Statutory Misinterpretation: Rash Holding in Brash Holdings

Date01 June 2017
AuthorPaulina Fishman
Publication Date01 June 2017
Paulina Fishman*
The modern approach to statutory construction guides the judiciary, the legal
profession, litigants, and ac ademics in interpreting the myriad legislative provisio ns in
Australian law. Yet what if critical sections have been construed in ways that are
irreconcilable with the basic rules of modern statutory interpretation? One of the most
important commercial statutes in the country is the Corporations Act 2001 (Cth). This
article exposes one instance of misinterpretation in respect of that statute, contained in
a decision of a unanimous Full Court of the Supreme Court of Victoria, and makes
proposals for resolving such quandaries.
When undertaking the task of statutory construction, courts must give primacy to the
legislative text. Three reasons for why this is important were identified by the Victorian
Court of Appeal in Treasurer of Victoria v Tabcorp Holdings Ltd.
First, it is demanded by
the separation of powers doctrine: it is for the Parliament to legislate and for the courts
to interpret.
If a court departs from the statutory text in construing a particular
provision, it faces the twin dangers of “constructing its own idea of a desirable
policy” or making “some a priori assumption about its purpose”.’
Secondly, ascribing
the natural meaning to the language chosen by Parliament maxim ises the
comprehensibility and accessibility of statute law.
This is particularly desirable given
that ignorance of the law is no excuse.
Thirdly, a natural reading promotes
accountabilityfor [t]o the extent that a statutory provision has to be read subject to a
* Currently reading for the Master of Studies in Legal Research at the University of Oxford.
The author acknowledges Associate Professor Kristin van Zwieten, University of Oxford, for
her ongoing guidance and advice in supervising the dissertation which is the source of this
article. The author is also grateful to two anonymous reviewers for their comments in respect
of an earlier draft of this article.
[2014] VSCA 143 (1 July 2014) (Tabcorp).
Ibid [101].
Ibid (citations omitted).
Ibid [102].
Latin maxim ignorantia juris non excusat. See also Watson v Lee (1979) 144 CLR 374, 408 (Mason
200 Federal Law Review Volume 45
counterintuitive judicial gloss, the a ccountability of Parliament to the electorate [is]
Nonetheless, the ordinary meaning may give way to a different
construction that is informed by considerations of context and purpose.
It therefore
appears that what these three reasons support most forcefully is the broader proposition
that courts undertaking th e task of construing legislation must be confined by the
binding rules of statutory interpretation.
Yet are all time-honoured and undisputed interpretations of statutory provisions
necessarily consistent with the cannons of modern s tatutory construction in Australia?
It is the contention of the present article that they are not. This will be demonstrated by
a detailed analysis of s 444D(1) of the Corporations Act 2001 (Cth) (CA), within a part of
the CA which provides for the administration of a companys affairs with a view to
executing a deed of company arrangement ( DOCA).
In relation to an instrument that
has the power to extinguish claims against the company, this subsection answers the
crucial question: which creditors may find themselves bound by a DOCA? The leading
authority on s 444D(1) (and on one other provision in Part 5.3 A)
is Brash Holdings Ltd
v Katile Pty Ltd.
That decision established that DOCAs may bind contingent and future
Without engaging with the normative question of whether such creditors
ought to be bound, this article will critically evaluate the interpretation of the Full Court
of the Supreme Court of Victoria by reference to modern Australian principles of
statutory construction. First, the subsection will be construed without any regard to
Brash Holdings. Secondly, the subsections interpretation at first instance and on appeal
shall be critically evaluated. Third ly, subsequent case law and commentary regarding
Brash Holdings and s 444D(1 ) will be examined. Lastly there are concluding remarks
about how this instance of misinterpretationand others like itmay be redre ssed.
A Legislation and Methodology
Section 444D(1) of the CA importantly states:
A deed of company arrangement binds all creditors of the company, so far as concerns
claims arising on or before the day specified in the deed under paragraph 444A(4)(i).
International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319, 349
[42] (French CJ), quoted in Tabcorp [2014] VSCA 143 (1 July 2014) [102].
See Michael Kirby, Statutory Interpretation: The Meaning of Meaning (2011) 35 Melbourne
University Law Review 113, 116; Military Rehabilitation and Compensation Commission v May
(2016) 257 CLR 468, 473 [10] (French CJ, Kiefel, Nettle and Gordon JJ); North Australian
Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569, 581 [11] (French CJ, Kiefel
and Bell JJ).
Baker v Campbell (1983) 153 CLR 52, 104 (Brennan J).
Corporations Act 2001 (Cth) Part 5.3A.
It is also authoritative on s 447A, which gives courts the power to order how Part 5.3A is to
operate in relation to a particular company: see, eg, Re Keneally as administrator of Australian
Blue Mountain International Cultural & Tourist Group Pty Ltd (admin apptd) (2015) 107 ACSR
172, 210 [109] (Black J); Re James as Administrator of ZYL Ltd [2015] WASC 57 (15 January 2015)
[9] (Master Sanderson).
[1 996] 1 VR 24 (Brash Holdings).
Ibid 34.

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