Khatri v Price

REASONS FOR JUDGMENT 1 Before 17 June 1999, six events occurred which it is necessary to set out for present purposes. 2 First, this Court, on the application of Mr Raj Khatri, made orders summoning certain persons to be examined before this Court about the affairs of a company which had earlier been ordered by a State Supreme Court to be wound up. (Mr Khatri had been appointed one of that company's liquidators by the State Supreme Court concerned.) Although this Court's orders did not identify the law under which they were made, it appears to have been the New South Wales Corporations Law. 3 Secondly, those examinations occurred, Mr Khatri participating in them. 4 Thirdly, this Court, on the application of Mr Khatri, made an order granting to a solicitor acting for Mr Khatri a warrant to search for and seize certain documents relating to the company. Again, although this Court's order did not identify the law under which it was made, it must have been the same State Corporations Law. 5 Fourthly, that warrant was executed. 6 Fifthly, Mr Khatri applied to this Court for an order that (relevantly) Ms Joanne Price, a principal of the company concerned, pay the costs of his applications to this Court to which I have referred in pars 2 and 4 above and of his conduct to which I have referred in pars 3 and 5 above, that conduct having been engaged in by him pursuant to the orders made by this Court on those applications. 7 Sixthly, Mr Khatri's application referred to in the preceding paragraph was fixed for hearing after 17 June 1999. 8 Then, on 17 June 1999, the High Court of Australia decided Re Wakim; Ex parte McNally and three related cases: see (1999) 163 ALR 270. 9 After the High Court's decision in those cases, Ms Price denied this Court's jurisdiction to grant the relief sought by Mr Khatri on his application referred to in par 6 above. Mr Khatri, on the other hand, asserted that this Court continued to have the necessary jurisdiction. It was agreed between Mr Khatri and Ms Price that I should determine the question of this Court's jurisdiction to grant the relief sought by Mr Khatri solely on the basis of written submissions by each and I have now received such written submissions. 10 In his written submissions, Mr Khatri seeks to locate the source of this Court's continued jurisdiction to make the order for which he applies in subs 43(1) of the Federal Court of Australia Act 1976 (Cth) ("the Act"). That subsection provides relevantly that "a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction)". He draws attention to the fact that the word "proceeding" is defined, in s 4 of the Act, as follows: "proceeding means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal…." 11 Mr Khatri concedes that, since McNally, it has become apparent that the orders made by this Court to which I have referred in pars 2 and 4 above were all made without jurisdiction, a concession which was properly made: see McNally at 317, par 164, and 318, par 167 (Gummow and Hayne JJ). However, he points out that the jurisdiction to award costs conferred upon this Court by subs 43(1) of the Act depends merely upon there being "proceedings before the Court". There is no requirement, he says, that those proceedings be proceedings within the Court's jurisdiction. He further argues that the Parliament's intention that this Court have jurisdiction to award costs even in proceedings before it in which it has no jurisdiction was made plain by the reference in subs 43(1) of the Act to this Court's jurisdiction to award costs, even in proceedings dismissed for want of jurisdiction. In any event, he says, even if subs 43(1) of the Act had not contained an express reference to this Court's jurisdiction to award costs in proceedings dismissed by it for want of jurisdiction, that provision would have been construed as not including a requirement that the proceedings in which costs were being awarded be proceedings within this Court's jurisdiction. He relies for that submission upon Pezet v Pezet (1946) 47 SR (NSW) 45 (FCSC; Jordan CJ and Maxwell and Bonney JJ). 12 I do not accept the construction of subs 43(1) of the Act put forward by Mr Khatri. In order to explain why that is so, it is necessary that I first refer to some preliminary matters. 13 "[I]n truth there is within the federal system of this country no court of unlimited jurisdiction": Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630 (Toohey J). (Of course, the High Court of Australia, as the apex of the Australian judicial system, must, of necessity and uniquely, be the sole arbiter of the limits of its own jurisdiction, but that does not detract from the correctness of the proposition which I have just set out.) 14 Because any Australian court is a court of limited jurisdiction, its "first duty", when there has been a purported invocation of its jurisdiction, is to satisfy itself that it has the jurisdiction purportedly invoked: Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 at 415 (Griffith CJ). (In making his well-known statement, Griffith CJ gave, as a reason for the existence of such a "first" duty, "if only to avoid putting the parties to unnecessary risk and expense". That reason appears to imply that the duty is one which must be fulfilled "first" in the sense that the court concerned must determine the question of its jurisdiction before hearing any evidence or argument on issues which would arise in the proceeding if it did have the jurisdiction purportedly invoked. However, in spite of that reason's having been given by Griffith CJ, the duty has not been generally understood to be "first" in that sense. The duty has been generally understood instead as permitting the court concerned to exercise a discretion (subject, obviously (if the court is not the High Court), to appellate or supervisory review, whichever is appropriate) to postpone determining the question of its jurisdiction until after it has heard the whole case, provided, however, that having done so, it then "first" determines that question. (It appears, incidentally, that, in recent years, an approach had grown up among some lower American federal courts which denied the primacy of a court's duty to determine its jurisdiction in a case, even in the limited sense which I have just described. That approach, called "the doctrine of hypothetical jurisdiction", was rejected by the American Supreme Court in Steel Co v Citizens for Better Environment 140 L Ed 2d 210 at 226-32 (1998).)) 15 Given the duty to which I have just referred, it follows that every Australian court must have at least a limited jurisdiction in every proceeding in which its jurisdiction is purportedly invoked, namely, a jurisdiction to determine whether it has the jurisdiction which has been purportedly invoked. 16 When the proposition to which I have just referred is kept in mind, the construction of subs 43(1) of the Act appears to me to be a relatively simple task. 17 As I construe subs 43(1) of the Act, the "proceedings" to which it first refers are the typical ones before this Court, namely, those in which the purported invocation of this Court's jurisdiction has been proper. 18 Then, to deal with those proceedings before it in which the only jurisdiction which the Court has actually exercised has been its limited jurisdiction to determine that it does not have the jurisdiction purportedly invoked, subs 43(1) of the Act confers, by its parenthetical words, a jurisdiction to award costs in proceedings dismissed for want of jurisdiction. (Presumably, in cases where the Court has exercised the discretion to which I referred in par 14 above, that jurisdiction to award costs in proceedings dismissed for want of jurisdiction is intended to extend, not only to the costs of the jurisdictional aspect of the case, but also to the costs resulting from the hearing of evidence and argument on issues which would have arisen in the proceeding if the Court had held that it did have the jurisdiction purportedly invoked.) 19 Subsection 43(1) of the Act, does not, however, confer upon this Court a jurisdiction to award costs in proceedings in which it has purported to exercise a non-existent jurisdiction. Not only do the parenthetical words in subs 43(1) not support, for the reasons which I have already given, Mr Khatri's argument, but their presence appears to me to militate against that argument, by providing the basis for an expressio unius argument to be made in connection with the construction of subs 43(1). Nor do Pezet or any of the many other cases like it (see, eg, Commissioner of Taxes v Rooney [1936] SASR 289 at 296-98 (FCSC; Murray CJ, Richards J and Reed AJ); Proust v Blake (1989) 17 NSWLR 267 at 272 (CCA; Samuels JA and Campbell and Mathews JJ)) assist Mr Khatri. Such cases are of no assistance to Mr Khatri because they were concerned specifically with the jurisdiction to award costs in proceedings dismissed for want of jurisdiction. Mr Khatri was unable to point to any case (nor have I been able to find one myself) in which a conferral of jurisdiction upon a court to award costs in proceedings before it has been construed as authorising the awarding of costs in proceedings in which the court concerned has purported to exercise a non-existent jurisdiction. The absence of any such case is entirely unsurprising to me. 20 I should mention here that Mr Khatri also sought to rely, in support of his argument that this Court has jurisdiction to make the order which he seeks, on the principle discussed particularly by Rich J in Cameron v Cole (1944) 68 CLR 571 at 590, namely, that "the decision of a superior court, even if in excess of jurisdiction, is at the worst voidable, and is valid unless and until it is set aside". 21 Of course, that principle was developed in a unitary state and was relied upon in Cameron in a non-constitutional setting. Whether it would necessarily be applied in a case in which the decision of the superior court concerned was in excess of jurisdiction because of the unconstitutionality of the legislation purporting to confer that jurisdiction has not, so far as I am aware, been authoritatively determined (although see the reasons for judgment of Finkelstein J in Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 84 FCR 367 at 380). 22 However, ignoring that aspect of the matter, I am unable to see how that principle can assist Mr Khatri in the present case - the question, as I see it, is whether this Court's orders to which I have referred in pars 2 and 4 above were made without jurisdiction, something which, as was conceded by Mr Khatri, had effectively been determined against him in McNally, not whether, having been made without jurisdiction, they were nevertheless valid unless and until set aside. 23 By way of conclusion, I mention two further matters. 24 First, Ms Price referred me to a decision of Lindgren J, Pace v Antlers Pty Ltd [1999] FCA 1165 (unreported; 20 August 1999), in which, in a winding up summons in which the only issues outstanding were finalisation of the assessment of the liquidator's remuneration and questions of costs, his Honour concluded, as a result of McNally, that this Court had no jurisdiction to determine those issues. That decision supports the conclusion which I have reached in the present matter, which, as will be apparent from what I have already said, is that Mr Khatri's application to which I have referred in par 6 above must be dismissed as incompetent. 25 Secondly, both parties referred in their written submissions to the Federal Courts (State Jurisdiction) Act 1999 (NSW). However, I refrain from making any comment at all about that State law, because it can be of no assistance in construing subs 43(1) of the Act.