Minister of State for Health of the Commonwealth of Australia v Trustee on Behalf of the Ancient Order of Foresters Friendly Society in Queensland

[1985] FCA 279

Re: THE MINISTER OF STATE FOR HEALTH OF THE COMMONWEALTH OF AUSTRALIA
And: TRUSTEES ON BEHALF OF THE ANCIENT ORDER OF FORESTERS FRIENDLY SOCIETY IN
QUEENSLAND
No. QLD G17 of 1981
Federal Court

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.

CATCHWORDS

Federal Court - jurisdiction - purported conferring of power on Court by scheme confirmed under National Health Act - held ineffective - effect of s.32(1) of Federal Court Act - whether notice to Attorneys-General necessary.

Judgments - deemed good while not set aside - principle inapplicable to give jurisdiction.

Company Law - order approving scheme of arrangement - whether can confer power to make further Court orders.

Federal Court of Australia Act 1976, s.32(1)

National Health Act 1953, ss.82Z, 82ZK, 82ZL, 82ZM

Companies Act 1961, s.181

HEARING

BRISBANE
#DATE 28:6:1985

ORDER

The applications be dismissed.

JUDGE1

This is an application by the scheme administrator of the Hospital Benefits Fund and the Medical Benefits Fund, two Funds formerly conducted by the Ancient Order of Foresters Friendly Society in Queensland, seeking orders that the Court sanction a compromise between the scheme administrator and the A.N.Z. Banking Group Limited and that the Court authorise the scheme administrator to transfer any funds held or received by him on behalf of the winding-up of the Medical Benefits Fund to the funds he holds on behalf of the winding-up of the Hospital Benefits Fund. The Funds were ordered to be wound-up by Sheppard J. (see Minister For Health (Cth) v. Ancient Order of Foresters Friendly Society In Queensland (Trustees) (1982) 45 ALR 64) pursuant to an application made under s.82Z of the National Health Act 1953.

1. A jurisdictional point arises at the outset. It was submitted on behalf of the scheme administrator that the Court has jurisdiction to entertain the applications under the clauses numbered 14 in each of the two schemes. Those clauses are identical and provide:-
   
   

"14. The Scheme Administrator may at any time or from time to time apply to the Court or a Judge thereof by Application in the existing proceedings relating to this Scheme either ex parte or after notice thereof upon a party interested (as may be appropriate) for advice or directions as to or to otherwise resolve any questions or matter relating to or arising out of the discharge of his duties and powers hereunder and the said Court or Judge may upon such application make any Order declaratory or otherwise in relation to such questions or matter and the costs thereof as it or he shall see fit which said Order shall be binding on the parties affected thereby."

The clauses numbered 1 in each scheme define the "Court" as "The Federal Court".

1. Section 82Z of the National Health Act 1953, mentioned above, empowers the relevant Minister in certain circumstances to apply to the Court for an order that a Fund be placed under judicial management or wound up. Where he applies for winding-up, the Minister is to "forward with the application a scheme for the winding-up of the Fund". The content of the scheme is not defined. Section 82ZK makes reference to "confirmation of a scheme by the Court" and the order of Sheppard J. effected such a confirmation, in my view. Under s.82ZL, an order under s.82ZK is "binding on all persons and has effect notwithstanding anything in the constitution, the articles of association or the rules of the registered organisation, or registered organisations, concerned". So the scheme may override the articles or rules. Section 82ZM gives the Court "jurisdiction to hear and determine applications under this Part and to make orders in respect of those applications". None of these provisions says that I may make orders of the type sought.

2. There is nothing in the Act which expressly empowered Sheppard J. to authorise applications to the Court to resolve questions relating to or arising out of the discharge of the scheme administrator's duties and powers. In his reasons his Honour was critical of the sketchy nature of the winding-up provisions in the Act and also said that "questions of jurisdiction and power do arise for consideration and that despite the scheme which I propose to approve apparently providing for some matters, it may be a real question as to whether certain provisions are properly included ...".

3. There appears to be no authority in which a question has been raised as to the validity of such a clause as Clause 14 of the scheme approved by his Honour, which purports to empower to the Court to make orders "declaratory or otherwise in relation to" questions of the kind referred to above. A somewhat similar point has, however, been considered in authorities decided under s.181 of the Companies Acts of the States in force from 1961. That section empowered Supreme Courts to grant approval to a compromise or arrangement between a company and its creditors, or between a company and its members. A problem which arose, in decisions under s.181 of the 1961 Companies Acts, was whether the Court, by its approval, could enable applications to itself of the kind presently before me. Mitchell J. in Re Slade Constructions Pty. Ltd. (1970) SASR 561 was asked to approve a scheme, under s.181 of the 1961 Companies Acts, containing the following clause:-
   
   

"43. The Scheme Manager may at any time or from time to time apply to the Supreme Court of South Australia or a Judge thereof by originating summons either ex parte or after service thereof upon any party interested (as the case may require) for advice or directions as to or to otherwise resolve any question or matter relating to or arising out of the discharge of his duties and powers hereunder and the said Court or Judge may upon such application make any order declaratory or otherwise in relation to such question or matter and the costs thereof as it or he shall be binding on all parties affected thereby."

This clause is very similar to, and in parts identical with, the clauses numbered 14 in the schemes the subject of this application. In respect of this clause, and another clause also purporting to give the Court power to hear and determine applications subsequent to approval of the scheme, Mitchell J. said at pp.564-565:-

"It seems to me that in each of these paragraphs there is an attempt to confer jurisdiction upon the Court. Such an attempt is, of course, otiose and the words may be regarded merely as surplusage. In my view, however, the Court should not sanction a document which may be construed as conferring jurisdiction upon the Court by persons who are obviously powerless to confer jurisdiction. It has been put to me on previous applications that the scheme when sanctioned becomes an order of the Court. In my view this is not correct. Even if it were, the Court cannot confer jurisdiction upon itself."

1. In relation to a rather similar problem, the observations made by Mitchell J. were adopted by Zelling J. in Re Forklift Sales (S.A.) Pty. Ltd. (1972) 3 SASR 21 at p 24. In Re R.M. Eastmond Pty. Ltd. (1972) 4 ACLR 801 Street J. (as he then was) had the same question before him and said that until he was satisfied to the contrary he would continue "to hold the view that the court cannot take upon itself continuing authority under the statute to prescribe what should or should not be done within the implementation of the scheme once the scheme is on foot". Next, Zelling J. again approved the reasons of Mitchell J. in the Slade case, remarking in In Re Adelaide Air Conditioning and Domestic Engineers Ltd. (1972) 6 SASR 603 at p 609 that: "The court should not sanction a document which may be construed as conferring jurisdiction upon the court by persons who are obviously powerless to confer jurisdiction."

2. There is no evident basis for holding that the views of Mitchell and Zelling JJ., and the somewhat more tentative view of Street J., are inapplicable to an order confirming a scheme for winding-up, under the National Health Act. Further, the reason given for these decisions, namely that a court cannot confer jurisdiction on itself, appears to be sound and to make it difficult to arrive at the conclusion that Clause 14 in the Schedule to the order of Sheppard J. had any legal effect.

3. Neither of the orders now sought, mentioned above, deals with a mere matter of machinery or administration; each is designed to have a substantial effect. Indeed, the second order sought is intended to achieve a result which may well have been beyond the power of the Court in the first instance, when the scheme was confirmed: it seeks to transfer funds, for reasons of administrative convenience, from one fund to the other, without consideration passing. It is not necessary to reach a final conclusion on that, as I have, for the reason already expressed, come to the conclusion that I have no power to make either order.

4. It should be mentioned that s.32 of the Federal Court of Australia Act, at first sight, might seem to provide some basis of jurisdiction. Sub-section (1) says that: "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." It was held in Philip Morris Inc. v. Adam P. Brown Male Fashions Pty Ltd. (1981) 33 ALR 465 that once the jurisdiction of this Court arises under a statute, s.32(1) extends it "to associated matters which arise under laws made by the Parliament, even though the Parliament has not (except by s.32(1)) conferred jurisdiction on the court in respect of those matters" (p.490 per Gibbs J.). However, the mere fact that it might be convenient for the Court to have power to create or alter rights, in connection with the winding-up order the National Health Act authorises it to make, does not justify such creation or alteration, nor can s.32(1) in itself authorise such creation or alteration.

5. Some of the cases in which the extent of the jurisdiction of this Court has been considered have been treated as raising constitutional questions. It seems at least arguable that such a question underlies the matter before me. Parliament is given power by Chapter III of the Constitution to confer and to define jurisdiction, but it is not clear whether it may exercise that power by delegating it to another body: compare Le Mesurier v. Connor 42 CLR 481 at pp 499-500 and Peacock v. Newtown Marrickville and General Co-operative Building Society No. 4 Ltd. 67 CLR 25; were I of opinion that the National Health Act, on its proper construction, authorised the making of an order empowering the Court to make further orders, the constitutional problem might arise. Because of the conclusion reached on the effect of the relevant provisions, apart from any constitutional point, notice to Attorneys-General is unnecessary.

6. The only other matter requiring mention is that, in my view, the principle that because the judgment of Sheppard J. still stands, not having been appealed against, it must be treated as good, does not avail the applicant. That rule has been applied in such cases as Nisbet v. Nisbet (1898) 24 VLR 340, Re Piper (1960) SR (NSW) 328 and Frick Australia Pty. Ltd. v. Pen Pak Ocean Products Pty. Ltd. (1971) Qd R 286 at pp 292-293 - the last decision having been reversed by the High Court on other grounds (46 ALJR 393). The principle cannot apply where the question is whether the Court has any jurisdiction at all to deal with the matter in question.

7. I therefore hold that insofar as Clause 14 of the scheme mentioned in the order of Sheppard J. purports to empower this Court to make orders of the type applied for, it is legally ineffective, that there is no other source of power to make the orders applied for and the applications must be refused.