None of the above-mentioned material to which I was referred makes reference expressly or by implication to the type of operation for which Greylag Goose contends. Perhaps that is its only relevance for present purposes.
34. In P.T. Garuda Indonesia Ltd v Australian Competition & Consumer Commission [2012] HCA 33; (2012) 247 CLR 240, 251 (French CJ, Gummow, Hayne and Crennan JJ), which coincidently was also concerned with foreign State immunity claimed by Garuda, the High Court observed that foreign authorities and legislation to which it was referred provided limited assistance. That case concerned whether a proceeding brought against Garuda by the Australian Competition and Consumer Commission for alleged anti-competitive activities concerned a commercial transaction. Section 11(1) provides that a foreign State is not immune in a proceeding insofar as the proceeding concerns a commercial transaction. It was held that the proceeding indeed concerned a commercial transaction and that Garuda, in those circumstances, did not have immunity.
35. Section 38 provides:

38 Power to set aside process etc.

Where, on the application of a foreign State or a separate entity of a foreign State, a court is satisfied that a judgment, order or process of the court made or issued in a proceeding with respect to the foreign State or entity is inconsistent with an immunity conferred by or under this Act, the court shall set aside the judgment, order or process so far as it is so inconsistent.

36. I am satisfied that the Originating Process is inconsistent with the immunity conferred on Garuda by the Immunities Act. The Originating Process must accordingly be set aside. A declaration of no jurisdiction is not necessary and is of no additional utility.
37. I make the following orders.

(1) The Originating Process filed by the first plaintiff and second plaintiff on 15 August 2022 is set aside.

(2) The plaintiffs are to pay the defendant’s costs of the motion.

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