FEDERAL COURT OF AUSTRALIA

Prime Property Investment Pty Ltd v Van Der Velde [2011] FCA 1397

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1    This is a purported appeal to the Full Court of this Court against orders made by a judge (Boddice J) of the Supreme Court of Queensland. The orders appear to have been made on 4 April 2011, although the appellants contend that they were not in fact made, or at least perfected, until 14 April 2011. I will address that contention later in these reasons.

2    The respondents to the appeal contend that the appeal is not competent. On 28 July 2011 they filed a notice of motion supported by an affidavit seeking an order dismissing the appeal on the ground that it is incompetent. A respondent was able to object to the competency of an appeal under O 52 r 18 of the Federal Court Rules as in force immediately before 1 August 2011 and may do so now under Rule 36.72 of the Federal Court Rules 2011. The respondents’ notice of motion came on for hearing before me. At the commencement of the hearing I raised with the parties the question of whether I had the power sitting as a single judge to determine the competency of the appeal. The hearing was briefly adjourned to enable the parties to consider that question. When the hearing resumed, counsel for the respondents said that I did not appear to have the power to rule on a notice of objection to competency. However, he submitted that I did have the power to hear and determine an application for summary judgment in relation to an appeal (Federal Court of Australia Act 1976 (Cth) s 25(2B)(aa)) (‘Federal Court of Australia Act’). He asked me to treat the respondents’ notice of motion as an application for summary judgment. Counsel for the appellants agreed to me proceeding in that way. I considered it appropriate to proceed in that way and, accordingly, I treat the respondents’ application as an application for summary judgment in relation to the appeal.

The Parties and the Proceedings In the Supreme Court of Queensland

3    The respondents to the appeal are Terry Grant Van Der Velde and David Michael Stimpson as joint and several liquidators of ACN 103 753 484 Pty Ltd (In Liquidation) formerly Blue Chip Development Corporation Pty Ltd (first respondent) and ACN 103 753 484 Pty Ltd (In Liquidation) (second respondent). The persons identified as the first respondent are the liquidators of the second respondent.

4    The appellants to the purported appeal are Prime Property Investments Pty Ltd (first appellant) and PNP Realty Pty Ltd (second appellant).

5    In these reasons I will refer to the parties by reference to their status in the purported appeal to the Full Court of this Court.

6    On 23 December 2010 the second respondent commenced an action in the Supreme Court of Queensland against the appellants (action number 13782 of 2010) by filing a Claim and a Statement of Claim. It is convenient to refer to this action as the main action.

7    In the main action the second respondent made claims for moneys had and received and interest against each appellant. In general terms the basis of the second respondent’s claims was that it paid commissions in connection with a property development at Caloundra on the Sunshine Coast to each of the first and second appellants to which the latter were not entitled. It was alleged that they were not entitled to the commissions by reason of the operation of s 140 of the Property Agents and Motor Dealers Act 2000 (Qld).

8    On 20 January 2011 the appellants as defendants to the main action filed an application in the main action seeking an order that the action be stayed under the International Arbitration Act 1974 (Cth). The application was supported by four affidavits. It is clear from those affidavits that the basis of the appellants’ application was that on 14 June 2006 the second respondent, the appellants and a number of other parties had entered into an arbitration agreement under which they had agreed to refer all disputes and matters in difference between them to international arbitration in Dunedin, New Zealand. The appellants claimed that the second respondent’s claims in the main action fell within the terms of the arbitration agreement and ought to be stayed.

9    On 1 February 2011 the first respondent (that is, the liquidators of the second respondent) commenced an action in the Supreme Court of Queensland against the appellants and other parties to the arbitration agreement (action number BS 654 of 2011). By that action the first respondent sought an order under s 568(1A) of the Corporations Act 2001 (Cth) (‘Corporations Act’) for leave to disclaim the arbitration agreement. They also sought other orders which are not presently material. It is convenient to refer to this action as the disclaimer action.

10    The appellants’ application for a stay in the main action and the first respondent’s disclaimer action were heard by Boddice J on 28 March 2011. After hearing submissions Boddice J reserved his decision. On 4 April 2011 his Honour delivered his reasons: In the matter of ACN 103 753 484 Pty Ltd (In Liq) formerly Blue Chip Development Corporation Pty Ltd [2011] QSC 64. In his reasons his Honour said that ‘[t]he application for leave to disclaim is allowed’ [22] and that ‘[i]n view of my conclusion in the application to disclaim, it is unnecessary to determine the defendant’s application for a stay of the proceedings’ [23]. Despite the latter conclusion his Honour did make orders on the appellants’ application for a stay in the main action.

11    The orders of the Supreme Court of Queensland were put before me and they record that on 4 April 2011, on the first respondent’s originating application filed on 1 February 2011 and on his application filed by leave on 28 March 2011, Boddice J made the following relevant orders in the disclaimer action:

1.    The applicants have leave under subsection 568(1A) of the Corporations Act 2001 (Cth) to disclaim the arbitration agreement between ACN 103 753 484 Pty Ltd (in liquidation), formerly called Blue Chip Development Corporation Pty Ltd, and the respondents dated 14 June 2006.

…

3.    The first and ninth respondents pay the applicants’ costs of and incidental to the originating application (for leave to disclaim).

His Honour also made the following relevant orders on the appellants’ interlocutory application filed on 20 January 2011 (that is, the application for a stay in the main action):

1.    The application is dismissed.

2.    The defendants are to pay the plaintiff’s costs (including reserved costs) of and incidental to this application.

12    As I have said, a question arose in the course of submissions before me as to whether the orders of the Supreme Court of Queensland were made on 4 April 2011 or on 14 April 2011. After the hearing I was sent the transcript of the hearing on 4 April 2011 and other material relating to the making of the orders in the disclaimer action and the main action. I am satisfied from reading that material that the important orders, being leave to disclaim in the disclaimer action and dismissal of the appellants’ application in the main action, were pronounced and therefore made on 4 April 2011 (see rule 660(1) of the Uniform Civil Procedure Rules 1999 (Qld). That material will be kept on the Court file.

13    On 12 April 2011 each of the appellants filed in the main action a Notice of Intention to Defend and a Defence. The first appellant’s Defence claims ‘a presently unliquidated sum by way of insolvency set-off up to the amount of the plaintiff’s claim’ and it does so on the basis of an alleged infringement of copyright. The first appellant’s claim is that it was the author of literary works identified in the Defence and that the first respondent infringed its copyright in those works by reproducing and authorising the reproduction of them.

14    The appellants’ notice of appeal to this Court purports to be an appeal against the orders made in both the disclaimer action and the main action. It purports to be an appeal from the whole of the judgment given on 4 April 2011 in both of the abovementioned matters. The first ground or allegation in the notice of appeal relates to the jurisdiction of this Court. It is as follows:

The proceeding is within the jurisdiction of the Federal Court of Australia in accordance with the decision of the Full Federal Court in Thompson and Morgan (United Kingdom) Limited v. Erica Vale Australia Pty Limited [1995] FCA 1210 ̶ coram Lockhart, Gummow and Hill JJ. referred to with approval, on another point, by the majority of the High Court in Akai Pty Ltd v. People’s Insurance Co Ltd (1996) 188 CLR 418. In the proceeding No. BS654 of 2011, an insolvency set-off founded on the Copyright Act 1968 has been pleaded by way of defence and accordingly, the entire action arises under the Copyright Act 1968 in accordance with Felton v. Mulligan (1971) 124 CLR 367. No. BS 13782 of 2010 is part of the same matter as BS654 of 2011 in accordance with the judgment of Gummow and Hayne JJ. In Re Wakim (1999) 198 CLR 511, at paragraphs 137 to 139, as the refusal of the stay in BS654 of 2011 was on account of the determination in BS13782 of 2011.

15    There are then a number of grounds of appeal that assert that the primary judge (Boddice J) erred in law in granting leave to disclaim the arbitration agreement (ground 2 subparagraphs (a)-(j)). Ground 3 contains a challenge to findings of fact made by the primary judge about the operation and terms of the arbitration agreement. Ground 4 contains a challenge to the service on other parties to the arbitration agreement of the proceeding in the disclaimer action. There is no suggestion in the notice of appeal that there are grounds for challenging the orders made on the application for a stay in the main action which are independent from the challenge to the orders in the disclaimer action. In other words, if the orders in the disclaimer action stand then the orders in the main action must also stand.

Issues on the application for summary judgment

16    It is convenient in terms of identifying the issues and relevant statutory provisions to begin by examining the main action and the disclaimer action as if they are two separate matters.

17    Before the filing by the first appellant of its Defence the main action involved the exercise of State jurisdiction by a State superior court. Within the main action there was an application by the appellants for a stay of the action.

18    The disclaimer action by the first respondent as liquidators of the second respondent involved the exercise of federal jurisdiction by the superior court of a State under the Corporations Act. Chapter 9 Part 9.6A of that Act deals with the jurisdiction and procedure of Courts and it confers civil jurisdiction (jurisdiction with respect to civil matters) arising under the Act on this Court (s 1337B(1)) and, subject to a qualification not presently material, in the Supreme Court of each State (s 1337B(2)).

19    For reasons which will become clear, the appellants drew my attention to s 1337A which deals with the operation of Part 9.6A Division 1 and provides as follows in subsection (5):

Nothing in this Division affects any other jurisdiction of any court.

20    Section 1337F deals with appeals and it provides among other things that no appeal from a decision of this Court is to be instituted in a State court and no appeal from a decision of a State court is to be instituted in this Court. The intention of this section appears to be that whilst both State Supreme Courts and this Court may exercise federal jurisdiction in civil matters arising under the Corporations Act, appeals must be taken to the appellate court in the court structure in which the proceeding or action was commenced.

21    If the disclaimer action is considered in isolation the position appears to be that an appeal against the orders made in the action does not lie to this Court by reason of subsection 1337F(3) of the Corporations Act. Any appeal would have to be taken to the Court of Appeal of the Supreme Court of Queensland.

22    I return to the main action to examine the effect of the first appellant filing its Defence. Again, I examine the matter as if the main action and the disclaimer action are quite separate.

23    The first appellant’s Defence raised issues under the Copyright Act 1968 (Cth) (‘Copyright Act’). At that point, the Supreme Court of Queensland began exercising federal jurisdiction under the Copyright Act. That follows, I think from the decision in Felton v Mulligan (1971) 124 CLR 367, where Barwick CJ said that jurisdiction under the Judiciary Act 1903 (Cth) (subsection 39(2)) may be attracted by the filing of a Defence and if it is,

… the jurisdiction which is exercised by the Supreme Court throughout the case will be federal, that is to say, part of the jurisdiction invested in the Supreme Court by the Judiciary Act, unless perhaps there is some completely disparate claim constituting in substance a separate proceeding.

See also Walsh J at 402-404; Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 476 per Stephen, Mason, Aicken and Wilson JJ; NEC Information Systems Australia Pty Ltd v Iveson (1992) 36 FCR 258 (‘NEC Information Systems Australia Pty Ltd v Iveson’) at 264.

24    This Court’s appellate jurisdiction is defined in s 24 of the Federal Court of Australia Act 1976 at s 24(1) and includes jurisdiction:

(c)    in such cases as are provided by any other Act, appeals from judgments of a court (other than a Full Court of the Supreme Court) of a State, the Australian Capital Territory or the Northern Territory, exercising federal jurisdiction;

25    There are a number of Commonwealth Acts which provide that appeals from State courts exercising federal jurisdiction may only be taken to the Full Court of this Court (see, for example, the Acts referred to in NEC Information Systems Australia Pty Ltd v Iveson at 265). One such Act is the Copyright Act and it provides as follows:

131A Exercise of jurisdiction

The jurisdiction of the Supreme Court of a State or Territory in an action under this Part shall be exercised by a single Judge of the Court.

131B Appeals

(1)    Subject to subsection (2), a decision of a court of a State or Territory (however constituted) under this Part is final and conclusive.

(2)    An appeal lies from a decision of a court of a State or Territory under this Part:

(a)    to the Federal Court of Australia; or

(b)    by special leave of the High Court, to the High Court.

131C Jurisdiction of Federal Court of Australia

Jurisdiction is conferred on the Federal Court of Australia with respect to actions under this Part.

26    These three sections appear in Part V Division 4A of the Copyright Act. Section 115 appears in Part V of the Act. It is an important section in the Act and it provides for remedies for infringement of copyright.

27    The first appellant’s Defence makes a claim for infringement of copyright.

28    I think that the effect of this Court’s decision in Thompson and Morgan (United Kingdom) Ltd v Erica Vale Australia Pty Ltd (1995) 31 IPR 335 (‘Thompson and Morgan (United Kingdom)’) is that in a case such as this once the first appellant’s Defence was filed the Supreme Court of Queensland was exercising federal jurisdiction and (leaving aside any completely separate matter) had the action proceeded to hearing and determination on the merits then any appeal would be to this Court notwithstanding the fact that when the action was instituted it raised only matters of state jurisdiction.

29    In this case there are two separate actions being the main action and the disclaimer action. The appellants’ submission is that they are nevertheless part of the one matter or controversy and, relying on Re Wakim; Ex Parte McNally (1999) 198 CLR 511 (‘Re Wakim’) and Thompson and Morgan (United Kingdom) they submit that the effect of the relevant legislative provisions is that an appeal lies to this Court. The appellants’ argument was put in various ways, but I think the essence of the argument was as follows. The appellants’ application for a stay in the main action is part of that matter. The appellants’ application for a stay and the disclaimer action are part of the same matter because the latter involves ‘an application for leave to disclaim the very contract upon which the application for the stay is based’.

30    The appellants relied on the following passages in the joint reasons of Gummow and Hayne JJ in Re Wakim (at 585-586 [139] and [141]):

    The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.

…

    Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.

31    The appellants also relied on the decision in Thompson and Morgan (United Kingdom), which involved two actions, one a matter of state jurisdiction (breach of contract) and the other federal jurisdiction under the Copyright Act (infringement of copyright). The Court held that the appeal from the decision of the State Court lay to this Court by reason of s 131B of the Copyright Act and paragraph 24(1)(c) of the Federal Court of Australia Act. One point of difference between that case and the case before me is that in Thompson and Morgan (United Kingdom) Ltd an order for consolidation had been made by the trial judge so that the two actions were combined and became one action.

32    The appellants also submitted in response to the respondents’ reliance on subsection 1337F(3) of the Corporations Act that the provision was subject to subsection 1337A(5) which preserved the jurisdiction this Court had under the Copyright Act and the Federal Court of Australia Act.

33    Counsel for the respondents submitted that the appellants’ application in the main action and the disclaimer action were part of the one matter. He submitted that the orders which are the subject of the appellants’ appeal were made on 4 April 2011 and that at that time federal jurisdiction under the Copyright Act had not been engaged. He submitted that the jurisdiction exercised by Boddice J in making the orders was federal jurisdiction under the Corporations Act in relation to the disclaimer action and State jurisdiction in relation to the appellants’ application in the main action for an order for a stay. There was no appeal to this Court in relation to the latter matter and, in relation to the former matter no appeal to this Court by reason of s 1337F(3) of the Corporations Act.

34    In my opinion, the disclaimer action is a separate matter from the main action. Not only is it a separate action and not the subject of a consolidation order as in Thompson and Morgan (United Kingdom), but it involved additional parties to those involved in the main action. Those additional parties had no interest in the legal and factual issues which were the subject of the main action. More importantly, putting to one side for the moment the appellants’ application in the main action for an order for a stay, there was no common substratum of fact or, if it be relevant, law, between the disclaimer action and the main action.

35    As far as the appellants’ application in the main action for an order for a stay is concerned, there is force in the respondents’ contention that this application is part of the one matter being the disclaimer action. Even if the contention is not correct that does not mean that there is an appeal to this Court from the order dismissing the application because at the time the order was made, that is, on 4 April 2011, federal jurisdiction under the Copyright Act had not been engaged. The decision made on the application was not one made under Part V of the Copyright Act.

36    There is a further reason to dismiss the purported appeal against the order dismissing the appellants’ application for a stay which does not depend on precisely when the order was made or when federal jurisdiction was engaged. As is acknowledged by the terms of the notice of appeal there is no merit in an appeal against the order in circumstances where leave to disclaim the arbitration agreement has been granted. There is no appeal to the Full Court of this Court against the grant of leave by reason of s 1337F of the Corporations Act.

37    This Court does not have jurisdiction to entertain the appellants’ appeal. In the circumstances it is not necessary to consider the respondents’ alternative argument based on subsection 7(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Qld).

Conclusion

38    The respondents are entitled to summary judgment in relation to the appeal. In the circumstances that means an order that the appeal be dismissed. I will hear the parties as to costs and any other orders.

Associate:

Dated:    8 December 2011