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1
Challenge Bank Limited (Transfer Of Undertaking)
CHALLENGE BANK LIMITED
(TRANSFER OF UNDERTAKING) BILL
1996
EXPLANATORY NOTE
Introductory Note
In December 1995, Westpac Banking Corporation (Westpac) acquired
100% of the issued share capital of Challenge Bank Limited (Challenge).
Challenge therefore is required under Reserve Bank regulations to surrender
its banking licence. It is thus necessary to transfer Challenge's undertakings
to Westpac.
Westpac has requested assistance from the States and Territories to pass
complementary legislation to facilitate the transfer of specific assets and
liabilities within each jurisdiction.
Further, since Commonwealth legislation is not being passed,
inconsistencies between this Bill and various Commonwealth Acts such as
the Privacy Act, Cheques Act etc may arise. The Act is to be gazetted for the
purposes of Section 38A of the Banking Act 1959 in order to remove any
possible inconsistencies between this Bill and such existing Commonwealth
legislation. It is envisaged that gazettal will take place after passing and
before commencement of the Bill.
The aim of these notes is to explain the operation of the legislation.
Policy objectives of the Bill and the reasons for those objectives
To provide for the transfer of the undertaking of Challenge to Westpac
by:
· providing for the transfer of assets and liabilities in Queensland
from Challenge to Westpac, without the usual written documents;
· providing for certain exemptions from Queensland taxes
(including stamp duty and debits tax) and charges, conditional
upon agreement to, and payment of, a lump sum in lieu of such
taxes and charges, the amount of which will be determined by the
Governor in Council, on the advice of the Treasurer; and
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Challenge Bank Limited (Transfer Of Undertaking)
· requiring the Queensland Registrar of Titles and other relevant
authorities to register certain transactions on application by
Westpac.
In addition, the legislation creates certain safeguards for third parties who
are affected by the merger. This is desirable in ensuring no person suffers
loss or damage as a result of the merger.
The way these policy objectives will be achieved by the Bill and why
this way of achieving the policy objectives is reasonable and
appropriate
The primary objective is achieved by vesting the undertaking of
Challenge in Westpac, effectively transferring the assets and liabilities, and
by allowing exemption for stamp duty and other charges, conditional upon
the payment of a lump sum in lieu of such charges. A legislative approach
such as this overcomes the need to identify, transfer ownership and pay
duty on the conveyance of individual assets and liabilities.
Protection for third parties is achieved by removing the obligation of
third parties to enquire as to the title of assets and liabilities, continuing
customer relationships with Westpac, continuing legal proceedings by or
against Westpac and providing for transitional administrative arrangements.
Legislating in these areas establishes clear guidelines as to the rights and
obligations of the merged entity.
Alternative way of achieving the policy objective
The alternative method to transfer the banking business of Challenge to
Westpac is to identify and transfer individual assets and liabilities by
conveyance, and for Westpac to pay stamp duty on each individual transfer.
Accordingly, assistance would not be provided to the merging banks and
the benefit of protection for third parties would be forgone.
Administrative costs for Government implementation of this Bill
The administrative costs arising from this Bill are insignificant and are
able to be met from current appropriations.
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Challenge Bank Limited (Transfer Of Undertaking)
Consistency with fundamental legislative principles
Care has been taken in drafting this Bill to ensure that no aspects of the
Bill infringe upon fundamental legislative principles.
Consultation
Consultation has taken place with Treasury Department (Office of State
Revenue), Justice Department (Office of Consumer Affairs), Department
of Natural Resources (Titles Office) and Premiers Department (Office of
Parliamentary Counsel). Westpac also has been consulted extensively
during formulation of the Bill.
Preamble provides a background to the Act as an aid to interpretation.
PART 1--PRELIMINARY
Clause 1 specifies the short title.
Clause 2 provides for the commencement of the Act at 12.00 noon on a
date to be fixed by proclamation.
Clause 3 defines words and expressions used in the Act.
Clause 4 provides that the Act binds the Crown.
PART 2--VESTING OF UNDERTAKING OF
CHALLENGE IN WESTPAC
Division 1--Vesting and its general effect
Clause 5 provides for the undertaking of Challenge to be transferred to,
and vested in, Westpac at the time of commencement of this Act.
Clause 6 provides that all contracts binding on and enforceable by or
against Challenge before commencement time are transferred to Westpac
immediately after commencement time and are then binding on and
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Challenge Bank Limited (Transfer Of Undertaking)
enforceable by or against Westpac. The clause does not apply to contracts
relating to excluded assets, nor does a director, secretary or auditor of
Challenge become a director, secretary or auditor of Westpac by virtue of
the clause.
Division 2--Other consequential effect of vesting
Clause 7 provides that Division 2 is subject to Division 1, that is the
more specific provisions of Division 2 do not limit the provisions of
Division 1.
Clause 8 provides that the relationship between Challenge and each of its
customers becomes a relationship between Westpac and those customers.
Clause 9 provides that each authority, instruction, mandate or order given
to Challenge by a customer of Challenge by or after commencement time is
taken to have been given to Westpac.
Clause 10 provides for the transfer of securities of Challenge held
immediately before commencement time to Westpac.
Clause 11 provides for the transfer of rights, liabilities and priorities in
relation to a security of Challenge to Westpac.
Clause 12 provides for the transfer of custody of documents, goods or
things held by Challenge as bailee to Westpac at commencement time.
Clause 13 provides that negotiable instruments or orders applicable to
Challenge become applicable to Westpac after the commencement time.
Clause 14 provides for information held by Challenge relating to a
customer to be available for, and used by, Westpac.
Clause 15 provides that Westpac continues to have rights in relation to
security held by Westpac over money on deposit with Challenge. It also
provides that Westpac will assume Challenge's rights where Challenge has
security over money on deposit with Westpac.
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Challenge Bank Limited (Transfer Of Undertaking)
Division 3--Transitional period
Clause 16 requires the Minister to decide the end of the transition period,
advise the day by gazette notice and provide a copy of the notice to
Westpac. It is envisaged that the transition period will not exceed three
months and will conclude when procedural matters relating to the transfer
are completed, such time being determined by the Treasurer, having regard
to the advice of the Chief Executive Officer of Westpac.
Clause 17 provides that Westpac may carry on business under the
business name "Challenge Bank Limited" during the transition period.
PART 3--GENERAL
Clause 18 provides for the exemption of State taxes and charges payable
in relation to the transfer of assets and liabilities from Challenge to Westpac,
subject to the payment by Westpac to the Treasurer of an amount in lieu of
all such State taxes and charges. No person is to have an obligation to lodge
a statement or return relating to these matters. Payment of the sum is to be
notified by gazette notice.
Clause 19 requires any person or authority who has statutory
responsibility for registering or recording transactions affecting assets or
liabilities, on application by Westpac, to make any amendments to the
register in respect of an asset or liability. This is so whether or not Westpac
has been registered as the proprietor of the asset or liability. The registering
authority is not required to enquire whether the asset or liability is
transferred under the Act.
Clause 20 removes from any person dealing with Westpac or Challenge
any obligation to enquire into whether any property the subject of the
dealing is an excluded asset. Further, Westpac is taken, in favour of the
person, to have full power and authority to enter into that dealing as if the
excluded asset had vested in Westpac under the Act. The consequence of
that dealing will be that the transaction is legally effective. However, the
clause does not affect the liability of Westpac to Challenge in relation to an
excluded asset. Nor does the clause validate a transaction if the party dealing
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Challenge Bank Limited (Transfer Of Undertaking)
with Westpac or Challenge has actual or constructive notice that the
property is an excluded asset.
Clause 21 provides that service of a document on Westpac is a service
on Challenge and vice versa, until such time as Challenge ceases to be a
related body corporate of Westpac under section 9 of the Corporations Law.
Clause 22 provides for any action by, against or in favour of Challenge
to be continued as if it were by, against or in favour of Westpac. It also
allows the making and enforcement of any judgement, order or award
against both Challenge and Westpac, which was previously against
Westpac, at the request of the recipient. This clause does not apply to any
action relating to an excluded asset.
Clause 23 provides that, where Westpac has erroneously been made a
party to an action, arbitration or proceeding relating to an excluded asset,
documents may be amended by substituting for the name of Westpac the
name of Challenge. No order is to be made against any party so amending
to pay to Westpac or Challenge any costs incurred as a result of the
amendment and the action is to be continued as if Challenge had originally
been made a party to it.
Clause 24 provides that nothing done or allowed under the Bill will
constitute a breach of contract, an Act or any other law, or allow a party to
terminate an agreement or release a surety or other obligee. Any advice or
consent of any person necessary to carry out any action authorised by the
Act also is taken to have been given.
Clause 25 provides that section 268(1) of the Corporations Law
(Assignment and Variation of Charges) is to be taken to have been
complied with if Westpac lodges with the Australian Securities
Commission a certificate signed by the Queensland Treasurer stating that
the undertaking of Challenge has become vested in Westpac. This provides
Westpac with a simple method of meeting its obligations regarding
registration of changes in interests in company assets.
Clause 26 provides that the Chief Executive Officer of Westpac can
certify a matter in relation to the operation or effect of the Act.
Clause 27 provides that a book or document that would have been
evidence about a matter for or against Challenge is admissible in evidence
about the same matter for or against Westpac.
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Challenge Bank Limited (Transfer Of Undertaking)
Clause 28 provides that for all courts, tribunals and proceedings, a
certificate under this Act is evidence of the matters certified. A document
purporting to be a certificate under this Act is to be taken to be a certificate
and to have been properly given unless the contrary is established.
Clause 29 provides that except as expressly provided in, or as a
necessary consequence of, this Act, nothing in this Act exempts Westpac
from the provisions of any Act relating to companies carrying on the
business of banking.
Clause 30 construes any reference to Challenge in any written law,
document or register as, where the context permits, a reference to Westpac.
Clause 31 provides that section 20A of the Acts Interpretation Act 1954
applies to this Act. This provides for the continuation of effectiveness of the
Act after its expiry.
Clause 32 provides for the Act to expire in 20 years. This provides a
reasonable period during which the Act remains on the statute books and is
accessible by Westpac should a need arise wherein a defence needs to be
mounted against such charges as for example, the effect of the Act having
contravened a provision of another law.
© The State of Queensland 1996