The reasoning of the Full Court
57 The first matter to note was the Full Court's assessment of what was before it. In [21] of their reasons the Full Court said:
As mentioned, the question asked by the Special Case is '[w]hether the Court has jurisdiction to grant the relief sought pursuant to the applicant's notice of motion filed 12 July 2002'. Having regard to the matters set out above, this must be regarded as a question whether the Court has jurisdiction to grant injunctive relief or damages in respect of the respondents' alleged breach of the Terms of Settlement filed in Court on 7 August 2001.
58 To the extent that this is a statement that the special case was in its terms limited to assessing whether an attempt to enforce the contractual foundation of the terms of settlement was within the jurisdiction of the Court, that was, with respect, not correct. To the extent that it was construing the special case by its terms and what had been put to Madgwick J on 10 March 2003, it is doubtful whether it was correct. It was, with respect, certainly not correct in the light of the terms of the special case and of the specific answer to the Court's question provided by the Barrister.
59 The Full Court first dealt with the arguments based on Pallas (emphasised by the respondents) and Darling Downs (emphasised by the Barrister). As I have said, it is significant to appreciate that in Pallas the contract was between one of the persons to the controversy and strangers to the pleaded controversy. Thus, the contract could be seen as extraneous and separate and distinct from the existing "matter". In Darling Downs, the contract of settlement was between the parties to the controversy. This was a clear point of distinction between the two decisions, resonating not only in the judgment of the majority in Darling Downs, butalso in the earlier judgment of Beaumont J in Pallas. It is clear that the majority in Darling Downs saw the enforcement in contract of the settlement as part of the same matter. The controversy was resolved by the settlement. The settlement was breached. Thus, the contractual end of the controversy, once breached, gave rise to a revival of the last aspect of the original matter. (In this respect see the reasoning of Lindgren J in Needlework Warehouse at [42] and [43] about the settlement in that case, with which I respectfully agree.) The majority in Darling Downs came to this view by reference to how Smith J in Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555 had analysed the position (not examining any question of federal jurisdiction) in relation to the proper method of enforcement - whether by motion or new action.
60 The Full Court in this case also analysed the position by reference to Roberts and concluded that the enforcement of the terms of settlement fell within the categories of case said by Smith J to require a separate action for their enforcement: see [37] -[43] and [50]-[53] of the Full Court's reasons. With respect, it is doubtful whether the fact that the proper way to bring forward a claim about a breach of contract as alleged by the applicant was in a fresh action (that is a fresh proceeding) concluded the question as to whether that fresh proceedings was a separate and distinct justiciable controversy for the purposes of federal jurisdiction. True it is there were new facts. That is obvious. But they were the facts which disclosed a breach of one contractual aspect of the "matter" - that being the attempt (which was asserted to have failed) to end or quell the controversy.
61 Difficult questions might arise as to the separateness of the matter if enough time or geography separated the complaints. The decision of a court as to whether a claim to enforce a settlement should be brought by way of motion in the original proceedings or should be brought by way of fresh statement of claim is a different enquiry from the question as to whether such a claim to enforcement is part of the original controversy or is an entirely distinct and separate controversy, for the purposes of federal jurisdiction. That is not to say that the analysis of the correct procedural approach may not be relevant to the assessment as to whether a new matter exists. For instance, if it were concluded that a notice of motion was an adequate or appropriate vehicle, that may well assist in the conclusion that the claims in the motion were part of the existing controversy.
62 The considerations discussed by Smith J in Roberts, to which the majority in Darling Downs and the Full Court here made reference, and the considerations referred to by McLelland J in Phillips v Walsh, go principally, by reference in part to 19th century Chancery practice, to the appropriate procedure for the enforcement action - whether by motion or by fresh pleading. One major consideration discussed in these cases is the complexity and substantialness of the debate about the contract and its alleged breach. The more substantial the debate, the more appropriate is a statement of claim, rather than the unpleaded notice of motion. Such are not considerations that will necessarily affect centrally the question whether there is a separate and distinct controversy in the area of discourse of federal jurisdiction. It is trite to say that a proceeding does not define a matter. The matter is the whole justiciable controversy and the matter can involve more than one proceeding: see Re Wakim at [135]-[147]. Thus, even if, procedurally, a fresh statement of claim is the appropriate vehicle, that would not conclude the enquiry as to whether the claims in the statement of claim were part of or comprised an entirely distinct and separate controversy.
63 Here, the parties debated the merits of Pallas and Darling Downs. Even if it be the case, contrary to my view, that the contractual enforcement was not part of, or an outgrowth or extension of, the original justiciable controversy, and was a new matter, the subject matter of the contract being enforced in this new matter was a bundle of rights which owed their existence, and the entitlement to enforce them in court, to Commonwealth legislation. So it was a matter arising under a law of the Parliament: LNC Industries v BMW.
64 In any event, the Full Court expressed the view that the facts here were more like Pallas than Darling Downs. This was a debate that the Barrister had understood could be lost. In my view, he was correct in his view that this point should be won; but he recognised the debate and the risk.
65 The Full Court then rejected the Barrister's arguments under s 32 of the FCA Act. Section 32 is in the following terms:
(1) To the extent that the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked.
(2) The jurisdiction conferred by subsection (1) extends to jurisdiction to hear and determine an appeal from a judgment of a court so far as it relates to a matter that is associated with a matter in respect of which an appeal from that judgment, or another judgment of that court, is brought.
66 The terms of the rejection by the Full Court were as follows at [55]:
We turn briefly to s 32 of the Federal Court Act. The associated jurisdiction conferred on the Court by that section may, in an appropriate case, extend the scope of the Court's jurisdiction. However, this may only occur if both the original claim and the claim argued to fall within s 32 are part of one 'matter'; the test being whether both claims arise out of the same substratum of fact: see Fencott v Muller (1983) 152 CLR 570 at 606 and 607. In the present case, the orders sought in Macteldir's notice of motion relate to the respondents' conduct in respect of a different publication (the 2002 Directory-Calendar) to the conduct in issue in proceeding N207 of 2001 itself (the 2001 Directory-Calendar). Given that publication is of the essence of both complaints, each complaint necessarily raises at least one separate factual issue.
67 With the utmost respect, I cannot agree. The only High Court authority is to the effect (conformably with the words of s 32) that s 32 of the FCA Act deals with separate and distinct matters. It is not what is sometimes called "accrued" jurisdiction. This latter expression may be better expressed as the limit of the matter or controversy. Associated jurisdiction under s 32 is the conferral of jurisdiction in another, different, federal matter, in respect of which jurisdiction could be, but has not been, conferred. The word "associated" is not a synonym for "accrued". In Philip Morris Inc v Adam P Brown Male Fashions (1981) 148 CLR 457, Barwick CJ at 476 indicated that "associated" embraced matters which may be disparate from each other, that is, not within the "accrued" jurisdiction of the already conferred federal matter. Gaudron J in PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520, 521 was of the view that Barwick CJ's views were implicit in the other judgments in that case. (See Philip Morris at 494-95, 518, 521-22.)
68 An example of the impact of associated jurisdiction is provided by Allied Mills Industries Pty Ltd v Trade Practices Commission (No 1) (1981) 34 ALR 105. There a cross-claim was brought by a party to the litigation against the Trade Practices Commission. Leaving aside the question of whether this fell within the whole controversy anyway, s 32 gave the Federal Court jurisdiction which it otherwise may not have had (the cross-claim being founded on common law and equitable causes of action) because the Trade Practices Commission was the Commonwealth for the purposes of s 75(iii) of the Constitution.
69 Another example of the use of s 32 can be seen in the dispute in PCS v MUA. There, the applicants claimed breach of an award and an enterprise agreement, contravention of the Workplace Relations Act 1996 (Cth) and of the Corporations Law against certain companies in the Patrick Group. The applicants also alleged two common law causes of action for conspiracy against the "Patrick parties", the National Farmers Federation and the Commonwealth. The claim against the Commonwealth fell within s 75(iii) and jurisdiction to hear it was not otherwise conferred on the Federal Court. Section 32 brought it within the Federal Court's jurisdiction. Gaudron J rejected the proposition that s 32 was limited to "matters which arise under other laws made by Parliament". This was how Gibbs J put it in Philip Morris v Adam P Brown Male Fashions. Her Honour said that it was at odds with the words of s 32 and the views expressed by Aickin J and Wilson J in Philip Morris v Adam P Brown Male Fashions at 535 and 547that s 32 extends jurisdiction to associated matters falling within ss 75 and 76 of the Constitution and was contrary to Turner v Owen (1990) 26 FCR 366 and Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 500-1 (Gummow J).
70 The possible relevance of associated jurisdiction under s 32 of the FCA Act in Pallas as recognised by Beaumont J and its less than central relevance here (though not for the reasons identified by the Full Court) is the introduction of s 39B(1A)(c) into the Judiciary Act in 1997. The possible role Beaumont J saw for associated jurisdiction if the settlement was between parties to the controversy was that the new matter (if it was not part of the existing controversy and so part of the accrued jurisdiction as his Honour also said) might well be a matter arising under a law of the Parliament. In 1985, Parliament had not conferred jurisdiction in terms of s 76(ii) of the Constitution on the Federal Court (though it could have done so). In 1997, it did so with the insertion of s 39B(1A)(c) into the Judiciary Act by s 3 of, and item 1 of Schedule 11 to, the Law and Justice Legislation Amendment Act 1997 (Cth). Thus, Beaumont J in Pallas discussed the relevance of s 32 of the FCA Act. Now, the better view as to the relevant enquiry is whether s 39B(1A)(c) applies. It is to be noted that in his reasons in July 1985 Beaumont J did not refer to LNC Industries v BMW which had been handed down the previous October, but was not published in the Commonwealth Law Reports until 1985.
71 The Full Court then set out how, in effect, it saw that the Court could have had jurisdiction if the motion had been framed differently. At [57] to [62] the Full Court said:
It is unnecessary for us to make any general statement about the jurisdiction of the Court to enforce compromises of existing proceedings. However, we wish to make it clear that, where undertakings to the Court have been given, ordinarily the Court would have jurisdiction to enforce such undertakings.
The Court has a wide range of remedies to ensure compliance with its orders: see Australian Meat Industry Employees Union v Mudginberri Station Pty Limited (1986) 161 CLR 98 ('Mudginberri') 161 CLR 98 at 114-115 (per Gibbs CJ, Mason, Wilson and Deane JJ).
There is no reason why, in an ordinary case, the Court could not grant an injunction to restrain a breach of an undertaking to the Court: see Australian Builders Construction Employees & Builders Labourers' Federation v Commonwealth of Australia (1981) 37 ALR 470 at 471 (per Deane J). Although his Honour was there speaking of an injunction to restrain a criminal contempt, it is necessary to bear in mind that the underlying rationale of every exercise of the contempt power is to protect the administration of justice: see Mudginberri at 107.
Here, it might have been possible for the applicant to frame its motion as a claim for injunctive relief to restrain conduct which would otherwise have amounted to a contempt. But it did not do so.
The second undertaking (as to which see para 5 above) is not limited in its terms to existing books, magazines or documents. It extends to future publications provided they have been copied or reproduced from the form and layout of the Macedonian Telephone Directory. However, the notice of motion seeks orders restraining the first and second respondents which go beyond the terms of this undertaking. The proposed orders are not limited to publications copied or reproduced from the Macedonian Telephone Directory. They seek orders in respect of specific publications or any publications 'in the nature of a directory printed in the form, layout style, content and general appearance of the applicant's Macedonian Telephone Directory'. The notice of motion also seeks an account of profits and damages.
It is the applicant's departure from a claim to enforce the existing undertakings which takes the notice of motion away from the ordinary case.
[emphasis added]
72 With the utmost respect, this (in particular the emboldened [60] and [62]) did the Barrister less than justice. The Barrister had made it clear in his submissions to the Court in his letter that he was seeking an order (that is an injunction) in effect to restrain a breach of undertakings that had been given to the Court. Perhaps, as Mr Neil submitted, he should have sought to amend the motion to set out the grounds of the orders that were being sought (though that would have been contrary to Order 19 rule 2 and Form 27). He did not do so. Rather, he left the matter with his submissions in his letter. In the light of the answer given by the Barrister to the letter from the Court, [60] and [62] of the Full Court's reasons appear to overlook how the motion was put at the time of this submission and, on one view, how it had always been put. (Lest there be any doubt about it, the Barrister's response to the question posed by the associate to the presiding Judge is on the Court file in the correspondence folder.)
73 Upon receiving the Full Court's judgment the Barrister did not apply to re-open, or to have the Full Court withdraw its reasons or orders. He could have made such an application. Perhaps, he should have done so. However, that was not the burden of the criticism made of him.
74 The following can be said about the motion, and by way of criticism of how the Barrister approached the motion. First, the motion always asserted a claim for relief under the Copyright Act. Even though badly framed in terms of a procedural vehicle, this asserted, non-colourably a federal claim, which thereby made the whole motion, to the extent that it was based on common facts, within the jurisdiction of the Court. The Barrister did not appreciate that. He failed to alert the Full Court to this clear basis of the Court's jurisdiction.
75 Secondly, the Barrister pressed the motion as the enforcement of a contract of settlement based on Darling Downs. He recognised that there was some debate about whether the contract was in the original matter or controversy. In my view, he was correct in arguing that it was part of the original matter. This is so even if the motion should have been brought forward as a separate proceeding. That, however, was a matter open to legitimate debate. It was appropriate for the Barrister, however, to recognise the advisability of adding another basis to the jurisdictional foundation because of this doubt whether the contractual claim was part of the same matter or was a different matter. In fact, he did recognise the need for that, and he propounded such a basis - the order to enforce the undertakings. His submissions on the motion were less than clear. His written response to the Full Court was clear.
76 Thirdly, in a manner that was less than clear, the Barrister sought to rely on the associated jurisdiction of the Court under s 32 of the FCA Act. The Full Court rejected this for reasons that were, with respect, wrong. Section 32 was, however, less than centrally relevant. If the contract claim was a separate matter, that is, was separate from the original controversy, it was within the jurisdiction of the Court by reason of s 39B(1A)(c) of the Judiciary Act, not s 32 of the FCA Act.
77 Section 39B(1A)(c) is in the following terms:
The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter:
…
(c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter
78 The Barrister thought that the extempore decision of Emmett J in Webb v Repatriation Commission was against this contention. He was correct. In that case, Emmett J discussed (and rejected) an argument that an asserted contract to settle a proceeding for review properly brought in the Administrative Appeals Tribunal under the Veterans' Entitlement Act was a matter arising under a law of the Parliament by saying at 417:
A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law - see Felton v Mulligan (1971) 124 CLR 367 at 382
That analysis is correct, as far as it goes. However, with respect, it failed to consider the judgment of the High Court in LNC Industries v BMW.
79 In LNC Industries v BMW a claim was made solely for breach of contract and breach of trust. There was no provision investing federal jurisdiction. There was no issue for decision under Commonwealth law. The matter, however, was one of federal jurisdiction, as arising under a law of the Parliament. This was so because the subject matter of the contract and of the trust was property owing its existence to Commonwealth law - a quota for the importation of cars under the Customs Act 1903 and Customs Regulations. Gibbs CJ Mason, Wilson, Brennan, Deane and Dawson JJ said the following at 581 (Murphy J agreeing at 582-83):
…A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law. …
80 The Barrister knew of Webb, but was ignorant of LNC Industries v BMW. He was not alone. Senior and junior counsel for the respondents could not have put the submissions that they did unless they shared the Barrister's lack of appreciation of LNC Industries v BMW. Consequently no-one alerted the Full Court to the clear alternative basis for jurisdiction (assuming that the contractual claim to enforce the terms of settlement was a separate matter) that the subject matter of the contract was the suit authorised by, and the rights claimed in the suit to be given by, laws of the Parliament: the Copyright Act, the FCA Act and s 39B(1A)(c) of the Judiciary Act itself by reference to the rights under the Copyright Act.
81 Fourthly, the Barrister was ignorant of Order 35 rule 11 and failed to alert the Full Court to its presence in the Rules.
82 Fifthly, for reasons that in my view were defensible, the Barrister took the view, early, that full blown copyright and contempt actions should be avoided.
83 In all these circumstances, should the Barrister be seen to have been in such default as to be in dereliction of his duty to the Court? I do not think so. He did fail to alert the Court to at least two clear bases of jurisdiction and to the existence of an express rule which would have made clear what he was otherwise putting. However, in respect of one of these omissions, he was distracted by a decision of the Court which itself appears to have overlooked LNC Industries. He maintained a more than arguable (indeed, in my view, correct) case that the contract claim was part of the original matter. He sought to buttress that with a proposition (plainly correct) that the Court had jurisdiction to enforce the undertakings given to the Court. He put this latter proposition clearly in his letter to the Court, although his advocacy on this point had, hitherto, been opaque. This letter appears to have been either overlooked or misunderstood. He did not seek to have the Court withdraw its reasons. Perhaps he should have. I do not think, however, that he should pay the costs for that.
84 A clearer understanding of federal jurisdiction by the Barrister may have ensured that the Full Court was alerted to the considerations which could be seen as plainly leading to an affirmative answer to the special case, as, in my view, should have occurred. However, the Barrister had a sufficient understanding to put at least two out of a number of available arguments, clearly. In my view, he could reasonably be expected to think that he had made clear to the Full Court that he was seeking to enforce not only the contract, but also the undertakings given to the Court by the Court's implied power.
85 I do not think that his conduct merits sanction under Order 62 rule 9 or s 43.
86 For the same reasons, I see no basis to sanction the Solicitor.
87 I have considered the submissions carefully and thoroughly put by Mr Neil QC and Ms Preston. The essence of the claim put first against the Barrister and Solicitor was that in the face of warnings by the legal representatives of the respondents the Barrister and Solicitor pushed on with a hopeless case or without adding contempt proceedings or another available clear basis of jurisdiction, such as Order 35 rule 11. The decision not to invoke contempt proceedings was an available choice, legitimately made. The difficulties that can be faced in such proceedings can be seen in Witham v Holloway (1995) 183 CLR 525; AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98 and Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201.
88 The approach adopted by the Barrister was not hopeless as alleged. It was less than complete and less than perfect, but it did seek to enforce the undertakings given to the Court and to enforce what was said to be an underlying contract.
89 It was put that the Barrister chose to proceed only on a contract basis. The evidence shows that is not the case. It is true that after the Full Court's reasons some of the documentation prepared by the Barrister revealed that he suggested embarking upon the approach of enforcing the undertakings that the Full Court said he had not done. I am prepared to accept that that revealed a certain fatalistic confusion on the part of the Barrister. The Full Court said that he had not put the motion as enforcing undertakings. He disagreed, as he said in evidence. Thus, he advised that the undertakings should be enforced, in effect, in a way that the Court would recognise. This confusion after the event does not contradict the unequivocal evidence of the submissions contained in the letter.
90 It was put that the Barrister was ignorant of Order 35 rule 11. That is a legitimate criticism. Counsel appearing in a court (any court) should be aware of the relevant rules. It is a basic task which appears to have been overlooked. However, in the context of the particular enquiry here I do not think it is a foundation for a personal costs order. The Barrister intuitively (and correctly) thought that the Court had jurisdiction and power to order compliance with undertakings given to it. He did seek such orders.
91 It is undoubted that, examined with precision and hindsight, the handling of the brief by the Barrister was less than perfect. Whether it was of a quality which is deserving of condemnation as negligent in a tortious claim it is unnecessary and inappropriate to decide. Questions of duty of care and advocate's immunity from suit might intrude into this issue. However, for the reasons that I have expressed, I do not think that his handling of his instructions and the motion was sufficiently neglectful as to amount to such a neglect of his responsibilities to warrant the visiting of personal costs under Order 62 rule 9 or s 43.
92 The views to which I have come that neither the Barrister nor the Solicitor should be responsible for the costs personally make it unnecessary to resolve some issues about the costs of the High Court application. If it were necessary to do so, I would conclude that I have no power under s 43, or Order 62 rule 9, to order costs arising in the High Court. That may be a head of damage in a professional negligence suit. However, I do not have power to make orders in relation to those costs in the light of the terms of s 43 and the definitions of the words "Court" and "proceeding". Also, to the extent that it might be necessary to find whether the Barrister and Solicitor advised Mr Mihajlov and Mr Stojanovski about an application for special leave to appeal to the High Court shortly after the Full Court's decision, I think, on balance, it is more likely that some advice in that regard was given. However, viewing all the evidence, I doubt that the Barrister understood the likely strength of this application, based not least upon the apparent overlooking or misunderstanding of his answer to the Court's question and thus a possible basis under s 35A(b) of the Judiciary Act and based on the considerations of federal jurisdiction to which I have referred. Thus, I doubt that any such advice was robustly optimistic, which may explain why Mr Mihajlov and Mr Stojanovski did not recall it. Whilst I do not think that they were giving false evidence to me, I do find that at some stage on or shortly after 17 October 2003, they were advised by the Barrister or the Solicitor of the availability of an application for special leave.
93 In all the circumstances, in my view, the motion should be dismissed.
94 I raised the question at the hearing whether, even if I dismissed the motion, the Barrister and the Solicitor should pay their own costs. This might be so if I thought that their default had brought on this application. I do not think that is the case. The job was done less than perfectly. That, however, is not a basis for an order under Order 62 rule 9 or an appropriate basis to have them pay their own costs.
95 The seriousness of the matter for all the parties has necessitated a lengthy judgment. Lest it be thought that the issue of federal jurisdiction is complex in a case such as this a number of things should be said. In relation to the enforcement of settlements of proceedings in this Court the following (non-exhaustive) considerations should be noted, subject to the exigencies of any given circumstances:
(1) Orders can be enforced by contempt proceedings.
(2) Undertakings can be enforced under Order 35 rule 11.
(3) Undertakings can be enforced by orders to prevent the undermining of the administration of justice: the BLF case
(4) Contracts to settle cases can be enforced: Darling Downs, though noting Pallas and its limits.
(5) The enforcement of a contract to settle a case (at least between the parties to the suit) concerning rights owing their existence to Commonwealth law, and hitherto sought to be vindicated in the Federal Court under the FCA Act or the Judiciary Act or another Commonwealth Act will be a matter arising under a law of the Parliament: LNC Industries v BMW, if it is not (as it may well be) part of the original matter.
(6) In a motion, or a statement of claim, if one claim is expressed to be made under a Commonwealth Act all claims in the same matter or controversy, which generally can be assessed by seeing whether it is based on the same substratum of facts, will be within federal jurisdiction.
96 If, contrary to the view expressed by Lindgren J in Wenkart v Pantzer and Needlework Warehouse, I am bound by the Full Court's view, even if I am of the view that essential parts of it are plainly wrong, then what I have said should be taken as the basis of a view that the Barrister could have reasonably expected to succeed on the special case on the law before the publication of the Full Court's reasons.
97 No occasion arises to say anything further about Pallas.
98 It is deeply regrettable that the applicant is left in the position it is in. It did seek, out of time, special leave to appeal the Full Court's decision to the High Court. That was refused on the basis that it was an unsuitable vehicle given the perceived procedural complexities of the case.
99 If there were a relevantly framed Suitor's Fund Act, I would, unhesitatingly, grant a certificate.
100 I am grateful to all counsel and solicitors for their assistance.
I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.