L. Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (in Liquidation)

[1980] FCA 54

Re: L. GROLLO & CO. PTY. LTD.
And: NU-STATT DECORATING PTY. LTD. (IN LIQ); WALTER ASHINGER; MARINO
ZAMPERONI; RAYMOND VICTOR OLIVER; WARWICK ALLEN LEEMING; M. & F. ZAMPERONI
PTY. LTD.; THE MASTER BUILDERS ASSOCIATION OF VICTORIA; THE ROYAL AUSTRALIAN
INSTITUTE OF ARCHITECTS; THE ROYAL AUSTRALIAN INSTITUTE OF ARCHITECTS
(VICTORIAN CHAPTER); THE MASTER BUILDERS FEDERATION OF AUSTRALIA INC.; THE
AUSTRALIAN INSTITUTE OF BUILDING (1980) 47 FLR 44
VG No. 39 of 1977
Trade Practices - Companies

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
VICTORIA DISTRICT REGISTRY
Smithers J.(1)

CATCHWORDS

Trade Practices - action against company in liquidation - s.263(2) Companies Act (Vic) - need to obtain leave to proceed.

Jurisdiction - s.79 Judiciary Act - operation of State law in federal jurisdiction.

Trade Practices Act 1974 ss.45, 46, 52, 53, 68.

Victorian Companies Act 1961 s.263(2)

Judiciary Act 1903 - s.70

Companies - Action under Trade Practices Act 1974 in Victoria against company in liquidation - Whether leave of Supreme Court of Victoria necessary - Judiciary Act 1903 (Cth), s. 79 - Trade Practices Act 1974 (Cth), ss. 45, 46, 52, 53, 68, 80, 82 - Companies Act 1961 (Vic.), s. 263 (2).

HEADNOTE

The plaintiff claimed relief against the defendants in respect of a contract between it and the first-named defendant. The plaintiff alleged breaches of the Trade Practices Act 1974.

The application was brought by the first, second, third, fourth, fifth and sixth-named defendants who alleged that the action against the first defendant had been commenced in breach of the provisions of s. 263 (2) of the Companies Act 1961, which provides: "After the commencement of the winding up no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes."

The first defendant had gone into liquidation on 5th August, 1976. The action against it had been commenced on 2nd May, 1977, without the leave of the Supreme Court of Victoria having been sought.

Held: A stay of the proceedings would be granted because: (1) The provisions of s. 263 (2) of the Companies Act 1961 are procedural in nature.
(2) Section 263 (2) does not, nor could it, apply in terms to an action brought in the Federal Court of Australia.
(3) Section 79 of the Judiciary Act 1903 may operate upon State Acts to give them an operation different from and larger than they would have according to their terms.

Huddart Parker Ltd. v. Mill Hill (Ship) (1950), 81 CLR 502, considered.

Parker v. Commonwealth (1965), 112 CLR 295, referred to.

John Robertson & Co. Ltd. (In Liquidation) v. Ferguson Transformers Pty. Ltd. (1973), 129 CLR 65, considered.
(4) The application of State law pursuant to s. 79 of the Judiciary Act 1903 does not depend upon whether or not the action is one of a class which might also be the subject of proceedings in the courts of the State.
(5) Section 263 (2) of the Companies Act 1961 is a Victorian law on a matter of procedure applicable to actions in Victorian courts and, upon its proper construction, extending to actions and proceedings of whatever kind which might be brought against the company in the course of winding up.

Re Young's Horsham Garage Pty. Ltd. (In Liquidation) (1967), 17 FLR 410, referred to.

Fiske v. Sterling Investment Co. Pty. Ltd. (In Liquidation) (1977), 3 ACLR 158, distinguished.

HEARING

Melbourne, 1979, December 11; 1980, April 23. #DATE 23:4:1980

MOTION.

Application by notice of motion on behalf of the first, second, third, fourth, fifth and sixth defendants for an order staying the proceedings against the first-named defendant.

A. Hercules (solicitor), for the plaintiff.

R. C. Walker, for the defendants.

Cur. adv. vult.

Solicitors for the plaintiff: Keith Hercules & Sons.

Solicitors for the first, third, fourth, fifth and sixth defendants: McCracken & McCracken.

S. M. P. REEVES

ORDER

1. The proceedings in this action against the first named defendant company (in liquidation) be stayed pending further order with liberty to either party to apply.

2. The plaintiff pay the first defendant's costs of and incidental to this application.

JUDGE1

This is an application by notice of motion on behalf of the first, second, third, fourth, fifth and six named defendants for an order staying proceedings against the first named defendant.

The proceedings are brought under Part VI of the Trade Practices Act 1974 (the Act) as amended, pursuant to s.80 and 82 thereof for declarations, injunctions and damages in respect of alleged breaches of part IV and part V of the Act. by the first named defendant. The wrongful conduct alleged against the first named defendant is that it entered into agreements with others of the defendants contrary to ss.45 and 46 and indulged in misleading conduct in contravention of ss. 52 and 53 and indulged in conduct in contravention of s.68 of the Act.

The claim by the plaintiff is for relief in respect of a contract said to have been entered into between it and the first named defendant. The claim is that the plaintiff entered into that contract as a consequence of misleading conduct of the first named defendant. It is said in relation to various clauses of the agreement including an arbitration clause appearing in the agreement that the same constitute or implement an agreement between the first named defendant and others of the defendants which contravenes the provisions of s.45 of the Act. It is claimed also that the plaintiff entered into the contract with the first named defendant as a consequence of misleading conduct of that defendant in trade and commerce. Complaint is also made that the contract offends the provisions of s.68 but that section would seem not to provide a basis for relief but rather to operate in association with the other complaints which are made underss.45, 46, 52 and 53 of the Act. The actual items of relief claimed against the first defendant are damages, a declaration that the contract between it and the first named defendant is void or orders varying the same as may be just, and an injunction restraining the first named defendant from taking any step towards an arbitration under the terms of the contract.

The present application is made on the ground that the action against the first named defendant has been commenced in breach of the provisions of s.263(2) of the Companies Act 1961 of the State of Victoria. That section provides,:-
"After the commencement of the winding up no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes."

The first defendant went into liquidation on 5 August 1976. The action against the first defendant was commenced on 2 May 1977. The action was commenced without leave of the Supreme Court of Victoria to bring it being sought. Mr. Hercules for the plaintiff submitted that it was not a condition of bringing this action against the first defendant that the leave of the Supreme Court of Victoria to bring the action should be obtained. On behalf of the defendant Mr. Walker submitted that by reason of the provisions of s.79 of the Judiciary Act 1903 the provisions of s.263(2) were applicable to the action and that leave of the Supreme Court of Victoria to bring the action was a condition of bringing it. Mr. Walker submitted that the provisions of s.263(2) were procedural and not substantive. He said they went not to any substantive right but merely to the remedy for enforcing it.

Mr. Walker relied, not on the decision of the High Court in Jack Robertson v. Phillip Industries Pty. Ltd. (1972) 1 A.L.R. 21, but on the reasons for judgment of the four Judges who dealt with the effect of s.79 of the Judiciary Act upon s.37 of the Limitation of Actions Act 1930 of South Australia. The decision of the Court was that s.37 of the South Australian Act did not apply to an action for treble damages brought under s.11(i) of the Australian Industries Preservation Act 1906 in the original jurisdiction of the High Court in the Adelaide registry.

By s.37 of the South Australian Act it was provided that all actions for slander and all actions for penalties, damages or sums of money given to any party by any statute in force at or after the commencement of the Act should be commenced within two years after the cause of action occurred but not after. Section 11(i) of the Australian Industries Preservation Act 1906 gave to a person injured in his person or property by any other person by reason of an act done by that other person in contravention of Part II of that Act a right to sue for and recover treble damages for the injury. Part II of the Act was headed "Repression of Monopolies". In the High Court McTiernan J. did not find it necessary to deal with the effect of s.79 in relation to the application of s.37 to the proceedings in the High Court. He held that s.37 was for other reasons, not relevant. Mr. Justice Walsh and Mr. Justice Gibbs found it necessary to consider whether by reason of s.79 of the Judiciary Act s.37 applied to the proceedings before them and concluded that it did not. Menzies J. and Mason J. concluded that by reason of the provisions of s.79 of the Judiciary Act s.37 did apply to the action then before the Court and barred it because it was commenced more than two years after the actual cause of action. The views of the members of the Court are certainly relevant to this application. It would seem clear that the provisions of s.263(2) of the Companies Act are provisions of a procedural nature. They take away no rights. They merely control the remedy for enforcing these rights. The substance of those provisions is that a party may not enforce his legal rights by action without the leave of the Court. The section proceeds on the basis that leave will be given, where it is appropriate, regard being had to other means of obtaining satisfaction in respect of the rights in question, to enforce them by action, in some cases subject to a condition. See Ruffles Pty. Ltd. (in liquidation) v. Cotis (1971) V.R. 637. Another method of obtaining such satisfaction is through the winding up provisions of the Companies Act and the performance by the liquidator of his duties thereunder in respect of claims and the administration of assets. It is for him to accept or reject claims according to his assessment of their validity or in accordance with directions of the Court. It is important to note that his duties extend to claims arising under the law of any state or country. The substance of the winding up provisions is that such acceptance and rejection of claims and distribution of assets shall proceed as a function of the liquidation undisturbed by litigation unless it should appear to be necessary or appropriate for a claimant to assert his claim by action, in which case, according to accepted principles leave so to proceed would be granted. But the Victorian Parliament cannot legislate to prevent the bringing in a Federal Court, even in its Victorian Registry, of a claim based on a Commonwealth statute which has no counterpart either in Victorian Common Law or Statute. Accordingly s.263(2) of the Companies Act cannot apply directly to the current proceedings. It is said however that by virtue of s.79 of the Judiciary Act it is given an extended operation so that it does so apply. The question is whether section 79 operates in relation to the law of Victoria contained in s.263(2) of the Victorian Companies Act in such a way that the law enacted therein is given an operation "different from and larger than the operation which" it would have according to the terms in which it is expressed. The expression quoted is from the words of Mason J. in John Robertson & Co. Ltd. (in liq) v. Phillips Industries Pty. Ltd. & Others (supra) at p.43. His Honour said:-
"Some State laws, in particular laws which prescribe and regulate the procedure to be followed in an action, are expressed so as to apply to proceedings in the courts of the States, or to particular State courts. Does s.79 pick up these provisions and give them an operation different from, and larger than, the operation which they would have according to the terms in which they are expressed?"
In a later passage the learned Justice said:-
"The broad purpose of s.79 is to ensure that the laws of the States are applied by courts in the exercise of federal jurisdiction. In general that purpose is achieved by the application of a State law according to its terms. Indeed, s.79 contains no express provision which would enable a court exercising federal jurisdiction to alter the language of a State statute and apply it in that altered form. However, the presence of the words 'including the laws relating to procedure evidence and the competency of witnesses' exhibits a clear intention that State laws relating to those topics should apply to federal jurisdiction. This purpose would fail partly in its objective if State laws on these topics are to be given a literal application under s.79 by courts other than State courts. State laws dealing with matters of procedure, as the earlier consideration of s.37 of the Limitation of Actions Act has shown, are often expressed so as to apply to State courts only, and in some instances they refer to particular State courts.

To ensure that State laws dealing with the particular topics mentioned in the section are applied in the exercise of federal jurisdiction by courts other than State courts, it is necessary that State laws be applied according to the hypothesis that federal courts do not necessarily lie outside their field of application. Section 79 requires the assumption to be made that federal courts lie within the field of application of State laws on the topics to which it refers, at least in those cases in which the State laws are expressed to apply to courts generally. This departure from the general principle that the section requires a State law to be applied according to its terms is justified, indeed demanded, by the clear requirement that State laws on the topics mentioned are to be applied in federal jurisdiction. Whether that requirement supports the broader view that a similar approach is to be taken in applying s.79 to substantive as well as procedural laws it is not now necessary to determine."
On the same subject comments are made by Gibbs J. in the same case at p.38 as follows:-
". . . It is also settled that s.79 does not give a new and more extensive meaning to State laws which it renders binding on a court exercising federal jurisdiction; it applies to those laws with their meaning unchanged: Commissioner of Stamp Duties (NSW) v. Owens (No. 2 (1953)88 C.L.R. 168; /1953/A.L.R. 1166 (n). Pedersen v. Young (1964) 110 C.L.R. 162, at 165-6; Re Young's Horsham Garage Pty. Ltd. /1969/ V.R. 977, at 979 To that last proposition it is, however, necessary to add a qualification. Section 79 may render applicable in a court exercising federal jurisdiction a State statute which either by its express provisions or upon its proper construction is limited in its application to the courts of the State: see per Menzies J. in Pedersen v. Young (110 C.L.R., at 167-8). If the laws of a State could not if upon their true construction as State Acts, they relate only to the courts of the State, it would seem impossible ever to find a State law relating to procedure, evidence or the competency of witnesses that could be rendered binding on courts exercising federal jurisdiction, because most, if not all, of such laws, upon their proper construction, would be intended to apply in courts exercising jurisdiction under State law."
Yet of the four Justices two, namely Walsh and Gibbs JJ., took one view and two, namely Menzies and Mason JJ. took an opposite view as to the applicability of the South Australian Statute of Limitations expressed to apply to "penalties, damages or sums of money given to any party by any statute in force" in relation to the action brought in the original jurisdiction of the High Court in the South Australian Registry for treble damages pursuant to s.11(1) of the Australian Industries Preservation Act. 1906 of the Commonwealth in respect of conduct alleged to contravene Part II of that Act.

It was the view of Mason and Menzies JJ. that s.37 of the Limitation of Actions Act, being an act relating to procedure, was, as such, a law of South Australia made applicable by s.79 to the action in the High Court. The time within which an action might be brought was prescribed by the State law in terms sufficiently general to be applicable by the operation of s.79 of the Judiciary Act to the proceedings in the High Court. But the view of Gibbs J. was expressed as follows at p.39:-
"If the words 'actions . . . given . . . by any statute' in s.37 included an action given by a Commonwealth statute which could be brought only in the High Court, the section would exceed the legislative power of the State. The section must be given a construction that would avoid that consequence. In short, s.37, standing alone, does not refer to actions brought under s.11 of the Australian Industries Preservation Act and when applied by virtue of s.79 of the Judiciary Act it does not get an extended meaning so as to include such actions. On this difficult question I have therefore come to the conclusion that the plaintiff's demurrer should be allowed."
Section 79 is a provision which deals with the law to be applied in respect of topics, the law with respect to which, is material to the determination of substantive issues in litigation in courts exercising federal jurisdiction It provides that subject to the constitution and laws of the Commonwealth the law to be applied shall be the law of the appropriate State with respect thereto in all cases in which it is applicable. "The purpose of the section is to adopt the law of the State where federal jurisdiction is exercised, as the law by which, except as the Constitution or Federal law may otherwise provide, the right of the parties to the lis are to be ascertained and matters of procedure are to be regulated" (per Windeyer J. (infra)). Thus in an action in the High Court in the Victorian Registry arising out of death caused by negligence on the high seas Windeyer J. applied Victorian law to decide whether according to law there was a liability in the defendant and if so the measures of damages. See Parker v. The Commonwealth (1965) 112 C.L.R. 295. Although he considered Victorian law applicable for other reasons he said at p.307:-
"Furthermore s.79 may be invoked as having the effect succinctly stated by the Court in Commissioner of Stamp Duties (N.S.W.) v. Owens /No.2/ /(1953) 88 C.L.R. 268/:'The purpose of that section is to adopt the law of the State where federal jurisdiction is exercised as the law by which, except as the Constitution or federal law may otherwise provide, the rights of the parties to the lis are to be ascertained and matters of procedure are to be regulated.' ((1953) 88 C.L.R. at p.170) Whatever path be taken the same end is reached - that I must have regard to the law of Victoria."

The view was taken that according to Victorian law death by negligence gave rise to liability under the Wrongs Act (Lord Campbell's Act) and that it specified the measure of damages. Therefore that was the law applicable to the facts of that case in the High Court. Reference may be made also to Cohen v. Cohen (1929) 42 C.L.R. 91 and Huddard Parker Ltd. v. Mill Hill (Ship) (1950) 81 C.L.R. 502.

In relation to any such topic which arises in litigation in a Federal Court it does not appear to me that the application of a State law under s.79 or on any other appropriate basis depends on whether or not the cause of action was one of a class which might also be the subject of proceedings in the Courts of the particular State. If it were the law of Victoria that a test tube baby is illegitimate then if the question of legitimacy of a person arose in an action in the Federal Court in its Victorian Registry in a matter which could or could not be the subject of proceedings in a Victorian Court, then, the law to be applied by the Federal Court on that topic that matter of the status of the person concerned, would be the Victorian Law. Such a law is not just a law applicable in the Courts of Victoria, it is a law, generally applicable concerning the status of citizens who are governed in relation to status by Victorian Law.

So far as procedural and evidentiary laws are concerned the first question would appear to be what is the topic to which they refer or with which they deal. So expressed it appears to me that in Robertson's Case Gibbs J. may be said to have regarded s.37 as restricted upon its proper construction, to topics not including the time limitation for bringing actions under Commonwealth Statutes with respect to which the State had no constitutional authority. But Mason J. considered that the references to 'statutes' in s.37 should not be read as a reference to Acts of the Parliament of South Australia only and as having no application to actions based on Imperial or Commonwealth Statutes or the Statute of other States. He said at p.42:-
"For the plaintiff it was submitted that the reference to 'statute' in s.37 should be read as a reference to Acts of the Parliament of South Australia only, and that it had no application to actions based on Imperial or Commonwealth statutes or the statutes of other States. In my opinion this submission misconceived the true character of the provision."
The indication is that the character of the provisions of s.37 gave the expression 'statutes' a meaning extending to all statutes. On this view it was the law of South Australia enacted in s.37, applicable to actions brought in South Australia, that actions for penalties, damages or sums of money given to a party by a statute of any State or country, must be brought within two years of the cause of action arising. The topic of the time limit for the action in the High Court was necessarily one arising for decision in the action in the High Court unless there were no applicable law on that topic. There was no Commonwealth law on that topic. There was a State law on it but it was a law which was enacted for application to actions in South Australian Courts only. In these circumstances the canon that by virtue of s.79 State laws relating to procedure are given a larger operation than their terms would otherwise support would operate.

It would seem therefore that in relation to s.263(2) the question is whether save as to proceedings by the Crown, which is not bound by s.263(2), (see re Youngs Horsham Garage Pty. Ltd. (1969) V.R. 977) the topic with which it deals is the control of legal proceedings on any and every cause of action which may be brought or contemplated against a company in the course of winding up. It seems to me that the intention of the Victorian Parliament was that without the leave of the Court no action or proceeding of any kind should be proceeded with or commenced in a Victorian Court. The restriction is entirely general. The extent of the operation of such a law might well be restricted by Commonwealth law or by the inevitable territorial limitations of a Victorian Statute. So far as restriction by Commonwealth law is concerned it is a tenable view that it would be the result of constitutional supremacy rather than of statutory construction.

That s.263(2) is a procedural provision is perhaps more clear than that a statute of limitations is procedural. As Walsh J. pointed out, in Robertson's Case (supra) at p.24, a statute of limitations may have a far greater importance than other procedural laws and may affect more directly the substantive rights of the parties. Compare also the remarks of Jordan C.J. in Coleman v. Shell Co. of Australia Limited (1943) 45 S.R.N.S.W. 27 at p.32 and Fullagar J. in re Ovens and King Traders Pty. Ltd. (1949) V.L.R. 16 at pp. 19 and 20. Section 263(2) does not take away any substantive rights, it relates merely to the method of ascertaining and satisfying existing rights. If real danger to the substantive rights of a party should arise unless leave to take proceedings were given, that would provide cause for the exercise of the power to grant leave. Accordingly, in my opinion s.263(2) is a Victorian law on a matter of procedure applicable to actions in Victorian Courts and extending accordingly to its proper construction to actions and proceedings of whatever kind which might be brought against a company in the course of winding up. Accordingly by s.79 it is made the law on that topic where it arises in an action in a Court exercising Federal Jurisdiction such as the Federal Court. That the Victorian statute which according to its terms operates only in respect of actions brought in a Victorian court between parties to whom it applies should be construed as referring to actions and proceedings based on any conceivable causes of action, including actions on Commonwealth Statutes which actually could not be brought in a Victorian court, results from the character of the provision in s.263(2). The reference to "parties to whom it applies" reflects the judgment in Re Young's Horsham Garage Pty. Ltd. (in liquidation) (1969) V.R. 977.

As I read the judgment in Robertson's Case (supra) it is the character of the provision which is the key to its construction. The differences between the Judges would appear to depend on the classification of the true character of the provision. On the view expressed by Mason J. it was from the character of s.37 that it was to be considered as referring to statutes even such as the Australian Industries Protection Act under which no action could have been taken in a South Australian Court. In the case of s.263(2) the character of the provision is that it is ancillary to the provisions of the Act which provide for the orderly winding up of a company according to law, it being the intention that those provisions shall, except in special cases, provide completely and justly for the due satisfaction according to law, so far as may be achieved, of all claims against the Company under whatever law they may arise. In Huddart Parker Ltd. v. Mill Hill (Ship)(1950) 81 C.L.R. 502 Dixon J. as he then was, expressed the view that by virtue of s.79 of the Judiciary Act, S.5 of the Arbitration Act (1928) of the State of Victoria applied to confer upon the High Court in an action before it, jurisdiction to stay an action on the ground that the parties had agreed to submit the matter to arbitration. Section 5 of the Victorian Act was, so far as material, in the following terms:-
"5. If any party to a submission or any person claiming through or under him commences any legal proceedings in any Court against any other party to the submission or any person claiming through or under him in respect of any matter agreed to be referred any party to such legal proceedings may at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings apply to that Court to stay the proceedings and that Court or a Judge thereof if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration may make an order staying the proceedings."
Speaking of the defendants in the action before him his Honour said at pp. 507-508:-
"They base their application to this Court on the supposition that as a result of s.79, or perhaps s.80, of the Judiciary Act 1903- 1948 the Court possesses statutory power to stay proceedings on the ground that there is an agreement to refer them to another tribunal or to arbitration. There is no express statutory power conferred upon this Court to stay, on such a ground, proceedings otherwise properly brought in its original jurisdiction. It is not a power that can arise otherwise than from statute. Section 79 provides that the laws of each State, including the laws relating to procedure, evidence and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State in all cases to which they are applicable. This section is based on a provision of the law of the United States which has a long and controversial history . . . But s.79 is more widely expressed than the American provision and I think that it should be interpreted and applied liberally. Notwithstanding the doubts expressed in Lady Carrington Steamship Co. Ltd. v. Commonwealth (3), I should be prepared to regard such a provision as s.5 of the Victorian Arbitration Act 1928, corresponding to s.4 of the Arbitration Act 1889 of the United Kingdom, as made applicable to the High Court exercising its federal jurisdiction: C.f. Cohen v. Cohen (1) and Musgrave v. Commonwealth (2)."
Section 263(2) does not purport to control proceedings in any Court other than a Victorian Court or to confer power upon any Court other than itself but it is clear that s.5 of the Arbitration Act did not purport to confer the relevant power upon any court other than a Victorian Court. It was a Victorian procedural law on the topic of actions brought by persons who had agreed to arbitrate instead of taking proceedings in a Court. The basis for the views of Dixon J. in the Huddard Parker Case would appear to be that s.79 required the application in the original jurisdiction in the High Court of the law of Victoria so that translated, as it were, by s.79, it spoke with the authority of the Commonwealth with respect to the topic with which it dealt when that topic was material to the issues in the proceeding in the High Court.

There are distinct similarities in the problems posed by s.5 of the Arbitration Act and those posed by s.263(2) in relation to the operation of s.79 of the Judiciary Act. Insofar as the construction of s.263(2) may be thought to be affected by expectation that a State statute would not purport to place restrictions on proceedings arising on a Commonwealth statute it may be observed:-

(a) it is the generality of the operation of s.263(2) that arises out of the circumstance that the winding up provisions of the Act extend to the acceptance and rejection of claims, local and foreign and under Commonwealth legislation that is important; and

(b) Section 263(2) is directed only to actions against Victorian companies in the course of liquidation.

It may well be that a Commonwealth Statute might by its provisions override s.263 (2), but when Parliament passed the Trade Practices Act (the Act) that Act took effect under the shadow of s.79, so that Parliament knew that if there were a State procedural statute on the topic of the taking of proceedings against companies in the course of winding up the law laid down in that Statute with respect to such actions would apply to such proceedings under the the Act by virtue of a statute, namely s.79 of the Judiciary Act, of the Commonwealth itself.

Section 263 of the Companies Act was considered by Menhennitt J. in the Supreme Court in Re Youngs Horsham Garage Pty. Ltd. (in liq.) (supra). In that case the action in contemplation was one by the Crown in right of the Commonwealth against the company in liquidation. His Honour took the view that notwithstanding the provision of s.217 of the Companies Act that the relevant part of that Act, which included s.263(2), "shall bind the Crown", that section did not bind the Crown in right of the Commonwealth. He took this view in accordance with the dictum of Dixon J. in Re Richard Foreman & Sons Pty. Ltd.; Uther v. Federal Commissioner of Taxation (1947) 74 C.L.R. 508 and Essendon Corporation v. Criterion Theatres Ltd. (1947) 74 C.L.R. 1 to the effect that prima facie in a State statute a reference to the Crown means the Crown in right of the State and not the Crown in right of the Commonwealth. His Honour considered the effect of s.79 of the Judiciary Act After examining authorities his Honour took the view that in applying State statutory provisions in courts exercising federal jurisdiction s.79 does not give the State Act a meaning different from that which it had upon its proper construction according to its terms. Accordingly s.263(2), even under the influence of s.79 did not operate as a restriction upon proceedings by the Crown in the right of the Commonwealth against the Company in liquidation. His Honour did not refer to the possible enlargement of the operation of a State procedural statute which speaks only with respect to proceedings in the Courts of the State. He did not have Robertson's Case before him. But the reasons which require, pursuant to s.79, the enlarged operation of procedural statutes which by their terms refer only to proceedings in State Courts so that they apply in Federal Courts, do not extend the operation of such statutes to actions brought by a party to an action by whom such procedural statutes by their terms do not apply.

It is one thing to say as above that s.263(2) in its reference to "actions and proceedings" relates to actions and proceedings on any and every cause of action, but it is quite another to say that it is to be construed as applicable to actions by a party, namely the Crown in right of the Commonwealth, to whom even in Victoria it would never have applied no matter what cause of action was involved. In view of the principle of construction applied by the learned Judge the section was to be read as providing that, with respect to actions brought or sought to be brought by parties other than the Crown in right of the Commonwealth, leave to proceed was required. Such a provision when "picked up" by s.79 of the Judiciary Act, and even taking into account that s.79 in "picking up" a State statute may give it an operation different from, and larger than the operation it would have according to the terms in which it is expressed, (c.f. Mason J. in Robertson's Case (supra) at p.43,) it could not give a State statute any operation with respect to an action by a party to an action by whom, the State statute, according to its proper construction, just did not apply.

In the reasons for judgment in Robertson's Case there is a passage in the following terms:-
"If a State statute of limitations, enacted in general terms, would on its proper construction apply to an action brought under a Commonwealth statute in a State court, it would be applied by force of s.79 if the action were brought in a Court exercising Federal jurisdiction." (per Gibbs J. at p.39)
Jurisdiction in proceedings under Parts VI of the Act is exclusive to the Federal Court. But federal jurisdiction in matters arising under the Act could have been conferred on State Courts. Had it been so conferred it is difficult to think that s.263(2) would not have been applicable to an action in the Victorian Supreme Court for relief under that Act. If that is so it is because s.263(2), as a matter of construction applies to actions resting on such a cause of action.

Mr. Hercules relied upon s.109 of the Constitution but I do not think he can gain any support therefrom because if s.263(2) is applicable it is applicable because of the Judiciary Act of the Commonwealth. He said also that it was incongruous that a person desiring to proceed under the authority of a Commonwealth Act should be required to obtain the leave of a State Court. But again the answer is that that is the result of the provisions of a Commonwealth Act. Mr. Hercules also relied on the decision of Powell J. in Fiske v. Sterling Investment Co. Pty. Ltd. (in liquidation) (1977) A.C.A.R. 40-398. In that case action was taken in the New South Wales Supreme Court for relief against a Victorian company which was in liquidation. The relief claimed included a declaration that a contract for the purchase of land had been validly rescinded. On behalf of the defendant it was submitted that the action was incompetent in the absence of leave of the Supreme Court of Victoria under s.263(2) of the Victorian Companies Act. His Honour rejected this submission. He said that s.118 of the Constitution was not in point because the Victorian section did not purport to apply to actions in New South Wales Courts. His Honour added that from the context of s.263(2) it appeared that it only applied to winding up in Victoria and to proceedings in Victoria which, if permitted to continue, might impede the due administration in Victoria of the winding up. I do not think that the decision in this case is of assistance in relation to the application of s.79.

Having regard to the foregoing it is my view that the first defendant should be granted a stay of proceedings against the plaintiff. I therefore order that such proceedings be stayed pending further order with liberty to either party to apply. The plaintiff will pay the costs of the first defendant of and incidental to this application.