Jackson v Sterling Industries Ltd

My additional comments relate to the question whether the orders requiring the appellant to "provide security in the sum of $3,000,000" might be a nullity. As presently advised, I consider that the making of the orders amounted to an error in principle, rather than a jurisdictional error. The Federal Court had jurisdiction to grant the final relief sought in the action by the respondent. There is no analogy with Reg. v Ross-Jones; Ex parte Green [1] , where the Family Court was held to have no jurisdiction to grant an interlocutory injunction in a proceeding where there was no semblance of jurisdiction to grant the permanent injunction claimed.

Here the issue was whether the form of interlocutory relief granted by Sheppard J. was appropriate to keep the matter in statu quo pending a determination of the claim to final relief. I do not regard the making of the orders as transcending such jurisdictional limits as may be implied in the authority which s. 23 of the Federal Court of Australia Act 1976 Cth confers to make orders "as the Court thinks appropriate". Generally speaking, other things being equal, when matters of principle are invoked to confine the making of orders by a superior court, pursuant to a power given to it by statute, it is preferable to regard those matters as regulating the exercise of the power, than to regard them as going to the existence of jurisdiction to make the orders.

We agree with Deane J. Since the first appearance of the remedy, the power to grant a Mareva injunction has been a matter of debate. It was initially seen to be derived from the power of the English High Court to "grant an injunction by an interlocutory order in all cases in which it appears to the court to be just or convenient so to do": s. 45(1) Supreme Court of Judicature (Consolidation) Act 1925 UK; Nippon Yusen Kaisha v Karageorgis [2] ; Mareva Compania Naviera S.A. v International Bulkcarriers S.A. [3] . Section 23 of the Federal Court of Australia Act 1976 Cth gives to the Federal Court a comparable power, in relation to matters in which it has jurisdiction, "to make orders of such kinds, including interlocutory orders as the Court thinks appropriate".

1. [1975] 1 W.L.R. 1093; [1975] 3 All E.R. 282. 2. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213.

It is not without difficulty that reliance has been placed upon statutory provisions of this kind because, according to accepted doctrine, they permit interlocutory relief in relation to the disposition of property only in aid of some existing legal or equitable right, not a mere chose in action: see Pivovaroff v Chernabaeff [4] ; Ex parte B.P. Exploration Co. (Libya) Ltd.; Re Hunt [5] . Initially the Mareva injunction was of limited scope being available only against a foreign defendant with movable assets within the jurisdiction which, unless restrained, he was likely to remove. Some broader rationale was needed both to explain and fashion the eventual extension of the remedy to defendants resident within the jurisdiction and to the dissipation of assets within the jurisdiction for the purpose of defeating any judgment: see Barclay-Johnson v Yuill [6] ; Rahman (Prince Abdul) v Abu-Taha [7] . It was to be found in the notion that the purpose of the Mareva injunction was to prevent the abuse of the process of the court by the frustration of its remedies: Iraqi Ministry of Defence v Arcepey Shipping Co. S.A. (The Angel Bell) [8] . The enactment in England of s. 37(3) of the Supreme Court Act 1981 UK, which confirmed the Mareva injunction in its extended form, rendered somewhat academic further debate in England upon the foundation of the remedy.

1. (1978) 16 S.A.S.R. 329. 2. [1979] 2 NSWL.R. 406. 3. [1980] 1 W.L.R. 1259, at pp. 1264-1266; [1980] 3 All E.R. 190, at pp. 194-195. 4. [1980] 1 W.L.R. 1268, at p. 1272; [1980] 3 All E.R. 409, at p. 411. 5. [1981] Q.B. 65, at p. 72.

However, if the power of a court to grant injunctions of the Mareva type and associated relief is to be found in its capacity to prevent the abuse of its process, then it is as much to be found in its inherent power as in any statutory power to grant such relief as is "just or convenient" or "appropriate". Thus it was that in Riley McKay Pty. Ltd. v McKay [9] the New South Wales Court of Appeal found the power to grant relief of the Mareva type in s. 23 of the Supreme Court Act 1970 NSW. Section 23 provides that the "Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales". No relevant distinction is to be drawn between the inherent power of the Court and that bestowed by the section although, as the Court of Appeal pointed out, the section confirms the inherent power without increasing it.

One important result of viewing the Mareva injunction in this way is to emphasize the limits of the remedy. Its use must be necessary to prevent the abuse of the process of the court. As Ackner L.J. pointed out in A. J. Bekhor & Co. Ltd. v Bilton [10] , the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. The remedy is not to be used to circumvent the insolvency laws.

In the Federal Court the power to grant a Mareva injunction may also be found in an inherent or, more correctly, implied power as well as in s. 23 of the Federal Court of Australia Act. It is an implied power because of the statutory nature of the Court. Notwithstanding that the Federal Court is declared by s. 5(2) of the Federal Court of Australia Act to be a superior court of record and a court of law and equity, there are limits upon its functions which differentiate it from other Australian superior courts. Ordinarily, a superior court of record is a court of general jurisdiction which means that, even if there are limits to its jurisdiction, it will be presumed to have acted within it. That is a presumption which is denied to inferior courts and is denied to a federal court such as the Federal Court. The consequence of the presumption is that prohibition does not, in general, go to a superior court, but prohibition is the means provided to keep such federal courts within the bounds of their jurisdictional limits: Constitution, s. 75(v); Judiciary Act 1903 Cth, s. 33(1)(b). In those courts jurisdiction cannot be presumed so as to displace this remedy: Reg. v Ross-Jones; Ex parte Green [11] . In this respect, federal courts differ from the supreme courts of the States which, although of statutory origin, are truly designated superior courts because they are invested with general jurisdiction by reference to the jurisdiction of the courts at Westminster. Nor does s. 32(1) of the Federal Court of Australia Act confer any general jurisdiction. That section, to the extent that the Constitution permits, confers jurisdiction on the Federal Court in respect of matters that are associated with matters in which the jurisdiction of the Court is invoked. Associated matters at common law or under State statute law form too wide a category to fall within any accrued or pendent jurisdiction which that Court may have and s. 32(1) has been held to do no more than confer jurisdiction upon the Federal Court in associated matters which arise under Commonwealth laws but in respect of which jurisdiction has not otherwise been conferred upon the Federal Court: Philip Morris Inc. v Adam P. Brown Male Fashions Pty. Ltd. [12] .

1. (1984) 156 C.L.R. 185, at pp. 207-221. 2. (1981) 148 C.L.R. 457, at pp. 494, 502, 516, 547.

However, the declaration of the Federal Court as a superior court is to be given effect as far as it can be and, as Aickin J. remarked in Philip Morris Inc. v Adam P. Brown Male Fashions Pty. Ltd. [13] , the vesting of judicial power in the specific matters permitted by the Constitution (see ss. 75, 76, 77) carries with it such implied power as is necessarily inherent in the nature of the judicial power itself. Having regard to the declaration of the Federal Court as a superior court and a court of law and equity, the implied power should be construed as being no less in relation to the jurisdiction vested in it than the inherent power of a court of unlimited, or general, jurisdiction.

Be that as it may, it cannot be suggested that either the power to grant relief under s. 23 or an implied power to prevent an abuse of process extends to the creation and enforcement of rights in addition to those for the protection or enforcement of which the jurisdiction of the Court is invoked. The power given by s. 23 is expressly limited to the making of orders in relation to matters in which the Court has jurisdiction and it does not extend the jurisdiction of the Federal Court. Nor could that Court's implied power be employed to create and enforce new rights. Whilst the implied power carries with it all that is necessary for the proper functioning of that Court, it does not extend its jurisdiction beyond that which is vested in it.

It has been a criticism of the Mareva doctrine that it constitutes an enlargement rather than the fulfilment of a court's function: see, e.g., Pivovaroff v Chernabaeff [14] , per Bray C.J.; Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 2nd ed. (1984), pars. 2183-2187. The criticism has not generally prevailed but it serves to emphasize the limited scope of the Mareva injunction. It exists not to create additional rights but to enable a court to protect its process from abuse in relation to the enforcement of its orders. It is neither a species of anticipatory execution nor does it give a form of security for any judgment which may ultimately be awarded. For the reasons given by Deane J., the orders made by the Federal Court went beyond the proper limits of the remedy and this appeal must be allowed.

Even though the orders ought not to have been made in the form in which they were, it does not appear to us that they were a nullity. The consequence is that the appellant was obliged to comply with them unless and until he obtained relief from them. It is not necessary to decide the point now, but we are not persuaded that the Federal Court lacked jurisdiction in any sense which would deprive its orders of effect. It had jurisdiction to entertain the application for interlocutory relief and to determine that application judicially. It erred, not because it assumed a power which it did not have, but because it exercised an existing power in an impermissible way. It was an erroneous exercise of its jurisdiction to make the orders which it did, and not a wrongful assumption of jurisdiction. The distinction may at times be fine but it is a necessary one and not just a matter of semantics. In the same way, a court which is given power to determine the facts upon which its jurisdiction depends may, if it proceeds upon a wrongful determination, be said in one sense to exceed its jurisdiction, but its orders will be valid unless and until corrected on appeal. The position is otherwise where it is apparent on the face of a purported exercise of jurisdiction that there is no power or where the court's jurisdiction depends upon matters in dispute which cannot be conclusively determined by the court: see R. v Hickman; Ex parte Fox and Clinton [15] ; Reg. v Ross-Jones; Ex parte Green; Reg. v Gray; Ex parte Marsh [16] .

1. (1945) 70 C.L.R. 598. 2. (1985) 157 C.L.R. 351.

The orders made by the Federal Court are effective until set aside, discharged or stayed. The fact that they were erroneously made is something to be taken into account in any proceedings consequent upon their having been disobeyed. The principle remains, however, that the order of a competent court must be obeyed whilst it remains in force: see Russell v East Anglian Railway Co. [17] ; Partington v Booth [18] ; Hughes v Williams [19] ; Rubie v Rubie [20] .

1. (1850) 3 Mac. & G. 104, at p. 124 [42 E.R. 201, at p. 208]. 2. (1817) 3 Mer. 148 [36 E.R. 57]. 3. (1847) 6 Hare 71 [67 E.R. 1087]. 4. (1911) 13 C.L.R. 350.

The power of the Federal Court to make the order challenged in this appeal depends on s. 23 of the Federal Court of Australia Act 1976 Cth which provides:

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. As Toohey J. points out, s. 23 confers on the Federal Court such powers as are necessary or incidental to the exercise of that Court's jurisdiction. But that is not to say that the Court's discretion to mould relief is at large. The relief which the Court is authorized to give does not extend beyond the grant of remedies appropriate to the protection and enforcement of the right or subject-matter in issue. In this case, an interlocutory remedy was sought and granted in an action in which the principal relief sought against the appellant was an award of damages. No interest in any fund or other property vested in the appellant was in issue. The interlocutory remedy sought against the appellant by the respondent was in the nature of a Mareva injunction, a remedy which is incidental to the exercise by a court of its jurisdiction to enter judgment for a debt or damages and which is designed to prevent the defendant from divesting himself of his assets whereby enforcement of such judgment might be frustrated.

The power to grant such an injunction does not support the making of an order which goes beyond what is in reasonable protection of a legal or equitable right which the court may enforce by judgment: cf. Siskina (Cargo Owners) v Distos S.A. [21] . To make an order giving an applicant, who has no more than a personal claim for damages, security for the payment of an amount that might be awarded is to go beyond what is in reasonable protection of his right, for it would convert him from an unsecured to a secured creditor. A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order. In this case, however, an objection to the order made is not novelty of form but error in principle. Although there is power to make an order in the nature of a Mareva injunction, it is wrong in principle to extract from the appellant's pocket a fund which, presumably, was to be available to satisfy any judgment for damages which might be awarded against him.

I am in agreement with the grounds which Deane J. advances for holding that the order was wrongly made. I too would allow the appeal but, the order having been made by a superior court of record, I agree that, without further argument, no order should now be made which might be taken as determining whether the appellant, at the time when the order required him to provide security, was bound to do so. It may be that the Federal Court's order itself established that Court's power to make it until this Court should otherwise decide: cf. Reg. v Ross-Jones; Ex parte Green [22] .

1. (1984) 156 C.L.R. 185, at pp. 215-216. Deane J.

Section 23 of the Federal Court of Australia Act 1976 Cth confers upon the Federal Court a broad power to make orders of such kinds, including interlocutory orders, as it "thinks appropriate". Wide though that power is, it is subject to both jurisdictional and other limits. It exists only "in relation to matters" in respect of which jurisdiction has been conferred upon the Federal Court. Even in relation to such matters, the power is restricted to the making of the "kinds" of order, whether final or interlocutory, which are capable of properly being seen as "appropriate" to be made by the Federal Court in the exercise of its jurisdiction.

There may have been a time when it would have been strongly arguable that the making of an interlocutory order to preserve assets of a defendant pending the determination of proceedings against him could not properly have been seen as "appropriate" to be made by a court in relation to the exercise of the jurisdiction to entertain the substantive proceedings. If that be so, that time has passed. Orders preventing a defendant from disposing of his assets so as to create a situation in which any judgment obtained against him would not be satisfied may be of comparatively recent development. They have, however, become an accepted incident of the jurisdiction of superior courts throughout most of the common law world. In this country, the jurisdiction to make such orders, commonly referred to as "Mareva injunctions", has been progressively asserted and exercised by the Supreme Courts of Victoria, New South Wales, Western Australia, Queensland, the Australian Capital Territory and South Australia.

Initially, injunctive orders to preserve assets were made to prevent a non-resident defendant from removing assets from the territorial limits of a court's jurisdiction so as to frustrate the effectiveness of any judgment that might be obtained: see Nippon Yusen Kaisha v Karageorgis [23] ; Mareva Compania Naviera S.A. v International Bulkcarriers S.A. [24] . In due course, it was perceived that a general interlocutory power to make orders preventing a defendant from disposing of his assets so as to defeat any judgment obtained in an action was an incident of the substantive jurisdiction to entertain the action and was not confined to the case where the defendant was a non-resident. That general power has been held to encompass an order requiring the disclosure by a defendant of his assets (see Bekhor Ltd. v Bilton [25] ; T.D.K. Tape Distributor v Videochoice Ltd. [26] ); an order for the delivery up (to a named solicitor) of designated assets which were not specifically in issue in the proceedings (see C.B.S. United Kingdom Ltd. v Lambert [27] ); and, an order restraining a local company from disposing of or dealing with assets which were outside the jurisdiction at least where they had been within the jurisdiction when the action commenced: see Hospital Products Ltd. v Ballabil Holdings Ltd. [28] ; on appeal [29] . Arguably, it extends to the making of an ancillary order after judgment to protect the efficacy of execution: see Stewart Chartering Ltd. v C. & O. Managements S.A. [30] . As a general proposition, it should now be accepted in this country that "a Mareva injunction can be granted if the circumstances are such that there is a danger of [the defendant's] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied": per Lord Denning M.R., Rahman (Prince Abdul) v Abu-Taha [31] quoted with approval by Street C.J. in Ballabil Holdings [32] .

1. [1975] 1 W.L.R. 1093; [1975] 3 All E.R. 282. 2. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213. 3. [1981] Q.B. 923. 4. [1986] 1 W.L.R. 141; [1985] 3 All E.R. 345. 5. [1983] Ch. 37. 6. [1984] 2 NSWL.R. 662. 7. (1985) 1 NSWL.R. 155. 8. [1980] 1 W.L.R. 460; [1980] 1 All E.R. 718. 9. [1980] 1 W.L.R. 1268, at p. 1273; [1980] 3 All E.R. 409, at p. 412. 10. (1985) 1 NSWL.R., at p. 160.

To some extent, the general power of the English High Court of Justice to grant a Mareva injunction was initially seen as based on the provisions of s. 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 UK: see also the Supreme Court Act 1981 UK, s. 37(3). That general power should, however, now be accepted as an established part of the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. That being so, the power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is comprehended by the express grant to that Court by s. 23 of the Federal Court of Australia Act of power, in relation to such matters, "to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate". Indeed, even in the absence of the provisions of s. 23, the Federal Court would have possessed power to make such orders in relation to matters properly before it, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. In that regard, I agree with the following comments of Bowen C.J. in his judgment in the present matter [33] :

In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words "inherent jurisdiction". Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process, is similar to, if not identical with, inherent power. 1. (1986) 69 A.L.R. 92, at p. 97.

However, the present problem relates not so much to the existence in the Federal Court of a general incidental power to grant injunctive relief to prevent a defendant disposing of specific assets so as to render nugatory a judgment obtained against him in proceedings within the jurisdiction of the Federal Court. It relates rather to the extent of that general power and, in particular, to whether the actual orders which the Federal Court has purported to make in the present case come within it.

The orders of the Federal Court which are now challenged by the appellant are those requiring the appellant to "provide security in the sum of $3,000,000". Those orders fall in a different category to any interlocutory order for the preservation of assets which has previously been made, at least in a reported case in this country. The basis of the initial order made by Sheppard J. was plainly adequate to warrant the grant of some relief in the nature of a Mareva injunction. That basis was that it appeared to his Honour that the present appellant, who was a respondent in the proceedings before him, remained in possession of assets representing the whole or most of an identified amount of $4,300,000 and that he was likely to dispose of those assets pursuant to an overall scheme to defeat any judgment which the present respondent, who was the applicant in those proceedings, might obtain against him. If the order had been restricted to injunctive relief preventing the appellant from disposing of so much of that $4,300,000 (or the assets representing that money) as remained in his possession, it would have clearly been within the powers of the Federal Court under s. 23 of the Act. However, the order which his Honour made differed in nature from the mere grant of such restricted injunctive relief. In terms, it provided that the present appellant "provide security in the sum of $3,000,000 in such manner and form as the parties may agree or, in default of agreement, the Court or its Registrar may approve". In the absence of agreement between the parties, it was subsequently ordered by Burchett J. that the "manner and form of providing the security ordered" be the payment of $3,000,000 (in cash or by bank cheque or partly in cash and partly by bank cheque) "to any Registrar" of the Federal Court or the "[p]rovision of security in the sum of $3,000,000 in such other manner and form as the Court or its Registrar" may approve. Beyond specifying that the $3,000,000 should be paid or provided by way of "security", the orders did not identify what, if anything, the money was to secure or what was subsequently to happen to it. Nor did they restrict the obligation of the appellant to pay the money by way of "security" by reference to the extent of the appellant's assets. The combined effect of the mandatory orders was to impose an unqualified requirement that, in the absence of approval of some "other manner and form", the appellant provide security by payment of the designated sum to a Registrar of the Federal Court.

There are three related grounds upon which these combined orders are susceptible of attack. First, they required the appellant to pay into court not money identified as being within his possession but money which he was required to provide or obtain regardless of source. Secondly, they go beyond a mere order for the preservation of assets pending judgment or execution in that they specifically required that the money be paid into court as "security". Thirdly, they failed to identify either what the money paid "to any Registrar" was to secure or what the entitlement of the appellant (or anyone else) was in relation to it after it has been so paid. Put in positive form, it appears to me that, when an order for the preservation of assets goes beyond simply restraining the defendant from disposing of specific assets until after judgment, it must be framed so as to come within the limits set by the purpose which it can properly be intended to serve. That purpose is not to create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him. Nor is it to introduce, in effect, a new vulnerability to imprisonment for debt, or rather for alleged indebtedness, by requiring a defendant, under the duress of the threat of imprisonment for contempt of court, to find money, which he may or may not have (whether or not at some point of time it may have been available to him), to guarantee to a plaintiff that any judgment obtained will be satisfied. It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action. It may be appropriate in a rare case that such an order requires the defendant actually to deliver assets to a named person or even to the court itself or (in "a most exceptional case") extends to the appointment of a receiver of all or part of the assets of a defendant company: see the discussion in the judgment of Street C.J., Ballabil Holdings [34] . Even in such cases however, the order must be confined to preserving assets until after judgment or, arguably, until there has been an opportunity to seek execution: it should not purport to create security over them in favour of the plaintiff and it should make clear that it goes no further than to deprive the defendant of possession of them for the purpose of precluding his disposal of them so as to defeat a judgment. That being so, any order requiring the delivery of assets should make clear that the assets will be held on behalf of the defendant until after judgment or further order and will then be re-delivered to the defendant unless they are made the subject of some other claim (e.g. by a person entitled to claim under a writ of execution) on behalf of the plaintiff or some other creditor.

The conclusion which I have reached in the present case is that the combined orders made by the Federal Court went beyond any order which could properly be made by that Court to the extent that they required the appellant to provide "security" by paying the amount of $3,000,000 to "any Registrar of the Court". It is true that the general effect of those orders could have been procured by an express order requiring the appellant to pay $3,000,000, being part of the identified sum of $4,300,000 or the proceeds thereof held by the appellant, to a designated person as receiver, to be held by that person on behalf of the appellant until a nominated time after judgment or until further order of the court with a proviso that that amount need not be paid to that person in the event that the appellant were to satisfy the Federal Court within a specified time that he had taken other steps (such as the provision of "security") to ensure that his assets were not dissipated prior to any judgment. It is also true that it would seem apparent that the initial order was framed by Sheppard J. on the basis that it represented a more favourable order from the appellant's point of view (by reason of the risk of self-incrimination) than would a simple order requiring the payment into court of $3,000,000 being part of the identified sum of $4,300,000. Notwithstanding those considerations however, it seems to me that the express formal orders of the Federal Court to provide "security" in the amount of $3,000,000 in the manner directed cannot properly be construed as not involving the creation of any security at all or as going no further than an order for the preservation of assets actually within the control of the appellant. That being so, the orders were not of a kind that it was within the power of the Federal Court to make as "appropriate" in relation to the proceedings before it or as an incident of its substantive jurisdiction to deal with those proceedings.

It follows that the appeal should be allowed. A question arises whether the relevant orders of the Federal Court were (at least formally) binding upon the appellant unless and until discharged or stayed (cf. Rubie v Rubie [35] ) or were a nullity which the appellant was entitled to ignore: cf. Reg. v Ross-Jones; Ex parte Green [36] . That question, which would be relevant to any contempt proceedings against the appellant by reason of his failure to comply with the terms of the mandatory injunction granted against him, was not canvassed in argument upon the hearing of the appeal to this Court. My tentative view upon it corresponds with that expressed by the Chief Justice in his judgment which I have had the benefit of reading subsequent to writing the foregoing. In the circumstances, and in the absence of further argument, no order should be made which might be construed as having the effect that the appellant is relieved from any consequences of his failure to comply with the requirements of the order of the Federal Court to provide security within the designated period.

1. (1911) 13 C.L.R. 350, at pp. 353-354. 2. (1984) 156 C.L.R. 185, at p. 203. Toohey J.

On 23 April 1986, in the Federal Court in Sydney, Sheppard J. ordered the appellant to "provide security in the sum of $3,000,000 in such manner and form as the parties may agree or, in default of agreement, the Court or its Registrar may approve" [37] . Sheppard J. made other orders against the appellant to which some reference will be appropriate later in these reasons.

Before a Full Court of the Federal Court (Bowen C.J. and Woodward J., with Jackson J. dissenting) the appellant unsuccessfully challenged the orders made against him [38] . He now appeals to this Court.

The original notice of appeal attacked the "jurisdiction" of the Federal Court to make the orders it did. The question is not one of jurisdiction, as counsel for the appellant recognized. By jurisdiction is meant:

the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision: Halsbury's Laws of England, 4th ed., vol. 10, par. 715.

The matter which the Federal Court had to decide was a claim by the respondent against the appellant and others by reason of their conduct in relation to the sale of a business, which conduct was alleged to have been misleading or deceptive or likely to mislead or deceive. The claim was one under s. 82 of the Trade Practices Act 1974 Cth, and at common law for fraudulent misrepresentation and negligent misstatement. The jurisdiction of the Court to entertain these claims was not in issue. The relief sought by the respondent was damages, interest, costs and

Such further or other relief, including orders pursuant to Section 87 of the Trade Practices Act as to the Court seems appropriate.

What was in issue on the appeal was the power of the Court to make the orders it did and the propriety of those orders if power existed. The notice of appeal was amended accordingly.

The notice of appeal describes the order to provide security as in the nature of a Mareva injunction. This is understandable as the description was one used in the courts below. Nevertheless, although reference to Mareva injunctions is appropriate for the resolution of this appeal, the real question is whether the Federal Court had power to make the orders it did, in particular the order for security.

It is necessary to say something of the circumstances in which Sheppard J. made his orders. His Honour had before him a number of motions by the respondent seeking a range of orders including: 1. an order that the appellant and other respondents to the application pay into court the sum of $3,000,000 as security for the payment of any judgment or costs ordered to be paid by them or any one of them; 2. alternatively, an order that the appellant pay into court the sum of $3,000,000.

For reasons that are not material to this appeal, the only order made relating to the sum of $3,000,000 was that against the appellant, being the order mentioned at the outset of these reasons. On 5 May 1986 Burchett J. amplified the order of Sheppard J. by directing that security be in the form of: (a) payment of $3,000,000 in cash to any Registrar of the Court; or (b) payment by bank cheque of $3,000,000 to any Registrar of the Court; or (c) payment partly in cash and partly by bank cheque of $3,000,000 to any Registrar of the Court; or (d) provision of security in the sum of $3,000,000 in such other manner and form as the Court or its Registrar might upon or prior to the provision of the security approve.

There has been no compliance by the appellant with the order of Sheppard J. and there is pending in the Federal Court a motion for punishment of the appellant by reason of his default.

The basis of the respondent's motions was that the respondent had good prospects of obtaining an award of damages against the appellant of some $3,000,000 and that, faced with that likelihood, the appellant had sought professional advice and thereafter proceeded to divest himself of his substantial assets. Furthermore, a company controlled by the appellant had borrowed from two finance companies amounts totalling $4,300,000 in cash and the appellant was taking active steps, again with professional advice, to dispose of that money so as to avoid meeting a judgment in favour of the respondent. The appellant had given the Brisbane police an explanation of an alleged disappearance of the $4,300,000 which Sheppard J. found was quite improbable. His Honour concluded that the appellant still had control of the money or had acquired assets with it. In addition, the appellant had secured an adjournment of the substantive application against him on the ground of ill health when, on the evidence available to him, Sheppard J. concluded that the appellant's object was to gain time to dispose of his assets.

In those circumstances his Honour was concerned that the appellant should not deliberately act so as to avoid meeting a judgment against him. But he was also concerned that an order requiring the appellant to pay into court $3,000,000 of the $4,300,000 borrowed by the company he controlled might require the appellant to incriminate himself by acknowledging his continued possession or control of money which he told the police had disappeared. In the end his Honour decided that an order that the appellant provide security in the sum of $3,000,000 would be consistent with the Court's powers and would avoid any question of self-incrimination.

The first issue that arises is his Honour's power to make the orders he did. The Federal Court was established by the Federal Court of Australia Act 1976 Cth. In Thomson Australian Holdings Pty. Ltd. v Trade Practices Commission [39] , Gibbs C.J., Stephen, Mason and Wilson JJ. said:

The Federal Court of Australia Act sets up the Federal Court and arms it with certain powers, e.g. ss. 22 and 23. But generally speaking, and apart from s. 32, the Act does not invest the Court with jurisdiction. It leaves it to the Parliament to do so by other statutes (s. 19). This the Parliament has done by other statutes, such as the Trade Practices Act. 1. (1981) 148 C.L.R. 150, at p. 161.

It follows that to determine the jurisdiction of the Court in a particular matter, regard must generally be had to some statute other than the Federal Court of Australia Act. In the present case jurisdiction to entertain the claim under the Trade Practices Act derives from that Act. Jurisdiction to deal with the common law claims made by the respondent depends upon the considerations mentioned in Fencott v Muller [40] and Stack v Coast Securities (No. 9) Pty. Ltd. [41] .

1. (1983) 152 C.L.R. 570. 2. (1983) 154 C.L.R. 261.

An Act conferring jurisdiction on the Federal Court may of course confer particular powers on the Court in respect of the subject-matter of jurisdiction. Thus s. 80 of the Trade Practices Act empowers the Court to grant an injunction in a range of circumstances. Section 87 empowers the Court to make a variety of orders where, in a proceeding instituted under Pt VI, "Enforcement and Remedies", the Court finds that a person who is a party to the proceeding has suffered or is likely to suffer loss or damage by conduct of another that was engaged in in contravention of a provision of Pt IV or V. Orders under s. 87 are not dependent upon the granting of an injunction under s. 80. Indeed, by reason of recent amendments to s. 87 made as a result of the decision of this Court in Sent v Jet Corporation of Australia Pty. Ltd. [42] , s. 87(1A) is capable of sustaining a separate cause of action.

The Federal Court is a creature of statute, but so too are the superior courts and other courts of this country. The High Court itself has the jurisdiction conferred upon it by the Constitution and Acts of the Parliament. Though it is common to speak of the inherent jurisdiction possessed by superior courts of unlimited jurisdiction, in truth there is within the federal system of this country no court of unlimited jurisdiction. The notion of inherent jurisdiction is in any event capable of misleading for, when examined, it is invariably concerned with the power of a particular court to act in a particular way: see, e.g., the analysis of judicial decisions in Riley McKay Pty. Ltd. v McKay [43] . In Reg. v Forbes; Ex parte Bevan [44] Menzies J. said of inherent jurisdiction that it is "the power which a court has simply because it is a court of a particular description". A Full Court of the Federal Court commented in Parsons v Martin [45] :

In our opinion a court exercising jurisdiction conferred by statute has powers expressly or by implication conferred by the legislation which governs it. This is a matter of statutory construction. We are of opinion also that it has in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred.

In view of the way in which the phrase "inherent jurisdiction" is used in many of the cases, it seems advisable generally to avoid the use of it to refer to this incidental and necessary power of a statutory court.

1. [1982] 1 NSWL.R. 264. 2. (1972) 127 C.L.R. 1, at p. 7. 3. (1984) 5 F.C.R. 235, at p. 241.

To formulate the question in the present case by reference to the existence and history of Mareva injunctions tends to obscure the basic question which goes to the power of the Federal Court. Nevertheless decisions relating to Mareva injunctions may throw light on the question of powers arising expressly or by implication from legislation conferring jurisdiction and they may also throw light upon the existence of such powers as may be incidental and necessary to the exercise of that jurisdiction or the powers so conferred.

Counsel for the appellant submitted that s. 23 of the Federal Court of Australia Act, in so far as it relates to interlocutory orders, is comparable with s. 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 UK, s. 66(4) of the Supreme Court Act 1970 NSW and s. 62(2) of the Supreme Court Act 1958 Vic. Proceeding on that basis, counsel argued that in the United Kingdom the settled rule in relation to s. 45(1) of the Supreme Court of Judicature (Consolidation) Act is that, on its proper construction, it enables an interlocutory injunction to be granted only in protection or assertion of some legal or equitable right which could be enforced by final judgment. The authorities offered in support of that submission were North London Railway Co. v Great Northern Railway Co. [46] and Siskina (Cargo Owners) v Distos S.A. [47] .

There is no reason why s. 23 of the Federal Court of Australia Act should be regarded as the counterpart of s. 45(1) of the Supreme Court of Judicature (Consolidation) Act or of the other provisions with which it was compared. Section 23 should be read according to its language and it is apparent that, where jurisdiction exists, the section confers a wide range of powers, though these powers must be read in the light of the comment by the majority in Thomson's Case [48] :

So also with s. 23; it arms the Court with power to make all kinds of orders and to issue all kinds of writs as may be appropriate, but it does not provide authority for granting an injunction where there is otherwise no case for injunctive relief. Section 23 reads: The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 1. (1981) 148 C.L.R., at p. 161.

In North London Railway Co. v Great Northern Railway Co. [49] , Cotton L.J. said of s. 25(8) of the Judicature Act 1873 UK, the forerunner of s. 45(1) of the Supreme Court of Judicature (Consolidation) Act:

In my opinion, all that was done by this section was to give to the High Court power to give a remedy which formerly would not have been given in that particular case, but still only a remedy in defence of or to enforce rights which according to law were previously existing and capable of being enforced in some or one of the different Divisions which are now united in the High Court. 1. (1883) 11 Q.B.D., at pp. 39-40.

That statement was endorsed by Lord Diplock in Siskina (Cargo Owners) v Distos S.A. [50] , though Jessel M.R. had taken a much broader view of the power in Beddow v Beddow [51] . But s. 23 speaks for itself. It is not concerned with divisions between law and equity nor with the historical divisions of the High Court of England. It is s. 5(2) of the Federal Court of Australia Act that established the Federal Court as "a superior court of record and a court of law and equity". The effect of s. 23 is to equip the Federal Court with powers arising expressly or by implication, in this case from the Trade Practices Act, and with powers that are incidental and necessary to the exercise of the jurisdiction conferred by that Act and the powers so conferred: see, e.g., Hughes v Western Australian Cricket Association (Inc.) [52] . More generally, the section gives to the Federal Court "the powers necessary for it to do justice in exercising the judicial power of the Commonwealth in matters over which it has jurisdiction": Ellicott J. in Hiero Pty. Ltd. v Somers [53] . The reference by Cotton L.J. to previously existing rights is therefore inapplicable to s. 23.

1. [1979] A.C., at p. 256. 2. (1878) 9 Ch. D. 89. 3. (1986) 66 A.L.R. 541. 4. (1983) 68 F.L.R. 171, at p. 178; 47 A.L.R. 605, at p. 612.

In Mareva Compania Naviera S.A. v International Bulkcarriers S.A. [54] , the case which gave its name to Mareva injunctions, Lord Denning M.R. approached the question of granting or refusing the particular injunction sought in that case as one of practice. Whether or not it be right to describe the question as one of practice, it is certainly one going to the power of the court. But in either case there is no reason to assume that the operation of the power (or the application of the practice) must be assessed by reference only to earlier decisions. Courts must respond to the situations of the time, as is apparent from the way in which the scope of Mareva injunctions has been extended.

1. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213.

From a decision which was concerned to freeze the assets of a foreign-based defendant (the Mareva Case itself, following Nippon Yusen Kaisha v Karageorgis [55] ), similar orders have been made against a foreign resident temporarily within the jurisdiction (Chartered Bank v Daklouche [56] ) and against local residents: Barclay-Johnson v Yuill [57] ; Rahman (Prince Abdul) v Abu-Taha [58] . A Mareva injunction has been granted after as well as before judgment (Stewart Chartering Ltd. v C. & O. Managements S.A. [59] ; Orwell Steel Ltd. v Asphalt Ltd. [60] ) and has, in some circumstances, been made available against a third party if that party is in possession or control of the defendant's property: Galaxia Maritime S.A. v Mineralimportexport [61] . It has been held no longer necessary that there should be a risk of removal of assets beyond the jurisdiction: Rahman (Prince Abdul) v Abu-Taha; Australian Iron & Steel Pty. Ltd. v Buck [62] . Recently orders have been made restraining defendants from leaving the jurisdiction when to do so may frustrate a Mareva injunction: Al Nahkel Trading Ltd. v Lowe [63] ; Bayer A.G. v Winter [64] .

1. [1975] 1 W.L.R. 1093; [1975] 3 All E.R. 282. 2. [1980] 1 W.L.R. 107; [1980] 1 All E.R. 205. 3. [1980] 1 W.L.R. 1259; 3 All E.R. 190. 4. [1980] 1 W.L.R. 1268; 3 All E.R. 409. 5. [1980] 1 W.L.R. 460; [1980] 1 All E.R. 718. 6. [1984] 1 W.L.R. 1097; [1985] 3 All E.R. 747. 7. [1982] 1 W.L.R. 539; [1982] 1 All E.R. 796. 8. [1982] 2 NSWL.R. 889. 9. [1986] Q.B. 235. 10. [1986] 1 W.L.R. 497; [1986] 1 All E.R. 733.

The factual situation arising in a given case may not previously have been considered by the courts. But notions such as the Mareva injunction will inevitably develop in response to particular circumstances and as their "doctrinal basis" receives further definition: see Glass J.A. in Ballabil Holdings Pty. Ltd. v Hospital Products Ltd. [65] .

The orders of Sheppard J. were not made in terms restraining the disposition of assets of the appellant; at least that is true of the order to provide security. Other orders were made enjoining the appellant from dealing with so much of the $4,300,000 as was held in safety deposit boxes or dealing with any assets acquired with that money. The appellant made no serious challenge to those orders. It would seem that in any event there was at the time the order was made no money in the boxes. If the order to provide security is upheld, there can be no doubt as to the efficacy of the other orders.

The decision of this Court in Thomson's Case does not stand in the way of the evolutionary approach mentioned earlier. There the Court was concerned with the power of the Federal Court to accept undertakings or grant injunctions in an action brought under the Trade Practices Act, where the conduct restrained by the undertaking or injunction would not have been in contravention of that Act. The practical effect of that decision has been significantly reduced by the 1983 amendments to s. 80 of the Trade Practices Act. But quite apart from those amendments, Thomson's Case was concerned with injunctions and undertakings given in relation to the final determination of an application. This Court is presently concerned with an order of an interlocutory nature designed to ensure that a judgment, if obtained against the appellant, will not prove useless. To that extent, the description by the majority in Thomson's Case of s. 80 (as it then stood) as constituting "the Federal Court's exclusive charter to grant injunctions restraining, or relating to, contraventions of the Trade Practices Act " [66] is not apposite to the present appeal.

It is apparent that Sheppard J. considered the case before him to be an unusual one. He commented:

It is the very extraordinary and unusual circumstances of the case and the systematically and blatantly fraudulent conduct of Mr. Jackson which the applicant submits call for an order of the extreme kind here claimed. None of these considerations go, I think, to the Court's jurisdiction. They go to the exercise of its discretion. His Honour then went on to describe the present respondent's fears as "well-founded", continuing: Mr. Jackson's conduct establishes, not only his intention, but also his determination, to deprive the applicant of the benefit of the judgment it expects to recover. Nothing that has emerged in the course of the hearing leads me to think that he is likely to waiver [sic] from his chosen course. He is determined to avoid the consequences of judgment if he possibly can. I thus agree with counsel for the applicant that nothing short of an order such as he seeks will prevent the continued divestiture and concealment of assets which began with the advice given in July last year. To refuse the order is to stand by and see the Court's processes frustrated by fraudulent conduct. It is in those circumstances that I have reached the conclusion that I should accede to the application.

No doubt the power to order security is one to be exercised with great caution. But the order made by Sheppard J. was, in my view, within power and was, in the particular circumstances of the case, an appropriate order to be made. It is true that the order to provide security did not relate to assets, specifically or generally. But that may be only to say that a Mareva injunction in its strict sense is not what was ordered. The order was made in support of the principal claim and was made in a very special factual context to ensure that assets believed to be in the possession or control of the appellant were not dealt with quite deliberately to avoid meeting any judgment the respondent might obtain. And the terms of the order were dictated by what his Honour saw as the need to meet any question of self-incrimination that might otherwise arise on compliance. In that context it was an order made "in relation to" a matter in which the Court had jurisdiction and it was incidental and necessary to the exercise of that jurisdiction. Again in that context the order did not run counter to the principle that a court will not grant an injunction to restrain a defendant from disposing of his assets merely to improve the prospects of the plaintiff, if successful, in recovering his judgment: see Barclay-Johnson v Yuill . Nor was the order made to give the respondent some advantage over other creditors of the appellant. It was framed so as to avoid that result.

Counsel for the appellant argued that a consequence of the order is that his client is liable to imprisonment for non-payment of a debt, a notion that the law has turned its face against. But that is not so. Sheppard J. made the order for security because the evidence satisfied him that an amount of $3,000,000 was available to the appellant. If the appellant stands in risk of imprisonment, it is because of his disobedience of an order of the court and for no other reason.

However there is one aspect of the matter remaining to be considered. In the Full Court of the Federal Court, Jackson J. dissented from the dismissal of the present appellant's appeal ordered by Bowen C.J. and Woodward J. His Honour did so, not because he doubted the Court's power to make the order sought by the respondent, but because he considered the effect of the order was to make the respondent a secured creditor if the appellant became bankrupt. Indeed, the appellant tried to file a debtor's petition but this was refused by the Registrar and it seems that there are in existence injunctions restraining the Registrar from accepting the petition and also restraining a creditor's petition against the appellant, pending determination of this appeal.

I do not think that the order of Sheppard J. had the effect contended for by Jackson J. As Bowen C.J. pointed out, the order was "not designed to give the applicant security in the sense of a preference or priority over other creditors. Rather it is directed to enabling Mr. Jackson to provide security to the Court for payment of $3 million as a more flexible order than an order to pay into Court that sum in cash. For example, if Mr. Jackson became bankrupt after paying the money into Court the Trustee would be entitled to approach the Court in respect of the payment out of the money. Sterling would not have any preference or priority over other creditors in such a case."

Sheppard J. ordered that $3,000,000 be paid into court by way of security. Ironically, on 27 April 1986 the appellant consented to judgment in favour of the respondent in the sum of $3,250,000 with costs. Orders giving effect to the consent were made on 29 April; judgment was entered on 30 April. The time for compliance with the order for security was 2 May. Had judgment been entered before the order of Sheppard J., different questions may have arisen. But both in the Full Court and before this Court neither side argued that the entry of judgment bore upon the questions for determination.

Sterling Industries Ltd. commenced action against John William Jackson (the appellant) and other persons in the Federal Court of Australia in 1984. The action, in which judgment has now been entered, was for damages arising out of the sale to Sterling Industries Ltd. of two taverns. Sterling Industries Ltd. claimed that certain statements made in relation to the sale constituted conduct proscribed by s. 52 of the Trade Practices Act 1974 Cth and additionally constituted fraudulent misrepresentation, or alternatively, negligent misstatement entitling it to damages.

On 23 April 1986 the Court ordered, inter alia, that Mr. Jackson:

1. provide security in the sum of $3,000,000 in such manner and form as the parties may agree or, in default of agreement, the Court or its Registrar may approve.

2. The time for compliance with order number 1 shall be not later than 2:30 p.m. on Friday 2nd May, 1986.

3. The security provided in compliance with order number 1 hereof is not to be released except by the consent of the parties or the further order of the Court.

That part of the order above set forth was the subject of an appeal to the Full Court of the Federal Court and is the subject of the present appeal. For the sake of convenience it is hereafter referred to as "the order".

The order was treated by the parties and indeed by the Federal Court, both at first instance and on appeal, as an order "in the nature of a Mareva injunction", that being the description given to orders whereby a defendant is restrained from dealing with assets in a manner designed to thwart the plaintiff in his efforts to have satisfied any judgment obtained in the action. Such an order is commonly made before judgment, but has on at least one occasion been granted after judgment in aid of execution: Stewart Chartering Ltd. v C. & O. Managements S.A. [67] .

Initially such orders were made only against foreign defendants to restrain them from removing assets from the jurisdiction: see Siskina (Cargo Owners) v Distos S.A. (The Siskina) [68] , per Lord Diplock. However, more recently such orders have been made against defendants ordinarily present within the jurisdiction (Barclay-Johnson v Yuill [69] ) and in restraint not only of the removal of assets from the jurisdiction, but also of dissipation of such assets within the jurisdiction of the Court: see, e.g., Rahman (Prince Abdul) v Abu-Taha [70] ; and Australian Iron & Steel Pty. Ltd. v Buck [71] . In the United Kingdom that development was sanctioned by the enactment of s. 37(3) of the Supreme Court Act 1981 UK which expressly empowers the High Court to grant an injunction restraining a party to any proceedings from removing assets from the jurisdiction, or otherwise dealing with such assets, whether or not the party is domiciled, resident or present within the jurisdiction.

1. [1979] A.C. 210, at p. 253. 2. [1980] 1 W.L.R. 1259; [1980] 3 All E.R. 190. 3. [1980] 1 W.L.R. 1268; [1980] 3 All E.R. 409. 4. [1982] 2 NSWL.R. 889.

The development of the Mareva injunction has been accompanied by judicial and academic debate as to what has been described as its "jurisdictional base": see, e.g., Heatherington, Inherent Powers and the Mareva Jurisdiction, Sydney Law Review, vol. 10 (1982-1985), p. 76; McGill, The Jurisdictional Basis for the Mareva Injunction, University of New South Wales Law Journal, vol. 3 (1980), p. 434; Martin, Mareva Injunctions, Australian Law Journal, vol. 59 (1985), p. 22; McAllister, Mareva Injunctions (1983); Spry, Equitable Remedies, 3rd ed. (1984), pp. 491-503, and Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 2nd ed. (1984), pp. 574-581. The possible sources of authority for such orders were canvassed by the New South Wales Court of Appeal in Riley McKay Pty. Ltd. v McKay [72] , it being held in that case that the Supreme Court of New South Wales derived its authority to make such orders "from the Supreme Court Act, s. 23, or from the Court's inherent power".

Initially in the United Kingdom authority for the making of such orders was sourced to s. 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 UK. By that sub-section it was provided that:

The High Court may grant a mandamus or an injunction or appoint a receiver by an interlocutory order in all cases in which it appears to the court to be just or convenient so to do.

This source was expressly identified in Nippon Yusen Kaisha v Karageorgis [73] ; Mareva Compania Naviera S.A. v International Bulkcarriers S.A. (The Mareva) [74] ; and Rasu Maritima S.A. v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (The Pertamina) [75] . The correctness of that sourcing was questioned, but not decided, in The "Siskina" . The enactment of s. 37(3) of the Supreme Court Act would seem to have obviated the necessity for identifying a source of authority independent of s. 37 for the making of such orders in the United Kingdom.

1. [1975] 1 W.L.R. 1093; [1975] 3 All E.R. 282. 2. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213. 3. [1978] Q.B. 644.

However, developments prior and subsequent to this enactment in relation to the grant of Mareva orders (particularly in relation to the rights of third parties) suggest a movement towards the identification of such orders as an aspect of what, in the absence of legislative sanction, would otherwise be identifiable as inherent power.

The nature and purpose of the inherent power of a court was explained in Cocker v Tempest [76] by Alderson B. in these terms:

The power of each Court over its own process is unlimited; it is a power incident to all Courts, inferior as well as superior; were it not so, the Court would be obliged to sit still and see its own process abused for the purpose of injustice The power must be used equitably; but if it be made out that the process of the Court is used against good faith, the Court ought to interfere to prevent it, for the purpose of administering justice. In Connelly v Director of Public Prosecutions [77] , Lord Morris stated that one purpose of inherent power was "to defeat any attempted thwarting of [the Court's] process". 1. (1841) 7 M. & W. 502, at pp. 503-504 [151 E.R. 864, at p. 865]. 2. [1964] A.C. 1254, at p. 1301.

In Barclay-Johnson v Yuill [78] , Sir Robert Megarry V.C. noted that "the heart and core of the Mareva injunction is the risk of the defendant removing his assets from the jurisdiction and so stultifying any judgment given by the courts in the action".

1. [1980] 1 W.L.R., at p. 1264; [1980] 3 All E.R., at p. 194.

Similarly, in Iraqi Ministry of Defence v Arcepey Shipping Co. S.A. (The Angel Bell) [79] , Robert Goff J. stated that the purpose of a Mareva injunction "was not in any way to improve the position of claimants in an insolvency but simply to prevent the injustice of a foreign defendant removing his assets from the jurisdiction which otherwise might have been available to satisfy a judgment".

In Z. Ltd. v A-Z and AA-LL [80] , Kerr L.J. gave expression to a similar principle in holding that the power to grant Mareva injunctions:

would not be properly exercisable against the majority of defendants who are sued in our courts. In non-international cases, and also in many international cases, the defendants are generally persons or concerns who are established within the jurisdiction in the sense of having assets here which they could not, or would not wish to, dissipate merely in order to avoid some judgment which seems likely to be given against them; bearing in mind that the great value of this jurisdiction must not be debased by allowing it to become something which is invoked simply to obtain security for a judgment in advance, and still less as a means of pressurising defendants into settlements. 1. [1982] Q.B. 558, at pp. 585-586.

Although the passages above cited do not expressly identify the order in question as an aspect of what would (in the absence of statutory authority) be the inherent "jurisdiction" or power of the court to control abuse of its process, they certainly reveal similarities with the criteria applicable to the exercise of such power. In Connelly v Director of Public Prosecutions , Lord Morris [81] held that "There can be no doubt that a court which is endowed with a particular jurisdiction has powers which are necessary to enable it to act effectively within such jurisdiction"; and this power has not, traditionally, been restricted to defined and closed categories (Tringali v Stewardson Stubbs & Collett Ltd. [2] ) but may be exercised where the administration of justice demands it: Cocker v Tempest; Ferris v Lambton [3] . An asset preservation order of the Mareva variety, issued only where the court is satisfied that a defendant is deliberately disposing of his assets with the object of defeating or frustrating the ultimate judgment of the court, would be within the scope of such power.

1. [1964] A.C., at p. 1301. 2. (1966) 66 S.R. (NSW) 335. 3. (1905) 22 W.N. (NSW) 56, at p. 57.

Although for reasons hereafter appearing it is my view that s. 23 of the Federal Court of Australia Act 1976 Cth ("the Federal Court Act") confers power upon the Federal Court to make orders restraining a defendant from dealing with assets in such manner as to thwart any judgment obtained in the action, it seems to me that such orders ought to be recognized as an aspect of what would, statutory authority aside, commonly be identified as inherent power. Such recognition is consistent with the practice which has developed in Australia and the United Kingdom in relation to the making of such orders. It reveals the nature and effect of these orders, and may provide assistance in the future development of the law and practice in this area.

Section 23 empowers the Federal Court of Australia:

in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. It was argued that s. 23 should be construed in the light of judicial exposition of the meaning and effect of the similarly worded provision of s. 25(8) of the Supreme Court of Judicature Act 1873 UK which provided that: A mandamus or an injunction may be granted or a receiver appointed by an interlocutory Order of the Court in all cases in which it shall appear to the Court to be just or convenient that such Order should be made .

Of that provision it was stated by Cotton L.J. in North London Railway Co. v Great Northern Railway Co. [4] :

In my opinion the sole intention of the section is this: that where there is a legal right which was, independently of the Act, capable of being enforced either at law or in equity, then, whatever may have been the previous practice, the High Court may interfere by injunction in protection of that right. 1. (1883) 11 Q.B.D. 30, at p. 40.

That construction of the provision and its successor provision (viz. s. 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 UK) was approved by the House of Lords in The "Siskina" [5] .

A similar construction of s. 23, it was argued, would result in the consequence that the Federal Court's powers should extend only to the making of an interlocutory order in protection or assertion of some legal or equitable right enforceable by final judgment. Any comparison of s. 23 of the Federal Court Act with the similarly worded provisions of the legislation in the United Kingdom necessarily reveals that s. 23 makes express provisions as to the circumstances in which the Federal Court's powers may be exercised, viz. "in relation to matters in which it has jurisdiction" whereas the legislative provisions in the United Kingdom were silent as to those circumstances. It was precisely this question which was addressed in North London Railway Co. v Great Northern Railway Co. , in which it was held that as there was no legal right in issue, merely a question of convenience and the saving of cost, the Court did not have the power to issue the injunction sought. In considering the "jurisdiction" conferred by the legislation, Cotton L.J. said [6] :

all that was done by this section was to give to the High Court power to give a remedy which formerly would not have been given in that particular case, but still only a remedy in defence of or to enforce rights which according to law were previously existing and capable of being enforced in some or one of the different Divisions which are now united in the High Court. 1. (1883) 11 Q.B.D., at pp. 39-40.

This principle was affirmed in The "Siskina" [7] , where the Court refused to issue an injunction in reliance on the powers conferred by s. 45(1) of the Supreme Court of Judicature (Consolidation) Act on the basis that it had no jurisdiction to entertain the cause of action asserted in the proceedings.

In these circumstances, there is no basis for the reading down of the words of s. 23 of the Federal Court Act by parity of reasoning with the decisions in those cases. Unlike s. 25(8) of the Supreme Court of Judicature Act and s. 45(1) of the Supreme Court of Judicature (Consolidation) Act, which concern themselves with interlocutory orders, s. 23 confers power to make orders, including interlocutory orders. In each such case, the power conferred by s. 23 extends, as noted above, to making orders "in relation to matters in which it has jurisdiction". The express conferral of power in such terms necessarily excludes any confinement of power to make interlocutory orders only in protection or assertion of some legal or equitable right enforceable by final judgment.

In Thomson Australian Holdings Pty. Ltd. v Trade Practices Commission [8] it was held that s. 23 does not enlarge powers circumscribed by or in connexion with the grant of jurisdiction, and in particular, does not authorize the grant of an injunction where there is otherwise no case for injunctive relief. That case was not an exhaustive exposition of the limits of the powers conferred by s. 23. Section 23 must be read in the context of any relevant conferral of jurisdiction and any legislative provision limiting the relief to which a party is entitled, including s. 22 of the Federal Court Act which not only authorizes the Federal Court to determine "all matters in controversy between the parties", but authorizes such determination by the granting of "remedies to which any of the parties appears to be entitled" in respect of a legal or equitable claim properly brought forward by him in the matter. Section 23 does not authorize the granting of relief other than relief entitled in respect of a claim brought forward. However, subject to these considerations, the Court has power to make such orders as the Court thinks appropriate "in relation to matters in which it has jurisdiction". So long as the orders made in restraint of dealing with assets are confined within these bounds, the Federal Court is possessed of power in relation to matters in which it has jurisdiction to make such orders if the Court thinks it appropriate.

The development of the law and practice relating to the making of orders in restraint of dealing with assets has made it clear that such an order creates no right in the plaintiff in the assets the subject of the order: see The "Angel Bell" [9] . The practice has developed that such orders may and should be varied to allow payment of debts incurred in the ordinary course of business even if not legally enforceable (The "Angel Bell" [10] ; Bakarim v Victoria P. Shipping Co. Ltd. (The Tatiangela) [11] ; and Riley McKay Pty. Ltd. v McKay ), to allow the defendant sufficient funds to meet reasonable living expenses (P.C.W. (Underwriting Agencies) Ltd. v Dixon [1] ), and to prevent interference with the rights of third parties: Galaxia Maritime S.A. v Mineralimportexport (The Eleftherios) [2] ; Clipper Maritime Co. Ltd. v Mineralimportexport (The Marie Leonhardt) [3] ; and Searose Ltd. v Seatrain UK Ltd. [4] . The practice is thus inconsistent with acquisition by a plaintiff of rights in respect of assets the subject of such order. As was stated by Buckley L.J. in Cretanor Maritime Co. Ltd. v Irish Marine Ltd. [5] :

Under such an injunction the plaintiff has no rights against the assets. He may later acquire such rights if he obtains judgment and can thereafter successfully levy execution upon them, but until that event his only rights are against the defendant personally. 1. [1981] Q.B., at p. 72. 2. [1981] Q.B., at p. 73. 3. [1980] 2 Lloyd's Rep. 193. 4. [1983] 2 All E.R. 158. 5. [1982] 1 W.L.R. 539; [1982] 1 All E.R. 796. 6. [1981] 1 W.L.R. 1262; [1981] 3 All E.R. 664. 7. [1981] 1 W.L.R. 894; [1981] 1 All E.R. 806. 8. [1978] 1 W.L.R. 966, at p. 977; [1978] 3 All E.R. 164, at p. 172.

An order which restrains a defendant from dealing with his assets, but creates no right in the plaintiff in respect of those assets, does not constitute relief in any sense relevant to the operation of s. 23. In particular it does not constitute relief to which a party is not entitled in respect of the claim brought forward by it.

The order the subject of appeal does not merely restrain the appellant from dealing with his assets, but requires that he provide security.

If the effect of that order were to create in Sterling Industries Ltd. some legal interest in the security provided, as, e.g., by making it a secured creditor in the event of judgment being obtained, then the effect of the order would, in my view, be to provide relief, albeit contingent, to which Sterling Industries Ltd. would not be entitled in respect of the claim brought by it. If on the other hand the effect of the order is limited to provide security against the dissipation of assets pending further order of the Court and creates no interest in Sterling Industries Ltd. in the security, then the order is one which is comprehended within the powers conferred by s. 23 of the Federal Court Act.

The reasons for judgment of Sheppard J. which were given prior to the making of the order the subject of appeal, make it clear that his Honour fully understood the purpose intended to be served by a Mareva injunction. He characterized such injunction as "designed to confer power on the court to do what is reasonably necessary to achieve the securing of a defendant's or respondent's property against the day when judgment may be recovered, in circumstances where it is shown that, through activities of the defendant or respondent involving divestiture, disposal, concealment or sending out of the jurisdiction of assets, that may not be the case". That passage indicates that it is the defendant's or respondent's retention of the property within the jurisdiction which was the object of a Mareva injunction, and the object of the order as made. There is nothing in his Honour's reasons for judgment, or indeed in the proceedings themselves, to suggest that the intended effect was to create any interest in Sterling Industries Ltd. in the security ordered, or to affect Mr. Jackson's interest therein, otherwise than by the curtailment of his power to deal with his assets in a manner designed to defeat the purpose of the litigation. In these circumstances, I am of the view that the order created no right in Sterling Industries Ltd. in relation to the security to be given and was therefore within the power conferred by s. 23 of the Federal Court Act.