Re Nec Information Systems Australia Pty Limited v Frank Iveson Lockhart; Jan Mark Pozdena; Amicron Computer Services Pty Limited (Receiver and Manager Appointed)(In Provisional Liquidation); Gregory Paul Kelly; Barry Raymond Cook and Frank Otto Fischl [1992] FCA 279 (12 June 1992)

FEDERAL COURT OF AUSTRALIA

Re: NEC INFORMATION SYSTEMS AUSTRALIA PTY LIMITED
And: FRANK IVESON LOCKHART; JAN MARK POZDENA; AMICRON COMPUTER SERVICES PTY
LIMITED (RECEIVER AND MANAGER APPOINTED)(IN PROVISIONAL LIQUIDATION); GREGORY
PAUL KELLY; BARRY RAYMOND COOK and FRANK OTTO FISCHL
No. N G572 of 1990
FED No. 414
Federal Jurisdiction
(1992) 108 ALR 561
(1992) 36 FCR 258

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Black C.J.(1), Lockhart(1) and Gummow(1) JJ.

CATCHWORDS

Federal Jurisdiction - cross vesting scheme - appeals - meaning of "special federal matter" - jurisdiction of State or Territory Supreme Courts to hear proceedings which involve a "special federal matter" - whether "a proceeding by way of an appeal" includes an application for leave to appeal - construction of a request by the Attorney-General to transfer "the proceeding".

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) - ss. 3, 4, 6, 7.

HEARING

MELBOURNE
12:6:1992

Counsel for Applicant : M.A. Pembroke

Solicitors for Applicant : Hunt and Hunt

Counsel for First and Second
Respondents and First and : J.M. Spender QC
Second Cross-Claimants D.J. Hammerschlag

Solicitors for First and

Second Respondents and First and Freehill, Hollingdale
Second Cross-Respondents : and Page

Counsel for First, Second and

Third Cross-Respondents : S.J. Rushton

Solicitors for First, Second

and Third Cross Respondents : Clayton Utz

Solicitor-General as

Intervener on behalf of the : K. Mason QC
State of New South Wales : L.S. Katz

Solicitor for State of New : Crown Solicitor,

South Wales : New South Wales

ORDER

THE COURT ORDERS THAT:

1. The questions raised by the Special Case be answered as follows:
Question 1 Whether following the order of Rogers C.J.,
Comm. Div. on 21 September 1990, the Federal Court of
Australia had exclusive jurisdiction in the matter,
including the pending application by the applicant for
leave to appeal from the decision of Giles J. given on
8 August 1990 in the Supreme Court of New South Wales.

Answer Following the order of Rogers C.J., Comm. Div.
of the Supreme Court of New South Wales of 21 September
1990 the Federal Court of Australia had exclusive
jurisdiction in the matter except for the pending
application by the applicant for leave to appeal from the
decision of Giles J. given on 8 August 1990 in the Supreme
Court of New South Wales and the appeal then lodged
therefrom following the grant of leave to appeal.

Question 2 If the Federal Court of Australia did not have
exclusive jurisdiction in the circumstances, whether the
decision and orders of the Supreme Court of New South
Wales, Court of Appeal, given on 19 April 1991, give rise
to a res judicata, which is conclusive and binding on the
first, second and third respondents, preventing them from
raising the same issues again in these proceedings in the
Federal Court of Australia.

Answer It is not necessary to answer this question.

Question 3 If the Federal Court of Australia did have
exclusive jurisdiction in the circumstances:
(a) Whether the decision of Giles J. given on 8 August
1990 is deemed to be a decision of the Federal Court
of Australia and whether that decision is res
judicata between the parties or alternatively created
an issue estoppel between the parties.
(b) Whether the Federal Court of Australia should give
leave to file and serve a notice of appeal pursuant
to Order 52, Rule 15(2) and hear an appeal from the
decision of Giles J. instanter.

Answer It is not necessary to answer this question.

2. The first and second respondents, Frank Iveson Lockhart and Jan Mark

Pozdena, pay the costs of the applicant and of all cross-respondents to the Special Case.

3. There be no order as to costs of the State of New South Wales.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

The questions contained in the Special Case pose important issues concerning the operation of what in this country has become known as the cross-vesting scheme, particularly in relation to matters of federal jurisdiction. However, no issue of validity was raised. The Court is concerned purely with matters of construction of the Act. Nevertheless, it will become necessary to refer to some of the basic principles of federal constitutional law which underpin the legislation.

2. The federal and State legislatures have reposed primarily in the courts the task of implementing the cross-vesting scheme, and this must be done by observing the letter and spirit of it; for without that the scheme cannot work.

3. The purpose of the scheme is expressed in the preamble to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("the Act") and the parallel legislation enacted by each of the States and by the Northern Territory and which came into force on 1 July 1988. Our references to the legislation shall be to the Act; but most of its provisions are mirrored in the complementary State legislation. The preamble states that inconvenience and expense have occasionally been caused to litigants by jurisdictional limitations in federal, State and Territory courts. It goes on to recite the desirability of establishing a system of cross-vesting of jurisdiction between those courts "without detracting from the existing jurisdiction of any court" and of providing a system under which, if a proceeding is instituted in a court "that is not the appropriate court", the proceeding will be transferred to the appropriate court. Further, and significantly for the present dispute, para. (b) of the preamble refers to proceedings concerning matters which otherwise would be entirely or substantially within the jurisdiction (other than any accrued jurisdiction) of this Court or the Family Court of Australia, or within the jurisdiction of the Supreme Court of a State or Territory. It is said to be desirable, in respect of those proceedings, to "structure the system" in such a way as to ensure as far as practicable that those proceedings "are instituted and determined in that court, whilst providing for the determination by one court of federal and State matters in appropriate cases".

4. The principal question in this case is whether the Supreme Court of a State or Territory ceases to have jurisdiction with respect to an appeal regularly instituted and pending before it which involves "a special federal matter" (an expression defined by s. 3(1) of the Act and to which reference shall be made later) if, after the institution of the appeal, the Attorney-General for the Commonwealth requests the Supreme Court to transfer "the proceeding" to the Federal Court pursuant to s. 6(7) of the Act. There is a related question whether the written request for transfer to the Federal Court of "the proceeding" by the Attorney-General in this case, on the true construction of the request, was intended to include an appeal then pending before the Court of Appeal of the Supreme Court of New South Wales ("the Court of Appeal").

5. The principal facts stated in the Special Case may be briefly mentioned.

6. On 27 April 1990 the applicant, NEC Information Systems Australia Pty Limited ("NEC"), commenced proceeding number 50240 of 1990 in the Supreme Court of New South Wales, Commercial Division, claiming $7,992,976 against the first and second respondents, Frank Iveson Lockhart and Jan Mark Pozdena, and $3,289,071 against the third respondent, Amicron Computer Services Pty Limited (Receiver and Manager Appointed) (In Provisional Liquidation) ("Amicron").

7. On 1 May 1990 Amicron commenced proceeding No. 2374 of 1990 in the Supreme Court of New South Wales, Equity Division, seeking a declaration that the appointment of the first and second cross-respondents, Gregory Paul Kelly and Barry Raymond Cook, as receivers and managers of the undertaking of Amicron (they were appointed on 11 April 1990 pursuant to a debenture charge of 7 December 1987 executed by Amicron in favour of NEC) was invalid. On 2 May 1990 NEC terminated the appointment of Messrs Kelly and Cook and appointed the third cross-respondent, Frank Otto Fischl, as receiver and manager in their stead.

8. On 1 June 1990 a cross claim was filed in the Commercial Division proceeding by Messrs Lockhart and Pozdena and Amicron joining as cross defendants NEC and Messrs Kelly, Cook and Fischl. The issues raised by the cross claim include the questions whether NEC contravened ss. 47 or 52 of the Trade Practices Act 1974 ("the Trade Practices Act") and whether Messrs Kelly, Cook and Fischl were validly appointed receivers and managers of the property of Amicron.

9. On 13 June 1990 an order was made by a Judge of the Supreme Court of New South Wales (Brownie J.) that the Commercial Division proceeding and the Equity Division proceeding be consolidated. On the same day Brownie J. ordered that the "special federal matters" for determination in the proceeding be determined by the Supreme Court of New South Wales.

10. On 8 August 1990 a Judge of the Supreme Court of New South Wales (Giles J.) heard a separate question under Part 31 of the Supreme Court Rules and answered it in the affirmative, holding that the joint and several appointment of Messrs. Kelly and Cook as receivers and managers of the property of Amicron was not authorized by the debenture charge. The judgment of Giles J. is reported at (1990) 8 ACLC 969.

11. On 23 August 1990 NEC and Messrs Kelly and Cook filed a summons seeking leave to appeal to the Court of Appeal against the judgment of Giles J. on the separate question determined by him.

12. On 28 August 1990 the Attorney-General for the Commonwealth, pursuant to s. 6(7) of the Act, requested the Supreme Court of New South Wales to transfer the "proceeding in the Commercial Division in the Supreme Court of New South Wales No. 50240 of 1990" to this Court.

13. On 21 September 1990 Rogers C.J. Comm. Div. of the Supreme Court, acting pursuant to the Attorney-General's request, ordered that "the proceedings" be transferred to this Court.

14. On 18 December 1990, in the Court of Appeal, with the consent of the parties, Meagher J.A., sitting alone, heard submissions in relation to the summons for leave and the appeal.

15. On 19 April 1991 the Court of Appeal granted leave to appeal from the orders of Giles J. and determined the appeal by allowing it. The judgment of the Court of Appeal is reported at (1991) 22 NSWLR 518.

16. On 5 August 1991 the High Court of Australia heard an application by Messrs Lockhart and Pozdena for special leave to appeal from the judgment of the Court of Appeal. The application was refused.

17. Following the transfer of the Supreme Court proceeding to this Court, Messrs Lockhart and Pozdena challenged the jurisdiction of the Court of Appeal to have heard and determined the summons for leave to appeal and the appeal itself from the decision of Giles J.

18. A Judge of this Court stated a Case for the consideration of a Full Court of the Court (see s. 25(6) of the Federal Court of Australia Act 1976 and Order 50 rule 1 of the Rules of the Court).

19. The questions raised by the Special Case are as follows:
Question 1 "Whether following the order of Rogers C.J., Comm. Div. on 21 September 1990, the Federal Court of Australia had exclusive jurisdiction in the matter, including the pending application by the applicant for leave to appeal from the decision of Giles J. given on 8 August 1990 in the Supreme Court of New South Wales."
Question 2 "If the Federal Court of Australia did not have exclusive jurisdiction in the circumstances, whether the decision and orders of the Supreme Court of New South Wales, Court of Appeal, given on 19 April 1991, give rise to a res judicata, which is conclusive and binding on the first, second and third respondents, preventing them from raising the same issues again in these proceedings in the Federal Court of Australia."
Question 3 "If the Federal Court of Australia did have exclusive jurisdiction in the circumstances:

(a) Whether the decision of Giles J. given on 8 August
1990 is deemed to be a decision of the Federal Court of
Australia and whether that decision is res judicata between the
parties or alternatively created an issue estoppel between the
parties.
(b) Whether the Federal Court of Australia should give
leave to file and serve a notice of appeal pursuant to Order
52, Rule 15(2) and hear an appeal from the decision of Giles J.
instanter."

20. The cross-vesting scheme applies to the Federal Court of Australia, the Family Court of Australia, the Family Court of Western Australia and the Supreme Courts of the States and the Northern Territory.

21. The judgments of the New South Wales Court of Appeal in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 contain general observations as to the objects and proper operation of the cross-vesting scheme. An application that proceedings which had been commenced in the Commercial Division of the Supreme Court be transferred to the Supreme Court of Queensland was removed into the Court of Appeal. In the result, an order was made for transfer to the Supreme Court of Queensland. It appears from the report of the case that it involved no exercise of federal jurisdiction by the State courts concerned.

22. Kirby P. said (at 716) that "the plain purpose of the legislation . . . is to provide a regime for the assignment of litigation to the most appropriate jurisdiction in Australia". Rogers A-J.A. said (at 725-6):

"It is important that full effect be given by the courts to
the imaginative and detailed code for ensuring that throughout
Australia disputes are dealt with by the one court and that be
the court most appropriate for the particular dispute.
Consistently with the preservation of dual State and Federal
court systems and with the State courts dispensing justice
within the State boundaries, there has been a legislative
recognition of the need to transcend State boundaries in
appropriate cases. No longer is it appropriate to regard the
court of another State as a 'foreign court'."

Street C.J., who agreed with the judgment of Rogers A-J.A., added observations including the following (at 713-4):

"The cross-vesting legislation in effect brings together the
eight State and Territory Supreme Courts, the Federal Court and
the Family Court into an organisation or relationship. Very
broadly speaking, the legislation now operative throughout
Australia achieves two objectives: first it enables any one of
these courts to exercise the jurisdiction of, and to apply the
law that would be applied by, any one of the other nine;
secondly it enables any one of those courts in which
proceedings are commenced to transfer them to any one of the
other nine;
. . .
The cross-vesting legislation passed by the Commonwealth,
the States and Territories both conferred on each of the ten
courts Australia-wide jurisdiction and set up the mechanism
regulating the transferring of proceedings from one of these
ten courts to another. In relation to transfer, the common
policy reflected in each of the individual enactments is that
there must be a judicial determination by the court in which
proceedings are commenced either to transfer or not to transfer
the proceedings to one of the other nine based, broadly
speaking, upon consideration of the interests of justice. To
describe it as a judicial determination, should not be
permitted to obscure the real purport of the decision. The
determination must, of course, be made with full regard to
principles governing an adjudication. But, in its effect, an
order granting or refusing a transfer is an administrative
decision."

23. As we have indicated, their Honours were concerned directly with a dispute in which there was no federal element. This may have coloured what was said in the above observations. For example, with reference to what was said by Street C.J., a court exercising the judicial power of the Commonwealth ordinarily would be slow to characterise decisions made by it in exercise of federal jurisdiction as being of an administrative character. Indeed, in our view, an understanding of the cross-vesting legislation is to be acquired only with an appreciation of the profound significance of the treatment by it of the exercise of federal jurisdiction and an appreciation of the distinctive qualities of that jurisdiction.

24. It also is to be kept steadily in mind that the structure of the Australian courts is such that, in truth, there is no court of unlimited jurisdiction: Parsons v Martin (1984) 5 FCR 235 at 240. Further, Chapter III of the Constitution makes the federal judicature "at once paramount and limited": The Queen v Kirby; Ex parte Boilermakers' Society of Australia [1956] HCA 10; (1956) 94 CLR 254 at 268. The Constitution identifies the organs to which the federal judicial power may be entrusted, prescribes the manner in which they may be constituted and provides for the ascertainment of the content of their jurisdiction.

25. Section 77 of the Constitution empowers the Parliament, with respect to any of the matters mentioned in ss. 75 and 76, to make laws having various particular characteristics. These laws may define the jurisdiction of a federal court (other than the High Court), and this Court is one such court. Next, the laws may invest any court of a State with federal jurisdiction, and finally they may define the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in State courts. (It is unnecessary to consider for the purposes of this case the special non-federal character of the Territory courts, as explained in Capital TV Appliances Pty Ltd v Falconer [1971] HCA 10; (1971) 125 CLR 591.)

26. As a starting point for consideration of the Act, it should be noted that:

(a) Where a State court is invested with federal
jurisdiction by a law which does so upon a condition whereby
the investment may be terminated, and, in the events that
happen, the condition operates, the result is completely to
divest the State court of the federal jurisdiction: George
Hudson Ltd v Australian Timber Workers' Union [1923] HCA 38; (1922-23) 32 CLR
413 at 429; The Commonwealth v Kreglinger and Fernau Ltd [1926] HCA 8; (1926)
37 CLR 393 at 421; The Queen v Green; Ex parte Cheung Cheuk To
[1965] HCA 32; (1965) 113 CLR 506 at 518. The provisions which dealt with
inter se matters, particularly s. 40A of the Judiciary Act
1903, provide an example;
(b) An exercise of federal jurisdiction may be attracted,
not only by the assertion of a plaintiff seeking relief, but by
a pleading by way of defence (Moorgate Tobacco Co. Ltd v Philip
Morris Ltd [1980] HCA 32; (1980) 145 CLR 457 at 476) and may be attracted for
the first time in the course of the conduct of an appeal in the
Full Court of a State: The Commonwealth of Australia v Rhind
[1966] HCA 83; (1966) 119 CLR 584;
(c) Once federal jurisdiction is attracted in a proceeding
in a State court, the jurisdiction which is exercised by that
Court throughout the case will be federal (save as to a
completely disparate claim constituting in substance a separate
proceeding) and there will remain no State jurisdiction capable
of concurrent exercise with the federal jurisdiction which, as
regards the whole of the matter, is invested in the State
court: Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 at 373. Thus, in
the present case, it was not disputed that, upon the filing on
1 June 1990 of the cross-claim in the Commercial Division
proceeding seeking a declaration of contravention of s. 52 of
the Trade Practices Act 1974 ("the Trade Practices Act"),
thereafter the Supreme Court, both at the trial level and in
the Court of Appeal, was exercising federal jurisdiction. This
case turns not upon that question, but upon the complication
introduced by the additional allegation of contravention of s.
47 of the Trade Practices Act, this being a matter arising
under Part IV of that Act and therefore a "special federal
matter"; and
(d) The general investment of State courts with federal
jurisdiction pursuant to s. 39 (2) (as to civil jurisdiction),
and s. 68 (2) (as to the criminal jurisdiction) of the
Judiciary Act 1903 may be supplanted by a more specific
investment of jurisdiction (whether exclusive or concurrent) in
particular matters that otherwise might have fallen within the
general description of those sections: Pearce v Cocchiaro
[1977] HCA 31; (1977) 137 CLR 600 at 608-9; Carlton and United Breweries Ltd v
Castlemaine Tooheys Ltd [1986] HCA 38; (1986) 161 CLR 543 at 551, 553-4.

27. In addition to these general considerations, for an appreciation of the operation of provisions of the Act dealing with the exercise of federal jurisdiction, some further propositions are important.

28. First, the legislation does not operate so as to confer upon this Court any fresh federal jurisdiction, in addition to that conferred upon it by other laws of the Parliament: Kodak (Australasia) Pty Limited v Commonwealth of Australia [1988] FCA 438; (1988) 22 FCR 197; Courtice v Australian Electoral Commission (1990) 21 FCR 554; Bond v Sulan [1990] FCA 419; (1990) 26 FCR 580 at 584. Therefore, for example, and as these authorities illustrate, it remains the position that the jurisdiction of this Court is not attracted merely by the circumstance that the matter is one in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party within the meaning of s. 75 (iii) of the Constitution.

29. Secondly, there are matters in which this Court has exclusive jurisdiction conferred by other laws, being jurisdiction to which the Act does not apply. Section 4(4) of the Act specifies as falling within this special category matters arising under the Industrial Relations Act 1988, the Conciliation and Arbitration Act 1904 and ss. 45D and 45E of the Trade Practices Act, which deal respectively with two particular species of restrictive trade practice, secondary boycotts, and collusive arrangements affecting supply or acquisition of goods or services. Matters arising under ss. 46A, 155A and 155B of the Trade Practices Act also fall into the special category; these concern trans-Tasman matters. In these cases, what (in another context) Higgins J. called the "manifest object" of the Act is not to disturb the exclusive conferral of jurisdiction upon this Court: George Hudson Limited v Australian Timber Workers' Union [1923] HCA 38; (1922-3) 32 CLR 413 at 444.

30. Thirdly, there is the class of matters in which original jurisdiction is conferred by particular statutes on this Court or the Family Court of Australia, and concurrently there is an investment of jurisdiction in State and Territorial courts, but subject to a conferral of appellate jurisdiction upon this Court or the Family Court (as the case may be) which jurisdiction is exclusive, save that in some instances (e.g. Copyright Act 1968 s. 131B, Patents Act 1990 s. 158, Trade Marks Act 1955 s. 114, Designs Act 1906 s. 40I) an appeal, by special leave, may be brought directly to the High Court of Australia. In other matters in this category (e.g. Commonwealth Electoral Act 1918 s. 383) original jurisdiction is conferred only upon the Supreme Courts of the States and Territories, but an appeal lies to this Court. It is this appellate federal jurisdiction which is specially treated in s. 7 (3) of the Act. This states:

"7(3) Where it appears that the only matters for
determination in a proceeding by way of an appeal from a
decision of a single judge of the Supreme Court of a State or
Territory are matters other than matters arising under an Act
specified in the Schedule, that proceeding shall be
instituted only in, and shall be determined only by, the Full
Court of the Supreme Court of that State or Territory."

The sub-section is not directed to the class of matter in which this Court has jurisdiction which is exclusive at both original and appellate level. It does not, in our view, support any wide proposition that the general policy of the legislation is that an order transferring proceedings from one court to another is not to prejudice any appeals on foot at the date of transfer (cf. NEC Information Systems v Lockhart (1991) 22 NSWLR 518 at 530-1). Appeals in matters arising under a statute specified in the Schedule to the Act are unaffected by the general command in the sub-section that appeals from a single Judge of a Supreme Court of a State or Territory shall be instituted only in the Full Court or Court of Appeal of that Supreme Court. Moreover, although s. 6(9) operates to exclude some appeals from the operation of s. 6, it is strictly limited in its operation and the clear inference is that s. 6 was intended to apply to proceedings by way of appeal that do not fall within s. 6(9).

31. Fourthly, the existing exclusive appellate jurisdiction of this Court in matters in the third class we have described is undiminished and, indeed, it is enhanced by ss. 7 (5) and (7) of the Act. Thus, where the Full Court of a State Supreme Court has commenced to hear, but has not determined, an appeal which, by virtue of the provisions we have described, should be before the Full Court of this Court, it shall transfer it to this Court unless "the interests of justice" require the Full Court of the State to proceed to determine the matter. This is the effect of s. 7 (7) of the Act.

32. Again then, there is apparent the manifest object that in some classes of matter the exclusive jurisdiction of this Court should continue because, in the view of the Parliament, there is particular utility in maintaining that position.

33. Fifthly, there are matters arising under federal law in respect of which original and concurrent jurisdiction has been conferred upon or invested in this Court and State and Territory courts, and appeals stay within the respective court structures, so that this Court has no appellate jurisdiction in respect of the judgments of State courts. An example is provided by the Admiralty Act 1988, ss. 9, 11. Matters arising under Division 1 or 1A of Part V of the Trade Practices Act, including those in respect of contraventions of s. 52 thereof, are a prime example; see ss. 86 and 86A of the Trade Practices Act. In such cases, where the Supreme Court of a State or Territory has been invested with the relevant federal jurisdiction, an order for transfer to the Supreme Court of another State or Territory may be made under s. 5 (2) of the Act. Moreover, where a matter for determination in a proceeding is a matter arising under Division 1 or Division 1A of Part V of the Trade Practices Act, then, in the circumstances specified in s. 10 of the Act, a transfer may be made by this Court, the Family Court of Australia, or the Supreme Court of a State or Territory to a court of a State or Territory, other than the Supreme Court thereof. But it is important to note that no such transfer may be made if, in addition to a matter for determination in the proceeding being one arising under Division 1 or Division 1A of Part V of the Trade Practices Act, a matter for determination in the proceeding is a "special federal matter": see s. 10 (c). This prohibition is directed, by the terms of s. 10 (a), not only to the Supreme Courts of the States and Territories, but also to this Court.

34. Likewise, the powers conferred by ss. 86A and 86B respectively of the Trade Practices Act upon this Court to transfer matters to the courts of the States and Territories (not being limited to the Supreme Courts thereof) and to the Family Court of Australia, are limited so as to exclude matters arising under Part IV thereof.

35. Sixthly, s. 4 (1) of the Act invests the Supreme Courts of the States and Territories with jurisdiction with respect to civil matters, which is jurisdiction which has been conferred upon this Court or the Family Court of Australia, whether before or after the commencement of the Act, and which is jurisdiction which the Supreme Courts would not have, apart from s. 4. To the extent not excluded by s. 4(4) this includes the class of proceeding embraced by the definition of "special federal matter" in s. 3(1). But, that conferral of jurisdiction is subject to the conditions specified in s. 6 of the Act, and it is upon the proper construction of s. 6 that this case turns.

36. The expression "special federal matter" is defined by s. 3(1) of the Act as meaning:-

"(a) a matter arising under Part IV (other than s. 45D or
45E) of the Trade Practices Act 1974;
(b) a matter involving
the determination of questions of law on appeal from a decision
of, or of questions of law referred or stated by, a tribunal or
other body established by an Act or a person holding office
under an Act, not being a matter for determination in an appeal
or a reference or case stated to the Supreme Court of a State
or Territory under a law of the Commonwealth that specifically
provides for such an appeal, reference or case stated to such a
court;
(c) a matter arising under the Administrative
Decisions (Judicial Review) Act 1977;
(d) a matter arising
under section 32 of the National Crime Authority Act 1984; or
(e) a matter that is within the original jurisdiction of the
Federal Court by virtue of section 39B of the Judiciary Act
1903,
being a matter in respect of which the Supreme Court of a
State or Territory would not, apart from this Act, have
jurisdiction."

37. Section 6 provides as follows:

"6(1) Where a matter for determination in a proceeding that is
pending in the Supreme Court of a State or Territory is a
special federal matter, that Supreme Court shall transfer the
proceeding to the Federal Court unless that Supreme Court makes
an order that the proceeding be determined by that Supreme
Court.
(2) The Supreme Court of a State or Territory shall not make
an order under subsection (1) that the court determine a
proceeding unless it appears to that Supreme Court that, by
reason of the particular circumstances of the case -
(a) it is not appropriate that the proceeding be transferred
to the Federal Court; and
(b) it is appropriate that that
Supreme Court determine the proceeding.
(3) Where the Supreme Court of a State or Territory makes an
order under subsection (1) in relation to a proceeding, it is
the duty of the court not to proceed to determine the
proceeding until the court is satisfied that -
(a) a notice in writing stating that the order has been made
and specifying the nature of the special federal matter for
determination in the proceeding has been given to the
Attorney-General; and
(b) a reasonable time has elapsed since the
giving of the notice for consideration by the Attorney-General
of the question whether action should be taken under subsection
(7) in relation to the proceeding.
(4) For the purposes of this section, the Supreme Court of a
State or Territory in which a proceeding referred to in
sub-section (1) is pending:
(a) may adjourn the proceeding for such time as the court
thinks necessary and may make such order as to costs in
relation to an adjournment as it thinks fit; and
(b) may direct a party to the proceeding to give a notice in
accordance with subsection (3).
(5) The Attorney-General may authorise the payment by the
Commonwealth to a party of an amount in respect of costs
arising out of the adjournment of a proceeding under this
section, under a corresponding provision of a law of a State or
under this section and under such a provision.
(6) Nothing in this section prevents the Supreme Court of a
State or Territory granting urgent relief of an interlocutory
nature where it is in the interests of justice to do so.
(7) The Attorney-General may request the Supreme Court of a
State or Territory in which a proceeding referred to in
sub-section 9(1) is pending to transfer the proceeding to the
Federal Court and, where such a request is made, that Supreme
Court shall transfer the proceeding to the Federal Court.
(8) Where, through inadvertence, the Supreme Court of a
State or Territory determines a proceeding of the kind referred
to in sub-section (1) without -
(a) the court making an order under that sub-section that
the proceeding be determined by that court; or
(b) a notice in
accordance with sub-section (3) being given to the
Attorney-General in relation to the proceeding,nothing in this
section invalidates the decision of that court.
(9) This section does not apply to a proceeding by way of an
appeal that is instituted in the Full Court of the Supreme
Court of a State or Territory if:
(a) the court the decision of which is the subject of the
appeal had made an order under sub-section (1) in relation to
the special federal matter; and
(b) the Attorney-General did not request the court referred to in
paragraph (a) to transfer the proceeding to the Federal Court."

38. Section 6 is fundamental to the operation of the cross-vesting scheme. It imposes two conditions upon the exercise of invested jurisdiction in special federal matters. The Supreme Court shall transfer the proceeding to this Court if so requested by the Attorney-General for the Commonwealth (sub-s. (7)). Further, and in any event, the Supreme Court shall order a transfer to this Court unless it makes the order referred to in sub-s. (1) for the determination of the proceeding in the Supreme Court. Both of these conditions upon the investment of Federal jurisdiction in the Supreme Court operate upon proceedings which are "pending" there, whether at first instance or on appeal. Subject to the operation of sub-s. (9), to which we will refer later, there is nothing to suggest that the operation of the conditions is confined to proceedings before the entry of judgment at trial.

39. It is the duty of a State or Territory Supreme Court, where a matter for determination in a proceeding pending in that court is a "special federal matter", to transfer the proceeding to this Court unless the Supreme Court orders that the proceeding be determined by itself, having regard to the criteria stated in sub-s. (2). The effect of sub-s (2) has been described (Griffith QC, Rose and Gageler "Further Aspects of the Cross-Vesting Scheme" (1988) 62 ALJ 1016 at 1021) as follows:

"Implicit in this provision is a requirement for a high
threshold of satisfaction before a State court determines not
to transfer a proceeding to the Federal Court."

The importance given by the Parliament to the observance of the criteria in sub-s. (2) is emphasised by the reservation by sub-s. (6) of the jurisdiction of the Supreme Court to grant interlocutory relief which is so urgent that it is in the interests of justice to do so: cf. Judiciary Act 1903, s. 78B(5). The Supreme Court is bound not to proceed to determine the proceeding itself until it is satisfied that notice in writing stating that the order has been made and specifying the nature of the "special federal matter" for determination in the proceeding, has been given to the Attorney-General for the Commonwealth and a reasonable time has elapsed since the giving of the notice to enable him to consider the question whether action should be taken by him under sub-s. (7), that is, to request the Supreme Court in which the proceeding is pending to transfer the proceeding to this Court. If the Attorney-General does not make such a request then the Supreme Court may proceed to determine the matter including the "special federal matter". It is central to the cross-vesting scheme that a Supreme Court, in making an order under s. 6(1) that a proceeding be determined by it, including the "special federal matter", and thereafter during the subsistence of the proceeding unless the Attorney-General has requested the Supreme Court to transfer the proceeding to this Court pursuant to s. 6(7) (and an order for transfer to this Court is made by the Supreme Court) is exercising federal, not State jurisdiction, in the proceeding: see Felton v Mulligan; Moorgate Tobacco Co. Ltd v Philip Morris Ltd. When the Full Court of a State or Territory is hearing an appeal in a matter where at first instance the Supreme Court ordered that the proceeding be determined by it and was not the subject of a request by the Attorney-General of the Commonwealth to transfer the proceeding to this Court, it is continuing to exercise federal, not State, jurisdiction. It is imperative that this be kept firmly in mind.

40. The Attorney-General may request the Supreme Court of a State or Territory to transfer a proceeding to this Court pursuant to sub-s. (7) (that is a proceeding which involves a "special federal matter") at any stage whilst the proceeding is pending before the Supreme Court, either at first instance or on appeal to a Full Court of the Supreme Court. This power is not limited to the occasion when the proceeding is pending only at first instance; there is no express limitation and the considerations to which we have already referred, and particularly the limited circumstances in which s. 6(9) is expressed to operate with respect to a proceeding by way of appeal, leave no room for any limitation to be implied. Further, the Attorney-General may make his request of his own motion without first having received notification under sub-s. (3) that the Supreme Court has made an order under sub-s. (1). But the power of the Attorney-General to request the transfer of the proceeding to this Court, once an appeal has been instituted to a Full Court of the Supreme Court, is circumscribed by sub-s. (9). The effect of sub-s. (9) is that, once an appeal has been instituted in the Full Court of a Supreme Court, and a Supreme Court, the decision of which is the subject of the appeal, had previously made an order pursuant to s. 6(1) that the proceeding be determined by itself, and the Attorney-General had not before the institution of the appeal, requested the Supreme Court to transfer the proceeding to this Court, then the jurisdiction of the Supreme Court to hear and determine the appeal is unaffected by s. 6, which no longer applies with respect to that appeal. The Attorney-General is not in those circumstances empowered to request that such an appeal be transferred to this Court. Subject to that one constraint, the Attorney-General for the Commonwealth may make a request for the transfer of a proceeding from a Supreme Court to this Court, a request that must be complied with, concerning any appeal instituted in the Full Court of a Supreme Court that is pending before that Court and involves a "special federal matter". The Attorney-General's power of request and the corresponding obligation of the Supreme Court to comply with it is not spent once the proceeding at first instance has been determined. It remains alive during the subsequent course of the proceeding including an appeal brought from the judgment at first instance subject only to the operation of sub-s. (9).

41. Sub-section (9) thus performs an important function under the cross-vesting scheme because, in its absence, the Attorney-General could exercise his power of request under sub-s. (7) with respect to any appeal to the Full Court of a Supreme Court from a decision at first instance of a Supreme Court which involves a "special federal matter". Save in the case of an appeal to which sub-s. (9) is directed, the Full Court of a Supreme Court remains bound during an appeal that involves a "special federal matter", but which for some reason (doubtless it would be inadvertence of the kind to which sub-s. (8) is directed) was not transferred to this Court or was not the subject of a Supreme Court order that it be determined by the Supreme Court itself pursuant to sub-s. 6(1). This is the imperative of sub-s. (1). Thus, because such an appeal involves a "special federal matter", the Supreme Court must transfer the appeal to this Court unless the Supreme Court orders, pursuant to sub-s. (1) based on the sub-s. (2) criteria, that the appeal be determined by itself. Again the procedures of s. 6 are brought into play whereby the Supreme Court is bound, on appeal, just as it is at first instance, not to proceed to determine the appeal until the requisite notice has been given to the Attorney-General and the time stipulated in sub-s. (3)(b) for consideration by the Attorney-General of the course of action he should take has elapsed. This would be a rare class of case and it is difficult to see how it would arise save in the case of inadvertence. But cases may arise; and it is essential for the proper operation of the cross-vesting scheme that the imperatives of sub-s. (1) apply, not only at the stage of first instance proceedings, but thereafter during the currency of appeals through the State or Territory structure.

42. Sub-section (9) is directed to the case where, as here, a Supreme Court has made an order under sub-s. (1) in relation to the "special federal matter" that the proceeding be determined by the Supreme Court and the Attorney-General for the Commonwealth has not requested the Supreme Court to transfer the proceeding to the Federal Court. The two events mentioned in paragraphs (a) and (b) of sub-s. (9) are historical in that they refer to matters that preceded the institution of the appeal. In such case the federal jurisdiction with respect to the appeal is exercised by the Court of Appeal and not the Federal Court.

43. In the present case (as mentioned earlier) a Judge of the Supreme Court ordered on 13 June 1990 that the Equity Division proceeding and the Commercial Division proceeding be consolidated. On the same day his Honour ordered that the "special federal matters" for determination in the proceeding be determined by the Supreme Court. This order was obviously made under s. 6(1). The material before us does not disclose when the Attorney-General received notification under sub-s. (3) of the order of Brownie J. made 13 June 1990, but it was not until 28 August 1990 that the Attorney-General for the Commonwealth, acting pursuant to s. 6(7) of the Act, requested the Supreme Court of New South Wales to transfer the proceeding to this Court. In the meantime Giles J., no doubt being satisfied as required by s. 6(3) that a reasonable time had elapsed for consideration by the Attorney-General, had heard a separate question under Part 31 of the Supreme Court Rules and answered it in the affirmative, holding that the joint and several appointment of the first and second cross respondents was not authorised by the debenture charge. On 23 August 1990 the applicant filed the summons for leave to appeal to the Court of Appeal against Giles J.'s decision on the separate question.

44. Thus, at the time the Attorney-General requested the Supreme Court to transfer the proceeding to this Court pursuant to s. 6(7), the appeal from Giles J.'s judgment had already been instituted (we assume for present purposes that the application for leave to appeal answers the description of the institution of a proceeding by way of appeal to the Court of Appeal within the meaning of s. 6(9), a matter to which we shall return later). Were it not for sub-s. (9) the Attorney-General's request would have related to the appeal itself and required the Supreme Court to transfer it to this Court. But sub-s. (9) prevented that occurrence because the appeal had been regularly instituted in the Court of Appeal and sub-s. (9) operated to exclude the application of s. 6(1) to that appeal.

45. The Attorney-General's request of 28 August 1990 was operative with respect to the whole proceeding pending in the Supreme Court except the component which was the subject of the appeal to the Court of Appeal, namely, the question of the validity of the appointment of the first and second cross respondents as receivers and managers under the relevant debenture charge. The proceeding (which included the federal component, namely, the issues arising under the Trade Practices Act) was otherwise the subject of the Attorney-General's request and of the order made by Rogers C.J., Comm. Div. on 21 September 1990 transferring the proceeding to the Federal Court. The isolated component of the proceeding, namely, the appeal to the Court of Appeal, was the only element in the matter that remained with the Supreme Court and which it was entitled, indeed bound, to hear and determine in the exercise of its federal jurisdiction.

46. It is s. 6(9), by excluding the further operation of s. 6(1) in the circumstances, which ensures that the Court of Appeal had the jurisdiction to hear and determine the appeal from Giles J.'s judgment. It was argued before us that s. 7(3) is relevant to this question; but for the reasons given earlier that sub-section relates to a fundamentally different question of federal jurisdiction.

47. We turn to the specific request of the Attorney-General of the Commonwealth of 28 August 1990 that "the proceeding" be transferred to the Federal Court. This document is, upon its proper construction, a request that the Supreme Court of New South Wales transfer to this Court the whole of proceeding No. 50240 of 1990 in the Commercial Division of the Supreme Court, but not so as to extend to the proceeding by way of appeal instituted five days earlier. The request referred in terms only to proceeding 50240 being the Commercial Division proceeding. It did not mention specifically Equity proceeding No. 2374 of 1990; but the two proceedings had been consolidated on 13 June 1990. It is common ground between the parties that nothing turns on this and that the order of Rogers C.J., Comm. Div. of 21 September 1990 should be treated as purporting to transfer both matters 2374 and 50240 of 1990 to this Court. Thus construed the Attorney-General's request is framed in language consistent with the interpretation of s. 6(9) which in our opinion it bears.

48. The reference in s. 6(9) to "a proceeding by way of an appeal" is apt in our view to include an application for leave to appeal. The expression "an appeal" is used elsewhere in the Act and it is therefore noteworthy that the potentially broader expression "a proceeding by way of an appeal" is used in s. 6(9) and in ss. 7(3), (5), (6) and (7). This suggests that the use of the potentially broader expression was deliberate. In cases in which the requirements of paragraphs (a) and (b) of s. 6(9) are met, there is no good reason why s. 6(1) should cease to apply when a notice of appeal has been filed but should not cease to apply when leave to appeal is sought. A summons for leave to appeal is of course not the same as a notice of appeal; but it is in our opinion the first stage of the appellate process, whether it succeeds or fails. The expression "by way of an appeal" should be interpreted as including all steps in the appellate process including a summons, application or motion for leave to appeal.

49. In our opinion the Court of Appeal of the Supreme Court of New South Wales had jurisdiction to hear and determine the appeal from the judgment of Giles J., though for reasons different to those expressed by the members of the Court of Appeal of the Supreme Court of New South Wales.

50. It is unnecessary in the circumstances to consider the other questions argued before us.

51. We would answer the questions raised by the Special Case as follows:

52. Question 1 Whether following the order of Rogers C.J., Comm. Div. on 21 September 1990, the Federal Court of Australia had exclusive jurisdiction in the matter, including the pending application by the applicant for leave to appeal from the decision of Giles J. given on 8 August 1990 in the Supreme Court of New South Wales.

53. Answer Following the order of Rogers C.J., Comm. Div. of the Supreme Court of New South Wales of 21 September 1990 the Federal Court of Australia had exclusive jurisdiction in the matter except for the pending application by the applicant for leave to appeal from the decision of Giles J. given on 8 August 1990 in the Supreme Court of New South Wales and the appeal then lodged therefrom following the grant of leave to appeal.

54. Question 2 If the Federal Court of Australia did not have exclusive jurisdiction in the circumstances, whether the decision and orders of the Supreme Court of New South Wales, Court of Appeal, given on 19 April 1991, give rise to a res judicata, which is conclusive and binding on the first, second and third respondents, preventing them from raising the same issues again in these proceedings in the Federal Court of Australia.

55. Answer It is not necessary to answer this question.

56. Question 3 If the Federal Court of Australia did have exclusive jurisdiction in the circumstances:

(a) Whether the decision of Giles J. given on 8 August
1990 is deemed to be a decision of the Federal Court of
Australia and whether that decision is res judicata between the
parties or alternatively created an issue estoppel between the
parties.
(b) Whether the Federal Court of Australia should give
leave to file and serve a notice of appeal pursuant to Order
52, Rule 15(2) and hear an appeal from the decision of Giles J.
instanter.

57. Answer It is not necessary to answer this question.

58. The moving parties on the hearing of the Special Case were the first and second respondents, Frank Iveson Lockhart and Jan Mark Pozdena. They must pay the costs of the other parties to the Special Case.

59. The Solicitor-General for the State of New South Wales was given leave to intervene in the matter and the Court was assisted by his argument. The Solicitor-General did not seek any order for costs; nor would any such order be appropriate. Accordingly, no order for costs of the State of New South Wales is made by the Court.