SV pair’s shot at security license law rejected

Shumit Banerjee, one half of SV Partners pair

SV Partners’ Shumit Banerjee.

When SV Partners’ pair Shumit Banerjee and Jason Porter were appointed joint and several voluntary administrators (VAs) of United Security Enterprises Pty Ltd (USE’s) it dawned on them very quickly that they had a problem.

Under the Security Industry Act and cl 13(3) of the Security Industry Regulation 2016 (NSW) the Commissioner of Police was obliged to revoke the company’s master security license due to the event of insolvency.

This prevented Bannerjee and Porter from being able to operate the business while they explored options, including any proposals for a deed of company arrangement (DoCA).

Off to the NSW Supreme Court they went, seeking a declaration that the “operation of the Security Industry Act and cl 13(3) of the Regulation was inconsistent with Corporations Act 2001 (Cth), Pt 5.3A (“Administration of a company’s affairs with a view to executing a deed of company arrangement”).”

A judge in the equity sniffed the wind and quickly reformulated the applicant’s question so as to get some constitutional input from the NSW Supreme Court of Appeal.

The decision was handed down recently in Banerjee v Commissioner of Police [2018] NSWCA 283 (22 November 2018).

The reformulated question asked: “Whether clause 13(3) of the Security Industry Regulation 2016 (NSW), in its operation pursuant to sections 15(4) and 26(1A) of the Security Industry Act 1997 (NSW), is inconsistent with the provisions of Part 5.3A of the Corporations Act 2001 (Cth) and therefore invalid or inoperative to the extent of any inconsistency by reason of s 109 of the Commonwealth Constitution.”

Things didn’t quite go the administrators’ way. The appeals court found no inconsistency and remitted the matter back to the equity court for determination, with Banerjee and Porter ordered to bear the police commissioner’s costs.

Banerjee toldINO the directors were still proposing to put up a DoCa to be put to creditors by the date of the second meeting on December 7.

Given the company cannot operate a security business one wonders where the directors see the value, unless it’s in keeping the company out of liquidation.

Further reading:

Employing Referrer Sees SV Pair To Reissue DIRRI

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

1 Comment on "SV pair’s shot at security license law rejected"

  1. The administrators were justified in asking the question. Otherwise, what is the point of it all, might as well advise clients to give up.

Leave a comment

Your email address will not be published.


*