Stack v Coast Securities No 9 Pty Ltd

Re: L.E. STACK; WENLOWE PTY. LTD. AND ANOR; WENLOWE PTY. LTD.; R. MACKIE AND
STAFF (VIC) PTY. LTD.
And: COAST SECURITIES No.9 PTY. LTD.
Qld Nos. G8, G9, G10 and G15 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fitzgerald J.

CATCHWORDS

TRADE PRACTICES - purchase of units in a building prior to its completion - alleged misrepresentations in contravention of ss. 52, 53(aa) and 53A of the Trade Practices Act 1974 (Cwlth) - notices of recission - respondent commences proceedings in the Supreme Court of Queensland for specific performance - applicants seek orders declaring the contracts to be void abinitio, refund of deposits paid, damages and injunctions restraining the respondent from further prosecuting the Supreme Court proceedings, and, where appropriate, from enforcing the Supreme Court judgments for specific performance.

INTERLOCUTORY INJUNCTIONS - nature and basis of proceedings in the Federal Court and the Supreme Court - existence of an arguable case to justify an interlocutory injunction - jurisdictions of Federal and State Courts - federal jurisdiction in matters in State courts - nature and extent of Federal Court's exclusive jurisdiction under s.86 of the Trade Practices Act - cross-claims - associated jurisdiction - the State courts and the Family Court - jurisdiction in these proceedings - final relief to which interlocutory injunctions may be adjectival - powers of Federal Court to grant the injunctions sought - stay of Supreme Court proceedings - refusal of injunction.

Trade Practices Act 1974 (Cwlth), ss 52, 53(aa), 53A, 80, 84, 86 & 87

The Commonwealth of Australia Constitution Act, ss. 75, 76(i), 76(ii) 77(i), 77(ii)

Judiciary Act 1903 (Cwlth), ss. 38, 39(1), 39(2)

Federal Court of Australia Act 1976 (Cwlth), ss 5, 21, 22, 23 & 32

Family Law Act 1975 (Cwlth), ss 78, 79 & 114

Supreme Court Act 1868 (Qld)

HEARING

BRISBANE

#DATE 23:3:1983

ORDER

1. The present application for an interlocutory injunction be refused with liberty to the applicant to reapply if it becomes necessary or appropriate to do so.

2. The applicant pay to the respondent its taxed costs of and incidental to the proceedings herein to date.

3. Liberty to apply.

JUDGE1

The current economic conditions are producing numerous actions in the Supreme Court of Queensland in which vendors of units at the Coastal resorts near Brisbane seek to enforce their contracts. These actions frequently lead to proceedings in this Court in which purchasers seek to escape the same contracts by reliance upon the Trade Practices Act 1974. The existence of dual proceedings in respect of what is, in each case, a single dispute, has led to a spate of applications to this Court either for a stay of the proceedings in this Court or for an injunction to restrain the plaintiff in the Supreme Court from prosecuting its action. Obviously, litigants are seeking by forensic manoeuvres to gain a tactical advantage from the jurisdictional split which exists in our system of federalism. Neither court, nor indeed the general public, would wish these individual attempts for short-term advantage to escalate to a point at which the judicial system might be brought into disrepute. I accordingly propose to discuss the issues raised in the four applications for interlocutory injunctions which are presently before me at greater length than would usually be appropriate.

The Nature of the Proceedings in this Court and the Supreme Court:

The respondent is the developer of a home unit building, "Princess Palm", at Palm Beach on the Gold Coast. Each of the applicants in the different matters now before me, Nos. G8, G9, G10 and G15 of 1983, contracted to purchase a unit in that building prior to it being erected. Completion of the contracts fell due in December 1982. Each of the contracts is alleged to have been induced by misrepresentation. Notice of rescission of each contract was given in December 1982.

In January 1983, the respondent commenced actions in the Supreme Court of Queensland seeking the specific performance of each of the contracts. In three of the four cases in the Supreme Court, corresponding to Applications G9, G10 and G15 in this Court, the respondent sued not only the purchasers, which are corporations, but certain alleged guarantors. On 18 February 1983, the Supreme Court of Queensland refused to stay the actions in that Court relating to the contracts the subject of Applications G9 and G10 and decreed specific performance of each of those contracts but did not fix any date for completion or make any consequential orders. No order was made against the alleged guarantors. Appeals have been instituted. The respondent has foreshadowed its intention to apply to the Supreme Court for summary judgment for specific performance of the contracts the subject of Applications G8 and G15. So far as the material before me indicates, no Statements of Claim have been delivered in the Supreme Court actions, or are intended to be delivered in view of the intention to proceed on summons for summary judgment. Further, although wider relief is asked in the writs, the summary judgment applications have effectively limited the Supreme Court actions, for the moment at least, to claims for specific performance. That was the footing on which the current applications were contested before me and it is appropriate to proceed on that basis, whilst keeping in mind that the form of any order made should take into account the possibility of amendment or expansion of the respondent's claims in the Supreme Court proceedings and any alteration that might effect the questions in issue between the parties.

Applications G8, G9 and G10 were filed in this Court on 18 February 1983, prior to the Supreme Court decrees on the same day for specific performance of the contracts the subject of Applications G9 and G10. The Application in matter G15 of 1983 was not filed in this Court until 28 February 1983. Presently before me are claims by the applicants for interlocutory injunctions to restrain the respondent in its prosecution of the Supreme Court actions. The proceedings in this Court do not yet include the alleged guarantors as parties, perhaps because they seem to have been commenced in haste. That omission can, of course, be cured and the relief claimed widened, if necessary, to extend to the restraint also of the Supreme Court proceedings against the guarantors. Alternatively, the form of any interlocutory injunction granted to the present applicants could be appropriately confined to the claims in the Supreme Court against them but not the guarantors.

The precise form of the Applications and Statements of Claim in this Court need not be set out. These are not matters in which any inadequacy in the pleadings complicates or confuses what is in contest at this interlocutory stage. Each applicant asserts that the alleged misrepresentations constituted contraventions of ss. 52, 53(aa) and 53A of the Trade Practices Act 1974. Each seeks orders declaring his or its contract of purchase "to be void ab inito", and for the refund of the deposit paid, damages, and an injunction restraining the respondent from further prosecuting the Supreme Court proceedings which it has brought in relation to that contract including, where appropriate, restraining the respondent from enforcing the Supreme Court's judgment for specific performance in relation to that contract. Both in the proceedings in the Supreme Court and this Court, the contract, the deposit, the non-performance of the contract and the notice of alleged rescission are common ground and indeed fundamental to the parties' respective claims. In both Courts the focus of the dispute concerns alleged misrepresentation said to have induced the transactions.

The evidence placed before me by the applicants in Applications G9 and G10 with respect to representations, departure from representations, and inducement, is identical with the evidence which the applicants, as defendants, placed before the Supreme Court in the corresponding Supreme Court actions in which summary judgment for specific performance has been decreed. Precisely the same evidence has been placed before me by the applicants in relation to Application G8 in this Court. There are some differences from the evidence of the other applicants in the evidence relied upon in this Court by the applicant in Application G15. Where necessary, I will make separate reference to the evidence in the different Applications. It is a reasonable inference that the evidence before this Court in Applications G9 and G15 would be duplicated were the corresponding Supreme Court actions to proceed.

The Supreme Court Proceedings in which Specific Performance was Decreed

As the learned Supreme Court Judge who granted specific performance of the contracts the subject of Applications G9 and G10 in this Court observed, all of the alleged representations related, at the time at which they are said to have been made, to future conduct or events; in Applications G8, G9 and G10 the alleged representations related to an absence of penthouses from the "Princess Palm" building, the location of its swimming pool, and the identification of the car bays to which the respective applicants would be entitled; in Application G15 the alleged representations related to when the complex was to be completed, the number of towers of which it was to be comprised, and the construction and location of a squash and gymnasium centre; and in all Applications the alleged representations related to the floor areas of the respective units; and the maintenance levies payable.

The applicants accepted before me that the learned judge correctly held that, if the misrepresentations were innocent, they could not be relied upon by the applicants as defendants in the proceedings before him because of a protective clause (clause 8(d)(i)) in each of the contracts which precluded reliance by a purchaser on innocent misrepresentations. His Honour further rejected an attempt by the defendants in those proceedings to have specific performance refused in the exercise of his discretion on the basis that there had been "tricky conduct" on the part of the plaintiff there, which is the respondent in this Court.

Accordingly, his Honour concluded that the defendants were entitled to leave to defend only if the misrepresentation which they alleged had been made fraudulently. He stated that that required a conclusion as to the state of mind of the respondent at the relevant time. He concluded, further, that, on the material before him, the defendants had not established that the plaintiffs had such a state of mind as would warrant a conclusion that the misrepresentations had been made fraudulently. He considered it inappropriate to refuse summary judgment merely to allow the defendants to seek by discovery whether or not such a case could be made out.

The learned Supreme Court Judge, however, granted a temporary stay of execution of the judgments which he had pronounced to permit the defendant in those proceedings to apply to this Court in the proceedings which had been commenced here that day "for a further injunction or stay of or in respect of this judgment or its enforcement". It seems from what I was candidly told by Counsel for the respondent in the proceedings in this Court that his Honour was influenced to refuse a stay of the proceedings before him and to take the course which he did by the concession made in the Supreme Court by the respondent that this Court could, in an appropriate case, grant such an injunction or stay. The respondent did not seek to depart from that position in this Court, although arguing that these were not appropriate matters for such orders to be made and that they ought be refused. From what I was told, it also seems to have been common ground in the Supreme Court, and was, as I understood their submissions, accepted by both parties in this Court that the Supreme Court could not give effect to any contravention of the Trade Practices Act involved in the misrepresentation alleged but that this Court could, by reason of that Act, make orders which would overcome the effect of any decrees for specific performance. Neither party seems to have adverted in the Supreme Court to the question whether the alleged misrepresentations as to future events or conduct would constitute contraventions of the Trade Practices Act; that seems to have been assumed.

The Basis of the Applicants' Claims in this Court

However, no submission was made to me for the applicants that an innocent misrepresentation with respect to future events or conduct reflecting a belief conscientiously and reasonably held was either conduct which was misleading or deceptive or likely to mislead or deceive within the meaning of s.52 of the Trade Practices Act, a false representation within the meaning of s.52(aa), or a false and misleading statement within the meaning of s.53A. It would be appropriate at this interlocutory stage, and not inconsistent with any submission made before me on behalf of either applicants or respondent, for me to act upon a view which has been consistently adopted by a number of judges of this Court that, irrespective of whether representations as to future events or conduct constitute promises or predictions, they involve contraventions of the presently relevant provisions of the Act only if it is established that the belief of the respondent was at the time different from what was stated, or that the respondent did not believe what was stated, or was recklessly indifferent as to what was stated. Accordingly, an issue as to the respondent's state of mind at the relevant time is, in fact, central to these proceedings as it was to the proceedings in the Supreme Court.
The Alleged Contraventions of the Trade Practices Act

The representations alleged in sub-paragraphs 7(a) and (b) of the Statement of Claim in Application G15 may be put to one side immediately. They were pleaded in the following terms:

"(a) There would be four towers in the complex and that the four towers would be completed within four years of the commencement of the project.

(b) There would be a squash and gymnasium centre provided in the fourth tower."

Other considerations aside, there is no way of knowing at this point whether any such representations will prove to be correct or incorrect. No more can be alleged by the applicant than that the promise or prediction has not yet been fulfilled. However, nor has the period expired.

Further, I would not be prepared to find that the applicants in Applications G8, G9 and G10 of 1983 have shown a sufficient case to justify the grant of an interlocutory injunction by reference to certain of the representations which they allege.

For example, in those Applications it is alleged that it was represented that there would be a swimming pool overlooking an ornamental lake on the northern side of the building. The lake is, in fact, not associated with the "Princess Palm" building but with one of the other buildings in the development. However, at some point, these applicants were provided with a copy of a site plan showing the pool in the location referred to. There is cogent evidence that the pool location was altered prior to May 1981 and that its correct location is shown in Sales Advertising Brochures since that date. The relevant contracts were entered into in July 1981. The swimming pool has been installed, but further to the south, at the end rather than at the side of a tennis court which overlooks the lake. Nothing in the affidavits filed on behalf of the applicants in these proceedings seek to attribute any significance to the change of location of the swimming pool.

Another of the representations alleged by the applicants in Applications G8, G9 and G10 is that each applicant was to be entitled to a particular car bay identified on a plan of the carpark area. It is said that a different car bay has been allotted. The car bay to which each of the applicants became and is entitled under his or its contract was identified on the contract by a cross marked on a plan of the carpark area which formed part of the contract. No attempt was made to suggest why any of the car bays were preferable to any of the others.

The cases for the applicants in Applications G8, G9 and G10 are also weak at this point insofar as they relate to allegations that each entered into the relevant contract in reliance upon a statement by a salesman employed by a real estate agent for the respondent that there would be no penthouses in the "Princess Palm" building. A director of the respondents has sworn an affidavit upon which he was not cross-examined in which he says that the respondent did not construct the penthouses but that purchasers of units on the top floor have, by amalgamation, created "a penthouse style of unit", and that their doing so was beyond the control of the respondent.

The allegations which are common to all Applications are that representations were made as to the floor areas of the respective units and as to the maintenance levies which would be payable. There are differences in detail between what it is alleged was said by the salesman who procured the contracts which are the subject of Applications G8, G9 and G10 and what it is alleged was said by the saleswoman who procured the contract which is the subject of Application G15. The former is alleged to have said that the floor areas in respect of the units would be 12 squares and the latter that the floor area of the unit would be between 11 and 12 squares. The former is alleged to have said that the maintenance levy would be $7.00 per week and the latter is alleged to have said that the maintenance levy would be between $10 and $15 per week.

The only material before the Supreme Court in relation to such matters was affidavits on behalf of the defendants in those proceedings alleging that such representations had induced the contracts and had proved incorrect. The position before this Court was markedly different. In each of Applications G8, G9 and G10, affidavits were filed by a director of the respondent, the real estate salesman, and the respondent's architect although the latter's evidence did not deal with the matters now under consideration. In Application G15, an affidavit by the real estate saleswoman was filed. No affidavit was filed in Application G15 by the director of the respondent but the present interlocutory proceedings were heard together and were so conducted that it is not inappropriate for me to refer to his affidavits filed in the other Applications. The respondent denies that the alleged representations were made and further denies that the real estate salespersons had authority to make them. It is clear from the respondent's own evidence that if the representations were made they were not only incorrect but there was no warrant for them. The floor areas are between one-half a square and two squares less than what was stated if the representations were made. Further, the respondent at no material time intended that the floor areas of the units in question should be different from what they are. Nor did it ever intend that the maintenance levies in respect of the various units would be as the real estate salespersons allegedly said. On the contrary, the respondent's position is that it would not be possible to make a reasonable promise or prediction as to what the amount of a maintenance levy would be except on an annual basis, because the levies are intended to provide the body corporate, which is by Queensland legislation constituted upon the registration of a Building Units Plan, with funds sufficient to satisfy from time to time numerous variable expenditures in respect of such matters as insurance, electricity, gardening and maintenance of the building.

No doubt difficult questions can arise where applicants must establish the state of mind of a corporation: see Tesco Supermarkets Ltd v. Nattras (1972) A.C. 153; Universal Telecasters (Qld) Ltd v. Guthrie (1978) 2 A.T.P.R. 40-062. The respondent here further sought to establish by evidence that the real estate salespersons had no authority to make the alleged representations: but see Australasian Brokerage Ltd v. The Australian and New Zealand Banking Corp Ltd (1934) 52 C.L.R. 430, 450 ff. The respondent also urged that what was sworn to placed the respondent outside the operation of s.84 of the Trade Practices Act and submitted that the applicants could not here rely upon any ostensible authority which the salespersons may have had. These may be interesting arguments at the trial but, in my opinion, they are plainly inappropriate for resolution at this interlocutory point.

It may be that at the final hearings some attempt will be made by the respondents to rely on contractual provisions such as clause 8(f), the protective clause on the Sales Advertising Brochure of the real estate agency which dealt with the applicants in Applications G8, G9 and G10, or the dimensions on the floor plans in the Sales Advertising Brochure which each of the salespersons claimed to have produced or provided to the applicants in each Application. Further, there is material which may weaken the applicants' case in relation to the alleged representations with respect to the amount of the management levy. The contracts and attached documentation clearly indicated that a variety of management, letting, and administrative agreements might be entered into by the respondent or by the body corporate, and copies of the proposed agreements were scheduled to each contract. Outgoings were plainly envisaged, and it is obvious that the costs not only might greatly exceed what was allegedly represented to the various applicants but were probably indeterminable in advance and almost certain to alter. Further, included in the documentation attached to each contract was a Statement pursuant to s.49 of the Building Units and Group Titles Act 1980 (Qld), which showed that the estimated cost of a manager/caretaker to be appointed was of the same order as the management levy referred to in respect of the representations as to management levies, or at least that allegedly made to the applicants in Applications G8, G9 and G10.

The Existence of an Arguable Case of Contravention of the Trade Practices Act

I pass over any question of whether either s.53(aa) or s.53A may have any relevant operation in these proceedings. It is sufficient for the applicants' present purposes if they can establish a strong enough case of misleading or deceptive conduct which induced the contracts, subject of course to any question of balance of convenience.

Notwithstanding the reservations which I have with respect to the allegations made by the applicants, no attempt was made to diminish their evidence by cross-examination. In the circumstances, in my opinion, they have a sufficiently arguable case to justify interlocutory injunctions if otherwise appropriate. No sufficient reason exists for me to reject the applicants' sworn evidence that the representations were made and that they relied upon them in entering the contracts. It is true that the witnesses for the respondents have placed their denials on oath. However, this is not the time for resolving any such conflict.

The Respective Jurisdictions of this Court and the Supreme Court

Apart from the absence from the Supreme Court proceedings of the answering affidavits from the respondent (which played such an important part in these proceedings by remedying the deficiency in the case for the applicants by providing evidence as to the respondent's state of mind), the material evidence here and in the Supreme Court is relevantly identical as indeed are the issues. Which party is to succeed in each case, and the relief to be granted, depends wholly on the manner of resolution of the disputed factual issues, and the applications of appropriate legal principles to the findings thus made and the undisputed facts.

In the circumstances, it does not seem to me to be feasible to attend to the questions posed by the present applications for interlocutory injunctions without at least some exploration of the respective jurisdictions of this Court and the Supreme Court of Queensland. It does not appear helpful or conducive to the harmonious operation of the judicial system as a whole to search for distinctions between the nature or historical origins of the respective Courts and it seems empty to me to speak in this context of presumptions that Courts of general jurisdiction act within jurisdiction. The reality, in our federal judicial system, is that there is no Court of unlimited original jurisdiction. Whatever other approach might have been adopted, the result of the Constitution and the laws of the Commonwealth Parliament is that each of the Courts in our system has very real limits upon its jurisdiction which are subject to supervision by the High Court. Each of this Court and the Supreme Court of Queensland is a superior court of record. It may be broadly asserted that, since the role which this Court has been assigned to play in respect of disputes such as exist between the combatants in the present litigation is given it by legislation of the Commonwealth Parliament the validity of which has not been questioned, any interference caused to what would otherwise have been the position has to be tolerated. On the other hand, except to that extent, the jurisdiction which the Supreme Court would otherwise have had remains unimpaired and it is called upon, in the exercise of that jurisdiction, to give effect to the Trade Practices Act as part of the law of the Commonwealth in force in Queensland.

Relevantly, the jurisdiction of this Court stems from s.86 of the Trade Practices Act 1974 which provision is in turn grounded upon sub-s. 76(ii) and sub-ss.77(i) and (ii) of the Constitution. For present purposes, it is sufficient to state that the general jurisdiction of the Supreme Court rests on the Supreme Court Act of 1867 (Qld) and, derivatively, earlier New South Wales and Imperial legislation. The Supreme Court's federal jurisdiction is derived from sub-s. 39(2) of the Judiciary Act, 1903 which is in turn founded on sub-ss. 76(ii) and 77(iii) of the Constitution. Sections 76(ii) and 77 of the Constitution provide:

"76. The Parliament may make laws conferring original jurisdiction on the High Court in any matter -
. . .
(ii) Arising under any laws made by the Parliament;
. . .

77. With respect to any of the matters mentioned in the last two sections the Parliament may make laws -

(i) Defining the jurisdiction of any federal court other than the High Court;

(ii) Defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States;

(iii) Investing any court of a State with federal jurisdiction".

Section 38 of the Judiciary Act makes exclusive of the jurisdiction of the several Courts of the States the jurisdiction given to the High Court by s.75 of the Constitution. Section 39 of the Judiciary Act provides, so far as now material:

"39(1) The jurisdiction of the High Court, so far as it is not exclusive of the jurisdiction of any Court of a State by virtue of section 38, shall be exclusive of the jurisdiction of the several Courts of the States, except as provided in this section.

(2) The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it, except as provided in section 38, and subject to the following conditions and restrictions:-

(a) A decision of a Court of a State, whether in original or in appellate jurisdiction, shall not be subject to appeal to Her Majesty in Council, whether by special leave or otherwise.
. . . "

Section 86 of the Trade Practices Act provides:

"86. Jurisdiction is conferred on the Court to hear and determine actions, prosecutions and other proceedings under this Part and that jurisdiction is exclusive of the jurisdiction of any other court, other than the jurisdiction of the High Court under section 75 of the Constitution".

This is not the first occassion on which parallel proceedings have been commenced in this Court and a State Supreme Court. One course which has been adopted on occasion has been an application for a stay of proceedings in one court or the other. I will say something more of that later. There have also been a number of proceedings in the Supreme Court of New South Wales in which defences based on the Trade Practices Act have been raised: see Hollywood Premier Sales Pty Ltd v. Faberge Sales (Australia) Pty Ltd (1976) 11 A.L.R. 18; Clae Engine (Qld) Pty Ltd v. Donaldson Australia Pty Ltd (1977) 14 A.L.R. 697; Magna Alloys and Research Pty Ltd v. Bradshaw (1977) 3 T.P.C. 71; W.R. Carpenter Finance Corporation v. Maloney (1979) A.T.P.R. 40-123 and Westco Motors (Distributors) Pty Ltd v. Palmer (1979) 37 F.L.R. 140. In none of those, except perhaps the latter in which the point did not have to be decided, does there seem to have been consideration given to any jurisdictional problems. More recently, a defence based upon the Trade Practices Act was raised and held to be within jurisdiction in the Supreme Court of New South Wales in Bestoys Pty Ltd v. George Wills and Co Ltd (1981) A.T.P.R. 40-225. In the Supreme Court of Queensland, in Bunny Industries Ltd v. Jones (1979) 53 F.L.R. 160, a claim based in part upon alleged contraventions of Part IV of the Trade Practices Act was held to be within jurisdiction. I will come back to the latter two decisions. For the moment, it is sufficient to observe that, to the extent that questions of jurisdictional conflict have been considered in the cases mentioned, attention has been confined to the literal terms of s.86 of the Trade Practices Act. It is arguable that that is too narrow an approach and that the exclusive jurisdiction to hear and determine "actions, prosecutions and proceedings" under Part VI of the Trade Practices Act provides, once enlivened, an exclusive jurisdiction to deal with the entire "matter" between the parties in the special sense in which that concept has been developed in relation to the exercise of federal jurisdiction.

Reference in some detail is necessary to four decisions of the High Court. Two, Felton v. Mulligan (1971) 124 C.L.R. 367 and Moorgate Tobacco Company Ltd v. Philip Morris Ltd (1979) 145 C.L.R. 457 concerned the nature and extent of federal jurisdiction which, in each case, it was held had been exercised by the Equity Division of the Supreme Court of New South Wales. The other two, Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd and United States Surgical Corporation v. Hospital Products International Pty Ltd (1981) 55 A.L.J.R. 120, concerned the nature and extent of this Court's jurisdiction in a proceeding initiated in this Court in reliance upon s.86 of the Trade Practices Act. Although the result of these four cases is to establish certain propositions quite clearly, there are some areas of present relevance which have not yet been authoritatively and exhaustively explored. Although it may be a somewhat unusual course, it seems to me that both what is now established and the questions which remain open for debate are best seen by extracting quite extensive quotations from the judgments which have been delivered in the High Court.

Federal Jurisdiction in Matters in State Courts

In each of Felton v. Mulligan and Moorgate Tobacco Company Ltd v. Philip Morris Limited, the question arose whether, in proceedings before it in which judgment had been delivered, the Supreme Court of New South Wales had been exercising federal jurisdiction. If it had, no appeal lay to the Privy Council: s.39(2) of the Judiciary Act. The application for leave to appeal was in each case removed from the Supreme Court of New South Wales into the High Court pursuant to s.40 of that Act.

In Felton v. Mulligan, supra, the Supreme Court of New South Wales had dismissed a suit brought by a woman against the legal personal representatives of her deceased former husband in which she sought a declaration that she was entitled to be paid certain sums of money by way of periodical maintenance under a deed which she had entered into with her former husband. A decree nisi for the dissolution of their marriage earlier given by the Divorce Division of the Supreme Court had purported to sanction the deed pursuant to s.87(1)(k) of the Matrimonial Causes Act 1959 (Cwlth). The executors defence, which was upheld in the Supreme Court, was that the deed was void on the ground that it attempted to oust the jurisdiction of the Court to fix by its order a proper sum to be paid by way of maintenance. The High Court held, by majority, that the New South Wales Supreme Court had been exercising federal jurisdiction in the proceedings on the deed.

McTiernan J. was of opinion that that was so because the action in the New South Wales Supreme Court was a "matrimonial cause" as defined in the Matrimonial Causes Act. The other three members of the majority, Barwick CJ., Windeyer and Walsh JJ., were of opinion that it was the defence, not the claim, by virtue of which the Supreme Court had been invested with federal jurisdiction. Of the minority, Menzies J. agreed that federal jurisdiction could be attracted to a State court by an issue raised by defence (pp. 382-383). Neither Owen J. nor Gibbs J., the other members of the minority, found it necessary to decide that point. The fundamental difference between the views of the majority and of the minority concerned whether, on analysis, the defence of the executors merely incidentally involved the interpretation of the Matrimonial Causes Act or was dependent upon that Act.

At the top of p.374, Barwick CJ. said:

"The critical question in the case is whether the defence did involve the exercise of federal jurisdiction by the Supreme Court. It would do so if the matter before the Supreme Court became or involved by reason of the defence raised to the applicant's claim, either wholly or partly a matter arising under a law made by the Parliament, in this case the Matrimonial Causes Act: see Constitution s.76(ii) and Judiciary Act s.39(2). Further the matter arising under a law of the Parliament will have arisen if the suit could have been disposed of by deciding the matter whether or not the suit was so disposed of: cf. Nelungaloo Pty Ltd v. The Commonwealth ((1952) 85 C.L.R. 545); The Commonwealth v. Bank of New South Wales ((1949) 79 C.L.R. 497. It is of course not enough that a law made by the Parliament must be construed in the course of the decision of the case. There must be a matter arising under a law of the Parliament. The contrast between the language of s.76(i) and 76(ii), is relevant in this connexion. The point at which interpretation of the federal statute, prima facie an apparently incidental consideration, may give rise to a matter arising under the statute is not readily expressed in universally valid terms. But the distinction between the two situations must be maintained."

One reason why in his Honour's view the defence raised a matter arising under the Matrimonial Causes Act was that it implicitly asserted the invalidity of the order made in the matrimonial proceedings sanctioning the deed (p.375). That was also the view of Windeyer J. (p.391). Barwick CJ. considered that there was an additional reason why the defence raised a matter arising under the Matrimonial Causes Act. The defence necessarily involved, in his opinion, the assertion that the deed offended the provisions of the Matrimonial Causes Act (p.377); compare the views of Walsh J. at pp. 407-408.

The views of Menzies J. as to what constitutes a matter arising under a Commonwealth law for the purpose of investment of federal jurisdiction, as expressed at pp. 382-383, were not relevantly different from the passage quoted above from the judgment of Barwick CJ. at p.374. Menzies J. said:

"It is to be observed from s.76(i) and (ii) of the Constitution that there is a difference between a matter arising under a law and a matter involving the interpretation of a law. A matter may involve the interpretation of a law without arising under that law. Thus, for instance, if, upon a claim for damages for negligence at common law, it became necessary to interpret some statutory provision imposing some duty upon the defendant, the litigation would involve the interpretation of the statutory provision but would not arise under it. A matter arises under a law when it is necessary in litigation to determine whether that law confers a right or affords a defence which is an issue in the litigation. A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law. It is to be observed that there is a difference between a 'proceeding', arising under a law and a 'matter' arising under a law. A 'proceeding' arises under a law only when it is authorized by that law; see Collins v. Charles Marshall Pty Ltd ((1955) 92 C.L.R. 529, at p.537). A 'matter' need not be a 'proceeding'; it may be part of a proceeding, e.g. a defence that the law authorizing the proceeding is unconstitutional. So it is that a matter may arise under a law made by the Parliament in a proceeding, which does not arise under that law."

The views of Windeyer J. in relation to the same matter were also to similar effect. They are summarised in a passage at the foot of p.388, where his Honour said:

"In my view a matter does not arise for adjudication under a law made by the Commonwealth Parliament unless a statute is relied upon as giving a right claimed or as the direct source of a defence asserted. It is not easy to formulate with precision criteria which will suffice in every case."

There is no real purpose in discussing here the different effect attributed by the minority to the defence in Felton v. Mulligan, supra, nor their reasons for so deciding. Further, Owen J. did not expound any statement of principle, and it is more convenient to glean the views of Gibbs J. from the later decision of Moorgate Tobacco Co Ltd v. Philip Morris Ltd., supra, to which he was also a party. However, the judgment of Walsh J. in Felton v. Mulligan, supra, is of importance.

Walsh J.'s views as to when a matter is one arising under a law made by the Commonwealth Parliament were not materially dissimilar from those of Barwick CJ. Menzies J. and Windeyer J. set out above. At p.408, Walsh J. said:

"A comparison between the terms of s.76(i) and those of s.76(ii) of the Constitution indicates that a distinction is to be drawn between a matter 'arising under' a law of the Parliament and a matter which involves the interpretation of such a law. The fact that the interpretation of a law is involved does not necessarily mean that there is a matter arising under the law. But, in my opinion, there is a matter arising under the law if the source of the right claimed by the plaintiff or applicant or the source of a defence which asserts that the defendant or respondent is immune from the liability or obligation alleged against him is a law of the Parliament."

Earlier at pp. 402-403, his Honour had said that the question whether a State court is invested with federal jurisdiction in particular proceedings "cannot be determined once and for all as soon as the proceedings are instituted and the claim made by them is formulated. The 'federal' questions may arise at a later stage". His Honour then proceeded to quote with approval a passage from Miller v. Haweis (1907) 5 C.L.R. 89 at p.93 including the following sentence:

"A question of federal jurisdiction may be raised upon the face of a plaintiff's claim, as in Baxter v. Commissioners of Taxation (N.S.W.) ((1907) 4 C.L.R. 1087 at p.1136), or may be raised for the first time in the defence, but as soon as the question is raised, if the jurisdiction of the State court has been taken away, it must stay its hand."

At pp. 403-404, his Honour continued:

"An objection which may be urged against that view may be stated as follows. Section 39(2) grants federal jurisdiction in the matters in which this Court has original jurisdiction or may have original jurisdiction conferred upon it, that is to say, the matters enumerated in ss. 75 and 76 of the Constitution. If jurisdiction were to be conferred in general terms upon this Court in all matters arising under any laws made by the Parliament, it would be essential that from the moment of the institution of the proceedings it should be known whether this Court had jurisdiction or not. Therefore, the federal nature of the matter must be apparent from the claim itself. It would not be possible to allow the question of jurisdiction to remain in abeyance, so to speak, until all the issues were known. But I am of opinion that such arguments cannot lead to the conclusion that the invested federal jurisdiction of a State court can never be attracted by a matter raised by way of defence. The difficulty which is posed by the arguments in relation to the jurisdiction of this Court is perhaps of theoretical rather than of practical significance. But, in any event, it cannot be decisive, in my opinion, of the question whether the federal jurisdiction, with which the State courts have been invested, may become exercisable by reason of matters raised by a defence. I am of opinion that it may be attracted by a defence or by an answer which is made to a defence if a "title, right, privilege, or immunity", upon which the defence or its rebuttal is founded, is given by and depends upon the Constitution or upon a Commonwealth law. In a prosecution based upon a State law, if the defence is raised that the defendant is immune by reason of s.92 of the Constitution from any obligation under that law, the State court exercises federal jurisdiction and, consequently, an appeal lies from its decision to this Court pursuant to s.39(2)(b) of the Judiciary Act. In such cases it is only because the defence raises a constitutional question that the jurisdiction which is exercised is federal: see e.g. Western Interstate Pty Ltd v. Madsen ((1907) 4 C.L.R. at p.1136). See also, in relation to a defence relying upon s.109 of the Constitution, Collins v. Charles Marshall Pty Ltd ((1961) 107 C.L.R. 102 at p.107)."

At p.410, Walsh J. expressed the view that there were not two or more matters involved in the proceedings in the New South Wales Supreme Court's Equity Division founded upon the deed of which one was a "federal" matter and the others "non-federal". In his view, in the proceedings in question there were no severable "non-federal" questions. His Honour expressed support for the view that nothing is so apt to promote confusion and difficulty as an attempt to dissect out of an entire legal question one of the component issues it involves and to submit it for decision in artificial isolation, and said that in the present case the decision was really given upon one entire legal question.

Finally, his Honour turned to the question whether, although in the proceedings before it the New South Wales Supreme Court in Equity had been invested by the Judiciary Act with federal jurisdiction, it nonetheless retained separately an independent grant of jurisdiction from another source. At pp. 411-413, his Honour said:

"Section 39(1) of the Judiciary Act took away the jurisdiction of the State courts in matters in which this Court had jurisdiction. It did so by making the jurisdiction of this Court exclusive (except as provided in the section) of that of the State courts. No provision of the Act was expressed to take away the jurisdiction of the State courts in those matters in which this Court did not have original jurisdiction but in which original jurisdiction might be conferred upon it. By s.39(2) the courts of the States were invested with federal jurisdiction in both classes of matter.

In my opinion the problem must be resolved by treating the Commonwealth law as paramount and as excluding, in relation to the matters to which that law applies, the operation of the laws under which the State jurisdiction of the court would be exercised. The equitable jurisdiction of the Supreme Court of New South Wales in this case depended upon Imperial legislation (including the statute 9 Geo. IV c.83.s.11) and legislation of the State of New South Wales (including the Equity Act 1901-1968): see Parker's Practice in Equity (N.S.W.) 2nd ed. pp.4-6. The supremacy of the laws of the Commonwealth over the legislation of the State of New South Wales is established by covering cl. 5 and s.109 of the Constitution. In so far as it may be necessary to assert their supremacy over any Imperial legislation from which the Court derived a power to adjudicate, authority for doing so is to be found in The Commonwealth v. Limerick Steamship Co Ltd ((1924) 35 C.L.R. 69).

Doubts have been expressed by Professor Cowen and by Professor Sawer as to the availability of s.109 to meet the problem under discussion: see Cowen's Federal Jurisdiction in Australia p.195; and Sawer, in Essays on the Australian Constitution, edited by Else-Mitchell 2nd ed., p.86. Those writers have suggested that s.39 does not disclose an intention "to cover the field", but, on the contrary, indicates that the intention was not to override, in all the matters to which s.39(2) refers, the jurisdiction which already belonged to the State courts. But in spite of difficulties created by the manner in which s.39 has been framed, my conclusion is that the laws under which the State courts would exercise their "belonging" jurisdiction are made inoperative by s.39. If sub-s. (2) thereof had simply invested the State courts with federal jurisdiction without adding the conditions and restrictions to which the investing was expressed to be subject, there would be perhaps no conflict with any laws under which the State courts already had jurisdiction. But when the conditions which have been attached to the grant of federal jurisdiction are considered, I think it should be held that Parliament intended that in the federal matters to which the section relates the only jurisdiction to be exercised by the State courts was to be federal jurisdiction, the exercise of which would be subject to the specified conditions."

In Moorgate Tobacco Company Ltd v. Philip Morris Ltd., supra, the plaintiff sought a declaration in the Supreme Court of New South Wales that it was the proprietor of the names "Kent Golden Lights" and "Golden Lights" as applied to cigarettes and a declaration that the respondents were not proprietors of the trade mark "Golden Lights". It also sought injunctions, one restraining the defendants from using the names "Marlboro Golden Lights" and "Golden Lights" in Australia and another restraining the defendants from proceeding with an application to register the trade mark "Golden Lights". The plaintiff's contentions, broadly stated, were that the defendants' actions were in breach of a licencing agreement between the plaintiff and the first defendant and fiduciary obligations owed by the first defendant to the plaintiff and, alternatively, that the application for registration of the trade mark constituted unfair competition. The plaintiff's claims for relief were founded upon contract, trust or fiduciary obligation and the tort of unfair competition. In its pleadings and in presenting its case at the trial, the plaintiff raised for determination issues concerning the proprietorship of the names and the mark, although no claim was advanced for passing-off. The Court dismissed the action based on contract, trust and tort, without having to decide any matters arising under the Trade Marks Act 1955 which it left to be disposed of in opposition proceedings under the Trade Marks Act. The High Court held that in respect of the entire proceedings, the Supreme Court of New South Wales had been exercising federal jurisdiction and that no appeal lay to the Privy Council.

A joint judgment was delivered by Stephen, Mason Aickin and Wilson JJ. Barwick CJ. agreed with their judgment, as did Murphy J. if, contrary to his preferred view, appeals in non-federal matters were still able to be taken to the Privy Council. Gibbs J. delivered a separate judgment in which he arrived at the same conclusion as the other judges. In this case, differently from Felton v. Mulligan, supra, it was the claim not the defence which invested the Supreme Court with federal jurisdiction by raising for judicial determination questions as to the rights which owed their existence to the Trade Marks Act or which could only be enforced by virtue of that Act.

At pp. 472-473, Gibbs J. said:

". . . It is well established that where the High Court is invested with jurisdiction to determine a matter of a particular kind, the Court is 'clothed with full authority essential for the complete adjudication of the matter' and not merely for the decision of the matter which attracted jurisdiction: R. v. Bevan; Ex parte Elias and Gordon ((1942) 66 C.L.R. at p.465 and pp 480-481). In other words, once the jurisdiction is attracted, the Court can deal with all questions necessary to be dealt with to enable the case to be finally disposed of, except such matters as are severable and distinct from that which attracted jurisdiction. This principle has been recognized in a number of cases: R. v. Carter; Ex parte Kisch ((1934) 52 C.L.R. 221, at p.223-224); Hopper v. Egg and Pulp Marketing Board (Vict) ((1939) 61 C.L.R. 665 at pp 673-674, 680-681); Carter v. Egg and Egg Pulp Marketing Board (Vict) ((1942) 66 C.L.R. 557, at pp 580, 585-587, 602); Parton v. Milk Board (Vict) ((1949) 80 C.L.R. 229, at pp 249, 257-258). In my opinion, a similar principle applies when a State court is invested with federal jurisdiction. By the investiture, the State court acquires jurisdiction to deal with all matters necessary to determine the whole case (except matters which are severable and distinctr from that which attracted jurisdiction). The consequence is that (except as to severable 'non-federal' questions, to use the words of Walsh J. in Felton v. Mulligan ((1971) 124 C.L.R. at p.41) the court will exercise federal jurisdiction in the whole case. The jurisdiction does not cease to be federal because the matter that attracted jurisdiction is either not dealt with, or is decided adversely to the plaintiff. Where there is no severable 'non-federal' question, the State court is invested with federal jurisdiction to hear and determine the whole case, and s.109 of the Constitution prevents the inconvenient result that the State court will exercise concurrently State and federal jurisdiction: of Felton v. Mulligan ((1971) 124 C.L.R. at p.373).

In the present case, the matters that arose under the Act were not severable and distinct from the rest of the case. The parts of the judgment to which I have already referred illustrate this. Indeed, as Helsham CJ in Eq. said, in reality the fight was over who was to get on the register of trade marks in Australia. The question arising under the Act was intimately bound up with the other matters that fell for decision."

At pp. 469-470, his Honour had rejected a submission on behalf of the unsuccessful plaintiff that the manner in which the case had been presented had meant that the federal element had vanished from the case so that the court did not exercise federal jurisdiction but State jurisdiction only. Further, at pp. 470-471, his Honour rejected the assumption upon which that argument was based, namely that the Supreme Court was invested with two jurisdictions from two sources, so that if it became no longer appropriate to exercise federal jurisdiction, State jurisdiction would remain. His Honour expressly approved what had been said by Walsh J. in Felton v. Mulligan, supra. At p.471, he said:

"Because of the view which I took in Felton v. Mulligan ((1971) 124 C.L.R. 367), it was unnecessary for me in that case to express a view on the question now under discussion. However, having now considered that question, I concur in what Walsh J. said on this aspect of the matter. I find it inconceivable that the Parliament could have intended that the conditions attached to the exercise of federal jurisdiction might be rendered nugatory either by the parties or by the State court. The law of the Parliament investing the State court with federal jurisdiction, and imposing conditions on its exercise, therefore is inconsistent with a law of the State which confers jurisdiction to do the same thing but would produce different consequences: cf Ffrost v. Stevenson (1937) 58 C.L.R. at 573). And the power of the Parliament to invest a State court with federal jurisdiction, which includes a power to impose conditions on the exercise of the jurisdiction so invested, must extend to ensure that the exercise of the jurisdiction and observance of the conditions are made effective."

In their joint judgment, Stephen, Mason, Aickin and Wilson JJ. also expressly agreed with what had been said by Walsh J. in Felton v. Mulligan, at pp 411-413, and with the reasons which he then gave for "treating the Commonwealth law as paramount and as excluding, in relation to the matters to which that law applies, the operation of the laws under which the State jurisdiction of the Court would be exercised. Their Honours continued:

"The supremacy of Commonwealth law in this respect is based on s.109 of the Constitution and covering cl.5."

The following passages amply demonstrate their Honours' reasons for concluding that in respect of the totality of the action the Supreme Court had been exercising federal jurisdiction. At pp. 476-477, they said:

"It was common ground between the parties that the Supreme Court was invested by s.39(2) of the Judiciary Act with federal jurisdiction to determine matters arising under the Trade Marks Act, being matters arising under a law made by the Parliament (Constitution,s.76(ii))). Moreover, the parties were in agreement that a matter is a s.76(ii) matter if, being a right, title, duty, privilege, protection or immunity, it 'owes its existence to Federal law or depends upon Federal law for its enforcement' (R. v. Commonwealth Court of Conciliation and Arbitration; ex parte Barrett ((1945) 70 C.L.R. 141, at p.154), per Latham C.J. Felton v. Mulligan ((1971) 124 C.L.R. at pp. 387, 408, 416). Nor was it in contest that a matter pleaded by way of claim for relief, will attract an exercise of federal jurisdiction (see Miller v. Haweis ((1907) 5 C.L.R. 89 at p.93); Felton v. Mulligan ((1971) 124 C.L.R. 367). In the result it was accepted that if in the proceedings there arose an issue as to the existence or non-existence of a right created by the Trade Marks Act the Supreme Court was exercising federal jurisdiction.

However, the parties were in dispute as to when a matter 'arises' within the meaning of s.76(ii), so as to attract the exercise of federal jurisdiction. The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. So too federal jurisdiction is attracted if the court finds it necessary to decide whether or not a right or duty based in federal law exists, even if that matter has not been pleaded by the parties. But the converse is not true. If a federal matter is raised on the pleadings federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds.
. . .
. . . Consequently, if the pleadings attracted federal jurisdiction by raising a s.76(ii) matter for determination, that jurisdiction was not lost by subsequent disclaimer or by the primary judge's failure to decide the matter."

At p.480, they said:

"In this case the proprietorship issues were raised directly for decision on the pleadings in the relief sought and in the presentation of the applicant's case. . . . Indeed, both the pleadings and the manner in which the case was fought create the strong impression in our minds that registration of the trade mark "Golden Lights" was the real bone of contention between the parties. What is more, many of the issues which arise in the case under the contract, trust and fiduciary obligation claims would have inevitably arisen for decision in opposition proceedings. In these circumstances, we find it impossible to conclude that the issues which arose under the Trade Marks Act were merely an 'incidental consideration' to use the expression of Barwick CJ. in Felton v. Mulligan (1971) 124 C.L.R. at p.374. They were directly pleaded and asserted by the applicant with a view to obtaining registration of a trade mark.

The important consideration which remains is whether there was room in the case for the exercise of any non-federal jurisdiction."

At p.481, they continued:

"In Felton v. Mulligan (1971) 124 C.L.R. p.373, Barwick CJ observed that if federal jurisdiction is attracted it is exercised throughout the case 'unless perhaps there is some completely disparate claim constituting in substance a separate proceeding'. In that case Walsh J. (1971) 124 C.L.R. p.410, with whom Barwick CJ agreed thought that there was no 'severable', non-federal question and that 'the decision was really given upon one entire legal question'.

At p.482, they said:

"The observations of Barwick CJ and Walsh J. in Felton v. Mulligan ((1971) 124 C.L.R. 357) reflected what had earlier been stated in a different context by Latham CJ in Carter ((1942) 66 C.L.R. 557). There, the plaintiffs had joined to a claim for a declaration of invalidity on constitutional grounds of three State statutes and a regulation a severable non-federal claim for an account of the defendant's dealings with the plaintiff and an order for payment of any amount found due on the taking of such account.
. . .
In Parton v. Milk Board (Vict) (1949) 80 C.L.R. 229, at 258), Dixon J. said that the Court had jurisdiction to deal with an attached non-federal claim because, unlike Carter's Case ((1942) 66 C.L.R. 557), it was not "collateral to and severable from that involving the Federal questions". See also P.J. Magennis Pty Ltd v. The Commonwealth ((1949) 80 C.L.R. 382, at p.425.)"

Having, early on p.482, expressed the view that if two claims arise out of common facts and transactions, they cannot be described as distinct and unrelated and that accordingly they are non-severable, the joint judgment continued at p.483:

"In this case many of the questions arising on the pleadings would have been relevant to the proprietorship issues and therefore incidental to the determination of them. It is true that the applicant's case for damages and an account of profits had its genesis in contract, fiduciary obligation and unfair competition. It was therefore non-federal in character. However, both the federal and non-federal cases presented by the applicant rested on what was a common substratum of transactions involving a plurality of issues of fact giving rise to questions of law some of which were common to both cases. So inextricably mixed and interwoven were the two cases that it would be a task of overwhelming difficulty to identify with precision the extent to which, and the respects in which, the Supreme Court was exercising non-federal jurisdiction, that is, jurisdiction in respect of issues which were not incidental to matters arising under the Trade Marks Act. The applicant's non-federal claim was not distinct from and unrelated to the federal claim; in the words of Barwick C.J. in Felton v. Mulligan ((1971) 124 C.L.R. at p.373), the applicant's non-federal case was not a 'completely disparate claim constituting in substance a separate proceeding'."

Although the High Court was in each of those cases concerned with the exercise of federal jurisdiction by a State court and not this or any other federal court, the reasoning which led the High Court in both cases to conclude that, in respect of the totality of the proceedings before it, the Supreme Court was exercising federal jurisdiction is directly applicable to the definition of the nature and extent of this Court's exclusive jurisdiction under s.86 of the Act. The correspondence between the two questions was recognised by the references to Felton and Moorgate in the Philip Morris Incorporated and United Surgical Corporation Cases and by the statements of the issues there involved by Mason J., with whom Stephen J. agreed. At p.136, 1st column B-D, his Honour said:

"To what extent, if at all, can the Commonwealth Parliament confer jurisdiction on a federal court to hear and determine a claim for relief based in non-federal law when that claim for relief is joined with a claim for relief based in federal law? This is the important issue which underlies this case. The answer to the question will have a marked impact on the jurisdiction of the Federal Court, on the scope of federally invested jurisdiction exercised by State courts and on the content of non-federal jurisdiction exercised by State courts."

Before turning to Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd and United States Surgical Corporation v. Hospital Products International Pty Ltd, supra, it is convenient to refer again to the decision of the Supreme Court of New South Wales in Bestoys Pty Ltd v. George Wills and Co Ltd, supra, and the decision of the Supreme Court of Queensland in Bunny Industries v. Jones, supra.

In the former case, the plaintiff sued the defendant for alleged breaches of a written agreement for the distribution of toys. The defendant not only denied the alleged breaches of the agreement, but contended that certain of the terms of the agreement were exclusionary provisions or provisions which had the purpose or had or were likely to have the effect of substantially lessening competition contrary to s.45(2) of the Trade Practices Act and/or that the plaintiff had, by the agreement, engaged in the practice of exclusive dealing contrary to sub-s. 47(1) of that Act. The defence alleged that by reason of those breaches of the provisions of the Act by the plaintiff the agreement was unenforceable or in the alternative void for illegality. There was no suggestion that proceedings had been instituted in this Court. Rogers J. said at p. 43,043 -

"It is thus to be perceived that when sec. 86 provides for the exclusive jurisdiction of the Court, that is limited to 'actions, prosecutions and other proceedings under this Part'. To determine a mere defence to an action structured on the basis of the provisions of the Act is not to hear or determine an action or prosecution in any of the accepted senses of those words. In the context of Pt IV of the Act, an action is one for damages pursuant to sec. 82 and no doubt proceedings for a pecuniary penalty pursuant to sec. 76 and for injunctive relief under sec. 80 could also be so described. Proceedings pursuant to sec. 79 are, no doubt, aptly described as prosecutions whilst 'other proceedings' are given full meaning and content when one has regard to the provisions of sec.81 and perhaps sec. 87. None of the expressions in sec. 86 are, in my opinion, apt to confer exclusive jurisdiction on the Federal Court in an action otherwise within the jurisdiction of a State court, when all that is sought to be done is to rely by way of defence upon some matter which constitutes an infringement of the provisions of Pt IV of the Act. The section takes as the criteria for its application some proceedings initiated pursuant to one or other of the heads of jurisdiction conferred by various provisions in Pt IV. A mere defence is no way associated with Pt VI of the Act."

In Bunny Industries Ltd v. Jones, supra, the plaintiff's statement of claim pleaded a number of causes of action against the several defendants. One allegation made was that certain of the defendants had conspired to procure other defendants to breach - obligations owed to the plaintiff under a contract and thereby caused loss to the plaintiff. Another of the paragraphs of the Statement of Claim alleged that acts were done "pursuant to and in furtherance of the said conspiracy", which acts were alleged to constitute unlawful conduct because in contravention of s.46 of the Trade Practices Act. The conduct in question was alleged to have caused loss to the plaintiff.

The plaintiffs also brought proceedings in this Court to recover such loss and damage.

In the Supreme Court, Dunn J. refused to strike out those matters in the Statement of Claim which the defendants contended were within the exclusive jurisdiction of this Court or to make an order staying that part of the Supreme Court action by which the plaintiff claimed "to recover loss or damages suffered by the conduct of the third and fourth defendants done in contravention of s.46 of the said Act", i.e. the Trade Practices Act.

As I read the learned judge's reasons for judgment, his Honour held that in addition to giving a cause of action under the Trade Practices Act the relevant - allegations also constituted an action at common law. At p.163 he said:

"Counsel for the respondent to the summons submitted that the allegation of illegality was an essential part of his cause of action at common law, and that the Act, although it created a new cause of action, did not purport to impair my jurisdiction to try common law actions such as that which had been brought by his client.

I have concluded that the submissions of counsel for the respondents are correct. The general rule is, of course, that the jurisdiction of superior courts is not taken away except by express words or necessary implication . . .
An action at common law is not aptly described as an action "under this Part" within the meaning of s.86; there is no necessary implication that it is such an action."

His Honour then proceeded to decline to stay the proceedings in the Supreme Court until after the outcome of the proceedings in this Court because of differences in parties and in the ambit of discovery, and also because "the cause of action in the Federal Court was the statutory cause of action and derived from the Trade Practices Act which I have discussed, a different cause of action from that which is relied on in the Supreme Court".

If it be assumed that the decisions in Bestoys and Bunny Industries are correct, and that s.86 of the Trade Practices Act posed no obstacle to the jurisdiction of the respective Supreme Courts in those cases, it seems that the jurisdiction exercisable by each of the State courts would have been federal jurisdiction, and that not merely in respect of the aspect which involved the Trade Practices Act but in respect of the whole action save any disparate and severable claim. Further, subject to the true effect of s.86, each Court would also have had federal jurisdiction to determine any other claim or defence which, not being disparate or severable, fell within the "matter" before the Court for determination. A consequence would be that any appeal involving the federal matter including the Trade Practices Act would not be to the Full Court of this Court but to the Full Court or Court of Appeal of the State.

The Nature and Extent of this Court's exclusive jurisdiction under s.86 of the Trade Practices Act

It is appropriate to turn at this juncture to the decisions of the High Court in Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd, and United States Surgical Corporation v. Hospital Products International Pty Ltd. Each of those decisions related to proceedings in this Court which were removed into the High Court pursuant to s.40 of the Judiciary Act because of questions raised as to this Court's jurisdiction. In the proceedings commenced by Philip Morris Incorporated, the plaintiffs sought injunctions to restrain the defendant from acting in contravention of ss. 52 and 53 of the Trade Practices Act 1974 and injunctions to restrain the defendant from passing off its goods and business as those of the plaintiffs. The plaintiffs also asked for an order for the delivery up of offending materials, damages, an account of profits, and a mandatory injunction compelling the defendants to assign to the plaintiffs a trade mark application which it had made or to withdraw the application. In the proceedings commenced by United States Surgical Corporation, the relief which it claimed, as described by Mason J. at p.142, 1st column C-E, was as follows:

"(a) That the respondents have engaged and are engaging in conduct that is misleading or deceptive within the meaning of s.52 of the Trade Practices Act.

(b) That the respondents have infringed and are infringing the applicant's copyright in literary works, being books entitled "Stapling Techniques General Surgery";

(c) That the respondents are, without the authority of the applicant, using and communicating confidential information the property of the applicant;

(d) That the respondents have engaged in and are engaging in unfair competition by imitating or copying the applicant's products and by authorizing the manufacture of products in accordance with the applicant's design;

(e) That the respondents have passed of and are passing off their goods and their business as the applicant's goods and as the applicant's business; and

(f) That the respondents are marketing surgical stapling equipment which is unsuitable for its intended purpose."

In neither proceedings was there any cross-claim by the respondent.

Barwick CJ and Murphy J. were of opinion that this Court had jurisdiction to decide the totality of the claims in each action, but their respective reasons were different. The approach of Barwick CJ corresponded broadly with that of Gibbs J. and that of Mason J. (with whom Stephen J. agreed). Each found the solution in what Barwick CJ described as "settled doctrine" and in the following passage at p.125, 2nd col. B-C, Barwick CJ said:

"It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted federal jurisdiction. It extends, in my opinion, to the resolution of the whole matter between the parties."

Gibbs J. said at p.133, 2nd col, D-F:

"The question that arises is whether, and in what circumstances, the jurisdiction of the Federal Court once attracted in respect of a matter arising under a law of the Parliament, is wide enough to enable the court to decide questions which it would clearly have no jurisdiction to entertain if made in separate proceedings. The court can only do so if those questions form part of the matter which attracts jurisdiction.

. . . it is necessary, in every case where a question of this kind arises, to decide what is the subject matter for determination that constitutes the "matter" which attracts jurisdiction. Such a matter may involve a number of questions not all of which in themselves are of a kind described in s.73 or s.76, and the court having jurisdiction may deal with all those questions."

At p.137, first column D, Mason J. spoke of the need "to take account of the scope and extent of the jurisdiction conferred on the Federal Court by s.86 of the Trade Practices Act". On the same page, at second column F to the end, he said:

". . . The federal jurisdiction which s.86 confers on the Federal Court in the present case is jurisdiction in relation to 'matters' arising under a law made by the Parliament (Constitution s.76(ii)). Because s.86 refers to 'actions, prosecutions and other proceedings under this Part' and Pt VI provides for actions, prosecutions and proceedings in which penalties and fines may be imposed and injunctions and damages awarded (see ss. 76, 77, 79, 80 and 82), s.86 is a law which defines the jurisdiction of a federal court with respect to 'matters' mentioned in s.76(ii) pursuant to s.77(i) and makes that jurisdiction exclusive of that which belongs to the States pursuant to s.77(ii)."

Different views were expressed as to what constitutes the "matter" which the Court has jurisdiction to determine. Dealing with how the "matter" involved in a case is to be identified, and thus how the range and extent of federal jurisdiction exercisable by a court is to be determined, Barwick CJ said at p.124, second column D-G:

". . . the matter will not be confined to the "cause of action", if any be asserted by the moving party, cause of action in the sense of a particular legal basis for the relief which is sought by the one party or, for that matter in the case of a cross-claim or counterclaim, by either of the parties. . . . The identification of the matter is very much a question of substance and not of form. The facts alleged by either or any of the parties and their consequences will in the last resort be the determinant of what is relevantly the matter."

The pleadings and the relief claimed were said to be of assistance, but not necessarily definitive of what is the "matter": p.124 2nd column D - 125 1st column A. Further elaboration of the concept appears at p.125, 1st column D-F:

"The jurisdiction to do so accrues to the court because there is a matter, in relation to which federal jurisdiction has been attracted, to be resolved. The jurisdiction thus accrued is itself federal jurisdiction. But, of course, it is limited to the resolution of the matter in relation to which, but not necessarily by which, the federal jurisdiction was attracted in the first instance. But the jurisdiction will not extend to any other matter, though that other matter might in some sense be an allied or associated matter. To be outside the accrued jurisdiction, however, the other matter must be separate and disparate from the matter in relation to or in connexion with which federal jurisdiction has been attracted. The federal jurisdiction will not extend to enable the court to resolve the further matter, being as I have said in substance a disparate and independent matter. But this does not involve any close confinement of the federal jurisdiction by too narrow a view of what is relevantly the matter. The emphasis on the disparate and independent nature of what is not part of or within the matter should ensure that no narrow view is taken of the parameters of the matter."

The application of these principles to the cases in hand was demonstrated by the learned Chief Justice in a passage at p.125 1st column F - 2nd column B, and a further passage at p.127, 1st column B-E.

Elsewhere, Barwick CJ appeared to introduce an element of discretion into the exercise by the court of its jurisdiction in relation to those aspects of the matter which are not incidental to the aspects of the matter which attracted the Court's jurisdiction, although generally the Court would be expected "to resolve the whole matter in relation to which federal jurisdiction had attracted": p.125 2nd column B-E. It appears from a later passage that these observations may have been related, in part at least, to the nature of the relief to be granted: see p.126 1st column C to end.

Indeed, the two passages last-mentioned pose another problem. At p.125 2nd column C, his Honour said:

"This accrued jurisdiction carries with it the authority to make such remedial orders as are necessary or convenient for or in consequence of that resolution".

At p.126, 1st column C, he said:

"As I have said, in my opinion, the authority to grant appropriate remedies is not included in the accrued federal jurisdiction". (Emphasis added).

His Honour then went on to discuss s.22 of the Federal Court of Australia Act 1976 as an appropriate grant of legislative power permitting this Court to grant all appropriate remedies in respect of any "matter" in relation to which it has jurisdiction. I will deal with s.22 at a later stage. It is unnecessary to say any more of s.22 in the present connection than that these cases lay down that s.22 of the Federal Court of Australia Act is not a source of jurisdiction but an expansion of the Court's powers to permit the grant of appropriate remedies so as to render the court's jurisdiction effective: see also ss. 5, 21 and 23 of the Federal Court of Australia Act.

The views of the then Chief Justice were markedly wider than those of Gibbs J., who said at p.134, 2nd column G - p.135 2nd column E -

"The cases to which I have referred show that if a party claims relief on two different legal grounds, but the facts on which the relief is sought on each ground are identical, and the relief sought on each ground is the same in substance if not in form, there is only one matter for determination. This seems to me correct in principle and convenient in practice. . .

. . . if one of the grounds on which a claim is based is that a right, duty or immunity arises under a Commonwealth Act then (provided that the claim is genuinely made) the matter may properly be given the character of a matter arising under a law of the Parliament, although the same right, duty or immunity is claimed also to arise under State law on the same facts.

I may now proceed to apply these principles to the present proceedings. In the action brought by the Philip Morris companies the plaintiffs base their claims to relief on identical facts. Substantially the same remedy is sought for the alleged passing off as for the alleged contraventions of the Trade Practices Act; the injunctions claimed are different in form but substantially the same in effect. In these circumstances, the fact that the relief is sought on two separate legal grounds does not mean that there is more than one matter for determination. It is a matter which the Federal Court has jurisdiction to determine.

On the other hand the proceedings brought by the United States Surgical Corporation comprise a number of different matters. A variety of relief is sought on different legal grounds and the various claims are based on different facts. The Federal Court has of course jurisdiction to determine the matters arising under the Trade Practices Act. It will in addition have jurisdiction to determine the passing off claims if based on facts identical to those on which the claims under the Trade Practices Act are based. If the proceedings raise a matter under the Copyright Act, it will fall to the Federal Court to decide whether that matter is associated with the matters arising under the Trade Practices Act within the meaning of s.32(1) and if it is so associated the Federal Court will have jurisdiction. That court has however no jurisdiction in respect of the other matters raised in those proceedings."

The effect of the latter passage appears more clearly if connected with his Honour's earlier analysis of the case brought by the United States Surgical Corporation. At p.130, first column C-E he said -

". . . it is apparent that the alleged facts constitute a contravention of the Trade Practices Act - that is, the engaging in misleading or deceptive conduct and the making of false representations - are not enough in themselves to entitle the applicant to succeed in an action for breach of confidence, breach of contract, infringement of copyright, fraud or conspiracy. To make out a cause of action of any of those kinds it would be necessary to prove further facts - to show, for example, the existence of a confidential relationship, the making of a contract, the possession of the copyright, the fraudulent intention, or the making of the agreement necessary to establish a conspiracy. Some, at least, of the claims which are made at common law rest on alleged facts different from or additional to those which give rise to the claims under the Trade Practices Act, and some of the relief sought is of a kind that could not be obtained in proceedings under that Act."

At p.139, second column G to the end, Mason J. said that "the lesson to be learned from the authorities is that the Court having jurisdiction to determine the matter falling within ss. 75 and 76 giving rise to the exercise of federal jurisdiction has jurisdiction to decide an attached non-severable claim". He continued (p.139 second column G - p.140 first column B) :

"The classification of a claim as "non-severable" does not necessarily mean that it is, or must be, united to the federal claim by a single claim for relief, though this is a common illustration of a non-severable claim. The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction".

Earlier, at p.139, second column D-F, Mason J. had discussed the High Court's decision in Moorgate Tobacco Ltd v. Philip Morris Ltd (1980) 145 C.L.R. 457, and said that it "decided that the entire jurisdiction exercised by the Supreme Court was federal jurisdiction, notwithstanding that some of the causes of action or claims for relief pleaded in the Statement of Claim were not grounded in federal law and that the remedies sought travelled beyond registration of the trade marks 'Golden Lights', which was the real bone of contention between the parties." He continued:

". . . It was this circumstance and the presence of the 'proprietorship' issue under the Trade Marks Act that made the exercise of jurisdiction federal and wholly federal, the causes of action or claims for relief based on non-federal law being non-severable. They could not be severed from the federal question because they were incidental, if not essential, to its determination and because the plaintiffs various claims for relief necessarily arose out of common transactions and facts."

At p.141, second column B-D, Mason J. held that in the action of Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd the plaintiffs' claim for relief based on passing-off was not "a distinct matter severable from the claims for relief based on the Trade Practices Act". The reasons emerge from the following short passage:

Further, there is an apparently unresolved question as to whether the commencement of proceedings in the Family Court in respect of a question within its jurisdiction terminates the jurisdiction of a State court to deal with the same subject matter even in a proceeding which is not within the Family Court's jurisdiction: see Rehn v. Rehn (1976) 8 A.L.R. 411; Tansell v. Tansell (1977) 19 S.A.S.R. 165; Cacek v. Cacek (1979) V.R. 385; Williams v. Williams (1979) 1 N.S.W.L.R. 376; Baba and Jarvinen (1980) F.L.C. 90-882; Hudina v. Hudina (1981) W.A.R. 342 and Reynolds v. Reynolds (1977) 2 N.S.W.L.R. 295.

So far as I am aware, there is no authoritative statement in the multitude of decisions which deal with the delineation of the jurisdictional boundaries between the State courts and the Family Court which is inconsistent with a proposition that the Supreme Court may have no jurisdiction in the present disputes.

Jurisdiction in these Proceedings

There is no need to dissect the issues in the litigation with which I am concerned beyond what has already been said, or to recanvass the steps which have been taken or the order in which events occurred.

It is, in my opinion, an arguable proposition that all of the claims of each party against the other both in this Court and in the Supreme Court of Queensland in each case are but a single matter within the exclusive jurisdiction of this Court now that proceedings are in existence here. No doubt, the Supreme Court initially had jurisdiction to deal with the respondent's claims in the action in that Court. Prior to its doing so, the applicants raised these alleged contraventions of the Trade Practices Act and commenced proceedings in this Court related to those alleged contraventions. It is not suggested that the applicants' claims are not bona fide and, indeed, I have concluded that the applicants have made out an arguable case that the alleged contraventions took place. The totality of the factual issues are identical in each case in each court. The relief sought in one court by one party is but the antithesis of the relief sought in the other court by the other party.

Other possibilities, of course, are that the Supreme Court has jurisdiction in respect of the action commenced there, and may deal with a defence that a contract has been rescinded which is related to the Trade Practices Act, i.e. in effect decide the whole dispute, or that it at least has jurisdiction to determine the respondent's claims, without reference to the Trade Practices Act, as it has indeed done in the two actions in which it has given judgment, leaving this Court to decide the questions under that Act by reference to the same facts, with all the attendant problems of possible estoppels or inconsistent findings or contradictory relief etc.

Insofar as this Court has jurisdiction, it seems to me at least arguable that it can grant appropriate final relief, at least apart from the injunctions to restrain other proceedings, a question which I will address separately. Insofar as the proceedings in this Court would be directly based on the Trade Practices Act, the Court has powers under s.80 (injunctions) s.82 (damages) and under s.87 which provides for a variety of other relief. I will note at a later stage an argument advanced on behalf of the respondent in reliance upon T.P.C. v. Milreis Pty Ltd (1977) 14 A.L.R. 623. It may be that it also has relevant declaratory powers under s.163A (see Ex parte Tooth and Co Ltd (1978) 19 A.L.R. 191) but see Polgardy v. Australian Guarantee Corporation Ltd (1981) A.T.P.R. 40-207. There is no present need to pursue that topic. Insofar as the proceedings which would be involved by claim or cross-claim would seek relief not available under that Act, Part III Div. 1 of the Federal Court of Australia Act seems to be a viable source of power to make appropriate orders provided that the claims are within the court's jurisdiction.

I do not have to investigate the various jurisdictional possibilities further and I do not think that I should do so, for a variety of reasons, including the following:

(i) the questions discussed above were not argued before me and, from what I was told, were not argued before the Supreme Court. Indeed, it is by no means clear to me that they are compatible with either party's approach. However, that may be, I decline to permit possible questions of jurisdiction merely to pass sub silentio or to embark lightly upon the grant of injunctions intended to stop proceedings in a State Supreme Court;

(ii) a final resolution of the questions, would likely necessitate notices pursuant to s.78B of the Judiciary Act. I have felt able to proceed this far because of sub-s. 78B(5) but, notwithstanding that provision, would not be disposed to reach a concluded opinion without ensuring that notices had been given;

(iii) a natural timidity inhibits me from any attempt to pass unnecessarily upon such vexed questions. There were marked divergences of opinion in the Philip Morris Incorporated and United States Surgical Corporation cases. Three of the High Court judges who decided those cases have resigned or died and have been replaced. The High Court has recently reserved judgment in another case L.N.C. Industries v. B.M.W. (Australia), in which the question has again been raised whether a State Supreme Court was exercising federal jurisdiction so that no appeal lies to the Privy Council. Further, there are sensitive policy issues involved. The High Court, as the final court of appeal for this country, seems plainly to be the appropriate arbiter rather than one of the courts unwillingly involved in what may wrongly be seen as a jurisdictional conflict between the Courts themselves.

In forming the view that it is arguable that all of the claims of the present combatants in this Court and the Supreme Court are within this Court's exclusive jurisdiction, I have not overlooked that there are dicta in the more recent decision of the High Court in Thomson Australia Holdings Pty Ltd v. Trade Practices Commission (1981) 55 A.L.J.R. 614 which may be thought to bear upon the question, or that, although s.86 of the Trade Practices Act is the source of this Court's jurisdiction in respect of entire "matters", it literally renders that jurisdiction exclusive only to the extent that each matter is an action, prosecution or other proceeding under Part VI of the Act. However, there is support for the view that the entire jurisdiction is exclusive: see e.g. per Mason J. in the Philip Morris Incorporated and United Surgical Corporation cases at p.137, 2nd column, F. It is sufficient, for present purposes, that the question is open and arguable.

The Final Relief Claimed by the Applicants

Counsel for the respondents submitted that there is no final relief which is within the power of this Court to grant to the applicants to which the present claims for interlocutory relief could be adjectival and accordingly that the interlocutory injunctions sought could not be granted. More particularly, the respondent submitted, on the authority of a decision of the Full Court of this Court in Trade Practices Commission v. Milreis Pty Ltd (1977) 14 A.L.R. 623, that para. 87(2)(a) of the Trade Practices Act does not empower this Court to nullify a contract otherwise valid but only to make a declaration that a contract is or has been void by reason of an invalidity which otherwise attaches.

There is no need in these proceedings to consider that submission which, it may be said, seems to overlook the applicants' claims for perpetual injunctions against the further prosecution of the Supreme Court proceedings or the enforcement of the judgments so far obtained. However, it may be acknowledged that there is room for argument that the decision of the High Court in Thomson Australian Holdings Pty Ltd v. Trade Practices Commission, supra, may raise questions as to the Court's power to make such orders. Although in Brown v. Jam Factory Pty-Ltd (1981) A.T.P.R. 40-213 the relief granted included a perpetual injunction against the continuation of proceedings in a State court, I am unaware of similar orders on a permanent basis since Thomson's Case.

Be that as it may, the applicants have established a prima facie case that they rescinded the contracts by notice in December 1982. It is within para 87(2)(a) of the Trade Practices Act, on any view of its operation, that this Court has power to declare that the contracts were void as and from those notices. The misleading or deceptive conduct advanced by the applicants arguably constituted fraudulent misrepresentations and contraventions of that Act if the evidence remains as at present and the applicants' evidence is accepted. There is nothing presently before me to indicate that the applicants had lost their right of rescission and no argument to that effect was advanced on behalf of the respondent. The relevant function of this Court in these proceedings, if the applicants succeed on the cases presently presented, would not be to avoid contracts but to make appropriate orders, including an order declaring the contracts void abinitio, consequent upon the applicants' own rescission of the contracts: cf Alati v. Kruger (1955) 94 C.L.R. 216,224. It is unnecessary in the circumstances, to consider whether, if on the applicants' cases the contracts had not been rescinded, the Court would have a power of rescission under sub-ss. 87(1) or 87(1A), or whether its other powers, e.g. its power in sub-s. 87(2) to vary contracts, might not afford scope for final relief to which the interlocutory injunctions could be seen as relevantly incidental.

Injunctions to Restrain the Prosecution of the Current Actions in the State Supreme Court : Applications G8 and G15 in this Court

(a) This Court's power to make such orders:

I have elsewhere expressed the view that, while the decision of the High Court in Thomson Australian Holdings Pty Ltd v. Trade Practices Commission, supra, establishes that s.80 of the Trade Practices Act is the exclusive source of this Court's power to grant a final injunction restraining conduct which is in contravention of a provision of that Act, it is at least sufficiently arguable for interlocutory purposes that the Court has power to grant interlocutory injunctions restraining conduct which is not in contravention of the Act but which might render nugatory any substantive relief which is within the Court's power in the proceedings: see Brisbane Gas Co Ltd v. Hartogen N.G. Ltd (1982) 42 A.L.R. 685. Compare St Justins Properties Pty Ltd v. Rule Holdings Pty Ltd (1980) 40 F.L.R. 282 and George Macgregor Auto Service Pty Ltd v. Caltex Oil (Aust) Pty Ltd (1980) 35 A.L.R. 72. My tentative view is that the necessary power exists and that, it seems, is sufficient: cf Superstar Australia Pty Ltd v. Coonan and Denlay Pty Ltd (1981) 40 A.L.R. 183, 187. It is my understanding that the vesting of judicial power under the Constitution in this Court as a superior court of record in the terms of s.5 of the Federal Court of Australia Act carries with it such implied powers as are necessarily inherent in the nature of judicial power: see, for example, the Philip Morris Incorporated and United Surgical Corporation Cases at p.149 1st column E per Aickin J.; and Re Winneke; Victoria v. The Australian Building Construction Employees' and Builders' Labourers' Federation (1982) 56 A.L.J.R. 506, 563, per Brennan J. By virtue of ss. 5 and 21-23 of its Act, this Court is in a vastly different position from that of the Commonwealth Industrial Court which was considered in R. v. Forbes; ex parte Bevan (1972) 127 C.L.R. 1. Except insofar as may be otherwise legislatively provided, as in Thomson's Case, the powers of this Court in respect of matters within its jurisdiction do not seem different, so far as is presently material, from those of the High Court or the State Supreme Courts. If the power of which I have spoken exists, it does not seem to matter whether it exists by virtue of express provisions in the Federal Court of Australia Act or whether it exists as an inherent power of Commonwealth Trading Bank of Australia v. Inglis (1974) 48 A.L.J.R. 196, 199, 2nd col. foot.

There is ample authority to establish the power of a superior court of record to make orders which are needed to ensure that the exercise of its jurisdiction is not frustrated by the action of one of the parties prior to trial: see e.g.Simsec v. McPhee (1982) 56 A.L.J.R. 277. The grant in appropriate cases of interlocutory injunctions to restrain proceedings in other courts is a recognised example of the exercise of this power. Further, at least where the Court asked for the injunction can do complete justice between the parties, the ground urged by the applicants here, namely the inability of the other court to do so, e.g. because it is unable to give effect to some defence, is an accepted basis for the exercise of the power. Of course, special reason may exist in some cases why the power does not exist. For example, a State Court may lack power to restrain the exercise of jurisdiction by a Federal Court for constitutional reasons.

Indeed, I did not understand the respondent to challenge the power of this Court to grant injunctions as were sought in appropriate cases; rather its counsel seemed to accept that he could not do so without departure from the course which had been adopted in the Supreme Court. Consistently with that he drew my attention more by way of an interesting aside than by way of submission to ss. 2 and 4(5) of the Judicature Act 1876 (Qld). I did not understand him to suggest that the effect of these provisions was to prohibit the injunctions sought. Rather, he seemed to accept that, if the Queensland Judicature Act did not so provide, it would be pro tanto invalid by reason of s. 109 of the Constitution. There is no occasion in these proceedings for further comment on such questions, whether those tacit concessions be correct or not.

(b) Stay of the Supreme Court Proceedings

On the other hand, despite doubts which have been voiced as to the range of a superior court's powers to stay its proceedings (see, for example, the article "State/Federal Court Relations" by Mr Justice Rogers in (1981) 55 A.L.J. 630 at pp 646 ff), I am satisfied that I should proceed in these cases on the basis that the Supreme Court of Queensland has a power to stay the actions before it which correspond to Applications G8 and G15 in this Court. As is apparent from what I have already said, the question of which litigation should proceed and which, if any, should be stopped, involves much more than questions of convenience. In L. Grollo Darwin Management Pty Ltd v. Victor Plaster Products Pty Ltd (1978) 33 F.L.R. 170, the Full Court of this Court accepted that the power exists and that a stay might be ordered if to do so was in the interests of justice. There have been a number of other decisions in this Court. Apart from the decision of the Chief Judge in Hughes Motor Service Pty Ltd v. Wang Computer (1978) 35 FLR 347, the reported decisions include Yooralla Sponsors Club v. Jabi Nominees Pty Ltd (1980) 49 F.L.R. 86 (Smithers J), Muller v. Fencott (1981) 37 A.L.R. 310 (Toohey J.), Yorke v. Treasureway Stores Pty Ltd (1981) A.T.P.R. 40-265 (Fisher J.), affirmed Treasurerway Stores Pty Ltd v. Yorke (1982) A.T.P.R. 40-286; and Jillawarra Grazing Co v. John Shearer Ltd (1982) A.T.P.R. 40-309 (Toohey J.). I do not propose to dwell here on the extent to which those decisions reflect the problems which I perceive may exist, at the threshold, in the disputes with which I am concerned relating to the jurisdictions of the respective courts.

In an unreported judgment delivered in Chambers in Melbourne on Tuesday 17 November 1981 in The Australian Building Construction Employees and Builders' Labourers' Federation v. The State of Victoria and Winneke, Stephen J. held that he had power to remove a stay of a judgment pronounced by the Full Court of this Court which had held that in order to avoid prejudice to deregistration proceedings against the Builders' Labourers' Federation in this Court the proceedings of a Royal Commission being conducted by Mr Winneke should be conducted in private. The stay existed by virtue of O.70, r.12(2) of the High Court Rules because the appellants, the State of Victoria and Mr Winneke, had appealed and given security for costs pursuant to O.70, r.10.

Stephen J. noted that the power to order the removal of the stay in the circumstances before him under O.70, r.12(3), was far from clear. He continued:

"That the power conferred by Rule 12(3) to remove a stay is indeed so confined there nevertheless exists, in my view, an inherent power in the Court to so act as to preserve the subject matter of proceedings pending the outcome of an appeal - see Tait v. The Queen (1962) 108 C.L.R. 620, the observations of Mr Justice Mason in Ex parte; Builders Labourers Federation 55 A.L.J.R. 391 and the observations of the New South Wales Court of Appeal in Tringali v. Stewardson Stubbs & Collett Ltd (1966) 66 S.R. (N.S.W.) 335 and especially at p.344 where, in the judgment of the Court comprised of the President and Mr Justice Jacobs and Mr Justice Asprey, it was said:

'there can be no doubt that this Court has an inherent jurisdiction to endeavour to ensure that the pursuit of its ordinary procedures by litigants does not lead to injustice and for this purpose to grant in the exercise of its discretion a stay of proceedings whether permanent or temporary, upon such conditions or terms (if any), as may seem appropriate in the particular circumstances and that this is a jurisdiction which may be exercised at any stage of the proceedings where it appears to be demanded by the justice of the case'.

Usually, of course it will be by granting a stay of judgment that the subject matter of proceedings will be preserved. But the principle, in my view, is a broad one, broad enough to apply more generally than to the ordinary case of the granting of a stay."

On that approach, which broadly accords with what was said by the Full Court of this Court in Grollo's Case, supra, the question which would arise were the Supreme Court to be asked to grant a stay is the same as that which as falls for decision by me in determining whether to grant an interlocutory injunction: cf Castanko v. Brown and Rest (UK) Ltd (1981) A.C. 557 (H.L.). In either circumstance, what is involved is the discretionary formulation of appropriate procedural orders to ensure that justice is administered to the resolution of the parties' substantive disputes.
(c) Refusal of Injunctions

Why then, I ask myself, should this Court grant injunctions rather than leaving it to the Supreme Court of Queensland to decide its own jurisdiction and to determine for itself whether the prosecution of proceedings before it should be permitted to continue? It cannot give itself jurisdiction by an erroneous decision, any more than can this Court: W v. W. (High Court, unreported 16 December 1982). However, if it errs in that respect in these disputes it is for its own Full Court or the High Court, not this Court, to correct it. What exceptional circumstances exist in these cases which necessitate this Court abandoning the restraint which would normally be expected as a matter of course? What reason exists for departure from the principles of judicial comity which are now perhaps more important than ever before in Australia? The public interest in favour of policies of judicial restraint and comityseems to me to be a weight factor to be considered always, where one Court is asked to restrain proceedings in another, and will often be decisive.

If the Supreme Court does retain jurisdiction in the actions before it, it has not been demonstrated that there is any issue of fact which can be raised here but not there, or which needs to be established there but not here; or, whether or not the Trade Practices Act can be resorted to in the Supreme Court proceedings, that there is any relief available in this Court to the applicants which is of practical value to them beyond the judgments which will be given in their favour if they are successful in the Supreme Court: cf St Justins Properties Pty Ltd, supra, at pp 286-287. There is little, if anything, in the order in which the various proceedings were commenced or in the extent to which they have progressed. If there are no jurisdictional difficulties, there is every reason why the Supreme Court actions, which were the proceedings first instituted, should continue. In short, nothing has emerged to support the approach to this Court rather than the Supreme Court proceedings which have been decided. Particularly having regard to the way in which the proceedings to date have been conducted, that consideration seems to me of no significance whatsoever.

On the other hand, there is an additional factor which confirms me in the opinion which I have reached that the injunctions should not be granted at this point.

Any attempt by either of the parties to bring the whole dispute into one court faces some jurisdictional arguments. Many of the issues have not been argued. No opportunity has been given to the Attorneys-General to be heard. No opportunity has existed for the removal of the proceedings into the High Court. Further, the applicants' insistence in the Applications now under consideration, G8 and G15, that injunctions are needed prior to the conclusion of the Supreme Court proceedings is inconsistent with their attitude in the other two applications, G9 and G10, in which the applicants' assertions necessarily involve the proposition that final relief can be given in this Court in due course which will negative the effect of the Supreme Court judgments.

Put in orthodox terms, both the absence of a need for the interlocutory relief sought and the balance of convenience seem to me to warrant its refusal.

Injunctions to Restrain the Enforcement of the Judgments given in the Supreme Court : Applications G9 and G10

My reasons for declining to grant interlocutory injunctions in these Applications at this point may be much more briefly stated. I propose to say nothing as to whether or not the power exists to grant such injunctions save that the judgments of the Supreme Court while they stand are not nullities and cannot be ignored: cf W. v. W. supra. They implicitly establish the existence of a valid contract which has not been rescinded. Questions as to the power to grant the injunctions sought cannot, in the circumstances, be separated from questions of estoppel which, in turn, cannot be disassociated from the issues which were before the Supreme Court and those which are before this Court. No relevant difference between the relevant Supreme Court actions and the proceedings in this Court has been established to my satisfaction. The applicants lost in the Supreme Court because of a lack of evidence, not because they had a defence which they were not permitted to advance.

In any event, there is no call for injunctions at this time. The Supreme Court is seised of these matters on appeal. The applicants can apply to the Full Court of the Supreme Court for a stay if the respondent seeks to enforce the judgments. Indeed, it is questionable how they can be enforced as they stand, as no orders have been made relative to the mode of performance.

In my opinion, justice will be best served by refusing the interlocutory injunctions sought whilst recording that the applicants may re-apply if it becomes necessary or appropriate to do so. The applicants must pay the costs of the proceedings to date. I will hear the parties as to the directions to be given for the future conduct of the Applications in this Court.

[1983] FCA 47

23 MARCH 1983