Jennifer Elizabeth Low in her capacities as Receiver & Manager of Performance Finance Ltd (Receiver & Manager Appointed) Acn 059 812 396, Receiver and Manager of California Film Finance (Gold) Pty Ltd (Receiver & Manager Appointed) Acn 061 060 633, Provisional Liquidator of Performance Group Holdings Pty Ltd (In Provisional Liq) Acn 053 969 887 and Liquidator of Performance Securities Pty Ltd (In Liq) Acn 075 982 268 v Performance Finance Ltd (Receiver & Manager Appointed) Acn 059 812 396, California Film Finance (Gold) Pty Ltd (Receiver & Manager Appointed ) Acn 061 060 633, Performance Group Holdings Pty Ltd (In Provisional Liq) Acn 053 969 887 and Performance Securities Pty Ltd (In Liq) Acb 075 982 268 [2004] WASC 80 (7 May 2004)

Last Updated: 12 May 2004

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : JENNIFER ELIZABETH LOW in her capacities as Receiver & Manager of Performance Finance Ltd (Receiver & Manager Appointed) ACN 059 812 396, Receiver and Manager of California Film Finance (Gold) Pty Ltd (Receiver & Manager Appointed) ACN 061 060 633, Provisional Liquidator of Performance Group Holdings Pty Ltd (In Provisional Liq) ACN 053 969 887 and Liquidator of Performance Securities Pty Ltd (In Liq) ACN 075 982 268 -v- PERFORMANCE FINANCE LTD (Receiver & Manager Appointed) ACN 059 812 396, CALIFORNIA FILM FINANCE (GOLD) PTY LTD (Receiver & Manager Appointed ) ACN 061 060 633, PERFORMANCE GROUP HOLDINGS PTY LTD (In Provisional Liq) ACN 053 969 887 and PERFORMANCE SECURITIES PTY LTD (In Liq) ACB 075 982 268 [2004] WASC 80

CORAM : SIMMONDS J

HEARD : 8 MARCH 2004

DELIVERED : 7 MAY 2004

FILE NO/S : COR 32 of 2004

MATTER : Section 424(1), s 532(2) and s 1322(4) of the Corporations Act 2001 (Cth)

BETWEEN : JENNIFER ELIZABETH LOW in her capacities as Receiver & Manager of Performance Finance Ltd (Receiver & Manager Appointed) ACN 059 812 396, Receiver and Manager of California Film Finance (Gold) Pty Ltd (Receiver & Manager Appointed) ACN 061 060 633, Provisional Liquidator of Performance Group Holdings Pty Ltd (In Provisional Liq) ACN 053 969 887 and Liquidator of Performance Securities Pty Ltd (In Liq) ACN 075 982 268

Plaintiff

AND

PERFORMANCE FINANCE LTD (Receiver & Manager Appointed) ACN 059 812 396, CALIFORNIA FILM FINANCE (GOLD) PTY LTD (Receiver & Manager Appointed ) ACN 061 060 633, PERFORMANCE GROUP HOLDINGS PTY LTD (In Provisional Liq) ACN 053 969 887 and PERFORMANCE SECURITIES PTY LTD (In Liq) ACB 075 982 268

Defendant

Catchwords:
Statutes - Interpretation of s 418 and s 532 of the Corporations Act 2001 (Cth)

Corporations - External administration - Qualification for appointment of receivers and managers and provisional liquidators - Whether a receiver and manager of one company can act as receiver and manager or provisional liquidator or liquidator for other companies within the same group of companies

Legislation:
Acts Interpretation Act 1901 (Cth)
Corporations Act 2001 (Cth), s 418, s 532

Result:
Application allowed

Category: A

Representation:

Counsel:

Plaintiff : Mr J C Vaughan

Defendant : No appearance

Solicitors:

Plaintiff : Christensen Vaughan

Defendant : No appearance

Case(s) referred to in judgment(s):

Case(s) also cited:

Nil

1 SIMMONDS J: This matter came before me on the application of the plaintiff, Jennifer Elizabeth Low, in her capacities as receiver and manager, provisional liquidator and liquidator of various companies in a group of companies called for this purpose "the Performance Group Holdings Group" (PGHG). The application raises important, and largely novel questions of the interpretation of a number of provisions in the Corporations Act 2001 (Cth) ("the Act"). Those questions arise on fairly complex facts, and give rise to fairly complex issues.

2 Accordingly, I have organised these reasons into four sections. Following the first section, which is the background to and substance of the application made by the plaintiff in this matter, I discuss the two sets of substantive issues that the application raises. Those sets are, first, what have been called in these proceedings the s 418 or receiver and manager issues. The second set is what were called in these proceedings the s 532(2) or provisional liquidator and liquidator issues.

Factual background and matters raised

3 The material facts for the purposes of these reasons are that there is a group of companies (the PGHG) headed by Performance Group Holdings Pty Ltd (PGH). One hundred per cent owned subsidiaries of PGH include Performance Finance Ltd (PFL) and California Film Finance (Gold) Pty Ltd (CFFG). CFFG, in turn, has a 100 per cent owned subsidiary in Performance Securities Pty Ltd (PS). Three other entities in the PGHG need mention. One is Lanza Music Pty Ltd (Lanza), which is a 95.2 per cent subsidiary of PS, with the remaining 4.8 per cent held by PGH. Another such entity is Goddard Corporation Pty Ltd, trading as APW Finance (Aquajet) (Goddard), which is a 99 per cent subsidiary of PS. The third such entity is Performance Finance (2002) Ltd, which is a 65.8 per cent subsidiary of PFL.

4 There is a most convenient diagram of the PGHG, including a number of entities not mentioned here, which is set out as annexure "JEL1" to the affidavit of the plaintiff, sworn 20 February 2004 in support of the originating process in this matter. I refer to this affidavit in a number of points later in these reasons as the plaintiff's affidavit.

5 There was a series of appointments of the plaintiff, to four companies in the group, up the chain to PGH and then down from it. The first such appointment, on 23 September 2003, was as receiver manager of PFL, under a debenture which is for the benefit of the major external creditors of the PGHG. The second appointment, on 13 October 2003, was as receiver manager of CFFG, under a debenture held by PFL. The third appointment, on 3 December 2003, was as provisional liquidator of PGH, by order of this Court. The fourth appointment, on 27 January 2004, was as liquidator of PS, under a creditors' voluntary winding-up of that company.

6 A series of legal issues, it was submitted to me, arose here, on the terms of the Act dealing with the qualifications for appointment and to act, of receivers and managers, under s 418, and of provisional liquidators and liquidators, under s 532. I should note that all subsequent references to sections are to those of the 2001 Commonwealth Act, unless otherwise indicated. I will need to otherwise indicate on a number of occasions, in light of the materials on which these reasons rest.

7 It is appropriate, in this introduction, to start with s 418. It states, in material part, in s 418(1):

"A person is not qualified to be appointed, and must not act, as receiver of property of a corporation if the person:

...

(e) is an officer of a body corporate related to the corporation;

... " (Emphasis added)

8 For the purposes of this section, "receiver" under s 416 "includes a receiver and manager". For those purposes, it is necessary to consider the definitions of "officer of a corporation" in s 9 and "officer, in relation to (a) body corporate; ... ", in s 82A.

9 Each of PFL, CFFG, PGH and PS are "related bodies corporate" of each other as indicated by s 9 "related body corporate" read with s 50, and s 46 "subsidiary" and s 9 "holding company". Reading this network of definitions, and bearing in mind for the purposes of s 9 the qualification "unless the contrary intention appears" for the purposes of all the defined terms in s 9, the plaintiff, subject to that qualification, would be an "officer" of PFL and CFFG within s 9 "officer" (c) (receiver manager) were it not for the exclusion in s 418(2). That exclusion reads:

"s418(2) 'Officer', in relation to a body corporate, does not include a receiver, appointed under an instrument whether before or after the commencement of this Act."

10 Further, the plaintiff, subject to that qualification, is an "officer" of PS within s 9 "officer" (f) (liquidator). There is also the further definition in s 82A to be taken account of, however. Section 82A does not have the "unless the contrary intention applies" qualification of s 9. Under s 82A, the plaintiff would be an "officer" of PFL and CFFG, under s 82A(1)(d) (receiver manager), were it not for the exclusion in s 418(2) I have referred to. The plaintiff, subject to the s 9 qualification, is an "officer" of PS under s 82A(1)(f) (liquidator in a voluntary winding up). The plaintiff, subject to the s 9 qualification, may also be an "officer" of PGH if a provisional liquidator is subsumed in s 9 "officer" by virtue of s 9 "officer" (f), to which I have already referred. Alternatively, the plaintiff may be an "officer" of PGH if a provisional liquidator is subsumed in s 82A by virtue of the inclusionary language used in the provision.

11 The receiver manager issues are these. Do the emphasised words from s 418(1), above, have the effect that the supervening appointments as provisional liquidator of PGH, or at least as liquidator of PS, disqualify the plaintiff from acting as receiver manager as indicated, from the earlier disqualifying event?

12 I turn now to s 532. Section 532(2) states that:

"A person must not, except with the leave of the Court, seek to be appointed, or act, as a liquidator of a company:

...

(c) if:

(i) the person is an officer of the company (otherwise than by reason of being a liquidator of the company or of a related body corporate);

... " (Emphasis added)

13 I note that "liquidator" for the purposes of s 532 includes "a provisional liquidator": s 532(1A). Section 532(2)(c)(i) must be read with s 532(6), whereby:

"A person is taken to be an officer ... of a company if:

(a) the person is an officer ... of a related body corporate;

... "

14 Reference again needs to be made to "officer" in s 9 and s 82A, as above, except that there is no equivalent to s 418(2) in s 532. However, there is the "otherwise" language in s 532(a)(c)(i) for the appointment of the plaintiff as provisional liquidator of PGH in relation to her appointment as liquidator of PS.

15 The provisional liquidator and liquidator issues are these. No prior leave was sought in respect of the plaintiff's appointments as provisional liquidator and liquidator respectively. The plaintiff's affidavit, in par 32, says that prior to seeking appointment as provisional liquidator of PGH, she asked her then lawyers about "any problem with me seeking appointment of myself as provisional liquidator and liquidator of PGH". The affidavit goes on to say she was not advised as to any problem. There does fairly clearly appear to be one, under s 532, in respect of the plaintiff's receiver manager appointments, both for her provisional liquidator appointment to PGH, and for the liquidator appointment to PS. The provisional liquidator and liquidator issues then resolve into the following questions, it was said. Can leave to act as provisional liquidator and liquidator respectively under s 532(2) be granted "nunc pro tunc"? To the extent any such leave if granted might not be sufficient to resolve any question as to the validity of acts in the intervening period, can a validating order in respect of such acts be made under s 532(4)?

16 The Court's resolution of these issues is sought in terms of applications for declarations or leave nunc pro tunc, as the case may be. Also, the plaintiff wishes in these proceedings to apply for leave to seek to be appointed and to act as liquidator of PGH under s 532(2).

17 I note that procedurally, the plaintiff also seeks leave to commence proceedings in these actions under s 471B (for the PGH matter) and s 500(2) (for the PS one). Given the significance of these matters to those companies, in the circumstances I am able to grant this leave in each case.

18 I should note, finally, the plaintiff in her affidavit at par 13 indicates the possibility of her appointment as liquidator of Lanza and Goddard, and in par 16 indicates the possibility of her appointment as liquidator of Performance Finance (2002) Ltd. Paragraphs 13 and 16 also indicate these appointments might either be by creditor resolution, which can dispense with s 532(2)(c) as s 532(5) provides, or by orders of the Court, including orders under s 532(2). But no relief is presently sought in respect of those three possible appointments.

Receiver manager issues: construction of s 418

19 Counsel for the plaintiff, Mr Vaughan, suggested two possible constructions of s 418, one of which he indicated was to be preferred, and the other of which was not. The preferred construction was called in these proceedings the "point in time disqualification" approach, and treats the words "must not act" in s 418(1) as descriptive of what a disqualified person cannot do. The other construction, which it was submitted should not be favoured, was called in these proceedings "the always operative disqualification" approach, and treats "must not act" as a prohibition operating throughout the period of appointment.

20 In approaching the construction of a provision in the Act, one needs to bear in mind the Acts Interpretation Act 1901 (Cth) ("the Interpretation Act"). This is as well as any other appropriate constructional norm. I refer, for this purpose, to the magisterial text on statutory interpretation in Australia, D C Pearce and R S Geddes, Statutory Interpretation in Australia, 5th ed (2001) at pages 88 - 102. The recognised starting-point is the ordinary meaning of the words in the statute, read in context: page 88. But the Interpretation Act provisions must also be borne in mind, particularly s 15AA, expressing the duty of the Court to prefer an interpretation that would advance the purpose of the legislation over one that would not do so. Account should also be taken of the presumptions applicable to interpretation of a provision like s 418. One relevant such presumption to which reference was made here was for penal provisions. Finally, of course, prior authority on the provision in question, even if not binding, is of value, as are authorities on analogous provisions.

21 Mr Vaughan placed reliance on the ordinary meaning of s 418 when read in context. However, the meaning Mr Vaughan contended for does not, as it were, leap off the page. Mr Vaughan conceded this, and that the always operative disqualification reading was an open one. However, he said that his preferred meaning emerged as the better one with tolerable certainty. My attention was directed to the placement of the words "must not act" between commas as indicating that they were a relative clause providing additional information only: see L Alexander, Longman English Grammar (1994) at 16, and on the use of punctuation Re Collins; Ex parte Hockings [1989] HCA 42; (1989) 167 CLR 522 at 525. This grammatical point emerged more clearly, it was said, if the words "must not act" were dropped from s 418(1), leaving the provision as providing simply for that disqualifying condition. This, it was said, would make it difficult to construct a contravention out of s 418.

22 Also, it was contended, considerable support for the preferred meaning of s 418(1) emerged from the immediate context to that section, in the form of s 418A. Section 418A permits certain persons to apply to the Court for declarations of validity of their appointment as receiver manager, or the validity under the terms of a charge of property of a corporation of an entry into possession, or assumption of control, of that property after a certain date. The entry into possession or assumption of control part of s 418A is said to apply not to receiver managers, but to mortgagees in possession or assuming control in some other way. The provisions specifically directed at receiver managers, it was said, speak only to the time of appointment, not the time or times of the supervening events.

23 Reference was also made to s 418(1)(f), including as a disqualifying condition being a person who at any time within the last 12 months has been an officer or promoter of the corporation or a related body corporate (subject to ASIC countermand, in writing). This, it was said, makes no sense except by reference to the time of appointment.

24 It was further contended that support was also derived from considering "absurdities" produced by the always operative disqualification reading. Two absurdities were mentioned. One was the problem for receiver managers under the always operative disqualification of inadvertent disqualification by supervening events. Such a disqualification possibility arose in this case, as I have indicated. There is no provision for leave of the Court or permission of creditors to otherwise disqualify a receiver manager to act, if this reading was followed. This may be contrasted with the position under s 532.

25 The second absurdity was in the case of Court-appointed receiver managers who were otherwise not disqualified. Under the always operative disqualification reading, such a person, as an officer of the corporation under s 9 "officer" par (f) definition (although not under s 82A, by virtue of s 82A(1)(b)) would contravene s 418 when they began to act. This is, in fact, a variation on a problem I reach below.

26 What is the position on the authorities? The only one counsel could find on point, although on another provision of the legislation, was Re Antard Pty Ltd (In Liq); Ex parte Cohen [1977] VicRp 23; [1977] VR 200, a decision of Harris J in the Supreme Court of Victoria on a provision in the Companies Act 1961 (Vic) corresponding to s 532. The Victorian provision, s 277A(1A)(b)(i) provided that "... a registered liquidator shall not, except with the leave of the Court, consent to be appointed and shall not act as a liquidator of a company - if he is an officer of the company". This provision came into force on 1 March 1976. A person who was a liquidator, and therefore an officer, of various companies before 1 March 1976, and whose appointments continued after 1 March 1976, sought declaratory relief as to the validity of the appointments. Harris J granted this relief, holding that the subsection struck at the disqualification of registered liquidators who were so disqualified at the time they were appointed as liquidators, not in any subsequent event. His Honour concluded (at 202):

"In my opinion, what the subsection strikes at is the disqualification of registered liquidators who are so disqualified at the time they are appointed to be liquidators":

27 There are differences between the Victorian provision and s 532, let alone s 418. However, in my view, the differences tell, if anything, in favour of the same construction for s 418. One difference, relied upon by the plaintiff, was that leave could be given to cure some of the disqualifications in the Victorian provision, as is possible under s 532, but not under s 418. The other difference, rather slighter, is the use of commas in s 418 and the current s 532, but not in the Victorian provision, a use that tends to emphasise the character of the words between the commas as a relative clause.

28 There appears, on the materials before me, to be no assistance to be derived from the purposive approach in the Interpretation Act. Mr Vaughan cited to me the authority of Jenner v Selmoore Pty Ltd (1997) 74 FCR 526, a decision of Ryan J of the Federal Court on an application for a declaration that an appointment of a receiver and manager was valid. Ryan J, at 536, identified the purpose of s 418 in terms of "the view that persons with some other existing or prior connection with the assets or affairs of the company or a corporation related to it lack the necessary independence to discharge the functions of a receiver". This, with respect, does not advance me far. Rather more helpful is the characterisation of the object of the Victorian provision in Re Antard (supra), at 202, in the judgment of Harris J as "to prevent registered liquidators who have a connection with companies that are to be wound up from becoming liquidators of such companies". However, I do not find this characterisation as "clear" from the language either of the Victorian provision or of s 418(1), as did Harris J in Re Antard on the Victorian provision.

29 I note that J O'Donovan, Company Receivers and Administrators, does not discuss this matter of the purpose to be ascribed to s 418 in relation to this issue. Nor have I been able to locate any references to that purpose in the legislative history of s 418, or its predecessors in the Companies Act 1981 and the "uniform" Companies Acts, the 1981 Act predecessor, s 323 of the Companies Act 1981 (Cth). However, there is some limited support for the preferred construction advanced by counsel for the plaintiff from that legislative history. I return to that matter below.

30 Returning to the construction challenge posed by the s 418(1) language, I note that the O'Donovan text at par 4.130 recognises the issue, referring to the "incredible result" on the always operative disqualification reading of a privately appointed receiver manager (an "officer" under s 9 "officer" and s 82A, as previously indicated) who was qualified for appointment, but who could not then act. The learned author appears to support the always operative disqualification reading by referring to authorities that have avoided similar results by reference to the "contrary intention" language of the sort appearing in the prefatory words to s 9 in the relevant receivership provision to displace such an application of s 9 "officer". I note, however, that such an approach is not available in respect of s 82A. The approach to s 82A commended in H A J Ford et al, Ford's Principles of Corporations Law, 11th ed (2003), at par 8020, might assist, however. That approach suggests using the s 9 definition when the word "officer" is used in relation to a "corporation", while using the s 82A definition for when "officer" is used in relation to a "body corporate". The authors then go on to state that this matter should be tested section-by-section to see whether it leads to a sensible operation. In any event, as the O'Donovan text notes, at par 4.130 the point in relation to s 418 that would otherwise produce the "incredible result" is put beyond doubt by s 418(2), which was previously referred to.

31 Before leaving the secondary literature, I should note, however, that the commentary on the corresponding issue for liquidators under s 532, in Andrew Keay, The Law of Company Liquidation, 4th ed (1999), at 281 appears to come to a different resolution of the corresponding constructional issue under that section corresponding to the one under s 418. The Keay text there notes "a certain imprecision in the language used" and "some authority to the contrary", citing Re Splinta Holdings Pty Ltd (In Liq); Ex parte Barnes (1976) 2 ACLR 103, SC, Vic, Menhennit J (an order by consent to serve as a liquidator) and Re Rochelle Flats Pty Ltd (In Liq); Ex parte Walsh (1976) 2 ACLR 104, SC, Vic, Starke J (order so to act, no reasons given). The Keay text appears to associate the better approach to s 532 with Re Antard, and with Re Perseus Mining NL; Ex parte Smith & Judge (1976) 2 ACLR 105, Supreme Court of Western Australia, Brinsden J. There his Honour concluded on the legislative history of what is now s 532 that it did not mean to exclude a person whose only association was by reason of being a liquidator.

32 In my view, the better approach to the construction of s 418 does follow that reflected in Re Antard. This reading is the point in time disqualification approach for which Mr Vaughan contended. It is at least as plausible as the always operative disqualification approach, as a matter of the reading of the words. When one takes account of their context, in the form of s 418A, the problems to which the readings in terms of the always operative disqualification leads, and the apparent lack of assistance from the purposive approach, then I believe one must favour the point in time disqualification.

33 Some limited assistance can be derived from a further consideration. Section 418 is a penal provision. The penalty for its contravention is, by s 1311(1) read with s 1311(5), a fine of five penalty units. Mr Vaughan directed my attention to Waldron (Registrar of Companies) v Bird [1974] VicRp 61; [1974] VR 497. In Waldron, Gillard J made absolute an order nisi to review the dismissal of an information for an offence against s 379 of the Companies Act 1961 (Vic), arising out of the disqualification to act as an auditor of a person because of s 187(1)(c) of that Victorian Act, corresponding to s 418(1)(c). Mr Vaughan conceded that the former approach to penal statutes, associated with the statement of Lord Asher MR in Tuck & Sons v Priester (1887) 19 QBD 629, is no longer the appropriate one. Rather, that associated with Gibbs J in Beckwith v The Queen [1976] HCA 55; (1976) 135 CLR 569, at 379, is to be followed. That approach, as quoted, in the Pearce and Geddes book, at 233, reads as follows:

"The rule formerly accepted, that statutes creating offences are to be strictly construed, has lost most of its importance in modern times. In determining the meaning of a penal statute the ordinary rules of construction must be applied, but if the language of the statute remains ambiguous or doubtful the ambiguity or doubt may be resolved in favour of the subject by refusing to extend the category of criminal offences ... The rule is perhaps one of last resort."

34 Here, that would mean the constructional issue before me might be approached in favour of the point in time disqualification if the language remains ambiguous or doubtful after using the other approaches I have referred to. As I cannot say I have completely eliminated all ambiguity and doubt by using those approaches, the Beckwith dicta I have cited are of some assistance to me in reaching my ultimate conclusion on the s 418 or receiver manager issues.

35 A related point goes to the matter of the effect outside criminal law of action contravening s 418. There appears to be some doubt about that effect, on the authorities.

36 A case usually cited in this regard is Portman Building Society v Gallwey & Anor (1955) 1 WLR 96. That case concerned a body corporate being appointed a receiver of a company's property, in contravention of the Companies Act 1948 (UK), s 366, a ground of disqualification having no counterpart in s 418. Wynn-Parry J said, in a passage quoted in full in the O'Donovan text at [4.170], from (1955) 1 WLR at 100, as follows:

"In my view, the language is perfectly clear and it is intended to prevent, and has the effect of preventing, a body corporate from being the receiver of the property of a company. It has, in my view, the effect of making it ultra vires any body corporate to act as receiver, and it follows, in my judgment, that any attempt to appoint a body corporate as receiver of the property of a company must be a nullity and must fail to create any contractual relations between the body corporate in question and the company over whose property it purports to be appointed receiver."

37 I note that in the Act, s 101, saving certain actions and other things from invalidity "merely" because of contraventions of certain provisions of the Act, has no application to s 418; and s 125, saving from invalidity certain conduct "merely" because such conduct was contrary to objects, restrictions or prohibitions in the company's constitution, likewise does not appear to affect this form of invalidity, if it exists.

38 However, my attention was drawn to the Australian case, Garden Mews-St Leonards Pty Ltd v Butler Pollnow Pty Ltd & Ors (No 2) (1984) 9 ACLR 117, a decision of McLelland J of the Supreme Court of New South Wales. This decision appears to be to the opposite effect, although it is read as consistent with the English case in the O'Donovan text, at par 4.170. In Garden Mews-St Leonards a challenge was made to the appointment of a receiver by the Court, which was resolved in favour of the conclusion the person so appointed was not disqualified by s 323 of the Companies Act 1981 (Cth), as expressed in Companies Code (NSW), s 323. The basis for the determination that the person was not so disqualified does not appear in the judgment. However, McLelland J went on to say, at 120, that "[T]his of course ... does not affect the validity of that appointment, but provides, prima facie, a sufficient ground for it to be set aside". McLelland J added later that he was prepared to give consideration to making orders under s 539(4)(a) and (c) of the Code, corresponding to the Act, s 1322(4)(a) and (c), to which I return later in these reasons. These orders would declare acts done by the person so disqualified were not invalid and would relieve him the civil liability for any such contravention. This statement of preparedness is at odds with the characterisation of Garden Mews-St Leonards in the O'Donovan text at par 4.170. However, the O'Donovan text also cites in Re Antard (supra) where Harris J held that the Court would not declare valid the act of a liquidator acting contrary to s 277A(1A) of the Victorian Act corresponding to s 532(1).

39 If the true construction of s 418 is of the point in time disqualification sort, it may properly be asked how a subsequent change in the circumstances of a receiver manager that gives rise to an apprehended conflict of interest might be dealt with. On the alternative reading, the always operative disqualification one, the change, if it would have disqualified the receiver manager from initial appointment, would disqualify the receiver manager from further action. Mr Vaughan suggested to me that, on the point in time disqualification reading, s 429 could always be resorted to in such a circumstance. That provision, in material part, permits the Court or ASIC to inquire into the matter if it appears to them that "the controller of property of a corporation" (defined in s 9 as including a receiver manager) "has not performed, or is not faithfully performing, the controller's functions", among other things. This is not as straightforward, and peremptory a response as the s 418 disqualification. But I recognise that it is a suitable way of dealing with the matter if it has risen to the quoted level from s 429 of non-or faithless performance. In the event, I do not find this analysis to tell against my preferred reading of s 418.

40 After the hearing Mr Vaughan sought leave to address a further matter on s 418, arising out of its legislative history. I have granted this leave as the matter is of some assistance. That history as set out in Mr Vaughan's additional submissions is as follows (omitting his paragraph numbers), which I adopt for this judgment:

"Before the amending act No 108 of 1983 s 323(1) of the Companies Act 1981 (Cth) referred to no person being 'qualified to be appointed, or shall act' as receiver. Compare s 418(1) CA's 'is not qualified to be appointed, and must not act'. [and its equivalent in s 187(1) of the Companies Act 1961 (WA) ('shall not be qualified to be appointed and shall not act').] The use of the disjunctive suggests that in s 323 of the Companies Act 1981 (Cth) there was an independent contravention in acting as receiver.

After the amending act No 108 of 1983 s 323(1) and (1A) of the Companies Act 1981 (Cth) certainly had that effect. There were two sub-sections, ie two operative parts, as opposed to the single expression now found in s 418(1) CA. There were two independent prohibitions, one being as to appointment (s 323(1)) and the other as to acting (s 323(1A)).

The Court will have regard to the history of a legislative scheme in order to assist it to work out what the legislation is intended to achieve: see D Pearce and R Geddes [supra] ... at 73. A recent example of this, in the context of the Corporations Act 2001, is provided by McEvoy v Incat Tasmania Pty Ltd [2003] FCA 810; (2003) 46 ACSR 392.

D Pearce and R Geddes suggest (at 73):

'If one views the whole scheme of the legislation, it may be possible to see the way in which the legislature is dealing with the subject matter: whether it is extending or contracting benefits; whether it is increasing penalties and so on. Such information is likely to be of use to a court in its endeavour to understand the legislature's wishes.'

The learned authors do acknowledge that caution must be employed. Ultimately the task is to determine the meaning of the current statutory provision according to its own terms. However, where the prior statutory provision is fundamentally different in structure, although dealing with the same subject matter, it must be considered doubtful that the Legislature is intending to achieve the same result: cf Goldsborough, Mort and Co Ltd v Larcombe [1907] HCA 58; (1907) 5 CLR 263 (although acknowledging that this case deals with substitution of a provision in fundamentally different language after judicial interpretation.)

That approach is a natural corollary of the accepted principle that words in legislation are assumed to be used consistently. When in replacement legislation the same words and structure could have been used, but are not, prima facie the presumption must be that the provision was intended to alter the law."

41 This history needs to be completed by indicating none of the sorts of extrinsic material admissible in this regard under the Interpretation Act provisions referred to elsewhere in these reasons, addresses the present aspects of them.

42 I conclude, as Mr Vaughan submitted to me, that the history I have described provides some, if limited, support for the "point in time" construction.

Liquidation issues: approach to s 532(2) contraventions

43 The plaintiff here concedes that there is no question that the appointment of her as provisional liquidator of PGH and as liquidator of PS was of a person disqualified through s 535(6), read with the definition of "officer" in s 82A(1)(d) by virtue of her receiver and manager appointment. Here, two matters arise, as I indicated at the beginning of these reasons. The first matter is, given that prior leave might have been sought for the plaintiff seeking the PGH and PS appointments and acting in the relevant capacities, whether or not leave now can, and should, be given nunc pro tunc. The second matter is that of making validating orders under s 1322(4) for those appointments and the plaintiff's acts under them. This is as far as those orders may possibly be necessary and appropriate. I deal with these two matters in that order.

Leave nunc pro tunc

44 The effect of granting leave nunc pro tunc would, on the face of it, be to cure any question of contravention of s 532(2) and also, one would have thought, of the validity of any acts by the provisional liquidator or the liquidator, as the case may be. The possibility of prior leave allowed for under s 532(2) might offer a ground on which to distinguish this source of invalidity from that under s 532(1) and the like provisions against the background of which authorities like Portman Building Society (supra) were decided. Here, I refer to Re Antard (supra) at 201 (although Harris J expressed no "concluded view" on the point).

45 A concluded view, in favour of the conclusion that failure to seek prior leave under a provision such as this one does not make the appointment invalid ab initio, is expressed in the context of the provisions on appointments of administrators in the judgment of Austin J of the Supreme Court of New South Wales, Equity Division, in Skafcorp Ltd (Administrator appointed) v Jarol Pty Ltd [2002] NSWSC 1183; (2002) 44 ACSR 138 at [31]. Austin J was speaking there of s 448B and s 448D, which correspond for administrators for present purposes to s 532(1). Austin J was contrasting those provisions with s 448C, corresponding for administrators for present purposes to s 532(2), a contrast returned to below. That is, unlike what may be the position under s 418 and s 532(1), or s 448B and s 448D, seeking appointment, or acting, contrary to s 532(2) or s 448C (because without prior leave) is, arguably at least, not a nullity.

46 The principal authority on whether or not, in respect of a provision like s 532(2), leave nunc pro tunc is possible appears to be Emanuele v Australian Securities Commission ([1997] HCA 20; 1997) 188 CLR 114. That case was an appeal against the grant of leave nunc pro tunc to the ASC under what is now s 459P to apply for an order to wind up under what is now s 459A. By a majority in Emanuele, the High Court dismissed the appeal. It is not easy to extract the approach one should take to the question of the permissibility of leave nunc pro tunc, given that there were five separate judgments in the case, although that of Dawson J in the majority is in large part simply in agreement with that of Toohey J.

47 The third member of the majority in Emanuele, Kirby J, provides the most substantial analysis, on which I draw. His Honour (at 146- 148) makes the possibility of leave nunc pro tunc turn on whether the statutory language does or does not allow for it, which calls for the same interpretative exercise as I engaged in concerning the receiver manager or s 418 issues.

48 In that interpretative exercise, it appears from the judgment of Kirby J at 149 - 157 that:

• the matter is one in which it is particularly useful to have regard to the stringency or otherwise of the statutory language, in the light of the reasons for its introduction;

• how meaningful the ex post deliberation on whether leave would have been granted can be;

• the extent to which the requirement could be treated as a procedural matter non-compliance with which could be characterised as technical;

• the authorities on the issue against the backdrop of expected consciousness of the drafters of the provision of those authorities;

• and whether there was a suggestion of leave nunc pro tunc giving a private party the ability to take certain action outside a specified time limit.

49 It appears to me on the basis of these considerations that leave nunc pro tunc in respect of s 532(2) is permissible. The language of s 532 is, if anything, less stringent than the language of the provision in issue in Emanuele: see Kirby J at 150. I do not, however, have any material on the legislative history of the introduction of the leave requirement in s 532(2) of the sort available in respect of the provision that is referred to in Emanuele. It seems plausible to assume, however, that there is meant to be scope for flexibility of approach to disqualification under s 532(2) which is not available under s 532(1), given the allowance for leave, and the scope and technicality of the grounds under s 532(2). The exercise of evaluating whether or not to grant leave would have been given before the event would seem to be meaningful after the fact, given the touchstone of concern for an apprehended conflict of interest to which I return under the question whether or not leave, in this case, can be given. The non-compliance with the leave requirement would, indeed, be characterised as technical as the material in this case, illustrative as it is of the breadth of s 532(2)(c) through "officer of a related corporation", tends to show. The authorities in this area do not, however, display a clear picture of which the drafters of s 532(2) could be said to have been aware, at least by comparison with the position of the drafters of the provision in issue in Emanuele: see Kirby J at 153 - 154. But there is no question here of a time limited private right of action of the sort treated as telling against leave nunc pro tunc outside the limit in Emanuele: see Kirby J at 157.

50 What authority there is on leave nunc pro tunc under s 532(2) appears to be Antard, discussed above, and the rather stronger views expressed in favour of the possibility of such leave in Aboriginal & Torres Strait Island Commission v Jurnkurakurr Aboriginal Resource Centre Aboriginal Corporation (In Liq) [1992] NTSC 39; (1992) 10 ACSR 121, a decision of Asche J of the Supreme Court of the Northern Territory. In that case, Asche J, at 122, indicates he would have been prepared to give the leave after the appointment, although in the event, because of circumstances referred to in the judgment, he did not think it appropriate. The same view, that leave after the appointment was something he was prepared to grant (and in the case, in fact, did grant), is expressed by Templeman J in The Swan Brewery Co Pty Ltd v Newman, unreported; SCt of WA; Library No 980593; 9 October 1998 at 40. In neither of these last two cases is there any discussion of the basis upon which such leave was permissible.

51 There is, however, some analysis of the point in a related statutory context, where the possibility of leave nunc pro tunc has, it appears, consistently been upheld. That context is s 448C(1), which says:

"... a person must not, except with the leave of the Court, seek or consent to be appointed as, or act as, administrator of a company or of a deed of company arrangement if: ... (c) the person is an officer of the company (otherwise than because of being an administrator or liquidator of, or an administrator of a deed of company arrangement executed by, a body corporate related to the company);"

52 This, in turn, is extended to "officer ... of ... a related body corporate", by s 448C(3)(a). These parallel the prohibitions in s 532(2), in s 532(2)(c)(i) as extended by s 532(6), even if they do not use precisely the same language, and even if, as explained by Lehane J of the Federal Court in Re Chilia Properties Pty Ltd (Administrator Appointed) (1997) 73 FCR 171, at 551, the position of an administrator is a more limited one than that of a liquidator. In Wright v Mansell [2001] FCA 1519; (2001) 116 FCR 46, Finkelstein J of the Federal Court, also on s 448(C), treated Chilia as well as the ATSIC decision on s 532(2), above as establishing that the failure before the appointment to secure the leave provided for by s 448C does not invalidate that appointment, and that leave nunc pro tunc is possible. Finkelstein J considered whether Emanuele affected that view, and concluded that nothing in the decision in the majority did so.

53 I should note, however, that Finkelstein J did go on to say at 590:

"I should say, however, that if the matter was res integra I might have come to a different view. But in this case the answer is provided by the authorities."

54 I consider that, the authorities on s 448C and s 532(2) apart, I am able to conclude in favour of the view they put forward, as I have indicated in my analysis using the judgment of Kirby J in Emanuele earlier. My view in that respect is strengthened by the judgment of Austin J of the Supreme Court of New South Wales Equity Division in Skafcorp, referred to above. Austin J also cites Chilia, and another decision, that of Young J of the New South Wales Supreme Court in Cussen v Signature Resorts Pty Ltd [2000] NSWSC 89; (2000) 18 ACLC 341, as establishing that leave nunc pro tunc may be given under s 448C. He notes the structure of Div 14 of Pt 5.3A of the Act, contrasting the disqualifications to be appointed or act as an administrator in s 448B (for failure to be a registered liquidator) and s 448D (for being an insolvent under administration) with s 448C (discussed above). As to s 448B and s 448D, Austin J concluded, at par 31, that it was "arguable" that a purported appointment in contravention of either was invalid:

"If that were so, then the fact that the prohibition in s 448C can be overcome by the grant of leave by the court, in contrast with the other provisions, suggests that non-compliance with s 448C does not invalidate the appointment."

55 I note again the structural similarity, in the respects important in this quoted passage, between the pair of s 448B and s 448D, and s 448C, with s 532(1) and s 532(2).

56 Accordingly, I conclude that leave nunc pro tunc can be granted under s 532(2).

57 The next question is whether or not such leave should be granted here, notwithstanding that, in respect of the plaintiff as provisional liquidator of PGH, she is receiver manager of PFL and of CFFG, in both cases appointed under a debenture. In the case of PFL, the debenture, as I noted at the beginning of these reasons, is in favour of external debenture holders, while in that of CFFG, the debenture appears to be in favour of PFL (annexure JEL1 to the affidavit of the plaintiff). The other question is whether or not leave nunc pro tunc should be granted in respect of the plaintiff as liquidator of PS, notwithstanding she is receiver manager of PFL and of CFFG.

58 Counsel for the plaintiff referred me to authorities establishing the proposition expressed in the judgment of Lucas J in Re Keith Morris Pty Ltd & Ors (1976) ACLC 40-206, at 28,246, as quoted in the judgment of Master Ng of this Court in Re Bruton Pty Ltd (1990) 2 ACSR 277 at 281 - 282. That passage from the judgment of Lucas J as so quoted reads as follows:

"It seems to me that in the ordinary course of things, with a number of companies involved in the same group and in which, as I have been told is the case here, the shareholding is much the same, so that in each case the contributories will be much the same persons, other things being equal, it is desirable from the point of view of ease of administration and expense that the liquidation of each of the companies should be undertaken by the same liquidator or liquidators. If, however, it is clear that there are serious conflicts bound to arise, then it would be desirable that different liquidators should be appointed to wind up different companies."

59 Bruton is cited, and the principles I have quoted followed, in the judgment of Master Bredmeyer of this Court in Re Nida Pty Ltd (1993) 10 ACSR 195, particularly at 198 - 199. Nida is, in turn, characterised as a "useful discussion of the authorities" in Chilia (supra) at 549, in the judgment of Lehane J of the Federal Court.

60 This approach appears to be something of a departure from the normal one to appointment of provisional liquidators or liquidators. That normal approach is summarised in the Keay text, at 205, as:

"In making an appointment the court should try to avoid persons who have associations with the applicant. The court will look for someone who is independent and unobjectionable to the applicant or the company. If there is any suggestion of a real prospect of conflict for a person, even if the prospect is small, then the courts will refrain from appointing that person. There must be no suggestion of bias as far as the appointee is concerned and he or she should be above suspicion [footnotes omitted]."

61 Immediately after this passage comes a reference to "urgent or exceptional circumstances", followed by an account of Bruton.

62 In this case, there are a number of considerations that engage the Bruton principles. They are the fact, typical of most groups, of the intertwining of the financial affairs of the entities in the group. There is, here, the additional and perhaps significant fact that the source accounting data for the entities in the group is contained in the single computer, as deposed in the plaintiff's affidavit at pars 19 - 20. There are also the considerations that the contraventions in this case were inadvertent and that no creditor has objected or indeed sought to appear in those proceedings. Matters of that sort appear to tell in favour of leave to be appointed and act as an administrator nunc pro tunc, in the judgment of Austin J in the Skafcorp case (supra) at [26]. In Bruton, at 280, Master Bredmeyer refers to the value of the views of a majority and numbers and value of unsecured creditors.

63 ASIC declined an invitation to appear here. In a letter produced to the Court as annexure "TK6" to the affidavit as to service by Travis Paul Kakura, sworn 26 February 2004, ASIC expressed as its view that:

" ... as per the general principle behind CA section 418 and 532 a practitioner should not take on appointments in these types of situations due to the risk of conflict of interest or the appearance of conflict of interest, unless the Court decides there are very good reasons why they should."

64 To the extent that that view reflects the authorities, I am of the opinion that such very good reasons appear in this case. To the extent that that view does not reflect the authorities, I do not follow it here.

65 I note that the plaintiff says in her affidavit (see "JEL12") that she and others have already invested considerable time investigating the affairs of PGH and PS. This is a matter said to tell in favour of appointment in Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167, a decision of Young J of the Supreme Court of New South Wales Equity Division. However, I am reluctant to give weight to it, because the question here is leave nunc pro tunc. That is a question which, as I read Emanuele, requires me to determine the matter on the basis of whether or not leave would then have been given.

66 It was also true that none of the authorities I have cited or seen concern the position of a prospective appointee whose disqualification rests on his or her position as receiver and manager of one or more entities in the group, as is the case here. While it would seem to me that such an appointment for the same corporation for which appointment as a provisional liquidator or liquidator is sought raises (fairly obvious) conflict issues, the same cannot be said for the situation before me.

67 Further, I note from the plaintiff's affidavit, pars 48(2) - 50, that further investigation and analysis may reveal the need for litigation to determine whether certain intra-group transactions are real or a sham and in any event are liable to be set aside. Some candidates for closer inspection seem to have surfaced already. The relevance of investigation disclosing intra-group transactions as shams to the issue of whether "a real conflict of interest will arise" is emphasised by Master Bredmeyer in Nida (supra) at 202. The Master indicates that, at that point, a provisional liquidator should resign and a replacement should be found. The plaintiff has indicated in her affidavit at pars 50 - 52 that she is aware of this issue, and in light of these reasons I would expect her to proceed accordingly, at least if the investigations turn out as Master Bredmeyer indicated in Nida.

68 It follows from this that I am able not only to grant the leave nunc pro tunc sought in respect of the appointment of the plaintiff as provisional liquidator of PGH and as liquidator of PS is granted, but also to grant the prior leave sought in respect of a possible appointment as liquidator of PGH.

Validating order

69 If, as I have indicated it is appropriate for me to do, I order that leave nunc pro tunc in respect of the plaintiff's appointment as provisional liquidator of PGH and as liquidator of PS is granted, it may be asked why any validating order under s 1322(4)(a), is necessary. Section 1322(4)(a), read with s 1322(6), is as follows:

" ... the Court may, on application by any interested person, make ... any of the following orders, ...:

(a) an order declaring that any act, matter or thing purporting to have been done, ... under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act ... "

Section 1322(6) says that:

"The Court must not make an order under this section unless satisfied:

(a) in the case of an order referred to in paragraph (4)(a):

(i) that the act, matter or thing ... is essentially of a procedural nature;

(ii) that the person ... concerned in or party to the contravention or failure acted honestly; or

(iii) that it is just and equitable that the order be made; and

(b) ...

(c) in every case - that no substantial injustice has been or is likely to be caused to any person."

70 The necessity for declarations of the sort asked for here is, it seems to me, clearly brought into question by the analysis of the effect of leave nunc pro tunc sought from and granted by Austin J in Skafcorp (supra) at pars [27] - [32]. At the same time, Austin J saw, at par [33], where ASIC and creditors of the companies' appointments had been notified (as here), "no obstacle" issue to granting declarations of that sort. This was notwithstanding his grant of leave nunc pro tunc. Such a declaration, it seems to me, was made on the same considerations as underlie his decision whether or not to grant such leave.

71 This form of analysis is one that I would follow in the case before me. A s 1322(4) order is possible on the analysis of s 532(2) I have set out above as making possible leave nunc pro tunc. The factors that satisfy me such orders as are sought here are ones I should make under that subsection, read with s 1322(6), are those that I have listed as justifying grant of leave nunc pro tunc. While I am not convinced any such orders need to be made, they conveniently express the effects of the grant of leave nunc pro tunc that I have made.

72 Accordingly, I would make the declaratory orders sought under s 1322(4).

The orders

73 For the foregoing reasons, I make the orders set out in the plaintiff's minute of proposed orders in COR 32 of 2004, filed 20 February 2004, with a minor modification to 3 and 4 to reflect these reasons, namely:

1. The time for service and hearing of the application is abridged.

2. The plaintiff:

(1) in respect of Performance Group Holdings Pty Ltd (In Provisional Liquidation) ACN 053 969 887, in accordance with s 471B of the Corporations Act 2001; and

(2) in respect of Performance Securities Pty Ltd (In Liquidation) ACN 075 982 268, in accordance with s 500(2) of the Corporations Act 2001;

has leave to commence and proceed with the application in this action against those companies.

3. As to Performance Finance Limited (Receiver & Manager Appointed) ACN 059 812 396 (PFL), it is declared that on the true construction of s 418(1) of the Corporations Act 2001, and in the events that have happened, the plaintiff was not and has not been prohibited by the provisions of s 418(1) of the Corporations Act 2001 from acting as receiver and manager of PFL on and since 3 December 2003 by reason of being appointed as provisional liquidator of Performance Group Holdings Pty Ltd (In Provisional Liquidation) ACN 053 969 887, or, on and since 27 January 2004 by reason of being appointed as liquidator of Performance Securities Pty Ltd (In Liquidation) ACN 053 969 887.

4. As to California Film Finance (Gold) Pty Ltd (Receiver & Manager Appointed) ACN 061 060 633 (CFFG), it is declared that on the true construction of s 418(1) of the Corporations Act 2001, and in the events that have happened, the plaintiff was not and has not been prohibited by the provisions of s 418(1) of the Corporations Act 2001 from acting as receiver and manager of CFFG on and since 3 December 2003 by reason of being appointed as provisional liquidator of Performance Group Holdings Pty Ltd (In Provisional Liquidation) ACN 053 969 887, or, on and since 27 January 2004 by reason of being appointed as liquidator of Performance Securities Pty Ltd (In Liquidation) ACN 053 969 887.

5. As to Performance Group Holdings Pty Ltd (In Provisional Liquidation) ACN 053 969 887 (PGH):

(1) the plaintiff has leave nunc pro tunc in accordance with s 532(2) of the Corporations Act 2001 to seek to be appointed and to act as provisional liquidator of PGH;

(2) it is declared under s 1322(4)(a) of the Corporations Act 2001 that the appointment of the plaintiff as provisional liquidator of PGH and the plaintiff's acts in that office are not invalid by reason of any contravention of s 532(2) of the Corporations Act 2001;

(3) the plaintiff has leave in accordance with s 532(2) of the Corporations Act 2001 to seek to be appointed and to act as liquidator of PGH.

6. As to Performance Securities Pty Ltd (In Liquidation) ACN 075 982 268 (PS):

(1) the plaintiff has leave nunc pro tunc in accordance with s 532(2) of the Corporations Act 2001 to seek to be appointed and to act as liquidator of PS;

(2) it is declared under s 1322(4)(a) of the Corporations Act 2001 that the appointment of the plaintiff as liquidator of PS and the plaintiff's acts in that office are not invalid by reason of any contravention of s 532(2) of the Corporations Act 2001.

7. There is no order as to costs on the application.