Bell Group N.V. (In Liquidation) v The Insurance Commission of Western Australia & Ors

[2016] HCATrans 69

[2016] HCATrans 069

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S247 of 2015

B e t w e e n -

BELL GROUP N.V. (IN LIQUIDATION) ARBN 073 576 502

Applicant

and

THE INSURANCE COMMISSION OF WESTERN AUSTRALIA

First Respondent

ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD ACN 008 66 993 (IN LIQUIDATION)

Second Respondent

THE BELL GROUP LTD ACN 008 66 993 (IN LIQUIDATION)

Third Respondent

ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL GROUP FINANCE PTY LTD ACN 009 165 182 (IN LIQUIDATION)

Fourth Respondent

BELL GROUP FINANCE PTY LTD ACN 009 165 182 (IN LIQUIDATION)

Fifth Respondent

ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL BROS. PTY LTD ACN 008 672 375 (IN LIQUIDATION)

Sixth Respondent

BELL BROS. PTY LTD ACN 008 672 375 (IN LIQUIDATION)

Seventh Respondent

ANTONY LESLIE JOHN WOODINGS AS PROVISIONAL LIQUIDATOR OF WESTERN INTERSTATE PTY LTD ACN 000 224 395 (IN PROVISIONAL LIQUIDATION)

Eighth Respondent

WESTERN INTERSTATE PTY LTD ACN 000 224 395 (IN PROVISIONAL LIQUIDATION)

Ninth Respondent

LAW DEBENTURE TRUST CORPORATION PLC

Tenth Respondent

COMMONWEALTH OF AUSTRALIA

Eleventh Respondent

W.A. GLENDINNING & ASSOCIATES PTY LTD

Twelfth Respondent

Application for removal

BELL J

TRANSCRIPT OF PROCEEDINGS

FROM SYDNEY BY VIDEO LINK TO PERTH

ON FRIDAY, 18 MARCH 2016, AT 12.01 PM

Copyright in the High Court of Australia

____________________

MR A.A. D’ARCY:   May it please the Court, I appear for the applicant, Bell Group NV.  (instructed by Lipman Karas)

MR G.R. DONALDSON, SC, Solicitor‑General for the State of Western Australia:   If your Honour please, I appear with my learned friend, MS R. YOUNG, for the first respondent.  (instructed by State Solicitor (WA))

HER HONOUR:   The attendance of the Commonwealth has been excused and submitting appearances have been filed on behalf of the remaining respondents to the removal application.  Yes, Mr D’Arcy - Mr D’Arcy, can I raise with you the matters that have led to the matter being listed today?

MR D’ARCY:   Yes, your Honour.

HER HONOUR:   As I understand it, it is common ground between the parties that the fate of what I will call the principal proceedings, that is Proceedings COR 208 of 2014, are ancillary to the proceedings brought by the liquidator of the Bell Group of companies seeking orders under 564 of the Corporations Act.

MR D’ARCY:   That is so, your Honour.  It is only the way the State has presented the matter and certainly ‑ ‑ ‑

HER HONOUR:   It is uncontroversial, is it not?

MR D’ARCY:   There are some additional matters that are potentially raised by COR 208 that are not necessarily raised in 146 and which is the reason for my qualification.

HER HONOUR:   I understand, but it is accepted by BGNV that in the event that its challenge to the validity of the Bell Act fails, these proceedings necessarily fall away, together with the liquidator’s proceedings.  Is that so?

MR D’ARCY:   Subject to one minor qualification.

HER HONOUR:   Yes.

MR D’ARCY:   The qualification is this.  The State has indicated that it may be necessary for some aspects of Action 208 to continue even if the legislation is held to be valid.  Now, we do not particularly understand why that is so but it is something that the State has put us on notice of.  As I understand the argument, your Honour, there are trust deeds, known as the TBGL and BGF trust deeds.  They contain a turnover trust provision.

HER HONOUR:   Yes.

MR D’ARCY:   The State has flagged the potential argument that if the authority makes a recommendation in favour of the Insurance Commission and a payment is made to the Insurance Commission it may be necessary to pursue Action 208 to seek declaratory relief that that payment is not caught by the turnover trust.

HER HONOUR:   I see.

MR D’ARCY:   So there is a theoretical possibility that Action 208 will continue even if a constitutional challenge to the validity of the Act fails.

HER HONOUR:   That theoretical possibility is mooted by the State.  It is not embraced by BGNV?

MR D’ARCY:   As I say, it is theoretical at this stage.  We do not actually understand the argument that was put.  But your Honour is right, for all practical purposes, subject to that qualification, we accept and we do in our written submissions, if our challenge fails, then 208 becomes redundant.

HER HONOUR:   Now, that might suggest a reason why one would not trouble with whether or not to make a removal order, given that circumstance.  I say that, Mr D’Arcy, to raise with you consideration that what is sought to be removed, as I understand it, is your summons for dismissal.  That matter was before Justice Pritchard, who is case managing these proceedings and the related liquidator’s proceedings in the Supreme Court of Western Australia.  On the last occasion when the matter was before her Honour, in early December of last year, the Bell Act had come into operation.

MR D’ARCY:   Yes.

HER HONOUR:   No one, it seemed, was seeking any orders before her Honour on that occasion.  Her Honour noted that she had not been asked to determine the jurisdictional issue that you raise by your interlocutory process that you filed in September. 

MR D’ARCY:   Yes.

HER HONOUR:   In the ordinary course one would expect the Supreme Court of Western Australia to determine whether it has jurisdiction.  That is a significant matter bearing on whether or not a removal order would be made so that an application to dismiss the proceedings was heard by the Full Court.

MR D’ARCY:   Yes, your Honour.

HER HONOUR:   That aspect really is not fleshed out in any detail in the submissions beyond your assertion - “Our application raises an important point of constitutional principle”.  It is not uncommon for important points of constitutional principle to be considered by courts other than this Court, and then this Court has the benefit of the consideration of those matters by the lower courts and the ordinary considerations of the orderly conduct of litigation and the requirements of special leave are engaged.

MR D’ARCY:   Yes.

HER HONOUR:   Now, I raise those matters, not to suggest the necessity to determine your application today, since it does seem to me to be premature, but to raise with you why the sensible course is not to stand the matter over.

MR D’ARCY:   Yes, your Honour, and ordinarily we would see the force in that submission, or that course of action.  There are two reasons why we say the application for removal should be removed.  The first is that there is a significant overlap between the issues that are raised in the constitutional challenge and the substantive issue that is the subject of the application for removal, and I will expand upon that in due course, your Honour.

HER HONOUR:   Yes, all right.

MR D’ARCY:   The second is that as at today the Supreme Court is prevented from determining that application by force of section 25(5) of the Bell Act so this Court is the only court that can determine the issue.

HER HONOUR:   Yes.

MR D’ARCY:   So if I can flesh those out, your Honour, in terms of overlap.  The ultimate issue to be determined in the removal application is whether the Supreme Court in 208 was exercising federal jurisdiction or whether it has no jurisdiction.  That very same issue is raised in the constitutional challenge.

HER HONOUR:   Can I cut to the chase, Mr D’Arcy?

MR D’ARCY:   Yes.

HER HONOUR:   Am I right in understanding that if, contrary to your submission in the removal application, the Supreme Court of Western Australia has jurisdiction to determine those aspects of COR 208 of 2014, apart from the claim against the Commonwealth, then that proceeding is a further proceeding that is subject to the arguments that BGNV advances as to 109 inconsistency between the Bell Act and the Judiciary Act and an allied challenge of repugnancy to Chapter III?

MR D’ARCY:   That is correct, your Honour.

HER HONOUR:   May I say it seems to me to neither add force or lessen force to the argument.  The argument is good or it is not.

MR D’ARCY:   Subject to this point, your Honour.  The authorities do say that in determining whether legislation impermissibly interferes with pending litigation it is an evaluative exercise, a line‑drawing exercise.  Some interference will cross the line.  Some will not.  We wish to protect against the possibility that – and your Honour may be right, it may be enough that we can establish interference with Actions 146 and 179 and we have crossed the line.  It may well be that we do not get across the line in relation to those two actions but we would get across the line if we could also demonstrate the interference with 208.  That is a possibility that we cannot discount.

HER HONOUR:   I understand the argument.

MR D’ARCY:   It is in anticipation of that, your Honour, that we want some certainty because you will have seen in our written submissions the 109 inconsistency and Chapter III arguments have three propositions.  The starting point is the exercise of federal jurisdiction.  We had to limit our submissions to 179 and 146 and had to put in a footnote ‑ ‑ ‑

HER HONOUR:   Well, you have to limit your submissions because you contend, of course, the Supreme Court of Western Australia is not exercising jurisdiction. 

MR D’ARCY:   Correct.

HER HONOUR:   That is your principal point in the removal application.

MR D’ARCY:   That is right.  If we ultimately fail in that, then we will take the second prize, if you like, your Honour.

HER HONOUR: Yes. Now, as to the circumstance that for the present – I think the position is your client contends that section 73 of the Bell Act cuts in and affects the – what I will call principal proceedings, that is Proceedings 208.

MR D’ARCY: Section 73 and section 25(5).

HER HONOUR:   Yes.

MR D’ARCY:   Your Honour, that is also the State’s position.  There is an affidavit I can take you to to establish that point.

HER HONOUR:   I see.  Very well.  It seemed to me that in the proceedings before Justice Pritchard there was some difference of view about that matter.

MR D’ARCY:   There was.

HER HONOUR:   That has been resolved, has it?

MR D’ARCY:   No, not resolved, but I can take you to an affidavit that was put forward by the State in support of a stay application in which they accept that 25(5) stands in the way of Action 208 proceeding.

HER HONOUR:   It remains a little difficult…..why the fact that this Court is the only court with jurisdiction to determine the issue would be a reason for this Court to make a removal order in circumstances in which - unless your challenge succeeds.

MR D’ARCY:   If that was the only argument we had, your Honour, I would not be pushing it.  We would accept that.  It is the overlap issue which is the primary issue.

HER HONOUR:   It is the overlap, yes.  Very well, Mr D’Arcy.  Mr Solicitor?

MR DONALDSON:   Yes, your Honour.  Could I perhaps pre‑empt your Honour by saying we agree with everything that has fallen from your Honour this morning in relation to this matter.  We have every confidence that the issue – or if I could refer to them as the Chapter III issues, your Honour, can be ventilated before the Court on the basis that 208 is in the status that it is currently in. 

HER HONOUR:   Yes.

MR DONALDSON:   I think as your Honour has indicated in the ordinary course with an application such as this when nothing is going to occur in those Proceedings 208 until the issue of the validity of the Bell Act is determined that it would simply wait until the major issue is resolved.  It seems to us to be the most sensible course, firstly, your Honour, and secondly, your Honour might I say that depending upon the outcome of the challenge to the validity of the Bell Act, one would have some considerable hope that the issue which is the subject of this application might be able to be resolved in any event.

HER HONOUR:   I see.  Thank you, Mr Solicitor, yes.  Anything further you want to put, Mr D’Arcy?

MR D’ARCY:   No, your Honour.  It is the overlap and it is the resulting uncertainty which does create some problems in, as I say, given the line‑drawing exercise and being left in some doubt as to whether we get across the line with or without 208.

HER HONOUR:   Yes.

This is an application to remove part of the cause pending in the Supreme Court of Western Australia in Proceedings COR 208 of 2014 pursuant to section 40 of the Judiciary Act 1903 (Cth). The principal proceeding is brought by the Insurance Commission of Western Australia against the applicant, BGNV, and a number of other defendants, including the Commonwealth of Australia. Submitting appearances have been filed on behalf of all the respondents to the removal application, save for the Insurance Commission and the Commonwealth. The attendance of the Commonwealth at today’s hearing has been excused.

BGNV seeks to have removed into this Court its interlocutory process filed on 3 September 2015, by which it seeks dismissal of the principal proceedings. In short, it contends that the jurisdiction of this Court is exclusive with respect to the subject matter for determination in the principal proceedings by force of section 38(d) of the Judiciary Act. The Insurance Commission, for its part, accepts that is so with respect to the claims brought against the Commonwealth. In issue is whether the exclusive jurisdiction extends to the entire matter, that is, the justiciable controversy the subject of the principal proceedings, or is limited to the claims made by Western Australia against the Commonwealth. The principal proceeding is ancillary to Proceeding 146 of 2014 in the Supreme Court of Western Australia, a proceeding brought by the liquidator of the Bell Group of companies seeking orders under section 564 of the Corporations Act 2001 (Cth).

Both proceedings are being case managed by Justice Pritchard. The liquidator’s proceeding is subject to section 73 of the Bell Group Companies (Finalisation of Matters and Distribution of Proceeds) Act 2015 (WA) which operates as a stay on and from 27 November 2015. The parties, I am informed, are agreed that the principal proceeding is also subject to section 73 of that Act.

The validity of the Bell Act is the subject of BGNV’s constitutional challenge which, together with two like challenges, is before the Full Court for hearing on 5 April 2016.  In the event the challenge to the validity of the Bell Act fails, BGNV accepts that its removal application would not require determination since the principal proceedings would necessarily fall away. 

BGNV has sought to have its removal application referred to the Full Court for determination together with the constitutional challenge.  The parties have been advised that if a removal order were made the matter would not be listed with the hearing of the constitutional challenge.  Subject to any contrary submission it was proposed to stand the determination of the removal application over, pending determination of the validity of the Bell Act.  BGNV sought to be heard on that proposal.  BGNV places principal reliance on its submission that there exists substantial overlap between the issue for determination in the removal application and its constitutional challenge and, for that reason, it contends it is appropriate for the application to be determined with a view to it being, in due course, heard by the Full Court.

The relationship of the subject matter of the removal application to the constitutional challenge is in some respects tangential.  If, contrary to BGNV’s submission, the Supreme Court of Western Australia has jurisdiction in respect of the claims made by the Insurance Commission of Western Australia against the defendants, apart from the Commonwealth, the proceeding is, for the purposes of BGNV’s constitutional challenge, subject to precisely the same argument respecting inconsistency between the Bell Act and the Judiciary Act, and its allied argument that the Bell Act is repugnant to Chapter III of the Constitution.

The submission that BGNV makes is an incremental one that, in terms of impairment of the exercise of judicial power, there is a distinction to be drawn between the impairment of the liquidator’s proceedings and another set of proceedings, being COR 179 of 2014, and consideration of the same arguments if added to the mix is COR 208.  That does not impress me as a consideration materially affecting the determination of BGNV’s challenge.

The principal proceedings, together with the liquidator’s proceedings, were before Justice Pritchard on 4 December 2015. Her Honour noted that she had not determined the jurisdictional challenge. BGNV did not invite her Honour to do so. Its position was, as I have indicated, that COR 208 is subject to section 73 of the Bell Act.

In the event the Bell Act, or parts of it, including section 73, were found to be invalid it would remain that the Supreme Court of Western Australia has undoubted authority to determine whether it has jurisdiction to entertain COR 208 of 2014. The Commonwealth adopts a neutral stance with respect to removal of BGNV’s summons for dismissal. The Insurance Commission of Western Australia opposes removal. BGNV contends its application raises a constitutional question of importance. Against that is consideration that removal denies this Court the benefit of the reasons of the lower courts on the question and bypasses the requirements for the grant of special leave.

In the circumstances, consideration of whether it is appropriate to remove BGNV’s summons for dismissal is, in my view, premature.  For these reasons, the application to remove part of COR 208 of 2014 into this Court is stood over to a date to be fixed.

As far as the costs of today’s application are concerned, any submission?

MR DONALDSON:   Your Honour, they could be reserved and they will be dealt with in due course, I am sure.

HER HONOUR:   Yes.  Well, Mr D’Arcy, are you content with that course?

MR D’ARCY:   Yes, your Honour.

HER HONOUR:   The costs of today are reserved.  The Court will adjourn.

AT 12.24 PM THE MATTER WAS CONCLUDED