Kinham Pty Ltd v TKJ Nominees Pty Ltd

Introduction 1 The Court has before it a motion on notice whereby the applicants seek orders that these proceedings be stayed, with liberty to apply for orders or directions to enable the proceedings to be transferred to the Supreme Court of Western Australia. The principal application, which was initiated on 19 May 1999, is for declarations and other relief under ss 565 and 1317HD of the Corporations Law when read with s 121 of the Bankruptcy Act 1966 (Cth). In short, the applicant claims that certain transactions amounted to what are often described as undue preferences, and were transactions which fell within one or other of the descriptions of transactions in s 565(1) of the Corporations Law. It is common ground between the applicants and the respondents that this Court has no jurisdiction to hear and determine the applicants' claims - see Re Wakim; Ex parte McNally [1999] HCA 27. 2 The applicants seek an order for a stay so that a summons can be issued in the Supreme Court for an order under s 11(2) of the Federal Courts (State Jurisdiction) Act 1999 (WA) that the proceeding be treated as a proceeding in that Court. As counsel for the applicants note in their written outline of submissions, a prerequisite for such an order is that the proceeding be stayed in this Court for want of jurisdiction. 3 All of the respondents submit that it is no longer appropriate for an application to be stayed in this Court when it has no jurisdiction to deal with the application at all. The first respondent goes somewhat further and submits that the Court cannot make an order staying the proceedings as, so the first respondent submits, there are no proceedings to stay. The respondents concede that it may have been appropriate for a stay to be ordered while the decision in Re Wakim was pending. However, it is submitted that now that that decision has been made, "… it is appropriate that all remaining actions in the Federal Court be removed from the Court either by withdrawal or dismissal". That submission is adopted in one form or another by all of the respondents. The respondents also seek an order for their costs. 4 I reject the submissions made on behalf of the first respondent that this Court cannot make an order to stay. That may not strictly be a submission that the Court lacks jurisdiction. It may simply go to the question of the Court's powers. Either way, I think the Court has either jurisdiction or power, whichever it be, to stay proceedings which have been initiated before Re Wakim was decided and which, as a result of that decision, are clearly not within the jurisdiction of this Court. 5 A court having proceedings before it, and the question of jurisdiction having been raised, must have the power, in my view, to stay those proceedings for lack of jurisdiction. I think that it would be unnecessarily restrictive to require the Court at this stage of the proceedings to strike out or dismiss them. I accept that it is sufficiently clear that this Court does not have jurisdiction to hear and determine the principal application on the basis of the documents filed. However, I reject the submissions advanced by the respondents that it is not appropriate for a stay order to be made and that they should have an order for costs in their favour. I agree, wholeheartedly, with the following observation of Finkelstein J in Welltina Pty Ltd v Mamone [1999] FCA 905 at paragraphs 4 and 5: "4. However, I do not propose to dismiss the application. The Attorney-General for the State of Victoria has made an announcement that the Victorian parliament will soon enact legislation that will permit the transfer of proceedings to the Supreme Court of Victoria, proceedings which have been commenced in the Federal Court in reliance upon legislation now declared invalid. In my view, the preferable course to adopt is to stay the present application until such time as the foreshadowed legislation is enacted so as to enable the respondents to take steps to have the matter transferred to the Supreme Court. That is a more orderly means of dealing with the application than would result from an order that the proceedings stand dismissed thus requiring the applicant to commence a fresh application in the Supreme Court. Not only is it a more orderly process, it is one that will, I hope, prevent the parties incurring more legal costs than are necessary. Litigation is already costly enough and I would not wish to make an order, the result of which would be, to burden the parties with even more costs. 5. As to the respondents' request for an order for costs, I do not believe that it is appropriate for such an order to go against the applicant. In instituting a proceeding in the Federal Court the applicant relied upon decisions of this Court and the High Court which were to the effect that the Federal Court had jurisdiction to deal with applications under the Corporations Law. The position the parties now find themselves in has come about through no fault of the applicant." 6 I note also a decision of French J in Cambridge Gulf Investments Pty Ltd (in liquidation) v Dandoe Pty Ltd [1999] FCA 1142. For the reasons which his Honour gave in that case last week (see in particular at par 24) his Honour made an order that the proceedings be stayed for want of jurisdiction so that an application could then be made for the matter to be dealt with by the Supreme Court of Western Australia under the Federal Courts (State Jurisdiction) Act 1999 (W.A.). 7 Welltina was decided in the absence of Victorian legislation corresponding to the Western Australian Federal Courts (State Jurisdiction) Act. I understand that the Victorian Parliament has still not passed such an Act. In my opinion, the fact that the Western Australian Parliament has enacted that legislation, simply makes it even more appropriate to take the course which Finkelstein J took in Welltina. 8 There is also the fact that the second respondent has given an undertaking to the Court, which in my view militates in favour of the orders sought by the applicant. The first respondent submitted that it cannot be certain that the applicants will seek orders under s 11(2) of the Western Australian legislation. I think the answer to that is that the orders which I make can be tailored to accommodate the circumstances. 9 The third and fourth respondents say that the proceedings are in their initial stage and that the applicants have foreshadowed that they propose to amend their statement of claim. That may well be so, but in my view the factors which influenced Finkelstein J in Welltina as to costs and the like still apply if the applicants were put to having to restart the proceedings de novo in the Supreme Court. 10 For the reasons that I have just given there will be orders that the proceedings be stayed and that the applicants have liberty to apply for orders or directions to enable the proceedings to be transferred to the Supreme Court of Western Australia. I will hear counsel but I propose to reserve the costs of this motion this morning. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of Justice Carr.