Welltina Pty Ltd v Mamone

REASONS FOR JUDGMENT 1 The applicant, Welltina Pty Ltd, has commenced a proceeding under s 549G of the Corporations Law for an order that a statutory demand served on it by the respondent be set aside. 2 The proceeding was instituted before the High Court handed down its decision in Re Wakim; Ex parte McNally [1999] HCA 27. In that case the High Court held that the State legislation which conferred jurisdiction on the Federal Court to hear and determine matters arising under the Corporations Law was invalid. The effect of the decision is that unless a matter brought under the Corporations Law also involves a federal matter, the Federal Court must decide that it does not have jurisdiction to hear and determine the matter and enter judgment for the respondent. Whether or not a federal matter is involved will usually be ascertained by an examination of the pleadings in the proceeding or, if the pleadings do not articulate a federal claim, by an examination of the facts which underlie the claim. For example, if the transactions and facts that give rise to a non-federal claim also give rise to a federal claim, or if the facts and transactions that give rise to the non-federal claim are sufficiently related to those that give rise to a federal claim, the Federal Court will have jurisdiction to hear the non-federal aspects of the matter. No doubt in some cases it will be necessary to amend the pleadings so that the federal matter is sufficiently articulated. This is what occurred in Australian Securities & Investments Commission v Yandal Gold Holdings Pty Ltd [1999] FCA 567. 3 The respondents, relying on Re Wakim, ask for an order that the proceeding be dismissed and that costs be awarded in their favour. It is clear enough, in this case, that the substratum of facts which found the application for relief under s 459G do not give rise to a federal claim, even a federal claim that has not been pleaded or in respect of which no relief has been sought. Accordingly, the s 459G application is an application that I must find the Federal Court does not have jurisdiction to entertain. 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 Further, when the proceeding is transferred to the Supreme Court, I assume it is likely that the documents which have been filed in this Court will be transferred to the Supreme Court and will be deemed to have been filed in that Court. Apart from any prejudice that the parties might suffer by reason of the likely delay which will occur before any transfer can take effect, it does not seem to me that the parties will incur any additional costs. 7 Accordingly, I decline to make the orders that are sought. However, I will order that the proceeding be stayed to be brought on again if necessary, after the Victorian legislation has been enacted, so that appropriate directions can be given to transfer it to the Supreme Court. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.