Case: Re Compass Airlines Pty Ltd (1992) 35 FCR 446
Outcome: cited
The legislative antecedents of s 597 were discussed by Lockhart J (Beaumont and Gummow JJ concurring) in Re Compass Airlines Pty Ltd (1992) 35 FCR 446 at 452-453. His Honour referred to the "long history" of the section in companies legislation and noted that neither s 597 nor its predecessor, s 541 of the Companies Code, had been confined to companies in the course of being wound up. He referred also to the "close correspondence" between the "inquisitorial provisions" under the companies legislation and the equivalent provisions with respect to individuals under bankruptcy legislation. He said (at 453): 'Like its predecessors, s 597 plays an important role in the administration of companies in liquidation, other administrations in insolvency and "external administrations" generally:...' He contrasted such provisions with those which relate to the investigation of the affairs of companies (whether or not in the course of being wound up) by government regulatory authorities and the making of reports by those authorities. The Compass case was concerned with the effect of s 597 upon legal professional privilege. 89 In my respectful opinion, the weight of authority, to the extent that it has considered the matter tends to support the proposition that ss 596A and 596B and their predecessors have been seen as provisions applicable to companies in one or other form of administration and not as applicable to companies at large. So much appears from the judgment of the Full Court in Re Compass Airlines and the Court of Appeal of New South Wales in HongKong Bank. New Zealand Steel also appears to be consistent with the views expressed by Gleeson J that the statutory context of s 597 was that of "external administration". It follows, that I would not, with respect, agree with the obiter observations at [84] of the Wainter judgment which would see the application of ss 596A and 596B extended to solvent corporations not under any form of external administration. 103 Neither McHugh J nor Gummow J who held the cross vesting of jurisdiction to be invalid made any comment on the characterisation of the examination process. Kirby J who held the cross vesting provisions to be valid, said that the examination function was "... a necessary and usual step in the process of the judicial winding up of a company". He acknowledged that it was a more difficult question whether the extension of the power to other "eligible applicants" such as the Australian Securities Commission and the inclusion of other inquisitorial powers contaminated the legislative provisions in such a way that they could not be severed to uphold permissible provisions and exercise the impermissible. As to that he agreed with the reasons of Brennan CJ and Toohey J (500). 104 Spinks v Prentice (1998) 87 FCR 89 was one of a group of appeals decided in conjunction with Re Wakim . It was an appeal from the Full Court of the Federal Court with respect to an order for examination of former officers of a company in liquidation. The company was taken to be incorporated in the Australian Capital Territory. The Full Court held that the Corporations Act 1989 (Cth), which applied the Corporations Law to the ACT, validly conferred jurisdiction on the Federal Court to entertain the application for an examination summons. The examination orders were also challenged before the Full Court on the basis that they did not involve an exercise of judicial power. As to that the Court said (at 96): 'It is true that, although there is no challenge to the winding up order made here, s 596A would permit an examination where there has been no winding up. But given the long history of courts exercising such powers, we can see nothing foreign to the exercise of judicial power in this aspect of s 596A.' They referred to the Compass Airlines and Grosvenor Hall cases. It is not clear, given the absence of any long history of judicial examination of corporations at large unrelated to winding up or other judicial procedures, whether their Honours were saying that applications under s 596A when there was no winding up order or pending court proceedings were an exercise of judicial power. To the extent that they were so saying, their observations were dicta.