A company under a 2013 deed of company arrangement made payments to the Deputy Commissioner of Taxation. The deed was terminated in 2017 and the company went into liquidation. The liquidators successfully recovered the payments from the DCT as unfair preferences. Justice Middleton of the Federal Court of Australia applied statutory interpretation principles in coming to his decision: Yeo, in the matter of Ready Kit Cabinets Pty Ltd (in liq) v Deputy Commissioner of Taxation  FCA 632.
The DCT had argued that the payments were made ‘by, or under the authority’ of the Deed Administrators within the meaning of sub-s 588FE(2B)(d) and were therefor not preferences and therefore are not voidable.
The Judge considered the terms of the DOCA at length but found that it was clear that that the payments were not made by the director ‘under the authority’ of the Deed Administrators.
On examining the law and various law reform and other ‘extrinsic material’ referred to by the parties, including from CAMAC, the Judge said:
‘The relevant task of the Court is to construe the words employed by Parliament in the context in which they have been used. As we are reminded, extrinsic material is secondary: see eg Commissioner of Taxation v Eichmann  FCA 2155 at  (footnotes omitted):
It is necessary to keep in mind that when it is said the legislative “intention” is to be ascertained, “what is involved is the ‘intention manifested’ by the legislation”. Statements as to the legislative intention made in explanatory memoranda or by Ministers, however clear or emphatic, cannot overcome the need to carefully consider the words of the statute to ascertain its meaning”: [other cases cited]
In saying that the meaning of sub-s 588FE(2B)(d) was clear in its application to these proceedings, Justice Middleton continued.
‘There are always dangers in interpreting legislation by reference to reports that may have given rise to the implementation of such legislation, but which may not be wholly incorporated into such legislation. Resort to the CAMAC June 1998 Report and the CAMAC November 2008 Report … fall within this category, and the Explanatory Memorandum takes the matter no further’.
Section 15AB of the Acts Interpretation Act 1901 (Cth)
The relevant law is found in s 15AB of the Acts Interpretation Act.
That section allows ‘material not forming part of the Act’ to be used if ‘it is capable of assisting in the ascertainment of the meaning of the provision’ in question according to stated criteria:
‘(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable’.
The ‘material’ can include relevant reports of a Royal Commission, Law Reform Commission, committee of inquiry, or parliamentary committee, the explanatory memorandum relating to the Bill and other listed sources.
But overall regard must be had to the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision, taking into account its context in the Act and the purpose or object underlying the Act; and the need to avoid prolonging legal or other proceedings without compensating advantage: s 15AB(3).
New Zealand decision
Australian courts do not often refer to many useful New Zealand court decisions. But in this case Justice Middleton referred to the NZ High Court decision of Cargill International SA v Solid Energy New Zealand Limited (subject to deed of company arrangement)  NZHC 1817. New Zealand law under Part 15A of its Companies Act 1993 is based upon Australia’s Part 5.3A.
Cargill has already been explained on this website. See New Zealand Voluntary Administration Law – an independence challenge to the Administrators.