Case: Nokes v Doncaster Amalgamated Collieries Limited [1940] AC 1014
Outcome: discussed
In Nokes v Doncaster Amalgamated Collieries Limited [1940] AC 1014 (' Nokes ') it was held that the provision applied only to rights and liabilities that were capable of being assigned under the general law. ASIC raised for my consideration the question whether the 'no assignment without consent' provision meant that Stork ICM's right of insurance indemnity could not be transferred under s 413. I discuss this question later, but since Nokes applies to 'liabilities' as well as to 'property', it is convenient to discuss the case here. 83 In Nokes , approval of a scheme of amalgamation was granted under s 153 of the Companies Act 1929 (UK) and an order was made under s 154 for the transfer of all the property and liabilities of the companies that were being amalgamated to a new company. The issue was whether a contract of service between an employee and a 'transferor' company became, by the operation of the order, a contract of service between the employee and the 'transferee' company. By majority, the House of Lords held that it did not. Section 154(1) of that Act was, relevantly, similar to s 413(1) of the Act. However, the definitions of 'property' and 'liabilities' in subs (4) of the English s 154 were different from the definitions of those expressions now found in subs (4) of the Australian s 413. Subsection (4) of the English s 154 provided: 'In this section the expression "property" includes property, rights and powers of every description, and the expression "liabilities" includes duties.' Subsection (4) of the Australian s 413 was set out at [66] above. 84 The facts in Nokes were that after the making of the order, Mr Nokes absented himself from work in circumstances that would have made him liable under s 4 of the Employers and Workmen Act 1875 (UK) if he could be regarded as employed under a contract of service with the transferee company. In holding that he could not be, the majority of the House of Lords held that s 154(1) applied only to rights and liabilities that were capable of being assigned under the general law, and that the mutual contractual obligations of employer and employee were not. A contract of service can not be bought or sold or given away. Under the general law, a new contract of service would have had to be entered into with the new employer, and s 154 did not overcome that position. Lord Romer dissented. 85 In Re "L" Hotel Co Ltd &amp; Langham Hotel Co Ltd [1946] 1 All ER 319, Uthwatt J said (at 320) that he saw the principle of Nokes as limiting the statutory provision to 'only such property as could be transferred by an act inter partes '. 86 While s 134(4) of the Companies Act 1936 (NSW) and s 183(5) of the Companies Act 1961 (NSW) both defined 'property' and 'liabilities' in terms in substance indistinguishable from those of the English s 154(4), new expanded definitions of those terms were introduced into the Australian legislation in 1981 as part of s 317 of the Companies Code , and they have remained unchanged since (see [66] above). They make it clear that 'duties that are of a personal character or are incapable under the general law of being performed vicariously' are included in the notion of 'liabilities', and that 'rights and powers that are of a personal character and are incapable under the general law of being assigned or performed vicariously' are included in the notion of 'property'. The researches of counsel have not discovered the reason for the expansion of the definitions, but it may have been to overcome the holding in Nokes . 87 The Scheme provides in cl 4 for Stork ICM's property and liabilities to be transferred to, and to be vested in or become the property and liabilities of, Stork FSA, without the need for any further act or deed. Clause 1.1 defines 'liabilities' to mean: 'all liabilities however arising and whether present, unascertained, immediate, future or contingent, including any "liabilities" (within the meaning in subsection 413(4) of the Corporations Act ) and any Future Proceedings.' The expression 'Future Proceedings' is defined in cl 1.1 of the Scheme to mean: 'legal proceedings which have not commenced, but for which the cause of action has accrued or the events that lead to a cause of action accruing have occurred.' However, it was agreed that in any order to be made, this definition should be varied in the interests of the potential claimants so as to read: 'legal proceedings which have not commenced, but for which the cause of action has accrued or the injury or other event that may lead to a cause of action accruing (including, without limitation, exposure to asbestos dust) has occurred, or will occur in the future.' 88 Stork ICM's liability to potential claimants is not a 'duty' within s 413(4) 's inclusory definition of 'liabilities'. However, in my opinion, it falls within the word 'liabilities' in s 413(4) according to the ordinary meaning of the term in any event.