CATCHBMORDS FEDERAL COUPT - jurisdiction - purported conterrina of power on Court by scheme confirmed under National Healtn Act - held uneffective - effect of 3.32(1) of Federel Courn Act - whether notice to Attarneys-General necessary. JUDGMENTS - deemed good while not set aside - frinciple inapplicable to give jurisdiction. COMPANY LAW - order approving scheme of arrangement - whether can confer power to make further Court orders. Fedéral Court of Australia Act 1976, s.32(1) National Health Act 1953, ss.82Z, 822K, 822L, 220M Companies Act 1961, s.181 THE MINISTER OF STATE FOR HEALTH OF_THE COMMONWEALTH OF AUSTRALIA v. TRUSTEES ON BEHALF OF THE ANCIENT ORDEP OF_FORESTERS FRIENDLY SOCIETY IN QUBENSLAND OLD G17 OF 1981 PINCUS 3. BRISBANE 28 JUNE 1985 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G17 of 1981 GENERAL DIVISTON ) BETWEEN : THE MINISTER OF STATE FOR HEALTH OF THE TOMMONWEALTH OF AUSTPALTA Applicant AND: TRUSTEES ON BEHALF OF THE ANCIENT OPDEP oF PORESTERS FRIENDLY SOCIETY IN QUEENSLAND khesranderts MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF OPDER: 28 JUNE 19895 WHERE MADE: BRISBANE THE COUPT OPDERS THAT: The applications be dismissed, NOTE: Settlement and entry of orders 1s dealt with in Order 364 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) OLD G17 of 1981 GENERAL DIVISION ) BETWEEN : THE MINISTER OF STATE FOR HEALTH OF THE COMMONWEALTH OF AUSTRALIA Applicant AND: TRUSTEES ON BEHALF OF THE ANCIENT OFDEP OF FORESTERS FRIENDLY SOCIETY IN QUEENSLAND Respondents PINCUS J. 28 JUNE 1985 REASONS FOR JUDGMENT This 1S an application by the scheme administrator of the Hospital Benefits Fund and the Medical Benefits Fund, two Funas formerly conducted by the Ancient Order of Foresters Friendly Society in Queensland, seeking orders that the Tourt sanction a compromise between the scheme administrator and the A.N.Z,. Banking Group Limited and that the Court authorise the scheme administrator to transfer any funds held or received by nim on behalf of the winding-up of the Medical Benefits Fund to the funds he holds on behalf of the winding-up or the Hospital Benefits Fund. The Funds were ordered to be wound-up by Sheppard dg. (see Minister For Health (Cth) v. Ancient Order of Foresters Friendly Socis*y In Queensland (Trustees) (1962) 45 A.L.R 4) pursuant to an application made under 5.822 of the National Health Act 1953. A jurisdictional point arises at the outset. It was submitted on behalf of the scheme administrator that the Court has jurisdiction to entertain the applications under the clauses numbered 14 1n each of the two schemes, Those clauses are identical and provide:- By "14, The Scheme Administrator may at any time or feom time to time apply to the Court ora Judge thereof by Application in the existing proceedings relating to this Scheme either ex parte or after notice therecr upon a party interested (as may be appropriate) for advice or directions as to or to otherwise resolve any questions or matter relating to or arising out of the discharge of his duties and powers hereunder and the said Court or Judge may upon such application make any Order declaratory or otherwise in relation to such questions or matter and the costs thereof as ait or he shail see fit which said Order shall be odainding on the parties affected thereby." The clauses numbered 1 in each scheme define the "Court" as "The Federal Court". Section 82% of the National Health Act 1957, mentioned above, empowers the relevant Minister 1n certain circumstances to apply to the Court for an order that a Fund be bslaced under judicial management Or wound up. Where he applies for winding-up, the Minister 18 to "forward with the arplication a scheme for the winding-up of the Fund". The content of the scheme 125 not defined. Section 22K makes reference to "confirmation of a scheme by the Court" and the order of Sheppard J. effected such a confirmation, i1n my view. Under s.82ZL, an order under s.822K 1s "binding on all persons and has effect notwithstanding anything 1n the constitution, the articles of association or the rules of the registered organisation, or registered organisations, concerned". So the scheme may override the articles oar rules. Section 822M gives the Court "jurisdiction to hear and determine applications under this Part and to make orders in respect of those applications". None of these provisions says that I may make orders of the type sought. There 15 nothing in the Act which expressiy empowered Dd Sheppard J. to authorise applications to the Court to resolve questions relating to or arising out of the discharge of the scheme administrator 's duties and powers. In his reasons his Honour was critical of the sketchy nature of the winding-up provisions in the Act and also said that "questions of jurisdiction and power do arise for consideration and that despite the scheme which I propose to approve apparently providing for some matters, 1t may be a real question as to whether certain provisions are properly included ... There appears to be no authority in which a question has been raised as to the validity of such a clause as Clause 14 of fhe scheme approved by his Honour, which purports to empower to the Court to make orders "declaratory or otherwise in relation to" questions of the kind referred to above. A somewhat similar point has, however, been considered in authotities decided under s.181 of the Companies Acts of the States 1n force from 1961. That section empowered Supreme Courts to qrant approval toa compromise or arrangement between a company and its creditors, or between a company and its members. A problem which arose, in decisions under s.181 of the 1961 Companies Acts, was whether the Court, by 1ts approval, could enable applications to itself of the kind presently before me. Mitchell J. ain Re Slade Constructions Pty. Ltd. (1970) S.A.S.R. 561 was asked to approve a scheme, under 3.181 of the 1961 Companies Acts, containing the following clause:-~ "43. The Scheme Manager may at any time or from time to time apply to the Supreme Court of South Australia or a Judge thereof by originating summons either ex parte or after service thereof upon any party interested {as the case may require) for advice or directions as to or to otherwise resolve any question or matter relating to or arising out of the discharge of his duties and powers hereunder and the said Court or Judge may upon such application make any order declaratory or otherwise in relation to such question or matter and the costs thereof as 1t or he shall be binding on all parties affected thereby." This clause 1s very similar to, and in parts identical with, the clauses numbered 14 an the = schemes the sub:ect of this application. In respect of this clause, and another clause also purporting to give the Court power to hear and determine applications subsequent to approval of the scheme, Mitchell J. said at pp.564-565:- "It seems to me that in each of these paragraphs there is an attempt to confer jurisdiction upon the Court. Such an attempt is, of course, otiose and the words May be regarded merely as surplusage. In my view, however, the Court should not sanction a document which may be construed as t conferring jurisdiction upon the Court by persons who are obviously powerless to confer jurisdiction, It has been put to me on previous applications that the scheme when sanctioned becomes an order of the Court. In my view this 1s not correct. Even if it were, the Court cannot confer jurisdiction upon itself." In relation to a rather Similar problem, the observations made by Mitchell J. were adopted by Zelling J. in Re Forklift Sales (S.A.) Pty. Ltd. (1972) 3 S.A.S.R. 21 at p.24. In Re R.M. Fastmond Pty. Ltd. (1972) 4 A.C.L.R. 801 Street J. (as he then was) had the same question before him and said that until he was satisfied to the contrary he would continue "to hold the view that the court cannot take upon itself continuing authority under the statute to prescribe what should or should not be done within the implementation of the scheme once the scheme 1s cn foot". Next, Zelling J. again approved the reasons of Mitcheli J. in the Slade case, remarking in In Re Adelaide Air Conditioning and Domestic Engineers Ltd. (1972) 6 S.A.S.R. 6063 at p.609 that: "The court should not sanction a document which may be construed as conferring jurisdiction upon the court by persons who are obviously powerless to confer jurisdiction." There is no evident basis for holding that the views of Mitchell and Zelling JJ., and the somewhat more tentative view of Street J., are imapplicable to an order confirming a scheme for winding-up, under the National Health Act. Further, the reason given for these decisions, namely that a court cannot confer jurisdiction on itself, appears to be sound and to make it difficult to arrive at the conclusion that Clause 14 in the Schedule to the order of Sheppard J. had any legal effect. Neither of the orders now sought, mentioned above, deals with a mere matter of machinery or administration; each 1s designed to have a substantial effect. Indeed, the second order sought 1s intended to achieve a result which may well have been beyond the power of the Court in the first instance, when the scheme was confirmed: it seeks to transfer funds, for reasons of administrative convenience, from one fund to the other, without consideration passing. It is not necessary toa reach a final conclusion on that, as I have, for the reason already expressed, come to the conclusion that I have no power to make e1lther order. It should be mentioned that s.32 of the Federal Court of Australia Act, at first sight, might seem to provide some basis of jurisdiction. Sub-section (1) says that: "To the extent that the Constitution permits, jurisdiction 1s conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court 1s invoked." It was held in Philip Morris Inc. v. Adam P. Brown Male Fashions Pty Ltd. (1981) 33 A.L.R. 465 that once the jurisdiction of this Court arises under a statute, 5.32(1) extends it "to associated matters which arise under laws maae by the Parliament, even though the Parliament has not (except by $.32(1)) conferred jurisdiction on the court in respect of those matters" (p.490 per Gibbs J.). However, the mere fact that it might be canvenient for the Court to have power to create or alter rights, in connection with the winding-up order the National Health Act authorises it to make, does not justify such creation or alteration, nor can s.32(1) in itself authorise such creation or alteration. Some of the cases in which the extent of the jurisdiction of this Court has been considered have been treated as raising constitutional questions. It seems at least arquable that such a question underlies the matter before me. Parliament is given power by Chapter III of the Constitution to confer and to define jurisdiction, but it is not clear whether it may exercise that power by delegating it to another body: compare Le Mesurier v. Connor 42 C.L.R. 481 at pp.495-500 and Peacock v. Newtown Marrickville and General Co-operative Building Society No. 4 Ltd. 67 C.L.R. 25; were I of opinion that the National Health Act, on its proper construction, authorised the making of an order empowering the Court to make further orders, the constitutional problem might arise. Because of the conclusion reached on the effect of the relevant provisions, apart from any constitutional point, notice to Attorneys-General 1s unnecessary. The only other matter requiring mention ius that, in my view, the principle that because the judgment of Sheppard J. still stands, not having been appealed against, 1t must be treated as good, does not avail the applicant. That rule has been applied in such cases as Nisbet v. Nisbet (1898) 24 V.L.R. 340, Re Prper (1960) §.R. (N.S.W.) 328 and Frick Australia Pty. Ltd. v. Pen Pak Ocean Products Pty. Ltd. (1971) Q@d. R. 286 at pp.292-293 - the last decision having been reversed by the High Court on other grounds (46 A.L.J.R. 393). The principle cannot apply where the question 15s whether the Court has any jurisdiction at all to deal with the matter in question. ea " Pas L . - tH ny dh LEA mate eo I therefore hold that insofar as Clause 14 of the scheme mentioned 1n the order of Sheppard J. purports to empower this Court to make orders of the type applied for, it is legally ineffective, that there is no other source of power to make the orders applied for and the applications must be refused. * certify thar thie ancl the Yoru of Pages are a true copy of ihe reasons fo: judgment herein of Hs Honour Mr. Justice Pincus Sa, 2 b/ 6/3 s Associate Daied