FEDERAL COURT OF AUSTRALIA Australian Securities & Investments Commission, in the matter of Houghton & Associates Pty Ltd (in liq) v Houghton & Associates Pty Ltd [2000] FCA 775 JURISDICTION – cross-vesting – whether inutile to make declaration that court has no jurisdiction to hear and determine matters already disposed of – application by receiver for remuneration – whether matter within inherent jurisdiction Corporations Law s 461(k) Federal Courts (State Jurisdiction) Act 1999 (NSW) ss 6, 11 IN THE MATTER OF HOUGHTON & ASSOCIATES PTY LTD (IN LIQUIDATION) ACN 001 818 373 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v HOUGHTON & ASSOCIATES PTY LTD & ORS NG 3132 OF 1998 EMMETT J 1 JUNE 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 3132 OF 1998 IN THE MATTER OF HOUGHTON & ASSOCIATES PTY LTD (IN LIQUIDATION) ACN 001 818 373 BETWEEN: Australian Securities and Investments Commission FIRST APPLICANT AND: HOUGHTON & ASSOCIATES PTY LIMITED ACN 001 818 373 (IN LIQUIDATION) FIRST RESPONDENT JOHN ROBERT HOUGHTON SECOND RESPONDENT COMMONWEALTH BANK OF AUSTRALIA THIRD RESPONDENT JUDGE: EMMETT J DATE OF ORDER: 1 JUNE 2000 WHERE MADE: SYDNEY THE COURT DECLARES THAT: 1. This Court has no jurisdiction to hear and determine the application made by John Frederick Lord that he be that he be allowed remuneration for the period 1 February 1999 up to and including 22 April 1999 for acting as receiver of the first respondent and for acting as trustee of the assets of the second respondent. 2. This Court has no jurisdiction to hear and determine any further application in the winding up of Houghton & Associates Pty Limited ACN 001 818 373 or in relation to the appointment of John Frederick Lord as trustee of the property of the second respondent. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 3132 OF 1998 IN THE MATTER OF HOUGHTON & ASSOCIATES (IN LIQUIDATION) ACN 001 818 373 BETWEEN: Australian Securities and Investments Commission FIRST APPLICANT AND: HOUGHTON & ASSOCIATES PTY LIMITED ACN 001 818 373 (IN LIQUIDATION) FIRST RESPONDENT JOHN ROBERT HOUGHTON SECOND RESPONDENT COMMONWEALTH BANK OF AUSTRALIA THIRD RESPONDENT JUDGE: EMMETT J DATE: 1 JUNE 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 13 July 1998, an application was filed on behalf of the Australian Securities and Investments Commission ("ASIC") seeking orders that John Frederick Lord be appointed as a receiver of the property of the first respondent, Houghton & Associates Pty Limited, and as trustee of the property of the second respondent, John Robert Houghton. The application also sought an order that Mr Houghton deliver up to the Court all passports in his name. On the same day I made orders ex parte, including orders for the appointment of Mr Lord as trustee of the property of Mr Houghton up to 16 July 1998 and an order that Mr Houghton deliver up all passports in his name to the court. Other orders were made abridging the time for service of the application. 2 On 16 July 1998, an amended application was filed on behalf of ASIC joining the Commonwealth Bank of Australia ("the Bank") as third respondent and also claiming an order that the Bank be restrained from making payments in full or partial discharge of certain specified accounts, thought to be accounts in the name of Houghton & Associates Pty Limited or Mr Houghton. 3 On 22 July 1998, I extended the order for the appointment of Mr Lord as trustee of the property of Mr Houghton until further order of the Court. I also appointed Mr Lord as receiver of the property of Houghton & Associates Pty Limited and restrained the Bank from making any payment in full or partial discharge of the named accounts without the authority of Mr Lord. 4 On 17 March 1999 I made orders that Mr Lord be allowed remuneration for acting as receiver of the property of Houghton and Associates Pty Limited and fixed the remuneration. I also ordered that he be allowed remuneration for acting as trustee of the property of Mr Houghton and fixed that remuneration. Those orders related to work done up to and including 31 January 1999. 5 On 7 April 1999 a further amended application was filed by ASIC seeking, in addition to the orders claimed in the amended application, an order that Houghton and Associates Pty Limited be wound up pursuant to section 461(1)(k) of the Corporations Law and an order that Mr Lord be appointed as liquidator of that company. 6 On 23 April 1999 I made orders that Houghton and Associates Pty Limited be wound up and that Mr Lord be appointed official liquidator. I also ordered Houghton and Associations Pty Limited to pay ASIC's costs of the application. Following the making of those orders the High Court has declared that this Court does not have jurisdiction in respect of matters arising under the Corporations Law of a State. Following that determination, the State of New South Wales has enacted the Federal Courts (State Jurisdiction) Act 1999 (NSW) ("the Act"). 7 Section 6 of that Act relevantly provides: "The rights and liabilities of all persons are, by force of the Act, declared to be, and always to have been, the same as if: (a) each ineffective judgment of: (i) the Federal Court of Australia, otherwise than as a Full Court of the Federal Court of Australia… ……………………… had been a valid judgment of the Supreme Court in a Division constituted by a Judge of the Supreme Court…" A reference in the Act to an "ineffective judgment" is a reference, inter alia, to a judgment of the Federal Court given in the purported exercise of jurisdiction purporting to have been conferred on the Court by a State Act. 8 The orders to which I have referred and which I have made in the proceeding each appear to be an ineffective judgment within the meaning of section 4 of the Act. It follows that the rights and liabilities of all persons are to be treated as if my orders had been orders of the Supreme Court of New South Wales. It may be, therefore, that, without any further order, the Supreme Court would be in a position to continue the supervision of the winding up of Houghton and Associates Pty Limited pursuant to the orders that I made and that are now deemed to be orders of the Supreme Court of New South Wales. 9 The matter comes before me again on an application by notice of motion filed by Mr Lord on 26 April 2000. In its original form the notice of motion sought a declaration that this Court has no jurisdiction to hear and determine a proceeding relating to a state matter and an order that the proceedings be stayed for want of jurisdiction. That application was prompted by the provisions of section 11 of the Act. 10 Section 11(2) provides: "(2) A person who was a party to a proceeding in which a relevant order is made may apply to the Supreme Court for an order that the proceeding be treated as a proceeding in the Supreme Court, and the Supreme Court may make such an order." Under section 11(3): "(3) If the Supreme Court makes an order under subsection (2), the proceeding, despite the relevant order: (a) becomes, and must be recorded by the Supreme Court as, a proceeding in the Supreme Court, and (b) for the purposes of any limitation law and for all other purposes, is deemed to have been brought in the Supreme Court on the day on which the proceeding was first recorded as a proceeding in the federal court. For the purposes of that section a relevant order is, inter alia, an order of the Federal Court dismissing, striking out or staying a proceeding relating to a state matter for want of jurisdiction. 11 Mr Lord, of course, is not a party to this proceeding although his appointment by the Court in effect places him in the position of an officer of the Court. I do not consider that there is any utility in my making a declaration that I have no jurisdiction to hear and determine what I have already done. There is no application before me to set aside those orders and until such time as they are set aside they continue to operate as the orders of a superior court. 12 The question of the future of this proceeding, however, is of significance because of Mr Lord's desire to be remunerated for the work that he has done since 1 January 1999 and his intention, if the Supreme Court becomes seized of the matter, to apply for remuneration. The notice of motion originally filed on 26 April 2000 has been amended today with my leave to claim orders that the remuneration of Mr Lord for the period 1 February 1999 up to and including 22 April 1999 for acting as receiver of Houghton and Associates Pty Limited and as trustee of the property of Mr Houghton be fixed in the sums referred to in the order. 13 It may be arguable that, since Mr Lord is an officer of this Court, it is within the inherent jurisdiction of this Court, so long as the orders that I have made stand, to deal with his remuneration. However, counsel for Mr Lord has submitted that having regard to the determination made by the High Court concerning the jurisdiction of the Court, even that is outside the jurisdiction. I am disposed to accept that contention and am satisfied therefore that I do not have jurisdiction to allow remuneration or to fix the remuneration for Mr Lord. 14 In the circumstances it seems to me to be appropriate that I make a declaration to that effect. It will then be open to Mr Lord to make an application to the Supreme Court either under section 6 or under section 11 for the Supreme Court to allow remuneration and to fix that remuneration. Accordingly I will declare that this Court has no jurisdiction to hear and determine Mr Lord's application that he be allowed remuneration for acting as receiver of the first respondent and for acting as trustee of the assets of the second respondent. I will also declare that this Court has no jurisdiction to hear and determine any further application in the winding up of Houghton & Associates Pty Limited or in relation to the appointment of John Frederick Lord as trustee of the property of the second respondent. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 6 June 2000 Counsel for John Frederick Lord: Mr P Fury Solicitor for John Frederick Lord: Peter Kemp Date of Hearing: 1 June 2000 Date of Judgment: 1 June 2000