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Friday, 15 November 2002
Page: 6535


Senator MURRAY (2:46 PM) —I move:

(2) Schedule 1, page 49 (after line 13), at the end of the Schedule, add:

Part 3—Amendments relating to bankrupt corporations

Corporations Act 2001

238 At the end of Division 6 of Part 5.7B

Insert:

588YA Liability of a company for the debts or labilities of a related company

(1) When a company is being wound up in insolvency, the liquidator, a creditor of the company, a nominee of a creditor of the company or the ASIC may apply to the Court for an order that a company that is or has been a related body corporate pay to the liquidator the whole or part of the amount of a debt of the insolvent company. The Court may make such an order if it is satisfied that it is just to do so.

(2) In deciding whether it is just to make an order under subsection (1), the matters to which the Court shall have regard include:

(a) whether the company provided services for or on behalf of the related body corporate; and

(b) whether the company occupied premises which are owned by the related body corporate; and

(c) the extent to which the related body corporate took part in the management of the company; and

(d) the conduct of the related body corporate towards the creditors of the company generally and to the creditor to which the debt or liability relates; and

(e) the extent to which the circumstances that gave rise to the winding up of the company are attributable to the actions of the related body corporate or an officer or officers of the related body corporate; and

(f) any other relevant matters as the Court considers just and appropriate.

(3) An order under this section may be subject to conditions.

(4) An order shall not be made under this section if the only ground for making the order is that creditors of the company have relied on the fact that another company is or has been a related body corporate of the company.

I will speak briefly, because this issue has been raised a number of times before and there is a considerable amount on the record about it. It is a fact that, if the Labor opposition supports this amendment, it will be the third or fourth time that the Senate has said to the House of Representatives, `This is an issue you must address.' I must indicate— and this is my paraphrase; it is not the exact response we have had—that, in previous debates, eventually the government has said, `We understand the intent and motivation behind this and we will look at this with a view to doing something about it.' The reason this is in here is that the behaviour of related corporations impacts upon individuals. If related corporations incur debts or liabilities that they cannot meet, at the bottom end of the creditors list are some very sad stories of a plumber or a carpenter or another tradesperson who is not paid and who themselves will then get into financial difficulty, and sometimes bankruptcy, as a result.

The Australian Democrats have long held that this amendment, which is based on the Harmer Law Reform Commission recommendation of 1988, should be in law. Every instance that we have—and we keep getting them, year after year—of corporations being able to walk away from a situation of debts or liabilities of a related company is just unacceptable. It has happened in the airline industry, it has happened very frequently— far too frequently, in my view—in the mining industry and it has happened in a number of other industries. So the amendment repeats the substance of what has been previously put. Unless the minister or the chamber requires me to motivate it far more strongly than I do, I am going to assume that those on both sides are familiar with the arguments and the construct that goes behind this proposal.