Re Trade Practices Commission v Manfal Pty Limited; Frederick Arthur Lilley; Richard Arthur Lilley; Geoffrey Neil Hatch; Russell Howton and Kevin Dennis Antonovich [1990] FCA 34 (15 February 1990)

FEDERAL COURT OF AUSTRALIA

Re: TRADE PRACTICES COMMISSION
And: MANFAL PTY LIMITED; FREDERICK ARTHUR LILLEY; RICHARD ARTHUR LILLEY;
GEOFFREY NEIL HATCH; RUSSELL HOWTON and KEVIN DENNIS ANTONOVICH
No. WA G84 of 1989
FED No. 38
Statutes - Companies

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Lee J.(1)

CATCHWORDS

Statutes - construction - application of State laws - competency of State to legislate to bind Crown in its various capacities - whether provisions of the Companies (Western Australia) Code so binding the Crown bound the Crown in the right of the Commonwealth - effect of Judiciary Act 1903 s.79

Companies - liquidation - whether requirement for leave to proceed against company in liquidation binds the Crown in the right of the Commonwealth.

Trade Practices Act 1974 s.52A

Companies (Western Australia) Code 1981 sub-s.371 (2), s.358

Judiciary Act 1903 ss.79, 64, 78B, 78A

Constitution Act 1901 ss.109 114

Suitors Fund Act 1951

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cwth) s.4

Companies Act 1961 (Vic.) sub-s.263(2), s.217

Crown Debts (Priority) Act 1981

National Companies and Securities Commission Act 1979 (Cwth)

National Companies and Securities Commission (State Provisions) Act 1980 (W.A.)

Companies and Securities (Interpretation and Miscellaneous

Provisions) Act 1980 (Cwth)

Companies and Securities (Interpretation and Miscellaneous

Provisions) (Application of Laws) 1981 (W.A.)

Companies Act 1981 (Cwth)

Companies (Application of Laws) 1981 (W.A.)

Federal Court Rules 1979 O.9 r.7, O.9 sub-r.6(2)

Thomson Publications (Aust) Pty. Ltd. v. Trade Practices Commission (1979) 27 ALR 551

Allied Mills Industries Pty. Ltd. v. Trade Practices Commission (1981) 34 ALR 105

Re Young's Horsham Garage Pty. Ltd. (In Liquidation) (1969) VR 977

The Commonwealth of Australia v. Bogle [1953] HCA 10; (1953-1954) 89 CLR 229

Commissioner of Stamp Duties (N.S.W.) v. Owens (No. 2) [1953] HCA 62; (1953) 88 CLR 168

John Robertson and Co. Ltd. v. Ferguson Transformers Pty. Ltd. [1973] HCA 21; (1973) 129 CLR 65

Maguire v. Simpson [1977] HCA 63; (1977) 139 CLR 362

Huddart Parker Ltd. v. The Ship "Mill Hill" and Her Cargo [1950] HCA 43; (1950) 81 CLR 502

Pederson v. Young [1964] HCA 28; (1964) 110 CLR 162

Cohen v. Cohen [1929] HCA 15; (1929) 42 CLR 91

Pavich v. Bobra Nominees Pty. Ltd. (1988) 84 ALR 285

L. Grollo and Co. Pty. Ltd. v. Nu-Statt Decorating Pty. Ltd. (In Liquidation) 1980 4 ACLR 907

Bradken Consolidated Limited v. The Broken Hill Proprietary Co. Limited [1979] HCA 15; (1979) 145 CLR 107

The Commonwealth v. Cigamatic Pty. Ltd. (In Liquidation) [1962] HCA 40; (1962) 108 CLR 372

Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. [1920] HCA 54; (1920) 28 CLR 129

Superannuation Fund Investment Trust v. Commissioner of Stamps in the State of South Australia (1979) 145 CLR 530

Port McDonnell Fishermen's Association v. The State of South Australia [1989] HCA 49; (1989) 63 ALJR 671

Pirrie v. McFarlane [1925] HCA 30; (1925) 36 CLR 170

Dao v. Australian Postal Commission [1987] HCA 13; (1987) 162 CLR 317

Commonwealth of Australia v. Duncan (1981) VR 879

Deputy Commissioner of Taxation (Qld) v. Moorebank Pty. Ltd. [1988] HCA 29; (1988) 78 ALR 641

HEARING

PERTH
15:2:1990

Counsel for the Applicant: Mr S. Owen-Conway

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondents: Mr B. Dodd

Solicitors for the First
Respondent: Mallesons Stephen Jaques

ORDER

Proceedings against the first respondent be stayed until such time as the applicant has obtained leave to proceed against the first respondent pursuant to sub-s.371(2) of the Companies (Western Australia) Code 1981.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

On 30 June 1989 the applicant ("the Commission") filed an application which inter alia sought a declaration that the first respondent had engaged in conduct which contravened s.52A of the Trade Practices Act 1974 ("the Act"). The application also sought injunctions against the first respondent pursuant to s.80 of the Act restraining the first respondent from repeating such conduct and orders pursuant to sub-s.87(1A) and para.87(2)(b) of the Act varying the terms of contracts made between the first respondent and six separate consumers on whose behalf the applicant brought the application. In addition, pursuant to sub-s.87(1A) and para.87(2)(d) of the Act the Commission sought orders directing the first respondent to pay to those consumers any loss or damage suffered, or likely to be suffered, by them by the first respondent's conduct.

2. Before the Commission commenced this proceeding, namely on 15 June 1989, the Supreme Court of Western Australia had appointed a provisional liquidator of the first respondent.

3. On 12 July 1989 the first respondent filed an appearance described as a conditional appearance. The first respondent did not file a notice of motion pursuant to 0.9 r.7 of the Federal Court Rules and, therefore, the appearance filed had effect for all purposes as an unconditional appearance (Federal Court Rules 0.9 sub-r.6(2)).

4. On 25 August 1989 a directions hearing was held at which various orders were made providing for the continuation of the proceeding including, inter alia, an order that the first respondent file and serve its defence on or before 6 October 1989.

5. On 6 September 1989 an order was made by the Supreme Court of Western Australia that the first respondent be wound up and a liquidator appointed.

6. Pursuant to sub-s.371(2) of the Companies (Western Australia) Code ("the Code"), upon an order being made by a Court for the appointment of a provisional liquidator or for the winding-up of a company no action or other civil proceeding may be commenced or proceeded with against the company except with the leave of the Court in accordance with such terms as the Court may impose.

7. On 16 October 1989 the first respondent, sought an order that the order for directions made on 25 August 1989 be set aside and that the action against the first respondent be stayed until such time as leave to proceed in the matter had been obtained by the Commission from the Supreme Court of Western Australia.

8. It was conceded by the first respondent that the Commission was an instrumentality, or agent, of the Crown in the right of the Commonwealth. (See Thomson Publications (Aust) Pty. Ltd. v. Trade Practices Commission (1979) 27 ALR 551 per Deane and Fisher JJ. at p 567; Allied Mills Industries Pty. Ltd. v. Trade Practices Commission (1981) 34 ALR 105 per Sheppard J. at pp 116-117.)

9. The first respondent submitted that the provisions of sub-s.371(2) of the Code applied to the proceeding commenced in the Federal Court because of the operation of s.79 of the Judiciary Act 1903 and further argued that with the aid of s.79 of the Judiciary Act 1903 the provisions of the Code should be construed to bind the Crown in the right of the Commonwealth. Alternatively, the first respondent argued that s.64 of the Judiciary Act 1903 indicated an intention on the part of the Commonwealth that where the Commonwealth was a party to litigation it would be bound by the same "rules of law" that would apply if the Commonwealth were a subject instead of the Crown and, therefore, it was bound by sub-s.371(2) of the Code.

10. The Commission argued that s.79 of the Judiciary Act 1903 was not available to provide an expanded construction of sub-s.371(2) of the Code so as to make that section applicable to an application brought by the Commission against a corporation under the Trade Practices Act 1974. With regard to s.64 of the Judiciary Act 1903 the Commission submitted that having regard to the terms of the Trade Practices Act 1974 there was "no room" for any construction of s.64 that would make the provisions of sub-s.371(2) of the Code binding upon the Commission.

11. It was not submitted that the provisions of sub-s.371(2) of the Code conflicted with the provisions of the Trade Practices Act 1974 (Cwth) thereby attracting the operation of s.109 of the Constitution. However, as I have noted later in these reasons such an argument was latent in submissions addressed to the question of the construction of s.64 of the Judiciary Act 1903.

12. In so far as the questions argued only involved matters of construction of s.358 and sub-s.371(2) of the Code and s.79 of the Judiciary Act 1903, it was submitted that no notice was required to be given to Attorneys-General pursuant to s.78B of the Judiciary Act 1903.

13. Similar questions were treated solely as matters of construction in Re Young's Horsham Garage Pty. Ltd. (In Liquidation) (1969) VR 977 and it was considered by Menhennitt J. in that case that s.40A of the Judiciary Act 1903 (the precursor of s.78A) did not apply to the matter before him.

14. It may be noted, however, that in The Commonwealth of Australia v. Bogle [1953] HCA 10; (1953-1954) 89 CLR 229, Fullagar J. at p 259 expressed the view that if a question of construction of a State statute resulted in a conclusion that the statute purported to bind the Crown in the right of the Commonwealth, a constitutional question would arise, his Honour assuming that an issue as to the extent of State legislative power would be involved.

15. Upon the assumption that I may proceed to determine the questions of construction of ss.358 and 371 of the Code and s.79 of the Judiciary Act 1903 without venturing upon a matter involving a matter arising under the Constitution or involving its interpretation I now turn to the relevant sections.

16. Section 358 of the Code is as follows:

"358. This part (Pt XII) binds the Crown in right of
the State of Western Australia and, so far as the
legislative power of the Parliament permits, the Crown
in all its other capacities."

17. Section 371 of the Code occurs in Pt XII and reads as follows:

"371(1) An order for winding up a company operates in
favour of all the creditors and contributories of the
company as if it had been made on the joint
application of all the creditors and contributories.
371(2) Where an order has been made for the winding
up of a company, or a provisional liquidator has been
appointed in respect of a company, no action or other
civil proceeding may be commenced or proceeded with
against the company except -
(a) by leave of the Court; and
(b) in accordance with such terms as the Court
imposes.

18. Section 79 of the Judiciary Act 1903 provides as follows:

"79. The laws of each State or Territory, including
the laws relating to procedure, evidence, and the
competency of witnesses, shall, except as otherwise
provided by the Constitution or the laws of the
Commonwealth, be binding on all Courts exercising
federal jurisdiction in that State or Territory in all
cases to which they are applicable."

19. It has been said that the latter provision does no more than pick up State laws with their meaning unchanged (Commissioner of Stamp Duties (N.S.W.) v. Owens (No. 2) [1953] HCA 62; (1953) 88 CLR 168). But this does not mean that s.79 is intended to be limited in its operation to laws of a State expressly made applicable to matters litigated in Courts exercising federal jurisdiction. The words "in all cases to which they are applicable" in s.79 should be construed as applying such laws of a State as are relevant, available and appropriate. If the terms of the State law show that it is intended to apply only to a specific State court, or only to proceedings involving the exercise of State jurisdiction, the law may not be amenable to application under s.79 of the Judiciary Act 1903 to bind a Court exercising federal jurisdiction.

20. As was stated in John Robertson and Co. Ltd. v. Ferguson Transformers Pty. Ltd. [1973] HCA 21; (1973) 129 CLR 65 per Menzies J. at pp 80-81 and per Mason J. at pp 94-95, although s.79 may be said to do no more than "pick up" State laws with their meaning unchanged, the relevant State laws will be read with due regard to the requirements of s.79 and no stringent reading of those laws will be applied to deny their operation in a Court exercising federal jurisdiction in that State when that Court is not a State court (see also Maguire v. Simpson [1977] HCA 63; (1977) 139 CLR 362 per Gibbs J. at p 376). As Dixon J. stated in Huddart Parker Ltd. v. The Ship "Mill Hill" and Her Cargo [1950] HCA 43; (1950) 81 CLR 502 at p 507, s.79 of the Judiciary Act 1903 should be interpreted and applied liberally. Section 79 has the purpose of providing for a consistent manner of exercise of federal jurisdiction in a State whether that jurisdiction is exercised in a State court or a federal court.

21. In Commissioner of Stamp Duties (N.S.W.) v. Owens (No. 2) the State law involved related to the issue of indemnity certificates under the Suitors Fund Act 1951 of the State of New South Wales. Such legislation may be said to have been intended to apply only to "State matters" heard in State courts exercising "State jurisdiction" and to contain no intention to impose upon the State the financial burden of cases arising out of the exercise of federal jurisdiction whether such cases were heard in State courts exercising federal jurisdiction or in federal courts.

22. In Pavich v. Bobra Nominess Pty. Ltd. (1988) 84 ALR 285, French J. held that s.79 of the Judiciary Act 1903 may have required the application of a State law relating to the awarding of interest on damages to that part of the exercise of federal jurisdiction which involved a common law cause of action included within the federal jurisdiction as accrued jurisdiction but it did not apply the State law to a cause of action arising under the Trade Practices Act 1974 which, at that time was within the exclusive jurisdiction of the Federal Court and may have been regarded as a "federal cause of action". His Honour held that the State law could not be construed as being intended to apply to a proceeding in respect of which State courts held no jurisdiction (see John Robertson and Co. Ltd. v. Ferguson Transformers Pty. Ltd. per Walsh J. p 84, Gibbs J. p 89; cf. Re Lyons; Ex parte Allpass v. Qantas Staff Credit Union Ltd. (1989) 87 ALR 69).

23. In Pedersen v. Young [1964] HCA 28; (1964) 110 CLR 162, the High Court held that s.79 of the Judiciary Act 1903 did not attract the operation of a Queensland statute of limitation to an action for damages in negligence brought in the High Court by an action commenced in a High Court registry in a State other than Queensland, notwithstanding that the cause of action arose in Queensland. It was not necessary to decide whether the provisions of s.79 would have applied the terms of the Queensland statute if the action in the High Court had been commenced in the State of Queensland. Kitto and Windeyer JJ. did not address the question in their judgments, Taylor J. expressly left the question open, Owen J. assumed that the provisions of the statute would be applied by virtue of s.79 and Menzies J. considered that the limitation provision may be applied by virtue of s.79.

24. In Cohen v. Cohen [1929] HCA 15; (1929) 42 CLR 91, Dixon J. had expressed the view that relevant State statutes of limitation would be applicable in federal jurisdictions exercised in the State where the action was heard.

25. The question was directly canvassed in John Robertson and Co. Ltd. v. Ferguson Transformers Pty. Ltd. Gibbs J. considered that s.79 would require the High Court sitting in a State to apply a State statute of limitations, or a statute permitting a Court to stay proceedings where the parties had agreed to submit disputes to arbitration, to a proceeding able to be litigated in State courts exercising federal jurisdiction notwithstanding that the State Acts on their proper construction were only intended to apply to courts of the State provided they were otherwise appropriate to the circumstances of the case. His Honour found, however, that such a State statute could not be construed as applying to an action enforceable only in a federal court and s.79 would not provide an extended meaning to make the Acts applicable to such an action (pp 88-89). Walsh J. did not express an opinion on the former point but stated the same conclusions as Gibbs J. on the latter (pp 84-85). Menzies J. (pp 80-81) and Mason J. (pp 92-95) agreed that a State law could not of its own force apply to a proceeding in a federal court but regarded the exclusivity of the federal jurisdiction as irrelevant in determining that s.79 made the State law applicable to the proceeding in the High Court.

26. The cause of action prosecuted in this Court arises under the Trade Practices Act 1974, but it is no longer a matter within the exclusive jurisdiction of the Court (see Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s.4). Furthermore, the State law in sub-s.371(2) of the Code is concerned with the control of the affairs of a corporation and protection of the interests of creditors of that corporation where the corporation has been made subject to an order for liquidation by a Court of the State. The legislative provision is intended to be of general effect extending to any action or civil proceeding against such a corporation. Although, a State law cannot, of its own force, control the conduct of proceedings in a federal court, there would appear to be no reason why, for the purposes of s.79 of the Judiciary Act 1903, sub-s.371(2) of the Code should not be regarded as the law of a State applicable to a case involving the exercise of federal jurisdiction and, therefore, binding upon the Federal Court and any State court exercising that federal jurisdiction.

27. The provision is a procedural measure amenable to application by s.79 of the Judiciary Act 1903. Such an application would not involve a new meaning nor a more extensive operation for the provision than would otherwise be the case but would require an "assumption to be made that federal courts lie within the field of application of State laws on the topics to which (s.79) refers, at least in those cases in which the State laws are expressed to apply to Courts generally" (John Robertson and Co. Ltd. v. Ferguson Transformers Pty. Ltd. per Mason J. p 95).

28. In Re Young's Horsham Garage Pty. Ltd. (In Liquidation) it was held that s.79 of the Judiciary Act 1903 could not give sub-s.263(2) of the Companies Act 1961 (Vic.) (an equivalent provision to sub-s.371(2) of the Code) a meaning more extensive than the ordinary construction of it would permit to bind a court exercising federal jurisdiction to require the Commonwealth to seek leave to commence proceedings against a corporation in liquidation.

29. In L. Grollo and Co. Pty. Ltd. v. Nu-Statt Decorating Pty. Ltd. (In Liquidation) (1980) 4 ACLR 907 at p 915, Smithers J. held that sub-s.263(2) of the Companies Act 1961 (Vic.) was amenable to application by s.79 of the Judiciary Act 1903 to the federal jurisdiction exercised by the Federal Court under the Trade Practices Act 1974:

"It may well be that a Commonwealth statute might by
its provisions override s 263(2), but when Parliament
passed the Trade Practices Act . . . that Act took
effect under the shadow of s 79, so that Parliament
knew that if there were a State procedural statute on
the topic of the taking of proceedings against
companies in the course of winding up the law laid
down in that statute with respect to such actions
would apply to such proceedings under the Act by
virtue of a statute, namely s 79 of the Judiciary Act,
of the Commonwealth itself."

His Honour noted that as had been stated in Re Young's Horsham Garage Pty. Ltd. (In Liquidation) such an application of sub-s.263(2) would not extend the meaning of the sub-section to enable it to bind the Crown in the right of the Commonwealth (pp 912, 915).

30. However, s.217 of the Companies Act 1961 (Vic.) as considered in Re Young's Horsham Garage Pty. Ltd. (In Liquidation) and which stipulated the extent to which the Crown would be bound by that Act was substantially different from s.358 of the Code. Section 217 of the Companies Act 1961 (Vic.) was in these terms:

"The provisions of this part relating to the remedies
against the property of a company, the priorities of
debts and the effect of an arrangement with creditors
shall bind the Crown."

It was conceded by both parties in Re Young's Horsham Garage Pty. Ltd. (In Liquidation) that on its true construction s.217 applied only to the Crown in the right of the State of Victoria and that no other meaning was intended by the legislature.

31. Section 358 of the Code purports to bind the Crown in the right of the State of Western Australia and to bind the Crown in all its other capacities so far as the legislative power of the State Parliament permits. Construction of that provision receives little assistance from the construction of s.217 of the Companies Act 1961 (Vic.).

32. The question of construction of a statute to determine whether it binds the Crown and whether any established rules, or presumptions, exist to aid such construction was considered in detail in Bradken Consolidated Limited v. The Broken Hill Proprietary Co. Limited [1979] HCA 15; (1979) 145 CLR 107. The judgment of Gibbs A.C.J. and the joint judgment of Mason and Jacobs JJ. provide detailed reviews of the authorities on point and it is unnecessary for that history to be retraced by me.

33. Gibbs A.C.J. tended to the view that it was convenient to adopt a rule of construction that a statute should not be taken to bind the Crown unless it was clear from the nature and purpose of the legislation, or the language used in it, that it was intended that the Crown be so bound by the statute. His Honour considered that such a rule of construction was to be applied to the Crown in either of its capacities in the right of the State or the right of the Commonwealth (pp 116-123).

34. Mason and Jacobs JJ. also concluded that there should be, at least between the Commonwealth and the States, an identical presumption of a legislative intention not to bind the Crown (p 136). Their Honours appeared to recognize that such a presumption may be overtaken by a "necessary implication" that the Crown was intended to be bound, such an implication to be derived from the nature of the statutory provisions and the whole subject matter of the legislation although they noted that the search for an implication in a statute which was "necessary" was a test that was not easily satisfied (p 135).

35. As Mason and Jacobs JJ. stated:

"The concept of the unity and indivisibility of the
Crown is not denied by the recognition that there are
different sources of legislative, executive and
judicial power. Indeed, it is only when there are
such different sources that the concept becomes
important at all. What it means in its application to
Australia is that there is one country under the rule
of a body of law even though the sources from which
the law emanates are different in different cases;
that the law binds everyone whom it is intended to
bind no matter from which legislative source it
springs by virtue of the Constitution, provided that
it is a law which it was within the legislative
competence of that source to enact and which remains a
valid law under the Constitution. That was the effect
of the decision in the Engineers's Case [1920] HCA 54; (1920)
28 CLR 129 and that decision has never been
overturned even though a limitation has been placed on
its application to particular situations as a result
of development which culminated in the decision in
Commonwealth v. Cigamatic Pty. Ltd. (in Liquidation),
the Cigamatic Case [1962] HCA 40; (1962) 108 CLR 372. This being
the position, it would seem to us that at least as
between the Commonwealth and the States there should
be an identical presumption of legislative intention
not to bind the Crown." (pp 135-136)

36. Within the fields of legislative competence granted to it under the Constitution, the Commonwealth can legislate to bind the Crown in the right of a State, but may not do so in a discriminatory way or with the object of controlling a State's exercise of its executive powers (Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 per Dixon J. at p 79-83). Similarly, subject to limits of legislative competence, a State may legislate to bind the Crown in the right of the Commonwealth.

37. A limitation of State legislative competence may be effected directly by the Constitution, (see for example ss.52, 107, 114), or indirectly by the combination of the exercise of legislative powers granted to the Commonwealth by the Constitution and s.109 thereof, providing for the supremacy of Commonwealth laws when in conflict with State laws, which together may shrink the area of legislative competence of a State. Furthermore, a State legislature may not derogate from prerogative fiscal rights of the Commonwealth (The Commonwealth v. Cigamatic Pty. Ltd. (In Liquidation) [1962] HCA 40; (1962) 108 CLR 372 per Dixon J. at pp 377-378; cf. Meagher and Gummow, "Sir Owen Dixon's Heresy" (1980) 54 ALJ 25; Mason and Crawford, "The Cross-vesting Scheme" (1988) 62 ALJ 328 at p 334).

38. Subject to those qualifications, a State legislature retains a legislative power which is not subject to any implied prohibition (Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd. [1920] HCA 54; (1920) 28 CLR 129 per Knox C.J., Isaacs, Rich, Starke JJ. at pp 155, 157, 160).

39. It becomes a matter of construction as to whether the statutes of either legislative body are intended to have an extended effect. As Mason and Jacobs JJ. said in Bradken Consolidated Ltd. v. The Broken Hill Proprietary Company Limited at p 136, the expression of an intention to bind the Crown in the right of the Commonwealth in a Commonwealth Act and the absence of a like expression in respect of the Crown in the right of the States would, as a matter of construction, lead to a conclusion that the Crown in the right of the States was not intended to be bound. The same comment would apply to the legislation of a State Parliament. No principle of unity and indivisibility of the Crown would apply to provide a presumption in aid of construction in the absence of an expressed intention. (See Superannuation Fund Investment Trust v. Commissioner of Stamps in the State of South Australia [1979] HCA 34; (1979) 145 CLR 330 per Mason J. at p 356.)

40. There is no suggestion in Bradken Consolidated Ltd. v. The Broken Hill Proprietary Company Limited or Superannuation Fund Investment Trust v. Commissioner of Stamps (S.A.) that legislation of a State purporting to bind the Crown in the right of the Commonwealth per se would be beyond the legislative power of the State notwithstanding some dicta in earlier cases which may have indicated a contrary view (see Victoria v. Commonwealth [1971] HCA 16; (1971) 122 CLR 353 per Barwick C.J. p 373, per Walsh J. p 410; The Commonwealth of Australia v. Bogle per Fullagar J. pp 259-260). If legislation directed at the peace, order or welfare and good government of a State, does not interfere with the relationship of the Commonwealth and its subjects in matters governed by prerogative fiscal rights of the Crown in the right of the Commonwealth, does not conflict with legislation of the Commonwealth, and does not exceed the limitation of legislative power imposed upon the State by the Constitution, there would be no reason why such legislation should not be regarded as being within the independent legislative competence of a State. (See Port McDonnell Fishermen's Association v. The State of South Australia [1989] HCA 49; 63 ALJR 671 at pp 680-681 and Pirrie v. McFarlane [1925] HCA 13; (1925) 36 CLR 170 per Starke J. at p 228.)

41. The orderly winding-up and control of the affairs of an insolvent corporation including the restriction of dissipation of assets and the enhancement of returns to creditors and members hitherto has been a matter for the exercise of State legislative power. The extension of such provisions to the Crown in the right of the Commonwealth on its face would not exceed the legislative power of a State subject to the qualifications referred to above.

42. Section 358 of the Code recognizes that the State's power to bind the Crown in the right of the Commonwealth is subject to limitations.

43. An acknowledgement of that limitation of legislative power may be found in ss.440 and 441 of the Code, which are also contained in Pt XII to which s.358 applies. Sections 440 and 441 provide for the priority of certain debts in a liquidation and thereafter the equal ranking of all other debts. As is set out in The Commonwealth of Australia v. Cigamatic Pty. Ltd. (In Liquidation) a State legislature does not have legislative competence to interfere with the fiscal right of the Crown in the right of the Commonwealth to receive payment of its debts in priority to others pursuant to the rights accorded to the Crown by common law. By s.3 of the Crown Debts (Priority) Act 1981 the Commonwealth has deferred the "prerogative right or privilege of the Crown in the right of the Commonwealth" to any provision of a law of a State relating to the order in which debts or liabilities of a body, whether incorporated or unincorporated, are to be paid or discharged. That legislation provides a State with competence to enact such provisions extending to the Crown in the right of the Commonwealth, and acknowledges that ss.358, 440 and 441 of the Code are intended to extend to and bind the Commonwealth in so far as they are able to do so.

44. Sub-section 371(2) of the Code does not interfere with a prerogative right of the Crown in the right of the Commonwealth, nor does it exceed any limitation of legislative power provided for in the Constitution and it does not conflict with Commonwealth legislation to which supremacy is accorded by s.109 of the Constitution. (See Commonwealth of Australia v. Duncan (1981) VR 879 at pp 884-885.)

45. In purporting to bind the Crown in the right of Western Australia and the Crown in all its other capacities in so far as the legislative power of the Parliament of Western Australia permits, s.358 of the Code evinces an intention to bind the Crown in the right of the Commonwealth and is able to do so subject to the limitations discussed above.

46. If it were necessary to go further and seek a necessary implication from the provisions of the Code by having regard to the purpose of the legislation and the mischief it sought to address, there is a necessary implication that the procedural provisions of sub-s.371(2) were intended to bind the Crown in all its capacities.

47. On 22 December 1978 the Commonwealth and the States executed an agreement, the recitals to which were as follows:

"(A) it is generally acknowledged in the interests of
the public and of persons and authorities
concerned with the administration of the laws
relating to -
(a) companies; and
(b) the regulation of the securities industry,
that there should be uniformity both in those laws
and in their administration in the States and
Territories of Australia in order to promote
commercial certainty and bring about a reduction
in business costs and greater efficiency of the
capital markets and that the confidence of
investors in the securities market should be
maintained through suitable provisions of investor
protection;
(B) the Governments of the Commonwealth and of the
State of Australia are agreed that such uniformity
will be achieved by establishing and implementing
a co-operative scheme the objects of which are to
ensure that -
(a) the legislation relating to the scheme is,
and continues to be, uniform throughout
Australia at all times;
(b) the legislation is administered on a uniform
basis;
(c) the Commonwealth and the States are able to
co-operate with each other in regard to the
matters to be provided in the legislation and
the way in which the legislation is
administered;
(d) the legislation is capable of effective
administration throughout Australia with the
minimum of procedural requirements and is so
administered; and
(e) changes in the legislation are proposed for
consideration as appropriate from time to
time and amendments made when the need for
reform arises;
(C) as the result of conferences between their
respective Ministers the Governments have reached
agreement on a scheme to achieve those objectives;
(D) the essential element of the scheme is an
agreement between the Commonwealth and the States
to provide for the introduction of legislation,
the establishment and operation of a Ministerial
Council and of a National Companies and Securities
Commission and for matters relating to the
functioning of the scheme as hereinafter appears;
and
(E) the funds and other resources required for the
administration of each State or Territory to carry
out its functions in accordance with the scheme
are to be provided by the respective parties to
that agreement:"

48. Pursuant to that agreement, the Commonwealth Parliament passed legislation that became the substantive law relating to companies applicable to the Australian Capital Territory and each State passed appropriate Acts applying that legislation, with necessary modifications, as the Companies Code of each State. (See National Companies and Securities Commission Act 1979 (Cwth), National Companies and Securities Commission (State Provisions) Act 1980 (W.A.), Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980 (Cwth), Companies and Securities (Interpretation and Miscellaneous Provisions) (Application of Laws) 1981 (W.A.), Companies Act 1981 (Cwth), Companies (Application of Laws) 1981 (W.A.).

49. By this network of legislation, the relevant parties gave effect to the formal agreement made between them and, in particular, established a co-operative scheme pursuant to which uniform companies legislation operated in the Australian Capital Territory and in all States and was administered uniformly throughout.

50. Section 358 of the Companies Act 1981 (Cwth) provides that the winding-up provisions in that Act bind the Crown in the right of the Commonwealth, in the right of a State and in the right of a Territory. The uniformity sought in the formal agreement is provided by s.358 of the Codes of each State, which apply the Companies Act 1981 (Cwth) as part of the law of each State and provide for the Crown in the right of the State to be bound and, subject to the legislative competence of each State, for the Crown in all its other capacities to be bound. There appears to be a clear intention that subject to the State being able to do so, the companies legislation enacted by the Commonwealth and applied as part of the law of each State is to bind the Commonwealth in each State in the same manner as it binds the Crown in the right of Commonwealth and in the right of all the States in the Australian Capital Territory.

51. Having reached this conclusion, it is unnecessary to consider the further submission that s.64 of the Judiciary Act 1903 applied to subject the Commission to the provisions of sub-s.371(2) of the Code. Indeed, for the reason set out below it would be inappropriate to do so.

52. Although it was submitted that the argument in respect of s.64 raised a question of construction only, the submissions addressed the application of the decisions Deputy Commissioner of Taxation (Qld.) v. Moorebank Pty. Ltd. [1988] HCA 29; (1988) 78 ALR 641 and Dao v. Australian Postal Commission [1987] HCA 13; (1987) 162 CLR 317 which involved findings that s.64 was unable to operate in a manner which provided an indirect paramountcy for a provision of a State law over a provision of a law of the Commonwealth. The argument as to whether the Trade Practices Act 1974 has "left room" for s.64 to operate necessarily involves a matter arising under the Constitution and pursuant to. s.78B of the Judiciary Act 1903 the Court may not proceed with a pending cause until appropriate notices of that matter have been delivered to the Attorneys-General.

53. Upon the assumption that the first respondent does not wish to pursue its argument based upon s.64 of the Judiciary Act 1903 there will be an order that proceedings against the first respondent be stayed until such time as leave has been obtained to proceed against the first respondent pursuant to sub-s.371(2) of the Code.