Federal Court to give permission to litigate company in liquidation


Federal Court to give permission to litigate company in liquidation

See: http://www.airc.gov.au/alldocuments/PR928959.htmSmith and Trollope Silverwood & Beck P/L (in liq) – AIRC (Grainger C) – PR928959 - 20 March 2003.


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Commissioner Grainger of the AIRC has followed the ruling of Justice Merkel in the Federal Court and ruled that employees seeking to pursue unfair dismissal actions against a company in liquidation, must first obtain the permission of the Federal Court to litigate.

The Corporations Act 2001 referred to the Federal Court’s permission being required in relation to a matter brought before ‘a court’. Commissioner Grainger considered the AIRC to be a tribunal - distinguished from a court. 

The distinction – between a court and a tribunal – can have practical consequences. Other practical issues include the exercise of conciliation by a tribunal, the rules of evidence being less stringent in a tribunal, the right to interpretation of legal instruments residing with a court and the differing lines of appeal depending on whether a court or tribunal has decided a matter.


Section 471B of the Corporations Act 2001 states a person cannot begin a proceeding 'in a court' against companies being wound up without Federal Court leave.

On 24 April, 2002 Justice Merkel issued a decision in 'ALHMWU v Home Care Transport Pty Ltd'  which found that for the purposes of s471B of the Corporations Act the AIRC is a court within the definition of s58AA of the Corporations Act and that therefore leave was required before a person could begin or continue with proceedings in this Commission against a company to which s471B of the Corporations Act applied.

Ruling by Commissioner Grainger

The Commissioner commented:

‘With very great respect to Justice Merkel, I do have reservations as to his finding that this Commission is a court for the purposes of s58AA and s471B of the Corporations Act and that leave of the Court is required for proceedings in this Commission to begin or to proceed when a liquidator of a company is appointed.’

The Commissioner considered that the Corporations Act had its own policy imperatives which ought not to be seen as superior to the policy imperatives which underpin the Federal Workplace Relations Act 1996.

The Commissioner continued:

‘However, this Commission does not operate in a vacuum. Whilst its role is to administer and enforce the provisions of the Workplace Relations Act it must do so in compliance with all other laws of the Commonwealth. 

'Whilst I am concerned that Justice Merkel's finding sits oddly with the finding of the Privy Council in the 'Boilermakers Case', I believe as a single Commissioner of this Commission I am bound to defer to Justice Merkel's decision.'

Accordingly, the Commissioner found that the present application could not proceed without the leave of the Federal Court pursuant to s471B of the Corporations Act.

See: Smith and Trollope Silverwood & Beck P/L (in liq) – AIRC (Grainger C) – PR928959 - 20 March 2003.


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