eens \o® [%4% CATCHWORDS PRACTICE AND PROCEDURE ~ course to be adopted with respect to trial of proceedings involving jurisdictional question - Federal Court's jurisdiction to deal with non-federal counter-claims (specific performance) - "matter" - exclusivity of jurisdiction - question soon to be considered by the High Court - undesirability of a single judge dealing with jurisdictional questions likely to be considered by the High Court - notices under s.78B Judiciary Act on trial not to proceed until High Court's ruling - early hearing date if parties subsequently proceed in the Federal Court Trade Practices Act Judiciary Act, s.78B The following unreported decisions considered - Fencott v. Muller (High Court) Stack & Ors v. Coast Securities (No. 9) Pty Ltd (Federal Court) Bargal Pty Ltd v. Force (30.3.1983) (Supreme Court) Bargal Pty Ltd v. Force (13.5.1983) (Supreme Court) GIRNAL HOLDINGS PTY LTD (First Applicant) and MICIIAEL ROBERT SHARP and MARY MARGARET SHARP (Second Applicants) v. LEIGHTON PROPERTIES PTY LIMITED Qld G6 and G21 of 1983 FITZGERALD J. BRISBANE 31 MAY 1983 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION ) Qld G6 of 1983 Qld G21 of 1983 BETWEEN: GIRNAL HOLDINGS PTY LTD First Applicant AND: MICHAEL ROBERT SHARP and MARY MARGARET SHARP Second Applicants AND: LEIGHTON PROPERTIES PTY LIMITED Respondent ORDER JUDGE MAKING ORDER: PITZGERALD J. DATE OF ORDER: 30 MAY 1983 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The trial of these proceedings will not proceed on 15 June 1983. 2. The proceedings be adjourned generally but may be restored for further directions at any time on short notice. 3. No order as to costs. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) Qld G6 of 1983 GENERAL DIVISION ) Qld G21 of 1983 BETWEEN: GIRNAL HOLDINGS PTY LTD First Applicant AND: MICHAEL ROBERT SHARP and MARY MARGARET SHARP Second Applicants AND: LEIGHTON PROPERTIES PTY LIMITED Respondent FITZGERALD J. 30 MAY 1983 REASONS FOR JUDGMENT When this matter was before me on 16 May 1983, the decision of the High Court in Fencott v. Muller (unreported) had recently been delivered. The parties were then in agreement that there was no obstacle to this Court trying the whole controversy between them, a motion for a stay of the proceedings in this Court was dismissed by consent, and dates for trial were fixed which were suitable to all parties. The hearing dates are 15, 16 and 17 June 1983. Since then, certain other proceedings 1n this Court, Applications G8, G9 and G10 of 1983, Stack and Ors v. Coast Securities (No. 9) Pty Ltd have been removed into the High Court for it to determine a constitutional question. The present matter was mentioned berore me on 26 May, when all parties were represented by counsel 2. The immediate question is what course should be adopted with respect to the trial of these proceedings which is fixed to commence in 2-3 weeks time. There are a variety of claims and cross-claims raised for determination in two separate applications which have been ordered to be heard together. The applicants seek relief under the Trade Practices Act 1974 in relation to contracts between the parties for the sale and purchase of fesidential units at the Gold Coast anid guarantees relating to the performance of thc contracts. The respondent, the vendor, claims specific performance and/or damages in respect of the contracts and the guarantees. The question as to whether the trial should be permitted to proceed is very much related to an identification of the jurisdictional question or questions which have been removed into the High Court. In order to carry out that task, it 1s necessary to refer back to the Stack Jitigation. The applicants in this Court in the Stack proceedings ("the purchasers") were already defendants in the Queensland Supreme Court when the proceedings in this Court were commenced. In some of those Supreme Court actions, judgment for specific performance had already been given against the purchasers in favour of the plaintiff in that Court ("the vendor"). In other actions in the Supreme Court, applications for summary judgment 3. for specific performance were threatened by the vendor. The purchasers sought in this Court orders under tne Trade Practices Act directed to the avoidance of the contracts. The particular applications with which I was concerned in the Stack litigation were applications for interlocutory injunctions to prevent the vendors from continuing further in the Supreme Court prior to this Court determining whether the contracts should be avoided under federal law. It is important to put those applications for interlocutory injunctions in context. From what I was told, the purchasers had raised the Trade Practices Act in the Supreme Court but McPherson J. had granted specific performance of the contracts which had been the subject of proceedings before him. Although there was no official transcript of McPherson J's reasons, both counsel who appeared before me were agreed as to what had occurred, and accepted the substantial accuracy of a shorthand note of what his Honour had said. After holding that, as the evidence stood, statements which the purchasers alleged had been made by the vendor's agent did not entitle the purchaser to rescind the contracts apart from the Trade Practices Act, McPherson J. continued - "The matters are also relied on as giving rise to redress for that conduct in terms of the Trade Practices Act and to that end the defendant has issued proceedings an the Federal Court with a view to obtaining relief including rescission of the contract ... If they are successful the relief will necessarily cut across any order that 1s made in this court ... 1t seems to me that the appropriate course is, having regard to the fact that the plaintiff has no available remedy apart from that in this court, the appropriate course 1s to give judgment in favour of the plaintiff against the defendants for a declaration that the contract in each instance ought to be specifically performed and thereafter to order that the first defendant purchaser specifically perform that contract." His Honour, however, granted a temporary stay of execution of the judgments which he had pronounced to permit the purchasers to apply to this Court "for a further injunction or stay of or in respect of this judgment or ats enforcement". It seems from what I was candidly told by Counsel for the vendor that McPherson J. 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 vendor that this Court could, 1m an appropriate case, grant such an injunction or stay. From what I was also 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 contraventions of the Trade Practices Act involved in the misrepresentations alleged, but that this Court could,by reason of that Act, make orders which would overcome the effect of any Supreme Court decrees for specific performance. If that view was incorrect, then there was a risk of grave injustice. Whether by reason of estoppel or otherwise, the consequence might have ensued that the contracts had been or would be upheld without any determination on the merits of the purchasers' allegations in relation to the Trade Practices Act. The difficulty existed because the view which had been adopted was that neither Court had overall jurisdiction but the jurisdiction was divided between them. In those particular proceedings, as they came to me, the underlying problem was therefore fundamentally jurisdictional. McPherson J. in the Supreme Court had acted on the basis that the Supreme Court had jurisdiction to grant specific performance of the contracts despite the proceedings in this Court to have the contracts avoided. From what I was told, McPherson J. was also of opinion that the Supreme Court could not entertain claims under the Trade Practices Act. From what had already occurred before McPherson J., 1t was a reasonable inference that the Supreme Court might grant specific performance of further contracts prior to any determination of the purchasers' Trade Practices Act claims. In those circumstances, questions as to the respective yurisdictions and powers of this Court and the Supreme Court wore unavoidably raised for consideration by the purchasers' applications for interlocutory injunctions, irrespective of how the parties sought to present their arguments. Because the proceedings then before me involved only applications for interlocutory injunctions, my task was limited to considering whether the propositions which needed to be established as a basis for such interlocutory injunctions were arguable. It might have been sufficient to deal with the applications on the basis which had been accepted in the Supreme Court but I did not feel able to do so because jurisdictional questions were involved and other similar applications were in the offing. said: In dealing with the jurisdictional guestions I "lt is, 1n 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 part 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 1s related to the Trade Practices Act, 1.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 aundeed done in the two actions in which 1t 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." 8. At no time have I sought to develop an argument as to what the answer 1s or ought to be concerning the respective jurisdictions of this Court and the Supreme Court. With one qualification, I based my opinion as to what I thought was arguable in relation to the respective jurisdictions entirely upon relatively recent dicta in the High Court. 'The sole qualification is that I noted briefly that there are a line of cases elsewhere 1n which the view has been debated as to whether there may be a jurisdictional conflict not only where, and to the extent that, a Commonwealth Act expressly makes federal jurisdiction exclusive but also where the exercise of non-federal jurisdiction might cut across or impede the exercise of federal Jurisdiction, In the Stack litigation I declined the injunctions sought. Inter alia, I considered that it was, in general, inappropriate for this Court to grant injunctions to restrain proceedings in a State Supreme Court and that it should be left to the Supreme Courts to decide their own jurisdiction subject of course to review by the High Court. At the time when I handed down judgment in the Stack litigation, I also refused in proceedings G18 of 1983, Force v. Bargal Pty Ltd, to grant an interlocutory injunction at the suit of another purchaser to restrain another vendor from continuing with Supreme Court proceedings. 9. Shortly thereafter, the vendor, Bargal Pty Ltd, brought on a motion in the Supreme Court for an injunction restraining the purchaser from proceeding in application No. G18 of 1983 in this Court until the determination by the Supreme Court of the vendor's action for specific performance. That application came before McPherson J. His Honour delivered reasons indicating why he considered that the extent to which this Court's jurisdiction is or could be made exclusive is limited. It 1s not for me to canvass what was there said. However, one matter may be noted. McPherson J. said - "I therefore find myself in respectful disagreement with the views expressed by Fitzgerald J. an the decision to which I have referred. In reaching the conclusion that the 'entire jurisdiction' (that is, both that expressly invested by s.86 of the Trade Practices Act, and that impliedly invested by the Constitution) is exclusive to the Federal Court his Honour considered ...". That passage 1s inaccurate in its description of the conclusion which I am said to have expressed and it is desirable that I say so, lest it inadvertently tend to support a damaging misconception that there is tension between the Courts. 10. Notices pursuant to s.78B of the Judiciary Act 1903 were given by the vendor in the Stack litigation and, by direction of this Court and the Supreme Court, in the Force litigation. Next came the judgment of the High Court in Fencott v. Muller. No further step has been taken in this Court in either the Stack litigation or the Force litigation since that judgment. However, a further judgment was delivered in the Supreme Court by McPherson J. in the Force litigation on 13 May 1983. In substance, his Honour indicated that he was of a mind to make a declaration that the effect of s.86 of the Trade Practices Act was not to render the jurisdiction of this Court exclusive in respect of the whole subject matter of the relevant action in the Supreme Court. However, at the request of senior counsel representing the Attorney-General of the Commonwealth of Australia, he refrained from doing so at that time and adjourned for a period. On the same day, 13 May 1983, the High Court ordered that matters G8, G9 and G10 of 1983 in this Court which form part of the Stack litigation be remaved unto the High Court "for the purpose only of determining the jurisdictional question". Although I have not seen any order which identifies the constitutional question which is to be decided by the High Court in the 11. Stack litagation, the nature of the questions to be argued perhaps sufficiently emerges from the following extract from the transcript before the High Court during the address of senior counsel for the vendor ~ "MR DAVIES: ... they are questions on which to put it at its lowest, in our respectful submission, there still remains doubt, that 1s, whether the Federal Court has jurisdiction to try the specific performance claim, and the second one, 1£ at has that jurisdiction, that jurisdiction 1s exclusive. eee GIBBS CJ: nee The view that Mr Justice Fitzgerald expresses, and I am not for a moment suggesting that it is right or wrong, 1s tnat a retrospective exclusivity attaches to a matter. MR DAVIES: Yes GIBBS CJ.: But the supreme court, undoubtedly, has jurisdiction to commence with the action of specific performance, but at some stage when someone makes a claim in the Federal Court it is retrospectively divested of jurisdiction. MR DAVIES: Yes, and perhaps there is even the further arguable view that once the controversy is raised, perhaps even in correspondence, as to a federal matter, as to a misleading statement, that the supreme court is deprived and retrospectively deprived, of jurisdiction." 12. I have already set out above the only view which I have expressed. That view, except that 1&6 was an opinion only as to what seemed to me arguable, does not appear to me different in effect from what was later said by Gibbs CJ in Fencott v. Muller in the following passage: "However, any inconvenience in a case such as the present arises only from the fact that the Parliament has chosen to make the jurisdiction of the Federal Court exclusive; 1t does not inevitably result from the constitutional provisions themselves. In any case, to attempt to mitigate the inconvenience which may result to a party who brings his proceedings in the Federal Court, by adopting a broad interpretation of the word "matter", or by otherwise according to the Federal Court an expanded jurisdiction, w11l have the effect of shifting the burden of inconvenience to a party who brings his proceedings in the Supreme Court of a State, since s.86 brings about _a reciprocity between the two jurisdictions, with the result that the wider the jurisdiction that 1s conceded to the Federal Court, the narrower is that remaining in the State Court. ..." (underlining added) His Honour, of course, had a narrower view of this Court's jurisdiction than did the majority in that case but that is of no present amportance,. Although so far as I am aware only the proceedings in this Court and not the proceedings in the Suoreme Court in the Stack litigation have been removed into the High Court, "exclusivity" must, I think, be one of the questions which it is intended the High Court will consider. However, it may not be the only question. 13. So far as I can ascertain, neither the proceedings in this Court nor the proceedings in the Supreme Court in the Force litigation have yet been removed into the High Court but there is an application to remove all the force litigation into the Hagh Court which 1s due to be heard by the High Court in the near future. According to the vendor's notice under s.78B of the Judiciary Act in respect of the proceedings in this Court in the Force litigation, the constitutional matter which has arisen is - "a dispute as to the respective jurisdictions of this Court and the Supreme Court of Queensland to deal with the claims of the Applicant made in these proceedings, whether as claims made in this Court or as defences in the Supreme Court of Queensland; and to deal with the claims of the Respondent made in action no. 6333 of 1982 between the Respondent in this Court as Plaintiff in the Supreme Court and the Applicant in this Court as Defendant in the Supreme Court, and in particular whether by reason of the institution of these proceedings and the application thereto of Section 86 of the Trade Practices Act 1974 as amended - (a) This Court has in consequence of the operation of Section 77(i) and Section 77({11) or other provisions of the Constitution exclusive jurisdiction to hear and determine the whole or any and what part or parts of the subject matter of the said action in the Supreme Court; (b) The Supreme Court has any and what jurisdiction to proceed in and to hear and determine any and what part or parts of the subject-matter of the said action in the Supreme Court." 14. The High Court in Fencott v. Muller did not expressly deal with this Court's jurisdiction to deal " with non-federal counter-claims which form part of a controversy between parties. I must, in view of what has occurred or may occur in the Stack and Force litigation proceed on the basis that that question may be dealt with in the High Court in the not too distant future. In all the circumstances, even though no objection to jurisdiction is raised by any party in these proceedings, I consider that, before I could proceed further, I would be required by s.78B of the Judiciary Act to direct that notices be given to the Attorneys-General of the Commonwealth and the State of Queensland. More difficult 1s the question whether I should proceed to try these proceedings as matters stand. The parties urge me to do so, the vendor perhaps less than the purchasers. The vendor seems to assume that, if this Court does not determine its cross-claims, it will be able to persuade the Supreme Court to try at least one of them, 1n late July or early August, in an action already commenced in the Supreme Court, irrespective of whether the jurisdictional problems have then been resolved by the High Court. The purchasers point out that that may not prove to be correct. Further, only one of the actions in the Supreme Court has been certified for speedy trial, there 1s no order that the two actions there be heard together, and, although the factual issues are identical, 15. the Trade Practices Act has not been raised in the Supreme Court by the purchaser. On any view, 1f the trial 1s not proceeded with in this Court, the parties will be significantly delayed. On the other hand, if I proceed to try the proceedings, even though I reserve judgment until after the High Court's decision, and it later emerges that I had no jurisdiction, the parties will have been put to considerable wasted expense and, expense aside, unfairness could result to one of the parties from an avoidable double trial of issues. These are not proceedings in which a decision on the Trade Practices Act claims adversely to the purchaser will have the practical effect that the purchaser is left without possible answer to the vendor's claims for specific performance. Reliance is placed by the purchaser not only on the alleged breaches of the Trade Practices Act but also on alleged breaches of contract by the vendor, alleged breaches by the vendor of s.49 of the Building Units and Group Titles Act 1980 (Qld) and matters which are said to warrant a discretionary refusal of equitable relief. Even if, as the parties accept, all these are but aspects of a single matter, 1t is obvious that there are a significant number of questions in the proceedings which are directly related only to the cross-claim and which do not fall for decision in this Court if it cannot decide the cross-claim. 16. Even 1f, as was submitted to me, no question of exclusivity of jurisdiction arises in these proceedings and the majority decision in Fencott v. Muller suggests that this Court does have jurisdiction and can, unless the proceedings are removed, itself appropriately rule on that question, the I[ligh Court proceedings in the Stack and Force litigation cannot be ignored. The only possible difference which I can discern between those cases and these is that there jurisdictional questions arose before the pleadings had proceeded beyond the Statements of Claim. No cross-claims had been delivered and, at least in the Force litigation if not in both, it seems that the wish of the vendor is not to cross-claim in this Court but to proceed in the Supreme Court. However, I do not know whether that is a relevant distinction. Further, there are other proceedings in this Court in which notices under s.78B of the Judiciary Act have been directed which do involve cross-claims by vendors which are not distinguishable from these proceedings. For all I know, they may be removed into the High Court or, if notices are directed under s.78B in these proceedings, these proceedings may be removed. All parties in these proceedings have informed me that they are anxious to avoid that step. In Stack, supra, I stopped short of expressing any opinion beyond what seemed to me arguable 17. having regard to what had been said to that point by the High Court. In explaining why I thought it inappropriate to form or express any more positive opinion, I said, inter alia: "... 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." There seem to me to be compelling reasons why a single judge of this Court should not proceed to deal with a jurisdictional question which 1s likely to be considered soon by the High Court in proceedings already in that Court. Accordingly, the trial of these proceedings will not proceed on 15 June 1983. I will make a formal order to that effect but I will make no other order at this time. The proceedings can be restored for further directions at any time on short notice. If it becomes appropriate, I will then darect notices under s.78B of the Judiciary Act. When the High Court delivers its ruling, if 1t is possible for the parties to proceed in this Court and they wish to do so, an attempt will be made to provide early hearing dates. , \ So Le? oan eo 3