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Federal Court of Australia |
Last Updated: 10 April 2000
THE BELL GROUP LTD v WESTPAC BANKING CORPORATION
WAG 3067 of 1995
Introduction
In accordance with the practice of the Federal Court in certain cases of public interest, I have prepared a brief summary to accompany the reasons for judgment that are being delivered today in relation to six motions in this matter. But the only authoritative pronouncement of my reasons is that contained in the full reasons for judgment. This summary is necessarily incomplete.
Summary of Judgment
The applicants comprise some 29 companies (all in liquidation) in what was formerly known as `The Bell Group" and two liquidators who, between them, are individual liquidators of 21 of those companies. The respondents are numerous banks ("the Banks"), many of whom lent money to various companies in the Bell Group over a period stretching back to the early 1980s.
At that time the Banks were prepared to lend money to the Bell Group on the basis of what were called "negative pledge" arrangements. That is, the borrowers agreed not to charge their assets by way of security to any other lenders.
The Bell Group also raised money during that period from other sources, principally in Europe. Those debts were evidenced by the issue of bonds. Between 1985 and 1987 the Bell Group issued bonds to the value of $400 million and £75 million. $150 million of that amount was borrowed from Heytesbury Securities Pty Ltd, a company associated with the late Mr Robert Holmes à Court. Generally speaking, the bonds were either redeemable for cash or could be converted into shares.
The extent to which the rights of the present holders of those bonds were and are subordinated, or shall remain subordinated, to all other creditors of the Bell Group, and in particular the Banks has become a major issue, not only in this case but also in certain proceedings before the Supreme Court of Western Australia.
In 1990 the applicant companies charged all of their assets to the Banks to secure repayment of various loans. Those loans then totalled about $260 million. In the judgment I have described the security documents as "the Securities". I shall do the same in this summary. When the applicants failed to repay the loans, the respondent Banks exercised their rights under the Securities and realised approximately $300 million upon the sale of the assets which were the subject of such security.
In the principal application in this matter (which has yet to be heard) the applicants seek to set aside the Securities and to obtain orders from the Court that the Banks pay to the liquidators of the applicant companies amounts equal to the total of such realisation, plus interest.
The applicants make their claims on numerous bases. I shall not try to summarise all of them. The main basis is that the applicants claim that some of their former directors and the respondent Banks wrongly caused the Bell Group of companies to execute the Securities in favour of the Banks at a time when the applicant companies were insolvent or nearly insolvent. They also rely upon those provisions of the former Companies Code and the Corporations Law which, by reference to bankruptcy principles, provide for certain transactions to be void against a liquidator.
The applicants instituted these proceedings in this Court in late 1995. It was then commonly thought that this Court had jurisdiction to hear and determine claims of this sort under the Commonwealth and State cross-vesting legislative scheme.
Numerous procedural steps were taken to prepare the matter for hearing. It was first set down for hearing (for a period of four months) in August 1998. Early that year the Banks made a major set of amendments to their defence and cross-claim. In briefest summary, the key part of those amendments raised the issue of the degree to which moneys raised by the issue of the bonds, which I have described above, and on-lent to other companies in the Bell Group were subordinated to other unsecured creditors of (and within) the Bell Group, including the Banks. As a consequence of those amendments, the applicants sought an adjournment of the hearing. I rejected that application, but postponed the start of the hearing by one month. A Full Court of this Court (on appeal from my decision not to adjourn the hearing date) vacated that hearing date. Later I fixed a new hearing to start in October 1999. However, on 17 June 1999, the High Court of Australia handed down its decision in a case known as Re Wakim. That decision held that a major relevant part of the cross-vesting legislation was constitutionally invalid. The result was that the applicants' claims, when viewed on their own, did not raise any federal matter within the jurisdiction of this Court.
However, the respondents contended that this Court had what is known as "accrued" jurisdiction. They pointed to the fact that their amended cross-claim was, in part, based upon conduct during the 1980s by the applicants being conduct by which, on the Banks' case, the applicants contravened s 52 of the Trade Practices Act i.e. that certain of the main companies in the Bell Group had engaged in misleading or deceptive conduct. The respondents argued that the factual basis for that part of their cross-claim had so much in common with the factual basis of the claims raised by the applicants that all of the disputes formed part of the one "matter".
In the meantime, in October 1996, the Banks had sued the applicants and others in the Supreme Court of Western Australia to prevent the execution of certain supplementary deeds which were intended to vary the terms of some of the convertible bonds. That action is identified as "CIV 2061 of 1996". An examination of the pleadings in that Supreme Court case and the defence and cross-claim in this case reveals, as I have found in the judgment delivered today, a very substantial degree of common factual allegations on the Banks' part.
Immediately after the High Court's decision in Re Wakim, procedural steps were taken in the Federal Court to decide whether this Court had jurisdiction to hear and decide the applicants' case against the Banks and the Banks' defence and cross-claim, and, even if this Court did have jurisdiction, whether it should transfer the proceeding to the Supreme Court of Western Australia.
The parties filed six notices of motion with a view to resolving those questions. Four of them were filed on behalf of the applicants and two on behalf of the respondents. Many affidavits were also filed. At various stages it appeared that constitutional questions had arisen. Some six notices to that effect were issued and served on the Attorneys-General for the Commonwealth, the States and the Territories. In the end, only two Attorneys intervened in the proceeding. The Attorney-General for Western Australia intervened to argue for the validity of what is known as the Western Australian "remedial" legislation which has been passed in relevantly identical terms by the various States since Re Wakim. As it turned out, it was not necessary for that issue to be decided. The Attorney-General for the Commonwealth intervened to argue for the constitutional validity of certain provisions of the Commonwealth Cross-Vesting Act, in particular the provisions which enable the transfer of a proceeding from this Court to a Supreme Court and a section which states that there shall be no appeal in relation to such a transfer decision.
The parties filed about 350 pages of written submissions in relation to the various motions. The hearing of the various motions took four days, the last such day being on 10 March 2000.
I will now summarise my conclusions. They are that:
* the Banks have, by their cross-claim, validly invoked the jurisdiction of this Court;
* leave was validly granted to the respondents to begin and proceed against the applicant companies by way of the cross-claim;
* the question whether the relevant part of the Banks' cross-claim is statute-barred is something which should be decided after a hearing;
* the applicants' claims fall within this Court's accrued jurisdiction, basically because they arise out of what is known as a "substratum of facts" which is common to the substratum from which the Banks' federal cross-claim arises;
* the Banks' cross-claims are not what is termed "colourable" i.e. obviously without substance, seeking only to attract this Court's jurisdiction;
* those parts of the Commonwealth Cross-Vesting Act which the Banks challenge as being unconstitutional, are valid;
* the proceeding in this application arises out of or is related to various proceedings in the Supreme Court of Western Australia, and in particular CIV 2061 of 1996, and
* one Court only should decide the issues in dispute;
* it is more appropriate that this proceeding be heard and determined by the Supreme Court of Western Australia. I have published fairly full reasons for that conclusion. They include the following:
(a) the case raises mainly matters of "State" law;
(b) there is a very substantial overlap between the proceeding in this Court and action No CIV 2061 of 1996 in the Supreme Court;
(c) there is the strong possibility of substantial cost savings if this case is heard either at the same time or at about the same time as the Supreme Court proceedings;
(d) there may still be doubts about this Court's accrued jurisdiction which could be the subject of an appeal by the unsuccessful party at the trial of the matter; and
(e) there are no doubts about the Supreme Court's jurisdiction to hear all of the matters; the risk of wasting millions of dollars in costs can be avoided.
CARR J
7 APRIL 2000
Bell Group Ltd v Westpac Banking Corp [2000] FCA 439
FEDERAL COURT OF AUSTRALIA - jurisdiction - applicants invoked supposed jurisdiction of Federal Court under cross-vesting legislation - respondents, two years later, raised cross-claim based on s 52 of Trade Practices Act 1974 (Cth) - applicants in liquidation - cross-claimants did not, initially, apply for leave to begin cross-claim - Federal Court later granted leave nunc pro tunc to begin and proceed with cross-claim - whether Federal Court's orders granting leave were within its jurisdiction - whether the Federal Court was a "Court" within the meaning of s 58AA of the Corporations Law able to grant leave to the respondents/cross-claimants pursuant to s 471B of that law - whether cross-claimants had validly invoked the Federal Court's jurisdiction - whether failure to obtain such leave an impediment to the invocation of Federal Court's jurisdiction - whether respondents' cross-claims were statute-barred or colourable - whether the applicants' claims (all of which were non-federal) fell within the Court's accrued jurisdiction consequent upon the filing of the respondents' cross-claim - whether the proceeding in this application arose out of or was related to certain proceedings in the Supreme Court of Western Australia - whether it was "more appropriate" that the proceeding be determined by the Supreme Court of Western Australia - whether the proceeding should be transferred to that Court in the interests of justice.
CONSTITUTIONAL LAW - whether ss 5(4) and 13 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) are constitutionally valid.
The Constitution (63 & 64 Vict. C.12), s 73
Judiciary Act 1903 (Cth) ss 79, 80, 39B(1A)(c)
Corporations Law ss 58AA, 471B, 565
Trade Practices Act 1974 (Cth) ss 52, 82, 86(1), 87(1), 87(1CA)
Corporations (Western Australia) Act 1990 (W.A.) s 42
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ss 5(4), 11, 13
Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 73 ALJR 839 referred to
Westpac Banking Corporation v Paterson [1999] FCA 1609; (1999) 167 ALR 377 followed
Elders Ltd v Swinbank [2000] FCA 56 distinguished
Dorrough v Bank of Melbourne Ltd (unreported, Federal Court of Australia, Cooper J, 1 August 1996) distinguished
Crayford Freight Services Ltd v Coral Seatel Navigation Co (1998) 82 FCR 328 distinguished
Hooper v Kirella Pty Ltd [1999] FCA 1609; (1999) 167 ALR 377 referred to
Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114 followed
Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571 referred to
Re Testro Bros Consolidated Ltd [1965] VR 18 followed
Gray v Raper (1866) LR 1 CP 694 followed
Re Sydney Formworks Pty Ltd [1965] NSWR 646 followed
BHG Nominees Pty Ltd v Ellis Young Investments Pty Ltd (1998) 16 ACLC 1,539 referred to
Re Saunders Ch [1997] 61 followed
Edensor Nominees Pty Ltd v Australian Securities and Investments Commission [1999] FCA 1722 referred to and distinguished
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; (1981) 148 CLR 457 referred to
L Grollo Co Pty Ltd v Nu-Statt Pty Ltd (No.2) (1980) 47 FLR 44 referred to
Seymour v Southern Districts Video Pty Ltd (1985) 4 FCR 596 referred to
Trade Practices Commission v Manfal Pty Ltd (1990) 27 FCR 22 referred to
Abebe v The Commonwealth [1999] HCA 14; (1999) 162 ALR 1 referred to
Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502 referred to
Smith v Smith [1986] HCA 36; (1986) 161 CLR 217 distinguished
Turner v Official receiver in Bankruptcy [1999] FCA 1817 distinguished
Suehle v The Commonwealth [1967] HCA 13; (1967) 116 CLR 353 referred to
Sydlow v T G Kotselas Pty Ltd (1996) 144 ALR 159 referred to
Churcher v Edwardstown Carpets (reg) (1993) 11 ACLC 393 referred to
Putnin v Jenka Pty Ltd (1994) 12 ACLC 282 referred to
Queensland Steel & Sheet Pty Ltd v Clout (1994) 12 ACLC 444 referred to
Burgandy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 applied
National Union of Workers v Davids Distribution Pty Ltd [1999] FCA 1109; (1999) 165 ALR 595 referred to
Wardley v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 followed
Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 referred to
Calmao v Stradbroke Waters Co-owners C-operative Society Limited (1989) 21 FCR 28 referred to
Bate v International Computers (Aust) Pty Ltd (1984) 2 FCR 526 referred to
Dorfler v Australia and New Zealand Banking Group Ltd (1991) 103 ALR 699 referred to
Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 referred to
ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 Marks v GIO [1998] HCA 69; (1998) 73 ALJR 12 referred to
Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 referred to
Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 followed
Stack v Coastal Securities (No. 9) Pty Ltd [1983] HCA 36; (1983) 154 CLR 261 followed
Cockle v Isaksen [1957] HCA 85; (1957) 99 CLR 155 applied
Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Queensland) [1995] HCA 31; (1995) 184 CLR 620 referred to
Sue v Hill [1999] HCA 30 referred to
Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 referred to
McGinty v Western Australia [1995] HCA 46; (1995) 186 CLR 140 referred to
Pidoto v Victoria [1943] HCA 37; (1943) 68 CLR 87 at 130-131 applied
Victoria v The Commonwealth [1995] HCA 45; (1996) 187 CLR 416 applied
Rex v Commonwealth Court of Conciliation and Arbitration [1910] HCA 33; (1910) 11 CLR 1 applied
Crandell v Servier Laboratories (Aust) Pty Ltd [1999] FCA 1461 referred to
Delta Car Rentals Australia Pty Ltd v Bamco Villa Pty Ltd [2000] FCA 72 referred to
Overall v Permanent Trustee Co Ltd [1999] FCA 1385 referred to
Re Hamilton-Irvine (1990) 94 ALR 428 applied
Hoddell v Hoddell Pty Ltd [1999] WASC 156 referred to
Fox Enterprises Pty Ltd v Fox (1995) 13 ACLC 573 at 576 referred to
McIntosh v National Australia Bank Ltd (1988) 17 FCR 482 distinguished
Gould v Brown [1998] HCA 6; (1998) 193 CLR 346 referred to
Coutts v Ronstan International Pty Ltd (unreported, FCA 4 June 1996) applied
Poignand v NZI Securities Australia Limited (1992) 109 ALR 213 referred to
Activate No 1 Pty Ltd v Equuscorp Pty Ltd [1999] FCA 619 referred to
Bristile Holdings Ltd v Giacci Brothers Pty Ltd [2000] WASCA 48 referred to
Charter Pacific Corporation Ltd v Commonwealth Scientific and Industrial Research Organisation (1998) 42 IPR 453 referred to
THE BELL GROUP LIMITED & ORS v WESTPAC BANKING
CORPORATION & ORS
WAG 3067 of 1995
CARR J
7 APRIL 2000
IN THE FEDERAL COURT OF AUSTRALIA |
|
WESTERN AUSTRALIA DISTRICT REGISTRY |
A. The Respondents' Motion Filed on 1 July 1999
The Court orders and declares that:
1. It has jurisdiction to hear and determine the matters in the proceedings on the applicants' seventh amended application and seventh amended statement of claim and the proceedings on the first, second and third respondents' minute of amended defence and cross-claim dated 11 March 1999.
2. Costs of the motion be costs in the cause.
B. The Applicants' Two Motions Filed on 15 July 1999
The Court orders and declares that:
1. The facts alleged in the application and statement of claim together with the facts alleged in the defence do not give the Court jurisdiction to hear and determine the matter constituted by the application, statement of claim and defence.
2. The Court has jurisdiction to hear and determine the matter constituted by the application, statement of claim, defence and cross-claim.
3. Costs of the motion be costs in the cause.
C. The Applicants' Motion Filed on 15 October 1999
The Court orders that:
1. The motion be dismissed.
2. Costs of the motion be costs in the cause.
D. The Respondents' Motion Filed on 8 December 1998
The Court orders and declares that:
1. For the purposes of these proceedings, the Federal Court of Australia is, and always has been, capable of granting leave under s 471B of the Corporations Law.
2. The motion be otherwise adjourned to a date to be fixed.
E. The Applicants' Motion Filed on 23 December 1999
The Court orders that:
1. Pursuant to s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and s 86A(1) of the Trade Practices Act 1974 (Cth), Federal Court of Australia proceeding No WAG 3067 of 1995 and the matters for determination in that proceeding be and are hereby transferred to the Supreme Court of Western Australia.
2. Costs of the motion be costs in the cause.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
WESTERN AUSTRALIA DISTRICT REGISTRY |
BETWEEN: |
THE BELL GROUP LIMITED ACN 008 666 993 (IN LIQUIDATION) & ORS 1ST-9TH Applicants |
AND: |
WESTPAC BANKING CORPORATION ACN 007 457 141 & ORS 1st-3rd Respondents |
JUDGE: |
CARR J |
DATE: |
7 APRIL 2000 |
PLACE: |
PERTH |
Introduction
1 The Court has before it six motions on notice. Five of those motions are concerned with whether the Court has jurisdiction to hear this application. In the sixth motion the applicants seek orders that the application be cross-vested or transferred to the Supreme Court of Western Australia.
Factual and Procedural Background
2 The applicants comprise some 29 companies (all in liquidation) in what was formerly known as "The Bell Group" and two liquidators who, between them, are the individual liquidators of 21 of those companies. As a matter of convenience I shall refer to the corporate applicants as "the applicants" and I shall refer to the other applicants as "the liquidators".
3 The first, second and third respondents are numerous banks grouped into two syndicates, being an Australian syndicate and a European syndicate. There is another respondent, but I shall refer to those banks as "the respondents".
4 On various dates in January and February 1990 the applicants executed 36 instruments to secure payment of various monies to the respondents. I shall refer to those documents as "the Securities".
5 In the principal application, the applicants claim that some of their former directors and the respondents wrongly caused the applicants, at a time when they were insolvent or nearly insolvent, to execute the Securities and thereby give security over their assets in favour of the respondents. The respondents subsequently realised approximately $300 million upon the sale of the assets over which they took such security.
6 The applicants claim that the Securities were taken in breach of their former directors' duties, being a breach or breaches in which the respondents knowingly participated or assisted. The applicants also rely upon those provisions of the former Companies Code and the Corporations Law which, by reference to bankruptcy principles, provide for certain transactions to be void against a liquidator. It is common ground that the application, when viewed on its own, does not raise any federal matter.
7 By 24 December 1997 the pleadings had progressed to the stage where the applicants had, with appropriate leave, filed and served their sixth amended statement of claim and had served on the respondents four progressively revised versions of their proposed seventh amended statement of claim. The respondents had, on 19 May 1997, filed a defence and cross-claim. In essence, the cross-claim, at that stage, simply sought declarations that the Securities were valid.
8 On 25 June 1997 an order was made, by consent, in the following terms:
"The cross-claimants have leave to begin and proceed with the cross-claim against the first, second, fourth, fifth and sixth cross-respondents nunc pro tunc provided that the cross-claimants shall not attempt to enforce any judgment arising out of or in relation to the cross-claim without first obtaining leave to do so."
9 On 27 January 1998 the solicitors for the respective parties agreed to an arrangement whereby the respondents would have leave to amend their defence and cross-claim by 6 February 1998 and that the applicants would have the right to object to any amendments to the cross-claim within 14 days. On 30 January 1998 the respondents filed and served an amended defence and cross-claim. By the amendments in both the defence and the cross-claim the respondents made some new pleas, raising (in the defence) issues of breach of contract and estoppel and (in the cross-claim) those same two issues plus allegations of the contravention by the applicants of s 52 of the Trade Practices Act 1974 (Cth). It is necessary to digress a little to understand the nature of these pleas.
10 At the time when the Securities were granted by the applicants, there were four main groups of external creditors of the Bell Group. The first group was the respondents, being owed approximately $262 million. The second group was known as the "BGNV Bondholders" (BGNV is an abbreviation for one of the companies in the Bell Group which acted as a financier). The BGNV Bondholders were owed approximately $400 million by BGNV which had virtually no other debts, being essentially a conduit for the on-loan of those funds to two other companies in the Bell Group whose names are abbreviated to "TBGL" and "BGF". BGNV did in fact on lend those funds as contemplated. An issue between the parties is whether the debts thus owed to BGNV were subordinated to the debts owing to other creditors of companies in the Bell Group and, in particular, the debts owing to the respondents. The companies referred to as TBGL, BGF and BGNV are, respectively, the first, third and sixth applicants in this matter. The third group comprised the TBGL and BGF Bondholders. TBGL and BGF borrowed about $150 million from Heytesbury Securities Pty Limited, a company associated with the late Mr Robert Holmes à Court, ("Heytesbury"). The fourth group comprised other unsecured creditors who were owed money for goods and services. It seems to be common ground that the rights to repayment arising out of the bonds issued by TBGL and BGF to Heytesbury (of approximately $150 million) were, and still are, subordinated to the rights of other creditors, including the respondents. It is also common ground that the rights of the BGNV Bondholders were similarly subordinated. By their amendments to the defence and cross-claim the respondents claimed that the monies owing by TBGL and BGF to BGNV ("the on-loans") also were, in 1990 (when the Securities were granted) and still are, subordinated to the debts owing to the respondents. [There are other pleas in relation to guarantees provided by TBGL, but the common theme is that repayment of any moneys owed to BGNV, the trustee for the BGNV Bondholders or the BGNV Bondholders themselves were all thus subordinated.] That claim was put as a matter of contract, as a matter of estoppel and (additionally in the cross-claim) in reliance upon s 52 of the Trade Practices Act. In so far as the respondents sought to rely upon s 52 of the Trade Practices Act in their cross-claim, they pleaded that if the BGNV on-loans were not subordinated, then the applicants had misled and deceived them (the respondents) in that regard, contrary to s 52. They further pleaded that by reason of such contravention, the applicants should only receive relief "which is predicated upon the basis that the loans are and were subordinated".
11 On 18 May 1998 the applicants filed a notice of motion to strike out those amendments to the defence and cross-claim. One of the bases for that motion was that no leave of the type referred to in s 471B of the Corporations Law had been obtained by the respondents to bring the cross-claim against the applicants, all of whom were in liquidation. On 23 June 1998 the respondents filed a motion seeking leave nunc pro tunc to amend the defence and cross-claim in terms of the document filed on 30 January 1998 and to begin and proceed with that cross-claim.
12 On 24 June 1998 that motion was heard. The applicants did not oppose the grant of leave of the type referred to in s 471B. Orders were then made as follows:
"The first to third respondents have leave nunc pro tunc to amend the defence and crossclaim in terms of the defence and crossclaim dated and filed on 30 January 1998.The first to third respondents have leave nunc pro tunc to begin and proceed with the crossclaim set out in the amended crossclaim dated and filed 30 January 1998 against the first, second, fourth to sixth cross-respondents provided that the cross-claimants shall not attempt to enforce any judgment arising out of or in relation to the crossclaim without first obtaining leave to do so."
13 On 8 December 1998, the respondents filed a further notice of motion seeking orders that they:
* have leave, if it be necessary, to begin and proceed with the crossclaim dated 3 December 1998 against the [applicants] provided that the cross-claimants shall not attempt to enforce any judgment arising out of or in relation to the crossclaim without first obtaining leave to do so; and
* have leave to amend the defence and crossclaim in terms of a minute of proposed amendment dated 3 December 1998.
14 On 11 March 1999 the respondents filed another minute of proposed further amended defence and cross-claim bearing that date.
15 On 12 March 1999, on the respondents' motion of 8 December 1998, the following orders were made:
"6. The respondents' motion dated 8 December 1998, for leave to proceed with the cross-claim, to the extent that leave is required, be listed for hearing on 17 June 1999 at 9.15 am.. . .
10. The respondents have leave to amend their defence and, subject to leave to proceed with the cross-claim being granted, the cross-claim in terms of the minute of proposed amended defence and cross-claim dated 11 March 1999."
16 As will be seen below, a major issue, raised in the motions which are at present before the Court, is whether by filing and serving that proposed further amended defence and cross-claim, or the preceding amended defence and cross-claim, the respondents have validly invoked the jurisdiction of this Court.
17 On 16 June 1999 I heard part of a motion by the applicants seeking leave to amend their statement of claim in terms of an eighth amended statement of claim of that date. A week had been set aside for hearing that and other motions.
18 On the next day, 17 June 1999, the High Court of Australia handed down its decision in Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 73 ALJR 839.
19 Shortly thereafter various directions were made with a view to resolving the question whether this Court has jurisdiction to hear this matter.
The motions before the Court
20 I shall first describe, briefly, the five motions concerning the jurisdictional issues. They are as follows:
(a) The respondents' motion of 1 July 1999 for a declaration that this Court has jurisdiction to hear and determine the matters in these proceedings on the applicants' seventh amended application and seventh amended statement of claim and the proceedings on the respondents' minute of amended defence and cross-claim dated 11 March 1999.
(b) Two motions filed by the applicants on 15 July 1999. In the first such motion the applicants move for orders that the Court has no jurisdiction over the matter the subject of this proceeding, or, in the alternative, that the Court has jurisdiction over that matter. In the second motion the applicants ask that the following questions be decided separately and before trial, namely:
* Question 1: whether the facts alleged in the application and statement of claim with the facts alleged in the defence give the Court jurisdiction to hear and determine the matter constituted by the application, statement of claim and defence; and
* Question 2: if the answer to question 1 is no, whether the facts alleged in the cross-claim give the Court jurisdiction to hear and determine the matter constituted by the application, statement of claim, defence and cross-claim.
(c) A further motion filed by the applicants on 15 October 1999 seeking the setting aside of the orders granting leave (to begin and proceed with the cross-claim) on 25 June 1997, 24 June 1998 and 12 March 1999, and an order permanently staying, or, alternatively, dismissing or striking out the proceedings for want of jurisdiction.
(d) The respondents' motion, filed on 8 December 1998 and amended on 11 November 1999, seeking a declaration that, for the purposes of these proceedings, the Federal Court of Australia is a "Court" as defined in s 58AA of the Corporations Law capable of granting leave under s 471B of the Corporations Law, and an order that the respondents have leave, if it be necessary, to begin and proceed with the cross-claim dated 11 March 1999.
21 From the respective written submissions of the parties it became apparent that constitutional issues arose in these motions. In short, the applicants contended that, to the extent that the respondents relied upon the Federal Courts (State Jurisdiction) Act 1999 (WA) ("the Validating Act") as validating the orders granting them leave to begin and proceed with the cross-claim, that Act was invalid because it was inconsistent with Chapter III of the Commonwealth Constitution. Notices were served on the Attorneys as required by s 78B of the Judiciary Act 1903 (Cth). Only the Attorney-General for Western Australia (henceforth "the State Attorney") indicated that he would intervene. The State Attorney's submissions raised (as a further issue) a question of inconsistency between the Trade Practices Act and s 471B of the Corporations Law, to the extent that the latter purported to require leave for the bringing of proceedings under the Trade Practices Act against companies in liquidation. Further notices were served on the Attorneys under s 78B of the Judiciary Act, but no other Attorney intervened. I now turn to the issues to be decided.
Whether the respondents have invoked this Court's jurisdiction
22 The respondents contended that when, on 30 January 1998, they filed their amended cross-claim, they invoked the procedures of this Court in a matter in respect of which jurisdiction had been conferred on the Court by s 86(1) of the Trade Practices Act and s 39B(1A)(c) of the Judiciary Act. Section 86(1) confers jurisdiction on this Court "... in any matter arising under this Act in respect of which a civil proceeding has ... been instituted under this Part" [Part VI]. Section 39B(1A)(c) of the Judiciary Act has, since 17 April 1997, conferred jurisdiction upon this Court in any matter arising under any laws made by the Parliament. It operates as a general conferral of jurisdiction in respect of such matters.
23 The applicants argued that the filing by the respondents of their amended cross-claim on 30 January 1998 was not by agreement of the parties (because their agreement was not an informed agreement in that they were not told the nature and extent of the proposed amendments) and was done without leave of the Court. The respondents contended that, at the very least (i.e. assuming, contrary to the respondents' contentions, there was no such agreement or leave) the amended cross-claim stood as the record of their assertion of a federal claim which they wished the Court to hear. That assertion was, so it was put, sufficient to found jurisdiction.
24 The respondents further contended that on 24 June 1998, when this Court made the orders referred to above, it exercised federal jurisdiction by permitting the respondents' claims to be litigated under the amended cross-claim.
25 The applicants submitted in summary, that, as revealed by Re Wakim, they have not, in their application, invoked the original jurisdiction of this Court either at or since filing the application. At the time when the amended cross-claim was filed, and again at the time when leave was granted to file that amended cross-claim, so the applicants submitted, this Court had no jurisdiction. Federal jurisdiction, so the applicants contended, could not be attracted by the amended cross-claim in those circumstances.
26 Secondly, the applicants contended that the federal jurisdiction of this Court could not be enlivened until a valid order, under s 471B of the Corporations Law for leave to proceed, had been made by the appropriate Court in respect of the cross-claim.
My Reasoning
27 In my view, the first of these arguments can be disposed of by reference to the recent decision of a Full Court of this Court in Westpac Banking Corporation v Paterson [1999] FCA 1609; (1999) 167 ALR 377. In that case Westpac had sued Mr and Mrs Paterson in the Supreme Court of New South Wales, seeking possession of their home by reason of their default under the terms of a mortgage. Mr and Mrs Paterson defended those proceedings and brought a cross-claim seeking relief under the Contracts Review Act 1980 (NSW). The proceedings were then transferred by the Supreme Court of New South Wales to the Federal Court, because they were thought to be related to other proceedings then pending in the Federal Court in which Mr and Mrs Paterson and others were applicants. After such transfer, Mr and Mrs Paterson filed an amended cross-claim raising a plea of contravention of s 52 of the Trade Practices Act. In the wake of Re Wakim, a judge of the Federal Court, having heard the matter and reserved judgment, declared that the Court lacked jurisdiction to determine the Paterson proceedings. Her Honour rejected the applicant's submission that the Court had acquired jurisdiction by reason of the filing of the cross-claim which raised federal issues.
28 The Full Court allowed the appeal and (at par 13) said this:
"As a matter of principle, there is no reason why the court cannot acquire jurisdiction in a matter arising under a law of the Commonwealth by the filing of a cross-claim which asserts a claim founded on the Commonwealth legislation. The filing of the cross-claim asserts the right and makes the claim to enforce the right part of the justiciable controversy between the parties. Provided the cross-claim is not "colourable", it attracts federal jurisdiction."
29 The applicants made a formal submission to the effect that the decision of the Full Court in Westpac was wrong. They also sought to distinguish that case from the present matter. The essence of that distinction was said to be the clear common substratum of facts in Westpac, contrasted with what was said to be the separate and distinct nature of the cross-claim in this matter.
30 At this stage of my reasoning, all I propose to do is confirm that I regard Westpac as having decided that the fact that there may have been no federal claim before the Court before a cross-claim is filed, does not prevent the Court from obtaining jurisdiction, both in relation to the cross-claim and the applicants' claims, subject to the latter being shown to fall within the accrued jurisdiction under the well-recognised principles. I do not think that Westpac can be distinguished, in relevant principle, from this case. Accordingly, I reject so much of the applicants' contentions as depend on the proposition that this Court had to have jurisdiction at the commencement of the proceedings (i.e. when the applicants filed their application) and could not acquire it upon the filing of the respondents' amended cross-claim. In my view, applying Westpac, on the filing of the amended cross-claim, subject to the various issues discussed below, the jurisdiction of this Court was invoked to decide the cross-claim and so much of the subject matter of the application as fell, in accordance with the usual principles in that regard, within its accrued jurisdiction.
31 In further submissions, filed on 18 February 2000, the applicants sought to rely on another decision of a Full Court of this Court subsequent to Westpac. That case was Elders Ltd v Swinbank [2000] FCA 56. In that case the applicants had sued a group of insurance companies in this Court seeking indemnity from them as the underwriters named in a contract of insurance. Orders had been made, under Order 29 rule 2 of the Federal Court Rules, for the separate decision of questions as to the liability of the respondent underwriters to indemnify the applicants under that insurance contract. Mansfield J answered those two questions in favour of the applicants and, but for the delivery subsequent to his Honour's judgment, of the decision in Re Wakim, he would have proceeded to determine the outstanding issues in the application that would have included an assessment of damages.
32 After the High Court had delivered its decision in Re Wakim, the respondents sought leave to appeal against the declarations (that they were liable to indemnify the applicants) and other orders pronounced by Mansfield J. Leave was required as, due to the outstanding issue remaining, his Honour's determinations on the two separate issues were interlocutory. The Full Court was asked to deal with the respondents' motion only in so far as they sought leave to appeal on the ground that his Honour had no jurisdiction to deal with the proceeding. That motion, so the Full Court noted, provoked an application by the applicants for leave to amend their statement of claim in order to raise issues under the Insurance Contracts Act 1984 (Cth).
33 The Full Court first dealt with a contention advanced by the applicants that a claim under the Insurance Contracts Act had been from the outset an issue in the application as originally framed. It noted that, subject to the validity of that contention, it was clear enough that the Court only had jurisdiction to deal with the application by force of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA) and that, in view of the decision in Re Wakim, this Court had to be taken never to have had jurisdiction to entertain the application.
34 The applicants maintained that a claim to interest under s 57 of the Insurance Contracts Act had already been sufficiently raised in the proceedings as to make the application, from the outset, one within the Court's original jurisdiction.
35 The Full Court found that this had not been the case. The applicants had claimed damages on one basis only (loss of profits) which, so the Full Court held, was a basis inconsistent with any reliance on s 57 of the Insurance Contracts Act. Furthermore, it could not be said that the only compensation available to the applicants for loss caused by being kept out of the indemnity monies would be by way of an award of interest under s 57. The subject matter of the application to amend, a proposed claim based on s 13 of the Insurance Contracts Act, was also held by the Full Court not to have already arisen so as to have enlivened the Court's original jurisdiction from the inception of the proceeding.
36 The applicants in the present matter relied heavily on the following paragraph (para 40) from the Full Court's reasons:
"Federal jurisdiction not having already been enlivened, there is no basis upon which the Court has any authority to exercise the power of amendment under O 13 r 2(2) and (6). It is not to the point that, if this Court's original jurisdiction is properly enlivened and application is then made to amend the proceedings to include a non-federal claim, one of the matters governing whether such an amendment should be allowed is whether the non-federal claim forms part of the entire controversy of which the federal claim is also a part. It is a fallacy to say, as the applicants have, that the institution of any proceeding in this Court, though confined in express terms to non-federal claims, necessarily invokes this Court's original jurisdiction to determine any federal claim not explicitly raised in the proceeding, just because it might be found, on analysis, to be part of the whole controversy of which the non-federal claims explicitly raised in the proceedings are themselves part."
37 The Full Court held that it was clear that the orders made by Mansfield J were made without jurisdiction, that the Full Court lacked jurisdiction to take any further action in the proceedings other than to recognise the want of jurisdiction by setting aside the orders on that ground. It proceeded to do so.
38 In my opinion, the Elders decision is to be distinguished from the present case and from the decision in Westpac. In Westpac, as in the present matter, an amended cross-claim was filed raising pleas which included a plea of contravention of s 52 of the Trade Practices Act. As the Full Court noted in that case (at para 10) until the filing of that amended cross-claim the proceedings in the Federal Court were liable to be dismissed for want of jurisdiction. The filing of the cross-claim, however, invoked federal jurisdiction. Neither Westpac nor the present matter was or is one in which the respondents were or are contending that they require leave to amend their pleading in order to attract federal jurisdiction.
39 It would seem, with respect, that the Full Court in Elders recognised that Westpac was a different sort of case when they referred to it briefly at para 13 of their reasons.
40 In my view, nothing decided in Elders casts any doubt upon what was decided in Westpac and, as I have mentioned above, I propose to apply Westpac to resolve this part of the argument in the present case.
41 The applicants placed some reliance on cases such as Dorrough v Bank of Melbourne Ltd (unreported, Federal Court of Australia, Cooper J, 1 August 1996) and Crayford Freight Services Ltd v Coral Seatel Navigation Co (1998) 82 FCR 328 for the proposition that this Court cannot give a respondent leave to amend its pleading and to file a cross-claim if there is no proceeding involving a matter within its jurisdiction at the time when the cross-claim is to be filed pursuant to the application for leave to do so and when such application is made. I did not read the applicants' written submission in that regard as taking the point any further than the issue which I have discussed above and to which I have applied Westpac to resolve. However, in oral argument it appeared (see page 19 of the transcript of 18 November 1999) that a formal point was being taken about the cross-claim not being filed in accordance with the Federal Court Rules. The point taken was that although the claims made in the cross-claim might have been within this Court's jurisdiction if they had been made in an originating application, they could not have been made in a cross-claim. In my view, that submission ought not to be accepted. By the document filed (the amended defence and cross-claim) the respondents invoked the Court's jurisdiction. If there was any defect or irregularity, it was one which the Court could remedy and did not go to jurisdiction. Dorrough is distinguishable (as the Full Court noted in Crayford at 335) on the basis that in that matter the principal application had been settled at the time when the cross-claim was filed. In my view, subject to the reservations which I have mentioned above, when the respondents filed their amended cross-claim they asserted a claim arising under a law of the Parliament, viz the Trade Practices Act - cf Hooper v Kirella Pty Ltd [1999] FCA 1584; (1999) 167 ALR 358 at paras 55-59 (another decision of a Full Court of this Court).
42 The next issue is whether, as the applicants contend, obtaining leave under s 471B of the Corporations Law was a pre-requisite to the invocation by the respondents of this Court's jurisdiction.
Whether leave under the Corporations Law was a pre-requisite to the invocation of this Court's jurisdiction
43 The applicants submitted that s 471B of the Corporations Law placed "a bar in front of the right to commence an action", so that it was necessary to obtain an order from a court of competent jurisdiction to remove that bar before commencing a relevant action. An action commenced without such leave was, so it was submitted, on the authorities, illegal. The applicants contended that this Court could not have jurisdiction unless the requisite leave had first been obtained.
44 The respondents contended that the leave requirement was procedural and did not constitute a jurisdictional bar.
My Reasoning
45 Section 471B of the Corporations Law provides as follows:
"471B While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes."
46 A similar provision can be found in s 459P of the Corporations Law which deals with who may apply to the Court for a company to be wound up in insolvency. Section 459P(2) provides as follows:
"(2) An application by any of the following, or by persons including any of the following, may only be made with the leave of the Court:(a) a person who is a creditor only because of a contingent or prospective debt;
(b) a contributory;
(c) a director;
(d) the Commission."
47 In Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114 at 150 Kirby J described the language of s 459P as "unusually emphatic" and referred to the language of subsection (2) as suggesting an element of strictness in compliance. The question in Emanuele was whether a Full Court of this Court had erred in granting leave nunc pro tunc to the Australian Securities Commission to apply to the Federal Court for orders winding up certain companies in insolvency. The Commission had not either applied for or obtained leave before making that application or at the hearing at first instance when the application had been granted. It would appear that s 459P(2) had not been referred to the primary judge. On appeal to the Full Court, that Court made an order that the Commission have leave nunc pro tunc pursuant to s 459P(2) to apply to wind up the relevant companies.
48 The High Court of Australia, by majority, held that an order granting leave under s 459P(2) could be made nunc pro tunc. Brennan CJ was one of the two dissenting judges, holding that the failure to obtain leave was a fundamental irregularity, the result of which was, on application of the principles explained in Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, that the order made without leave could be set aside ex debito justitiae on the application of a person with a sufficient interest - see p 124. At the same page his Honour made the following observation, which I consider to be helpful in the present matter:
"It is a false dichotomy to divide all statutory provisions affecting the commencement of legal proceedings into provisions that deny jurisdiction and provisions that are procedural. Whatever may be the position in courts of inferior jurisdiction, it is not the true dichotomy in courts of superior jurisdiction where an order made in proceedings irregularly commenced or conducted will not be held to be a nullity though it might be set aside ex debito justitiae on the application of a person with a sufficient interest."
49 His Honour had previously made it clear (see p 122) that he considered that leave could not be granted nunc pro tunc after an application to wind up a company in insolvency had been made.
50 Gaudron J, who was also in dissent, differed from Brennan CJ in that regard. At p 139 her Honour said this:
"It follows, in my view, that although leave to make a winding up application may be granted at any point prior to, or simultaneously with, the making of a winding up order, it may not be granted thereafter, whether by the judge who made the order or by a court exercising appellate jurisdiction."
51 Toohey J (with whom Dawson and Kirby JJ agreed) expressly adopted (see p 129) the approach taken by Sholl J to the interpretation of s 199 of the Companies Act 1961 (Vic) in Re Testro Bros Consolidated Ltd [1965] VR 18. Section 199 of the Companies Act provided that no action should be commenced or continued without the leave of the Court after the service of the notices which comprised the first step in proceedings to appoint an official manager under Part IX of the Companies Act. Sholl J in Testro Bros reviewed authorities stretching back to Gray v Raper (1866) LR1 CP 694. At p 33 his Honour said this:
"There is ... a uniform set of authorities in Australia, extending over seventy years, for the granting of leave under such sections, nunc pro tunc ... Before the Judicature Acts, it was held that the omission to obtain leave to continue a common law action after a winding-up order could not be made the subject of a plea in defence to the action, but that application for a stay must be made to the Court having winding-up jurisdiction ... Since the Judicature Acts, no doubt an application to stay could be made in the Court in which the action is pending, and it may be that the absence of leave could also be pleaded as a defence. But clearly the absence of leave is not a matter going to jurisdiction..."
52 This passage from Sholl J's reasons in Testro was set out in Toohey J's reasons in Emanuele at 128. At 129 Toohey J, after noting that Sholl J's approach had been followed by McLelland CJ in Eq in Re Sydney Formworks Pty Ltd [1965] NSWR 646 said:
"I respectfully adopt what is said by Sholl J as the approach to be taken to the legislation now under consideration. To the extent that National Mutual Fire Insurance Co Ltd v The Commonwealth [1981] 1 NSWLR 400 takes a different view, it should not be followed."
53 I think it is helpful to note his Honour's reference to Re Sydney Formworks Pty Ltd, because in that case McLelland CJ in Eq (whose expertise in this field and the like expertise of Sholl J was given due recognition by Kirby J at 153) had to consider whether leave could be granted nunc pro tunc under s 218 of the Companies Act 1936 to commence an action for damages for personal injury against a company in liquidation. Section 218 may be regarded as a predecessor of s 471B of the Corporations Law. McLelland CJ followed a line of authorities which included Testro and the cases considered in Testro and held that the Court administering the liquidation could grant leave nunc pro tunc to continue an action which had been commenced without leave under the section.
54 The assistance which I see the decision in Re Sydney Formworks Pty Ltd and the reasoning in Emanuele providing to the resolution of the issue before me derives from the fact that it appears to be accepted that the principles applicable to the significance or otherwise of instituting proceedings without leave are the same, whether the underlying principal application or other proceedings be in the nature of a petition to wind up a company in insolvency (as in Emanuele), an action against a company in respect of which proceedings have begun to appoint an official manager (as in Testro) or an action against a company in liquidation (as in Re Sydney Formworks Pty Ltd). There is nothing in the reasoning in Emanuele which suggests any difference whether of principle or in policy considerations between the various types of leave application.
55 Although, technically speaking, none of the authorities would appear to be binding on me in the present matter, I think that they point sufficiently clearly in favour of the proposition that a failure to obtain leave under s 471B of the Corporations Law did not preclude this Court from having jurisdiction. I note that in the passage cited above, Brennan CJ observed that such proceedings, irregularly commenced or conducted, would not be a nullity.
56 I note also that in BHG Nominees Pty Ltd v Ellis Young Investments Pty Ltd (1998) 16 ACLC 1,539 an order was made nunc pro tunc granting leave to institute and proceed with an application under the Trade Practices Act against a company being wound up. Weinberg J, in an ex tempore judgment, regarded the approach adopted in Emanuele and Testro as being applicable (see p 1543). Counsel for the party opposing the grant of leave in that matter conceded that the Court had power to make the orders asked.
57 If further reassurance be required on this issue, I think that it is to be found in the reasons for judgment of Lindsay J in Re Saunders Ch [1997] 61. In that case, proceedings in tort and contract for damages had been brought against the defendants before it was discovered that they had been made bankrupt. The plaintiffs then sought leave under s 285(3) of the Insolvency Act 1986 (UK) nunc pro tunc to commence the proceedings. Section 285(3) is expressed in terms very similar to s 471B of the Corporations Law. Lindsay J reviewed an extensive range of decisions, both English and from several Commonwealth jurisdictions, and (at 83) held that leave might, in appropriate circumstances, be given notwithstanding that the proceedings had already been commenced.
58 For the foregoing reasons, in my view, even though the respondents had not obtained leave before filing their amended cross-claim, that factor was not a bar to the invocation of this Court's jurisdiction.
The Status of the Orders Granting Leave
59 As the decision in Re Wakim has now revealed, if the orders of 24 June 1998 and 12 March 1999 respectively, granting leave to the respondents to begin and proceed with their cross-claim, had as their only jurisdictional basis s 42(3) of the Corporations (Western Australia) Act 1990 (WA) or any other corresponding or like State provision, those orders would have been made without jurisdiction. Even then, the orders would not be nullities - see the authorities discussed above. They could, as Brennan CJ observed in Emanuele, be set aside as a matter of right on the application of a person with a sufficient interest. I now turn to the question whether those orders had any other jurisdictional basis.
Whether this Court had jurisdiction and power to grant to the respondents leave to proceed
Applicants' Contentions
60 In summary, the applicants contended that the orders granting leave were made without jurisdiction or power and were thus nullities. This was because, "...the "Court" which must give leave to proceed under section 471B can by definition only be the Federal Court `... when exercising the jurisdiction of Western Australia'." This was a reference to the definition of "Court" in s 58AA(1) of the Corporations Law (set out below). The Federal Court could not, so the applicants submitted, exercise the jurisdiction of Western Australia and never could have done so. The Federal Court, like the High Court, could only exercise federal judicial power, and must do so in conformity with the Constitution.
61 The applicants contended that an order giving leave to proceed against a company in liquidation is a civil matter arising under the Corporations Law of Western Australia. Section 42(3) of the Corporations (Western Australia) Act purported to confer jurisdiction on the Federal Court with respect to civil matters arising under the Corporations Law of Western Australia and was invalid. The result was that no jurisdiction had been conferred upon the Federal Court with respect to civil matters arising under the Corporations Law, including jurisdiction upon an application for leave to proceed under s 471B. Where an insolvent applicant was incorporated and/or wound-up in Western Australia, the Supreme Court of Western Australia was, so the applicants submitted, the only court able to grant leave under s 471B.
Respondents' Contentions
62 The respondents filed two sets of written submissions on this point. The first set, filed on 8 November 1999, pre-dated the decision of a Full Court of this Court in Edensor Nominees Pty Ltd v Australian Securities and Investments Commission [1999] FCA 1722, delivered on 10 December 1999. In those submissions the respondents contended that s 58AA of the Corporations Law, which defines the expressions "Court" and "court", was not a section which conferred jurisdiction and, for that reason, did not offend against the constitutional principles explained in Re Wakim.
63 Section 58AA relevantly provides as follows:
"SECT 58AA Meaning of "court" and Court"58AA (1) Subject to subsection (3), in this Law:
"court" means any court when exercising the jurisdiction of this jurisdiction;
"Court" means any of the following courts when exercising the jurisdiction of this jurisdiction:
(a) the Federal Court;
(b) the Supreme Court of this or any other jurisdiction;
(c) the Family Court of Australia;
(d) ...
(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Law may, subject to the Acts mentioned in subsection (3), be brought in any court.
(3) The jurisdiction that courts have in relation to matters under this Law is dealt with in Part 9 of each of the following:
(a) the Corporations Act 1989;
(b) the Corporations (New South Wales) Act 1990 of New South Wales;
(c) the Corporations (Victoria) Act 1990 of Victoria;
(d) the Corporations (Queensland) Act 1990 of Queensland;
(e) the Corporation (Western Australia) Act 1990 of Western Australia
(f) the Corporations (South Australia) Act 1990 of South Australia;
(g) the Corporations (Tasmania) Act 1990 of Tasmania;
(h) the Corporations (Northern Territory) Act 1990 of the Northern Territory.
(4) The matters dealt with in those Parts of those Acts include the applicability of limits on the jurisdictional competence of courts.
64 Section 42(3) of the Corporations (Western Australia) Act 1990 (WA) provides that jurisdiction is conferred on the Federal Court with respect to civil matters arising under the Corporations Law of Western Australia. I interpolate to observe that as Re Wakim shows, the subsection cannot achieve that result.
65 The respondents submitted that the purpose of s 58AA was to distinguish between superior courts, being those which were defined to be "Courts" and courts generally which were defined to be "courts".
66 Further, so the respondents contended, in the phrase "when exercising the jurisdiction of this jurisdiction", the word "jurisdiction" first occurring had its ordinary meaning of "authority to decide", whereas the words "this jurisdiction", as defined in s 9 of the Corporations Law, meant Western Australia, including its coastal sea. I omit, at this stage, any reference to the extensive citation of authorities by the respondents in their submissions.
67 The next stage in the respondents' first set of written submissions was to submit that s 79 of the Judiciary Act 1903 (Cth) "picked up" s 471B of the Corporations Law so as to be binding upon all courts exercising federal jurisdiction in Western Australia.
68 The respondents argued that when, on 25 June 1997 and 24 June 1998 respectively, this Court granted leave pursuant to s 471B to proceed with their claims under the Trade Practices Act, it was exercising federal jurisdiction conferred by s 86(1) of that Act and s 39B(1A) of the Judiciary Act. There was a procedural requirement to obtain such leave; the source of that requirement being s 471B of Corporations Law of Western Australia. That procedural requirement was picked up by s 79 of the Judiciary Act. The Federal Court, when granting leave on each of those occasions, was exercising its authority to decide an issue whose source was a law of Western Australia. Accordingly, so it was submitted, the Federal Court was and is a "Court" exercising the jurisdiction of the jurisdiction of Western Australia within the meaning of s 58AA, because it was and is adjudicating on an immunity from suit given to a company in liquidation by a law of Western Australia which was made applicable by s 79 of the Judiciary Act. The respondents submitted that nothing in Re Wakim affected these contentions because, so it was submitted, Re Wakim was concerned with the purported conferral of jurisdiction, not the distinction between superior and inferior courts which was the work carried out by s 58AA of the Corporations Law.
69 The respondents acknowledged that this part of their submissions (i.e. the part relating to Re Wakim) was affected by the Full Court decision in Edensor, a decision to which I now turn.
70 Edensor was the quite well-known case concerning a takeover by Yandal Gold Pty Ltd ("Yandal") of Great Central Mines Ltd ("Great Central"). The Australian Securities and Investments Commission brought proceedings in this Court for declarations and other relief on the basis that Yandal and others had contravened s 615 of the Corporations Law. As a result of subsequent amendment to the pleadings, declarations and ancillary relief were also sought under the Trade Practices Act on the basis that Yandal and other respondents had also contravened s 52 of that Act. The learned primary judge found that there had been breaches of s 615 of the Corporations Law and, among other provisions, s 52 of the Trade Practices Act. One of the respondents, Edensor Nominees Pty Ltd, appealed to a Full Court of this Court. A preliminary point arose on the appeal as a result of the High Court decision in Re Wakim. The appellant challenged orders, made under ss 737 and 739 of the Corporations Law, that it pay to shareholders in Great Central an amount of $28.5 million. Both of those sections conferred upon "the Court" power to make the orders to which they refer. The appellant contended that s 58AA by defining "Court" as including the Federal Court "when exercising the jurisdiction of this jurisdiction" purported to confer State jurisdiction on this Court which, under the principles explained in Re Wakim, was not constitutionally possible.
71 The Full Court agreed with the primary judge that there was a common substratum of fact which conferred on the Federal Court jurisdiction to decide the whole "matter", i.e. including the claims made under the Trade Practices Act and to decide whether there had been a contravention of s 615 of the Corporations Law. The Full Court then turned to what it described as "the real question". It said (at paragraph 24):
"So the real question, in our opinion, is not whether the reference to the Federal Court in s 58AA is invalid as such, but whether, when this Court is seised of a "matter" by force of the accrued jurisdiction conferred upon it by the Parliament of the Commonwealth, this Court then exercises the jurisdiction of the State in which the relevant corporation is incorporated."
72 The Full Court recognised (at paragraph 25 of its reasons) that when a federal court exercises accrued jurisdiction it is exercising federal jurisdiction. In that paragraph, the Full Court set out a passage from the reasons for judgment of McHugh J in Re Wakim at para 293-294. That passage included the following two sentences:
"But the jurisdiction which the legislation in the present proceedings [those provisions of the Corporations Act 1989 (Cth) and the Corporations (New South Wales) Act 1990 (NSW) which purported to give the Federal Court of Australia jurisdiction to exercise state judicial powers] purports to confer upon the federal courts is not accrued federal jurisdiction. It is an attempt to confer State jurisdiction in respect of controversies that fall outside the realm of federal jurisdiction."
73 The Full Court in Edensor then observed as follows:
"The last two sentences of this passage are an apt description of the present case. Section 58AA of the Corporations Law, when read with the substantive provisions to which it attaches, including ss 737 and 739, purports to confer on this Court the jurisdiction of the State of Victoria. It empowers the Court to make orders under provisions such as ss 737 and 739 only when it is "exercising the jurisdiction" of that State. That is not accrued federal jurisdiction but State jurisdiction."
74 The Full Court then assumed, for the purposes of argument, that the Commission was the Commonwealth and rejected an alternative submission that s 39B of the Judiciary Act applied so as to give the Federal Court jurisdiction to make orders under ss 737 and 739. It did so by stating that the alternative submission had "the same vice" as the principal submission, i.e. that:
"...the Court would be exercising the jurisdiction of the State of Victoria purportedly conferred by a State Act."
75 The Full Court then considered and excluded s 22 of the Federal Court of Australia Act 1976 (Cth) as being a source of power for the orders made at first instance. The Court concluded its reasoning (in paragraph 33) in the following terms:
"There may be cases, the present is not one of them, where the power in a State statute is expressed in general terms or in ways which permit the Court to exercise the power that a State statute confers. Whether that is the case is a question of construction. It may involve considerations such as those that arise when s 79 of the Judiciary Act 1903 is invoked. Cf Davies v Federal Commissioner of Taxation (1989) 89 ATC 4377 and the cases there discussed."
76 In further submissions filed after the Full Court decision in Edensor, the respondents submitted that, essentially for the reasons advanced in their first set of submissions, the decision in Edensor was clearly wrong. The respondents contended that Edensor is authority only where s 79 does not apply, and that s 79 had to apply, to make s 471B of the Corporations Law applicable at all. The respondents pointed out that in Edensor ss 737 and 739 of the Corporations Law could only ever have applied by reason of s 79 of the Judiciary Act.
77 The respondents submitted that if they had applied to the Supreme Court of Western Australia for leave to proceed with their claims under the Trade Practices Act, the Supreme Court would be exercising federal jurisdiction. They relied upon Hooper and Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; (1981) 148 CLR 457, and Re Wakim at paragraphs 138-140.
78 The respondents further submitted that if, as the Full Court held in Edensor, a court is only "exercising the jurisdiction of this jurisdiction" when it is exercising State jurisdiction, then in the circumstances referred to in the immediately preceding paragraph the Supreme Court would not be a "Court" within the definition contained in s 58AA. The result would be that, assuming Edensor to be correct and that s 471B was "picked up" and made applicable to the present proceedings by s 79 of the Judiciary Act, there is no court able to grant leave pursuant to s 471B in respect of the present matter, or indeed in any other matter in federal jurisdiction. Accordingly, so the respondents contended, s 471B could not be picked up by s 79 because s 86 of the Trade Practice Act and s 39B(1A)(c) of the Judiciary Act "otherwise provide(s)". The respondents submitted that such a result i.e. that leave can be obtained from no court whatsoever, was inconsistent with, and irreconcilable with, the jurisdiction conferred on the Federal Court by s 86 of the Trade Practices Act and s 39B(1A)(c) of the Judiciary Act. But, on the hypothesis that Edensor was correct, the respondents argued that s 79 does not apply to s 471B, and there was no requirement to obtain leave.
My Reasoning
79 Sections 79 and 80 of the Judiciary Act provide as follows:
"State or Territory laws to govern where applicable
79. The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
Common law to govern
80. So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters."
80 When the respondents filed their amended cross-claim they thereby invoked federal jurisdiction by asserting claims arising under the Trade Practices Act - see the Full Court decisions in Westpac at paragraphs 11-14 and Hooper at paragraphs 55-59. I have already held, earlier in these reasons, that the fact that the respondents had not obtained leave under s 471B of the Corporations Law was not a bar to such invocation of jurisdiction. I have also held that leave may be granted nunc pro tunc. In my view, by the operation of s 79 of the Judiciary Act, s 471B of the Corporations Law became binding on this Court in its exercise of the jurisdiction thus invoked, see L Grollo Co Pty Ltd v Nu-Statt Pty Ltd (No.2) (1980) 47 FLR 44; Seymour v Southern Districts Video Pty Ltd (1985) 4 FCR 596; Trade Practices Commission v Manfal Pty Ltd (1990) 27 FCR 22.
81 The next question is whether s 79 may be applied in such a manner that this Court may grant the leave referred to in s 471B? That question did not arise in the cases which I have cited immediately above, because the corresponding section in those cases specified the Supreme Court of the relevant State as being the Court whose leave was required to begin or proceed with a proceeding.
82 Section 58AA makes it clear that the reference to the Court in s 471B includes the Federal Court. But that reference is, as discussed above, qualified so as to read "the Federal Court when exercising the jurisdiction of this jurisdiction". I shall refer to that qualification as "the qualifying phrase".
83 The Full Court in Edensor (at paragraph 33) expressly put to one side cases in which s 79 of the Judiciary Act was invoked. It has been invoked in this case. Accordingly, I do not consider that I am bound to apply in this matter the construction given to the qualifying phrase by the Full Court in Edensor.
84 Furthermore, I think that there is a significant and relevant distinction in the character of the powers conferred by ss 737 and 739 of the Corporations Law (being the relevant sections in Edensor) on the one hand and the power to grant leave which is referred to in (but not, in my opinion, conferred by) s 471B. Incidentally, I would not regard ss 737 and 739 of the Corporations Law as sections which purport to confer jurisdiction on this Court. The purported conferral of jurisdiction is to be found in s 42(3) of the Corporations (Western Australia) Act, one of the provisions struck down in Re Wakim.
85 The reasoning in the line of cases cited above, starting with Grollo, and the reasoning in the three Full Court cases of Hooper, Westpac and Edensor and the obvious intent of s 471B can, I think, all be reconciled by taking an approach along the following lines. Section 79 of the Judiciary Act picks up s 471B to impose a procedural bar on beginning or proceeding with proceedings against companies being wound up in insolvency or by the Court or in respect of which a provisional liquidator is acting, without the leave of the Court. The reference to "a proceeding in a court" in s 471B can be seen (in s 58AA(1)) as meaning any court when exercising the jurisdiction of this jurisdiction. The same qualification applies to the term "Court" in s 58AA(1).
86 The term "jurisdiction" when first used in the qualifying phrase must, I think, have its ordinary meaning of "authority to decide": Abebe v The Commonwealth [1999] HCA 14; (1999) 162 ALR 1 at para 24 and the other authorities there cited. The term "jurisdiction" when secondly used must be used in a geographical sense, otherwise the reference to "...the coastal sea of the State" in the definition of "jurisdiction" in s 9 of the Corporations Law would not make sense. There is no contrary intention to be found in s 58AA. Kirby J, in Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502 at paragraph 22, thought that that was clearly the case and that the expression "the jurisdiction of this jurisdiction" meant the jurisdiction of Australia in which the Law was relevantly operating i.e. the jurisdiction of a component part of the Commonwealth such as New South Wales.
87 The qualifying phrase should be construed, for the purposes of deciding this case, as meaning "when exercising authority to decide in Western Australia". I would distinguish cases such as Smith v Smith [1986] HCA 36; (1986) 161 CLR 217 and Turner v Official Receiver in Bankruptcy [1999] FCA 1817 on two bases. First, because in the present matter when granting leave to the respondents to proceed with their cross-claim under s 52 of the Trade Practices Act, this Court was exercising federal jurisdiction. Secondly, in s 31 of the Family Provision Act 1982 (NSW) and the relevant part of the Real Property Act 1900 (NSW) in which s 138 is to be found (being the respective relevant sections in those cases), only the Supreme Court of New South Wales was specifically referred to.
88 Accordingly, so construed, s 471B (as picked up by s 79 of the Judiciary Act) operates as a stay of proceedings, in this case, in the Federal Court, without leave of a "Court". If and when the Federal Court grants leave for proceedings in this Court to be begun or proceeded with, then s 471B is given effect as required by s 79 of the Judiciary Act. The discretionary principles or factors to which a State Court would normally give consideration would, again by virtue of ss 79 and 80 of the Judiciary Act, in like manner be taken into consideration by the Federal Court when deciding to grant leave, with or without conditions - see Suehle v The Commonwealth [1967] HCA 13; (1967) 116 CLR 353 at 356. In this case, leave was granted on the usual condition preventing enforcement of any judgment without further leave. There was no need to have recourse to any purported conferral of State jurisdiction or power on this Court to grant leave to proceed. The granting of leave is the exercise of a power, or possibly merely a dispensation, in the course of exercising jurisdiction. Here there was no doubt, in my opinion, that once the respondents filed their amended cross-claim, this Court's federal jurisdiction was invoked. But its exercise was conditioned by "picked up" State law. The question is whether this Court fell within the description of the courts which, by exercising the power or dispensation, satisfied that condition. As a matter of statutory construction, I think that it is quite clear that it did. It is possible that, when invoking federal jurisdiction, in this case under s 86 of the Trade Practices Act and s 39B(1A)(c) of the Judiciary Act, against a corporation in liquidation leave is not required, although it has traditionally been sought and granted. It is not necessary for me to decide that issue. I have worked on the assumption that such leave is required.
89 The applicants contended that the respondents (as cross-claimants) also required leave to begin or proceed with the cross-claim (and amendments) against the liquidators. They did not contend that such leave was required under s 471B of the Corporations Law. I do not propose to review the authorities in detail here. First, because in my view the point does not go to jurisdiction, for the reasons which I have already given. Secondly, the authorities relating to proceedings brought against a liquidator personally do not, in my opinion, clearly demonstrate that leave is required before such proceedings may be brought, but that such proceedings will be stayed where they wrongfully impede the processes of winding up - see for example Sydlow v T G Kotselas Pty Ltd (1996) 144 ALR 159 at 165, a case in which the cross-claimants took the precaution of applying for leave. Thirdly, valid orders have been made for leave to proceed against the corporate applicants which, in practical terms would bind the liquidators. If I am wrong, and leave is required, it can be obtained nunc pro tunc without affecting the issue of this Court's jurisdiction.
90 In my view, each of the orders granting leave to begin and proceed with the cross-claim is and always has been valid.
91 In those circumstances there is no need for me to consider the State Attorney's submissions that s 471B of the Corporations Law was inconsistent (within the meaning of s 109 of the Constitution) with those provisions of the Trade Practices Act which permit a litigant to commence proceedings against another party for a breach of that Act. This was part of a submission that, if s 471B were thereby rendered inapplicable, there would be no need to consider the constitutional validity of the Validating Act. It was an interesting vignette to hear a State Attorney-General arguing (for perfectly understandable reasons) that a State law was inoperative for direct inconsistency with a Commonwealth law.
Is There a Further Jurisdictional Bar?
92 During the course of submissions on the third day of the hearing of these motions, junior counsel for the applicants raised the question whether, even if I held that the applicants' claims were within the accrued jurisdiction of this Court, there might be a further jurisdictional bar. This was said to arise out of a line of cases including Churcher v Edwardstown Carpets (reg) (1993) 11 ACLC 393, Putnin v Jenka Pty Ltd (1994) 12 ACLC 282 and Queensland Steel and Sheet Pty Ltd v Clout (1994) 12 ACLC 444. This line of cases concerned proceedings brought initially in inferior courts. Putnin (a decision of the Full Court of the Supreme Court of Western Australia) and Queensland Steel (a decision of the Queensland Court of Appeal) were each cases where a liquidator was suing to recover preferential payments as being void as against him under s 565 of the Corporations Law. The proceedings had been brought in the District Court of Western Australia and in a Magistrates Court in Queensland respectively. The Full Court of the Supreme Court of Western Australia and the Queensland Court of Appeal held that such a proceeding was a matter arising under the Corporations Law and fell within s 42 of the respective Corporations Acts. The Supreme Court of Western Australia held (at 287) that s 42 was:
"... an exhaustive denomination of the courts having jurisdiction to deal with civil matters arising under the Corporations Law."
93 In Queensland Steel (at 447) the Queensland Court of Appeal said that its reasoning accorded with that of the Full Court in Putnin. Accordingly it was held that neither of the inferior courts in those cases had jurisdiction to hear the actions brought by the liquidators.
94 It was not necessary, of course, in either of those cases (nor in Churcher) for any consideration to be given to the question of this Court's jurisdiction to hear cases involving preferential payments.
95 As a result of this matter being raised during the course of oral argument, directions were made for the applicants to file written submissions by 24 December 1999 and for the respondents to file submissions in response by 20 January 2000 (the time was later extended by consent). The applicants filed 13 pages of written submissions and the respondents filed 8 pages of written submissions in response. I do not propose to summarise those submissions; they have been placed on the Court file.
96 In my view, for reasons substantially the same as those set out above between paragraphs 79 to 88 when read with paragraphs 122 to 137 where I conclude that the applicants' claims fall within this Court's accrued jurisdiction, the Court has jurisdiction to hear and determine a liquidator's claim to the extent that it arises under s 565 of the Corporations Law or s 451 of the Companies Codes. As the respondents submit, the remedies sought by the liquidators are common law remedies which this Court can order if the transactions are found to be void. The claims which are based upon s 565 of the Corporations Law or s 451 of the Companies Codes are part of the matter (the cross-claim under s 52 of the Trade Practices Act) in respect of which jurisdiction has been conferred on this Court by the Trade Practices Act and the Judiciary Act.
97 Both those sections (s 565 and s 451) are picked up and given effect by s 79 of the Judiciary Act. The cases relied upon by the applicants and cited in respect of their submissions relating to s 42 of the Corporations Act are in my opinion really not to the point. They were all based on the assumption that s 42 conferred jurisdiction on the Federal Court of Australia, which Re Wakim shows to be a false assumption. To the extent that s 42(3) purports to confer jurisdiction on the Federal Court with respect to civil matters arising under the Corporations Law of Western Australia, it has been shown to be constitutionally invalid.
98 Nonetheless, as I have said, in my view the jurisdiction to grant relief at common law consequent upon any avoidance worked by s 565 of the Corporations Law or its predecessor in the Codes is within this Court's federal accrued jurisdiction to decide the whole controversy between the parties.
Whether the Validating Act validates the leave orders
99 In view of the conclusions reached above, there is also no need to consider this issue.
Whether the respondents' cross-claims under the Trade Practices Act are
statute-barred
Applicants' Contentions
100 The applicants contended that the respondents' alleged cause of action accrued prior to January 1990 when the alleged misrepresentations were made, and acted upon by them. The applicants relied upon the provisions of s 87(1CA)(b) of the Trade Practices Act which relevantly provides that an application under s 87(1A) (being the section under which, so the applicants contended, the relevant cross-claim has been brought) may be commenced at any time within 3 years after the day on which the cause of action accrued. Accordingly, as the amended cross-claim was not commenced within that 3 year period it was, so it was put, ineffective to ground jurisdiction. The applicants submitted that "...the cause of action is allowed to exist only for three years and then evaporates."
Respondents' Contentions
101 The respondents submitted that whether the Trade Practices Act cross-claims were statute-barred could only be relevant to questions of jurisdiction if such statute-barring was so clear as to support the inference that the claims had been made colourably or as a mere subterfuge in order to fabricate jurisdiction. They submitted that the relevant cause of action was not yet complete and that time had not started to run. This was because the essence of their claims under ss 80 and 87 of the Trade Practices Act was that loss would be prevented from arising if the parties who engaged in the allegedly misleading or deceptive conduct were kept to their representations, departure from which would occasion loss. If the applicants were allowed, now, to resile from the position which had allegedly been represented concerning the subordinated loans, loss would now be caused. In any event, so the respondents submitted, there was an unresolved controversy on the authorities as to whether the limitation periods in s 82(2) and s 87(1CA) applied to s 87(1). Furthermore, there was no limitation period applicable to relief sought under s 80. The authorities cited for these two latter submissions can be found at paragraph 47 of the respondents' written submissions filed on 8 November 1999.
My Reasoning
102 To invoke federal jurisdiction it is necessary for the claim or defence raised to be genuine and not a mere subterfuge to fabricate jurisdiction. Subject to that qualification, the strength of the claim or defence is immaterial: Burgandy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219; National Union of Workers v Davids Distribution Pty Ltd [1999] FCA 1109; (1999) 165 ALR 595 at 601 and Hooper at paragraph 55.
103 Although the context here is different to that in Wardley v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 (a striking out case) I think that it is appropriate to bear in mind the caveat expressed in the joint judgment of Mason CJ and Dawson, Gaudron and McHugh JJ at 533-534 in that case. Their Honours expressed a view that limitation questions (being substantially the same as the limitation question in this matter) should generally not be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases.
104 I think that it is at least reasonably arguable, as the respondents contended, that their cause of action has not yet accrued i.e. that it is not yet apparent that they are likely to suffer loss or damage in the event that it transpires that BGNV or the BGNV Bondholders are not subordinated creditors.
105 To the extent that the respondents rely upon s 80 of the Trade Practices Act for the injunctive relief which they seek, it would appear that there is no statutory limitation period: Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 at 133.
106 The respondents also rely upon s 87(1). There is, as the respondents submitted, an unresolved controversy on the authorities as to whether the limitation periods in s 82(2) and s 87(1CA) apply to s 87(1). On the one hand Pincus J in Calmao v Stradbroke Waters Co-owners Co-operative Society Limited (1989) 21 FCR 28 at 29-30 considered that the time limit expressed in s 87(1CA) applied to s 87(1). Similarly, Woodward J in Bate v International Computers (Aust) Pty Ltd (1984) 2 FCR 526 at 527 held that the three year limitation period provided in s 82(2) applied to other claims under s 87. And Spender J held to similar effect in Dorfler v Australia and New Zealand Banking Group Ltd (1991) 103 ALR 699 at 702. On the other hand, Merkel J in Gregg at 132-133 held that the limitation period expressed in s 87(1CA) applied only to the statutory causes of action under s 87(1A) and not to either s 80 or s 87(1).
107 In my view, it is sufficiently arguable that the respondents' claims are not statute- barred as to require the rejection of the applicants' contentions that the making of those claims has not validly invoked the jurisdiction of this Court. Those contentions are linked to the applicants' contentions that the respondents' federal claims are colourable, although the latter contentions were put under a separate heading, to which I now turn.
Whether the Respondents' Federal Claims are Colourable
108 This part of the applicants' assertion that this Court lacks jurisdiction to hear the respondents' cross-claim for relief under s 80 and s 87 of the Trade Practices Act focusses upon the nature of the relief sought. I do not propose to set out all of the various arguments put by the applicants. They can be found in paragraphs 34-38 of their submissions of 1 November 1999, paragraphs 40-46 (which, by reference, incorporate paragraphs of their submissions of 2 December 1999) and the transcript of argument on 18 November 1999 at pages 29-31, 54 and 57-61. On the respondents' side, their contentions can be found at paragraphs 54-59 of their submissions dated 8 November 1999, paragraphs 38-42 of their submissions of 9 December 1999 and the transcript of argument on 18 November 1999 at pages 45-53.
109 I think that it would be useful at this stage if I were to recapitulate, in barest summary, the respondents' Trade Practices Act cross-claims. In essence, they are that between 1985 and 1989 the applicants, and in particular BGNV, TBGL and BGF made representations to the respondents that the on-loans from BGNV to TBGL and BGF of monies, raised principally in Europe, were subordinated to any monies owing to the respondents, and that those three Bell Group companies engaged in conduct which amounted to representations to the same effect. Thereafter those applicants and respondents built a commercial relationship which was founded upon such subordination. If the respondents had believed that BGNV's rights and the rights of the BGNV Bondholders competed with their rights, then a quite different relationship might well have arisen or there might have been no relationship at all. The respondents thereby lost opportunities between 1985 and 1989 to reorder their banking relationships as a result of being thus misled. The applicants and their new controllers are seeking to resile from the representations, so that if the Securities are set aside and the respondents are ordered to repay the proceeds of realisation of the Securities to the applicants, then the debts owing to BGNV by TBGL and BGF will not be treated as being subordinated but will rank pari passu with the debts owing to the respondents, and the respondents will thereby suffer loss.
110 As I have mentioned earlier, the respondents put these claims in contract, by way of estoppel and also under the Trade Practices Act.
111 Various orders are sought by the respondents in their cross-claim, but in order to assist in understanding the submissions and my reasoning, I set out below the relevant portions of paragraph 105 of the cross-claim as it stands at present:
"...if (contrary to the assertions of the Banks) the applicants, or any of them, are, or would be otherwise, entitled to relief by way of setting aside of the said securities or the payment of money, whether by damages or otherwise, the court should make an order, either under s 80 or s 87 of the Trade Practices Act, or otherwise at general law to mould relief consequent upon and conformable with the nature of the estoppel pleaded above restraining the applicants from enforcing any relief claimed or any relief to which they would be entitled except relief predicated upon the on-loans from BGNV to TBGL and BGF being subordinated in the manner referred to in paragraph 13C(2)(4) above."
112 [A later foreshadowed amendment to the cross-claim shows that the relief which the respondents propose to seek is to apply both before and after the point at which relief may be granted to the applicants.]
113 The applicants submitted, in essence, that the respondents' cross-claims are so ill-founded as to be untenable and colourable, seeking only to attract this Court's jurisdiction. Being so colourable, the Federal Court's jurisdiction is not enlivened.
114 The applicants pointed to the fact that there is no suggestion in the cross-claim that the respondents are continuing to be misled or deceived, or that the corporate cross-respondents are continuing to engage in misleading or deceptive conduct. They also pointed to the fact that the respondents do not seek to restrain the continuance of any misleading or deceptive conduct, but are seeking relief which would give effect to the allegedly false and misleading or deceptive representation as if it were a warranty which would cause the winding up of the applicants TBGL and BGF to be conducted on the basis that the on-loans were relevantly subordinated. Relief was also sought against the liquidators who engaged in no misleading or deceptive conduct. The relief sought would change the order of application of assets available for creditors specified by the Corporations Law by subordinating the claim of BGNV to those of the respondents. The applicants said that the Trade Practices Act cannot be "stretched" to achieve such a result. In particular, there was an insufficient nexus between the alleged contravention and the injunctive relief sought. The power to grant such injunctive relief was, so it was put, confined by reference to the scope and purpose of the Trade Practices Act, in particular s 80 which, so it was submitted was "...designed to prevent a repetition of the conduct for which the relief is sought" citing Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 203-204.
115 The applicants submitted that the "supposed subordination and the misrepresentations about it" in the cross-claim were "ineffective as being illegal". This was put on the basis that subordination of an existing debt in return for no new value is contrary to law. [Section 563C of the Corporations Law came into force on 23 June 1993, some years after the events in question].
My Reasoning
116 In general, the applicants make no attack on the factual basis put forward by the respondents for their Trade Practices Act claim. Accordingly, I proceed on the basis that the respondent will at trial establish that the relevant applicants engaged in the conduct alleged and that such conduct caused the respondents not to re-arrange matters in the manner pleaded, including not taking steps which would have prevented or lessened the chance of having to rank equally with BGNV in the various liquidations.
117 Sections 80 and 87 of the Trade Practices Act are expressed in very wide terms. The authorities show that they are to be given a broad construction - see, for example, ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 at 256-257, 264-266 and 268; Marks v GIO [1998] HCA 69; (1998) 73 ALJR 12 at 30 and Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503-506.
118 As the respondents concede, the cross-claim will raise issues at trial about the intersection between the Corporations Law and the Trade Practices Act. However, unless the claims are clearly hopeless and can thus be seen to be colourable, that does not preclude this Court from having jurisdiction. A fair reading of the cross-claim discloses allegations of conduct which, if proved at trial, might well be found to have been misleading or deceptive in all the circumstances. In my view, it is reasonably arguable that there is a sufficient nexus between the conduct complained of by the respondents and the relief which they seek, in order to prevent them from suffering the loss and damage which would arise if the debts to BGNV were not subordinated.
119 As to the claims made against the liquidators, again it seems to me to be reasonably arguable that they are properly joined to the cross-claim. If, as the respondents submitted, there has been misleading or deceptive conduct and the corporate applicants are ordered to behave in a manner holding them to the representations, on a prima facie basis, they are entitled to have the liquidators likewise bound. It is reasonably arguable that the liquidators' control of the various insolvent applicants and the assets of those applicants is subject to the rights of parties affected by the conduct of those applicants which may have been in breach of the Trade Practices Act and the entitlements to relief of those who have legitimate complaints arising under that Act. I accept the respondents' submissions to that effect, to the extent that those submissions are reasonably arguable.
120 The resolution of the issue, raised by the applicants, that the alleged subordination was ineffective as being illegal, will require findings of fact (for example whether the respondents gave value by continuing the financing arrangements) and, depending upon those findings, a decision whether the respondents' legal proposition is valid and how s 52 of the Trade Practices Act is to be applied in such circumstances i.e. at the intersection with the Corporations Law. In my view, the applicants' submissions in that regard are not so obviously correct as to deny the respondents their day in Court.
121 In my view, whatever the strength or weakness of the cross-claims may be shown to be at trial, they are not colourable in the sense referred to, for example, in Burgandy Royale Investments Pty Ltd.
Whether the Applicants' Claims Fall within the Accrued Jurisdiction
Applicants' Contentions
122 The applicants contended that the respondents' causes of action under the Trade Practices Act arose only if the applicants' case succeeded. The causes of action were, so it was put, consequential, not defensive, not joining issue with the claim and not proffering a defence in confession and avoidance. The applicants contended that the Federal Court's original jurisdiction could not be enlivened in this way.
My Reasoning
123 I shall not set out separately the respondents' contentions because, in large measure, I accept them, and to do so would be repetitive.
124 There was little, if any, dispute between the parties about the correct legal approach to be taken to the assessment of whether the respondents' claims under the Trade Practices Act and the applicants' claims in their statement of claim were parts of a single "matter". For example, it was common ground that a "matter" is a justiciable controversy, part of which may comprise a federal claim but which may also include another cause of action arising under another law, provided that the latter is not severable from the former.
125 I do not propose to set out all of the often-quoted extracts from the relevant authorities. The authorities include Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 at 606-608; Stack v Coastal Securities (No. 9) Pty Ltd [1983] HCA 36; (1983) 154 CLR 261 at 290-291; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd at 475; Burgandy Royale Investments Pty Ltd at 219 and Re Wakim at paragraphs 135, 139 and 140.
126 I set out below short extracts from two of those paragraphs in Re Wakim:
"[135] It must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the Parliament is not "restricted to the determination of the federal claim or cause of action in the proceeding but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part."[140] ... There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts" notwithstanding that the facts upon which the claims depend "do not wholly coincide". So, too, there is but one matter where different claims are so related that determination of one is essential to the determination of the other..."
127 At paragraph 139 in Re Wakim the central task was described as being to identify the justiciable controversy.
128 In Fencott v Muller at 608 in the judgment of Mason, Murphy, Brennan and Deane JJ, their Honours said this:
"What is and is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter."
129 In terms of pleadings, I turn first to the statement of claim. The applicants' complaint is that the directors of the applicant companies and the respondents acted in a way which wrongfully removed assets, which might have become available for distribution to all unsecured creditors, into the hands of the respondents. That conduct was alleged to be wrongful and in breach of directors' duties, in which the respondents knowingly participated or assisted and also as being in contravention of those provisions of the Bankruptcy Act which are picked up in the Corporations Law.
130 It is part of the applicants' case that the debt owing to BGNV was unsubordinated i.e. that in 1990 (when the Securities were taken by the respondents) BGNV had access to the assets of the Bell Group on an equal footing with the respondents.
131 As I have mentioned above, the respondents contend that the on-loans from BGNV to TBGL and BGF were subordinated, either on the basis of contracts to that effect, or estoppel, or on the basis that the applicants had misled or deceived the respondents, thereby entitling the respondents to relief on the basis that the loans are and were unsubordinated.
132 I accept the respondents' submission that there is significant overlap between the factual matters relied upon for the contention in the defence that the applicants are estopped and the factual matters relied upon for the contention in the cross claim that the applicants have engaged in misleading and deceptive conduct.
133 As part of deciding the applicants' claim, it will be necessary for the Court to assess the decision, made by the directors in 1990, to grant security to the respondents and to assess the respondents' conduct in participating in that decision and accepting the benefit of the security. Whether or not the approximately $400 million of debt owing to BGNV was subordinated would appear to me, on the materials before the Court at present, to be a very significant factor.
134 This is particularly so when it is appreciated that it is common ground that some of the debts owing to one major TBGL and BGF Bondholder (approximately $150 million owing to Heytesbury) were subordinated, leaving, in terms of external debt, in the main, only the approximately $262 million owing to the respondents and the approximately $400 million owing to the BGNV Bondholders (through BGNV).
135 Issues raised by the statement of claim and defence include:
* whether the creditors of BGF would have benefited from the realisation of the assets of various Bell Group companies;
* whether the effect of a document known as Subordination Deed No. 2 was to deprive BGNV of debts owed to it by TBGL and BGF;
* whether the directors of BGF breached their duties to that company;
* whether the directors of TBGL breached their duty to TBGL;
* whether the sole director of BGNV breached its duty to BGNV by executing the BGNV subordination deed;
* whether the Australian directors breached duties owing to the Bell Group of companies in respect of which they were directors, or had an intention to defraud those companies by the grant of the Securities to the respondents;
* whether the respondents knowingly participated and assisted in breaches of duty by directors of the Bell Group of companies;
* whether the applicants are entitled to any equitable relief;
* whether, by the subordination deed, BGNV disposed of and alienated its right to collect receivables; and
* whether various instruments executed by the various Bell Group companies were made with an intent by those companies and the respondents to defraud creditors.
136 The authorities show that it is not necessary that the facts upon which the claims in the statement of claim and the defence depend should wholly coincide with the facts upon which the cross-claims under the Trade Practices Act depend. It seems to me that there is sufficient commonality, in the sense of common transactions and facts, for the respondents' Trade Practices Act cross-claims (which are very similar to the facts upon which the defence of estoppel is based) for them to be part of the one justiciable controversy. I reject the applicants' submission that the cross-claim is relevantly severable from the claims which they make in their application and statement of claim.
137 In Re Wakim (at paragraph 141) there is the following useful observation:
"Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter."
138 If the estoppel issue were heard in the Supreme Court proceedings referred to below as "the WA Proceeding" and the same evidence were heard in the Federal Court in relation to the s 52 claims (being to a large extent based on the same facts) there is the possibility of conflicting findings.
139 The respondents take the position that even if, on the application of relevant legal principles other than those reflected in the Trade Practices Act, the applicants are entitled to have the Securities set aside and the proceeds of realisation of the assets secured repaid, the respondents are entitled to relief under the Trade Practices Act on the basis that the applicant companies engaged in misleading or deceptive conduct. In pre-Judicature Act terms, the situation is comparable to a matter in which a plaintiff might have rights at law, but in respect of which a defendant may be able to obtain an injunction from a Chancery Court to restrain the plaintiff from exercising those rights.
140 In summary, I think that the Trade Practices Act cross-claims and the applicants' claims in their statement of claim each form part of the single justiciable controversy between the parties. They each raise and rely upon matters which will have to be decided as part of the applicants' claims. If the cross-claims are successful, then claims brought by the applicants (even if they make out their case) will not result in a judgment in their favour. In basic terms, the question to be decided is - who gets the money?
141 I consider that for the reasons expressed above, all the applicants' claims are accrued to the causes of action under the Trade Practices Act which the respondents have raised in their cross-claim.
Discretion
142 The applicants and the respondents each made submissions on the matter of whether this Court had a discretion to exercise any accrued jurisdiction, and, if so, how that discretion should be exercised.
143 The current state of the authorities suggests that the exercise of the accrued jurisdiction is discretionary: Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd at 475; Stack v Coast Securities (No 9) at 294-295, but see Re Wakim at para 149.
144 On the assumption that there is such a discretion i.e. that this Court may decline to exercise the accrued jurisdiction, I would so exercise it. My reasons for taking that course are the same as the reasons set out below for my conclusion that this proceeding (in its entirety) should be transferred to the Supreme Court of Western Australia.
Whether the application should be transferred to the Supreme Court of Western Australia?
145 On 23 December 1999 the applicants filed a notice of motion, the relevant paragraph of which reads as follows:
"1. This proceeding be transferred to the Supreme Court of Western Australia pursuant to section 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)".
146 The applicants have filed 44 pages of written submissions in support of that motion, the respondents have filed 50 pages of submissions in opposition and the applicants have filed a further 26 pages of submissions in reply. The applicants were content to have the motion decided on the papers so filed. The respondents sought to make further oral submissions.
A Further Constitutional Issue
147 The respondents challenged the constitutional validity of s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (hereafter "the Cross-Vesting Act"). Notices were given under s 78B of the Judiciary Act to the Attorneys of the Commonwealth, the States and the Territories. The Attorney-General for the Commonwealth was the only Attorney-General who intervened. The motion was set down for oral argument on 10 March 2000, on which date Mr D.M.J. Bennett QC, Solicitor-General for the Commonwealth appeared (with Mr C.J. Horan) in order to support the constitutional validity of the sub-section.
148 At the further hearing on 10 March 2000 the applicants sought and obtained leave (over the opposition of the respondents) to make a further contention. That was, in essence, that this Court had jurisdiction to transfer the proceeding to the Supreme Court pursuant to s 5(4) of the Cross-Vesting Act whether this Court had jurisdiction to hear and determine the justiciable controversy revealed by the pleadings, or not. This was contrary to what had previously been common ground between the parties, namely that this Court could only transfer a proceeding in respect of which it had jurisdiction, other than jurisdiction conferred by the Cross-Vesting Act. The applicants' new submission was, in essence, that their motion for transfer under s 5(4) of the Cross-Vesting Act (opposed by the respondents) was a "matter" within the meaning of s 76 of the Constitution. That is, it was no longer relevant, for the purposes of the transfer motion, to consider whether this Court had jurisdiction to hear and determine the justiciable controversy revealed by the pleadings. The respondents felt that this contention raised another constitutional issue. Further notices were served under s 78B, but no Attorney intervened. In view of my conclusions above concerning the Court's jurisdiction, it is not necessary to consider the applicants' further contention. I now turn to the issue of whether s 5(4) of the Cross-Vesting Act is constitutionally valid.
The Sub-Section
149 Section 5(4) of the Cross-Vesting Act provides as follows:
5(4) Where:(a) a proceeding (in this sub-section referred to as the "relevant proceeding") is pending in the Federal Court or the Family Court (in this sub-section referred to as the "first court"); and
(b) it appears to the first court that -
(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court;
(ii) having regard to -
(A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of a State or Territory;
(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-sub-paragraph (A) and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and
(C) the interests of justice,
it is more appropriate that the relevant proceeding be determined by that Supreme Court; or
(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory,
the first court shall transfer the relevant proceeding to that Supreme Court."
The Respondents' Contentions
150 The respondents' contentions had two bases. The first was that s 13 of the Cross-Vesting Act was invalid and that s 5(4) was not severable. The second basis involved the effect of the constitutional invalidity of that part of the Commonwealth and State cross-vesting legislative scheme (purported conferral of State jurisdiction upon federal courts) as was found to be invalid in Re Wakim. I shall deal first with the matter of s 13.
The First Basis (the Section 13 Point)
151 Section 13 of the Cross-Vesting Act provides as follows:
"LIMITATION ON APPEALS13. An appeal does not lie from a decision of a court -
(a) in relation to the transfer or removal of a proceeding under this Act; or
(b) as to which rules of evidence and procedure are to be applied pursuant to sub-section 11(1)."
152 The respondents focussed on s 13(a) and, in particular, its purported exclusion of appeals to the High Court of Australia. The respondents contended that this was not a valid exception to or regulation of the jurisdiction conferred by s 73 of the Constitution upon the High Court of Australia to hear and determine appeals.
153 Section 73 of the Constitution relevantly provides as follows:
"Appellate jurisdiction of High Court73. The High Court shall have jurisdiction, with such exceptions and subject to such regulations as the Parliament prescribes, to hear and determine appeals from all judgments, decrees, orders, and sentences:
(i) of any Justice or Justices exercising the original jurisdiction of the High Court;
(ii) of any other federal court, or court exercising federal jurisdiction; or of the Supreme Court of any State, or of any other court of any State from which at the establishment of the Commonwealth an appeal lies to the Queen in Council;
(iii) of the Inter-State Commission, but as to questions of law only;
and the judgment of the High Court in all such cases shall be final and conclusive. ..."
154 The respondents submitted that s 13 was plainly not a "regulation". Neither the applicants nor the Attorney-General for the Commonwealth disagreed with that proposition. They contended that it was an "exception".
155 There was no difference between the parties and the Commonwealth about the meaning of the term "exception" in this context - see Cockle v Isaksen [1957] HCA 85; (1957) 99 CLR 155.
156 The respondents contended that "a real question" arose as to whether s 13 was effective to exclude appeals where, as in the present case, the proceeding involved one or more matters arising under the Constitution. The respondents submitted that the motions in relation to jurisdiction ("the Jurisdiction Motions") in these proceedings raised numerous questions arising under the Constitution. Parliament could not, so it was put, prevent the High Court from hearing an appeal from a decision which involved questions arising under the Constitution - a point adverted to but which it was not necessary to decide in Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Queensland) [1995] HCA 31; (1995) 184 CLR 620 at 651 and Sue v Hill [1999] HCA 30 at para 41. The respondents contended that it was to be implied into Chapter III of the Constitution from the Constitution itself, the structure of Chapter III and the position of the High Court in the judicial structure in Australia, that the High Court cannot be prevented from hearing appeals on matters relating to the Constitution: Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106 at 135; McGinty v Western Australia [1995] HCA 46; (1996) 186 CLR 140 at 168-169, 231. The respondents argued that s 13 was invalid to the extent that it purported to exclude an appeal to the High Court or make "inutile" or less useful the vindication of rights arising from the decisions on the Jurisdiction Motions. The respondents contended that if a transfer occurred, the relevance of the various constitutional questions might all become attenuated and so interfere with those questions. Intrinsic to a decision to transfer was a decision about the jurisdiction of the transferring court. The respondents submitted that s 5 was also invalid as being inseverable from s 13, standing as an unreviewable power to cross-vest.
My Reasoning
157 In my view, s 13 of the Cross-Vesting Act is constitutionally valid as an exception within the meaning of s 73 of the Constitution. There can be no doubt that it operates validly to exclude appeals to a Full Court of this Court; there was no submission to the contrary. In Cockle v Isaksen at 165-166 in the reasons for judgment of Dixon CJ, McTiernan and Kitto JJ, there appear the following passages:
"An exception assumes a general rule or proposition and specifies a particular case or description of case which would be subsumed under the rule or proposition but which, because it possesses special features or characteristics, is to be excluded from the application of the rule or proposition. It is not a conception that can be defined in the abstract with exactness or applied with precision; it must depend very much upon context. ... In the case of each description of court or tribunal the intention of s 73 doubtless is that the general rule shall be that the High Court has jurisdiction to hear and determine appeals from its judgments decrees orders or sentences. From that general rule the legislation (sic) is empowered to prescribe exceptions. In the present case there is no attempt to use the power to prescribe exceptions so as to destroy the general rule, in relation to any court or tribunal or class of courts or tribunals comprised within s 73, that an appeal shall lie from its judgments decrees orders or sentences. ... It is true that it [the particular ground of exception in s 113(1) of the Conciliation and Arbitration Act 1904 (Cth)] relates rather to its legal basis than its operative effect as between the parties, its pecuniary significance, its finality or its interlocutory character. But familiar as these are as grounds for restricting or regulating appeals from judgments orders etc. they are not exhaustive ... It is enough to say that it fixes upon a description of judgment decree order or sentence of State courts exercising federal jurisdiction, it does not eat up or destroy the general rule laid down by the Constitution that appeals lie to this Court ...".
158 Section 13 is, in my view, concerned with certain interlocutory orders of the types described in it. To make those orders an exception to the general rule that an appeal lies to the High Court of Australia does not, in my opinion, eat up or destroy the general rule.
159 I accept that the words "in relation to" can be interpreted, on occasion, quite broadly. But I think that in the case of s 13, Parliament's intention is sufficiently clear. As I see it, Parliament thought it was undesirable for there to be appeals, relevantly in this case, from the decision of a court relating to the transfer of a proceeding to another court, with consequent delays and expense in the conduct of the litigation. I would not construe s 13 as preventing a party from raising jurisdictional or constitutional issues on appeal from an order transferring a proceeding under the Cross-Vesting Act, either by way of appeal to a Full Court of this Court or to the High Court. Furthermore, to the extent that constitutional issues remain live in the proceeding, the mere transfer of the proceeding to another court would not, in my opinion, prevent a party from challenging the decision on any constitutional point by way of an appeal to the High Court.
160 If I am wrong in that conclusion, and s 13 would be constitutionally invalid as purporting to operate so as to exclude appeals to the High Court from decisions which involve questions arising under the Constitution (based upon acceptance of the respondents' argument that there is an implication to that effect to be read into the Constitution), then I consider that not only is s 5 a sufficiently independent provision, within power, which is severable from s 13, but also that s 13 may and should (in the assumed circumstances) be read down as not applying to decisions involving matters arising under the Constitution or involving its interpretation. Section 5 will continue to operate in relevantly the same manner i.e. defining the terms and conditions under which cases are to be transferred: Pidoto v Victoria [1943] HCA 37; (1943) 68 CLR 87 at 130-131.
161 As to reading down s 13, I think, for reasons which I explain below, it is sufficiently apparent that Parliament did not intend the section either to operate fully and completely according to its terms, or not at all - see Pidoto at 107-108 and Victoria v The Commonwealth [1995] HCA 45; (1996) 187 CLR 416 at 502.
162 Applicable to both lines of reasoning immediately above are s 15 and s 16(4) and (5) of the Cross-Vesting Act.
163 Section 15, which mirrors s 15A of the Acts Interpretation Act 1901 (Cth), indicates Parliament's general intention that the Cross-Vesting Act is to be upheld as valid to the extent to which it is not in excess of the legislative power of the Commonwealth. Assuming that the respondents are correct in their contention about the constitutional implication, this would in my opinion, amount to a sufficiently "clear limitation" on Parliament's legislative power as to enable s 13 to be read as subject to that limitation - see Victoria v The Commonwealth at 502-503.
164 Section 16(4) and (5) also evidence an intention that the Cross-Vesting Act was not intended to operate fully and completely according to its terms, or not at all - a subject to which I return below.
The Second Basis
165 The respondents contended that s 5(4) of the Cross-Vesting Act was invalid because it was not severable from that part of the Commonwealth and State cross-vesting legislation which was found to be invalid in Re Wakim. The respondents submitted that the Commonwealth and State cross-vesting legislation were part of a single legislative scheme which created a seamless web of jurisdiction and transfer between courts which was intended to be reciprocal. At best, after the decision in Re Wakim, the scheme was, so it was put, highly "lop-sided" and, as a scheme, had an operation different to that intended - a reference to the principles explained in Pidoto and Victoria v The Commonwealth.
166 Mr T.M. Jucovic QC, senior counsel for the respondents, sought to illustrate the inseverability of the whole scheme of which s 5(4) formed part, by reference to the factors referred to in s 5(4)(b) and in particular s 5(4)(b)(i), (ii) and (iii). For ease of reference, I shall refer to those three paragraphs as (i), (ii) and (iii). It is common ground that the applicants' motion is moved under (i) and (iii), but not under (ii). The respondents submitted that the intended operation of s 5(4)(b) was for the first court to consider (i), then (ii) and, if neither of the criteria in either of those sub-paragraphs satisfied, to consider (iii). If, at the end of that process, the first court were satisfied under any of those three sub-paragraphs then the first court was obliged to transfer the proceedings. The respondents contended that the first court was only to consider (iii) if neither (i) nor (ii) were satisfied. That was because such a construction would give effect to the word "otherwise" in (iii).
167 In those circumstances, so the respondents submitted, s 5(4) would have a different operation from that which it was intended to have. It was obvious, so the respondents contended, from the preamble and from s 9 of the Cross-Vesting Act that s 5(4) was intended to have an operation which assumed the validity of the cross-vesting scheme. After the decision in Re Wakim, s 5(4) had a different operation from that intended, not merely because of the fact that (ii) ceased to have any relevant operation, but because of the interaction of (ii) with (i). The respondents argued that when the first court, as it was required by (i) to do, determined what was "more appropriate", that had "infused with it" the status of a system which was constitutionally valid. Furthermore, the respondents submitted that when the question was asked - what was "more appropriate"?, the legislature had provided in (ii) a dictionary or guidelines in sub-sub-paragraphs (A) and (B) of matters which the first court ought to take into account. Those matters having fallen away post Re Wakim, (i) had a different operation, (i) and (ii) also had a different operation as did (iii), which was only to be considered after the first court had determined whether the proceeding was within (i) or (ii). As all three clauses of s 5(4)(b) would operate differently after Re Wakim, the respondents submitted that there could be no severance under the principles recognised in Rex v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co [1910] HCA 33; (1910) 11 CLR 1 and Pidoto.
My Reasoning
168 I do not accept the respondents' submissions that the Court is obliged to apply s 5(4)(b) by first considering (i), then (ii) and then finally, (iii), although it is likely to consider the sub-paragraphs in that order. I accept the Attorney's submissions that the sub-paragraph sets out three independent and alternative tests which the Court must apply in determining whether to transfer a proceeding. The first test, under (i), is whether the relevant proceeding arises out of or is related to another proceeding pending in the Supreme Court. The Court must then decide whether it is "more appropriate" that the relevant proceeding be determined by that Supreme Court. The second test, in (ii), requires the Court (see sub-sub-paragraph B) to take into account whether the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in (in this case) the Federal Court and capable of being instituted in the Supreme Court apart from the Cross-Vesting Act and any State court relating to cross-vesting of jurisdiction. The Court's focus is on the institution of the proceedings. The second test also requires the Court (see sub-sub-paragraph C) to have regard to the extent to which the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State, and not within the jurisdiction of the Federal Court apart from the cross-vesting legislation mentioned immediately above. Cumulatively with those considerations the second test requires the Court to take into account (under sub-sub-paragraph C) the interests of justice, and decide whether it is "more appropriate" that the relevant proceeding be determined by the Supreme Court. The third test, in (iii), is whether it is "otherwise in the interests of justice" that the relevant proceeding be determined by the Supreme Court. I regard, the second test as being independent of and alternative to the first and third tests, and I think that Parliament so intended.
169 Neither the first nor the third test is either expressly or impliedly limited to circumstances where the proceeding was instituted in the Federal Court solely pursuant to jurisdiction vested under the cross-vesting scheme. Furthermore, the second test will apply where the Federal Court has accrued jurisdiction over a proceeding, but a substantial part of it would not have been capable of being instituted in the Federal Court.
170 As I have mentioned above, s 15 of the Cross-Vesting Act (mirroring as it does s 15A of the Acts Interpretation Act) indicates the Parliament's general intention that the Act is to be upheld as valid to the extent to which it is not in excess of the legislative power of the Commonwealth.
171 As Mr Bennett submitted, Parliament anticipated that the cross-vesting scheme might not operate as a whole, either for constitutional or other reasons. Section 16(4) provides a mechanism whereby the Governor-General, if satisfied that State Acts relating to cross-vesting of jurisdiction are not effective to confer jurisdiction on the Federal Court to declare, by Proclamation, that the Cross-Vesting Act ceases to be in force. There is similar provision in s 16(5) where a particular State Cross-Vesting Act has been repealed, rendered inoperative, suspended or altered in a substantial manner. It seems to me that such specific provision of a mechanism to deal with the consequences of partial validity is inconsistent with a supposed legislative intention that the Cross-Vesting Act was intended to operate fully and completely according to its terms, or not at all. On the contrary, it seems clear that Parliament intended that, in the absence of a proclamation by the Governor-General, there was a likelihood, and an anticipation, that the Cross-Vesting Act would operate in part (or in a "lop sided way" as the respondents put it) if this was acceptable to the Executive.
172 So far in these reasons, I have adopted the respondents' approach of referring to the cross-vesting scheme as a whole. The reality is that in terms of sections within the Cross-Vesting Act which have been revealed as constitutionally invalid, the extent of such invalidity is limited. The relevant effect of Re Wakim is that s 9(2) of the Cross-Vesting Act is invalid in so far as it purports to confer jurisdiction under State laws on the Federal Court and the Family Court, or to consent to such a conferral. In any event, as Mr Bennett submitted, much of the cross-vesting scheme remains. This includes:
* the cross-vesting of the jurisdiction of the Federal Court in the Supreme Court of each State and Territory;
* the cross-vesting of jurisdiction between State Supreme Courts;
* the cross-vesting of jurisdiction between State Supreme Courts and Territory Supreme Courts;
* the cross-vesting of jurisdiction between the Territory Supreme Courts and the Federal Court; and
* the cross-vesting provisions in the Corporations Act 1989 (Cth) which confer jurisdiction on the Federal Court with respect to civil matters arising under the Corporations Law of the Australian Capital Territory.
173 It is true that Re Wakim shows that proceedings cannot be instituted in the Federal Court pursuant to jurisdiction conferred by State laws in conjunction with the operation of s 9(2) of the Cross-Vesting Act. But, in its terms, s 5(4) continues to apply to a proceeding within the jurisdiction of the Federal Court (including accrued jurisdiction) enabling the transfer of that proceeding to the Supreme Court of a State. The range of proceedings which fall within s 5(4) may be reduced, but the sub-section is capable of operating with respect to all proceedings over which the Federal Court has jurisdiction. In my view, the remaining provisions of the Cross-Vesting Act constitute a "consistent, workable and effective body of provisions": Whybrow at 36.
174 Finally, I note that the validity of s 5(4) has either been accepted or assumed in Crandell v Servier Laboratories (Aust) Pty Ltd [1999] FCA 1461 at paras 5-6; Delta Car Rentals Australia Pty Ltd v Bamco Villa Pty Ltd [2000] FCA 72 at para 13 and Overall v Permanent Trustee Company Ltd [1999] FCA 1385.
175 For the foregoing reasons, I consider that s 5(4) of the Cross-Vesting Act is constitutionally valid.
The Transfer Motion - the Respective Contentions of the Parties and My Reasoning
Applicants' Contentions
176 The applicants' contentions were primarily directed to the submission that the proceeding in this Court arose out of or was related to other proceedings pending in the Supreme Court of Western Australia and that it is more appropriate that this proceeding be determined by that Court i.e. that there be a transfer under s 5(4)(b)(i). In the alternative, for substantially the same reasons as advanced under that heading, the applicants submitted that it was "otherwise in the interests of justice" within the meaning of s 5(4)(b)(iii) that this proceeding be determined in the Supreme Court of Western Australia.
177 In barest summary, the applicants contended that:
* this proceeding arises out of or is related to various winding-up proceedings, pending in the Supreme Court of Western Australia, of those Bell Group companies which are applicants;
* this proceeding is related to certain other proceedings pending before the Supreme Court of Western Australia, identified as "the Proof of Debt Proceedings" and "the WA Proceeding";
* the Supreme Court of Western Australia is the more appropriate court to determine this proceeding, basically for the following reasons:
- the applicants' claims arise in the Federal Court's accrued jurisdiction, not its original jurisdiction;
- there is continued uncertainty about jurisdiction, including the extent of the Federal Court's jurisdiction;
- matters such as the interests of third parties, case management and cost and efficiency make it more appropriate that this proceeding be heard in the Supreme Court of Western Australia;
- this Court cannot supervise the liquidators' conduct, including any application for directions or to approve a compromise which they may wish to make;
- the respondents are involved in all the other proceedings before the Supreme Court of Western Australia;
- there are no difficulties arising out of the location of the respective courts;
- the applicants are not precluded from applying for transfer of the proceeding by reason of their having instituted proceedings in the English High Court of Justice or having made earlier applications for transfer which were dismissed by consent;
- the respondents will not be prejudiced by the application of the Evidence Act (WA) instead of the Evidence Act (Cth), there being no presumption that the former Act will apply;
- the applicants' part-heard motion to amend its application and statement of claim can readily continue in the Supreme Court of Western Australia;
- the Supreme Court of Western Australia will be equally able to determine costs issues as would the Federal Court;
- the respondents' proposed amendments to the defence and cross-claim highlight the appropriateness of one court hearing both proceedings; and
* alternatively, it is "otherwise in the interests of justice" [within the meaning of s 5(4)(b)(iii)] that this proceeding be determined by the Supreme Court of Western Australia (henceforth "the Supreme Court").
Whether this proceeding arises out of or is related to the various winding
up proceedings pending in the Supreme Court
178 The applicants' contention that this proceeding "arises out of" the winding up proceedings of the applicants in the Supreme Court was based on the proposition that there was a sufficient causal link between the winding up proceedings and this proceeding - see Re Hamilton-Irvine (1990) 94 ALR 428 at 432-433. This was because, so it was put,
(a) most of the Bell Group companies, and in particular TBGL and BGF, were placed into liquidation or provisional liquidation prior to the commencement of this proceeding;
(b) the liquidators of the applicant Bell Group companies are themselves applicants in this proceeding;
(c) the liquidators either "possessed" or are necessary parties in relation to the Bankruptcy Act claims, being causes of action which only came into existence upon each company being placed into liquidation and a liquidator being appointed who had avoided the relevant dispositions;
(d) the other principal cause of action currently relied upon by the applicants, namely the claim against the respondents for knowing assistance and participation in and obtaining a benefit from the directors' breach of fiduciary duties, arose in circumstances where the companies were insolvent (or nearly so) at the relevant time and ought to have been placed into liquidation at that time, with all their assets being distributed amongst all their respective creditors. Instead the respondents exercised their purported rights under the Securities and applied the proceeds in payment of their debts to the disadvantage of all other creditors; and
(e) the applicant companies and their liquidators are by this proceeding seeking to recover the monetary advantages gained by the respondents and "to thereupon conduct the administration of the liquidations".
My Reasoning
179 In Re Hamilton-Irvine Beaumont J, when asked to apply s 5(1) of the Cross-Vesting Act, expressed the view that the phrase "arises out of" meant that the proceeding in the first court results or proceeds or originates from or out of the litigation in (in that case) the Territory of Norfolk Island. On the facts, his Honour held that there was an insufficient causal element.
180 I have some reservations about whether there is a sufficient causal link between the winding up proceedings in the Supreme Court and the proceeding in this Court. It seems to me to be a question of degree. However, on balance I think that there is a sufficient causal link. I think that it is sufficient to point to the fact that the Bankruptcy Act claims are only available to the liquidators, only came into existence when the companies were placed into liquidation and that they resulted from the liquidators choosing to avoid the relevant dispositions.
181 Furthermore, in my opinion, this proceeding is "related to" the winding up proceedings in the Supreme Court for similar reasons, but with an additional reason. The additional reason is that, by their amended cross-claim the respondents seek specially-moulded relief, in the event that the applicants are successful in their primary claims and the respondents are successful in their claims based on either contract, estoppel or breach of s 52 of the Trade Practices Act. That relief, as the applicants point out in their submissions, would require BGNV (which would otherwise prove for over $400 million) to be treated as a subordinated creditor in the winding up of TBGL and BGF, or at the very least to be treated, as against the respondents, as a subordinated creditor.
182 Whether BGNV is to be treated as a subordinated creditor would have, in my view, very substantial implications for the winding up of various companies in the Bell Group and, in particular, BGNV, TBGL and BGF.
183 In fact, it seems to be common ground that unless the proceeding in this Court is successful (from the applicants' point of view) there will be no funds for distribution in the winding up of the relevant companies in the Bell Group. Thus, both the relief sought by the respondents (in varying what might otherwise be the statutory priorities in the distribution of funds) and also by the applicants can be seen to be relevantly associated or connected with the winding up proceedings in the Supreme Court - see Hamilton-Irvine at 433, Hoddell v Hoddell Pty Ltd [1999] WASC 156 at para 22 and Fox Enterprises Pty Ltd v Fox (1995) 13 ACLC 573 at 576.
Whether the proceeding is related to the proof of debt proceedings in the Supreme
Court of Western Australia
184 The evidence (see the affidavit of Mr Ian Adrian sworn 23 December 1999) is that there are ten appeals relating to admissions and rejections (partial or whole) of proofs of debt in the winding up of Bell Group companies which are pending in the Supreme Court of Western Australia. Each of those appeals has been stayed by orders of Templeman J made on 15 April 1998. The main reason for those stays was the fact that this proceeding was then listed for trial on 1 August 1998. The respondents in this application are parties to four of those appeals, including one which was the subject of a successful interlocutory appeal to the Full Court of the Supreme Court. That particular matter concerned the respondents' appeal against the decision of the liquidator of TBGL to admit a proof of debt in the sum of $291 million lodged by a company identified as J.N. Taylor Holdings Limited. A substantial part of the respondents' standing in those proceedings is based on the contingency that they may be unsuccessful in this Court and rank as major unsecured creditors in the winding-up of TBGL.
185 In the stay proceedings the respondents were represented by Mr M C Goldblatt. Mr S.J. Archer appeared for the liquidators and each company. In his reasons for granting the stay, Templeman J observed:
"It is also true, as Mr Goldblatt says, that issues will be canvassed in the Federal Court proceedings which have a bearing on the applications before me so that if the applications are stayed but it is necessary to resurrect them at some stage, it is likely that they will come back in a different form. Mr Goldblatt is supported by Mr Archer in making that point."
186 Again with a degree of hesitancy, I accept that the proceedings in this Court are "related to" the proof of debt proceedings in the Supreme Court in the sense that they are associated and connected by virtue of the impact of the result of these proceedings on whether the Supreme Court proof of debt proceedings will be prosecuted or not. Sensibly, the applicants have not argued that the proceeding in this Court arises out of those other proceedings.
Whether this proceeding is related to "the WA Proceeding"
187 To understand this issue it is necessary to describe the WA Proceeding. I shall do so as briefly as possible.
188 On or about 1 October 1996, those of the respondents in this proceeding who are known as "the Australian Banks" issued proceedings in the Supreme Court of Western Australia which proceedings bear number CIV 2061 of 1996 and which are referred to in these reasons as "the WA Proceeding". In the WA Proceeding the Australian Banks, initially, sued an English company known as The Law Debenture Trust Corporation Plc ("LDTC"), TBGL and its liquidator, BGF and its liquidator, and the Insurance Commission of Western Australia (then known as the State Government Insurance Commission of Western Australia) ("ICWA"). Subsequently, the other respondent banks were added as plaintiffs in the WA Proceeding, so that all of the banks which are respondents and cross-claimants in the proceeding in this Court are plaintiffs in the WA Proceeding. With the exception of LDTC and ICWA, all of the defendants in the WA Proceeding are applicants and cross-respondents in the proceeding in this Court. Counterclaims have been made against the banks in the WA Proceeding.
189 I shall endeavour to explain the genesis of the WA Proceeding and the issues raised in it, again as briefly as possible.
190 I have already in these reasons (at para 10 above) referred to the facts pleaded in the amendments to the respondents' cross-claim in this proceeding, effected by the minute filed on 30 January 1998. It is necessary now to add a little more detail.
191 In 1985 and 1987 TBGL and BGF respectively issued certain subordinated bonds (the "Subordinated Bonds"). One of the main reasons for such subordination had to do with the financing methods then used by the Bell Group. At their core was a negative pledge arrangement. This, as the name suggests, involved undertakings not to pledge the assets of the various companies and to maintain certain financial ratios involving assets, debt and equity. There were covenants to that effect. There were also reporting conditions which required the borrowers from time to time to furnish to the respondents financial statements setting out particulars of indebtedness and the various ratios. The respondents allege that part of the arrangement was that the Subordinated Bonds, which were subordinated to their rights, would be treated by them as equity and not as ordinary debts. In 1988 the Subordinated Bonds were acquired by ICWA. The Subordinated Bonds are the subject of trust deeds ("the Heytesbury Trust Deeds") by which LDTC became trustee for the bondholders. The Heytesbury Trust Deeds contained provisions to the effect that in the event of TBGL or BGF being wound up, the claims of bondholders (currently ICWA) or of the trustee on their behalf (LDTC) became debts subordinated to the claims of those creditors who were not subordinated, but otherwise those bondholders were to participate on a pari passu basis with the claims of other subordinated creditors.
192 LDTC, as trustee, has lodged a proof of debt against TBGL for $182,329,166 and against BGF for $96,145,832.33. Each of the respective liquidators has admitted those proofs of debt.
193 It appears to be common ground that unless the applicants are successful in the proceeding in this Court there will be no assets available to satisfy the debts of TBGL or BGF.
194 In 1995 an agreement was entered into for the funding of the proceedings in this Court i.e. this application. Funding creditors included ICWA. One condition of the funding agreement was that the liquidators of the applicant companies (save for BGNV) would make an application under s 564 of the Corporations Law for a distribution in favour of funding creditors, including ICWA. The liquidators made such an application in 1996, but Templeman J refused it, considering it to be premature.
195 LDTC and ICWA have taken the position that if an order is eventually made under s 564 in ICWA's favour, any distribution of property made pursuant to such an order will not be a distribution subordinated to any other creditor of TBGL or BGF and will not be subject to the subordination provisions contained in the Heytesbury Trust Deeds.
196 Furthermore, as part of the financing arrangements referred to immediately above, at the request of ICWA, LDTC has exercised its power (contained in clause 20 of each of the Heytesbury Trust Deeds) to vary the terms of those trust deeds so as to "unsubordinate" the bondholders. On 12 June 1995 ICWA executed two supplemental deeds to provide, in effect, that if an order is made by the Supreme Court of Western Australia under s 564 of the Corporations Law in favour of ICWA, any amount paid pursuant to such order is to be paid to ICWA and not to other unsecured creditors. The supplemental deeds will not be effective until the liquidators of TBGL and BGF execute them. The liquidators have applied to the Supreme Court for a direction under s 479 of the Corporations Law that they execute the supplemental trust deeds. Such direction has not yet been given and the liquidators have not executed the supplemental trust deeds.
197 In the WA Proceeding the respondents, as plaintiffs, seek to prevent the liquidators of TBGL and BGF from executing the supplemental trust deeds. Relief is also sought against LDTC, TBGL, BGF and ICWA. The basis of such relief includes breach of trust, fraud on the power of amendment, breach of contract and estoppel. The respondents allege, amongst other things, that the execution by the liquidators of TBGL and BGF of the supplemental deeds would involve a breach by TBGL of banking agreements made between it and the respondents in 1990. In their respective defences, all the defendants have contended, that those banking agreements are void or voidable and should be set aside.
198 By counterclaim in the WA Proceeding, LDTC and ICWA seek declarations that, on a proper construction of s 564, any distribution of property made to one or both of them pursuant to an order under that section would not be subordinated to the unsubordinated creditors of TBGL and BGF (including the respondents) and would not be subject to the subordination provisions in the Heytesbury Trust Deed. They also seek a declaration that clause 20 in each of those trust deeds authorises LDTC and the liquidators to execute the supplemental trust deeds. On 19 and 20 January 1998, Templeman J heard, among other interlocutory applications, an application by the plaintiff banks (i.e. the respondents in this case) for a stay of the WA Proceeding pending the determination of the proceeding in this Court, and a cross- application by LDTC and ICWA for a partial stay of the WA Proceeding pending the determination of the proceeding in this Court, but that certain issues be tried in the meantime.
199 On 27 January 1998, Templeman J stayed the WA Proceeding generally with immediate effect, with liberty to apply generally. In the proceedings before Templeman J it was common ground between the parties that there should be a stay of those issues in the action which were common to the proceeding in this Court (see p 10 of his Honour's reasons for judgment dated 27 January 1998). His Honour, in deciding to stay the proceedings generally, made the following observations:
"... I consider that it is in the interests of justice to stay the action generally until the outcome of the Federal Court proceedings are known. I take account of the fact that unless those proceedings are successful, there will be no s 564 application: and this action will not proceed.. . .
I do not think it appropriate to make an order in those terms. [That only the trial should be stayed so that interlocutory matters could be completed]. Apart from the fact that this action may become unnecessary, I think it unrealistic to suppose that interlocutory applications could be concluded in the near future. Having regard to the history and complexity of the matter, I think it likely that interlocutory applications of one form or another would continue ad infinitum. In any event, there is I think a reasonable prospect of such applications being influenced by developments in the Federal Court action. If the time comes to lift the stay, it will be possible to have this action disposed of as expeditiously as may be necessary. The Court has the procedures and the resources to achieve that result."
200 I am quite satisfied that this proceeding is related to the WA Proceeding. I have examined the amended defence and cross-claim dated 30 January 1998 in this proceeding simultaneously with an examination of the amended statement of claim (filed in January 1998) in the WA Proceeding. At the heart of each proceeding is:
* whether certain representations were made in 1985, 1986 and 1987, principally by TBGL, that not only the Subordinated Bonds (issued to Heytesbury) but also bonds issued by BGNV in 1985 and 1987 ("the first BGNV issue" and "the second BGNV issue") were subordinated;
* if the representations were made, did they result in a contract later coming into existence or did the respondents act to their detriment, and what are the legal consequences?
201 In particular, I have examined the matters pleaded in each of those documents which were the subject of paragraphs 60(a) to (n) and (p) to (r) of the applicants' submissions filed 7 December 1999, incorporated by reference in paragraph 19 of their submissions filed on 4 February 2000. I acknowledge that what is termed the "third BGNV issue" [dealt with in paragraphs 13A(30)-(38) of the amended defence and cross-claim in this proceeding] is not pleaded in the WA Proceeding. However, subject to that point there is, in my view, a very marked and substantial overlap of the factual matters pleaded in the two pleadings to which I have referred above. The respondents do not contest the applicants' assertion that there is no reduction in such overlap in the 11 March 1999 version of the cross-claim.
202 In fact the respondents have recognised the overlap between the factual matters and issues raised in this proceeding and in the WA Proceeding, in the following documents:
* paragraph 82 of the affidavit (filed in this proceeding) of Ms Michelle Cole (a partner in the firm of solicitors representing the respondents) sworn on 11 June 1998;
* the respondents' submissions dated 12 January 1998 filed in the WA Proceeding;
* the affidavit (filed in this proceeding) of Mr Steven Paterniti (another partner in the firm of solicitors representing the respondents) sworn 28 January 2000 (in particular, paragraphs 103-105 of that affidavit); and
* a notice of motion lodged with the Court by the respondents on 11 February 2000 seeking to amend their defence and cross-claim so as to plead in that document the very issues raised in the Supreme Court proceedings.
203 The overlap between the two sets of proceedings (and hence the close relationship between them) is usefully summarised by sub-paragraphs 60(p), (q) and (r) of the applicants' submissions filed on 7 December 1999, which I accept, and which I reproduce below:
"(p) in the statement of claim in the WA proceeding the Banks allege that they relied upon the representations contained in the letter of 11 December 1985 and attached summary document (paragraph 18), the Information Memorandum (paragraphs 23I and N) and in the letter of 15 April 1987 and offering circular (paragraph 31) "from time to time":(i) in determining the liability ratios for the purposes of the banking covenants entered into from time to time and did not treat the liabilities of TBGL or BGF (as the case may be) under the first BGNV issue, the first Heytesbury bond issue, the second BGNV issue or the second Heytesbury bond issue as liabilities (but as equity) for the purposes of the balance sheet ratios;
(ii) were induced thereby "in the continued conduct of the banking business" of the Banks "with TBGL and other companies in the Bell Group" to treat such liabilities of TBGL or BGF "not as a liability ranking pari passu" with such liabilities of TBGL or BGF to the Banks "and omitted in the continued conduct of that banking business to consider the possibility" of such liabilities of TBGL and BGF under such bond issues to be ranking upon a liquidation of TBGL and BGF "wholly or partially in priority to or pari passu with the other unsecured liabilities of" TBGL and BGF;
(q) then in paragraph 62 of the statement of claim in the WA proceeding (IRA-15), the Banks allege that, by reason of all of the matters mentioned in the previous subparagraphs, "it would be unconscionable for TBGL or BGF" to be able to unsubordinate the Heytesbury bonds by a variation to their trust deeds "so as to depart from the representations pleaded above and relied upon by" the Banks and in their relief seek against TBGL, BGF and their respective liquidators declarations that TBGL and BGF are estopped from executing the supplemental deeds of trust seeking to unsubordinate the two Heytesbury bond issues: prayer 2(2) and 3(2) of the relief sought (IRA-15);
(r) in paragraphs 13A(70),(72),(73),(74),(75),(76) and (77) of the amended defence and cross-claim in this proceeding (IRA-3) the Banks alleged that "from late 1985 to late 1989" (this is obviously what is meant "from time to time"):
(i) the Banks believed and assumed that the bondholder debt was subordinated;
(ii) this belief and assumption was engendered, induced and fostered by the conduct, inter alia, of the representations in the letter of 11 December 1985 and attached a (sic) summary, the provision of the Information Memorandum and (sic) to LMBL and subsequent provision of that to Lloyds Syndicate Banks, the offer document of April 1987 and the letter of 15 April 1987 and the conduct of the banking relationship with the Banks from 1985 until about late 1989;
(iii) from late 1985 to late 1989 the Banks entered and conducted their banking relationship upon the false hypothesis and a serious misapprehension and but for the representations would have had the opportunity to reorder their banking affairs on a fundamentally different hypothesis (this is extremely similar if not the same as the allegation that they omitted in the conduct of the banking relationship to consider the possibility of unsubordination);
(iv) it would be unfair and unjust to permit Bell Group companies to resile from the state of affairs (what is said to be unconscionable);
(v) the applicants are estopped from denying to the Banks that the relevant bonds are not subordinated."
Whether it is more appropriate that this proceeding be determined by the Supreme Court of Western Australia
204 The factors which weigh in favour of a conclusion that it is more appropriate that the proceeding in this Court be determined by the Supreme Court of Western Australia include the following:
* two different superior courts should not be hearing substantially similar issues between parties who are parties to both cases;
* all of the applicants' claims arise in the accrued jurisdiction of this Court. They are essentially what Northrop J described in Coutts v Ronstan International Pty Ltd (unreported, FCA 4 June 1996) at 7 as "State Matters";
* two of the three bases upon which the respondents seek relief in their amended cross-claim are non-federal i.e. claims based on contract or in the alternative by way of equitable estoppel; it is only the third basis (contravention of s 52 of the Trade Practices Act) which, so I have held, attracts the jurisdiction of this Court to the whole matter;
* the Supreme Court has been specifically invested [by s 86(2) of the Trade Practices Act] with jurisdiction to determine the respondents' claims under the Trade Practices Act. The risk of wasted time, resources and expenditure can be removed by transfer to the Supreme Court of Western Australia, which clearly has jurisdiction to hear and determine all claims on either side;
* ICWA and LDTC are not parties to the proceeding in this Court. They are parties to the WA Proceeding in respect of which there is a real and significant overlap. Orders might well be made in the Supreme Court that the evidence in this proceeding (if transferred) be heard at the same time and be evidence in the WA Proceeding;
* if the applicants are successful in this proceeding, it is inevitable that there will be a further application under s 564 of the Corporations Law to the Supreme Court on behalf of the funding creditors to obtain a degree of priority in the liquidation of TBGL and BGF. Although it is possible that a different judge will hear the two sets of proceedings, it would be open for the one Supreme Court Judge to hear both sets of proceedings and thus be in a far better position to assess the merits or otherwise of an application under s 564. There is room for case management to achieve efficiencies in relation to time and money;
* the respondents are either parties to or have actively participated in the related proceedings in the Supreme Court (described above) and in the applications by the liquidators of BGF and TBGL for directions under s 479(3) of the Corporations Law. Furthermore, on their application they were joined as a party to the application under s 564 of the Corporations Law, being the proceedings which I have mentioned at paragraph 153 above which Templeman J dismissed as being premature.
205 The respondents put forward various matters in opposition to the transfer of this proceeding to the Supreme Court of Western Australia. They included the following:
* all of the matters upon which the applicants rely (except what the respondents describe as "the crystallisation of the law concerning the jurisdictional aspects of cross-vesting" - i.e. Re Wakim) have been known to the applicants since they applied to this Court for leave to serve out of the jurisdiction. The applicants, so the respondents submitted, made a deliberate choice not to bring a cross-vesting application until late 1999, some four years after the application was filed. The respondents claimed that there was no explanation why the transfer application had not been brought earlier;
* in 1998 the respondents had proposed a cross-vesting of the WA Proceeding to the Federal Court which, eventually, the applicants refused;
* any uncertainty as to the existence of the jurisdiction of the Federal Court to determine all of the issues was not a ground for transfer; as the respondents put it "the merits of that jurisdictional issue are irrelevant to the merits of the cross-vesting application".
* the jurisdiction of this Court has already been extensively exercised in this litigation, there having been approximately 68 separate interlocutory proceedings and two invocations of the appellate jurisdiction of this Court. The matter has been listed for trial on two occasions;
* a considerable amount of time and money "has been invested in the Federal Court" and in particular in the management of the case by me. I was said to have an intimate knowledge of the matter, having had management of the case throughout its interlocutory steps and exercising control over its direction and preparedness for trial;
* the respondents have prepared their evidentiary material on the footing of Federal Court practices and procedure and the application of the Evidence Act 1995 (Cth) ("the Federal Evidence Act"). The respondents say that they will suffer substantial and far-reaching prejudice if the proceedings are transferred to the Supreme Court and the Federal Evidence Act is not applied.
* in paragraph 63 of an affidavit sworn on 28 January 2000 by Mr S R Paterniti, the respondents give examples of what are said to be significant differences between the Federal Evidence Act and the Evidence Act 1906 (WA) ("the State Evidence Act"). These include what are said to be differences in the rules relating to documentary evidence, the hearsay rule, the opinion rule, expert evidence and a general discretion to dispense with the rules of evidence. In paragraphs 64 to 97 of that affidavit, the respondents give some details of the work which the parties have carried out in preparation for the trial of this matter. The respondents also give an indication of the additional work which will be required if the proceedings are transferred to the Supreme Court and the State Evidence Act is applied. The respondents say that it will be necessary for them carefully to review all of the evidence prepared by the parties to date and to make an assessment of whether, and to what extent, the provisions of the State Evidence Act will affect the admissibility of the evidence. This work, so the respondents claim will require them to incur substantial additional costs and will delay the completion of their trial preparation.
My Reasoning
206 In my opinion, it is more appropriate, within the meaning of s 5(4)(b)(i) that this proceeding be determined by the Supreme Court of Western Australia. I reach this conclusion after balancing the various arguments raised for and against the transfer motion. I should make it clear that there was weight on both sides of the scale. My reasons for reaching that conclusion are as follows.
207 All of the applicants' claims are of a type which, so far as corporations are involved, would normally have been brought in a State Court until it was thought that this Court had been vested with jurisdiction under the Corporations Law. I acknowledge that s 565 of the Corporations Law, and its predecessors, incorporate by reference some of the principles of bankruptcy, an area of law which has long been federal in its nature. However the essential nature of all of the applicants' claims is that each claim is what Northrop J described in Coutts as "a State claim". I appreciate that Northrop J was considering transfer of that case under the "interests of justice" test in s 5(4)(b)(iii). At p 7 of his reasons, his Honour said this:
"In order to enable the cross-vesting legislation to operate fairly and justly it is important, in my opinion, that the background to the legislation be remembered. In cases of the kind presently before the Court, in the interests of justice, it is important to ensure that the State Courts deal with those matters which, essentially, are State matters, while the Federal Court deals with those matters which are, essentially, federal matters. Otherwise the problem sought to be resolved by the cross-vesting legislation will rise again." [The problem previously identified by his Honour was that more and more cases were coming to the Federal Court in reliance upon the accrued jurisdiction and thus having an adverse effect on the Supreme Courts of the States and Territories.]
208 This proceeding is, as I have held, within this Court's jurisdiction only by reason of the third basis of the respondents' cross-claims. It will be recalled that the first two bases were breach of contract and estoppel. The third basis, the claim based on s 52 of the Trade Practices Act, validly invokes this Court's jurisdiction and, as I have held, brings the applicants' claims into its accrued jurisdiction. The factual platform for the estoppel claim is virtually the same as that for the s 52 claim. But the first two of those bases are not federal in their nature and furthermore they are, as I have explained above, in large measure common to the WA Proceeding. That is not to suggest that the s 52 claim is to be regarded as subordinate to the other two claims. However, it does serve to accentuate the extent to which the claims on both sides of the case are State claims.
209 If the matter were to proceed in this Court, it would be open to the unsuccessful parties to appeal, as of right after trial, to the Full Court and, subject to obtaining special leave, to the High Court of Australia on grounds which could include a complaint that my decision on the jurisdiction issues was wrong and this Court never had any jurisdiction to hear and determine this matter. Several million dollars have already been expended by the parties on these proceedings. There is evidence (see paragraph 62 of Mr S R Paterniti's affidavit sworn 28 January 2000) from which I infer that that figure to date is not less than $18 million. My firm impression is that there will be many more interlocutory motions to be heard (there are two pending, one on either side, relating to extensive amendments to pleadings). My assessment is that many more millions of dollars will be expended in bringing this matter to trial and on the actual hearing of it. There will also be a substantial allocation of this Court's resources. Virtually all of that prospective expenditure will be wasted if a jurisdictional challenge were to be mounted by the parties against whom judgment is entered after trial in this Court. The respondents argued that doubts about jurisdiction should not be a relevant factor when deciding which Court was the more appropriate to determine the proceeding. They relied upon the observations of Gummow J in McIntosh v National Australia Bank Ltd (1988) 17 FCR 482 at 483-484. In that case his Honour was considering a motion by the respondent for an order under s 86A of the Trade Practices Act that the proceedings be transferred to the Supreme Court of New South Wales. There were no parallel proceedings pending in that Court. The basis for the respondents' motion was what it contended was a real doubt as to whether the accrued jurisdiction of the Court had been attracted in respect of certain non-federal claims brought against it by the applicant. His Honour said this (at 483-484):
"To remit or transfer a proceeding is to exercise jurisdiction in respect of it: Johnstone v Commonwealth [1979] HCA 13; (1979) 143 CLR 398, Pozniak v Smith (1982) 151 CLR 58. It follows, in my view, that s 86A is not to be construed as authorising the transfer of matters for determination in a proceeding in this Court on the footing that uncertainty as to existence of jurisdiction in this Court makes the transfer "in the interests of justice".
210 In that case his Honour reached the conclusion that there was no uncertainty as to the jurisdiction of this Court in respect of the non-federal claims. The respondents' counsel had indicated in address that if his Honour reached that conclusion, then the interests of justice did not favour transfer and the application for transfer would not be further pressed.
211 I think McIntosh can be distinguished from the present case. First, the doubt was the sole basis for the respondent's motion in that case. In this application it is simply one, although an important one, of several factors which in my view make it more appropriate that the proceeding be determined by the Supreme Court. Secondly, the doubt about jurisdiction was very narrowly confined in McIntosh and easily resolved by Gummow J on an examination of the pleadings. The present matter is far more complex, even labyrinthine, as the above reasons may demonstrate. There are so many different computations of circumstances, any one of which might, on appeal, disclose a jurisdictional deficiency. There would be no such problems in the Supreme Court.
212 These proceedings are not simply "related to" the WA Proceeding. There is, as the applicants submit, a real and very significant overlap between the two sets of proceedings. The respondents' motion, filed on 11 February 2000, whereby in effect they seek to have most of the matters presently being litigated before the Supreme Court in the WA Proceeding brought into their cross-claim, is a further clear indication of the common issues. I refer also to my analysis above of the common ground in the pleadings in the two sets of proceedings, and the other matters showing the degree of overlap.
213 The Supreme Court (on 20 January 1998) has stayed the WA Proceeding in anticipation that this Court's decision in this application may determine whether the WA Proceeding will ever need to go ahead. The proceeding in this Court has become much more protracted than was to be expected when that stay order was made. The Supreme Court cannot be expected to stay proceedings before it indefinitely. There is evidence before me that the defendants in the WA Proceeding have, on 28 February 2000, filed a chamber summons seeking a partial lifting of the stay orders made on 20 January 1998, so that an injunctive order may be made restraining the respondents from commencing any further actions in this Court which seek against the defendants in the WA Proceeding any of the relief sought in that proceeding.
214 I think that it is undesirable for such a situation to continue, because it tends to bring the justice system into question. It is even more undesirable, to the point of being unthinkable, that two sets of proceedings with so much in common might go ahead in the two courts with the risk of inconsistent findings. The logical course is for one set of proceedings to be heard by the same judge. The respondents seek to do this by their proposed further amendments to their cross-claim. In view of the preponderance of State claims compared to the respondents' claim under s 52 of the Trade Practices Act, it seems to me much more appropriate that the disputes be resolved in the Supreme Court. In making that assessment, I have not ignored what, on the respondents' case, can be described as the potential "knock out" effect of their s 52 claim i.e. that even if the applicants are successful in all their claims, success by the respondents in their claim under s 52 of the Trade Practices Act has at least the potential to render the applicants' victories not only pyrrhic but worthless.
215 My assessment is that the bulk of the evidence in the case will be concerned with the applicants' claims relating to the taking of Securities at a time of insolvency or near insolvency, the breach of the former directors' duties and the like, whether the sale proceeds can be traced, and the respondents' defences to those allegations. The evidence in respect of the s 52 claim is likely to emerge as part of the breach of contract and estoppel claims. Its status as an independent case, in evidentiary terms, is likely to be relatively minor.
216 I accept the applicants' submission that if they are successful in this proceeding, there is bound to be a further application under s 564 of the Corporations Law to the Supreme Court on behalf of the funding creditors to obtain a degree of priority in the liquidation of TBGL and BGF. There is, if this proceeding is transferred to the Supreme Court, at least the potential for the same judge who hears the principal proceedings to determine the application under s 564 of the Corporations Law. This is a relevant factor, but not one to which I would attribute as much weight as I do to the foregoing factors.
217 On the other hand, I have recognised the strength of the respondents' submissions. Usually applications for transfer are brought very early in the course of proceedings. The delay is not quite as long as the respondents' claim (the applicants' made a cross-vesting application in December 1998, which remains undetermined) but it is considerable. However, the circumstances are unusual, to say the least. It was not until comparatively recently that it became apparent that the cross-vesting legislation was in real constitutional peril. There was the equal division in the High Court (on 2 February 1998) in Gould v Brown [1998] HCA 6; (1998) 193 CLR 346 and then, of course, Re Wakim was handed down on 17 June 1999. In such exceptional circumstances, delay does not, in my opinion weigh as heavily as it would in a normal case.
218 The same reasoning tends to reduce what would otherwise have been the significance of the extensive exercise by this Court of its jurisdiction, including the hearing of some 68 separate interlocutory proceedings and two appeals to the Full Court. But any benefit which may have been derived from those interlocutory skirmishes will carry through when this application is transferred to the Supreme Court of Western Australia. I acknowledge that I have acquired, as the respondents assert, a knowledge of this matter. I would not describe it (as they do) as "an intimate knowledge". The proceedings have been dragged out for so long, that I have had to re-familiarise myself with the matter on each occasion when it came before me. I have no doubt that any Supreme Court Judge will be able to familiarise himself or herself very readily with the history of the matter and the issues which are raised in it.
219 One of the factors relied upon by the applicants in support of the transfer of the proceedings was their proposal, foreshadowed in a version of the proposed eighth amended statement of claim, to sue the respondents under s 574 of the Companies Code for damages for what was said to be their knowing involvement in contraventions of the Companies Code. The applicants contended that the Federal Court would not have jurisdiction over those claims, but that the Supreme Court would have jurisdiction, and that the claims could be added by the foreshadowed amendment to their statement of claim if this proceeding were transferred to the Supreme Court. The respondents submitted that such a course would confer a significant forensic advantage upon the applicants and a concomitant forensic disadvantage upon them. The applicants had chosen not to institute the proposed proceedings in the Supreme Court and might avoid statutory time bars by relying upon the fact that the principal application had been commenced in this Court in 1995. I have decided not to give any weight to the applicants' submissions on this point as demonstrating (on their case) the appropriateness of transferring this proceeding to the Supreme Court. The applicants have had plenty of opportunity to bring the foreshadowed claims either in the Supreme Court or in this Court. I do attach some weight to the respondents' submissions about prejudice as affecting the appropriateness or otherwise of such transfer. However, I am confident that when the Supreme Court deals with the application to amend, it will take into account the matters raised by the respondents. There are conditions which can be attached to the granting of leave to amend in circumstances such as these. In the overall context of the matters in issue, I consider that this issue is a relatively minor one. In my view, it does not cause the balance to tilt against the appropriateness of the transfer of this proceeding to the Supreme Court.
220 The main factor which has concerned me is whether the respondents will suffer prejudice by the application of the State Evidence Act rather than the Federal Evidence Act and, if so, the extent of such prejudice. The respondents submitted that they had prepared their evidentiary material for the trial of this case on the footing that the Commonwealth Evidence Act would apply, and that there are significant differences between the provisions of the State Evidence Act and the Commonwealth Evidence Act. The respondents' evidence on this point can be found in the affidavit of Mr S R Paterniti sworn 28 January 2000 (which contains submissions also) between paragraphs 63 and 97. The respondents also deal with this matter of prejudice in their written submissions dated 11 February 2000, which were further developed in oral submissions on 10 March 2000.
221 There was a dispute between the parties as to whether s 11(1)(c) of the Cross-Vesting Act (or its Western Australian equivalent) would be likely to alleviate any difficulties encountered by the respondents. Section 11 (1) relevantly provides as follows:
"Conduct of Proceedings11(1) [Law to be applied] Where it appears to a court that the court will, or will be likely to, in determining a matter for determination in a proceeding, be exercising jurisdiction conferred by this Act or by a law [of * the Commonwealth or] a State relating to cross-vesting of jurisdiction -
(a) . . .
(b) . . .
(c) the rules of evidence and procedure to be applied in dealing with that matter shall be such as the court considers appropriate in the circumstances, being rules that are applied in a superior court in Australia ...".
[The provisions in the two Acts are identical save that the State Act has the additional words which I have inserted in parenthesis near the asterisk above].
222 I think that it is clear that when this proceeding is transferred to the Supreme Court of Western Australia, that Court will not be exercising jurisdiction conferred by the State Cross-Vesting Act. I think it is also sufficiently clear that it will not be exercising jurisdiction conferred by the Commonwealth Cross-Vesting Act. That is because s 4 of the Commonwealth Cross-Vesting Act contains the condition, in s 4(1)(b), that the Supreme Court would not, apart from that section, have jurisdiction with respect to that matter - see Poignand v NZI Securities Australia Limited (1992) 109 ALR 213 at 219. Accordingly, I do not think that s 11 will have any application. In that regard I differ, respectfully, from Tamberlin J's assessment to the contrary in Activate No 1 Pty Ltd v Equuscorp Pty Ltd [1999] FCA 619 at para 15. The reality is that the Supreme Court would have jurisdiction under s 86(2) of the Trade Practices Act. Even if s 11(1)(c) of the Cross-Vesting Act applied, there would be no guarantee that the Commonwealth Evidence Act would be applied at the hearing in the Supreme Court. It would be a matter in the Supreme Court's discretion depending upon which rules the Court considered to be appropriate in the circumstances.
223 I accept that there are significant differences between the two Evidence Acts. I do not propose to rule upon each of the series of legal arguments raised on either side about the extent, in practical terms, of those differences. My impression is that they are not quite as significant as the respondents maintain but somewhat more significant than the applicants contend. The applicants submitted that I should take into account proposed amendments to the State Evidence Act which are at present being considered by the Western Australia Parliament. I do not think that, when considering the appropriateness or otherwise of the transfer of this proceeding, it would be proper to do so. It would be simply too speculative. Some of the evidentiary problems (with s 79C of the State Evidence Act, one of the sections here relevant) surfaced in a fairly recent decision of a Full Court of the Supreme Court of Western Australia, Bristile Holdings Ltd v Giacci Brothers Pty Ltd [2000] WASCA 48. In the reasons for decision of the Court (comprising two judges, Owen and Steytler JJ) their Honours said this (at para 34):
"In our opinion s 79C is hopelessly inadequate for modern commercial litigation. In the absence of a legislative solution perhaps O29 r2(1) provides a mechanism for overcoming some of the deficiencies in the section. But it cannot be ignored. We think that this application should have been approached as if it were an application for orders ahead of trial to facilitate proof of matters under the section. That this course is open is clear on the authorities ..."
224 Unfortunately the authorities (reviewed in Bristile) suggest that Order 29 rule 2(1) of the Rules of the Supreme Court of Western Australia can only be used to facilitate proof of matters in issue which are largely peripheral, although not completely, formal. However, there does appear to be some glimmer of hope, arising from their Honours' observations in Bristile, for parties who find themselves in the respondents' situation.
225 As to the degree of prejudice, the respondents have, for understandable reasons, largely tendered their evidence of prejudice by way of examples rather than on an exhaustive basis.
226 While I accept that, to a degree, the respondents will have to review their evidence to accommodate the requirements of the State Evidence Act, I am not satisfied on their evidence that the degree of prejudice will be such as to outweigh the factors which I consider make it more appropriate that this case should be determined by the Supreme Court.
227 Most of the foregoing reasoning is based on the relationship between the proceeding in this Court and the WA Proceeding. I have also found that this proceeding arises out of and is also related to the various winding up proceedings and is also related to the proof of debt proceedings. I would have found in favour of transfer even without having made those findings. However, those findings together with the degree of the relationship between the various sets of proceedings makes it even more appropriate, in my opinion, that this proceeding should be determined by the Supreme Court of Western Australia.
Whether the transfer order should be made under the Cross-Vesting Act
228 The applicants submitted, in effect, that the transfer order should be made under the Cross-Vesting Act because such a transfer would have "... the added benefit of lessening the risk of there being further resources expended on the jurisdiction issues and questions". That is because s 13(a), as discussed above, precludes an appeal in relation to an order to transfer pursuant to the Cross-Vesting Act.
229 The respondents submitted that, if I were minded to make a transfer order, I should make it under s 86A of the Trade Practices Act which is in somewhat similar terms to s 5(4) of the Cross-Vesting Act. The respondents contended that, in those circumstances, they would have a right to appeal against the transfer order.
230 I have decided not to accede fully to the respondents' submissions. Section 86A was inserted into the Trade Practices Act by the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987. I shall refer to that Act as "Act No 23 of 1987". A perusal of Act No 23 of 1987 shows that the question of appeals was certainly in the Parliament's mind when it caused amendments to be made to the various other acts amended by it. The Cross-Vesting Act was passed at much the same time as Act No 23 of 1987. Both Acts were assented to on 26 May 1987. Parliament decided not to bar appeals from transfer orders made under s 86A of the Trade Practices Act when it inserted that provision by enacting Act No 23 of 1987. But it chose to exclude appeals in relation to decisions to transfer made under s 5(4) of the Cross-Vesting Act. My task is to give effect, as best I can, to Parliament's intention. I approach the matter on the following basis.
231 The applicants, by their motion filed on 23 December 1999, have exercised their right to invoke the power conferred by s 5(4) of the Cross-Vesting Act. That section is expressed in mandatory terms i.e. it uses the word "shall". It provides that where the circumstances described in it exist, the Court "shall transfer the relevant proceeding" to the Supreme Court in which the other proceeding is pending. Relevantly in this matter, once a Court finds that it is more appropriate that the relevant proceeding be determined by the Supreme Court, it is, in my view, under a duty imposed by Parliament to transfer that proceeding to the Supreme Court. The consequence of that course is that, by virtue of s 13(a) no appeal lies from that decision.
232 On the other hand, s 86A of the Trade Practices Act is expressed in discretionary terms. In Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 137 ALR 47 at 62-63 a Full Court of this Court described these two pieces of legislation as having been enacted by the Commonwealth in order to provide "... separate, albeit overlapping, but additional sources" (relevantly) of power to transfer matters arising under Commonwealth legislation to Supreme Courts. The Full Court referred to the fact that s 13(a) of the Cross-Vesting Act precluded appeals (see p 60), but it did not have to decide the question which I have to decide in this case. The parties to this case have not cited any decision involving a choice of powers to transfer under one or other of the two respective pieces of legislation, being a choice made on the basis of whether an appeal was available. I note that in Charter Pacific Corporation Ltd v Commonwealth Scientific and Industrial Research Organisation (1998) 42 IPR 453 Cooper J made a transfer order under both s 5(4)(b)(ii) of the Cross-Vesting Act and s 86A(1) of the Trade Practices Act. However, his Honour did so on the basis that the considerations which persuaded him that the Supreme Court of Victoria was the more appropriate Court to hear and determine that matter also called for the exercise of the discretion under s 86A. No question about the availability or otherwise of an appeal appears to have been discussed in that case.
233 In Crandell, Sackville J chose to make a transfer order under s 86A(1). The parties jointly supported the transfer. His Honour, in making that choice, appears to have been influenced by the fact that any judgment in the matters would be enforceable throughout Australia as provided for in s 86A(3)(b) - see para 11 of his reasons.
234 In view of my finding that it is more appropriate that the proceeding in this Court be transferred to the Supreme Court of Western Australia I shall do so in accordance with s 5(4) of the Cross-Vesting Act.
235 I am also satisfied that s 86A(2) applies, for the same reasons. To ensure that not only the proceeding but also all matters for determination in this proceeding are transferred to the Supreme Court of Western Australia, I shall make the transfer orders under both s 5(4) of the Cross-Vesting Act and s 86A(1) of the Trade Practices Act.
I certify that the preceding two hundred and thirty-five (235) numbered paragraphs are a true copy of the Reasons for Judgment of Justice Carr. |
Associate:
Dated: 7 April 2000
Counsel for the Applicants: |
Mr D E Horton QC with Mr J T Svehla |
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Solicitors for the Applicants: |
Messrs Blake Dawson Waldron |
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Counsel for the Respondents: |
(On 18/11/99, 14/12/99 and 15/12/99 Mr J L B Allsop QC with Mr M C Goldblatt and Mr M J Leeming. (On 10/3/00 Mr T M Jucovic QC with Mr M C Goldblatt and Mr M J Leeming |
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Solicitors for the Respondents: |
Messrs Freehill Hollingdale & Page |
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Counsel for the Attorney-General of Western Australia, intervening on 14/12/99 |
Mr R J Meadows QC, Solicitor-General for the State of Western Australia, with Ms J C Pritchard |
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Solicitor for the Attorney-General of Western Australia, intervening |
Mr Peter Apostolos Panegyres, Crown Solicitor for the State of Western Australia |
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Counsel for the Attorney-General of the Commonwealth of Australia, intervening on 10/3/00 |
Mr D M J Bennett QC, Solicitor-General for the Commonwealth of Australia, with Mr C R Horan |
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Solicitor for the Attorney-General of the Commonwealth of Australia |
Australian Government Solicitor |
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Date of Hearing: |
18 November 1999, 14, 15 December 1999, 10 March 2000 |
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Date of Judgment: |
7 April 2000 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2000/439.html