R v Keydane Pty Ltd (in liq)[2023] QDC 39

DISTRICT COURT OF QUEENSLAND

Background and issue

1. [1]
   In this proceeding, a question has arisen about whether leave to proceed is required pursuant to s 500(2) of the Corporations Act 2001 (Cth) (‘CA’) to commence or continue a criminal prosecution against a defendant company in voluntary liquidation pursuant to a creditors’ voluntary winding up.
2. [2]
   I have decided that the answer is no. On 9 March 2023 I made orders. These are my reasons.
3. [3]
   The defendant, Keydane Pty Ltd (trading name Jungle Surfing Canopy Tours), is charged on indictment with an offence of reckless conduct – category 1 pursuant to s 31 of the Work Health and Safety Act 2011 (Qld) as follows:

Between the ninth day of June 2018 and the twenty-third day of October 2019, at Cape Tribulation in the said State, KEYDANE PTY LTD held a duty pursuant to section 19(2) of the Work Health and Safety Act 2011 and, without reasonable excuse, engaged in conduct that exposed an individual to whom that duty was owed to a risk of death or serious injury or illness, and was reckless as to the risk to an individual of death or serious injury or illness.

4. [4]
   The charge relates to an incident in which it is alleged that a person died after falling from a zipline canopy tour in the Daintree.

Procedural history

5. [5]
   On 16 December 2022 the indictment was presented and the defendant appeared by a representative of a law firm. On 21 December 2022 the law firm gave notice that it was withdrawing as lawyer on the record for the defendant. On 30 January 2023 the matter was mentioned, the defendant did not appear, and the matter was listed for mention with the defendant’s appearance required on 7 March 2023.
6. [6]
   On 7 March 2023 the defendant again did not appear.  The prosecutor sought a trial date and informed the Court that the defendant was in liquidation. He submitted that leave to proceed was unnecessary. I invited further submissions on that issue, by reference to authority, and evidence with respect to the defendant’s status. The matter was stood down to later that day to enable that to occur. When it resumed, the prosecutor relied upon an affidavit exhibiting documents relating to the defendant’s status, referred me to a number of single judge decisions from other jurisdictions, and made oral submissions. Later that day, by leave, he provided by email to my associate some further decisions.

Relevant facts

7. [7]
   On 30 March 2020 at a general meeting of the members of the defendant, it was resolved that the defendant company be wound up and that John Goggin be appointed liquidator. The notice of appointment as liquidator was expressed to be pursuant to s 491(2)(b) of the CA.
8. [8]
   Since then, the company has been administered under a creditors’ voluntary winding up. It has not been deregistered.
9. [9]
   I was not informed of the history of the matter pre-indictment. It appears that in the Magistrates Court the company had been legally represented by a law firm appointed by the company’s insurer. That arrangement has now been terminated by the insurer. On the limited information available to me, I do not know whether the question of leave to proceed was ever raised in the Magistrates Court.
10. [10]
    On 7 February 2023 the liquidator informed the prosecutor that he did not intend to defend the charge on the company’s behalf.
11. [11]
    The liquidator also noted that pursuant to s 533B(1) of the CA, penalties or fines imposed by a court in respect of an offence against a law are not admissible to proof against an insolvent company. This means that if the prosecution proceeds and the defendant company is convicted and fined, no fine would be recoverable against the insolvent company.
12. [12]
    I interpolate that questions of the utility or otherwise of the prosecution are matters for the prosecuting authority, not the Court. The prosecutor submitted that, notwithstanding no penalty may be paid, pursuing such a prosecution and the recording of a conviction (if the charge were proved), would be in the public interest and would serve the purposes of general deterrence and denunciation.
13. [13]
    There is no related proceeding on indictment in this Court charging an officer (including a director) of the defendant company.

Statutory framework

14. [14]
    In ch 5, External Administration, the CA distinguishes between winding up in insolvency, by the Court, and voluntarily.
15. [15]
    Part 5.4B relates to winding up in insolvency or by the Court (which does not apply here). It contains s 471B which provides:

3. 471B
   Stay of proceedings and suspension of enforcement process

3. While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

3. (a)
   a proceeding in a court against the company or in relation to property of the company; or

3. (b)
   enforcement process in relation to such property;

3. except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

16. [16]
    Part 5.5 relates to voluntary winding up (which does apply here).  The mechanism for voluntary winding up is prescribed in s 491:

3. 491
   Circumstances in which company may be wound up voluntarily

3. (1)
   Subject to section 490, a company may be wound up voluntarily if the company so resolves by special resolution.

3. …

17. [17]
    The effect of voluntary winding up is described in s 493:

3. 493
   Effect of voluntary winding up

3. The company must, from the passing of the resolution, cease to carry on its business except so far as is in the opinion of the liquidator required for the beneficial disposal or winding up of that business, but the corporate state and corporate powers of the company, notwithstanding anything to the contrary in its constitution, continue until it is deregistered.

18. [18]
    On the information before the Court, the defendant has not been deregistered.
19. [19]
    Part 5.5 div 3 contains provisions concerning a creditors’ voluntary winding up including s 500.^[1] The terms of s 500 are similar, but not identical, to s 471B. Section 500 provides:

3. 500
   Execution and civil proceedings

3. (1)
   Any attachment, sequestration, distress or execution put in force against the property of the company after the passing of the resolution for voluntary winding up is void.

3. (2)
   After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

3. (3)
   The Court may require any contributory, trustee, receiver, banker, agent, officer or employee of the company to pay, deliver, convey, surrender or transfer forthwith or within such time as the Court directs to the liquidator any money, property of the company or books in his, her or its hands to which the company is prima facie entitled.

3. (emphasis added)

20. [20]
    Section 500 uses the term ‘Court’, rather than lower case ‘court’. By virtue of s 58AA of the CA, ‘Court’ means any of the Federal Court, the Supreme Court of a State or Territory, the Family Court of Australia and certain other courts concerned with family law matters.
21. [21]
    For the purposes of this decision, it is unnecessary to consider in detail the proper approach to the exercise of the discretion conferred on the Court to grant leave to proceed.^[2] In short, this and other cognate sections confer on the Court a supervisory jurisdiction. In deciding such an application the Court is concerned to protect companies in liquidation from being harassed by unnecessary litigation. The Court is also concerned to assist in the orderly administration of companies in liquidation by requiring claimants to adopt the ordinary procedure of lodging a proof of debt for their claim unless a claimant can demonstrate some good reason why departure from that procedure is justified in the claim advanced.

Consideration

22. [22]
    Read alone, on its face s 500(2) appears to apply only where proceedings of a civil nature are pending against a company. It refers to ‘no action or other civil proceeding’. This phrase by itself connotes that the word ‘action’ is confined to a proceeding which is a type of ‘civil proceeding’.
23. [23]
    The wording of s 500(2) can be contrasted with that in s 471B; ‘a proceeding in a court’, which does not contain any restriction on the nature of the proceeding against the company.
24. [24]
    There are conflicting authorities on whether leave is required under s 471B for criminal proceedings.  In Worksafe Western Australia Commissioner v Australian Countertop Pty Ltd (in liq)^[3] it was held that s 471B applies to both civil and criminal proceedings, and leave was required to commence or continue with criminal prosecutions.^[4] In RA Ringwood Pty Ltd v Lower^[5] ('Ringwood') the Full Court of the Supreme Court of South Australia considered an earlier provision, s 263(2) of the Companies Act 1962 (SA), which was not identical to either s 471B or s 500. It used the phrase ‘action or proceedings’. The majority view was that that phrase in s 263(2) was restricted to a civil proceeding and did not apply to any criminal prosecutions. Ringwood was applied by the Queensland Court of Appeal in Tate v Aarjets Pty Ltd ATF The Jurgholme Trust & Anor^[6] (‘Tate’) where McMurdo P said (Muir and Fraser JJA agreeing) that leave was not required under s 471B to commence or continue criminal proceedings. In Tate there was no discussion of the change in language between s 471B and its predecessor, and no reasons for adopting Ringwood were given.  There is a useful recent summary of the various decisions on s 471B in Burwood Council v Pan Pac Investments Pty Ltd (No 2).^[7]
25. [25]
    Section 471B (which applies to compulsory liquidation) performs quite differently to s 500(2) (which applies to voluntary liquidation) so any conflict in the authorities with respect to s 471B is not determinative of the construction of s 500(2), which is the relevant provision here.
26. [26]
    There do not appear to be any Queensland authorities directly considering the application of s 500(2) to criminal proceedings.
27. [27]
    The prosecutor relied upon single judge decisions in other jurisdictions which have held that a criminal prosecution is not an ‘action or other civil proceeding’ for the purposes of s 500(2), and that leave to proceed is not required to commence or continue a criminal prosecution against a company in voluntary liquidation.
28. [28]
    In Workcover Authority of New South Wales (Inspector Maltby) v Josef & Sons Contracting Pty Ltd (in liq)^[8] (‘Inspector Maltby’) Schmidt J concluded that the use of the general phrase ‘proceeding in a court’ in s 471B requires leave to begin, or proceed with, any proceeding in a court, whether civil or criminal, whereas the use of the phrase ‘no action or other civil proceeding’ in s 500(2) only requires leave to proceed with, or commence, civil proceedings and actions. Her Honour held that leave was not required under s 500(2) to bring criminal proceedings against a company in voluntary liquidation. Her Honour’s judgment contains a detailed analysis of the Act and relevant cases, leading to the above conclusions.^[9]
29. [29]
    Her Honour’s decision and reasoning in Inspector Maltby has been adopted in Orr v LakeCoal Pty Ltd,^[10] Burwood Council v Pan Pac Investments Pty Ltd (No 2),^[11] and most recently in Cowie v GD Pork Pty Ltd (in liq).^[12]
30. [30]
    Finally, I note that in Re Linc Energy Ltd (in liq)^[13] the question of whether the issue of an environmental protection order was a civil proceeding was raised. Jackson J found it unnecessary to decide that issue but observed that any prosecution for an offence arising from contravention of an environmental protection order would not be a civil proceeding for the purposes of s 500.^[14]
31. [31]
    I am persuaded by, and respectfully agree with, the reasoning and conclusions of Schmidt J in Inspector Maltby with respect to s 500(2). As a result, I find that leave is not required to commence or continue the criminal prosecution in this case.

Conclusion and orders

32. [32]
    Leave to proceed is not required.
33. [33]
    I will hear from the prosecution as to the orders sought.
34. [34]
    The matter is listed for review on 24 April 2023 at 9am.