BE Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton

McCOLL JA : I agree with Campbell JA and the orders his Honour proposes.

CAMPBELL JA : Nature of the Proceedings

Between 3 August 2004 and 7 October 2005 Ms Mary Sutton performed work as a taxation consultant for the benefit of BE Australia WD Pty Ltd (" BEA "). She had no direct contractual relationship with BEA. Rather, her services were provided to BEA through labour hire companies. The arrangements under which she worked were terminated on 7 October 2005, without prior notice or payment in lieu of notice.

On 1 November 2005 Ms Sutton commenced proceedings in the Industrial Relations Commission (" IRC ") against BEA. She alleged that the arrangements with BEA were unfair within the meaning of s 106 Industrial Relations Act 1996 (" IR Act ") in various respects. She sought to have the relevant contract or arrangement varied so that her services could not be dispensed with except upon reasonable notice, and a monetary payment for breach of the contract or arrangement as so varied.

On 1 October 2009, shortly before the proceedings in the IRC were due to be heard, BEA was placed in voluntary administration.

A Deed of Company Arrangement (" DOCA ") was subsequently approved by BEA's creditors. Section 444E Corporations Act 2001 (Cth) prevents any person bound by the DOCA from proceeding with a proceeding against the company except with leave of the Court.

Ms Sutton lodged a Proof of Debt in respect of her claim under s 106 IR Act . Ultimately, the Deed Administrators rejected that Proof.

Ms Sutton then began proceedings in the Equity Division of the Supreme Court of New South Wales seeking either an order under s 1321 reversing the decision of the Deed Administrators to reject her proof of debt, or an order under s 447A Corporations Act the effect of which would justify the Deed Administrators in admitting Ms Sutton's proof under the DOCA. The primary judge held that the Deed Administrators had correctly rejected the Proof of Debt. However, the judge also held that an order under s 447A should be made, the effect of which was that Ms Sutton was treated as though she was a creditor for the purpose of the DOCA. Finally, the judge ordered under s 447A that the Deed Administrators should adjudicate her Proof of Debt: Sutton v BE Australia WD Pty Ltd (admin apptd) [2010] NSWSC 772.

In the present proceedings BEA and the Deed Administrators seek leave to appeal against this decision. Their application for leave to appeal has been heard as a concurrent hearing, so that all arguments that the applicants would wish to put if leave were granted have been placed before the Court. The applicants challenge both the primary judge's finding that there was power under s 447A to make an order of the type he made, and his decision that it was an appropriate exercise of discretion to make such an order.

On the present application Mr C R Newlinds SC appeared with Mr D Sulan for the Applicant. Mr D L Williams SC appeared with Ms J Little for the Respondents.

In the course of the argument, Mr Williams sought an extension of time in which to seek leave to cross-appeal against the primary judge's decision upholding the rejection by the Deed Administrators of Ms Sutton's Proof of Debt. In accordance with directions given at the hearing of the application for leave to appeal, both parties filed written submissions directed to Ms Sutton's application for extension of time and application for leave to cross-appeal, and the merits of her application to cross-appeal. While Ms Sutton's legal representatives were content to have those questions decided on the papers, the legal representatives of BEA and the Administrators sought a further oral hearing concerning the foreshadowed cross-appeal.

In my view, no further oral hearing is necessary. The written submissions that have been filed are thorough, and in any event the issues raised in them were debated to some extent at the hearing.

I have reached the conclusion that the judge was right to conclude that Ms Sutton was not a "creditor" , but that it was an error to seek to use s 447A to enable Ms Sutton to be treated as if she were a creditor.

By some time in 2009 the financial accounts of BEA showed Ms Sutton as a contingent creditor in the sum of $330,000.

On 1 October 2009 BEA was placed into voluntary administration. By that date Ms Sutton's proceedings in the IRC had been listed for hearing, to commence on 23 November 2009.

Section 440D(1) Corporations Act provides: "During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except: (a) with the administrator's written consent; or (b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes."

When hearing an application under s 106 IR Act the IRC sits as the Industrial Court of New South Wales: ss 151, 151A and 153 IR Act . The present proceedings have been conducted on the basis that the Industrial Court is a "court" within the meaning of s 440D and thus that the appointment of the administrators stayed the proceedings in the IRC.

On 3 November 2009 the Administrators advised the IRC that they did not consent to the continuation of Ms Sutton's proceedings. They continue to withhold that consent. To date the Supreme Court has not given leave for the IRC proceedings to continue, though the judgment appealed from envisaged that in some circumstances such leave might be given. Thus, the IRC proceedings are treated in this litigation as having been stayed pursuant to s 440D(1) Corporations Act while the voluntary administration was under way.

On 6 October 2009 a representative of the Administrators sent to Ms Sutton's solicitor a copy of the First Report to Creditors, saying that they understood that Ms Sutton was a creditor of BEA and/or a related company of BEA. The enclosed report gave advice about the date and place of the first meeting of creditors, and requested submission of Proofs of Debt. The first meeting of creditors was held on 14 October 2009.

Ms Sutton submitted a Proof of Debt on 13 October 2009.

A Report to Creditors dated 29 October 2009 (which related to the affairs of both BEA and a related company, BE Australia WD 2 Pty Ltd (administrator appointed) (" BEWD2 ") was distributed. It reported that BEA "was sold through a Management Buy Out on 6 August 2009" for $1,000. Presumably this refers the assets of BEA having been sold, as the Administrators report that the book value of the assets sold was approximately $5.4m and that liabilities of $5.8m were assumed. A Balance Sheet as at 31 December 2008 showed a capital deficiency of more than $112m. The report included the statement: "The contingent liabilities comprise: ...

A second Supplementary Report to Creditors dated 5 January 2010 put forward a proposal for a DOCA. It estimated that creditors of BEA would receive eighty-four cents in the dollar under the DOCA, and would receive 0.43 cents in the dollar on a liquidation.

Ms Sutton was invited to attend creditors' meetings in October, November and December 2009 and in January 2010. The judge found that Ms Sutton was admitted to vote at those meetings as a contingent creditor, with the value of her claim being assessed at $330,000.

At a creditors' meeting on 13 January 2010 creditors that were related entities of the First Applicant, owed debts of nearly $122 m, voted in favour of the DOCA. Broadly, the terms of the DOCA were that the inter-company indebtedness would not be paid until all of the creditors had been paid, and any funds remaining after distribution to admitted creditors were to be paid to the United States parent of BEA.

On 9 February 2010 Ms Sutton submitted a Proof of Debt under the DOCA, for a total of $535,048.30. A schedule showed that the claim was made up as follows:

On 17 February 2010 a letter from the solicitors for the Administrators rejected Ms Sutton's Proof of Debt in its entirety. The judge summarised the ground of rejection as being: "that no part of the claim was provable under the DOCA as a matter of law because, as at the Appointment Date under the Deed, 1 October 2009, Ms Sutton had no more than a bare right to make an application invoking the jurisdiction of the Commission under s 106 IRA ". ([13]) That letter also said that, if that view was wrong, the Proof would be admitted only to the extent of allowing $11,697.42 concerning her claim for payment in lieu of notice, with all the other heads of her Proof of Debt not being allowed. That figure was arrived at because it was the amount she would receive if she were entitled to one month's payment in lieu of notice.

At the hearing the primary judge had before him a letter written by the solicitors for the Administrators on the previous day, that set out the then current position concerning the estimated dividend to creditors: "1. The deed administrators are still in the position of collecting in the deed fund and adjudicating on the proofs which have been received. It follows that, at present, the final outcome with respect to payment of dividends to creditors is unknown and there are a number of different permutations. 2. However, on the present estimates prepared by the deed administrators, if Ms Sutton is admitted to prove in the deed fund for $330,000: (a) there are [sic] is a scenario where creditors may still receive 100 cents in the dollar; (b) there are other scenarios where creditors may receive slightly less, namely 94 cents or 96 cents in the dollar; and (c) on each of the scenarios, the deed administrators estimate that creditors may receive greater than 84 cents in the dollar (which was the estimate provided to creditors in the administrators' report of 5 January 2010). 3. On the estimates prepared by the deed administrators, if Ms Sutton is admitted for the full amount of her proof ($535,048) in each of the scenarios the creditors may receive less than 84 cents in the dollar, namely, around 70 to 79 cents in the dollar. 4. Any surplus after distribution to admitted creditors would be returned to the deed proponent, BearingPoint Inc. If Ms Sutton's claim is admitted for any amount (whether it be $535,048; $330,000 or $11,697) it will adversely affect the amount of surplus which would otherwise be returned to BearingPoint Inc."

The primary judge rejected the appeal against the adjudication of the proof of debt. He accepted at [15] that whatever the definition of "creditor" might be in any particular DOCA, a DOCA has binding force only by virtue of s 444D(1) Corporations Act . That section provides: "A Deed of Company Arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the Deed under paragraph 444A(4)(i)".

Section 444A(4)(i) states that a DOCA must specify: "The day (not later than the day when the administration began) on or before which the claims must have arisen if they are to be admissible under the deed."

The DOCA in the present case in clause 1.1 defined "Claims" as meaning: "all actions, claims, suits, causes of action, arbitrations, debts, costs, demands, verdicts and judgments at law or in equity under any statute whether certain or contingent, present or future, ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before the Appointment Date." It defined "Creditor" as meaning "a person who has a Claim against the Company." It defined "Appointment Date" as meaning "1 October 2009" . That was the date on which the voluntary administrators had been appointed.

The judge accepted that a claim under s 106 IR Act which is unadjudicated as at the "relevant date" was not provable. This was because that claim did not seek to enforce any existing right obligation or liability, but merely to invoke the Commission's jurisdiction under s 106 IR Act to create a new right as from the date of the Commission's order and to give a remedy for breach of that newly created right. Thus, the judge concluded that the liquidators had been correct in rejecting the proof of debt.

The judge held that the Court had power to make an order under s 447A of the type for which the Respondent contended. In particular, the judge held at [27] that 447A(1) conferred power: "... to vary the operation of s 444D(1) and s 444A(4)(i) so that the Deed Administrators are able to admit to proof under the DOCA Ms Suttons' claim under s 106 IRA , notwithstanding that that claim was not, as at the Appointment Date, specified in the DOCA, a claim or debt of the nature that could have been proved in the winding up of the company." He further held that it was appropriate, in the exercise of the Court's discretion, for that power to be exercised.

The amended originating process had sought an order that the Respondent be admitted as a creditor in the sum of $330,000. However, by the time of the hearing that claim had evidently been modified. The judge recorded, at [36]: "... the parties have not, in this application, sought the Court's determination of the proper amount to be admitted, if any."

At [35] the primary judge explained the order that he proposed as one that: "... while requiring the Deed Administrators to admit Ms Sutton's proof under the DOCA as an admissible claim, will not require them to admit that claim in any amount, or at all. The administrators will have to adjudicate on the proof. If they reject it as bound to fail or as excessive, a suitable means of determining any resulting dispute is available."

His Honour went on to say, at [37]-[38]: "If the order under s 447A(1) which I propose is made, the Deed Administrators reject Ms Sutton's claim in the Proof of Debt, in whole or in part, then Ms Sutton can appeal to this Court under s 1321 Corporations Act for determination of the amount of the claim which should be admitted, if any. That would not, however, be a satisfactory course. This Court would have to stand in place of the Industrial Relations Commission in deciding whether Ms Sutton has made out a claim for relief under s 106 IRA and, if so, what compensation she should receive. It is far more appropriate that the Industrial Relations Commission, rather than this Court, exercise that specialised jurisdiction. Accordingly, if it becomes necessary to adjudicate further upon the Deed Administrators' rejection of Ms Sutton's Proof of Debt in whole or in part, leave should be granted to Ms Sutton under s 440D(1)(b) to continue with the IRC proceedings."

His Honour did not, at the time of delivering judgment, make any orders. Rather, he stood the matter over to enable Short Minutes to be brought in.

The orders his Honour made on 8 September 2010 were: "1. An order pursuant to s 4471(1) of the Corporations Act (the Act), Part 5.3A of the Act is to operate in relation to the first defendant and the Deed of Company Arrangement dated 1 February 2010 (the DOCA) so that a 'creditor' is deemed to include the plaintiff for the purposes of Part 5.3A and Ms Sutton's claim is deemed to have arisen no later than 1 October 2009. 2. An order that the defendants be required to admit proof of debt to be lodged by the plaintiff under the DOCA as an admissible claim, which is to be adjudicated by the second and third defendants. 3. An order that the first defendant pay one half of the plaintiff's application for an order under s 447A(1) Corporations Act , there being no order as to the costs of the other issues in the proceedings."

We have been informed, without objection, that after the decision in the court below Ms Sutton lodged a proof of debt. The administrators have not yet adjudicated on it, because they have obtained from ASIC an extension of the time within which they must adjudicate on that proof to within 29 days after the decision is given in this appeal. Relevant Provisions of the Corporations Act

Various interacting provisions of the Corporations Act must be taken into account. Provisions specifically relating to voluntary administration and the entry of a DOCA are contained in Part 5.3A, which runs from s 435A to s 451D.

Section 435A provides: "The object of this Part is to provide for the business, property and affairs of an insolvent company to be administered in a way that: (a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or (b) if it is not possible for the company or its business to continue in existence-results in a better return for the company's creditors and members than would result from an immediate winding up of the company." (emphasis added)

Section 439A(1) requires a voluntary administrator to "convene a meeting of the company's creditors " . Section 439C provides that at that meeting the creditors may resolve, inter alia, that the company execute a DOCA.

Section 444A(4) identifies matters that a DOCA must specify. They include: "(b) the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors' claims; ... (d) to what extent the company is to be released from its debts ; ... (h) the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed; (i) the day (not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the deed." (emphasis added)

Section 444D(1) provides: "A deed of company arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i)." (emphasis added)

Notwithstanding this repeated use of "creditor" and "claim" , neither Part 5.3A of the Corporations Act , nor the interpretation provisions contained in Part 1.2 of that Act contains any definition of "creditor" or "claim" .

Two provisions appearing in Part 5.6 Corporations Act , which is entitled "winding up generally" , are also relevant.

Section 553(1) provides: "Subject to this Division [Proof and ranking of claims] and Division 8 [Pooling], in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company." (emphasis added)

Section 553E provides: "Subject to this Division and to section 279, in the winding up of an insolvent company the same rules are to prevail and be observed with regard to debts provable as are in force for the time being under the Bankruptcy Act 1966 in relation to the estates of bankrupt persons (except the rules in sections 82 to 94 (inclusive) and 96 of that Act), and all persons who in any such case would be entitled to prove for and receive dividends out of the property of the company may come in under the winding up and make such claims against the company as they respectively are entitled to because of this section." (emphasis added) Leave to Cross-Appeal and Extension of Time?

The basis upon which Mr Williams sought leave to cross-appeal was to challenge the primary judge's decision that Ms Sutton was not a "creditor" within the meaning of s 444D(1) Corporations Act , or within the definition of "creditor" in the DOCA. Those questions are logically anterior to whether it was appropriate for the primary judge to make an order under s 447A requiring that Ms Sutton be treated as though she were a creditor. Indeed, if in truth Ms Sutton were a creditor, such an order under s 447A would not be necessary. Further, determining whether Ms Sutton was a "creditor" within the meaning of s 444D or the DOCA depends upon many of the same cases and statutory provisions as enter into a consideration of whether the order under s 447A should have been made. As will later appear, I have decided that it is appropriate to grant leave to appeal, to enable the question of whether the order under s 447A should have been made to be examined. That the cases and statutory provisions would need to be examined in any event for the purposes of the appeal itself supports granting leave to cross-appeal.

While the application for leave to cross-appeal, and for the necessary extension of time, was filed on 25 May 2011, many months out of time, it was obviously prompted by the course that argument on the appeal took. In my view, it is appropriate to grant the extension of time that is sought, and to grant leave to cross-appeal.

Dealing with the issues in a logical order requires that the cross-appeal be considered before the appeal. Was Ms Sutton a "Creditor" With a "Claim"?

Mr Williams submits that Ms Sutton was a creditor entitled to prove under the DOCA. He submits that Ms Sutton's claim fits comfortably within the definition in the DOCA of "Claims" as including "... claims... under any statute, whether certain or contingent, present or future, ascertained or sounding only in damages, the circumstances giving rise to which occurred ... before the Appointment Date" . He submits that she has a claim under a statute (namely, the IR Act ), and all the facts upon which her claim to an order under s 106 IR Act depended had occurred well before the Appointment Date. He accepts that, had the DOCA not intervened, she would have received an order entitling her to the payment of money only upon the IRC determining that she should be given relief under s 106 IR Act , quantifying or otherwise identifying that relief, and making orders to give effect to those determinations. However, he submits that, notwithstanding that, her situation is no difference in substance to that of a person with a claim for damages against a company under a statutory provision such as the Trade Practices Act , concerning which liability and quantum are not foregone conclusions. Such a claim, he submits, is a "claim" within the meaning of the DOCA, and its value is capable of being assessed. The value of Ms Sutton's claim can likewise be assessed.

Mr Williams accepts that, whatever the definition of "creditor" might be in the DOCA, the DOCA has binding force on creditors only by virtue of s 444D(1) of the Act. Section 444D(1) depends on the notions of "creditors" and "claims" , neither of which words, as I have said, are defined for the purpose of Part 5.3A. He submits that the decision in Brash Holdings v Katile Pty Ltd [1996] 1 VR 24 makes clear that, for the purposes of Part 5.3A, the words "creditor" and "claim" have, at the least, the same meaning that they have in s 553.

In Brash Holdings v Katile Pty Ltd the Appeal Division of the Supreme Court of Victoria (Brooking, J D Phillips and Hanson JJ) held, at 34: "The words of s 444D(1), 'arising on or before the day...', do not, with respect, support the conclusion ... that the subsection does not comprehend future or contingent debts or claims. In short, we think that whatever the ambit of the words of s 553, the same will be so in relation to s 444D. It is true that s 553 uses two expressions, 'debts' and 'claims', while s 444D(1) speaks only of 'claims'. But Pt 5.3A as a whole, and especially s 444A(4), suggests that 'claims' is used as a single expression to cover what s 553 divides into 'debts' and 'claims' and that it is both 'debts' and 'claims' in the s 553 sense in respect of which creditors may be bound by the deed."

Their Honours also said, at 36: "... we consider that a deed of company arrangement, if entered into by any of the appellants, will, by virtue of s 444D(1) of the Corporations Law bind, so far as concerns all debts and claims hereinafter mentioned, all those persons who on the day specified in the deed had debts or claims that would have been provable in the winding up of the company under s 553 if the 'relevant date' mentioned had been the day specified in the deed."

The legislation under consideration in Brash was the Corporations Law . However, in the form that the Corporations Law had at the date of the decision in June 1994 the provisions to which their Honours referred did not differ materially from the correspondingly numbered provisions of the present Corporations Act . The Rival Submissions

It is common ground between Mr Williams and Mr Newlinds that the meaning of "claim" in s 553 also applies in s 444D. Mr Williams submits that claims under s 106 IR Act against a company fall within s 553(1) as "claims against the company (present or future, certain or contingent, ascertained or sounding only in damages) being ... claims the circumstances giving rise to which occurred before the relevant date" . Mr Newlinds disputes that undetermined litigation seeking an order under s 106 IR Act falls within s 553.

Mr Williams also submits that even if Ms Sutton's claim under s 106 does not fit within s 553, it nonetheless counts as a "claim" for the purposes of Part 5.3A. His argument on that topic is put in two ways. One is that he submits that Brash does not preclude an argument that creditors under Part 5.3A include, but are not limited, to those persons who have a relevant claim under s 553. Alternatively, he submits that Brash is either wrong or has been wrongly applied and a creditor for the purposes of s 444D should not be confined to those who meet the criteria in s 553. Nature of the Rights of an Applicant under Section 106 IR Act

At 1 October 2009 (the date BEA was placed in voluntary administration), s 105 IR Act provided: "(1) In [Part 9 - Unfair contracts]: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument."

Section 106 IR Act is in Part 9 Division 2 of IR Act , which runs from s 106 to s 109A. At 1 October 2009 s 106 provided: "(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. ... (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. ... (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss."

Section 108 IR Act is a most unusual provision concerning standing, that bears upon the nature of the power that the Commission exercises under s 106. Section 108 is one of the indications that the power the IRC exercises under s 106 is an arbitral rather than a judicial power - see [66] below. At 1 October 2009 it provided: "An order may be made under this Division on the application of: (a) any party to the contract, or (b) any person who, but for the making of such an order, would be a party to the contract, or (c) an industrial organisation of employers whose members employ persons working in the industry to which the contract relates, or (d) an industrial organisation of employees whose members are employed in the industry to which the contract relates, or (e) an association registered under Chapter 6 of which a party to the contract is a member, and not otherwise."

Section 88F Industrial Arbitration Act 1940 was a predecessor of s 106 IR Act , in terms not relevantly different to those of s 106 IR Act . This Court has considered the nature of a claim made under s 88F, or s 106, on several occasions.

Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 was an application by a franchisor for an order in the nature of prohibition to prevent the Industrial Commission from hearing an application under s 88F. The application under s 88F had been brought by certain petrol retailers who contended that the franchise agreements under which they operated were unfair. One basis on which the franchisor sought prohibition was that the operation of s 88F on these particular agreements was excluded under s 109 of the Australian Constitution because to that extent s 88F was inconsistent with the Petroleum Retail Marketing Franchise Act 1980 (Cth) (" the Federal Act "). Another basis was that the franchise agreements in question were not ones "whereby" the franchisees "perform work in any industry" , and thus the Commission did not have jurisdiction under s 88F to deal with them.

One of the reasons Mahoney JA gave for refusing prohibition, at least at that stage, because s 88F was inconsistent with the Federal Act, was, at 461-2: "Section 88F does not, by its own operation, create any rights or obligations. Its function is to grant jurisdiction to the Industrial Commission. That jurisdiction involves, inter alia, two things: it may categorise, as I have described it, a particular arrangement as 'unfair', 'harsh or unconscionable', 'against the public interest' or otherwise as falling within the subpars (a) to subpar (e) of s 88F(1); and, secondly, it may declare void the whole or part of such an arrangement and make an order for payment of money or otherwise as set out in the section. It is only if and in so far as that power is exercised that rights or obligations arise by virtue of s 88F. Therefore, essentially the claim made by Majik in this case is that the possibility of such an order being made creates an inconsistency under s 109 with the Federal Act. At the present stage of the Commission's proceedings, Majik cannot, of course, claim that an order made by it does in fact create a relevant conflict or inconsistency with the operation of the Federal Act: its claim is and must be that it is possible an order will be made which will create such an inconsistency with the Federal Act and that that possibility gives rise at this stage to an inconsistency which prevents s 88F operating to grant jurisdiction in the present matters to the Commission."

Part of the reasoning of Handley JA for concluding that s 88F was not shown at the time of the application for prohibition to be inconsistent with the Federal Act was, at 467: "Section 88F confers jurisdiction on the Commission to avoid or vary contracts and to make consequential orders for the payment of money. The effect of legislation which in terms does no more than confer jurisdiction on a court to grant particular relief was considered in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141. Latham CJ said (at 155): '... A right is created by the provision that a court may make an order, and such a provision also gives jurisdiction to the court to make the order. The fact that the court may not be bound to make an order, but may exercise a discretion, does not alter the effect of such a provision .... Such a provision gives a new jurisdiction to the court and ... if the court exercises its discretion in favour of the applicant, a new right to the applicant.' Similarly Dixon J (at 165-166) said in reference to such a provision: '... it must be taken to perform a double function, namely to deal with substantive liabilities or substantive legal relations and to give jurisdiction with reference to them. It is not unusual to find that statutes impose liabilities, create obligations or otherwise affect substantive rights, although they are expressed only to give jurisdiction or authority....' Section 88F therefore creates substantive rights and since proceedings under the section comprise a suit or action (see Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 at 560) there is every reason for concluding that it gives rise to rights of action. But even if that is not so the section clearly confers another 'remedy' on these applicants which is within s 24(1)."

The other member of the Bench on that occasion, Kirby P, said nothing that bears upon the present topic. Mr Williams points out that at 447, Kirby P agreed with the reasons of Handley JA for why "no error [had] been shown in the finding by the Commission that it had jurisdiction to hear and determine the applications" , that would warrant relief "at this stage" . However, that remark relates to Handley JA's reasons why the claim made in the Industrial Commission was not outside the scope of the jurisdiction conferred by s 88F. It did not relate to the reasons why there was no inconsistency between s 88F and the Federal Act, a topic concerning which Kirby P gave his own reasons.

The Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 case to which Handley JA referred was one where two people who had acted as house-parents brought an action under s 88F against the Minister for Child Welfare. A provision of the Child Welfare Act 1939 said that "no suit or action shall lie against the Minister" if the Minister has acted in good faith and with reasonable care. The Minister sought prohibition, contending that that section deprived the Industrial Commission (as it then was) of jurisdiction to hear the action against him. Prohibition was refused on the basis that the section could give the Minister a defence if its conditions were made out, but it did not operate to deprive the Commission of jurisdiction. Kirby P at 549 and McHugh JA at 560 both accepted that the proceedings in the Commission were a "suit or action" . However, McHugh JA at 559-560 made clear that it was a suit or action of an unusual kind: "A further indication that the proceedings are not an ordinary suit or action is that the power conferred by s 88F is arbitral, not judicial power. Even before the amendments made in 1985 an industrial union of employees could invoke the jurisdiction of the Commission under s 88F: Federated Miscellaneous Workers' Union of Australia, New South Wales Branch v Wilson Parking (NSW) Pty Ltd [1978] 1 NSWLR 563. That a stranger to a contract can obtain an order that the contract is void is itself an indication that the Commission is not exercising judicial power in an ordinary suit or action. Moreover, I think that the Commission can exercise its power under s 88F in a case where, although the contract was not unfair or harsh or unconscionable or against the public interest at the time of its making, subsequent events have made it so. The jurisdiction of the Commission to void or vary a contract, independently of the circumstances which existed at the time of its making, indicates conclusively in my opinion that the power conferred by s 88F is not an exercise of judicial power: cf R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361. It is a further indication that the Commission does not hear a suit or action as those expressions are ordinarily understood. But despite the nature of the proceedings under s 88F and the matters to which I have referred, it is difficult to resist the conclusion that the proceedings are an 'action'. 'Action' is a generic term and includes every sort of legal proceeding unless the context indicates a more restricted meaning: Re Carter Smith; Ex parte Commissioners of Taxation (1908) 8 SR (NSW) 246 at 248; 25 WN (NSW) 92."

Fisher v Madden [2002] NSWCA 28; (2002) 54 NSWLR 179 concerned a company to which a receiver had been appointed, and in relation to which a DOCA had been entered. The plaintiff, an employee of the company, was dismissed because she was redundant. The dismissal occurred after the appointment of the receiver, but before any voluntary administrator had been appointed, or before any DOCA entered. She brought proceedings under s 106 IR Act , seeking that her contract of employment be varied to entitle her to a payment of money by reason of being dismissed. Section 433(3) Corporations Law required a receiver to accord priority of payment to "any debt or amount that in a winding up is payable in priority to other unsecured debts pursuant to paragraph 556(1) ... (h)."

Section 443(9) Corporations Law provided: "For the purposes of this section, the references in Division 6 of Pt 5.6 to the relevant date shall be read as references to the date of the appointment of the receiver, or of possession being taken or control being assumed, as the case may be."

Section 556(1)(h) referred to "retrenchment payments payable to employees of the company" . Unlike some of the other paragraphs in s 556(1), s 556(1)(h) set no temporal limit on when a retrenchment payment had to be payable, or on where in time fell the period of service in relation to which a provable employee benefit was calculated. The lack of temporal limitation was confirmed by s 556(2) which provided: " retrenchment payment , in relation to an employee of a company, means an amount payable by the company to the employee, by virtue of an industrial instrument, in respect of the termination of the employee's employment by the company, whether the amount becomes payable before, on or after the relevant date."

Subject to a presently irrelevant exception, s 554 Corporations Law provided: "(1) The amount of a debt or claim of a company (including a debt or claim that is for or includes interest) is to be computed for the purposes of the winding up as at the relevant date."

Before the Commission had determined her claim, the receiver made application to the Equity Division of the Supreme Court for directions under s 424 of the Corporations Law . The first instance judge made a declaration that any liability of the company to pay Ms Fisher any sum arising out of any orders made by the Commission "... not being a liability which arose out of the terms of [Ms Fisher's] contract of employment as it existed, in respect of any liability for redundancy payments at the date of termination of employment, and in respect of other liabilities, at the date of appointment of the receiver, would not be a liability entitled to payment in priority under s433(3)(c) of the Corporations Law ."

Ms Fisher appealed to the Court of Appeal. Her appeal was dismissed. Meagher JA said, at [12]-[13]: "There was a tendency in Mr Neil's submissions to treat Miss Fisher as if she already possessed a claim, or at least a right to an order. This is not the case. Section 106 does not of itself confer any rights or obligations on anyone. Not only does she not have a right to a quantifiable order, she does not have a right to an order at all. She has the right to apply for an order, nothing more. As Mahoney JA (at 461) said in Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443: 'Section 88F [the predecessor of s 106] does not, by its own operation, create any rights or obligations. Its function is to grant jurisdiction to the Industrial Commission.' The narrowness of her right is further emphasized when one considers whether it is a 'contingent' debt or claim within s553. The word 'contingent' is a slippery word. In the field of real estate, Fearne's Contingent Remainders (a book which Baron Parke took with him on his honeymoon) describes a contingent remainder as a remainder limited so as to depend on an event or condition, which may never happen or be performed, or which may not happen or be performed until after the determination of the preceding estate. Even in the case of such a contingent remainder, one always knows the nature of the preceding estate and the nature of the contingent remainder, which might or might not come into existence. In cases other than real estate, life is more precarious still. In Federal Commissioner of Taxation v Gosstray [1986] VR 876 at 878 Tadgell J said: 'An attempt to formulate a universally applicable definition of a contingent debt or of a contingent creditor is difficult, and probably not very useful having regard to the variety of contingent claims that may properly be the subject of proof. A contingent creditor, like an elephant, is rather easier to recognize than to define. The following statement by Pennycuick J. In Re William Hockley Ltd [1962] 1 WLR 555, at 558; [1962] 2 All ER 111, is well known: 'The expression "contingent creditor" is not defined in the Companies Act , but must, I think, denote a person towards whom under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date.' In Re Gasbourne Pty Ltd [1984] VR 801 at 837, Nicholson J said that he did not regard that description as exhaustive, and with respect I would not disagree. In Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455, at 459 Kitto J, having observed that not much assistance is to be gained from observations to be found in reported cases as to the import of the word "contingent" in the context now being considered, regarded what Pennycuick J had said as being "perhaps rather a definition of a 'contingent or prospective creditor'". Kitto J did, however, consider that the importance of the words of Pennycuick J "for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen".' It follows, I think, that even at today's date, one cannot accurately categorise Miss Fisher's rights (if any) as a 'contingent' debt or claim. She has the bare right to make a claim, nobody knowing whether it will succeed or not, or if so in what amount, or subject to what terms or conditions. And if that be her position today, it was so much the less substantial before the appointment of the receiver. Moreover, if that difficulty were overcome, one has to face the additional problem that just because a claim or debt is a contingent debt or claim for the purposes of s 553 in a winding up, it does not necessarily follow that it has priority under s 556, dealing with priority of debts in a receivership. None of the debts referred to in s 556 which does deal with receivers is in the last bit contingent."

Sheller JA (with whom Beazley JA agreed) regarded it as important that s 556(2) required a retrenchment payment to be an "amount payable". That involved, he held at [42] "an existing obligation, [in respect of which] the company may or will become subject to a present liability upon the happening of some future event or at some future date" .

At [44] Sheller JA said: "In the present case at the relevant date [the company] was under no existing obligation to pay a sum of money by way of a retrenchment payment to Ms Fisher immediately or on a future event. Ms Fisher had only a right to take proceedings in the Industrial Relations Commission to vary the contract to that end."

He went on to quote the passages that I have quoted at [63] and [64] above from the judgments of Mahoney JA and Handley JA in Majik Markets , and concluded, at [46]: "However Ms Fisher's right under s106 of the Industrial Relations Act be categorised, her right to invoke the jurisdiction of the Industrial Relations Commission did not until such time as an order was made create any obligation on Dataflow to make a retrenchment payment to her. Moreover, even if the Industrial Relations Commission declared the contract unfair, varied it ab initio and ordered Dataflow to make a retrenchment payment to Ms Fisher, it remains true that at the relevant date of Mr Madden's appointment no amount for retrenchment payment had become payable before, on or after the relevant date."

Colley v Futurebrand FHA Pty Ltd [2005] NSWCA 223; (2005) 63 NSWLR 291 arose when a new s 108A was introduced into Chapter 2 Part 9 Division 2 of the IR Act . It provided that an application could not be made under that Division if the application related to contract of employment under which a remuneration package that exceeded a particular sum of money was paid or received during the 12 months before the application was made, or (in the case of a contract that had been terminated) the 12 months before the contract was terminated. The question at issue was whether s 108A applied in relation to contracts of employment that had been entered before s 108A came into operation, but that were terminated after it came into operation. The dismissed employee had a remuneration package that exceeded that sum. However the employee contended that s 108A did not apply to the contract in question because of the provisions of s 30(1)(c) Interpretation Act 1987 . Under s 30(1)(c) the amendment of an Act does not "affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act" .

Handley JA (Giles JA agreeing) said at [13]: "Section 106 does not confer defined rights on a party to an unfair contract of the relevant kind ( Fisher v Madden as Receiver and Manager of Dataflow Computer Services Pty Ltd (2002) 54 NSWLR 179 at 184, 193-194). In terms it does no more than confer jurisdiction on the Commission to grant particular relief. The effect of legislation in this form was considered in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141."

He then set out the same passages from the judgments of Latham CJ and Dixon J as he had set out in Majik Markets at 467 and that I have set out at [64] above. Handley JA continued, at [15]: "Such legislation is a modern illustration of Sir Henry Maine's statement that substantive law may be secreted in the interstices of procedure. See also Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 at 461, 467; Fisher v Madden (at 193). As Meagher JA said in the last case (at 183 [12]): '[12] ... Section 106 ... does not of itself confer any rights or obligations on anyone. Not only does [the appellant] not have a right to a quantifiable order, she does not have a right to an order at all. She has the right to apply for an order, nothing more.'"

Handley JA also said, at [30]-[33]: "Given that the only right expressly conferred by s 106 is a right to apply to the Commission for specific relief, a would be applicant, as Meagher JA said in Fisher v Madden (at 183 [12]) 'has the right to apply for an order, nothing more'. Even if the contract is unfair and an experienced practitioner could give some estimate of the likely order, there is, as Meagher JA said (at 183 [12]), no 'right to a quantifiable order'. The claimant had no ascertainable right or entitlement defined by reference to past facts similar to the rights to compensation in Hamilton Gell v White [1922] 2 KB 422 and Resort Management Services Ltd v Noosa Shire Council [1997] 2 Qd R 291, the right to the hardship allowance in Chief Adjudication Officer v Maguire [1999] 1 WLR 1778, or the land rights claim in New South Wales Aboriginal Land Council v Minister Administering the Crown Lands (Consolidation) Act and the Western Lands Act (1988) 14 NSWLR 685. The filing of an application under s 106 causes a right to accrue because the applicant acquires ( Esber v The Commonwealth (1992) 174 CLR 430; Gerrard v Mayne Nickless Ltd (1996) 135 ALR 494) a legally enforceable right to have the Commission hear and determine the application according to law. This is a new right, different from a mere right to take advantage of the section. There is no other act or event which can convert the general right to take advantage of s 106 into an accrued or acquired right. This is not a case where a right or entitlement automatically accrues or is acquired on an event such as an unfair dismissal, the injurious affection of land ( Resort Management Services Ltd ), the giving of a notice to quit ( Hamilton Gell v White ), or an illness causing a special disability ( Chief Adjudication Officer v Maguire ). Until an application under s 106 is made, the right under that section can fairly be characterised as a mere right to take advantage of the section, to use the language of Lord Herschell LC ( Abbott v Minister for Lands [1895] AC 425 at 431), and an abstract rather than a specific right to use the language of Atkin LJ ( Hamilton Gell v White at 431)."

In the result, the claimant was not protected by s 30(1)(c) from the limitation of the Commission's jurisdiction bought about by s 108A(1). "Claims" Under Section 553(1)

The present form of s 553 Corporations Act derives from amendments made in 1992 to the Corporations Law , following some recommendations of the Harmer Report. In Environmental & Earth Sciences Pty Ltd v Vouris [2006] FCA 679; (2006) 230 ALR 119 Graham J set out at [43]-[53] details of how the law concerning the debts that were provable in a winding up had stood immediately before the 1992 amendments that gave effect to the Harmer Report, the changes made by those 1992 amendments, and the relevant provisions of the Harmer Report, the Explanatory Memorandum relating to the 1992 amendments, and the Second Reading Speech relating to those amendments. His Honour's thoroughness makes it unnecessary for me to repeat the task. Paras [43]-[53] of Vouris should be regarded as notionally included in this judgment.

Several cases have considered what is a "claim" within the meaning of s 553(1). In this section of the judgment I will extract relevant parts of those cases, without further analysis.

Sons of Gwalia Ltd (subject to deed of company arrangement) v Margaretic [2007] HCA 1; (2007) 231 CLR 160 held that a shareholder who had purchased shares in the company as a result of misleading and deceptive conduct by the company had an action for damages that was provable in the winding up of the company. The company in question had entered a DOCA, one of the terms of which provided that the deed fund would be distributed in the same order of priority as would apply if the company were being wound up ([139]). Hayne J recorded at [142]-[143] that the applicant's claim had been made on the basis that there had been a contravention of s 52 of the Trade Practices Act 1974 (Cth), s 1041H of the Corporations Act 2001 , s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth), and "at common law or in equity, in respect of fraud, misrepresentation or other acts or omissions" . One issue in the case was whether this claim was provable in the DOCA. Another issue was whether, if the claim was provable, it was postponed under s 563A until all debts owed to or claims made by persons otherwise than as members of the company, had been satisfied.

The proceedings were brought to test the entitlement of shareholders in the position of the plaintiff to claim under the DOCA. The case was argued on the assumption that the plaintiff could show one or more of the alleged contraventions of statute, and the consequential damage asserted ([9]). Thus only the statutory causes of action were of any importance in the High Court. In the High Court the argument proceeded upon a basis that a liability for unliquidated damages was capable of being a debt within the meaning of s 563A ([10], [119]). It was not stated that there was any corresponding assumption concerning whether a claim for unliquidated damages fell within s 553. When such damages were the only remedy that Mr Margaretic claimed it was of central importance to the case whether his claim fell within s 553, so that appears to have been a matter that was implicitly decided.

Hayne J considered a specific problem about whether the claims were provable within the meaning of s 553(1). That problem concerned whether the circumstances giving rise to the claim had occurred before "the relevant date" . In that particular DOCA "the relevant date" was the day on which the administrators had been appointed. The problem arose because the misleading and deceptive conduct that was relied upon had occurred before the appointment of the administrators, but the loss or damage: "... was not apparent to [Mr Margaretic] before the appointment of administrators. The extinction of value could be said to have arisen because of the administrators' appointment." ([170]) Hayne J continued, at [171]-[172]: "What is meant, in s 553, by 'debts or claims the circumstances giving rise to which occurred before the relevant date'? How does that expression apply in the present matters? Those questions have not previously been considered by this Court, or by any Australian intermediate court. (But see McDonald v Federal Commissioner of Taxation (2005) 58 ATR 418; Environmental & Earth Sciences Pty Ltd v Vouris (2006) 152 FCR 510.) In construing the temporal limit that is imposed by s 553, it is important to recognise the generality of other expressions used in s 553 in defining what debts and claims are to be admissible to proof. The section speaks of ' all debts payable by, and all claims against, the company'. It amplifies those expressions by the parenthetical reference: 'present or future, certain or contingent, ascertained or sounding only in damages'. If the words of the section were not wholly sufficient (as they are) to indicate an intention to define provable claims very widely, the Report of the Australian Law Reform Commission on the General Insolvency Inquiry (the Harmer Report), read with the Explanatory Memorandum for the Bill that became the 1992 Act, puts the point beyond any doubt. The Harmer Report (Australia, The Law Reform Commission, General Insolvency Inquiry , Report No 45 (1988), vol 1, p 315 [774]) identified a basic aim of insolvency laws as being 'to deal comprehensively with all of the debts and liabilities of the insolvent' and said that, '[i]n the case of a company, the aim is to deal with all the claims against a company so that its affairs can be fully wound up or so that it can resume trading' (emphasis added). The Harmer Report concluded (Report No 45 (1988), vol 1, p 315 [777]) that '[t]he categories of claims which are admissible should be as wide as possible so that the financial affairs of the insolvent are dealt with comprehensively'. Otherwise, as the Harmer Report pointed out (Report No 45 (1988), vol 1, p 315 [777]), 'if the creditors are unable to make their claims in the insolvency, they are unable to recover at all (unless they have a basis for action against either directors of the company or a guarantor of the company's debts or unless the winding up is stayed)'. The Explanatory Memorandum (Explanatory Memorandum, Corporate Law Reform Bill 1992 (Cth), para [849]) for the Bill that became the 1992 Act said that the reforms embodied in the new provisions of ss 553-553E 'reflect[ed] the recommendations of the Harmer Report'." (emphasis in original)

He went on to hold that the circumstances giving rise to Mr Margaretic's claim occurred before the administration began. The nature of the misleading and deceptive conduct of which the applicant complained was that the company had breached the continuous disclosure requirements of its stock exchange listing. The damage that Mr Margaretic asserted arose because he had thus purchased shares in ignorance of significant financial information, the effect of which was that the shares were worth less than the price at which he had purchased them.

At [174] Hayne J said: "... Mr Margaretic's claim is not a future or contingent ( Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455 at 459 per Kitto J; National Bank of Australasia Ltd v Mason (1975) 133 CLR 191 at 200 per Barwick CJ) claim or debt. It is a present and, he would say, a certain claim. If not ascertained, and the better view may well be that his claim is now ascertained, it is a claim sounding in damages."

Hayne J's application of principle to the facts of the case was, at [175]-[176]: "... had Mr Margaretic known what he now says are the relevant facts before SOG appointed administrators (assuming for the purposes of argument that his allegations are true) he would have had complete causes of action against SOG for identical relief under the various statutory provisions upon which he now relies. And the claims he could then have made would not have been contingent or future claims; they would have been present claims for damages representing the difference between what he had outlaid in buying the shares and the true value of what he bought as determined by a properly informed market. The appointment of administrators so soon after Mr Margaretic bought his shares reveals that the shares he bought would have been judged by a properly informed market to be worthless when he bought them and accordingly, he suffered loss when he bought the shares ( HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 654-659 [28]-[40]). Contrary to the submissions of ING, renouncing his shareholding, whether by selling the shares to a third party or rescinding the contract with the vendor, was not a necessary step in his claiming that loss. It follows that, although the agreed facts demonstrate that the appointment of administrators reduced the value of Mr Margaretic's shares to zero, his claim is one the circumstances giving rise to which occurred before the administrators' appointment. Had the facts upon which Mr Margaretic now relies been known then, they would have been known to the whole market, not just him, and he would have had the same claim he now makes ( HTW Valuers (2004) 217 CLR 640 at 657-658 [37]). His knowledge of the relevant facts bears only upon whether he makes a claim; his knowledge of those facts does not bear upon whether he has a claim. His claim is of a kind that is within s 553 of the 2001 Act." (emphasis in original)

Gummow J held that Mr Margaretic's claims were provable under s 553(1) and agreed generally with the reasons of Hayne J ([45]-[46]). Heydon J at [261] and Crennan J at [265], likewise agreed with Hayne J. Thus, his Honour's reasoning on this topic is supported by a majority in the High Court.

Hayne J's citation of Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455 and National Bank of Australasia Ltd v Mason (1975) 133 CLR 191 shows that those cases remain relevant in the construction of s 553. Engwirda Construction concerned who was a "contingent creditor" within the meaning of s 221 of the Companies Act 1961-1964 (Qld). That section conferred standing to petition for a winding up order. The decision held that a builder was a "contingent creditor" concerning a claim to be paid an amount it asserted was due under a building contract, notwithstanding that its entitlement to be paid was dependent upon obtaining either an architect's certificate to that effect, or a decision to that effect in an arbitration that was required under a Scott v Avery clause. Kitto J (with whom Barwick CJ and Windeyer J both agreed) said, at 459: "Not much assistance is to be gained, I think, from observations that are to be found in reported cases as to the import of the word 'contingent', and I shall refer to one only. In In re William Hockley Ltd , Pennycuick J suggested as a definition of 'a contingent creditor' what is perhaps rather a definition of 'a contingent or prospective creditor', saying that in his opinion it denoted 'a person towards whom, under an existing obligation, the company may or will become subject to a present liability upon the happening of some future event or at some future date'. The importance of these words for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen . A building contract creates, as soon as it is entered into, an obligation upon the building owner to pay the contract price, either as a whole upon a future event or, more usually, by progress and final payments each of which is to be made on a future event. The event or events may not happen, but if and when one of them does happen the building owner, by force of the contractual obligation, must pay the builder a sum of money. It is, I think, nothing to the point that the event may be complex, as where the payment is agreed to be made when the whole or some part of the work has been done to the satisfaction of an architect as expressed in a certificate or to the satisfaction of an arbitrator as expressed in an award: the building owner is bound from the time the contract is made to pay money to the builder upon a contingency; and that in my opinion makes the builder a contingent creditor of the owner." (emphasis added)

National Bank of Australasia Ltd v Mason considered a guarantee of "all monies which are now owing or which may from time to time hereafter be owing to the Bank ... whether contingently or otherwise" . The guarantor, the principal debtor and the Bank were sued. The contention of the plaintiff in that litigation was that the guarantor had deposited three cheques into the principal debtor's account, which the Bank had collected, and that that depositing and collection was a conversion of the cheques. Before that litigation had been decided, and at a time when the principal debtor owed no money to the Bank, the guarantor sought a discharge of a mortgage that he had given in support of the guarantee. The court held that the guarantor was entitled to a discharge of the mortgage. Barwick CJ said, at 200: "In my opinion, the possibility that the company will have to pay to the appellant the amount paid by it to the payees of the cheques cannot be regarded as moneys 'owing contingently'. Nor, in my opinion, can that amount be properly described as a contingent liability of the company. That description is not satisfied by the fact that money may become owing upon the occurrence of some event. There must be some present obligation to pay out of which the money may become due. The stress is upon the word 'owing', which imports some existing obligation though it may be imperfect until an event within its purview occurs."

Edwards v Attorney General [2004] NSWCA 272; (2004) 60 NSWLR 667 concerned applications by the corporate trustee, and its directors, of a trust that had been established for the purpose of medical research into asbestos related diseases. The principal assets of the trustee were shares in two companies that had formerly been subsidiaries of a company in the James Hardie Group, and that had become subsidiaries of the trustee. The two subsidiaries had been involved in the supply of asbestos, and had been subject to numerous claims for injury and death caused by asbestos. They regularly paid out substantial sums to meet judgments and settlements of claims against them. Actuarial evidence suggested that claims would continue to be made, that there would be sufficient funds to pay all the judgments obtained in the next year or so, but that the assets of the subsidiaries would be exhausted well before many of the asbestos related claims were formulated or adjudicated upon ([43]). Mr David Jackson QC had recently been appointed to enquire into various matters including the adequacy of the funds available to the trustee. The trustee sought judicial advice about whether it was justified in refraining for applying for the appointment of a provisional liquidator to its subsidiaries until Mr Jackson's findings were known. The directors of the trustee sought an order under s 1318 Corporations Act , that they be relieved from any liability they might have, in their capacity as director of the trustee or the two subsidiaries, arising out of the payment by those companies of their debts as they fell due including debts arising in respect of claims made for asbestos related liabilities.

Young CJ in Eq (as his Honour then was), with whom Spigelman CJ and Mason P agreed generally said, at [58]-[60]: "On current authority, persons injured through exposure to asbestos manufactured or supplied by Amaca or Amaba do not have a completed cause of action until damage is suffered and that usually involves manifestation of the disease: Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14; 13 ANZ Insurances Cases 61-596. Indeed, some of the future claimants could be in the more extreme category where the people concerned have not yet been exposed to the asbestos such as home renovators doing future renovations or may even be people not yet born who might be involved in demolishing an asbestos ridden building somewhere in 2030. No-one can currently know the identity of the future claimant. This type of liability must be distinguished from the case of a contingent creditor. A contingent creditor is a person to whom a corporation owes an existing obligation out of which a liability on its part to pay a sum of money will arise in a future event, whether that event be one which must happen or only an event which may happen: Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1970] ALR 173; Re International Harvester (Aust) Ltd (1983) 7 ACLR 415 at 416 ; 1 ACLC 700 at 703. Again, the liabilities in this case must be distinguished from the case of a prospective creditor, a prospective creditor being one who is owed a sum of money not immediately payable but which will certainly become due in the future either on some date which has already been determined, or on some date determinable by reference to future events: Stonegate Securities Ltd v Gregory [1980] Ch 576; [1980] 1 All ER 241; Re Simionato Holdings Pty Ltd; Cmr of Taxation v Simionato Holdings Pty Ltd (1997) 15 ACLC 477. The distinction is vital because while contingent or prospective creditors are taken into account in assessing solvency, possible future claims that might crystallise are not. The great probabilities are that if Amaca and Amaba were to go into provisional liquidation now, then the only claims that would be paid by the liquidator would be those which have crystallised and, after paying the doubtless heavy expenses of liquidation, there would be a distribution of surplus funds to the shareholder [Medical Research and Compensation Foundation] which would be used for the purpose of the alleged charitable fund. The future creditors would get nothing and this may very well be the case even if the claim matured the day after the liquidation commenced."

Lam Soon Australia Pty Ltd v Molit (No 55) Pty Ltd (1996) 70 FCR 34 is a decision of the Full Court of the Federal Court of Australia (von Doussa, O'Loughlin and Lehane JJ). It arose when a company that operated a loss-making business in certain leased premises, and also operated certain other profitable businesses, entered a DOCA. The DOCA proposed that all non-associated creditors at the date of appointment be paid in full, but that the lessor be paid an amount equal to the amount it would receive as a dividend arising from its entitlement to be paid rent in the future if the company were to go into liquidation. The court rejected a contention that the lessor was not bound by the DOCA concerning the rent that would arise under the lease in the future. Their Honours at 41-42 considered whether the lessor's entitlement to be paid rent during the remainder of the lease term was a "claim arising on or before the day specified" with in the meaning of s 553: "There can be no doubt that where a financier has, before a company becomes subject to administration under Pt 5.3A, lent money to it on the security of a mortgage of its property, the claim of the financier for the principal sum lent, and its claim for interest, are 'claims arising on or before the day specified' in the deed (assuming, of course, as seems to be customary, that the day so specified is the day on which an administrator was appointed). That is so even if the contract of loan provides that payments are to be made by instalments, over a substantial period. Equally, there can be no doubt that those claims would, if the company were wound up, be provable in its liquidation (the test which Brash v Katile held to be applicable); and certainly the claims to both principal and interest are to be regarded, at the day specified in the deed, as present rather than future property (see, eg McLeay v IRC (1963) 9 AITR 265; Shepherd v Commissioner of Taxation (Cth) (1965) 113 CLR 385) and it is no misuse of language to describe them as claims which have arisen on or before that day. Indeed, any other conclusion would apparently exempt from the restrictions in s 444E any creditor of the company whose debt was contractually payable later than the specified day: such a conclusion is hardly consistent with the statutory object. To return to the mortgage loan: if the terms of the contract provide that upon the appointment of an administrator, or if an instalment of principal or interest is not paid, the lender may require immediate payment of the total sum outstanding and if the lender, after an administrator is appointed or after a deed is entered into, actually does so, that does not eliminate the claim which arose on or before the specified day and cause a different claim to arise in its place. It simply quantifies the claim and brings forward the due date for its payment. So much may be thought so obvious as not to require mention. These matters were, however, to some extent canvassed in argument and they form, we think, a useful introduction to a consideration of the statutory treatment of a claim to rent payable in the future under a lease. It is apparent from what we have already said that if on the true construction of subs 444D(1) the position of a lessor was substantially different from that of a mortgagee, that might be thought a result somewhat at odds with the expressly stated object of Pt 5.3A and certainly at odds with the apparent assimilation of the positions of lessors and mortgagees by the other subsections of ss 444D and 444F. Clearly enough a claim under an existing lease for rent payable in the future is an existing right, not a mere expectancy: if authority is needed, Shepherd provides it. There is thus in our view no misuse or straining of language in saying of a claim to rent payable after the specified day under a lease in existence on the specified day that it is a claim which has arisen on or before that day. Once that is accepted, it is in our view no less such a claim if the amount payable in respect of it becomes ascertained or crystallised, either in accordance with the terms of the lease itself or as damages at law, in circumstances where after the appointment of the administrator (whether before or after a deed of company arrangement is entered into) the lease is terminated by the lessor in exercise of a contractual right to do so or upon acceptance by the lessor of a repudiation by the lessee."

After consideration of whether, if a lease has not been disclaimed, the lessor is disentitled from proving in the lessee's winding up for rent until it has become due and payable, their Honours continued at 43-44: "A good deal of the difficulty in this area of the law has resulted, we think, from a tendency to consider together claims for future rent and claims for possible breaches of covenant and to treat both as 'contingent' or 'future'. ... To suggest that because a contract might be, but has not yet been, repudiated means that an existing contractual obligation to pay money in the future should be treated as giving rise not even to a contingent claim but to a claim 'which might never arise' seems to us, with respect, simply wrong. It would apply equally, in principle, to a mortgage debt or terms sale. In truth, there is in each case an existing right; in each case it does not follow, because the right will bear fruit in the future when money is required to be paid, and may be defeasible in certain events, that it is not a claim which has arisen. A question may arise as to the valuation of the claim: in the case of a winding-up that question will be answered by reference to s 554A; in the case of a deed of company arrangement, it may be answered by reference to the terms of the deed. 'Future breaches of covenant' may be quite another matter. No doubt it is true, for example, that the right of a lessor under an existing covenant to keep leased premises in repair is an existing right or claim which may in theory have a value. A right to sue for damages for a particular future breach of that covenant, however, is we think, looked at before the breach occurs, not even a contingent claim: it is a mere expectancy and could not be the subject of proof." Is an Undetermined Application under Section 106 IR Act a "Claim" under Section 553 Corporations Act ?

In Silbermann v One.Tel Ltd [2002] NSWSC 295; (2002) 167 FLR 274 Gzell J refused to grant leave under s 500(2) Corporations Act to permit s 106 IR Act proceedings to be brought by directors against a company that was being wound up. The directors had held credit cards that they used to discharge expenses incurred on behalf of the company. The order that they sought in the IRC was one that would remedy what they contended was an unfair aspect of their contract with the company, namely that it failed to provide a complete indemnity against the liability that they had to the issuers of the credit cards.

Gzell J considered the extent to which the 1992 amendments to s 553 had made a difference to the pre-existing law. He said, at [14]: "I reject the submission that the 1992 amendments effected a widening of the term 'claims.' In this respect, the language is the same. The difference is that both debts and claims are now defined in terms that the circumstances giving rise to them occurred before the date on which the winding up is taken to have begun. It may be thought that those words add little to the concept of debts and claims in the earlier legislation. After all, if a debt or claim depends upon an obligation on the part of a company on the date upon which the winding up is taken to have begun, it must have arisen from circumstances which occurred before that date."

After consideration of Majik Markets and Fisher v Madden , he held that the directors did not have a "future claim admissible to proof against the [liquidators]" ([18]).

In Buckingham v Pan Laboratories (Australia) Pty Ltd [2004] FCA 597; (2004) 136 FCR 102 Jacobson J refused leave under s 500(2) Corporations Act to enable some former employees of a company in liquidation to continue proceedings under s 106 IR Act . He followed the decision of Gzell J in One.Tel , and at [81] expressed the view that the conclusion reached by Gzell J was "plainly correct" . Jacobson J gave his own additional reasons for dismissing the application at [83]-[86]: "The principle which underlies the whole of the law of insolvency is that upon the making of a winding up order the rights of all parties, including creditors, crystallise. The assets of the company are to be realised and distributed rateably among the creditors then existing. ... [In Commercial Banking Co of Sydney Ltd v George Hudson Pty Ltd (in Liq) (1973) 131 CLR 605] Menzies J said at 613: 'It is a deeply rooted principle of company law that, when liquidation has commenced, one creditor should not be assisted by the court to improve its position vis-a-vis other creditors.' It would be inconsistent with these fundamental principles for a claim under s 106 of the IR Act to be characterised as a ' future claim ' which may be admitted to proof in a winding up. The section gives the Commission a wide discretion to alter, retrospectively, substantive rights and liabilities. In Fisher at [5] Meagher JA described the Commission's powers as malleable. The power which is conferred would, if exercised, permit the Commission to alter retrospectively the rights of existing creditors which have already crystallised on liquidation. The power to alter those rights would flow from a finding of unfairness in a claim made by a person to whom no obligation is owed at the relevant date. It cannot have been the intention of the legislature that a claim to the exercise of such a jurisdiction would be a future claim admissible to proof against the company under s 553(1) of the Act. It is not to the point that the circumstances giving rise to the claim, that is to say, the employment of the applicants, occurred before the relevant date. The question is whether the claim is a future one in the sense referred to in s 553(1). For the reasons set out above, it is not."

Mr Williams submits that both Buckingham and One.Tel are incorrectly decided, and should be overruled.

Mr Williams also submits that the position of Ms Sutton in bringing her litigation seeking a statutory remedy under s 106 IR Act is no different to that of Mr Margaretic in relying on the various statutory remedies that he invoked.

In my view there is a very significant difference. Section 82 Trade Practices Act provided: "A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part ... V ... may recover the amount of loss or damage by action against that other person...". Once the misleading or deceptive conduct has occurred, s 82 imposes on the person who engaged in that conduct a legal obligation to pay the consequent loss or damage. The company involved in Sons of Gwalia was under such an obligation by reason of the operation of the Trade Practices Act at the time the DOCA was adopted. By contrast, in the present case at the time the DOCA was adopted BEA was under no legal obligation to Ms Sutton by reason of the operation of the IR Act .

Mr Margaretic also relied on statutory remedies other than under the Trade Practices Act . Section 1041I Corporations Act gives a remedy for breach of s 1041H of that Act, and s 12GF ASIC Act gives a remedy for breach of s 12DA of that Act, each of which is cast in analogous terms to the remedy s 82 Trade Practices Act gives for breach of s 52 of that Act. If, as the High Court presupposed for the purposes of the litigation, the company in Sons of Gwalia had breached s 1041H and s 12DA before the adoption of the DOCA the company would likewise have been under a statutory liability to Mr Margaretic for the loss or damage he suffered in consequence of those breaches.

There is one sense in which Ms Sutton had a claim at the time that the administrators were appointed. In that sense, she had a claim because she had litigation on foot in the Industrial Relations Commission, in which she was claiming an order from the Commission.

However, just because something is a " claim" in one sense of the word does not mean necessarily mean that it is a " claim" within the meaning of s 553. The particular shade of meaning that " claim" has in s 553 can be ascertained from the purpose of the section. That purpose is that all the legal obligations to which a company is subject should be ascertained, and each of them valued as at a common date, so that those obligations can be taken into account in a winding up or other administration that is under way. Someone has a " claim" within the meaning of s 553 if he or she has a basis, founded on an existing legal right, for asserting a right to participate in the division of the assets of the company. Ms Sutton did not have one of those.

In Majik Markets , Handley JA recognised that the former s 88F created substantive rights. However, as recognised in the passage that Handley JA quoted from the judgment of Latham CJ in Ex parte Barrett , the substantive right that the section created is one that arises when the Commission exercises its discretion in favour of applicant. When McHugh JA, in Minister for Youth and Community Services said that the power conferred by s 88F is not an exercise of judicial power he was drawing attention to the power not being one that depended upon the ascertainment and enforcement of existing rights of the parties. The judgments in Fisher v Madden all proceed on the basis that an applicant for an order under s 106 has nothing more than a right to take proceedings, that did not arise from any existing legal obligation of the defendant in those proceedings, and did not result in there being any legal obligation of the defendant in those proceedings until such time as the Commission had made an order. In Colley v Futurebrand Handley JA recognised that the filing of an application under s 106 resulted in the applicant acquiring a legally enforceable right to have the Commission hearings determine the application according to law, and that that was a new right, different from the right to take advantage of the section. Ms Sutton had rights of that kind at the commencement of the administration, because by that time she had already begun proceedings in the Commission. However, those rights were not ones that resulted in her having any legal entitlement to participate in the division of the assets of the company.

That Ms Sutton does not have a " claim" within the meaning of s 553 is also consistent with the decisions of the High Court in Engwirda Constructions and Mason , with the decision of this court in Edwards v Attorney General , and with the exposition of provable claims in the Full Court of the Federal Court in Lam Soon . Each of those decisions required that there be an existing legal obligation that a company owed at the relevant date to someone before that person has a "claim" that is provable in the winding up of the company.

The trial judge in the present case was right in concluding that Ms Sutton did not have a " claim" . There is no occasion to overrule the decisions in One.Tel and Buckingham . Analogy with Claims for Costs?

A claim for costs in litigation has some similarity to a claim for an order under s 106 IR Act . Section 98 Civil Procedure Act 2005 confers on the court a discretion as to costs. Though s 98 provides that that conferring of discretion is subject to rules of court, the rules under UCPR do not take that discretion away. UCPR 42.1 provides a default rule that costs will follow the event unless the court otherwise orders, but that default rule is itself applicable only 'if the court makes any order as to costs" .

Some first instance decisions have held that when a plaintiff brings an action alleging that a company has committed a legal wrong, but no order for costs has been made against the plaintiff before a DOCA becomes operative, the plaintiff has a "claim" within the meaning of s 553 for the costs it has incurred up to the commencement of the DOCA. That is because an entitlement to costs could arise out of or be "an incident of" an obligation of the company in, say, tort or contract, that existed before the DOCA became operative, or by reason of the company having suffered a judgment for damages for breach of a statutory obligation before the DOCA became operative: McCluskey v Pasminco Ltd [2002] FCA 231; (2002) 120 FCR 326 at [39]-[44]; Environmental & Earth Sciences Pty Ltd v Vouris at [99].

Those cases are to be contrasted with other first instance cases have held that there is no provable claim for the costs of a winding up application if an order for costs has not been made before a DOCA becomes operative: FAI Workers Compensation (NSW) Ltd v Philkor Builders Pty Ltd (1996) 20 ACSR 592; Expile Pty Ltd v Jabb's Excavations Pty Ltd [2004] NSWSC 284 at [27]-[37]; McDonald v Commissioner of Taxation [2005] NSWSC 2; (2005) 187 FLR 461. The explanation for that result, given in Philkor and followed in Expile , is that s 466 Corporations Law (and, now, Corporations Act ) requires a person who issues a winding up summons to prosecute those proceedings at his or her own cost. Thus the possibility of the costs order being made is not a contingent claim because there is no pre-existing obligation of the company to which it may become subject on the happening of a future event or at some future date. An additional explanation given in Expile at [34] is that a claim for damages depends upon the company's wrongdoing, while a winding up summons depends upon a company's insolvency, and a company which becomes insolvent does not, by that circumstance alone, commit a legal wrong against anyone. Nor is an application for the costs of bringing winding up proceedings a future claim. As Palmer J said in Expile at [37]: "A future claim is distinguishable from a contingent claim in that, while both are founded on an obligation existing as that the commencement of the winding up or the deed of company arrangement a future claim will arise at some times thereafter while a contingent claim that may arise. A typical example of a future claim is a claim for rent which will become due in the future under a lease which is in existence at the commencement of the winding up..."

Suppose that the company whose winding up is being sought owes no relevant pre-existing legal obligation. In such a situation, the prospect that a costs order might be made cannot be either a contingent claim or a future claim. It is precluded from being so by the absence of a relevant pre-existing legal obligation. Of course, in the common situation where the winding up of the company is sought on the basis of failure to comply with a statutory demand, the company owes a legal obligation of one kind to the applicant. That obligation is the debt that is the reason why the applicant is a creditor and thus has standing to bring the application. Further, the non-payment of the existing debt in response to a statutory demand can in the absence of other evidence provide adequate proof of insolvency. However, the fact that a company owes a debt does not mean that it has an obligation, even prospectively or contingently, to pay the costs of its creditor obtaining a winding up order. Hence, the legal obligation inherent in the debt is not a relevant pre-existing legal obligation, so far as payment of the costs of a winding up application is concerned. Analogously, if Ms Sutton had been in a legal relationship with BEA as either an employee or an independent contractor, and had brought proceedings under s 106 IR Act seeking to improve the terms of her contract, the legal obligations that BEA owed to her under her existing contract would not be relevant legal obligations, concerning whether she had a provable claim relating to the alteration of contract that she was seeking from the IRC.

In Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 the High Court considered a situation where judgment for damages was given against a man before he became bankrupt, and an order for costs arising from that litigation was made against him after the bankruptcy. The Court held that the costs so ordered were not provable in his bankruptcy. The joint judgment of Gleeson CJ, Gummow, Hayne and Crennan JJ stressed, at [2], that the decision essentially turned upon the construction of s 82 Bankruptcy Act 1966 (Cth). Their Honours also observed at [9], that under section 82 "the classes of provable debts are narrower than those encompassed by s 553 of the Corporations Act 2001 (Cth) as regards corporate insolvency."

Even so, there are some aspects of the judgment of the plurality that expound the nature of costs awards in a way that does not depend upon the text of s 82. At [35] their Honours rejected the proposition that exposure to an adverse costs order arose from an obligation incurred prior to the bankruptcy. Similarly at [37] their Honours rejected the proposition that exposure to an adverse costs order is "incidental" to liability for the underlying judgment debt. This rejection was accompanied by a footnote that referred to McCluskey , preceded by a "cf". I suspect that that indicates disapproval of McCluskey .

There is a strong analogy, in my view, between the position of a litigant who seeks but has not yet obtained an order under s 106 IR Act , and that of a person who seeks but has not yet obtained an order for the costs of seeking a winding up order. In each case, whether an order will be made is an exercise of discretion, and that discretion does not arise from any legal right that the applicant has (beyond the bare right to seek the order) before the order is actually made. Until the order is made, the applicant does not have a "claim" that falls within the meaning of s 553.

Even if I am wrong in thinking that the High Court in Foots has rather delphically disapproved of the type of reasoning shown by McCluskey , the present case is not one where any order that Ms Sutton might have obtained any Industrial Relations Commission arose out of or was an incident of any obligation that the company owed to her before the DOCA became operative.

This consideration of the position concerning costs orders confirms, by analogy, the conclusion to which I have already come, namely, that Ms Sutton did not have a " claim" within the meaning of s 553.

It is impermissible to use the Corporations Regulations as an aid to construction of the Corporations Act (D C Pearce and R S Geddes, Statutory Interpretation in Australia , 7 th ed (2011) at [3.41] and the cases there cited). However, I mention that s 445A(5) Corporations Act provides that the DOCA is taken to contain certain "prescribed provisions" except so far as the DOCA provides otherwise. One of the "prescribed provisions" is clause 8(1) of Schedule 8A of the Corporations Regulations . That clause provides: "Subdivisions A, B, C and E of Division 6 of Part 5.6 of the Corporations Act apply to claims made under this deed as it references to the liquidator were references to the administrator of this deed."

Section 553 appears in subdivision A of Division 6 of Part 5.6. Even if clause 8(1) cannot be used to construe the Act, clause 8(1) provides an additional reason for construing the DOCA so that the claims provable under it are those that would be provable under s 553. That is so notwithstanding that the definition of "Claims" in the DOCA is cast in language that is arguably wider than that of s 553. Can a "Claim" Under Part 5.3A not be a "Claim" Within Section 553?

Mr Williams points out that the decision in Brash was given, as the court records, "as a matter of great urgency" (at 25). He points out that the submission that counsel made to the Victorian Appeal Division, and that the court eventually upheld, was that the word "creditors" in s 444D(1): "... should be read as extending to all those who had a claim against the company arising on or before that date, whether the claim be 'present or future, certain or contingent, ascertained or sounding only in damages' (as described in s 553(1) of the Corporations Law ...)" (at 28)

That submission does not ask that the court definitively decide the furthest extent of the meaning of "creditors" in s 444D(1), only that it decide that that meaning extends as far as the meaning of people with "claims" within the meaning of s 553.

He also points out that, in the course of their reasoning at 32, their Honours said that the reasoning they had been considering to that point: "... provides compelling reasoning for supposing that 'the creditors' upon whom such powers are conferred are not substantially different from 'the creditors' mentioned in relation to voluntary winding up in Pt 5.5 of the Law. It may be that under Pt 5.3A 'the creditors' have greater power as regards the initiation of the winding up of the company than they do under Pt 5.5; but that only provides more, rather than less, reason for supposing that 'the creditors' are not substantially different under the two Parts." (emphases added)

I accord no weight to the decision in Brash having been delivered urgently. It is still a decision of an intermediate appellate court. In any event, it is very carefully reasoned, and the decision was reserved for over a week.

I accept that the specific submission that counsel put to the Appeal Division did not in terms require that their Honours decide whether "creditor" and "claim" in s 444D(1) went any wider than a meaning of those words in s 553. Likewise it could be said that their Honours were considering a quite particular factual question, concerning whether a DOCA could bind landlords who had leased real estate to the company in question, concerning payments of rent and outgoings that would fall due under those leases after the DOCA was entered. However, the reasoning that led their Honours to the conclusions that I set out at [53] and [54] above was not limited by reference to the particular submission that had been put, nor was it dependent upon any aspects of that particular factual situation. Rather, their Honours' conclusion arose from a detailed examination of the terms of the relevant provisions of Part 5.3A and its relationship to the provisions of the Corporations Law relating to claims provable in a winding up. If a court actually decides a case by concluding that a broad proposition is the law, and by applying that broad proposition to the facts of the case, the broad proposition is part of the ratio decidendi of the case.

It is true that, part way through their reasoning, the reasoning process they had engaged in to that point enabled their Honours to conclude that the "creditors" in Part 5.3A were not substantially different to those referred to in Part 5.5. In June 1994, when Brash was decided, Part 5.5 of the Corporations Law related to voluntary winding up. It ran from s 490 to s 512, and thus was not the Part in which s 553 is to be found. Part 5.5 of the present Corporations Act likewise relates to voluntary winding up, and runs from s 490 to the (now repealed) s 512. Later in their reasoning, in the passages that I have set out at [53] and [54] above, their Honours expressed themselves quite unambiguously, and without any of the imprecision involved in saying that one thing is not substantially different to another, when they said " whatever the ambit of the words of s 553 the same will be so in relation to s 444 D" .

Mr Newlinds submits that it is not open to me to decide that Brash has left open the possibility of a "claim" and "creditor" in s 440D being wider than the meaning of those terms in s 553, because of the decision of the High Court in International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151. That litigation arose when Ansett went into administration, then adopted a DOCA. IATA had for many years operated a Clearing House system, with rules that member airlines contracted to observe. If airline A sold and issued a ticket for services to be provided by airline B, airline A gave a credit for the cost of that service to a centrally operated fund. When airline A provided a service concerning which airline C had sold the ticket, airline A was entitled to claim on the fund. The fund thus enabled setting off of claims between the many airlines that were its members. The question at issue in IATA v Ansett was whether the deed administrators were entitled to claim directly against other airlines for the cost of services that the other airlines had booked, but Ansett had provided. At [42] Gummow, Hayne, Heydon, Crennan and Kiefel JJ said: "... on 2 May 2002 the Deed was executed as provided in s 444B. Thereupon, and by force of ss 444D and 444G, the Deed bound Ansett, its officers and members, the administrators, and certain creditors of Ansett. This class of creditors included those with claims against Ansett where the circumstances giving rise to the claims occurred on or before 12 September 2001. Authorities including Hoath v Comcen Pty Ltd (2005) 53 ACSR 708 at 711-712 [17] indicate that these claims must also still have been current on 2 May 2002, the date of execution of the Deed. Further, and this follows from the construction given s 444D in Brash Holdings [1996] 1 VR 24, the claims are those which would have been admissible to proof under s 553 in a winding-up of Ansett if the circumstances giving rise to the claims had occurred before 12 September 2001 ." (emphasis added)

Mr Newlinds submits that the last sentence of this paragraph shows the plurality deciding that the claims provable under the deed are equivalent to those that would have been admissible to proof under s 553. I accept that that is a fair reading of the words.

I have some doubt about whether that sentence is part of the ratio of IATA v Ansett , as the decision turned upon who owed money to whom on a proper construction of the rules of the Clearing House. Even so, as a seriously considered dictum of the High Court, I should follow it: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [134], [147].

Further, this reading of Brash has been explicitly accepted by the Full Federal Court in Lam Soon . Von Doussa, O'Loughlin and Lehane JJ, in discussing Brash , said at 40: "The Court proceeded to hold explicitly that the expression in s 444D(1), 'claims arising on or before the day specified in the deed', should be read as having the same content as the expression 'debts or claims the circumstances giving rise to which occurred before the relevant date' in s 553 of the [ Corporations Law ] and thus (at 34) as comprehending future or contingent debts or claims. It was not suggested that we should decline to follow that decision. Given what was said by the High Court in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492, and given also that we are far from persuaded that the decision of the Appeal Division was plainly wrong - with respect, we think it was right - in our view we should follow the decision and apply it." (emphasis added)

The phrase "the claims are those" in IATA v Ansett , and the phrase "read as having the same content as" in Lam Soon do not admit of the possibility that the class of claims under s 444D(1) is any wider than that of claims under s 553.

There is a difference in terminology between s 444D(1) and s 553(1) as the former refers to "claims arising on or before the day specified in the deed" while the latter refers to "claims the circumstances giving rise to which occurred before the relevant date" . Treating the claims that fall within s 444D(1) as coextensive with those that could fall under s 553(1), as IATA v Ansett and Lam Soon require, has the effect that this difference in terminology does not result in any difference in substance.

Brash has been referred to in various other decisions of intermediate courts of appeal, but not in a way that deals directly with whether there is a relationship of identity between the "claims" in s 444D(1) and the "claims" in s 553: Australasian Memory Pty Ltd v Brien (1998) 45 NSWLR 111 at 138-145; MYT Engineering Pty Ltd v Mulcon Pty Ltd (1997) 140 FLR 247 at 276; Joseph Khoury & Sons v Zambena Pty Ltd [1999] NSWCA 402; (1999) 217 ALR 527 at [22]; Ansett Australia Ground Staff Superannuation Fund Pty Ltd v Ansett Australia Ltd [2003] VSCA 117; (2003) 176 FLR 393 at [12]; Something Better Pty Ltd & Terry v Pyramid Building Society (in liq) [1996] 2 VR 352 at 358 (reversed on appeal, though not on this point, in Pyramid Building Society (in liq) v Terry (1997) 189 CLR 176); GM and AM Pearce & Co Pty Ltd v RGM Australia Pty Ltd [1998] 4 VR 888 at 893-894; Surber v Lean [2000] WASCA 380; (2000) 23 WAR 445 at [67]; City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130; (2009) 179 FCR 243 at [32]-[33], [79], [135]-[137]. I do not find in those decisions anything that suggests there might not be the relationship of identity between the " claims" in s 444D(1) and the " claims" in s 553. I also recognise that Brash has been applied without any hint of reluctance or criticism by many first instance judges. First instance judges are required to follow a decision of an intermediate appellate court, but there is no obligation to follow it happily.

The core meaning of "creditor" is a person to whom a debt is owing. That can be confirmed by recourse to dictionaries. It has a subsidiary and specialised meaning in relation to accounting, concerning the type of entries that are made on the credit side of an account. A contingent creditor is not a creditor in either of these senses of the term. Rather, such a person is someone who might, in some circumstances, become a creditor. It would not be appropriate accounting treatment to enter an estimate of the amount for which he or she might become a creditor on the creditor side of a conventional set of accounts. The contingent liabilities of a corporation need to be disclosed in its accounts, if those accounts are to give a true and fair view of the affairs and financial position of the corporation. However, that is done by a note to the accounts, and does not mean that a contingent creditor actually is a "creditor" in the ordinary meaning of the word. The decision in Brash was, in effect, that a reading of Part 5.3A Corporations Act in the light of the Act as a whole required an extended meaning of "creditor" to be recognised in Part 5.3A, namely that it is a person who has a " claim" within the meaning of s 553. If the meaning of " creditor" in Part 5.3A is to be extended even further, there must be a sound reason, based in construction of the statute, for doing so.

Mr Williams submits that there is such a reason. He submits that the scheme, purpose and scope of Part 5.3A requires a meaning of "creditor" that is even wider than that which Brash accorded it. He submits that the Harmer Report in Chapter 16 advocated a "fresh start" philosophy for insolvent companies. He submits that the scheme provided for in Part 5.3A is about insulating the insolvency of the company from the consequences of allowing creditors to take action against them, and that this requires creditors with contingent claims to be recognised as creditors. He submits that if Ms Sutton is not a "creditor" for the purpose of the DOCA, she has neither the benefit nor the burden of the DOCA, and can continue her action against the company. He submits that such a result is inconsistent with the purpose of Part 5.3A to afford the company a fresh start following its administration.

Further, he submits that recognising the claim of a claimant under s 106 IR Act , would, commercially, be no different to recognising the claim of a person who asserts a tort action against the company, who asserts that they have contractual rights that in some circumstances might mature into a liability (such as a guarantee), or that they have a claim for damages under the Trade Practices Act .

These arguments differ radically from the type of argument that succeeded in Brash . Brash involved a meticulous examination of numerous provisions of the Corporations Law , and considered their interaction. Mr Williams' arguments invoke no such textual considerations.

The "scheme, purpose and scope" of Part 5.3A that he invokes is itself not based in the text of the statute. Section 435A ([40] above) makes an explicit statement of the object of Part 5.3A. Ms Sutton does not fall within para (a) of that statement of objectives, because the DOCA has no effect on the company or its business continuing in existence - the company has at all relevant times been little more than a shell, and its business had already been sold, before the company entered voluntary administration pursuant to a management buyout ([21] above). She would only fall within para (b) of the statement of objectives if "creditor" in Part 5.3A has a wider meaning than in s 553 - which is the very thing that Mr Williams is seeking to demonstrate.

I accept that s 435A does not exhaustively state every legislative purpose that is to be taken into account in the application of the provisions of Part 5.3A ( Vero v Kassem [2011] NSWCA 381 at [81]-[82]). However, any purpose that is to be read into Part 5.3A must be found somewhere within the statute. No specific source has been suggested to us.

The relevant provisions of the Harmer Report are set out in Environmental & Earth Sciences v Vouris at [51], and I will not repeat them here. I will put to one side any concerns about whether the Harmer Report " is capable of assisting in the ascertainment of the meaning of the provision " , as s 15AB Acts Interpretation Act 1901 (Cth) requires must be the case before extrinsic material can be relied on as an aid to construction (cf Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 280 at [12], [16], [168], [172]; Preston v Commissioner for Fair Trading [2011] NSWCA 40 at [170]-[174] concerning the analogous New South Wales provision). Statements such as that at [779] of the Harmer Report, that " categories of admissible claims should be as wide as possible" are at too high a level of generality to provide assistance. They beg the question, as wide as possible to achieve what?

There was somewhat greater precision in the statement at [777] of the Report that the "categories of claim which are admissible should be as wide as possible so that the financial affairs of the insolvent are dealt with comprehensively" . However, that statement involves an understanding of what are the "financial affairs" of an insolvent corporation. That expression could not refer to every transaction or practice in which a corporation engages that might produce financial effects. If a corporation were to become insolvent and cease trading, that might cause significant financial harm to someone who regularly supplied goods or services to the corporation, and who could no longer look to the business of the corporation as a source of profit. However unless there is actually a supply contract in place, rather than the habit or practice of dealing, those harmful consequences are not part of the "financial affairs" of the corporation, in the relevant sense. If the corporation has called for tenders, but becomes insolvent before it awards a contract following on the tendering process, any expectation that a tenderer had of profit from a contract is not part of the "financial affairs" of the corporation. That is so even if the tender that a tenderer submitted was a very good one, that on objective criteria would have had a high chance of success if the corporation had continued to carry on business. Similarly, suppose that Ms Sutton's claim to be entitled to an order in the IRC could have been shown to be one that would have had a high prospect of success if it had proceeded to judgment (an exercise that was not attempted). Even if this were the case, before the Commission had given judgment, Ms Sutton's assertion of an entitlement to an order from the commission was not sufficient to make her claim part of the "financial affairs" of BEA, or to make her a creditor within the meaning of Part 5.3A.

Another reason that the Harmer Report gives at [777] for the categories of claim being wide is that "it also favours creditors, since if the creditors are unable to make their claims in the insolvency, they are unable to recover at all" . That does not provide a reason for the scope of admissible claims being any wider than those of "creditors" as expounded in Brash .

Mr Williams' argument that the claim of a claimant under s 106 IR Act is commercially no different to the claims of various other claimants who are not actually owed a debt, such as a person with an undetermined claim for damages under the Trade Practices Act , is not disposed of by the reasons I gave at paras [101]-[103] above. Those reasons relate to a difference in legal analysis, not to a difference in commercial effect. However, there would be very many people who might as a matter of fact suffer financial harm as a consequence of a corporation becoming insolvent. The examples I have given of the regular supplier to the corporation, and the hopeful tenderer, are just two of a multitude of relationships that there might be between a person who in fact is likely to suffer financial loss as a result of the insolvency of a corporation, and the corporation itself. But why should mere foreseeability of loss, as a result of a corporation ceasing to carry on business, be regarded as giving the person who might suffer the loss an entitlement that the law should recognise to share in the divisible assets of the corporation? In the law of tort, there needs to be more than the foreseeability of financial loss to a person before there is any legal obligation to take reasonable care not to cause such loss.

Identification of someone as a "creditor" confers on them various legal rights under Part 5.3A. Without being exhaustive, a creditor is entitled to attend meetings of the company's creditors under ss 436E and 439A, and to vote at those meetings. The administrator is required to investigate the affairs of a company under s 438A and then to form an opinion about which course of action is in the interests of the company's creditors. If the creditors resolve that the company should execute a DOCA, then s 444A(4)(b) requires that the DOCA specify the property of the company that is to be available to pay creditors' claims. Section 444A(4)(h) requires the DOCA to specify the order in which proceeds of realising that property are to be distributed amongst creditors bound by the deed. It is as a result of the vote of the creditors that a decision is made whether a DOCA will be entered. Under s 444D, creditors are bound by the terms of the DOCA. Under s 445C, the creditors have power to pass a resolution terminating a DOCA. Various of the court's powers in relation to the operation of a voluntary administration or a DOCA are to be exercised by reference to what is in the best interests of the company's creditors - ss 437F(4), 445D(a)(ii), 445D(1)(c), and 445D(1)(f). I see no reason of text or policy for regarding the class of "creditors" who are accorded these legal rights as extending to people who otherwise have no legal rights against the company, but rather an expectation that in fact they would have benefited from the continued existence of the company. Further, a voluntary administrator has an obligation to give notice of the first meeting of creditors to as many of the company's creditors as reasonably practicable (s 436E(3)(a)). The Court has an obligation to make various decisions by reference to the interests of the creditors as a whole. These obligations would either be extremely difficult or impossible to perform if "creditors" extended to people who had no legal rights at all against the company.

In all these circumstances, I do not accept that the class of "creditors" under Part 5.3A extends any wider than the class of people with a "claim" under s 553. The primary judge was right in concluding that Ms Sutton was not a "creditor" within the meaning of Part 5.3A.

The cross-appeal should be dismissed.

The written submissions of Mr Newlinds said that the application for leave was "... made out of caution in the event that the Court determines that the proceedings do not involve 'a matter at issue' of the value of $100,000 or more for the purpose of s 101(2)(r)(i) of the Supreme Court Act 1970 ." No affidavit had been filed on behalf of the Applicants demonstrating any facts that put a value on the claim.

Section 101(2) Supreme Court Act 1970 provides: "An appeal shall not lie to the Court of Appeal, except by leave of the Court of Appeal, from: ... (r) a final judgment or order in proceedings of the Court, other than an appeal: (i) that involves a matter at issue amounting to or of the value of $100,000 or more, or (ii) that involves (directly or indirectly) any claim demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more."

In Aroona Developments Pty Ltd (in liq) v Killen [2004] NSWCA 363; (2004) 50 ACSR 668 Ipp JA held that leave was not necessary to appeal from a decision of a judge hearing an appeal from a liquidator's rejection of proof of debt, where the judge had admitted the proof for a sum in excess of $600,000. Ipp JA followed Moller v Roy (1975) 132 CLR 622 in holding, at [24], that: "[W]hen a judgment is given in a specific amount, it is the amount of the judgment that determines the right of appeal."

Ipp JA reached that conclusion notwithstanding an argument that the proof of debt that had been admitted was likely to result in the creditor actually receiving less than $100,000. He held that the actual return that was likely on the admitted proof was irrelevant, just as (at [21]): "[A] judgment of $100,000 against an impecunious defendant does not give rise to the need, on the part of such a defendant, to obtain leave to appeal against the judgment merely because the plaintiff, on execution, would be likely to receive less than $100,000." And at [24]: "Where the amount of the judgment exceeds $100,000 the 'value' of the 'matter at issue' is irrelevant to competence of the appeal."

In the present case, however, the judgment appealed against is not one for a stated sum of money, or expressed (as in the case where a proof of debt is admitted in a stated sum of money) in a particular amount. In circumstances such as the present it is necessary for a litigant who seeks to demonstrate that s 101(2)(r) does not deprive them of an appeal as of right to demonstrate that they have a realistic prospect on appeal of lessening the prejudice that they suffer by reason of the order appealed against to an extent greater than $100,000: Pawlowska v Zajglic [2011] NSWCA 118 at [14]-[21] and cases there cited.

It would not be in the longer term forensic interests of the Applicants to demonstrate that Ms Sutton's proof of debt was worth more than $100,000. Thus, it is understandable that they have not attempted to give that demonstration. However, their failure to attempt the task produces the consequence that they must seek and obtain leave to appeal.

Mr Newlinds submits that there are three reasons for granting leave to appeal: "(a) the appeal involves an important question about the outer limits of section 447A of the Act, which has not been satisfactorily considered by any trial or appellate court; (b) there are strong arguments that the primary judge reached the wrong conclusion as to the power of section 447A and the exercise of his discretion miscarried; (c) if the applicants' argument is accepted it will bring finality to these proceedings. Conversely, if the present orders stand, the parties may ultimately need to engage in litigation in the IRC (or the Supreme Court) regarding the quantum of the respondent's claim. This will disadvantage other creditors."

I do not propose to decide the "outer limits" of s 447A. However, whether the particular order that was made below was within the scope of the power under section 447A is of sufficient general importance to warrant the grant of leave to appeal. It is unnecessary to consider the other reasons put forward in favour of leave to appeal. I will henceforth refer to the Applicants as the Appellants. Standing to Bring Proceedings?

Section 447A(4) Corporations Act identifies the persons who may apply for an order under s 447A: "An order may be made on the application of: (a) the company; or (b) a creditor of the company; or (c) in the case of a company under administration-the administrator of the company; or (d) in the case of a company that has executed a deed of company arrangement-the deed's administrator; or (e) ASIC; or (f) any other interested person."

Mr Newlinds submitted, in his written submissions, that Ms Sutton lacked the standing to make application for an order under s 447A. The primary judge did not make an express decision that she had standing, but rather assumed that she had sufficient standing. Mr Newlinds submits that, if that assumption were wrong, the order under s 447A would inevitably need to be set aside. Mr Williams does not submit that there is any obstacle to Mr Newlinds raising this point on appeal.

When Ms Sutton was not a creditor of the company, the only other basis upon which she might possibly have standing would be as "any other interested person" . Mr Newlinds submits that she does not fall into this category because "any other interested person" did not extend to "a person who, absent a remedial order under s 447A, has no interest, rights or obligations created by Part 5.3A."

In oral submissions he put it somewhat differently. He submitted that before Ms Sutton obtained the order under s 447A she had a right to invoke the jurisdiction of the IRC, and an expectation that at some time in the future that right would turn into an order for money. He submitted that the DOCA did not affect those rights nor the operation of Part 5.3A concerning them, and thus Ms Sutton was not a "person interested" in whether the s 447A order was made.

Even put in those terms, I do not accept this argument. It is true that had the DOCA not been entered, Ms Sutton would have been free to continue her action in the IRC. If she were not a person bound by the DOCA, s 444E(3) would not prevent her from continuing with that action, even after the DOCA was entered. Section 444E provides: "(1) Until a deed of company arrangement terminates, this section applies to a person bound by the deed. ... (3) The person cannot: (a) begin or proceed with a proceeding against the company or in relation to any of its property; or (b) begin or proceed with enforcement process in relation to property of the company; except: (c) with the leave of the Court; and (d) in accordance with such terms (if any) as the Court imposes."

Mr Newlinds submits that she is not bound by the DOCA. It is a consequence of my findings so far that that submission would be right, if the order under s 447A had not been made.

However, the practical effect of operation of the DOCA would be that by the time her claim in the IRC had been heard and determined all assets of the company that might have been available to meet her claim would already have been distributed under the DOCA. It is only by being treated as a creditor under the DOCA that she can gain access to the only pool of assets likely to be available to meet her claim.

While Mr Newlinds accepts that the DOCA would have this practical effect, he submits that that is not enough to give her standing to seek the s 447A order. He submits it is "bootstraps reasoning" for her in effect to say "I am asking for this order because if I get it I will be better off and, therefore, I have a relevant interest."

In Allatech Pty Ltd v Construction Management Group Pty Ltd [2002] NSWSC 293; (2002) 41 ACSR 587 Austin J considered a situation where a company that had operated as a builder entered a DOCA. At the time of entering the DOCA it had not completed a particular development project that it had contracted with a developer to build. The developer had obtained a certificate from the architect involved in the building project, certifying that the builder owed the developer a particular sum of money. The builder contested that it owed that amount of money, and asserted that, rather, the developer owed it a very large sum. The commercial point of the DOCA was to provide funding to enable the builder to sue to recover that alleged debt. Austin J held that the developer had standing as an "other interested person" to seek the termination of the DOCA under s 445D Corporations Act . Section 445D(2) conferred standing to apply for an order terminating the DOCA on, inter alia, a creditor of the company, and on "any other interested person" . While the developer claimed to be a creditor of the builder, deciding whether that claim was correct would involve very complex litigation, raising the very issues that the funding sought to be raised under the DOCA was to be used to litigate. Thus a preliminary issue was determined about whether the developer had standing as an " other interested person" .

Austin J held, at [18], that the words "other interested person" are "words of wide scope" . He held, at [20] that those words "are intended to encompass applicants whose material rights or economic interests are or may be affected by the operation or effect of the deed of company arrangement which they seek to challenge, at least where the effect is substantial." He drew an analogy with the standing provisions of ss 27 and 30 of the Administrative Appeals Tribunal Act 1975 (Cth) which permitted a persons whose "interests are affected" by a decision to seek review of that decision and to become a party. He adopted the view that Davies J had expressed, concerning those words, in Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 1) (1980) 3 ALD 74. Davies J had said, at 79 that those words: "... denote interests which a person has other than as a member of the general public and other than as a person merely holding a belief that a particular type of conduct should be prevented or a particular law observed. The interest affected need not be a legal interest nor need the person seeking joinder establish legal ownership of the interest ..."

Austin J also adopted Davies J's statement that: "... a person seeking joinder must be able to identify a relevant interest which is his. In other context, dicta in cases have used the adjectives 'real', 'genuine' and 'direct' to describe the relationship required between the decision and the interest. Sections 27(1) and 30(1) do not make use of adjectives but they do require that the applicant demonstrates genuine affection of an interest which attaches to him."

Austin J, at [21], said that standing in administrative law was conferred by this provision: "... when a person complaining about an administrative decision has a sufficient practical interest to have the decision reviewed. That is broadly the same task as the legislature has assigned to the court by using the words 'other interested person' in s 445D(2). It is not necessary for me to hold that the words 'interests are affected' in the Administrative Appeals Tribunal Act identify precisely the same class of applicants as the words 'other interested person' in s 445D(2). It is enough to say that when material legal rights or pecuniary or other economic interests of the applicant are or may be substantially affected by the matter in issue, the applicant is an 'other interested person', however much further those words may extend ..."

At [26], Austin J said that there "must be some additional ingredient beyond the bare claim to be a creditor" before it could "sensibly be said" that the developer was an interested person. He found it was sufficient that the developer had "a claim to be a creditor which, whether it is ultimately found to be correct, relies on grounds that are genuinely arguable." That arguable claim had the effect that one way in which the developer was an interested person was that it had a claim to be a deed creditor. The other way in which it was an interested person was that it was suing for its debt by a cross-claim in litigation already on foot. Regardless of whether it was a deed creditor, the developer "has a substantial economic interest in the termination of the deed, because the termination of the deed could well affect the successful prosecution of its claim for recovery of debts in the Construction List proceeding" ([41]).

In Commonwealth of Australia v Rocklea Spinning Mills Pty Ltd [2005] FCA 902; (2005) 145 FCR 220 Finkelstein J held that the Commonwealth was a "person interested" in whether a DOCA was terminated because the DOCA provided for it to receive a lesser distribution than it would have received in a winding up. After the administration had begun, the Commonwealth had provided money under the General Employee Entitlements and Redundancy Scheme (GEERS). That scheme enabled certain unpaid employees' claims against the company to be met. In a winding up of the company, the Commonwealth would have had a priority right of payment under s 560 Corporations Act in respect of the money advanced by it to meet the employees' claims against the company. However, precisely because the payment had been made after the commencement of the administration, the Commonwealth was not a "creditor" of the company. At [20] Finkelstein J applied Allatech , agreed with the remark of Austin J that "interested person" should be given wide scope, and held that the Commonwealth was an "interested person" , because "its pecuniary rights are potentially adversely affected by the deed."

In my view, Allatech and Rocklea Spinning Mills were correctly decided so far as who is an "interested person" within s 445D(2) is concerned. Some statements in them need modification to be applied to the present case. That is because in the context of s 445D(2) an "interested person" is a person who has an interest in whether the court makes an order terminating a DOCA. By contrast, in the context of s 447A an "interested person" is a person interested in whether the court makes the order that is sought under s 447A.

Ms Sutton had an economic interest in whether the DOCA was administered on the basis that she was treated as being a creditor. That interest was one that she had other than as a member of the general public, and other than as an opinion that would not have a real practical effect upon her. It has not been suggested that the claim that Ms Sutton was bringing in the Commission was frivolous or had slight prospects of success. Nor is it submitted that, if she were to be treated as though she were a creditor, that would not have a substantial effect on her economic interests. In my view, she had standing to bring the present proceedings, even though she is not a creditor. Was the Section 447A Order Justified?

Mr Williams points out, correctly, that the judge's order ([37] above) does not require the administrators to admit Ms Sutton's proof for any particular amount. I would agree that it does not require the administrators to admit the claim for any particular amount. The requirement in the order that the defendants admit the proof "as an admissible claim" does not even have implicit in it that it is at the least to be admitted for a nominal amount. The clear intent of the judge's order was that the claim was to be " admissible" in the sense that it was one that the administrators were obliged to evaluate, and to admit to proof for whatever they decided its value might be, but that it was open to them to decide that its value was zero. Mr Newlinds submits that it was erroneous for the judge to admit the claim at all.

Mr Williams submits that order 1 has merely adjusted the "admissible claims date" in the DOCA, and has not created any new rights in Ms Sutton. He submits that the power under s 447A has frequently been used to vary a DOCA, including to extend a time period. The examples he gives are Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [17]-[18]; McGrath v Capena Contracting Pty Ltd [2009] FCA 665 at [15]; Re Ansett Australia Ltd [2002] VSC 114; (2002) 41 ACSR 598 at [16]-[19] and Milankov Nominees Pty Ltd v Roycol (1994) 52 FCR 378 at [25]. I agree that the power has been used, and used correctly, in those ways.

However, though the power under s 447A can be used to vary a DOCA, and can be sued to extend a time period, that does not mean that any conceivable variation of the DOCA, or any conceivable variation of a time period, would be a proper exercise of the power. McGrath v Capena Contracting was a very different case to the present. Capena was a construction company. It had constructed, under a contract with Patricks, the pavement at a container terminal in Brisbane. That pavement had been designed by Maunsell, under a different contract with Patricks. The pavement proved defective, though the defects revealed themselves only after Capena had entered voluntary administration. A term of a DOCA that Capena entered barred all claims in relation to which the proof had not been lodged by 16 June 2006. Maunsell was first notified by Patricks of defects in the pavement on 1 April 2006, but not in terms that led it to expect that Patricks would sue it concerning the defects. However in August 2007, Patricks began litigation in the Supreme Court of Queensland against Maunsell claiming damages for the defects. Maunsell then sought to lodge a proof of debt with the administrators of Capena, to claim an indemnity from it. Perram J made an order under s 447 that Part 5.3A was to operate in relation to Capena "so that the time for lodgement of the Maunsell Proof ... be extended beyond the time allowed" by the relevant clauses of the DOCA. He also granted Maunsell leave to proceed against Capena in the Supreme Court litigation.

I do not accept the proposition that is inherent in Mr Williams' submissions, that if alteration of the date for a claim being lodged was permissible in Capena it was likewise permissible in the present case. In Capena , Maunsell was, at the date for lodgement of proofs, in a similar situation to that of Mr Margaretic in Sons of Gwalia - the damage concerning which it later wished to make a claim against Capena had occurred, but Maunsell did not at that time realise its seriousness. Thus, at the date for lodgement of proofs, it would have been a present creditor, just as Mr Margaretic was at the date that was relevant in his case. No issue arose in McGrath v Capena about whether Maunsell was required to be a creditor of Capena at any date earlier than the date for lodgement of proofs. The order of Perram J in McGrath v Capena enabled Maunsell to lodge a proof at a later date than that required by the Deed, but concerning a claim that it had as a creditor at the relevant date for lodgement of proofs. That is not the situation in the present case.

The question at issue in Re Ansett Australia was whether there was power (at all) under s 447A for the court to order that a DOCA be amended. Warren J held that such a power existed. No question arose about whether there were any limits on the circumstances in which s 447A could properly be used to amend a DOCA.

Milankov Nominees v Roycol does not contain paragraph numbers in the FCR report that Mr Williams cited. However, the version of the case on Austlii contains paragraphs numbers, and I take it that it is those paragraph numbers he is referring to. The paragraph number to which Mr Williams referred appears at 52 FCR 383, at the top of the page. That contains a statement that a creditor: "... may apply to the Court under s 447A of the [ Corporations Law ] for any order that is appropriate in the circumstances. Under the latter provision such an order may include an order restraining the company and administrator from executing the deed, or an order varying the terms of the deed of company arrangement if it appears to the Court that it is in the interests of creditors to do so. In the exercise of the unfettered power provided by s 447A an order that the deed be varied would not be subject to the limitation imposed by s 445G(4) of the Law where an order to vary the deed may only be made with the consent of the administrator of the deed."

That passage does not advance Ms Sutton's case, because it recognises that an order varying the terms can be made "if it appears to the Court that it is in the interests of creditors to do so" . That test requires the Court to consider the interests of the creditors collectively. An order that someone who is not a creditor be treated as though they were a creditor could not be "in the interests of creditors" . That is because it would either result in the real creditors having less money available for distribution amongst them (if the proof of the deemed creditor was admitted for a substantial sum), or in the interests of the real creditors remaining unaffected (if the proof of the deemed creditor was valued at zero or admitted for a nominal sum).

Mr Williams points out that soon after Part 5.3A was enacted judges remarked on the width of the power given to the court under s 447A: eg Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 at 611 per Young J ( "plenary powers to do whatever it thinks is just in all the circumstances" ); Aloridge Pty Ltd v Christianos (1994) 13 ACSR 99 at 101 per Burchett J ( "broad discretionary power" ), Milankov Nominees v Roycol at 383 per Lee J ( "the unfettered power provided by s 447A" ).

Those views were confirmed to some extent, but perhaps not totally, by the decision of the High Court in Australasian Memory v Brien . The joint judgment of Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ considered the scope of orders that could be made under s 447A. The company in question had been in voluntary administration. Its creditors resolved that the company be wound up. However, that resolution was passed at a meeting that occurred earlier than the earliest permissible date under s 439A(2) and (5) Corporations Law . Santow J had made an order under s 447A (along with certain other orders under s 1322) that had the effect of retrospectively validating the calling of the meeting. The High Court held that that order had been validly made, even though it resulted in Part 5.3A operating in a different way to the way in which s 439A specifically stated it was to operate.

Their Honours said, at [16]: "... to say that s 447A(1) cannot be understood as permitting the 'circumventing' of other 'specific' provisions of Pt 5.3A amounts to no more than an assertion of the answer to the question that arises; it offers no reason for reaching the conclusion proffered." Their Honours noted, at [17], that the power under s 447A(1): "... is not cast in terms of a power to make orders to cure defects or to remedy the consequences of some departure from the scheme set out in the other provisions of Pt 5.3A. Its operation is not confined to such cases." They said, at [18]: '... orders under s 447A(1) may alter the operation of other provisions of the Part. That is, the orders contemplated in the examples go beyond a curial determination of what is the effect of the existing provisions of the Part on a particular company in the circumstances that may be established in a proceedings; the orders contemplated are orders that alter how the Part is to operate in relation to a particular company, not how the Part does operate in relation to that company." (emphasis in original) At [24] their Honours said: "It is not right to seek to characterise s 447A as some general source of power to which resort cannot be had because to do so would 'circumvent' the statutory limitations upon the exercise of the power that is given by s 439A(6) to extend the convening period. So to characterise s 447A is to give to all of the other provisions of Pt 5.3A a fixed and unchanging operation in relation to all companies. Yet the evident legislative intention of s 447A is to permit alterations to the way in which Pt 5.3A is to operate."

Those remarks about the width of the power in s 447A were tempered by some other parts of the judgment. At [20] their Honours said: "The considerations we have mentioned suggest that the powers under s 447A are wide but they do not compel the conclusion that they are entirely without limit." Further, at [26] their Honours accepted that there was a textual limitation in s 447A, because the expression "how this Part is to operate" "is an expression that looks to the future, not the past. " It is permissible for an order under s 447A to say, in effect, that henceforth certain past events will be treated as though they are different in some particular respect to the way they actually transpired, but the order must still be cast in future-looking language. At [32], their Honours declined to decide whether two other suggested limitations on the scope of s 447A applied.

It may be accepted that s 447A confers on a court a discretionary power in terms that are expressed extremely widely. However, any statements that first instance judges have made about the breadth of the power should, like all judicial statements, be read subject to the context in which they are made: Quinn v Leathem [1901] AC 495 at 506; Commonwealth v Bank of New South Wales (1949) 79 CLR 497 at 637-638; R v Beserick (1993) 30 NSWLR 510 at 517; Leaway v Newcastle City Council (No 2) [2005] NSWSC 826; (2005) 220 ALR 757 at [75]-[84] and cases there cited. None of the views to which I have referred in [177] above were expressed concerning a situation anything like using s 447A to deem someone who is not a creditor to be a creditor.

Concerning a power granted to an administrative decision-maker where no express limitations are imposed on the power, the following propositions are well established. The power is unconfined except to the extent of any limitations imposed by the subject matter, scope and purpose of the statute. As a matter of construction, if the Court can see by reference to the subject matter, scope and purpose of the statute that some exercises of the power would definitely be extraneous to any objects that the legislature could have had in view, the conferred power will be confined to exclude such exercises of the power: Swan Hill Corporation v Bradbury (1937) 56 CLR 746 at 757-8 (by-law requiring council consent to build); Water Conservation and Irrigation Commission (New South Wales) v Browning (1947) 74 CLR 492 at 505 (legislation requiring consent of Commission to transfer of land); R v The Australian Broadcasting Tribunal; Ex parte 2HD Proprietary Limited (1979) 144 CLR 45 at 49 (legislation requiring consent of Tribunal to transfer of television licence); State of New South Wales v Commonwealth of Australia (1983) 151 CLR 302 at 321-322 (statutory power of Minister to register a health benefits fund on such conditions as he sees fit); FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 368 (regulation prohibiting insurer from carrying on business without approval of the Governor-in-Council); Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 (statutory power of Minister to recommend a grant of land if Commissioner recommended the grant be made); Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 285 (statutory power of Minister to grant resident status).

The requirement for administrative decision-makers to act in a way that is not inconsistent with the objects of the legislation is expressed as a limitation on the power of the decision-makers. This is because, at least under the general law, a court can exercise control over administrative decision-makers only by reference to whether a purported decision is within power or arrived at in accordance with the law. Responsible exercise of public power makes it just as important for a court, as for an administrator, to exercise for the purpose for which it was conferred any power conferred by statute. However, a somewhat different conceptual scheme is used to achieve that objective concerning decisions of courts to the conceptual scheme that is used to achieve the objective concerning decisions of administrators. The availability of appeals against decisions of courts enables the exercise of a power conferred by statute on a court to be reviewed on its merits (at least when the appeal is not confined to an appeal requiring demonstration of an error of law, and within the limits imposed by House v The King (1936) 55 CLR 499 concerning discretionary decisions). As well, when a power has been conferred on a court there is a greater reluctance to construe the empowering legislation as conferring a power that is inherently limited, than would be the case concerning a power conferred on an administrative decision-maker. In Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205 Gaudron J explained why: "Powers conferred on a court are powers which must be exercised judicially and in accordance with legal principle ... the necessity for the power to be exercised judicially tends in favour of the most liberal construction, for it denies the validity of considerations which might limit a grant of power to some different body, including, for example, that the power might be exercised arbitrarily or capriciously or to work oppression or abuse."

In Australasian Memory v Brien at [17], after the portion that I have quoted at [179] above, their Honours continued by saying that there was nothing: "... on the face of s 447A(1) that suggests that it should be read down. In particular, the words of the provision are wide enough to confer power to make orders which will have effect in the future but which are occasioned by something that has been done (or not done) under the other provisions of Pt 5.3A before application is made under s 447A(1). As was said in the judgment of the Court in Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 at 421: 'It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.' Cogent reasons must be advanced, then, if the power given by the general words of s 447A(1) is to be read down."

A footnote to their Honour's reference to Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 continued: "See also FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284 per Wilson J; at 290 per Gaudron J; PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313, per Brennan CJ, Gaudron and McHugh JJ; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 275-276 per Gummow J; Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 per Gaudron and Gummow JJ."

The importance of a court exercising a broad power that has been conferred on it to achieve the purposes for which it was conferred appears from the judgment of Wilson J in FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268, that their Honours cited in the footnote just mentioned. The power in question in FAI General Insurance was a court's power to extend or abridge time for the delivery of particulars. After referring to the breadth of the discretionary power, Wilson J said at 283-4: "It is a remedial provision which confers on a court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance."

This principle also appears from the passage in PMT Partners that was cited in the footnote. Brennan CJ, Gaudron and McHugh JJ said, at 313, that a particular power that had been conferred on a court to extend time concerning an arbitration: "... is one that must be exercised judicially. That means, among other things, that it must not be exercised arbitrarily, capriciously or to frustrate the legislative intent. Rather, it must be exercised in the interests of justice and within the confines of 'the purposes for which it was entrusted'." (footnote omitted)

However, the fact that a power is conferred on a court does not necessarily mean that its scope will be construed as broadly as its words will stand. In Australasian Memory v Brien itself at [17] the court recognised that "cogent reasons" could result in the scope of a power given in general terms being read down. David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 275-6 provides a specific example. Section 1322(4)(d) Corporations Law provided a general power to extend the time for doing any act under that Law. Gummow J (Brennan CJ, Dawson, Gaudron and McHugh JJ agreeing) held that the general power under s 1322(4)(d) was limited by the specific provision in s 459G that permitted an application to set aside a statutory demand to be made only within 21 days after service of the demand. As Gummow J explained at 276 "the imposition of such a restriction is consistent with the scheme of the 1992 Act."

Barker J expressed a similar view in Re Timeshare Resort Club Ltd [2010] FCA 673; (2010) 187 FCR 13 at [82] when he said that s 447A was a provision: "permitting the court to fashion the operation of Pt 5.3A of the Act in relation to a particular company to enable the avoidance of circumstances that might otherwise militate against the proper administration of that company in accordance with the objects of the Act." Indeed, in the decision to which this appeal relates, the primary judge said at [20] that s 447A: "... is not subordinate to other provisions of the Part and it should not be read down so as to inhibit variation of any other provision within the Part, if the court sees that the variation promotes the overall objects of the Part ." (emphasis added)

Other cases have held that the power under s 447A has its limits: eg, Re Switch Telecommunications Pty Ltd (in liq); Ex parte Sherman [2000] NSWSC 794; (2000) 35 ACSR 172 at [21] (Santow J); Gibbons v LibertyOne (in liq) [2002] NSWSC 274; (2002) 41 ACSR 442 at [40]-[45] (Austin J); Chief Commissioner of State Revenue v Rafferty's Resort Management Pty Ltd (in liq) [2008] NSWSC 542; (2008) 66 ACSR 199 at [28]-[32] (Austin J). It is not necessary to consider whether the particular limitations on s 447A to which those cases advert actually apply. The point is rather that it may be that limitations on the power in s 447A can be found.

One such limitation on the operation of s 447A was identified by Brereton J in Honest Remark Pty Ltd v Allstate Explorations NL [2006] NSWSC 735; (2006) 201 FLR 456. There, Brereton J rejected an application that the court use its power under s 447A to appoint a "special purpose administrator" to a company already operating under a DOCA. The purpose of that appointment was said to be so that certain transactions of the DOCA administrators could be investigated. Brereton J said at [66], in reliance on Re New Tel Ltd [2004] FCA 1154; (2004) 210 ALR 270 at [7], that "an order under 447A must have a nexus with how Pt 5.3A is to operate in relation to a particular company" . He declined to make the order sought, because no such nexus could be demonstrated.

Though we were reminded of Honest Remark , neither party denied the applicability of the limitation on s 447A proposed by Brereton J. However, Mr Williams submitted that the "nexus" requirement is satisfied if one is able to identify that the order actually modifies the operation of the statutory provisions in Part 5.3A. This submission was based upon Brereton J's acceptance at [66] of a statement of Barrett J in Re AFG Insurances Ltd [2002] NSWSC 735; (2002) 20 ACLC 1588 that: "It seems to me to be clear from the joint judgment in Australasian Memory that, before any order can properly be made under s 447A(1), it is necessary to identify the Pt 5.3A provision (or the effect produced, or to be produced, by a Pt 5.3A provision) the operation of which is to be modified and then to articulate the modification that the order is to achieve. I do not think it is possible to identify any Pt 5.3A provision as relevant for present purposes; and none was suggested in the course of submissions." I do not read Barrett J as saying here that the order must expressly identify the provisions in Part 5.3A the operation of which are to be modified. Rather, his Honour was stating a requirement of the judicial reasoning process. A judge proposing to make an order under s 447A must be able to identify the provisions in Part 5.3A the operation of which are to be modified. Otherwise, the order will not be one which is "about how [Part 5.3A] is to operate" .

Assuming the applicability of the "nexus" test, a nexus of the type with how Part 5.3A is to operate in relation to a particular company can often fairly readily be shown as a matter of form of the order. The order might specifically identify particular statutory provisions within Part 5.3A that are to be departed from in some particular respects, or it might simply identify some steps that are to be taken in an administration that are clearly different to the steps that would be taken if Part 5.3A were applied directly in accordance with its terms. In my view, the orders made in the court below (para [37] above) have a nexus with how Part 5.3A is to operate in relation to BEA, if one focuses on this limited sense of "nexus" .

Mr Newlinds submitted that in considering the required "nexus" reference ought be made to the objects of Part 5.3A. He referred in that respect to Re Octaviar Ltd (No 8) [2010] QCA 45; (2010) 237 FLR 315 at [10]-[12]. Those paragraphs do not bear out his submission - they refer to the objects of Part 5.3A and some of its history, but say nothing about the "nexus" test. However, whether it is as part of the process of applying the "nexus" test, or whether it is simply as a limitation that arises as a matter of construction on the scope of the power under s 447A, or whether it is part of the court's obligation to exercise the power under s 447A in a judicial manner, that power cannot properly be used in a way that is foreign to the purpose for which it is inserted in the Corporations Act . Re Motor Group

The judge in the court below placed considerable reliance on the decision of Hely J in Re Motor Group Australia Pty Ltd [2005] FCA 985; (2005) 54 ACSR 389. Re Motor Group concerned a motor vehicle importer to which voluntary administrators had been appointed on 26 April 2005. At a time when the voluntary administrators were wishing to put a proposal for a DOCA before the creditors, they approached the court ex parte seeking a determination of whether a group referred to as the "warranty creditors" would be bound if a DOCA were to be entered. Hely J explained at [3]: "'Warranty creditors' are persons who purchased a new motor vehicle imported by MGA who had a motor vehicle warranty on 26 April 2005, and who have not made a warranty claim arising out of circumstances before that date. Such persons are contingent or prospective creditors of MGA as at 26 April 2005, as MGA's liability on the warranty is dependent on the occurrence of later events."

Hely J noted a divergence of views of certain judges and commentators about whether a right to sue for a future breach of covenant was a provable claim, or a "mere expectancy" that was not provable. Hely J had been asked to give a direction under s 447D to the administrators that they would be justified in treating the warranty creditors as contingent creditors whose claims arose no later than 26 April 2005. However, his Honour noted that any such direction would not amount to a judicial determination of the issue and implicitly declined to give any such direction. However, after noting the breadth of power under s 447A, he continued, at [14]-[16]: "Even if it be correct to characterise the claims of warranty creditors as 'mere expectancies', s 447A empowers the Court to make an order that Pt 5.3A is to operate in relation to MGA so as to include the warranty creditors as creditors whose claims arose no later than 26 April 2005. One of the objects of Pt 5.3A, expressed in s 435A(b), is to achieve a better result for creditors 'than would result from an immediate winding up of the company'. The DOCA appears to achieve that objective, hence the s 447A(1) power should be exercised in the present case. It is true that warranty creditors and trade creditors are treated differently under the proposed DOCA, but the funds to pay the trade creditors and warranty creditors are to be provided from a source external to MGA. Both trade creditors and warranty creditors are better off under the proposed DOCA than on a liquidation. If a warranty creditor considers that the DOCA is unfairly prejudicial or unfairly discriminatory, then an application may be made under s 445D to terminate the deed."

The relevant order that he made was: "Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) ('the Act'), Pt 5.3A of the Act is to operate in relation to the second applicant so that a 'creditor' is deemed to include those purchasers (and their successors in title) of new motor vehicles imported by the second applicant who had a vehicle warranty on 26 April 2005, as creditors of the second applicant for the purposes of Pt 5.3A of the Act, whose claims are deemed to have arisen no later than 26 April 2005."

In the present case, the primary judge did not accept a submission that had been put to him that Re Motor Group was distinguishable because the "warranty creditors" already had existing enforceable rights at the date of the administration. The primary judge noted, at [25]: "Hely J did not attempt to decide whether the 'warranty creditors' had existing rights: his Honour was prepared to vary the meaning of 'creditor' in s 444D(1) so that, whether or not the 'warranty creditors' had a right to prove before the variation, they would unarguably have that right as a result of the variation."

The primary judge regarded Re Motor Group as providing "authoritative support" for the proposition that the definition of "creditor" for the purposes of the DOCA in this case can be extended under s 447A(1) to incorporate Ms Sutton's claim even though, at this stage, that claim might more properly be described as a "mere expectancy'" .

In my view it follows inexorably from the remarks of Kitto J in Engwirda Constructions , treated as still relevant to s 553 by the majority in Sons of Gwalia , that the warranty creditors in Re Motor Group would be contingent creditors of the company. There might be big problems in valuing their claims: unless there was a sound statistical basis for estimating the probability that a particular car would turn out to have a defect within the warranty period, and a sound statistical basis for quantifying the likely cost of remedying a defect, the claims might need to be valued at zero or merely a nominal amount. But that does not deny that, as a matter of analysis, they are contingent creditors. The position of the warranty creditors in Re Motor Group is distinguishable from that of Ms Sutton, who at the start of the administration had no legal rights against the company at all.

The Full Federal Court in Lam Soon at 44 made the obiter remark that a right to sue for damages for a particular future breach of a covenant to keep leased premises in repair was not even a contingent claim. To that extent, Lam Soon is, in my respectful opinion, contrary to the decisions in Engwirda and Sons of Gwalia that I am obliged to follow. There may be excellent reasons for concluding that the right to sue for damages for a particular future breach of a covenant to keep leased premises in repair could not be valued at anything other than zero or a nominal amount, but it still gives rise to a contingent claim.

Mr Williams submits that in Re Motor Group Hely J did not conclude that the creditors in question were "contingent creditors" . Rather, he submits that his Honour held that even if it were correct to characterise the claims of warranty creditors as "mere expectancies" , s 447A empowers the court to make an order to include such claims as arising prior to the relevant admissible claims date.

I doubt that that is the correct reading of Re Motor Group . The passage at [3] where Hely J said that the warranty creditors were contingent or prospective creditors of MGA as at 26 April 2005, seems to me to be a finding, not the recounting of a submission.

In support of his analysis of Re Motor Group , Mr Williams points out that the order that Hely J made not only included creditors with an existing legal right pursuant to a warranty, but also successors in title. That aspect of his Honour's order is something of a mystery - the justification for it does not appear in the reasons for judgment. Hely J's explanation of the meaning of "warranty creditors" at [3] refers to MGA as having "issued" motor vehicle warranties for a particular number of vehicles. That suggests that the warranty might be contractual. If it was solely as a contractual warranty that the "issued" warranty could be enforced, it would depend upon the terms of the contract as to whether the benefit of the warranty was assignable to a successor in title. It would be commercially most unusual for such a warranty to be assignable, and for the vendor of a car to assign the benefit of a warranty to a purchaser of the car. Alternatively, and I suspect this is the more likely explanation, at the time Re Motor Group was decided in 2005, Part V Division 2A Trade Practices Act (ss 74A-74L) imposed certain statutory liabilities on an importer of goods. That liability arose through s 74A(4) deeming a corporation that was not the manufacturer of goods, but who had imported them into Australia, to be the manufacturer, if the actual manufacturer did not have a place of business in Australia. Some of those statutory obligations could be enforced not only by a consumer, but also by a person who acquired the goods from or derived title to the goods through or under the consumer and who had suffered loss or damage through breach of the statutory standard: s 74B(1)(e) concerning unsuitable goods, s 74C(1)(d) concerning falsely described goods, s 74D(1)(d) concerning goods of unmerchantable quality, s 74(1)(e) concerning goods that did not comply with sample, s 74F(1)(e) concerning failure to provide facilities for repairs or parts, and s 74G(1)(d) concerning failure to comply with an express warranty. In particular, s 74G(1)(d) would enable a successor in title of a consumer to whom MGA had "issued" a warranty, to sue for breach of that warranty. If it was through s 74G(1)(d) that a successor in title could enforce the warranty, the class of "warranty creditors" would be determinate. It would be everyone who, on 26 April 2005, had the benefit of a warranty, either because it had originally been issued to them, or because on 26 April 2005 that class member was a successor in title of a person to whom a warranty had been issued. Each of those people would have had, on 26 April 2005, an existing legal right against MGA.

In my view, in Re Motor Group was correctly decided if Hely J is read as saying that:

If the intended meaning of the reasons for judgment in Re Motor Group was other than this, then in my respectful view it was mistaken. It is not possible to use s 447A to require someone who is not a creditor to be treated as though he or she is a creditor.

In my view, the order of the primary judge went beyond a proper exercise of the power conferred by s 447A. Whether this is seen as a limitation on the power in s 447A, or a fundamental requirement for the proper exercise of the power, the power should only be used to achieve one of the purposes for which it was conferred. When Ms Sutton is not a "creditor" , making the order could not fall within any of the objectives identified in s 435A. Nor is any wider objective that emerges from other parts of the Corporations Act able to be found to justify the order. I respectfully agree with the reasons that Jacobson J gave in Buckingham v Pan Laboratories at [83]-[86], that I have set out at [99] above. If it is a contravention of a deeply rooted principle of company law for a court to assist one creditor to improve its position vis-a-vis another creditor after it enters an insolvency regime, it is at least equally a contravention of such a principle for a court to assist a non-creditor to improve its position vis-a-vis actual creditors.

The appeal should be allowed, the order that was made under s 447A should be set aside, and the Respondent's application should be dismissed. Costs

Mr Williams submits that Ms Sutton should have her costs of the application for leave to cross-appeal and the cross-appeal, regardless of the result. He reminds us that the administrators treated Ms Sutton as at least a contingent creditor until the day on which her proof was rejected. He submits that the administrators' challenge to the s 447A order is based upon the correctness of the judge's decision that she was not a creditor. The application to the court did not take the form of an application for directions. Nevertheless, Mr Williams submits that remarks that Warren J made in Re Ansett Australia Ltd should be applied in the present case. At [23], Warren J said: "It seems that there is little authority in relation to the costs of an application in circumstances such as the present whether relating to an administrator or a liquidator. A review of such authorities as exist was conducted by Hansen J of this court in Farrow Finance Co Ltd (in liq) v ANZ Executives and Trustee Co Ltd (1997) 23 ACSR 521. As observed by Hansen J in Farrow , generally where the question is not complex and a position in opposition to the liquidator (in this case the administrator) is taken and the position of the liquidator or administrator is ultimately vindicated costs should follow the event: see Re Masureik & Allan Pty Ltd (1981) 6 ACLR 39; Farrow Finance v ANZ , above at 525-7. Hansen J observed in Farrow , on the other hand, generally where the issue is a complex one or one involving a relatively novel proposition in law the starting point is that the costs of all necessary parties are to be paid by the liquidator (in this case the administrator) and counted as costs in the liquidation: see Re GPI Leisure Corp Ltd (in liq) (1994) 53 FCR 365; 130 ALR 256; 15 ACSR 282, UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd (unreported, SC(Vic), Hansen J, No 2034/95, 19 July 1996, BC9603954); Farrow Finance v ANZ , above, at 527-8."

Those remarks were dicta, because her Honour made an order whereby costs followed the event. Ansett was a particularly clear case concerning costs. That was because a particular creditor had adopted an untenable position at a creditors meeting (by contending that the court had no power at all to vary or amend a DOCA) and thereby brought about a situation where the administrators had no choice but to have the court decide (as it did) that such a power existed.

Mr Williams submits that this is a case where the issue is a complex one, or involves a relatively novel proposition in law, and thus that the costs should be treated as costs of administration of the DOCA.

In my view, there is no occasion to make a costs order by reference to any principle other than that costs follow the event. In form, the litigation in the court below was an application by Ms Sutton appealing against the rejection of her proof of debt, or alternatively seeking an order under s 447A. Even though she ultimately did not press the appeal against rejection of her proof of debt, the question of whether she was a creditor was an integral part of considering whether it was appropriate to make an order under s 447A.

The form of the proceedings, as inter partes litigation, is not decisive of how the costs of that litigation should be dealt with. Courts exercising equity jurisdiction encounter a variety of situations where a fund is being administered subject to the control of the court, and a question arises about the proper manner in which that fund should be administered. Such a situation can arise concerning administration of deceased estates, concerning administration of trusts, concerning company liquidations, concerning administration of the estates of incapable people, and concerning DOCAs. In those situations, whether the costs of the court deciding the question that has arisen should be treated as costs of administration of the fund is significantly influenced by whether the proceedings are in substance adversarial ones. While where the costs should fall in litigation is always a matter of discretion, very commonly costs are paid from the fund for non-adversarial proceedings, and by the loser for adversarial proceedings: In re Buckton; Buckton v Buckton [1907] 2 Ch 406 at 414-5; In re Halston; Ewen v Halston [1912] 1 Ch 435; In re Cunningham; Sproule v Quested (1914) 31 WN (NSW) 44 at 45; O'Brien v Ritchie (1931) 48 WN (NSW) 85 at 86; Murdocca v Murdocca (No 2) [2002] NSWSC 505 esp at [71]-[78]; Re Jay-O-Bees Pty Ltd [2004] NSWSC 818; (2004) 50 ACSR 565 at [106]-[107].

The principles that Hansen J stated in Farrow Finance v ANZ (1997) 23 ACSR 521, and that Warren J adopted in Re Ansett Australia are, with respect, very shallowly rooted in principle and authority. While it is true that in Re GPI Leisure Corp Ltd (in liq) (1994) 53 FCR 365; 130 ALR 256; 15 ACSR 282 Whitlam J made an order, on a liquidator's application for directions at which interested parties also appeared, for the costs of all parties to be paid out of the assets of the company, his Honour gave no reason for taking that course, and indeed it is not even clear from the judgment whether there was any contest about the appropriate order for costs. Hansen J's judgment in UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd (unreported, SC(Vic), 19 July 1996) stated no general principle, and made an order for costs by reference to detailed consideration of the facts relating to the conduct of the particular litigation he was deciding. I do not find in those cases a reason to depart from the guidance arising from Re Buckton and to other cases I have mentioned concerning the way the costs of the present application should fall. Both the hearing in the court below and the appeal and cross-appeal were in substance adversarial litigation. The costs should follow the event. Orders

I propose the following orders: (1) Extend to 25 May 2011 the time in which to seek leave to cross-appeal. (2) Grant leave to appeal. (3) Grant leave to cross-appeal. (4) Dismiss the cross-appeal. (5) Allow the appeal. (6) Set aside the orders in the court below, and in lieu thereof order that the summons be dismissed with costs. (7) Respondent to pay costs of the Appellant of the application for leave to appeal, application for leave to cross-appeal, the appeal, and the cross-appeal. (8) Respondent to have a certificate under the Suitors Fund Act in relation to the costs in order (7) if qualified.

YOUNG JA : This is an appeal from a judgment of Palmer J in the Corporations List of the Equity Division.

The basal facts are that the respondent, Ms Mary Sutton had a claim pending under s 106 of the Industrial Relations Act 1996 at the time when the appellant company went under administration and later became operating under a Deed of Company Arrangement (DOCA). I am grateful to Campbell JA for setting out the necessary facts so that I am dispensed from repeating them.

Palmer J heard a claim by Ms Sutton who protested about her proof of debt covering her s 106 claim being rejected by the administrators of the DOCA.

Palmer J (see Sutton v BE Australia WD Pty Ltd [2010] NSWSC 772) ruled that those administrators had properly rejected the proof of debt, but made an order under s 447A of the Corporations Act 2001 (Cth) having the effect of requiring Ms Sutton to be treated as though she were a creditor and further ordered under that section that the administrators adjudicate on her proof of debt. The respondent company appeals against the orders made pursuant to these findings.

Belatedly, Ms Sutton sought leave to cross appeal.

The issues before this Court are: 1. Does the appellant require leave to appeal? 2. The fate of the cross appeal. 3. The fate of the appeal.

As to the first issue, I agree with Campbell JA that it has not been demonstrated that more than $100,000 is at issue and that leave is necessary. I also agree with his Honour for the reasons he gives that leave should be granted. I also agree that leave should be given for the cross appeal to be filed and argued.

As to the cross appeal, the authorities cited by Campbell JA, particularly Brash Holdings Ltd v Katile Pty Ltd [1996] 1 VR 24, clearly show that as Ms Sutton's claim had not progressed past the stage of her stating her allegations to the Industrial Court at the relevant dates, she was properly ruled not to be a creditor or have a claim against the DOCA.

I thus agree that the cross appeal must be dismissed.

However, I regret to say that I do not share Campbell JA's view as to the appeal.

The appeal turns on the ambit of the Court's power to make orders under s 447A(1) of the Corporations Act . That sub-section reads: "The Court may make such order as it thinks appropriate about how this part is to operate in relation to a particular company."

Palmer J briefly expounded s 447A in [19] and following of his reasons as follows (omitting most citations): 19 The Court's power to make an order under s 447A(1) Corporations Act is not unlimited. The Court's order must affect, usually by way of alteration, the operation of a particular provision, or of particular provisions, within Part 5.3A on the affairs of a particular company. 20 The section is an integral part of the legislative scheme contained in Pt 5.3A; it is not subordinate to other provisions of the Part and should not be read down so as to inhibit variation of any other provision within the Part, if the Court sees that that variation promotes the overall objects of the Part. 21 Section 447A has been used in many different circumstances - most pertinently in Re Motor Group Australia Pty Ltd a decision of Hely J.

His Honour then considered Re Motor Group Australia Pty Ltd (2005) 54 ACSR 389 in depth. It is necessary to set out part of the decision of Hely J. His Honour said at [14]: "Even if it were correct to characterise the claims of warranty creditors as 'mere expectancies", s 447A empowers the court to make an order under Pt 5.3A is to operate in relation to MGA so as to include the warranty creditors as creditors whose claims arose no later than 26 April 2005."

Palmer J said at [25] that in that case, Hely J was prepared to vary the meaning of "creditor" in s 444D(1) so that, whether or not the "warranty creditors" had a right to prove before the variation, they would unarguably have that right as a result of the variation. It seems to me quite clear that that is exactly what Hely J did say.

Although the judgment was given at first instance, it is a judgment of one of the most experienced Australian company lawyers of the 20 th century and is entitled to great respect.

The primary judge continued: 26 In my view, Re Motor Group Australia provides authoritative support for the proposition that the definition of "creditor" for the purposes of the DOCA in this case can be extended under s 447A(1) to incorporate Ms Sutton's claim even though, at this stage, that claim might more properly be described as a "mere expectancy". In this regard, it is of significance that at the time of commencement of the administration of BEA, at least two of the factors comprising Ms Sutton's "claim" were in existence: there had been a contract or arrangement for the performance of work and it had been terminated by BEA without notice or payment in lieu of notice. It is true that no wrong had been committed at that stage by BEA because there was no contractual provision then preventing it from doing what it did..."

The result reached by Hely J and Palmer J accords with the general principles of administration by the court of insolvent companies that the administration is to be done fairly and equitably even to the extent of the court directing liquidators as its officers to act honourably and equitably even though the legalities might point in another direction. The most extreme example of this principle is, of course, Ex Parte James Re James (1874) 9 Ch App 609.

I have carefully read what Campbell JA a has written on the fate of the appeal. With respect I do not find any assistance in considering the ambit of powers of administrative authorities given wide powers. I also consider that it is better to read Hely J in the Motor Group case as meaning to say what he did in fact say in [14] rather than reconstruct that decision.

I do not, with respect, agree with Campbell JA's statement in [206]: "It is not possible to use s 447A to require someone who is not a creditor to be treated as though he or she is a creditor". I agree with the primary judge on this aspect of the case.

It follows that I would dismiss the appeal with costs.