The appellants invoked the principle of constraint in no uncertain terms, pointing to the multiplicity of interlocutory applications and the number of proceedings in various courts. (Not all of these, it should be added, can be placed at the feet of the Bank, or indeed of any individual party.)
15 To the extent that the Bank had invoked jurisdiction to order security for costs under Part 51, r 16 of the Supreme Court Rules 1970 (NSW), it also faced the possible contention that such an order could only be made where "special circumstances" were established. The judgment of the Registrar did not in terms turn on that constraint, but the Bank was keen to emphasise that the application was brought under s 1335 of the Corporations Act 2001 (Cth), which not only allowed it to avoid the need to establish special circumstances, but arguably required a reconsideration of its application by this Court on the merits. The step which led to that result relied upon the invocation of the Corporations Act as bringing with it the exercise of federal jurisdiction. The investment of federal jurisdiction in this Court, as a State court, required, it was contended, a determination by judge or judges of the Court and, to the extent that jurisdiction could be exercised by a Registrar, that could validly occur only subject to the effective control of a judge or judges.
16 Once a claim was made for security for costs under a Commonwealth law, this Court was exercising federal jurisdiction (if not from an earlier time, which would depend upon whether Commonwealth law had been invoked in the substantive proceedings). Not only is this Court exercising federal jurisdiction, it is no longer exercising State jurisdiction, subject to the federal element being otherwise than trivial or insubstantial and there being no completely separate and distinct State claim, not sharing a common substratum of facts: see Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at [50] (McHugh J); and see Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 475 (Barwick CJ) and 521 (Murphy J); Fencott v Muller (1983) 152 CLR 570 at 593 (Gibbs CJ) and 609-610 (Mason, Murphy, Brennan and Deane JJ); Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261, at 290 (Mason, Brennan and Deane JJ); and Re Wakim; Ex parte McNally (1999) 198 CLR 511 at [71] (McHugh J) [136]-[140] (Gummow and Hayne JJ, Gleeson CJ and Gaudron JJ agreeing). Whether, if the federal jurisdiction sought to be invoked is in fact unavailable, the judicial officer retains jurisdiction under State law need not be considered: c.f. Business Insurance Australia Pty Ltd v District Court of New South Wales [2006] NSWCA 383 at [18] (Handley JA, Beazley and Ipp JJA agreeing).
17 In the exercise of federal jurisdiction, State laws will only apply to the extent that they are valid and operate pursuant to a law of the Commonwealth. That effect may be derived from s 79 of the Judiciary Act 1903 (Cth) but only in so far as a law of the Commonwealth has not "otherwise provided". If s 1335 has operation in the present circumstances, there would seem to be no room for the operation of State law.
18 The operation of the Corporations Act requires reference to ss 5D-5G which provide for the interaction between corporations legislation and State and Territory laws: see heading, Part 1.1A. The operation of those provisions has been helpfully explained by Barrett J in HIH Casualty & General Insurance Ltd v Building Insurers' Guarantee Corporation [2003] NSWSC 1083; (2003) 202 ALR 610. Where there is no direct inconsistency between a State law and the Corporations Act, the Corporations Act is not intended to exclude or limit the concurrent operation of State law: s 5E(1) and (4). Section 5F was not said to be relevant in the present case. Section 5G makes provision, in terms of its heading, to avoid direct inconsistency arising between the Corporations Act and State law. Section 5G(11) provides:
"(11) A provision of the Corporations legislation does not operate in a State or Territory to the extent necessary to ensure that no inconsistency arises between:
(a) a provision of the Corporations legislation; and
(b) a provision of a law of the State or Territory that would, but for this subsection, be inconsistent with the provision of the Corporations legislation."
19 This operative provision only has effect, however, in the case of a State provision as defined by s5G(3). The relevant State provision in the present case is Part 51, r 16 of the Supreme Court Rules, which was, within the terms of the Table in sub-s 5G(3), "a pre-commencement (commenced) provision": see item 1. The question raised by the condition specified in this item is that "the State provision operated, immediately before this Act commenced, despite the provision of" the Corporations Law of the State. The result is that s 1335 of the Corporations Act will not operate inconsistently with Part 51, r 16 if Part 51, r 16 had effect, before the commencement of the Corporations Act, to qualify the operation of the State Corporations Law. The Bank submitted it had no such effect and that s 1335 of the Corporations Act operated to confer an unfettered discretion on this Court to order security for costs in relation to an appeal involving a corporation.
20 There was a time when it was thought that the predecessors of s 1335 did not apply to appeals because it operated where a corporation is "plaintiff in any action or other legal proceeding": see Uptown Sydney Development Corporation Pty Ltd v Bank of New Zealand (No. 1) (1993) 11 ACSR 300 at 302-303 (Kirby P). His Honour's views which were expressed to be obiter, were inconsistent with a line of authority according a less specific meaning to the word "plaintiff", as explained by Mason P in Winnote Pty Ltd (In liq) v Page (2005) 64 NSWLR 244 at [17]-[19]. The conclusion that "plaintiff" in s 533 of the Companies (NSW) Code included an appellant was expressly held by Bowen CJ in the Federal Court in J&M O'Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (No. 2) (1983) 70 FLR 261 at 263. That case was followed in Tasmania by Evans J in Chris Poulson Insurance Agencies Pty Ltd v National Mutual Life Association of Australasia Ltd [1998] TASSC 86 and, more recently in this Court in the authorities noted by Mason P in Winnote at [19]. This approach has been followed by a single judge in the Court of Appeal in Western Australia: see Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd [2007] WASCA 171 at [7] (Buss JA). Buss JA not only considered the reasoning in Winnote persuasive, but said that it was in any event appropriate that a consistent approach be adopted in relation to uniform national legislation: see Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492, recently affirmed in Farah Constructions Pty Ltd v Say-dee Pty Ltd [2007] HCA 22; (2007) 81 ALJR 1107 at [135]. The importance of intermediate courts of appeal adopting a uniform approach to Commonwealth legislation can be stated more emphatically. The application of s 1335 on an appeal adopted in the authorities should be affirmed.
21 One consequence of that approach, as expressly noted by both Handley JA in FPM Constructions Pty Ltd v The Council of the City of Blue Mountains [2005] NSWCA 147 at [3] and by Hodgson JA in Harrington Services Pty Ltd (In liq) v Harrington [2003] NSWCA 89 at [31], is that the discretionary power conferred by s 1335 is not constrained by the requirement of "special circumstances" found in the State rule. (The contrary view appears to have been adopted without argument in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143 at [12].) However there was, prior to the commencement of the Corporations Act, no clear statement as to the inter-relationship of the provision under the Corporations Law (or its predecessor) and Part 51, r 16 which, when the Supreme Court Act 1970 (NSW) was enacted, was to be found in Part 51, r 11 in the Fourth Schedule to the Act. While the rules were intended to have effect despite anything in an existing Act (see s 6), Part 51, r 11 (and, later, Part 51, r 16) expressly state that each did and does "not affect the powers of the Court under Part 53, Division 1". Part 53, Division 1, as in force immediately prior to the commencement of the Corporations Act, included r 5 stating that the Division "does not affect the provisions of any Act under which the Court may require security for costs to be given". Although there does not appear to have been any express explication of the operation of these provisions prior to the commencement of the Corporations Act, Registrar Jupp held in Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 114 at [18], after preferring the authorities supporting the application of s 1335 to appeals:
"It follows that even if special circumstances did not exist in this case the Court of Appeal would have jurisdiction pursuant to section 1335 of the Corporations Law to make an order for security for costs based on the admitted impecuniosity of the corporate appellants."
22 That statement of principle was not challenged, but appears to have formed the basis of the decision of the Court in Strata Consolidated (Australia) Pty Ltd v Bradshaw [2000] NSWCA 225 (Heydon JA, Sheller and Beazley JJA agreeing). It follows that, as was submitted by Mr Gleeson SC appearing for the Bank, Part 51, r 16 was not a State provision which, immediately prior to the commencement of the Corporations Act, affected the power conferred by the Corporations Law. For the purposes of the table in s 5G(3) of the Corporations Act, it did not operate "despite the provision of" the Corporations Law of the State. The result is that s 1335 of the Corporations Act confers a discretionary power on this Court in relation to applications for security for costs against corporate appellants which is not constrained by the requirement for "special circumstances" in the rules.
Nature of challenge to decision of Registrar
23 The Bank did not suggest that the decision of the Registrar in relation to its application for security for costs was invalid because he was not capable of exercising judicial power under Chapter III of the Constitution. Rather, it argued that it was a condition of validity that his decision be subject to effective control and supervision by a judge or judges of the Court, as required (so it was said) by the Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49 ("the HCF Case") and Harris v Caladine (1991) 172 CLR 84 at 94-95 (Mason CJ and Deane J), pp 124-127 (Dawson J), pp 151-154 (Gaudron J) and 164 (McHugh J). In the Bank's submission, compliance with the principles explained in Harris v Caladine required this Court to reconsider the application for security afresh and, if it thought appropriate, make an order whether or not it was possible to identify some specific error on the part of the Registrar and certainly without the constraints imposed by House v The King and Adam P Brown Male Fashions v Philip Morris Inc in relation to review of the exercise of a discretionary power by a judge. In substance, the Bank adopted the position most clearly stated by McHugh J in Harris v Caladine that the delegation by a court of judicial power to an officer who was not a judge was constitutionally valid "provided that the exercise of the power is subject to review by way of a de novo hearing by a Justice or judge of that court who has been appointed in accordance with s 72 of the Constitution" (p 164). His Honour continued:
"Nor, in my opinion, will anything less than a hearing de novo to review the exercise of the power by the officer be sufficient. That is to say, appellate review is an insufficient condition of the delegation of the exercise of the power; there must be a complete rehearing of the facts and the law as they exist when the Justice or judge reviews the order made by the officer. Otherwise, the officer and not the Justices or judges of the court would be exercising the original jurisdiction of the court."
24 The first step required identification of the power of review provided for by State law. Three sources of powers were identified by the Bank. The first derives from the conferral by s 46(2)(b) on a single judge of appeal of various powers to make orders not determinative of an appeal, which would include orders for security of costs. Part 51, r 58 of the Supreme Court Rules confers on the Registrar the powers of a judge of appeal under sub-s 46(1) and (2) of the Supreme Court Act. It follows, as it was submitted, that the power conferred on the Court of Appeal to "discharge or vary a judgment given by a judge of appeal, or an order made or direction given by a judge of appeal" extends to a judgment, order or direction given by the Registrar exercising such powers: s 46(4).
25 It has been necessary on occasion to consider whether a single judge of appeal can review a decision of the Registrar: see, eg, Penrith Whitewater Stadium Ltd v Lesvos Enterprises Pty Ltd [2007] NSWCA 131. That question does not arise in the present proceedings. However, in the course of that judgment, reference was made to the fact that Part 61, r 4 of the Supreme Court Rules provided that the powers of the Court "under this Part may in respect of the Registrar of the Court of Appeal be exercised by a judge of appeal". One of the powers was a power to review an order of a Registrar. However, the power of review was repealed upon the commencement of the Uniform Civil Procedure Rules 2005. The equivalent provision is now found in Part 49, Div 4, which relevantly provides:
"49.19 If in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit."
26 Whether the result was to confer power on a single judge of appeal or whether it conferred a power to be exercised by the Court of Appeal is not a matter which is of present relevance: r 49.19 provides an available basis for this Court to review the decision of the Registrar. (I accept that that rule operates with respect to registrars of the Supreme Court: c.f. Penrith Whitewater at [7], but see also Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [4]-[6].)
27 As noted by Santow JA in Wentworth v Graham (2002) 55 NSWLR 638, there is provision in s 121(3) of the Supreme Court Act permitting the Court to set aside or vary an order made by a Registrar in the exercise of powers conferred on that officer "by or under this or any other Act": s 121(2). Power conferred by the Supreme Court Rules or the Uniform Civil Procedure Rules is power conferred "under" the respective Acts.
28 For present purposes the source of the power is of limited relevance. Although the language varies as between s 46(4) ("discharge or vary"), s 121(3) ("set aside or vary") and UCPR r 49.19 ("review … and make such other order, by way of confirmation, variation, discharge or otherwise") it was not suggested in the present case that the scope of the review was affected by those differences in language.
29 As was noted in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [4]-[5] the authorities in this Court affirm the view that an exercise of power under s 46(4), at least where the order under review is that of a judge of appeal, will be limited by the principles of constraint. In Wentworth v Graham, Santow JA referred to the potential differences in approach available referring at [7] to the principles of constraint and at [8] to the proposition that "[t]he power to review is not an appeal and is not subject to the limitations expressed in s 75A of the Act" and that "it is not necessary to demonstrate that there has been an error of principle in the order under review". His Honour saw no inconsistency because of the "natural inhibition against the unrestrained substitution of the reviewing court's views in a matter of practice and procedure": at [9] and [10]. However, that approach is hard to reconcile with the approach adopted by this Court in reviewing a decision of the Registrar in Strata Consolidated which expressly sought error of the kind identified in House v The King.
30 So far as the scope of the review is concerned, the Bank sought to avoid entirely the restrictions generally accepted as appropriate in considering a discretionary decision with respect to a matter of procedure. It contended that the exercise of federal jurisdiction required that this Court undertake a review of a kind that would ensure effective control, by way of reconsideration, of the decision of a registrar.
31 It is therefore necessary to return to the statements of principles in Harris v Caladine, referred to at [23] above. It may be noted that not all members of the Court adopted the strict approach proposed by McHugh J. Thus, relevantly for present purposes, Mason CJ and Deane J expressed as a condition of the validity of the delegation of power to an officer of the Family Court the following requirement (at p 95):
"The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of their delegated jurisdiction, powers and functions, must be subject to review or appeal by a judge or judges of the court. For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly, if the review is by way of hearing de novo, the delegation will be valid. The importance of insisting on the exercise of review by a judge or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge. In other words, a litigant can avail him or herself of the judicial independence which is the hallmark of the class of court presently under consideration."
32 Dawson J (at pp 124-125) noted that the decision of the Registrar was in fact subject to a review by way of de novo hearing. However, his Honour did not think that express provision of such a review was necessary. He stated (at p 125):
"But even if there had been no such provision the result would, in the absence of any provision to the contrary, have been much the same. For where the function of exercising a discretion is delegated by a court, as it may be delegated to a Registrar, the exercise of the delegated discretion cannot confine the exercise of the same discretion by the person in whom it is primarily reposed …. Upon a hearing by way of review of the decision of a Registrar the court is exercising its own discretion. There are not the same restrictions which exist when there is an appeal from a judge to whom a discretion is confided, rather than delegated, at first instance."
33 The other member of the majority in Harris v Caladine, Gaudron J, accepted that the Family Court Act provided a review of the kind which required no identification of discernable error, but took the matter no further.
34 Two features of Harris v Caladine require express identification. The first is that all members of the Court identified the registrars in the Family Court as exercising "delegated" power, a description which followed aptly from the terms of s 37A of the Family Law Act 1975 (Cth) which expressly referred to a "power delegated by rules of Court": s 37A(3), referring to the power under sub-s (1). The significance of that language may be discerned in the extract from the judgment of Dawson J set out above. The second point of significance is that the Court was dealing with officers of a federal court. The power of the Parliament to create federal courts may be found in s 71 of the Constitution, such courts having the number of judges prescribed under s 79, who will have the tenure and terms of appointment required by s 72. However, there is no equivalent power in the Parliament in relation to State courts and, as the HCF Case confirmed, when investing federal jurisdiction in a State court, the Commonwealth must take the court as it finds it: see, eg, 150 CLR at 64 (Mason J). That meant, in the context of the HCF Case, that the Court in which federal jurisdiction was invested, pursuant to s 77(iii) of the Constitution, included a master appointed under the Supreme Court Act and assigned to a Division of the Court. As explained by Gibbs CJ at p 59:
"He was the officer of the court by whom the jurisdiction and powers of the court in the matter in question were normally exercised, and an order made by him, if not set aside or varied by the court, would take effect as an order of the court."
35 In the HCF Case, after referring to the dissenting judgment of Gibbs J in Kotsis v Kotsis (1970) 122 CLR 69, which was overruled in the HCF Case, Mason J continued (150 CLR at 61):
"His Honour there observed that the exercise of federal jurisdiction did not call for a curial organization different in kind from that established for the exercise of State jurisdiction [122 CLR at 110]. In this situation there is every reason for supposing that the framers of the Constitution intended to arm the Parliament of the Commonwealth with a power to invest federal jurisdiction in a State court as it happened to be organized under State law from time to time. Although the Commonwealth Parliament has no power to alter the structure or organization of State courts, its freedom of action is completely preserved. It has the choice of investing State courts with federal jurisdiction or of establishing appropriate federal courts."
36 In this passage, Mason J reflected both the scope and limits of the powers conferred on the Parliament by Chapter III of the Constitution. This approach is consistent with a long line of authority in the High Court: see the cases referred to by Anne Twomey, The Constitution of New South Wales (Federation Press, 2004) p 186. As explained by Griffith CJ in Federated Sawmill, Timberyard and General Woodworkers' Employes' Association v Alexander (1912) 15 CLR 308 at 313, "when the Federal Parliament confers a new jurisdiction upon an existing State Court it takes the Court as it finds it, with all its limitations as to jurisdiction, unless otherwise expressly declared". Further, in Le Mesurier v Connor (1929) 42 CLR 481 at 496, Knox CJ, Rich and Dixon JJ, after referring to ss 77 and 79 of the Constitution, stated:
"It is no less certain that these general powers cannot be interpreted as authorizing legislation dealing with the organization of State Courts. The power conferred by sec 77(iii) is expressed in terms which confine it to making laws investing State Courts with Federal jurisdiction. Like all other grants of legislative power this carries with it whatever is necessary to give effect to the power itself. But the power is to confer additional judicial authority upon a Court fully established by or under another legislature. Such a power is exercised and its purpose is achieved when the Parliament has chosen an existing Court and has bestowed upon it part of the judicial power belonging to the Commonwealth. To affect or alter the constitution of the Court itself or of the organization through which its jurisdiction and powers are exercised is to go outside the limits of the power conferred and to seek to achieve a further object, namely, the regulation or establishment of the instrument or organ of Government in which judicial power is invested, an object for which the Constitution provides another means, the creation of Federal Courts."