FEDERAL COURT OF AUSTRALIA

Robins v Incentive Dynamics Pty Ltd [1999] FCA 1651

JURISDICTION – Court exercising appellate jurisdiction – jurisdiction to set aside decision made without jurisdiction – form of orders – whether relief should be withheld or modified to enable respondents to take advantage of Federal Courts (State Jurisdiction) Act 1999 (Cth).

Federal Court of Australia Act 1976 (Cth), ss 5(2), 24(1), 28(1), 32, 43(1)

Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), s 4(1)

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 9(2)

Federal Courts (State Jurisdiction) Act 1999 (NSW), ss 3, 4, 6, 11, 14

Corporations (NSW) Act 1990 (NSW), s 42(3)

Corporations Act 1989 (Cth), s 56(2)

Re Wakim; Ex parte McNally (1999) 163 ALR 270, followed

Gould v Brown (1998) 193 CLR 346, cited

Cameron v Cole (1944) 68 CLR 571, followed

Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 84 FCR 367, cited

Ah Yick v Lehmert (1905) 2 CLR 593, followed

Chamberlain v The Queen (No 2) (1984) 153 CLR 521, cited

Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd [1999] FCA 1572, cited

Kovac v R (1977) 15 ALR 637, cited

Anderson v R (1977) 19 ALR 212, cited

R v Tait (1979) 24 ALR 473, cited

Quinn v Given (1980) 29 ALR 88, cited

Johns v Australian Securities Commission (1993) 178 CLR 408, considered

Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51, cited

Federated Engine-Drivers and Firemen’s Association of Australasia v The Broken Hill Proprietary Company Ltd (1911) 12 CLR 398, cited

DOUGLAS ROBERT McNEILL ROBINS & ORS v INCENTIVE DYNAMICS PTY LIMITED (IN LIQUIDATION) (ACN 003 294 700) & ANOR

N 684 OF 1999

PAGBY PTY LTD (ACN 005 203 136) v INCENTIVE DYNAMICS PTY LIMITED (IN LIQUIDATION) (ACN 003 294 700) & ANOR

V 387 OF 1999

JUDGES:       BRANSON, SACKVILLE J & KIEFEL JJ

DATE:            26 NOVEMBER 1999

PLACE:          SYDNEY

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:                   DOUGLAS ROBERT McNEILL ROBINS

                                        First Appellant

                                        JOHN HAIGH ROBINS

                                        Second Appellant

                                        COLDWICK PTY LIMITED

                                        Third Appellant

                                        ROBINS HAIGH McNEILL PTY LIMITED

                                        Fourth Appellant

                                        CHERYL ANN CHANG

                                        Fifth Appellant

AND:                              INCENTIVE DYNAMICS PTY LIMITED (IN LIQUIDATION)

                                        (ACN 003 294 700)

                                        First Respondent

                                        ROBERT WILLIAM MORTON (In his capacity as Official 

                                        Liquidator of Incentive Dynamics Pty Ltd)

                                        Second Respondent

THE COURT ORDERS THAT:

1.      The appeal be allowed.

2.      Orders 1, 2, 4, 5 and 8 of the orders made by the primary Judge on 12 July 1999 be set aside.

3.      Order 9 made by the primary Judge on 12 July 1999 be set aside insofar as it applies to the first, second, third and fourth appellants.

4.      In lieu of orders referred to in pars 2 and 3, an order be made that the proceedings against the first respondent Douglas Robert McNeill Robins, the second respondent John Haigh Robins, the fifth respondent Coldwick Pty Limited, the sixth respondent Robins Haigh McNeill Pty Limited and the eighth respondent Cheryl Ann Chang, be dismissed for want of jurisdiction.

5.      The respondents pay the appellants’ costs of the appeal.

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

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.      The appeal be allowed.

2.      Order 6 and Order 11 made by the primary Judge on 12 July 1999 be set aside.

3.      Order 9 made by the primary Judge on 12 July 1999 be set aside insofar as it applies to the appellant.

4.      In lieu of the orders referred to in pars 2 and 3, an order be made that the proceedings against the seventh respondent, Pagby Pty Limited, be dismissed for want of jurisdiction.

5.      The respondents pay the appellant’s costs of the appeal.

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

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

N 684 of 1999:

BETWEEN:                   DOUGLAS ROBERT McNEILL ROBINS

                                        First Appellant

                                        JOHN HAIGH ROBINS

                                        Second Appellant

                                        COLDWICK PTY LIMITED

                                        Third Appellant

                                        ROBINS HAIGH McNEILL PTY LIMITED

                                        Fourth Appellant

                                        CHERYL ANN CHANG

                                        Fifth Appellant

AND:                              INCENTIVE DYNAMICS PTY LIMITED (IN LIQUIDATION)

                                        (ACN 003 294 700)

                                        First Respondent

                                        ROBERT WILLIAM MORTON (In his capacity as Official 

                                        Liquidator of Incentive Dynamics Pty Ltd)

                                        Second Respondent

V 387 of 1999:

REASONS FOR JUDGMENT

THE COURT

The Proceedings

1                     On 16 June 1999, the day before the High Court delivered judgment in Re Wakim; Ex parte McNally (1999) 163 ALR 270, the learned primary Judge gave judgment in proceedings which had occupied twenty-two hearing days.  His Honour stated that he proposed to make orders in favour of the applicants, Incentive Dynamics Pty Ltd (In Liquidation) (“Incentive”) and its liquidator, Mr Morton (the “Liquidator”) against six of the eight respondents to those proceedings.  The orders were duly entered on 12 July 1999.

2                     The six appellants, with one immaterial exception, are the parties against whom the primary Judge made orders.  Two separate notices of appeal have been filed.  The first (N 684 of 1999) was filed on behalf of five of the appellants on 14 July 1999 and has been subsequently amended.  The second (V 387 of 1999) was filed on behalf of the remaining appellant on 13 July 1999 and has also been subsequently amended.  Incentive and the Liquidator are the respondents to each appeal.  The two appeals have been heard together.

3                     Each appeal relies on one ground and one ground only.  The ground is that the primary Judge had no jurisdiction or power to hear and determine the proceedings, since they did not fall within any law of the Commonwealth Parliament defining the jurisdiction of this Court.

4                     The respondents (that is, Incentive and the Liquidator) concede that in consequence of the decision in Re Wakim, the primary Judge had no jurisdiction to make the orders he did.  The respondents also accept that this Court has jurisdiction to entertain the appeal against his Honour’s judgment and orders.  The only dispute concerns the form of the orders which should be made on the appeal.  In particular, the respondents dispute the appellants’ contention that the orders made by the primary Judge should be set aside and, in lieu thereof, an order should be made dismissing the proceedings for want of jurisdiction.

5                     The proceedings at first instance were brought by the present respondents against the six appellants and two other parties.  The eight respondents to the proceedings at first instance were four directors or de facto directors of Incentive, two companies associated with one of the directors, the spouse of that director, and an unrelated company.

6                     The primary Judge identified three principal categories of claims.  These were as follows:

(i)                  claims against the directors for breach of their fiduciary duties to Incentive;

(ii)                claims against all eight respondents in respect of advances said to have been made by Incentive; and

(iii)               claims against three of the respondents in respect of advances related to the purchase of property, including claims that certain moneys were held on trust for Incentive.

7                     His Honour rejected the claims based on constructive trust and breaches of fiduciary duty.  His Honour found, however, that six of the respondents were indebted to Incentive in varying amounts and gave judgment against each of them accordingly.  Five of these respondents are appellants in these appeals.  No order was made by the primary Judge against the sixth appellant (Ms Chang, the fifth appellant in N 684 of 1999), but nothing appears to turn on that fact.

The Jurisdictional Issue

8                     Neither the pleadings nor the judgment at first instance identify the source of the purported exercise of jurisdiction by the primary Judge.  Nor did argument in this Court precisely identify the source.  It appears to be common ground, however, that insofar as the present respondents’ claims against the appellants arose under the Corporations Law, the primary Judge relied on:

(i)                  s 42(3) of the Corporations (NSW) Act 1990 (NSW) (“Corporations (NSW) Act”), which purports to confer jurisdiction on the Federal Court with respect to civil matters arising under the Corporations Law; and

(ii)                s 56(2) of the Corporations Act 1989 (Cth) (“Corporations Act (Cth)”), which purports to permit the Federal Court to exercise jurisdiction (whether original or appellate) conferred on it by a law of the State with respect to matters arising under the Corporations Law of a State and to hear and determine a proceeding transferred to it under such a provision.

9                     Insofar as the respondents made claims against the appellants otherwise than under the Corporations Law, it appears to have been assumed by the parties that the balance of the claims came within the Court’s accrued jurisdiction or the associated jurisdiction conferred by s 32 of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”).  Alternatively, they and the primary Judge may have relied on

(iii)               s 4(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (“Cross-vesting Act (NSW)”) which purports to vest original and appellate jurisdiction in the Federal Court with respect to State matters; and

(iv)              s 9(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (“Cross-vesting Act (Cth)”), which purports to permit the Federal Court to exercise jurisdiction, whether original or appellate, conferred on the Court by a law of the State relating to the cross-vesting of jurisdiction and to hear and determine a proceeding transferred to the Court under such a provision.

10                  On the appeal, the respondents did not dispute that the effect of the decision in Re Wakim is that

(i)                  s 42(3) of the Corporations (NSW) Act and s 4(1) of the Cross-vesting Act (NSW) are invalid insofar as they purport to confer jurisdiction on the Federal Court: Wakim, at [33], per McHugh J; at [111], per Gummow and Hayne JJ (with whom Gleeson CJ and Gaudron J agreed); at [265] per Callinan J; and

(ii)                s 56(2) of the Corporations Act (Cth) and s 9(2) of the Cross-vesting Act (Cth) are invalid insofar as they purport to confer jurisdiction on the Federal Court to exercise State judicial power or consent to the conferral of such jurisdiction: Wakim, at [33], per McHugh J; at [127], per Gummow and Hayne JJ (with whom Gleeson CJ and Gaudron J agreed).

11                  It follows that the primary Judge, although he acted in conformity with the law determined by an evenly divided High Court in Gould v Brown (1998) 193 CLR 346, had no jurisdiction to determine the proceedings or make the orders he did.  No question of accrued or associated jurisdiction could arise.

The Proceedings Under the State Jurisdiction Act

12                  On 27 August 1999, the respondents filed a summons in the Supreme Court of New South Wales against seven defendants, including the six appellants.  The respondents invoked the Federal Courts (State Jurisdiction) Act 1999 (NSW) (“State Jurisdiction Act”) to claim a declaration

“that the rights and liabilities of the parties to the proceedings being a proceeding in the Federal Court of Australia between [Incentive] and [the Liquidator] as applicants and the Respondents…are and always have been the same as if the judgment of Mansfield J on 16 June 1999 in the proceedings had been a valid judgment of the Supreme Court of New South Wales in its Equity Division constituted by a Judge of the said Supreme Court.”

The respondents also sought an order that the proceedings be treated as a proceeding in the Supreme Court and a direction that the Registrar of the Supreme Court arrange for the transfer of the files of the proceedings.

13                  The respondents’ application came before Santow J on 27 September 1999.  After hearing argument, his Honour said this:

“I think it seems that neither of you is going to consent to a simple declaration that this is an ineffective judgment.  I don’t see any advantage in splitting the case up.  As I presently see matters I think the matter should be adjourned until after the Full Federal Court proceedings.”

His Honour then made the following direction:

“In relation to the plaintiffs’ summons of 27 August 1999 I direct that the proceedings be adjourned until after the conclusion of the Full Federal Court hearing set down for 15 November 1999 and to as early a date as is practicable for a two day hearing in this court at which all issues outstanding between the parties are to be determined as arise either directly or indirectly from the plaintiffs’ summons aforesaid…”.

The State Jurisdiction Act

14                  Since the State Jurisdiction Act and the proceedings part-heard before Santow J played some part in the argument on the appeal, it is convenient to refer to the key provisions of that legislation.

15                  The State Jurisdiction Act was prepared as a response to the decision in Re Wakim through the Standing Committee of Attorneys-General, in conjunction with the Special Committee of Solicitors-General and the Parliamentary Counsel’s Committee: NSW Parl Deb, Leg Ass, 24 June 1999, 1407-1408.  It is intended to provide a model for all States.  The State Jurisdiction Act was assented to on 6 July 1999 and commenced on 9 July 1999.  Thus far similar legislation has been enacted in four States: Federal Courts (State Jurisdiction) Act 1999 (Qld); Federal Courts (State Jurisdiction) Act 1999 (SA); Federal Courts (State Jurisdiction) Act 1999 (WA); Federal Courts (State Jurisdiction) Act 1999 (Tas).

16                  The two key concepts in the State Jurisdiction Act are those of an “ineffective judgment” and a “State matter”.  A “State matter” is defined in s 3 to mean

“a matter

(a)                   in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State or a Territory, or

(b)                   …; or

(c)                   in respect of which a relevant State Act purports or purported to confer jurisdiction on a federal court, or

(d)                   …”.

Section 4 explains what is meant by an “ineffective judgment”:

“(1)     A reference in this Act to an ineffective judgment is a reference to a judgment of a federal court in a State matter given or recorded, before the commencement of this section, in the purported exercise of jurisdiction purporting to have been conferred on the federal court by a relevant State Act.

(2)               If:

(a)               a Full Court of the Federal Court of Australia in its appellate jurisdiction has purported to affirm, reverse or vary an ineffective judgment, or

(b)               …,

a reference in this Act to the ineffective judgment is a reference to the ineffective judgment in the form in which, and to the extent to which, it purports or purported to have effect from time to time.”

17                  Section 6 of the State Jurisdiction Act addresses the effect of an ineffective judgment of the Federal Court:

“6        The rights and liabilities of all persons are, by force of this Act, declared to be, and always to have been, the same as if:

(a)               each ineffective judgment of:

(i)                 the Federal Court of Australia, otherwise than as a Full Court of the Federal Court of Australia, or

(ii)               …

had been a valid judgment of the Supreme Court in a Division constituted by a Judge of the Supreme Court, and

(b)               each ineffective judgment of:

(i)                 a Full Court of the Federal Court of Australia, or

(ii)               …,

had been a valid judgment of the Supreme Court in the Court of Appeal.”

18                  Section 11 provides a procedure whereby a proceeding in a “federal court” may be treated as a proceeding in the Supreme Court.  One consequence of the proceeding being treated in this way is that, for the purposes of any “limitation law” (a defined expression), it is deemed to have been brought in the Supreme Court on the day on which the proceeding was first recorded as a proceeding in the federal court: s 11(3)(b).  Section 11(1) defines a “relevant order” as follows:

“(a)     an order of a federal court, whether made before or after the commencement of this section, dismissing, striking out or staying a proceeding relating to a State matter for want of jurisdiction, or

  (b)     a declaration by a federal court, whether made before or after the commencement of this section, that it has no jurisdiction to hear and determine a proceeding relating to a State matter, or

  (c)      any other decision or determination by a federal court, whether made before or after the commencement of this section, that it has no jurisdiction to hear and determine a proceeding relating to a State matter.”

Sub-sections 11(2) and (3) establish the procedure for the proceeding to be treated as a proceeding in the Supreme Court:

“(2)     A person who was a party to a proceeding in which a relevant order is made may apply to the Supreme Court for an order that the proceeding be treated as a proceeding in the Supreme Court, and the Supreme Court may make such an order.

(3)               If the Supreme court makes an order under subsection (2), the proceeding, despite the relevant order:

(a)               becomes, and must be recorded by the Supreme Court as, a proceeding in the Supreme Court, and

            …”.

19                  Section 14 of the State Jurisdiction Act provides, inter alia, that nothing in the Act applies to

“(a)     a judgment given or recorded by the Federal Court of Australia that has been declared to be invalid, or has been quashed or overruled, by a Full Court of the Federal Court of Australia before the commencement of this section (otherwise than on the ground that the Court had no jurisdiction).”

The Submissions

20                  The appellants submitted that a superior court such as the Federal Court always has jurisdiction to decide whether it has jurisdiction to hear and determine a matter.  This (it was argued) is true at first instance and, if anything, even more so on appeal when the question is directly raised.  No challenge to the jurisdiction of the primary Judge could have been made in the proceedings at first instance, since his Honour was bound by the decision in Gould v Brown so long as it stood.  Once Re Wakim was decided, however, it became clear that the primary Judge lacked jurisdiction to determine the proceedings (otherwise than by holding that he had no jurisdiction).  Since a challenge had been made within time on the appeal, the Court was under a duty to determine the issue before it.  The result, inevitably, had to be the setting aside of the orders made by the primary Judge and the dismissal of the proceedings for want of jurisdiction.

21                  Mr Walker SC, who appeared with Mr Kintominas for the appellants, contended that the State Jurisdiction Act could have no bearing on the power or duty of this Court in its appellate jurisdiction to correct the error (albeit an unavoidable error) at first instance.  According to Mr Walker, the role of the Court is simply to correct the error and not to fashion its procedures to accommodate what it perceives to be the operation of the State Jurisdiction Act.

22                  The respondents contended that the Court was not bound to quash or reverse the orders made by the primary Judge, notwithstanding the concession that they were made without jurisdiction.  Mr Whelan QC, who appeared with Mr Chippindall for the respondents, suggested that the appeal was likely to be pointless, since the judgment of Mansfield J was an “ineffective judgment” for the purposes of the State Jurisdiction Act.  It followed that the State Jurisdiction Act gave his Honour’s orders the same force and effect as would have been the case had the judgment been pronounced by the Supreme Court of New South Wales.

23                  Nonetheless, as Mr Whelan pointed out, the appellants had foreshadowed that, if this Court were to set aside the judgment and orders of the primary Judge, they intended to argue in the Supreme Court that the effect of s 4(2) of the State Jurisdiction Act would be to prevent the Act giving force and effect to those orders.  In these circumstances, according to Mr Whelan, the proper approach for the Court was to minimise the opportunity for the appellants to seek an “unmeritorious tactical advantage” and to endeavour to facilitate the operation of the remedial legislation.  Mr Whelan submitted that that course was best served by the Court making a declaration that the primary Judge lacked jurisdiction to hear and determine the proceeding.  A declaration in that form would be a “relevant order” for the purposes of s 11(1) of the State Jurisdiction Act and would allow the respondents to apply to the Supreme Court under s 11(2).  This would have the effect of preserving the respondents’ position for the purposes of any limitation law.  Moreover, an order in this form would not be an order which “purported to affirm, reverse or vary an ineffective judgment” within s 4(2) of the State Jurisdiction Act.  Alternatively, the Court could make an order staying the proceedings for want of jurisdiction, thereby achieving the same result.  Mr Whelan’s fall-back position was that the Court should simply adjourn the appeal to enable a fresh application to be made to the Supreme Court.

Scope of the Dispute

24                  By the end of the argument it was apparent that the respective positions of the parties were quite close, even if they did not entirely converge.  A number of propositions were not in dispute.

25                  First, both parties accepted that the judgment and orders of the primary Judge, notwithstanding that they were made without jurisdiction, were not a nullity.  This conclusion follows from the fact that the Federal Court is a superior court of record: Federal Court Act, s 5(2).  The judgment of a superior court, even if made in excess of jurisdiction, is merely voidable and is therefore valid until set aside: Cameron v Cole (1944) 68 CLR 571, at 590, per Rich J; at 598-599, per McTiernan J; at 606, per Williams J; Re Wakim, at [162], [164]-[165], per Gummow and Hayne JJ; Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 84 FCR 367 (FC), at 380, per Finkelstein J (and United States authorities referred to there).

26                  Secondly, the parties agreed that this Court has appellate jurisdiction to hear and determine a challenge to the jurisdiction of a Judge purporting to exercise the original jurisdiction of the Court.  The jurisdiction is conferred by s 24(1) of the Federal Court Act, which proves, subject to presently irrelevant exceptions, that

“the Court has jurisdiction to hear and determine:

(a)           appeals from judgments of the Court constituted by a single Judge;

…”.

This view of the effect of s 24(1) is consistent with the general proposition that a court can exercise its appellate jurisdiction to set right an error, including a wrongful assertion of jurisdiction: Ah Yick v Lehmert (1905) 2 CLR 593, at 601, per Griffith CJ; Chamberlain v The Queen (No 2) (1984) 153 CLR 521, at 529, per Gibbs CJ and Mason J.  (In Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd [1999] FCA 1572, French J identified the source of a single Judge’s jurisdiction to determine whether there is jurisdiction to entertain the proceedings at first instance as s 71 of the Constitution or, alternatively, an implied grant of jurisdiction under the Federal Court Act. It is not necessary to address that question in these proceedings.)

27                  Thirdly, the respondents did not challenge the constitutional validity of s 24(1) of the Federal Court Act. They accepted, as did the appellants, that the scope of the Court’s appellate jurisdiction, and of the Court’s powers on an appeal, depend upon the construction of Part III of the Federal Court Act.  It is implicit in what has already been said that the parties were in agreement that s 24(1) is intended to confer appellate jurisdiction to determine (inter alia) whether a Judge who has purported to exercise the original jurisdiction of the Court acted correctly.  That the parties were justified in taking this approach is confirmed by s 43(1) of the Federal Court Act, which confers jurisdiction on the Court to award costs in all proceedings before the Court including proceedings dismissed for want of jurisdiction.

28                  Fourthly, Mr Walker expressly accepted that, if the Court were minded to set aside the orders of the primary Judge as having been made without jurisdiction, it would be appropriate also to order that the proceedings be dismissed for want of jurisdiction.  The significance of this concession is that an order in the latter form appears to fall within the definition of “relevant order” in s 11(1) of the State Jurisdiction Act.  An order in this form would therefore have the same effect, for example in relation to the operation of a limitation law, as a declaration that the Court has no jurisdiction to hear the proceedings or an order staying the proceedings for want of jurisdiction (these being the orders sought by the respondents).  In the result, there is no dispute between the parties that this Court should resolve the appeal by making an order that will constitute a “relevant order” for the purposes of s 11(1) of the State Jurisdiction Act.

29                  Fifthly, Mr Whelan did not dispute that the appellants were entitled to raise the jurisdictional issue notwithstanding that it had not been canvassed before Mansfield J.

An “Ineffective Judgment”?

30                  Although we were referred to the State Jurisdiction Act, neither party invited us to resolve the questions of construction to which the legislation gives rise.  It is therefore inappropriate for us to express concluded views on any of these questions.

31                  Nonetheless, we think it appropriate to mention one issue of construction presented by s 4(2) of the State Jurisdiction Act.  Some of the appellants’ submissions appeared to assume (without developing the point) that an order by this Court setting aside the orders made by the primary Judge for want of jurisdiction would attract s 4(2), since the Court’s orders would have satisfied the language of s 4(2): that is, it would be a case where

“a Full Court…in its appellate jurisdiction has purported to…reverse or vary an ineffective judgment”.

32                  It is far from obvious that this assumption is correct.  It is, we think, at least arguable that the drafter used the word “purported” in s 4(2) of the State Jurisdiction Act because the sub-section is intended to cover only the situation where the Full Court has erroneously sought to exercise State judicial power, as distinct from exercising federal judicial power.  This construction of s 4(2) seems to derive support from s 14(a) of the State Jurisdiction Act, which implicitly recognises that the legislation applies to certain judgments of the Federal Court which have been quashed for want of jurisdiction.  Moreover, there seems to be a deliberate shift in language from s 4(2) (which uses the expression “affirm, reverse or vary”) and that of s 14(a) (which uses the expression “quashed or overruled”).

33                  If s 4(2) of the State Jurisdiction Act applies only to a purported exercise by a Full Court of State judicial power, it would seem to follow that an order by a Full Court of this Court setting aside a judgment for want of jurisdiction would not come within the sub-section s 4(2).  Such an order made in the exercise of appellate jurisdiction would be a valid exercise of federal judicial power, not a purported exercise of State judicial power.  It would also seem to follow that the judgment at first instance would remain the “ineffective judgment” for the purposes of ss 4 and 6 of the State Jurisdiction Act.

34                  The significance of what we have said is that, if the suggested construction of s 4(2) is correct, any order made in the present case by this Court in the exercise of its appellate jurisdiction would seem to be irrelevant to the operation of the State Jurisdiction Act.  In short, the setting aside of the orders of the primary Judge for want of jurisdiction would not alter the character of his Honour’s judgment as an “ineffective judgment” for the purposes of s 4(2) of the State Jurisdiction Act.

Reasoning

35                  The respondents adopted a cautious posture on the appeal.  They contended, we think with some force having regard to what we have just said, that orders made on the appeal would be unlikely to prejudice their entitlement to invoke the provisions of the State Jurisdiction Act in the Supreme Court.  Nonetheless, they invited this Court to decline to make orders that would ordinarily flow from their concession that the primary Judge acted beyond his jurisdiction.  The respondents did so on the basis that this Court should act in a manner designed to maximise their chances of taking advantage of the remedial provisions of the State Jurisdiction Act. 

36                  A necessary element of the respondents’ submissions was the proposition that this Court, in exercising its appellate jurisdiction, has a discretion to grant or withhold relief notwithstanding that it is established beyond argument that the primary Judge acted beyond his jurisdiction.  Mr Whelan relied for this purpose on s 28(1) of the Federal Court Act, which provides as follows:

“(1)     Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:

            (a)        affirm, reverse or vary the judgment appealed from;

(b)        give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order;

(c)        set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit;

…”.

According to Mr Whelan, s 28(1)(b), in particular, allows the Court to grant or withhold relief according to the justice of the case.  He pointed out that in Re Wakim itself, the Court declined to grant prerogative relief which would have had the effect of setting aside orders made (so the High Court held) without jurisdiction: see at [162], [164]-[165], per Gummow and Hayne JJ.

37                  In Kovac v R (1977) 15 ALR 637, an appeal from the Supreme Court of the Australian Capital Territory, a Full Court of the Court observed (at 643)

“that s 24 of the Federal Court of Australia Act1976 is the substantive section conferring upon this court jurisdiction to hear appeals from the Supreme Court of a Territory and that s 28 is modal”.

The Court therefore concluded that s 28 of the Federal Court Act did not confer an unfettered discretion on appeal to substitute its own sentence for that of the trial Judge where the trial Judge’s discretion had not been shown to have miscarried.  See also Anderson v R (1977) 19 ALR 212 (FC), at 213; R v Tait (1979) 24 ALR 473 (FC), at 476; Quinn v Given (1980) 29 ALR 88 (FC), at 93.

38                  These decisions strongly suggest that s 28(1)(b) of the Federal Court Act does not confer on the Court a discretion as broad and untrammelled as that for which Mr Whelan contended.  Courts are not infrequently given power by statute, in apparently wide terms, to grant or withhold relief.  But provisions in this form, as Brennan J remarked in Johns v Australian Securities Commission (1993) 178 CLR 408, at 433, do

“not set the Court on an uncharted course without legal reference points by which to steer.”

In that case, the High Court was concerned with s 16(1)(d) of the Administrative Decisions (Judicial Review Act 1977 (Cth), which empowers the Court to make an order directing any party to do anything it “considers necessary to do justice between the parties”.  Brennan J, with whom Dawson J agreed, pointed out (at 434) that “justice” means justice according to law.  Thus if there is no right to relief against a person under the general law, that person does not become liable to have an adverse order made under s 16(1)(d) merely by reason of being joined as a respondent in the relevant proceedings.  See also Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51, at 84-85, per Brennan J (with whom Toohey and McHugh JJ agreed).

39                  In this case, the appellants have regularly invoked the appellate jurisdiction of the Court in order to challenge the orders made by the primary Judge.  They are entitled to appeal as of right against those orders and they have done so within the time specified in the Federal Court Rules.  The appeal has come on for hearing before a Full Court in the usual manner.  It has been conceded by the respondents that, in view of the decision in Re Wakim, the primary Judge lacked jurisdiction to make the orders he did.  In short, as a matter of law, the orders should not have been made.

40                  As Griffith CJ remarked in Federated Engine-Drivers and Firemen’s Association of Australasia v The Broken Hill Proprietary Company Limited (1911) 12 CLR 398, at 415, it is

“the first duty of every judicial officer…to satisfy himself that he has jurisdiction…”.

If it becomes clear on appeal that the Court below has made orders without jurisdiction, ordinarily the appellants are entitled to have those orders set aside and to have the proceedings dismissed for want of jurisdiction.  To deny the appellants the relief to which they are entitled on the ground, for example, that the point they have taken is “unmeritorious” would not be to act according to law.

41                  There is nothing in Re Wakim which suggests to the contrary.  The reason prerogative relief quashing the relevant orders was refused in that case was that the applications were well out of time and there were powerful discretionary considerations militating against an extension of time.  These included the fact that one of the applicants had already litigated the issues unsuccessfully and that third parties might have acquired rights which would have been adversely affected had the impugned orders been quashed: at [165] per Gummow and Hayne JJ.  No such considerations are present in this case.  What is more to the point for present purposes is that the Court granted prohibition to the second applicant (who had not previously litigated the issue) in order to prohibit further steps being taken in this Court under the order for winding up.  As Gummow and Hayne JJ said (at [164]):

“[i]t was an order made without jurisdiction and further effect should not now be given to it by that Court.”

42                  Nothing we have said is intended to deny that there may be cases in which it is appropriate to adjourn an appeal by reason of pending proceedings in another court.  Each case must be assessed by reference to its own circumstances.  But in this case, Santow J, the Judge of the Supreme Court to whom the respondents made their application under the State Jurisdiction Act adjourned the proceedings before him pending the outcome of this appeal.  It would be very curious indeed if we were now to adjourn the hearing of the appeal in order to allow the respondents to make a further application to the Supreme Court.  To do so would not merely create further delays, but would pay scant respect to the orders made by Santow J.

43                  Nor is anything we have said intended to deny that there may be circumstances in which the orders of the Court exercising appellate jurisdiction should be framed in a manner that is consistent with and perhaps designed to attract the provisions of remedial legislation.  Once again, whether such an order should be made will depend on the circumstances of the case, of which the most important are likely to be the substantive rights and duties of the parties to the appeal.  The Court is not necessarily bound to shut its eyes to remedial legislation intended, for example, to minimise the inconvenience and uncertainty that would otherwise flow from a decision holding a legislative scheme to be unconstitutional.

44                  But in this case, as we have explained, the appellants accept that the order should be in a form which would seem to comply with the definition of “relevant orders” in s 11 of the State Jurisdiction Act, thus preserving the respondents’ position as far as any relevant “limitation law” is concerned.  Some questions may remain concerning the operation of the State Jurisdiction Act although, as we have pointed out, it is by no means obvious that the respondents’ pending application to the Supreme Court will or could be prejudiced by any orders made on this appeal.  In any event, if there is such prejudice, it is a consequence of this Court giving effect, as it is bound to do, to the rights of the parties in accordance with the law determined by the High Court.  There is no basis for declining to make the orders that rectify what is conceded to have been the error (albeit an unavoidable one) made by the primary Judge, namely to have made orders adversely affecting the appellants in the absence of jurisdiction to do so.

45                  Orders should therefore be made setting aside the orders made by the primary Judge insofar as they affect the appellants, including the order as to costs.  In lieu thereof orders should be made dismissing the proceedings against the appellants for want of jurisdiction. Senior Counsel for Ms Chang (the fifth appellant in N 684 of 1999) accepted that this was the appropriate form of orders so far as she was concerned, even though the primary Judge had dismissed the proceedings against her.  The respondents should pay the appellants’ costs of the appeal.

Associate:

Dated:              26 November 1999