FEDERAL COURT OF AUSTRALIA

 

Macteldir Pty Limited v Dimovski [2005] FCA 1528

Practice and Procedure – costs claimed against legal practitioners for alleged incompetence in propounding a notice of motion found by a Full Court not to be within the jurisdiction of the Court.

Jurisdiction of the Court – contract to enforce a settlement of a proceeding within the jurisdiction of the Court being a contract between the same parties to the original proceeding can be enforced in this Court – whether as part of the original matter or, if a separate matter as a matter arising under a law of the Parliament under s 39B(1A)(c) of the Judiciary Act as undertakings to the Court – enforcement of undertakings to the Court by procedure short of contempt.

Federal Court of Australia Act 1976  s 25(6), s 43

Judiciary Act   s 39B(1A)(c)

Federal Court Rules  O 62 r 9, O 35 r 11

 

Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201

AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98

Australian Building Construction Employees’ and Builders’ Labourers’ Federation v

Commonwealth (1981) 53 FLR 396  referred to

Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212  applied

Darling Downs Investment Pty Ltd v Ellwood (1988) 18 FCR 510   discussed

Fencott v Muller (1983) 152 CLR 570   referred to

Hooper v Kirella (1999) 167 ALR 358   referred to

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564   referred to

Levick v Commissioner of Taxation (2000) 102 FCR 155   discussed and applied

LNC Industries v BMW (Aust) Pty Ltd (1983) 151 CLR 575  discussed an dapplied

Macteldir Pty Limited v Dimovski (2003) 132 FCR 492   discussed and not followed

Minister for Immigration and Multicultural and Indigenous Affairs v SZANS (2005) 215 ALR 733   referred to

Moorgate Tobacco v Phillip Morris (1980) 145 CLR 457    referred to

Myers v Elman [1940] AC 282   referred to

NEC Information Systems Australia Pty Ltd v Iveson (1992) 36 FCR 258   applied

Needlework Warehouse Pty Limited v Chansonette Pty Limited [2005] FCA 1525

Pallas v Finlay (1985) 61 ALR 220   discussed and distinguished

PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520   discussed and applied

Philip Morris Inc v Adam P Brown Male Fashions (1981) 148 CLR 457   applied

Phillips v Walsh (1990) 20 NSWLR 206    discussed

Re Wakim; Ex parte McNally (1999) 198 CLR 511  applied

Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555   referred to

Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481   applied

Webb v Repatriation Commission (2000) 105 FCR 415  discussed and distinguished

Wenkart v Pantzer (No 3) (2004) 135 FCR 422    followed

Witham v Holloway (1995) 183 CLR 525

MACTELDIR PTY LIMITED v MILE DIMOVSKI AND ANOR

NSD 207 of 2001

 

ALLSOP J

2 NOVEMBER 2005

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 207 of 2001

 

BETWEEN:	MACTELDIR PTY LIMITED APPLICANT
AND:	MILE DIMOVSKI FIRST RESPONDENT   ROCKDALE ILINDEN SOCCER CLUB INC SECOND RESPONDENT
JUDGE:	ALLSOP J
DATE OF ORDER:	2 NOVEMBER 2005
WHERE MADE:	SYDNEY

 

 

 

THE COURT ORDERS THAT:

 

1.                  The notice of motion of the applicant filed on 24 February 2004 be dismissed.

2.                  The applicant pay the costs of Mr James Roskov and Mr John de Meyrick of said motion, with the exception of the costs of the argument and preparation therefor covering the asserted waiver of privilege as to advice to the applicant in July 2004.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 207 of 2001

 

BETWEEN:	MACTELDIR PTY LIMITED APPLICANT
AND:	MILE DIMOVSKI FIRST RESPONDENT   ROCKDALE ILINDEN SOCCER CLUB INC SECOND RESPONDENT

 

JUDGE:	ALLSOP J
DATE:	2 NOVEMBER 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     The applicant (Macteldir Pty Limited) seeks orders under s 43 of the Federal Court of Australia Act 1976 (the “FCA Act”) and Order 62 rule 9 of the Federal Court Rules (“the Rules”) requiring two legal practitioners, Mr James Roskov and Mr John de Meyrick (to whom I will refer as the “Solicitor” and the “Barrister”, respectively) to pay certain costs that the applicant has been ordered to pay the respondents and to disallow all their own fees charged to the applicant in the proceeding.

2                     Section 43 and Order 62 rule 9 are, relevantly, in the following terms:

SECT 43 

(1)       … the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded.

…

(2)       Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

ORDER 62 RULE 9

(1)     Without limiting the Court’s discretion to award costs in a proceeding, if costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Court that a legal practitioner is responsible (whether personally or through a servant or agent), the Court may, after giving the legal practitioner a reasonable opportunity to be heard, do any of the following:

(a)   disallow the costs as between the legal practitioner and the legal practitioner’s client;

(b)   if the legal practitioner is a barrister — disallow the costs as between the barrister and the barrister’s instructing solicitor;

(c)   direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party;

(d)   direct the legal practitioner to indemnify any party other than the client against costs payable by the party indemnified.

 

(2)     Without limiting subrule (1), a legal practitioner is taken to be responsible for a default under that subrule if a proceeding cannot conveniently proceed, or can proceed only with the incurring of extra costs or with inconvenience to the Court or another party to the proceeding, because of the failure of the legal practitioner:

(a)   to attend before the Court in person or by proper representative; or

(b)   to file any document that ought to have been filed; or

(c)   to deliver for the use of the Court any document that ought to have been so delivered; or

(d)   to be prepared with any proper evidence or account; or

(e)   to comply with any provision of these Rules or any judgment or order or direction of the Court; or

(f)   otherwise to proceed.

(3)     Before making an order under subrule (1), the Court may refer the matter to a Registrar for inquiry and report.

(4)     The Court may order that notice of any proceeding or order against a legal practitioner be given, as specified in the order, to:

(a)   the legal practitioner’s client; or

(b)   if the legal practitioner is a barrister — the barrister’s instructing solicitor.

(5)     For the purpose of giving effect to a costs order, the Court may give ancillary directions, including a direction to a legal practitioner to provide to the Court or a party to the proceeding a bill of costs in assessable form.

[emphasis added]

 

Relevant legal principles

3                     It is common ground that such orders as are sought in the notice of motion filed on 24 February 2004 should only be exercised with great caution and upon the Court being satisfied that the relevant default of the legal practitioner is sufficiently serious as to amount to a breach of duty, not only to the client, but also to the Court. 

4                     A number of cases were cited by the parties.  It is unnecessary to go into any detailed analysis of them.  There may be a difference in emphasis or approach in some of the cases as to whether a penal or a compensatory purpose should predominantly influence the decision.  The Full Court examined the issue and relevant authorities in Levick v Commissioner of Taxation (2000) 102 FCR 155 at [29]-[50].  The authorities to which the Court referred, with approval, included the statements of Viscount Maugham and Lord Wright in Myers v Elman [1940] AC 282 at 292 and 319, respectively, to the effect of the need to show “a serious dereliction of duty…” or “a failure … to fulfil his duty to the Court and to realise his duty to aid in promoting in his own sphere the cause of justice.”  After their review of the authorities the Full Court in Levick said at [43] and [44]:

We accept the statements of principle made in the cases we have cited. We endorse the emphasis on caution in making orders against solicitors, particularly as it will often be difficult for a court to know all the details and circumstances of the solicitor's instructions. We share the concern expressed by Donaldson MR and Dillon LJ in Orchard about the risk of a practice developing whereby solicitors endeavour to browbeat their opponents into abandoning clients, or particular issues or arguments, for fear of a personal costs order being made against them. We agree such conduct might amount to contempt of court.

 

Having said that, it is equally important to uphold the right of a court to order a solicitor to pay costs wasted by the solicitor's unreasonable conduct of a case. What constitutes unreasonable conduct must depend upon the circumstances of the case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success.

[emphasis added]

5                     For the reasons that will become apparent, by reference to these principles, no order of the kind sought should be made against the Barrister or the Solicitor.

The facts

6                     In fairness to all the parties, in particular the applicant (and its principals) it is necessary to descend into some detail in relation to the relevant circumstances.  By way of introduction, the applicant complains that the Solicitor and Barrister so mishandled a motion in the Court to enforce previous terms of settlement against the respondents to the proceedings that the Court found, on a Case Stated under s 25(6) of the FCA Act, that it had no jurisdiction (that is, no authority to decide) the motion that the practitioners had caused to be filed.  It was submitted that both practitioners had acted incompetently in either propounding a motion which the Court had no jurisdiction to entertain (in the face of warnings by the respondents) or in propounding a motion in respect of which there was doubt that the Court had jurisdiction to hear, without taking available steps to make good the available jurisdiction of the Court.

7                     The decision of the Full Court is reported:  (2003) 132 FCR 492.  In Wenkart v Pantzer (No 3) (2004) 135 FCR 422 at [94] and in Needlework Warehouse Pty Limited v Chansonette Pty Limited [2005] FCA 1525 at [67] Lindgren J said that because the Full Court’s decision was in the original jurisdiction of the Court he was not bound by it, but that he would decide inconsistently with it only if he thought it plainly wrong.  The approach taken by Lindgren J to the precedential status of a decision of a Full Court sitting in the original jurisdiction would appear to be in accordance with principle:  Minister for Immigration and Multicultural and Indigenous Affairs v SZANS (2005) 215 ALR 733 at [36]-[37] and the cases there cited.  In Wenkart and Needlework Warehouse his Honour found that the Full Court decision was distinguishable and did not have to decide upon the correctness of the decision.  I, unfortunately, have no such luxury.  I will return to this question of the correctness of the Full Court’s decision in due course.  For present purposes it should be noted that these reasons should be read against the background set out in the reasons of the Full Court.

8                     Prior to the Solicitor and Barrister becoming involved, the applicant had sued the respondents, Mr Dimovski and Rockdale Ilinden Soccer Club Inc, alleging various copyright infringements by the publication of a local community telephone and advertising directory.  Mr Dimovski and the principals of the applicant, Mr Mihajlov and Mr Stojanovski, were members of the Macedonian community, many of whom lived in the Rockdale and Hurstville areas of Sydney.  After a mediation involving persons from the local Macedonian community, the proceeding was settled.  The terms of settlement are set out in full at [5] of the Full Court’s reasons.  The terms were set out in a form intended to be a court document.  They were signed by the solicitors for the parties.  The terms were as follows:

BY CONSENT and without admission of liability the parties agree to the following orders:

1.                  This is the full and final settlement of this matter and the Terms are not to be disclosed by any party.

2.                  The first and second defendants will not publish, produce, distribute, promote or in anyway be related with the publication, production, distribution or promotion of any book, magazine or document which contains advertisements, pictorials or drawings with similar contents which have been copied or reproduced from the form and layout of the Macedonian Telephone Directory.

3.                  The first and second defendants will publicly announce an apology to the plaintiffs through the Radio Station 2NBC which broadcasts in the Macedonian language within the state of New South Wales and consents to the announcement.  The first and second defendants will also advertise an apology with a Macedonian newspaper which circulates in New South Wales.

4.                  The contents of the advertisement/apology will be as agreed between the plaintiff and first and second defendants and if there is no agreement within one month from the date of these orders then both parties will be bound by the decision of the Mediators Dimitar Todorovski and Igor Aleksandrov Avramovski.

5.                  The first and second defendants will not advertise or announce through any radio station advertisements which have been copied or reproduced from the form and layout of the Macedonian Telephone Directory.

6.                  The first defendant will pay all legal and associated costs and disbursements in respect of these proceedings for both the plaintiff and the second defendant, on behalf of the Plaintiff agreed to be sum in the sum of [sic] $7,000.00 payable within 28 days.

7.                  The first and second defendants will deliver to the plaintiffs the remainder of the printed directories which were printed by Rockdale Ilinden Soccer Club, which have not yet been distributed within one calendar month from the date of these orders.

9                     Undoubtedly, the terms of settlement embodied a contract.  There are at least two possible views (there may be more) as to the extent of the contractual obligations upon the respondents therein.  One view is that the contract would be fully performed by the submission to orders of the Court in the terms set out in the document. A second view is that there was an independent subsisting contractual obligation by the respondents to do and not to do the acts specified in the terms.

10                  On 7 August 2001, the matter came before Madgwick J.  The then solicitor for the applicant, Mr Angelovski, appeared.  There was no appearance for the respondents.  At least implicitly, Mr Angelovski was, no doubt, mentioning the matter for the respondents.  After some discussion, Madgwick J did not make all the orders contemplated by the terms of settlement.  Rather, his Honour noted undertakings to the Court in terms of paragraphs 2, 3, 5 and 7; noted the agreement in paragraph 4; and made the order for costs in paragraph 6.  His Honour then dismissed the proceedings – plainly meaning that he otherwise dismissed the proceedings.

11                  The transcript of this day was not available at the time of the deliberation of the Full Court; but (after some uncertainty which was addressed in a manner to which I will come) the special case before the Full Court and the motion before me both proceeded on the basis that undertakings to the Court had been so given by the respondents in terms of paragraphs 2, 3, 5 and 7 of the terms of settlement.

12                  At this point, it is important to note that the rights asserted by the applicant in the proceeding against the respondents owed their existence to a law of the Commonwealth Parliament – the Copyright Act 1968.  The entitlement to approach the Federal Court of Australia to vindicate those rights also arose under and by reference to laws of the Commonwealth Parliament – the Copyright Act, the FCA Actand the Judiciary Act 1903 (in particular, in respect of the last-mentioned Act, s 39B(1A)(c) thereof).  The contract was a compromise of those asserted rights, whereby in exchange for a promise of an end to the litigation over the asserted rights which, if held by the applicant, were created by Commonwealth law and which litigation was conducted pursuant to authority granted by Commonwealth law, the respondents agreed to do, and not to do, certain things.

13                  Arguably, upon the Court accepting the undertakings, the contract embodied in the terms of settlement was substantially performed, because of the substantial practical equivalence of orders of, and undertakings to, the Court.  That was not the view of the Barrister or the Solicitor when they came into the matter and thereafter.  Whilst some criticism was made in this respect in submissions, it was not central to the criticisms made of them. 

14                  In late 2001 or early 2002, the respondents created a second (2002) directory which the principals of the applicant viewed as a breach of the terms of settlement.  Mr Mihajlov and Mr Stojanovski saw this directory as infringing the applicant’s copyright in a manner that they thought was covered by the terms of settlement.  To vindicate this position, Mr Angelovski commenced fresh proceedings by an application and statement of claim alleging further copyright infringement.  This proceeding was not served.  Mr Mihajlov and Mr Stojanovski became dissatisfied with Mr Angelovski and turned to the Solicitor for assistance in May 2002.  After gaining some familiarity with the matter and obtaining sufficient of Mr Angelovski’s file, the Solicitor briefed the Barrister. 

15                  The Solicitor was a local suburban solicitor admitted to practice in 1994 who had a general practice, including superior court litigation.  The Barrister was junior counsel of over 20 years experience who practised in superior courts in areas which included intellectual property.

16                  Both the Solicitor and Barrister understood the client’s wishes were “to enforce the settlement”.  Looked at broadly, such instructions could be satisfied by taking one or more of the following courses of action (there may be others):

(a)                a fresh copyright infringement action (though this might be seen to lie outside the instructions);

(b)               contempt proceedings;

(c)                a motion in the proceeding seeking an order (in the nature of an injunction) under Order 35 rule 11 of the Rules to enforce the undertakings;

(d)               a motion or application seeking an order (that is an injunction) of the kind provided for by Order 35 rule 11 of the Rules, but founded on the undoubted general power of the Court implied within s 23 of the FCA Act to prevent an undermining of the Court’s authority by conduct which is a breach of an undertaking to the Court:  see Australian Building Construction Employees’ and Builders’ Labourers’ Federation v Commonwealth (1981) 53 FLR 396, 397-98 per Deane J, with whom Bowen CJ and Evatt J agreed (the “BLF case”); and

(e)                depending upon the proper construction of the terms of settlement, enforcement of the underlying contract to the extent obligations lay unperformed and open to enforcement by order.

17                  Order 35 rule 11 of the Rules is in the following terms:

(1)     Where:

(a)   a person (whether a party or not) gives an undertaking to the Court to do or refrain from doing any act or to pay any sum of money; and

(b)   the person fails to fulfil the undertaking;

any party may move on notice for a judgment or order requiring that person to do or refrain from doing the act in question, or to pay the sum of money in question.

(2)     The Court, on being satisfied that the undertaking was binding on the person, shall make the order referred to in subrule (1).

(3)     The Court may be informed of an undertaking to the Court in the proceedings by (amongst other things) reference to a note made by the Judge hearing the proceedings or by his clerk.

(4)     This rule does not affect the powers of the Court to punish a person for contempt.

18                  Section 23 of the FCA Act is in the following terms:

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.

19                  Upon being briefed with the relevant material, the Barrister came to certain views, which he expressed to the Solicitor and which were acted upon.  He advised that the fresh copyright proceedings instituted by Mr Angelovski be discontinued.  The basis for this view was expressed in paragraph 2 of his written advice of 14 June 2002 as follows:

To recommence on the present pleadings would involve litigating the entire matter (not litigated earlier) and opening up issues that need not be revisited as the respondents have already conceded to the original application and claim in the Terms of Settlement.

20                  The course suggested was set out in paragraphs 3, 4 and 5 of the advice and was as follows:

What is required at this stage is the enforcement of the Terms of Settlement in default of the respondents’ undertakings.  That requires the original proceedings (matter No. 207 of 2001) to be revived.

That action is taken on Notice of Motion with supporting affidavits.  I assume that you wish me to prepare that document for your execution.  (If not, please advise.)

I propose to seek an injunction against further publication of the respondent’s magazine, an order for accounting and statement of profits, an order for the seizure of any remaining copies of the magazine, an order to restrain the respondents from making any published announcements in relation to the matter other than those authorised by the Terms of Settlement, and also an order for punitive damages, (The applicant may not wish to pursue all of those orders nor to do so against the Soccer Club itself, but, as discussed in conference, those orders should nevertheless be sought at this stage.)  If these proposed orders are not consistent with your instructions, please advise.

21                  The evidence is clear that the Barrister was also of the view, and so advised the Solicitor, that contempt proceedings should not be commenced because of the perceived difficulty of the burden of proof.

22                  The advice of 14 June 2002 went on to deal with the evidence required to underpin the assertions of copying which were central to any attempt (by whatever procedural vehicle) to vindicate the applicant’s instructions.  The advice did not elucidate the juridical foundation of the suggested orders.

23                  Three days later, on 17 June 2002, the Barrister sent to the Solicitor drafts of a notice of discontinuance, a notice of motion, and supporting affidavits.  The draft notice of motion was in the terms of the notice of motion filed which was before the Full Court, which the Full Court set out at [9] and which was in the following terms:

1.    An Order restraining the first and second respondents, their servants and agents, from further publication, distribution and promotion of the publication titled, “Sports Magazine, Club Sponsor’s and Member’s Directory 2002 Volume 2”, or any later volume or edition thereof.

2.    An Order restraining the first and second respondents, their servants and agents, from publishing, distributing and promoting any other book, booklet, magazine or document, being in the nature of a directory printed in the form, layout style, content and general appearance of the applicant’s Macedonian Telephone Directory.

3.    An Order restraining the first and second respondents, their servants and agents, from promoting the publication referred to in Order 1, in any radio broadcast, print media or other form of mass communication.

4.    An Order that the first and second respondents account to the applicant in respect of all moneys received and all profits made in respect of the publication titled, “Sports Magazine, Club Sponsor’s & Member’s Directory 2002 Volume 2.”

5.    An Order that the first and second respondents pay to the applicant damages in the amount of profit indicated by the taking of accounts pursuant to Order 4.

6.    An Order that the first and second respondents pay to the applicant pursuant to section 115(4) of the Copyright Act 1976 (Cth), such other damages as to the Court seems just.

7.    An Order that the first and second respondents deliver to the applicant within 28 days, all remaining copies of the publication referred to in Order 1, wheresoever those copies may be located within the possession, control and recovery of the respondents, their servants and agents.

8.    Such other and further orders as to the Court seem just.

9.    Costs.

24                  A number of things need to be said about the form of this notice of motion given the serious criticisms of the Barrister made about it.  First, it does not identify the grounds of the orders sought.  It was submitted that it should have done so.  However, Form 27, required by Order 19 rule 2, states, in terms, that the grounds on which orders are sought are not to be stated.  Secondly, the orders, in particular order 2, do not track in terms the undertakings to the Court.  However they are capable of falling, at least substantially, within the undertakings if supported by evidence.  Another (and perhaps less elegant) way of expressing the matter would have been to seek an order restraining a breach of contract or breach of the undertakings given to the Court by the acts set out in the orders.  That, however, does not make invalid the method adopted.  The juridical bases for the orders would need to be made good upon elucidation at the appropriate time.  Thirdly, one of the orders asserted, in terms, a claim for relief under the Copyright Act.  That claim, even if it should have been brought by statement of claim as filed by Mr Angelovski, rather than by notice of motion in the earlier proceedings, was a non-colourable assertion of a claim to relief in federal jurisdiction apparently based on the same factual complaints founding the claims for the other orders.

25                  At no stage did the Barrister advert directly to Order 35 rule 11 or to the BLF case.  However, the Barrister said in evidence, which evidence I accept, that at the time of the drafting of the notice of motion he saw: (a) the bases of orders 2 and 3 and 7 as the breach of the agreement in the terms of settlement and the breach of the undertakings; (b) the basis of orders 4 and 6 as the Copyright Act; and (c) the basis of order 5 as the agreement alone.  Thus, although he did not satisfy himself of the legal basis for his view, the Barrister was of the view that the Court could make an order for a party to do or refrain from doing an act by way of enforcement of an undertaking to the Court.  He did not see this as a contempt action. 

26                  Thus, the Barrister was of the view that a combination of avenues reflected in [16] above, in particular (e) and an order of the kind in (c) or (d) and an order of the kind in (a) (but by motion) should be propounded.

27                  Immediately thereafter, the Solicitor began preparing the necessary affidavits.  The Barrister became involved, promptly and conscientiously, in attending to the settlement of them.

28                  On 19 July 2002, the motion came before Madgwick J.  His Honour expressed the view that a new proceeding should be begun.  The Barrister disagreed.  The Barrister also made clear at this first return date that the notice of motion sought orders to “enforce some undertakings and the terms of settlement in a copyright matter”.  Madgwick J expressed the view that what needed to be done was a fresh application and statement of claim pleading a contract and breach and a fresh copyright claim.  Those were alternatives, but they were not the only available course.

29                  Mr Alkadamani, junior counsel for the respondents, submitted that a contract was sought to be enforced and it should be pleaded in a new action.  No jurisdictional point was raised at this time; rather, it was a matter of the correct procedural form.  (Defective procedural form can always be cured by order.  Absence of jurisdiction is the lack of legal authority to decide the controversy.)  That Mr Alkadamani was making a procedural point was made clear by the correspondence between the Barrister, Mr Alkadamani and the associate to Madgwick J shortly after 19 July 2002.  The Barrister, relying on Darling Downs Investment Pty Ltd v Ellwood (1988) 18 FCR 510, 520 (as he did later before the Full court) said that a notice of motion was adequate.  Mr Alkadamani relying on Phillips v Walsh (1990) 20 NSWLR 206 at 210E said that a statement of claim was required.  In Phillips v Walsh, McLelland J (as his Honour then was) said at 210:

I have considered whether any justification for the plaintiff’s application can be found in the authorities which deal with the power of the court to enforce on motion in existing proceedings an agreement compromising those proceedings:  see Green v Rozen [1955] 1 WLR 741; [1955] 2 All ER 797; Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VLR 555; [1957] ALR 71; McCallum v Country Residences Ltd [1965] 1 WLR 657; [1965] 2 All ER 264; E F Phillips and Sons Ltd v Clarke [1970] Ch 322; McLaren v Schuit (1983) 33 SASR 139; General Credits (Finance) Pty Ltd v Fenton Lake Pty Ltd [1985] 2 Qd R 6 and Darling Downs Investments Pty Ltd v Ellwood (1988) 18 FCR 510; 80 ALR 203.

These authorities present a confusing picture and since the matter was not dealt with in an argument before me, I do not propose to attempt any extended analysis of them.  It is sufficient for present purposes to say that, although there is some arguable support for the proposition (although it is far from clear) that the Court might on motion in the present proceedings enforce a particular term of the agreement between the parties noted in the order of 16 June 1989 which came within the ambit of the proceedings as originally constituted, it would not be proper to do so where substantial matters are involved beyond the ambit of the proceedings as originally constituted, or where, in the interests of justice, disposition of the matter on summary application is inappropriate.

30                  McLelland J was not directing himself to the question of federal jurisdiction.  His Honour was concerned with the proper procedural vehicle for the enforcement of a settlement.

31                  The matter was then prepared for hearing.  The Barrister gave a number of warnings to the clients through the Solicitor about the uncertainty of litigation.  This was prompted, in particular it would seem, by the evidence of copying not being powerful.  The confidence of the clients early in the piece in the availability of evidence was not being borne out, for whatever reason.

32                  No argument was put before me that any step in the preparation of the case by the preparation of affidavits, discovery and interrogatories was in any way unnecessary.  By November 2002, the Barrister began to turn his mind to damages.  This was so, no doubt, because of the passage of time since the acts complained of and thus the possible weakening of a case for the injunctive relief.  In a memorandum to the Solicitor on 15 November 2002, the Barrister said:

Injunctions

I realise that the applicant’s principal intention is to obtain injunctive relief against further publication of anything that looked like the Macedonian telephone directory but, because of the way the undertakings were given, the case has really come down to one based on damages for breach of those undertakings in relation to (quote) “advertisements, pictorials or drawings with similar and the same contents which have been copied or reproducedfrom the form and layout of the Macedonian Telephone Directory.”

…

Before the matter proceeds to trial (if that is inevitable) we will need to discuss with the clients their Notice of Motion and to consider whether, as events have now overtaken the matter, we can now pursue some of the orders that we are presently seeking.

In that regard Order 1 now seems to be otiose.

Order 2 goes beyond just breach of the undertakings and, if that is to succeed (and I see it as the applicant’s main objective) then we will need to bring evidence other than that which we are pursuing at present relating to the copying of advertisements.

Order 2 also has the problem that it stands alone from the undertakings and represents what the applicant probably set out to achieve originally and probably thought it had in fact achieved.  But, whilst an undertaking to that effect may have been forthcoming at the time (which would have then been subject to breach of those undertakings) it is certainly not what the respondents are prepared to concede now, and it will be difficult to establish that there has been an infringement of any copyright based on the “look” of the two publications.

…

Order 3 is also now otiose and unlikely to be of any use if granted.

Order 4 relates to Order 5, both of which are referred to above in relation to damages.

Order 6 is still relevant, as indicated above in reference to damages.

Order 7 is also now otiose as there is really not much point in the Court ordering at this stage that the respondents hand over any remaining copies of their Volume 2.  They are clearly of no value to anyone now, assuming any still exist.

[emphasis in original]

 

33                  It can be seen that the Barrister recognised a textual deficiency  in order 2 of the notice of motion (by reason of its width), although it did encompass the undertaking.

34                  The motion was set down for hearing before Madgwick J commencing on 10 March 2003.  Mr Yates SC appeared with Mr Alkadamani for the respondents.  On that day, for the first time, the respondents submitted that the Court had no jurisdiction to entertain the motion.  In his evidence before me, the Barrister indicated that he was taken by surprise by this submission and that up to that point, he had entertained no doubt that the Federal Court had the authority to enforce a breach of undertakings and breach of contract being terms of settlement of a case properly before it.  The Barrister had this view intuitively.  He had practised for over 20 years.  He did not look up the Rules or research the position for this precise proposition beyond what might be called the Darling Downs line of authority.  He was not aware of Order 35 rule 11.  That was less than perfect, but his intuitive appreciation was soundly based.  It is understandable that he was taken by surprise by the respondents’ proposition.  Not all legal practice is based on textual support of thought processes.  Experience and knowledge can, sometimes, entirely legitimately, provide the foundation for prudent and proper action.  Nevertheless, making due allowance for considerations of this kind, it is fair to say that the Barrister should have been aware of Order 35 rule 11, at least a reasonable time after the challenge to jurisdiction had been made.

35                  This surprise and upset to the equilibrium of the Barrister may perhaps explain what happened on 10 March 2003 as recounted by the Full Court at [14] to [17] of the reasons:

On 10 March 2003, Mr D M Yates SC appeared, with Mr Alkadamani, for the respondents.  He argued the Court had no jurisdiction to grant the relief sought in the notice of motion; the motion only sought enforcement of an agreement between the parties.  He said the motion made a claim of breach of contract, a claim not cognisable in the Federal Court.  Mr Yates also submitted that, if the Court did have jurisdiction, the relief sought in the motion would be inappropriate to a breach of contract claim.

Mr de Meyrick contended the notice of motion was within the Court’s jurisdiction, though he conceded some of the claimed relief would be inappropriate.  He said:  ‘The only paragraph that really now matters is damages’.  Mr de Meyrick referred to para 6 of the notice of motion, which sought an order that the respondents pay to the applicant damages pursuant to s 115(4) of the Copyright Act.  Mr de Meyrick said:  ‘The matter comes down to the enforcement of the terms’.  The following exchange then occurred:

‘HIS HONOUR:Mr de Meyrick, the court’s jurisdiction has been challenged.  In order to judge that I at least have to know what exactly you’re seeking – now, what exactly are you now seeking, that’s all.  I’m not asking you why I just want to know what.

MR DE MEYRICK:        What we are seeking is the enforcement of the terms of settlement and damages.’

In subsequent discussion, Mr de Meyrick resiled from this position.  He said he sought order 2 (an injunction restraining the respondents from publishing, distributing or promoting any book, booklet, magazine or document in the form, layout style, content and general appearance of the applicants’ directory) and order 7 (an order for delivery up of infringing material).  In relation to damages, and despite the form of the notice of motion, Mr de Meyrick said he was not relying on s 115(4) of the Copyright Act; therefore, he did not seek order 6, but rather order 5, which he had previously disavowed.  Order 5 seeks an order for damages ‘in the amount of profit indicated by the taking of accounts pursuant to Order 4’.

When the hearing resumed after the luncheon adjournment on 10 March, Mr de Meyrick asked Madgwick J to state a Special Case for the Full Court.  His Honour agreed to do so.  A draft case was subsequently prepared and filed.

36                  Without wishing to be overly critical of the Barrister, one can see a certain vacillation and lack of clarity in his submissions.  That may have been caused by the new point and the call of the moment for a certain improvisation.  Nevertheless, from the point of view of federal jurisdiction, the following should be noted about the events of 10 March 2003 and the notice of motion.  It was the respondents who asserted that the motion claimed only a breach of contract.  Plainly, in terms, it did not.  An unpleaded, but extant, claim for relief under the Copyright Act was present.  The Barrister conceded that this claim was “inappropriate” – but it had been made.  It is a fundamental tenet of federal jurisdiction that once a federal claim is made, even a bad one, and even one that is abandoned, or struck out, the whole matter in which that claim is made is, and remains, federal jurisdiction : Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 218-19;  NEC Information Systems Australia Pty Ltd v Iveson (1992) 36 FCR 258 at 264;  Fencott v Muller (1983) 152 CLR 570 at 606-608;  Re Wakim; Ex parte McNally (1999) 198 CLR 511at [135]; Felton v Mulligan (1971) 124 CLR 367at 393; Moorgate Tobacco v Phillip Morris (1980) 145 CLR 457 at 475-77; Unilan Holdings Pty Ltd  v Kerin (1993) 44 FCR 481, at 481-82;  Hooper v Kirella (1999) 96 FCR 1 at [55]; and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at [1], [28] and [99].  Also, the phrase “what we are seeking is the enforcement of the terms of settlement and damages” was ambiguous as to its juridical basis. 

37                  On 10 March 2003, Madgwick J, to a degree encouraged by the submissions of Mr Yates, said in discussion with counsel that a contract to settle a Federal Court proceedings in performance of which undertakings had been given could not be enforced in the Federal Court without an application for contempt.  Though only said in discussion with counsel and without the benefit of argument, it should be said that as a general proposition, with respect, that is wrong.  There was a tendency in some of what fell from both bench and bar to propound an exclusive dichotomy between contract and contempt.  These two alternatives, however, as the Barrister appreciated and as the Full Court made clear, were not exhaustive of the procedural mechanisms to enforce the respondents’ obligations.

38                  It is also plain from what was said on 10 March 2003, that the Barrister was aware of the issue as to the construction or limits of the contract.  He referred to the possibility of the contract having “merged” in the undertakings.  Thus, he understood the importance of putting both the contract and the undertakings point.

39                  In any event, a case was stated under s 25(6) of the FCA Act.

40                  The special case book was prepared and filed on 6 June 2003.  It is unnecessary to set out all that is contained in the special case.  Paragraph 20 (emphasised by the Full Court at [19] of their reasons) was in the following terms:

The applicant’s claim is for breach of the terms of settlement.

However, paragraph 21 of the special case under the heading “Question” was:

Whether the Court has jurisdiction to grant the relief sought pursuant to the applicant’s notice of motion filed 12 July 2002.

41                  On 13 June 2003, the Barrister sent an updating advice to the Solicitor.  In it he described his task as follows:

To succeed, I need to be able to convince the Full Bench that the matter is not a breach of contract case, but the enforcement of the Court’s own orders and undertakings by way of damages.  Whilst I am finding some useful material and cases that may help in that argument, the outcome is not certain (ie., for either side).

42                  Whatever the infelicities of expression, and the difficulties with damages, the Barrister recognised the need to stress the enforcement of the undertakings to the Court.  He also warned of the vagaries of litigation.

43                  The parties filed written submissions on the special case.  The respondents’ submissions were filed first.  The respondents asserted that the only relief propounded was contractual enforcement of the terms of settlement.  It emphasised paragraph 20 of the special case.  The following was put:

In substance the present issue is whether the Court has jurisdiction to entertain proceedings on a simple contract (ie for alleged breach of the terms of settlement).  The respondents submit that, clearly the Court does not have that jurisdiction:  Pallas v Finlay (1985) 61 ALR 220 at 223.

44                  With the utmost respect to senior counsel who put those submissions, and not wishing to be critical of him, this overstated Pallas and, as a general proposition, was untenable and in the teeth of the unanimous view of the High Court in LNC Industries v BMW (Aust) Pty Ltd (1983) 151 CLR 557 to which I will come.  Confidently and clearly expressed as it was, as a general proposition, this can be seen as a heresy which dominated the structure of the debate in the submissions to the Full Court.

45                  In Pallas, proceedings under and concerning the Trade Practices Act 1974 were settled by terms of settlement.  The terms of the settlement imposed upon persons who were not parties to the suit certain obligations of joint and several liability.  Those parties were not part of the pleaded controversy.  Beaumont J, with who Northrop J and Lockhart J agreed, said that the attempt to enforce the obligation against these persons was a separate claim and separate controversy or matter entirely, and not one over which the Court had jurisdiction.  (See [30] and [31] of the Full Court’s decision here for the text of the two most relevant paragraphs of Beaumont J’s reasons.)  Pallas was decided in 1985.  Section 39B(1A)(c) was placed into the Judiciary Act in 1997.  The reference by Beaumont J to what may well have been the position as to the accrued and associated jurisdictions of the Court if the obligors under the terms of settlement had been participants in the pleaded controversy (which of course was the position here) need not be discussed at this point.  I will return to these considerations in due course.

46                  The respondents submitted (echoing the successful submissions in Pallas) that the contract to enforce the settlement was an entirely separate “matter”, with a different factual substratum, to the original dispute – the events, obviously, taking place after the compromise of the first proceedings.  It was emphasised by the respondents that those proceedings had been dismissed (subject of course to the undertakings of the Court).

47                  The Full Court set out the essential elements of the respondents’ submissions at [22]-[24].

48                  Parts of the Barrister’s long submissions were set out at [25] to [28] of the Full Court’s reasons.  What appears at [25] of the reasons is taken from paragraph 18 of the Barrister’s submissions and is as follows:

(a)       That what it seeks to have enforced is not just an agreement in the nature of a contract between the parties, but an agreement to seek certain Orders of the Court, which the Court has treated in the essential parts as undertakings given to the Court;

(b)       That, even so, “the matter” falls within the law as determined in relation to the enforcement of such terms;

(c)                That otherwise, the Court still has jurisdiction to hear and determine the matter.’

          (Original emphasis)

49                  This was less than pellucid.  It does, however, appear to have been an argument based not merely on the enforcement of a contract of settlement.  This might be seen to be reinforced by paragraphs 59 and following, which referred to the Court’s power to enforce undertakings given to it, and by the reference in paragraph 14 to s 23 of the FCA Act. 

50                  Much time and energy was, understandably, taken up by the Barrister in urging the adoption of the approach in Darling Downs rather than Pallas, given the respondents’ emphasis on the importance of Pallas.  Considerable attention was also given to ss 22 and 32 of the FCA Act.

51                  The Barrister gave evidence that he was aware of s 39B(1A)(c) of the Judiciary Act, but that he did not deal with it because he perceived problems arising from the judgment of Emmett J in Webb v Repatriation Commission (2000) 105 FCR 415.  Because of these concerns, he emphasised, through Darling Downs, that the claims in the notice of motion remained part of the original matter or controversy.

52                  Perhaps because of the lack of clarity in the Barrister’s submissions, the Court, through a letter from the associate to the presiding Judge, sought clarification of the relevance of the undertakings.  The letter was in the following terms:

The Judges assigned to this matter have considered the written submissions received from you.  However, there is one aspect of the case that causes them some perplexity.  They have asked me to write to each of you seeking clarification.

At page 19 of the Appeal Book, there is a Report of Listing dated 7 August 2001.  This records the giving of undertakings to the Court in terms of paras 2, 3, 5 and 7 of set Terns of Settlement, (sic) set out at pages 17-18 of the appeal Book.  However, the Terms of Settlement are not framed in terms of undertakings to the Court and the Report of Listing suggests that there was no appearance on behalf of the respondents on 7 August 2001.

I have been requested to ask each of you the following questions:

(i)                do you contend that undertakings to the Court were given on 7 August 2001?

(ii)               if so, how were the undertakings conveyed to the Court?

(iii)             If undertakings were given, does that have any bearing on the Special Case?  If so, how?

Please provide your answers in writing.

53                  The Barrister’s reply was as follows (in full):

The applicant responds to the Questions as follows:

Q(i):    Do you contend that undertakings to the Court were given on 7 August 2001?

A:        Yes, that appears to be the effect of whatever transpired on that day, as recorded in the Report of Listing.

According to the document that was handed up (p 17 of the Case Book) the parties were asking the Court to make Orders in accordance with the terms of their agreement.  As only one such Order was made (para 6 in relation to costs), the distinction between that Order and the treatment of paragraphs 2, 3 5 & 7 as undertakings, as well as the fact that only one other paragraph (4) was noted is significant.

Q(ii):   if so, how were the undertakings conveyed to the Court?

A:        In the absence of any documentary material, it would seem that the undertakings were given orally from the bar table; or more likely that the Court, in declining to treat paragraphs 2, 3, 5 & 7 of the terms as the basis for final Orders, was prepared instead to accept those paragraphs as undertaking to the Court.

Q(iii):If undertakings were given, does that have any bearing on the Special Case?  If so, how?

A:        Yes, the fact that parts of the parties’ terms were taken to be undertakings to the Court, adds substantially to the scope of the Court’s jurisdiction in the matter.

The applicant contends (for the reasons already set out in its Written Submissions of 25 July 2003) that even if the terms had been treated merely as an agreement between the parties, and simply noted by the Court, the subsequent events would still abide in the same substratum of facts, the “matter” would not have been the subject of final judgment, the Court would, not have been functus officio, and the parties would not have closed the door to the Court’s jurisdiction.

For that to have been otherwise then the applicant, in seeking the Court’s further intervention, would have to be asking the Court to do something different to that which it had sought initially – ie., as in Pallas v Finlay, relied upon by the respondents, where orders were being sought against different parties.

Here however, the parties were not just saying to the Court:  “We have come to an agreement.  Here are the terms.  Thank you for your assistance”, even though, as submitted, that would not have dissipated the Court’s jurisdiction in the matter.  Here the parties came seeking Orders which the Court treated (as to the essential parts) as undertakings.  As such, and for the reasons set out in the applicant’s Written Submissions commencing at para. 59 thereof, it is not just a matter of seeking to enforce the terms of the parties’ agreement, but also the undertakings that were given to the Court in respect thereof.

It is also worth noting that, provided jurisdiction pertains, the Court has complete control of its own processes and, as pointed out in Submissions (para 56) section 22 of the Act permits the Court to “grant, either absolutely or on such terms and conditions ad the Court thinks just, all remedies to which any of the parties appears to be entitled.

[last emphasis added]

 

54                  There was no issue as to the correctness of the answers to the first two questions.  It is important to understand the terms of the answer to the third.  Whatever the lack of clarity in the existing submissions, the Barrister now made clear, upon any reading of this document, that the orders sought were not just a matter of seeking to enforce the terms of the parties’ agreement, but also the undertakings that were given to the Court in respect thereof.

55                  Thus, the following can be seen as the essential framework of the way that the matter had been propounded to this point:

(a)      A notice of motion was filed which contained on its face a claim for relief under the Copyright Act.

(b)      That claim, once propounded, was abandoned as inappropriate.

(c)      A contract to resolve a suit under the Copyright Act, the FCA Act and the Judiciary Act was sought to be enforced against the very parties to the original suit as part of the same matter by notice of motion.

(d)      Alternatively, a separate matter of that character was asserted, though s 39B(1A)(c) of the Judiciary Act was not referred to.

(e)      The notice of motion was also propounded, in submissions, as an enforcement of the undertakings that had been given to the Court, though Order 35 r 11 and the BLF case were not referred to (though, s 23 of the FCA Act was).

56                  The Full Court heard no oral argument and dealt with the matter on the papers.

The reasoning of the Full Court

57                  The first matter to note was the Full Court’s assessment of what was before it.  In [21] of their reasons the Full Court said:

As mentioned, the question asked by the Special Case is ‘[w]hether the Court has jurisdiction to grant the relief sought pursuant to the applicant’s notice of motion filed 12 July 2002’.  Having regard to the matters set out above, this must be regarded as a question whether the Court has jurisdiction to grant injunctive relief or damages in respect of the respondents’ alleged breach of the Terms of Settlement filed in Court on 7 August 2001.

58                  To the extent that this is a statement that the special case was in its terms limited to assessing whether an attempt to enforce the contractual foundation of the terms of settlement was within the jurisdiction of the Court, that was, with respect, not correct.  To the extent that it was construing the special case by its terms and what had been put to Madgwick J on 10 March 2003, it is doubtful whether it was correct.  It was, with respect, certainly not correct in the light of the terms of the special case and of the specific answer to the Court’s question provided by the Barrister.

59                  The Full Court first dealt with the arguments based on Pallas (emphasised by the respondents) and Darling Downs (emphasised by the Barrister).  As I have said, it is significant to appreciate that in Pallas the contract was between one of the persons to the controversy and strangers to the pleaded controversy.  Thus, the contract could be seen as extraneous and separate and distinct from the existing “matter”.  In Darling Downs, the contract of settlement was between the parties to the controversy.  This was a clear point of distinction between the two decisions, resonating not only in the judgment of the majority in Darling Downs, butalso in the earlier judgment of Beaumont J in Pallas.  It is clear that the majority in Darling Downs saw the enforcement in contract of the settlement as part of the same matter.  The controversy was resolved by the settlement.  The settlement was breached.  Thus, the contractual end of the controversy, once breached, gave rise to a revival of the last aspect of the original matter.  (In this respect see the reasoning of Lindgren J in Needlework Warehouse at [42] and [43] about the settlement in that case, with which I respectfully agree.)  The majority in Darling Downs came to this view by reference to how Smith J in Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555 had analysed the position (not examining any question of federal jurisdiction) in relation to the proper method of enforcement – whether by motion or new action.

60                  The Full Court in this case also analysed the position by reference to Roberts and concluded that the enforcement of the terms of settlement fell within the categories of case said by Smith J to require a separate action for their enforcement:  see [37] –[43] and [50]-[53] of the Full Court’s reasons.  With respect, it is doubtful whether the fact that the proper way to bring forward a claim about a breach of contract as alleged by the applicant was in a fresh action (that is a fresh proceeding) concluded the question as to whether that fresh proceedings was a separate and distinct justiciable controversy for the purposes of federal jurisdiction.  True it is there were new facts.  That is obvious.  But they were the facts which disclosed a breach of one contractual aspect of the “matter” – that being the attempt (which was asserted to have failed) to end or quell the controversy. 

61                  Difficult questions might arise as to the separateness of the matter if enough time or geography separated the complaints.  The decision of a court as to whether a claim to enforce a settlement should be brought by way of motion in the original proceedings or should be brought by way of fresh statement of claim is a different enquiry from the question as to whether such a claim to enforcement is part of the original controversy or is an entirely distinct and separate controversy, for the purposes of federal jurisdiction.  That is not to say that the analysis of the correct procedural approach may not be relevant to the assessment as to whether a new matter exists.  For instance, if it were concluded that a notice of motion was an adequate or appropriate vehicle, that may well assist in the conclusion that the claims in the motion were part of the existing controversy.

62                  The considerations discussed by Smith J in Roberts, to which the majority in Darling Downs and the Full Court here made reference, and the considerations referred to by McLelland J in Phillips v Walsh, go principally, by reference in part to 19^th century Chancery practice, to the appropriate procedure for the enforcement action – whether by motion or by fresh pleading.  One major consideration discussed in these cases is the complexity and substantialness of the debate about the contract and its alleged breach.  The more substantial the debate, the more appropriate is a statement of claim, rather than the unpleaded notice of motion.  Such are not considerations that will necessarily affect centrally the question whether there is a separate and distinct controversy in the area of discourse of federal jurisdiction.  It is trite to say that a proceeding does not define a matter.  The matter is the whole justiciable controversy and the matter can involve more than one proceeding:  see Re Wakim at [135]-[147].  Thus, even if, procedurally, a fresh statement of claim is the appropriate vehicle, that would not conclude the enquiry as to whether the claims in the statement of claim were part of or comprised an entirely distinct and separate controversy.

63                  Here, the parties debated the merits of Pallas and Darling Downs.  Even if it be the case, contrary to my view, that the contractual enforcement was not part of, or an outgrowth or extension of, the original justiciable controversy, and was a new matter, the subject matter of the contract being enforced in this new matter was a bundle of rights which owed their existence, and the entitlement to enforce them in court, to Commonwealth legislation.  So it was a matter arising under a law of the Parliament:  LNC Industries v BMW.

64                  In any event, the Full Court expressed the view that the facts here were more like Pallas than Darling Downs.  This was a debate that the Barrister had understood could be lost.  In my view, he was correct in his view that this point should be won; but he recognised the debate and the risk.

65                  The Full Court then rejected the Barrister’s arguments under s 32 of the FCA Act.  Section 32 is in the following terms:

(1)  To the extent that the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked.

(2)  The jurisdiction conferred by subsection (1) extends to jurisdiction to hear and determine an appeal from a judgment of a court so far as it relates to a matter that is associated with a matter in respect of which an appeal from that judgment, or another judgment of that court, is brought.

66                  The terms of the rejection by the Full Court were as follows at [55]:

We turn briefly to s 32 of the Federal Court Act.  The associated jurisdiction conferred on the Court by that section may, in an appropriate case, extend the scope of the Court’s jurisdiction.  However, this may only occur if both the original claim and the claim argued to fall within s 32 are part of one ‘matter’; the test being whether both claims arise out of the same substratum of fact: see Fencott v Muller (1983) 152 CLR 570 at 606 and 607.  In the present case, the orders sought in Macteldir’s notice of motion relate to the respondents’ conduct in respect of a different publication (the 2002 Directory-Calendar) to the conduct in issue in proceeding N207 of 2001 itself (the 2001 Directory-Calendar).  Given that publication is of the essence of both complaints, each complaint necessarily raises at least one separate factual issue.

67                  With the utmost respect, I cannot agree.  The only High Court authority is to the effect (conformably with the words of s 32) that s 32 of the FCA Act deals with separate and distinct matters.  It is not what is sometimes called “accrued” jurisdiction.  This latter expression may be better expressed as the limit of the matter or controversy.  Associated jurisdiction under s 32 is the conferral of jurisdiction in another, different, federal matter, in respect of which jurisdiction could be, but has not been, conferred.  The word “associated” is not a synonym for “accrued”.  In Philip Morris Inc v Adam P Brown Male Fashions (1981) 148 CLR 457, Barwick CJ at 476 indicated that “associated” embraced matters which may be disparate from each other, that is, not within the “accrued” jurisdiction of the already conferred federal matter.  Gaudron J in PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520, 521 was of the view that Barwick CJ’s views were implicit in the other judgments in that case.  (See Philip Morris at 494-95, 518, 521-22.) 

68                  An example of the impact of associated jurisdiction is provided by Allied Mills Industries Pty Ltd v Trade Practices Commission (No 1) (1981) 34 ALR 105.  There a cross-claim was brought by a party to the litigation against the Trade Practices Commission.  Leaving aside the question of whether this fell within the whole controversy anyway, s 32 gave the Federal Court jurisdiction which it otherwise may not have had (the cross-claim being founded on common law and equitable causes of action) because the Trade Practices Commission was the Commonwealth for the purposes of s 75(iii) of the Constitution.

69                  Another example of the use of s 32 can be seen in the dispute in PCS v MUA.  There, the applicants claimed breach of an award and an enterprise agreement, contravention of the Workplace Relations Act 1996 (Cth) and of the Corporations Law against certain companies in the Patrick Group.  The applicants also alleged two common law causes of action for conspiracy against the “Patrick parties”, the National Farmers Federation and the Commonwealth.  The claim against the Commonwealth fell within s 75(iii) and jurisdiction to hear it was not otherwise conferred on the Federal Court.  Section 32 brought it within the Federal Court’s jurisdiction.  Gaudron J rejected the proposition that s 32 was limited to “matters which arise under other laws made by Parliament”.  This was how Gibbs J put it in Philip Morris v Adam P Brown Male Fashions.  Her Honour said that it was at odds with the words of s 32 and the views expressed by Aickin J and Wilson J in Philip Morris v Adam P Brown Male Fashions at 535 and 547that s 32 extends jurisdiction to associated matters falling within ss 75 and 76 of the Constitution and was contrary to Turner v Owen (1990) 26 FCR 366 and Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 500-1 (Gummow J). 

70                  The possible relevance of associated jurisdiction under s 32 of the FCA Act in Pallas as recognised by Beaumont J and its less than central relevance here (though not for the reasons identified by the Full Court) is the introduction of s 39B(1A)(c) into the Judiciary Act in 1997.  The possible role Beaumont J saw for associated jurisdiction if the settlement was between parties to the controversy was that the new matter (if it was not part of the existing controversy and so part of the accrued jurisdiction as his Honour also said) might well be a matter arising under a law of the Parliament.  In 1985, Parliament had not conferred jurisdiction in terms of s 76(ii) of the Constitution on the Federal Court (though it could have done so).  In 1997, it did so with the insertion of s 39B(1A)(c) into the Judiciary Act by s 3 of, and item 1 of Schedule 11 to, the Law and Justice Legislation Amendment Act 1997 (Cth).  Thus, Beaumont J in Pallas  discussed the relevance of s 32 of the FCA Act.  Now, the better view as to the relevant enquiry is whether s 39B(1A)(c) applies.  It is to be noted that in his reasons in July 1985 Beaumont J did not refer to LNC Industries v BMW which had been handed down the previous October, but was not published in the Commonwealth Law Reports until 1985.

71                  The Full Court then set out how, in effect, it saw that the Court could have had jurisdiction if the motion had been framed differently.  At [57] to [62] the Full Court said:

It is unnecessary for us to make any general statement about the jurisdiction of the Court to enforce compromises of existing proceedings.  However, we wish to make it clear that, where undertakings to the Court have been given, ordinarily the Court would have jurisdiction to enforce such undertakings.

The Court has a wide range of remedies to ensure compliance with its orders: see Australian Meat Industry Employees Union v Mudginberri Station Pty Limited (1986) 161 CLR 98 (‘Mudginberri’) 161 CLR 98 at 114-115 (per Gibbs CJ, Mason, Wilson and Deane JJ).

There is no reason why, in an ordinary case, the Court could not grant an injunction to restrain a breach of an undertaking to the Court: see Australian Builders Construction Employees & Builders Labourers’ Federation v Commonwealth of Australia (1981) 37 ALR 470 at 471 (per Deane J).  Although his Honour was there speaking of an injunction to restrain a criminal contempt, it is necessary to bear in mind that the underlying rationale of every exercise of the contempt power is to protect the administration of justice: see Mudginberri at 107.

Here, it might have been possible for the applicant to frame its motion as a claim for injunctive relief to restrain conduct which would otherwise have amounted to a contempt.  But it did not do so.

The second undertaking (as to which see para 5 above) is not limited in its terms to existing books, magazines or documents.  It extends to future publications provided they have been copied or reproduced from the form and layout of the Macedonian Telephone Directory.  However, the notice of motion seeks orders restraining the first and second respondents which go beyond the terms of this undertaking.  The proposed orders are not limited to publications copied or reproduced from the Macedonian Telephone Directory.  They seek orders in respect of specific publications or any publications ‘in the nature of a directory printed in the form, layout style, content and general appearance of the applicant’s Macedonian Telephone Directory’.  The notice of motion also seeks an account of profits and damages.

It is the applicant’s departure from a claim to enforce the existing undertakings which takes the notice of motion away from the ordinary case.

[emphasis added]

 

72                  With the utmost respect, this (in particular the emboldened [60] and [62]) did the Barrister less than justice.  The Barrister had made it clear in his submissions to the Court in his letter that he was seeking an order (that is an injunction) in effect to restrain a breach of undertakings that had been given to the Court.  Perhaps, as Mr Neil submitted, he should have sought to amend the motion to set out the grounds of the orders that were being sought  (though that would have been contrary to Order 19 rule 2 and Form 27).  He did not do so.  Rather, he left the matter with his submissions in his letter.  In the light of the answer given by the Barrister to the letter from the Court, [60] and [62] of the Full Court’s reasons appear to overlook how the motion was put at the time of this submission and, on one view, how it had always been put.  (Lest there be any doubt about it, the Barrister’s response to the question posed by the associate to the presiding Judge is on the Court file in the correspondence folder.)

73                  Upon receiving the Full Court’s judgment the Barrister did not apply to re-open, or to have the Full Court withdraw its reasons or orders.  He could have made such an application.  Perhaps, he should have done so.  However, that was not the burden of the criticism made of him.

74                  The following can be said about the motion, and by way of criticism of how the Barrister approached the motion.  First, the motion always asserted a claim for relief under the Copyright Act.  Even though badly framed in terms of a procedural vehicle, this asserted, non-colourably a federal claim, which thereby made the whole motion, to the extent that it was based on common facts, within the jurisdiction of the Court.  The Barrister did not appreciate that.  He failed to alert the Full Court to this clear basis of the Court’s jurisdiction.

75                  Secondly, the Barrister pressed the motion as the enforcement of a contract of settlement based on Darling Downs.   He recognised that there was some debate about whether the contract was in the original matter or controversy.  In my view, he was correct in arguing that it was part of the original matter.  This is so even if the motion should have been brought forward as a separate proceeding.  That, however, was a matter open to legitimate debate.  It was appropriate for the Barrister, however, to recognise the advisability of adding another basis to the jurisdictional foundation because of this doubt whether the contractual claim was part of the same matter or was a different matter.  In fact, he did recognise the need for that, and he propounded such a basis – the order to enforce the undertakings.  His submissions on the motion were less than clear.  His written response to the Full Court was clear. 

76                  Thirdly, in a manner that was less than clear, the Barrister sought to rely on the associated jurisdiction of the Court under s 32 of the FCA Act.  The Full Court rejected this for reasons that were, with respect, wrong.  Section 32 was, however, less than centrally relevant.  If the contract claim was a separate matter, that is, was separate from the original controversy, it was within the jurisdiction of the Court by reason of s 39B(1A)(c) of the Judiciary Act, not s 32 of the FCA Act. 

77                  Section 39B(1A)(c) is in the following terms:

The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter:

…

(c)     arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter

78                  The Barrister thought that the extempore decision of Emmett J in Webb v Repatriation Commission was against this contention.  He was correct.  In that case, Emmett J discussed (and rejected) an argument that an asserted contract to settle a proceeding for review properly brought in the Administrative Appeals Tribunal under the Veterans’ Entitlement Act was a matter arising under a law of the Parliament by saying at 417:

A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law — see Felton v Mulligan (1971) 124 CLR 367 at 382

 

That analysis is correct, as far as it goes.  However, with respect, it failed to consider the judgment of the High Court in LNC Industries v BMW. 

79                  In LNC Industries v BMW a claim was made solely for breach of contract and breach of trust.  There was no provision investing federal jurisdiction.  There was no issue for decision under Commonwealth law.  The matter, however, was one of federal jurisdiction, as arising under a law of the Parliament.   This was so because the subject matter of the contract and of the trust was property owing its existence to Commonwealth law – a quota for the importation of cars under the Customs Act 1903 and Customs Regulations.  Gibbs CJ Mason, Wilson, Brennan, Deane and Dawson JJ said the following at 581 (Murphy J agreeing at 582-83):

…A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law. …

80                  The Barrister knew of Webb, but was ignorant of LNC Industries v BMW.  He was not alone.  Senior and junior counsel for the respondents could not have put the submissions that they did unless they shared the Barrister’s lack of appreciation of LNC Industries v BMW.  Consequently no-one alerted the Full Court to the clear alternative basis for jurisdiction (assuming that the contractual claim to enforce the terms of settlement was a separate matter) that the subject matter of the contract was the suit authorised by, and the rights claimed in the suit to be given by, laws of the Parliament: the Copyright Act, the FCA Act and s 39B(1A)(c) of the Judiciary Act itself by reference to the rights under the Copyright Act.

81                  Fourthly, the Barrister was ignorant of Order 35 rule 11 and failed to alert the Full Court to its presence in the Rules. 

82                  Fifthly, for reasons that in my view were defensible, the Barrister took the view, early, that full blown copyright and contempt actions should be avoided.

83                  In all these circumstances, should the Barrister be seen to have been in such default as to be in dereliction of his duty to the Court?  I do not think so.  He did fail to alert the Court to at least two clear bases of jurisdiction and to the existence of an express rule which would have made clear what he was otherwise putting.   However, in respect of one of these omissions, he was distracted by a decision of the Court which itself appears to have overlooked LNC Industries.  He maintained a more than arguable (indeed, in my view, correct) case that the contract claim was part of the original matter.  He sought to buttress that with a proposition (plainly correct) that the Court had jurisdiction to enforce the undertakings given to the Court.  He put this latter proposition clearly in his letter to the Court, although his advocacy on this point had, hitherto, been opaque.  This letter appears to have been either overlooked or misunderstood.  He did not seek to have the Court withdraw its reasons.  Perhaps he should have.  I do not think, however, that he should pay the costs for that.

84                  A clearer understanding of federal jurisdiction by the Barrister may have ensured that the Full Court was alerted to the considerations which could be seen as plainly leading to an affirmative answer to the special case, as, in my view, should have occurred.  However, the Barrister had a sufficient understanding to put at least two out of a number of available arguments, clearly.  In my view, he could reasonably be expected to think that he had made clear to the Full Court that he was seeking to enforce not only the contract, but also the undertakings given to the Court by the Court’s implied power.

85                  I do not think that his conduct merits sanction under Order 62 rule 9 or s 43.

86                  For the same reasons, I see no basis to sanction the Solicitor.

87                  I have considered the submissions carefully and thoroughly put by Mr Neil QC and Ms Preston.  The essence of the claim put first against the Barrister and Solicitor was that in the face of warnings by the legal representatives of the respondents the Barrister and Solicitor pushed on with a hopeless case or without adding contempt proceedings or another available clear basis of jurisdiction, such as Order 35 rule 11.  The decision not to invoke contempt proceedings was an available choice, legitimately made.  The difficulties that can be faced in such proceedings can be seen in Witham v Holloway (1995) 183 CLR 525; AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98 and Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201.

88                  The approach adopted by the Barrister was not hopeless as alleged.  It was less than complete and less than perfect, but it did seek to enforce the undertakings given to the Court and to enforce what was said to be an underlying contract.

89                  It was put that the Barrister chose to proceed only on a contract basis.  The evidence shows that is not the case.  It is true that after the Full Court’s reasons some of the documentation prepared by the Barrister revealed that he suggested embarking upon the approach of enforcing the undertakings that the Full Court said he had not done.  I am prepared to accept that that revealed a certain fatalistic confusion on the part of the Barrister.  The Full Court said that he had not put the motion as enforcing undertakings.  He disagreed, as he said in evidence.  Thus, he advised that the undertakings should be enforced, in effect, in a way that the Court would recognise.  This confusion after the event does not contradict the unequivocal evidence of the submissions contained in the letter.

90                  It was put that the Barrister was ignorant of Order 35 rule 11.  That is a legitimate criticism.  Counsel appearing in a court (any court) should be aware of the relevant rules.  It is a basic task which appears to have been overlooked.  However, in the context of the particular enquiry here I do not think it is a foundation for a personal costs order.  The Barrister intuitively (and correctly) thought that the Court had jurisdiction and power to order compliance with undertakings given to it.  He did seek such orders.

91                  It is undoubted that, examined with precision and hindsight, the handling of the brief by the Barrister was less than perfect.  Whether it was of a quality which is deserving of condemnation as negligent in a tortious claim it is unnecessary and inappropriate to decide.  Questions of duty of care and advocate’s immunity from suit might intrude into this issue.  However, for the reasons that I have expressed, I do not think that his handling of his instructions and the motion was sufficiently neglectful as to amount to such a neglect of his responsibilities to warrant the visiting of personal costs under Order 62 rule 9 or s 43.  

92                  The views to which I have come that neither the Barrister nor the Solicitor should be responsible for the costs personally make it unnecessary to resolve some issues about the costs of the High Court application.  If it were necessary to do so, I would conclude that I have no power under s 43, or Order 62 rule 9, to order costs arising in the High Court.  That may be a head of damage in a professional negligence suit.  However, I do not have power to make orders in relation to those costs in the light of the terms of s 43 and the definitions of the words “Court” and “proceeding”.  Also, to the extent that it might be necessary to find whether the Barrister and Solicitor advised Mr Mihajlov and Mr Stojanovski about an application for special leave to appeal to the High Court shortly after the Full Court’s decision, I think, on balance, it is more likely that some advice in that regard was given.  However, viewing all the evidence, I doubt that the Barrister understood the likely strength of this application, based not least upon the apparent overlooking or misunderstanding of his answer to the Court’s question and thus a possible basis under s 35A(b) of the Judiciary Act and based on the considerations of federal jurisdiction to which I have referred.  Thus, I doubt that any such advice was robustly optimistic, which may explain why Mr Mihajlov and Mr Stojanovski did not recall it.  Whilst I do not think that they were giving false evidence to me, I do find that at some stage on or shortly after 17 October 2003, they were advised by the Barrister or the Solicitor of the availability of an application for special leave.

93                  In all the circumstances, in my view, the motion should be dismissed. 

94                  I raised the question at the hearing whether, even if I dismissed the motion, the Barrister and the Solicitor should pay their own costs.  This might be so if I thought that their default had brought on this application.  I do not think that is the case.  The job was done less than perfectly.  That, however, is not a basis for an order under Order 62 rule 9 or an appropriate basis to have them pay their own costs.

95                  The seriousness of the matter for all the parties has necessitated a lengthy judgment.  Lest it be thought that the issue of federal jurisdiction is complex in a case such as this a number of things should be said.  In relation to the enforcement of settlements of proceedings in this Court the following  (non-exhaustive) considerations should be noted, subject to the exigencies of any given circumstances:

(1)      Orders can be enforced by contempt proceedings.

(2)      Undertakings can be enforced under Order 35 rule 11.

(3)      Undertakings can be enforced by orders to prevent the undermining of the administration of justice:  the BLF case

(4)      Contracts to settle cases can be enforced:  Darling Downs, though noting Pallas and its limits.

(5)      The enforcement of a contract to settle a case (at least between the parties to the suit) concerning rights owing their existence to Commonwealth law, and hitherto sought to be vindicated in the Federal Court under the FCA Act or the Judiciary Act or another Commonwealth Act will be a matter arising under a law of the Parliament:  LNC Industries v BMW, if it is not (as it may well be) part of the original matter.

(6)      In a motion, or a statement of claim, if one claim is expressed to be made under a Commonwealth Act all claims in the same matter or controversy, which generally can be assessed by seeing whether it is based on the same substratum of facts, will be within federal jurisdiction.

96                  If, contrary to the view expressed by Lindgren J in Wenkart v Pantzer and Needlework Warehouse, I am bound by the Full Court’s view, even if I am of the view that essential parts of it are plainly wrong, then what I have said should be taken as the basis of a view that the Barrister could have reasonably expected to succeed on the special case on the law before the publication of the Full Court’s reasons.

97                  No occasion arises to say anything further about Pallas.

98                  It is deeply regrettable that the applicant is left in the position it is in.  It did seek, out of time, special leave to appeal the Full Court’s decision to the High Court.  That was refused on the basis that it was an unsuitable vehicle given the perceived procedural complexities of the case.

99                  If there were a relevantly framed Suitor’s Fund Act, I would, unhesitatingly, grant a certificate.

100               I am grateful to all counsel and solicitors for their assistance.

I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Associate:

Dated:              2 November 2005

Counsel for the Applicant:	Mr M Neil QC and Ms G Preston
Solicitor for the Applicant:	Petrovski Lawyers
Counsel for Mr J de Meyrick:	Mr M Williams SC and Mr N Murray
Solicitor for Mr J de Meyrick:	McCabe Terrill
Counsel for Mr J Roskov:	Mr G Curtin
Solicitor for Mr J Roskov:	Middletons
Date of Hearing:	17, 18 and 19 October 2005
Date of Judgment:	2 November 2005