Edlan No 54 v McIntyre

[2003] NSWSC 1020

Reported Decision: 47 ACSR 691

Supreme Court

CITATION:	Edlan No 54 v McIntyre [2003] NSWSC 1020
HEARING DATE(S):	31 October 2003
JUDGMENT DATE:	6 November 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Windeyer J at 1
DECISION:	Federal Court judgments held "ineffective" - consequent orders for enforcement of rights.
CATCHWORDS:	JURISDICTION - practice and procedure - Supreme Court - judgment given in Federal Court of Australia in invalid exercise of State Jurisdiction pre Wakim - plaintiff seeks declaration that Federal Court judgment is ineffective judgment under Federal Courts (State Jurisdiction) Act 1999 and consequent orders for enforcement of rights - whether Federal Court judgment ineffective - whether jurisdiction purported to be exercised by Federal Court was under cross-vesting legislation or corporations legislation - no question of accrued jurisdiction - whether Commonwealth Acts authorizing Federal Court to exercise jurisdiction purported to be conferred bear upon question of whether judgment ineffective.
LEGISLATION CITED:	Corporations Act 1989, (Cth) s56(2) Corporations Law s232(6), s1317HA, s1317HD Corporations (New South Wales) Act 1990, s42(3) Federal Courts (State Jurisdiction) Act (NSW) 1999, s4 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s9(2) Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s4 Trade Practices Act 1974 (Cth), s52
CASES CITED:	Continental Venture Capital Ltd v Amann Australia Pty Limited (2001) 53 NSWLR 687 Gould v Brown (1998) 193 CLR 346 Re Marks & Ors; Ex parte Saint (2000) 204 CLR 158 Re Wakim: Ex parte McNally (1999) 198 CLR 511
PARTIES :	Edland No 54 Pty Limited (Plaintiff) Auro Romano McIntyre (Defendant)
FILE NUMBER(S):	SC 1805 of 2002
COUNSEL:	Mr D B McGovern SC with him Messrs I E Davidson and M P Cleary (Plaintiff) Mr B W Collins QC with him Mr R J Kelly (Defendant)
SOLICITORS:	Giles Payne & Co (Plaintiff) K A Garling (Defendant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

THURSDAY 6 NOVEMBER 2003.

1805/02 EDLAN NO 54 PTY LIMITED V AURO ROMANO MCINTYRE

JUDGMENT

1 The plaintiff seeks a declaration that certain judgments and orders obtained in the Federal Court of Australia are “ineffective judgments” within the meaning of the s4 of the Federal Courts (State Jurisdiction) Act (NSW) 1999 together with supplementary orders to enable enforcement of the judgment and orders.

2 While the further amended summons refers to a series of judgments and orders in the Federal Court there are only four which are of relevance. These are as follows:

A. In proceedings No. NG 672 of 1996 an order for judgment was made on 25 February 1999 in favour of the plaintiff against the defendant in the sum of $566,839.88. That order was made pursuant to an earlier order and reasons for judgment given on 11 September 1998, when an order was made for payment to the plaintiff by the defendant of the sum of $505,496.43 with liberty to the plaintiff to apply for interest. It was the interest allowed of $61,363.45 which brought the figure up to $566,839.88.

B. In proceedings No. 292 of 1998 by judgment and orders dated 29 April 1999 Beaumont J dismissed a claim by the plaintiff in these proceedings for a declaration that it was entitled to a charge or lien over a particular property on the basis of a vendor’s lien for unpaid purchase moneys.

C. In respect of both decisions the losing party appealed to the Full Court of the Federal Court. That Court dismissed the appeal from the money judgment, but allowed the appeal against the dismissal of a claim for a declaration as to a vendor’s lien. In lieu thereof the Full Court on 16 June 1999 made a declaration that the plaintiff, Edlan, holds an unpaid vendor’s lien over a particular property known as “Riverview Lodge” which lien secures the said judgment debt. The final orders of the Full Court of the Federal Court were made on 16 June 1999, the day before the High Court of Australia gave its judgment in Re Wakim: Ex parte McNally (1999) 198 CLR 511.

3 The question then for decision is whether the money judgment upheld by the Full Court of the Federal Court of Australia and the declaration as to a lien made by the Full Court of the Federal Court are ineffective judgments within the meaning of that term, under s4 of the Federal Courts (State Jurisdiction) Act 1999 so that the rights of the parties are the same as if the ineffective judgments had been judgments of this court and the rights and liabilities so declared enforceable as such.

4 There are certain collateral proceedings running with the main proceedings. Proceedings on the lien commenced as proceedings in this Court No. 4739 of 2002 seeking an order for an extension of a caveat based upon a claimed interest pursuant to a vendor’s lien for unpaid purchase moneys. These proceedings were cross-vested to the Federal Court on the basis of their being connected with the money claim against the defendant. They became proceedings No NG 292 of 1998 in that Court. After the decision of the Full Court of the Federal Court upholding the claim for a vendor’s lien, questions relating to the form of the caveat were referred back to Beaumont J, the trial judge, and ultimately were cross-vested by Beaumont J back to this Court. Campbell J then determined that those proceedings as to the form of caveat be determined with the remaining proceedings. The parties have agreed that in the event that the plaintiff’s contentions are upheld and the Federal Court judgments and orders in question are declared to be ineffective judgments then the caveats now entered will remain in force until the vendor’s lien is discharged by payment of the amount secured by it. It is thus not necessary to go into the caveat proceedings any further.

5 The original proceedings in the Federal Court of Australia No NG 672 of 1996 were a claim by the plaintiff Edlan No 54 Pty Ltd (“Edlan”) and two other persons against the defendant McIntyre and four other respondents for misleading and deceptive conduct under s52 of the Trade Practices Act 1974 said to have arisen in a transaction called a share sale agreement. It is not necessary to consider that further. An application was made to amend the statement of claim to include a claim said to have arisen three years earlier than the misleading and deceptive conduct claim under which Edlan claimed to be entitled to damages for breach of an agreement made in August 1990 under which certain property was to be transferred to McIntyre on terms that he was to pay to Westpac Banking Corporation Limited amounts secured on that property, which moneys he had failed to pay. There was claimed damages for breach of the agreement to pay the said moneys and there was also a claim for breach of duty owed by McIntyre to Edlan pursuant to s232(6) of the Corporations Law the claim being for loss and damage in the sum of $505,476.43 in consequence of such breach of duty. The amended application so far as it is relevant claimed damages against McIntyre for breach of contract, an order that McIntyre compensate Edlan pursuant to s1317HA or s1317HD of the Corporations Law and that McIntyre pay to Edlan an amount of $505,476.43 with interest.

6 In his judgment allowing the amendment Beaumont J ordered that there be a separate trial of the three causes of action, namely the Trade Practices claim, the claim for breach of contract and unjust enrichment and a further claim for $85,895.00 which need not be gone into separately. The separate trial order was later revoked but that does not matter. Beaumont J so far as the claim arising out of the 1990 transfer of property was concerned said:

So far as the first cause of action now sought to be introduced is concerned, it is claimed on behalf of the applicants that jurisdiction is vested in this Court to entertain the claim by reason, inter alia, of the provisions of s 1317HA or, alternatively, of s 1317HD of the Corporations Law. This source of jurisdiction is not seriously challenged on behalf of the respondents. So far as the second cause of action proposed to be introduced is concerned, it is accepted on behalf of the applicants that the only possible source of this Court's jurisdiction in this respect is the cross-vesting legislation.

Although there would have been no accrued jurisdiction in this Court to entertain either of the causes of actions now sought to be introduced, there being no common substratum of facts or law involved in either claim vis-a-vis the existing cause of action now sued upon, it is, nonetheless, of course open to the applicants now to invoke the provisions of both the Corporations Law and the cross-vesting legislation as a basis for this Courts jurisdiction to entertain such claims.

7 The second cause of action referred to is that relating to the claim for $85,895.00. It does not relate to the subject matter of the judgments under consideration before me.

8 The judgment of Beaumont J in favour of Edlan makes no reference whatsoever to any claim under s232 of the Corporations Law or the later sections to which I have referred. The money judgment is based entirely upon the breach of a contractual term to make payments otherwise due by Edlan to Westpac Banking Corporation. If that is the position the words “inter alia” might be thought to indicate jurisdiction under the cross-vesting legislation. Whether that is so or not, one thing is clear and it is that jurisdiction was not exercised under any accrued jurisdiction power. The argument of counsel for the defendant before me as to this must be rejected.

9 It does not seem to me to matter whether or not jurisdiction was purported to be exercised pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), or the Corporations (New South Wales) Act 1990, or for that matter both. If it was only the former then there can be no doubt as to the position and counsel for the defendant did not argue otherwise. It must have been the former for the lien claim.

10 Section 4 of the Federal Courts (State Jurisdiction) Act 1999 defines so far as is relevant the meaning of “ineffective judgment” in sub-section (1) as follows:

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

11 “Relevant State Act” is defined in the definition s3 of the Act as meaning any of the following Acts:

…
(d) Corporations (New South Wales) Act 1990
…
(f) Jurisdiction of Courts (Cross-vesting) Act 1987
…

12 The Federal Court of Australia, if not exercising jurisdiction under the cross-vesting legislation must have been exercising it under the Corporations (New South Wales) Act 1990, s42(3) of which provides as follows:

42(3) Jurisdiction is conferred on the Federal Court of Australia with respect to civil matters arising under the Corporations Law of New South Wales.

13 As the conduct complained of all related to New South Wales then that sub-section is relevant. It would therefore appear that the judgment is an ineffective judgment because it is a judgment of the Federal Court in a State matter as defined by s3, given in the purported exercise of jurisdiction purporting to have been conferred on the Federal Court by a relevant State Act, namely the Corporations (New South Wales) Act 1990, s42. The defendant’s argument against this is that the Federal Court is purporting to exercise jurisdiction pursuant to s56(2) of the Corporations Act 1989 of the Commonwealth. Thus it is argued that the judgment is invalid but not ineffective under s4 of the Federal Courts (State Jurisdiction) Act 1999.

14 It is not suggested there was a purported exercise of jurisdiction under any Corporations Act of a State other than that of New South Wales. Jurisdiction was purported to be exercised pursuant to that purportedly conferred under s 42(3) of the Act. Section 56(2) of the Corporations Act 1989 (Cth) may have purported to give the Federal Court power to exercise such purported jurisdiction but what the Court was purporting to do was to exercise the s42(3) jurisdiction invalidly conferred.

15 I should add that if the defendant’s argument was correct then the same result would arise from purported exercise of the cross-vesting power pursuant to the then s4(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) because the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) by s9(2) purported to confer jurisdiction on the Federal Court in respect of the State matter. The argument put here is not stated to have been put to the Court of Appeal in Continental Venture Capital Ltd v Amann Australia Pty Ltd (2001) 53 NSWLR 687 probably because it could not be supported. The Federal Acts may have purported to give the Federal Court power to exercise the conferred jurisdiction, but in doing so the Federal Court was purporting to exercise a jurisdiction which had no basis other than the purported conferral. The Commonwealth legislation was adjectival to this. Whether or not it was argued, and whether or not the purported exercise of jurisdiction was under the Corporations legislation or the Cross-Vesting legislation, the Federal Court judgments and orders cannot be distinguished from those in Continental Venture. In any event so far as the Corporations legislation is concerned, the decision of the High Court in Re Marks & Ors; Ex parte Saint (2000) 204 CLR 158 determines the matter as does the following passage from the judgment of McHugh J in Gould v Brown (1998) 193 CLR 346 at 415:

Section 56(2) of the Commonwealth Act does not confer jurisdiction on the Federal Court. It operates on the hypothesis that a law of a State has conferred jurisdiction on the Federal Court.

16 Orders

The plaintiff is entitled to orders in its favour but those put forward are not altogether appropriate. I will stand the matter over to enable the parties to give attention to the appropriate orders. These should include any order for appointment of trustees for sale but the operation of that order should be postponed for a period of 28 days so as to give the defendant the opportunity to pay the judgment debt secured by the lien in which event that order can be discharged by consent. It will be necessary to make orders to bring proceedings No 4739 of 2002 to an end, those proceedings it seems now being limited to the forms of caveat entered to protect the vendor’s lien.

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Last Modified: 11/13/2003