Johnson & Ors, Ex parte - Re Macks & Ors A9/2000 [2000] HCATrans 312 (14 June 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A6 of 2000

In the matter of -

An application for Writs of Certiorari and Prohibition against THE HONOURABLE JOHN WILLIAM VON DOUSSA, a Judge of the Federal Court of Australia

First Respondent

THE HONOURABLE CATHERINE MARGARET BRANSON, a Judge of the Federal Court of Australia

Second Respondent

THE HONOURABLE MAURICE FRANCIS O'LOUGHLIN, a Judge of the Federal Court of Australia

Third Respondent

THE HONOURABLE JOHN RONALD MANSFIELD, a Judge of the Federal Court of Australia

Fourth Respondent

PETER VANCE CAREY, a Registrar of the Federal Court of Australia

Fifth Respondent

GREGORY CHARLES FISHER, a Registrar of the Federal Court of Australia

Sixth Respondent

THE JUDGES AND REGISTRARS OF THE FEDERAL COURT OF AUSTRALIA

Seventh Respondents

PETER IVAN MACKS as Liquidator of Addstead Pty Ltd (In Liquidation) and the companies named in Schedule "A" and ADDSTEAD PTY LTD (IN LIQUIDATION) and the companies named in Schedule "A"

Eighth Respondents

THE DEPUTY COMMISSIONER OF TAXATION

Ninth Respondent

Ex parte -

ANTHONY JOHN SAINT

Applicant

Office of the Registry

Adelaide No A9 of 2000

In the matter of -

An application for Writs of Certiorari and Prohibition against THE HONOURABLE JOHN WILLIAM VON DOUSSA, a Judge of the Federal Court of Australia

First Respondent

THE HONOURABLE CATHERINE MARGARET BRANSON, a Judge of the Federal Court of Australia

Second Respondent

THE HONOURABLE MAURICE FRANCIS O'LOUGHLIN, a Judge of the Federal Court of Australia

Third Respondent

THE HONOURABLE JOHN RONALD MANSFIELD, a Judge of the Federal Court of Australia

Fourth Respondent

PETER VANCE CAREY, a Registrar of the Federal Court of Australia

Fifth Respondent

GREGORY CHARLES FISHER, a Registrar of the Federal Court of Australia

Sixth Respondent

THE JUDGES AND REGISTRARS OF THE FEDERAL COURT OF AUSTRALIA

Seventh Respondents

PETER IVAN MACKS as Liquidator of Addstead Pty Ltd (In Liquidation) and the companies named in Schedule "A" and ADDSTEAD PTY LTD (IN LIQUIDATION) and the companies named in Schedule "A"

Eighth Respondents

THE DEPUTY COMMISSIONER OF TAXATION

Ninth Respondent

Ex parte -

ANTHONY FRANCIS JOHNSON, PETER DAMIAN SLATTERY, JOHN STORRIE KEEVES, ROBERT JAMES BAXTER,

JOHN DESMOND WARDE, WILLIAM McMILLAN CHRISTIE, DAVID PETER RYDON, CAROLINE RUTH CHRISTINE and GORDON RADFORD

Applicants

GLEESON CJ

GAUDRON J

McHUGH J

GUMMOW J

KIRBY J

HAYNE J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 14 JUNE 2000, AT 10.19 AM

(Continued from 13/6/00)

Copyright in the High Court of Australia

_____________________

GLEESON CJ: Yes, Mr Whitington.

MR WHITINGTON: May it please the Court, when I finished yesterday I had left quite a few loose strands and if I might try and ravel one or two of them together, and at the risk of unnecessarily prolonging the debate, can I return very briefly to the issue of the nature of the orders made without constitutional jurisdiction.

We seek to emphasise one point in particular and that is that the power of a court, which has been long recognised in courts in our kind of system, to decide the existence of jurisdiction may, of course, result in a determination that there is jurisdiction as well as the determination that there is no jurisdiction. But, without that power, it can never be said that it has been conclusively determined, subject to appeal, that the substantive decision was made within jurisdiction, and it follows from that that the substantive jurisdiction will not be final and binding, in the sense that it will be liable to collateral challenge, and the validity of the decision will always be open unless and until another court, such as this Court, determines the issue.

On the other hand, if the Court does have power to decide its own jurisdiction it necessary follows that the decision and the associated substantive decision is final and binding unless and until set aside on appeal or by prerogative writ. We submit that that is a fundamental aspect of the judicial process and that the matter cannot simply be approached through a simple syllogism to the effect that the legislation conferring substantive jurisdiction is constitutionally invalid and invalid ab initio. Therefore, an order made under it is likewise invalid, ab initio. But, amongst other things, we say to approach the matter that way might focus attention on the wrong piece of legislation. The critical enactment of the Commonwealth is not the one that confers the substantive jurisdiction but the one that we submit confers the judicial power, including the power to determine its own - the Court to determine its own jurisdiction. Now, that is all I wish to say on that topic, if the Court pleases.

Might I turn then to the issue of discretion because the Court, of course, will remember that in the decision of Re Wakim the Court made the proposition, as we understand the reasons of the majority, that both prerogative writs, certiori and prohibition, were discretionary. Of course, there was a threshold discretionary issue, that is as to the extension of time which was - - -

GAUDRON J: But that was not said with respect to prohibition in Wakim, was it?

MR WHITINGTON: I thought that that was the effect of the Court's reasons. It has been said in other places that prohibition is always discretionary. The prerogative relief is always discretionary. In any event, I accept that the primary focus in this part of the reasons was on the issue of certiorari.

GAUDRON J: It was on the question of extension of time.

MR WHITINGTON: Yes, if your Honour pleases, I accept that. Although, his Honour Justice McHugh, I think, in paragraph 81 of his reasons does, as I understand it, deal with certiorari itself as a matter of discretion. We accept the primary focus was on the extension of time although, in our respectful submission, if certiorari went as a matter of right, if there was no discretionary issue behind it, then that would have been a very powerful consideration in the discretion under Order 55.

McHUGH J: I do not think I dealt with certiorari, did I, as a matter of discretion, but in relation to prohibition I obviously took the view that there was a discretion as to what steps you could prohibit. In other words, you could select.

MR WHITINGTON: Yes. Can I put these submissions in the event the Court accepts what we say? That is that the grant of certiorari involves an element of discretion. We say that this case is stronger than Re Wakim on the matter of discretion. In that case, the Court was prepared to assume that the intervention of third party rights had occurred and referred to the fact that nothing had been put to the contrary, or nothing to the contrary had been shown. That appears from paragraph [165] in the joint judgment of your Honours Justice Gummow and Hayne.

In this case the Liquidator has deposed in an affidavit to the very considerable steps taken by him after his appointment and the affidavit is in the application book volume 2 page 411. I will not ask the Court to go to it now but can I briefly summarise for the purpose of this part of the argument the steps deposed to. The Liquidator, first, has carried on a business for a short period of time. Secondly, he sold various parcels of land and received and dealt with the proceeds. Thirdly, he sold other assets. Fourthly, he has proved in the insolvent estate of a director who was indebted to certain companies.

Next, he has entered into an agreement to settle litigation and disputes. Next, he has conducted liquidator's examinations. Further, he has instituted and defended legal proceedings and recovered and dealt with property under court judgments. Next, he has entered into two agreements with the Commonwealth Bank and the insurer GIO for the provision of funds to enable the prosecution of two actions known as the Foster's action and there is a related action connected with that and, secondly, the actions against the prosecutors in the Supreme Court, and as a result of which the liquidators and the 63 plaintiff companies in those proceedings have expended very considerable sums of money, amounting to almost $5 million and, finally, the Liquidator has incurred debts in the administration of certain companies.

KIRBY J: How does one weigh up these matters personal to your client or to those who are affected against the importance of upholding the effect of the constitutional ruling? I mean, were not some of these considerations, though it was an appeal, presented to the Court in Bond? On one sense, one might take the view it is very inconvenient to allow belated points to be raised, but upholding the Constitution is a very important principle of a rule of law society.

MR WHITINGTON: We accept that, your Honour, and we should have thought that upholding the Constitution was perhaps not a discretionary factor; it was an overriding factor. If the Constitution dictates that these orders be struck down, then so be it.

GUMMOW J: That is circular. The question is: what does the Constitution contain?

MR WHITINGTON: Precisely, your Honour, and we have already dealt with that.

GUMMOW J: This rule we are talking about may itself be part of it.

MR WHITINGTON: Precisely. We accept that, your Honour, and that is the foundation of our submissions. We are putting these submissions on the assumption that the Constitution does not strike down these orders. If the orders are struck down by the Constitution, there is no issue of discretion.

KIRBY J: But even if they are not struck down, even if they are voidable, they are voidable because of a constitutional flaw, and following that flaw through and according to people who claim it is ostensibly quite an important principle in a society such as ours that lives under a written Constitution.

MR WHITINGTON: All I can say, your Honour, is that in a sense it is another way of saying that the orders are voidable. Of course, they are voidable under the Constitution but they are voidable. The ultimate question is whether they should be avoided. Of course, the premise is they are voidable under the Constitution, so no doubt the Court will take that into account, but the discretionary factors are necessarily to be weighed against that premise, that starting point that the orders are voidable under the Constitution.

KIRBY J: I have in my mind that the notion of voidable in the United States' authorities is a very fragile - that the orders are voidable in the sense that they exist as between the parties until set aside. They exist to give rise to the challenge. They cannot deprive the Court of its jurisdiction to dispose of the challenge. But they are very fragile in the sense that once you apply, in the United States - I may be wrong - my understanding is that it is almost as a course that you get the relief. Is that incorrect or not?

MR WHITINGTON: Well, I am not in a position to tell your Honour absolutely whether that is correct. Of course we would accept that the issue of what avoidability means in a case such as the present must be worked through. We cannot merely use labels without considering the implications. We accept that. But we also say that in this case we are dealing with orders of a particular kind - orders going to status. These orders have affected the status of these companies for over five years now. In affecting the status of companies there is necessarily a wider effect than an ordinary inter partes order.

McHUGH J: Yes, but that is frequently the consequence of holding something or other as constitutionally invalid. Take the decision in Ha. That had enormous ramifications for State revenues. For all I know it may be that money that was paid was recoverable because it was money paid under mistake of law.

MR WHITINGTON: Yes. Yes, your Honour, we accept that it is accepted constitutional doctrine that if an enactment is constitutionally invalid, in the ordinary course, leaving aside judicial orders, steps taken under it will likewise have been conducted without authority. But the cases that deal with that have not ever had to, in our respectful submission, at least in this Court, address the implications for orders of a court. Ha's Case, for instance, involved revenue and, in effect, the reversal of the revenue flow. Many of the other cases in this context also involve the assessing of revenue or administrative acts by the government which, in a sense, are more readily reversible than the kind of consequences we are talking about here. Of course, no government - - -

McHUGH J: Sometimes they are and sometimes they are not. Barton's Case holds that States cannot legislate to protect revenues which have been declared or which are the result of invalid impositions, invalid because section 92 strikes them down. Take cases like James v South Australia, the invalidation of the legislation there led to actions for trespass to goods and other forms of action against the officers who had acted under that invalid legislation and seized James' fruit and came before this Court again in James v The Commonwealth, not the section 92 case, but the later case. Why should you draw a distinction between invalidity under legislation and invalidity under judicial orders?

MR WHITINGTON: I was making the point, the slightly different point that this Court has not so far considered the consequences of invalidity when they are mediated through orders of the court.

McHUGH J: Yes, I understand that.

MR WHITINGTON: So far, it has dealt with cases where those consequences are mediated through, generally, administrative action. Now, that is action taken by the government. Now, I hesitate to say it in the presence of so many Solicitors-General, but as a matter of practical common sense, we say, it is easier for the government and for the State to bear the consequences of invalidity than for private individuals and, of course, no government likes to see its revenue taken away from it. No government likes to expose itself or its officers to actions or suits for trespass because it has found to have been acting under unconstitutional authority. But we say that is not the same thing. It is qualitatively different to consider the implications for that third party who cannot so readily protect themselves and who have proceeded to act under the aegis of court orders or rights and consequential rights conferred by court orders.

KIRBY J: That would have greater force if you could point to some American authority or some other principle, otherwise it sounds a bit like the courts' lawyers looking after their own and not worrying too much about the consequences on other branches of government.

MR WHITINGTON: Well there is another principal reason, of course, and that is that neither the executive nor the legislature have the power to determine the limits of their own power, whereas the court does have the jurisdiction to determine its own jurisdiction and further, of course, the courts have the power, in our system of constitutional government, to determine the limits of legislative power. Now, that is the doctrine of judicial review. That doctrine itself was a creature of the courts, in Marbury v Madison. It was not a necessary result. The Court in Marbury v Madison could have held otherwise that, for instance, Congress had the power to determine the limits of Congress' power, but the courts took upon themselves to say that they were the arbiters of the extent of Congress' power. Congress ultimately acquiesced in that and so that created a new kind of constitutional norm, but it was the courts who created adoption of judicial review.

Now what we say on that is that that doctrine cannot be inflexible, it is a creature of the courts. It is a doctrine which can be moulded, not to seek the circumstances of the particular case, but to seek the circumstances of the particular legislation whose invalidity has created the problem. We say the power must rest with the court to mould the doctrine of judicial review, to enable the consequences of invalidity to be modified, depending on the nature of the legislation which is invalid. Now that was an attempt to answer your Honour Justice Kirby's proposition to me, I suppose, through principle, because I cannot, I am afraid, point to any American authorities which directly answer your Honour's question.

KIRBY J: There is quite a lot of United States Supreme Court authority in this area, as we found in Spalvins, and I think we do well to look at it at least in approaching how we solve analogous problems.

MR WHITINGTON: Yes, well, for our part, we think that the authority of the United States Supreme Court in the Chicot County Case, which your Honour Justice McHugh referred to in Peters in 1988, puts the proposition that we would want to put very aptly and, as we understand, the debate from Spalvins and the submissions of the Commonwealth, Chicot is still regarded as good law. The Commonwealth cites a case, I think, of Willy, which I think as late as 1988 applied that authority.

Now, can I return to the issue of discretion. The point we wanted to make here was that events have unfolded since 1995. They have been unfolded under orders going to the status of companies and there have been a number of supervening events. Against that, the prosecutors appear to put the proposition, not that they did not know of the orders at the time they were made, but that they were not directly affected by or interested in those orders, until they were served with the proceedings in the Supreme Court.

Now we say that that, of course, is a relevant consideration for the Court to weigh, but in a matter such as this it must be weighed against the fact that these are status orders and against the supervening events and that the critical focus must be on those supervening events and not on the conduct of the prosecutors. But, in any event, if one is to focus on the conduct of the prosecutors, we submit that when they became aware of the Supreme Court proceedings in July 1998, they must also have been aware of the decision in Gould v Brown, which was delivered in February 1998, and the fact that that left the questionable basis of the Federal Court's jurisdiction under the cross-vesting legislation unresolved and in an unsatisfactory state.

Against that background and that knowledge, they did not issue these prerogative proceedings until February of this year which is a period in excess of 18 months from service upon them of the proceedings which were founded upon the orders which they now seek to set aside.

Can I briefly make two points on prohibition. First, as a matter of fact and evidence, we say it is clear from the Liquidator's affidavit that he is not taking any further steps in the Federal Court and, hence, there would be no utility in a prohibition order of the kind made in Brown; Ex parte Amann.

GAUDRON J: Well, there was certainly no utility in orders directed to the judges of the Federal Court .

MR WHITINGTON: Yes.

GAUDRON J: Yes. I mean, that is clear on one view. You have still to face up to the terms of the prohibition sought and whether prohibition should go to the Liquidator himself.

MR WHITINGTON: Yes. Well, there might be a technical question whether the appropriate remedy is prohibition but putting that to one side we accept the proposition which was being put earlier that the court has, if you like, a plenitude of remedies available to it and it could fashion an order restraining the Liquidator, but we say that if the orders are not quashed then the Liquidator should be allowed the authority of those orders, except to the extent of taking steps in the Federal Court which has no jurisdiction in the matter.

GAUDRON J: Yes. I am still lost about this debate. If the orders are not quashed it seems to me that the Supreme Court of South Australia has to proceed as if they are valid.

MR WHITINGTON: Yes.

GAUDRON J: If the orders are quashed, then it seems to me that the Supreme Court of South Australia can act pursuant to the State Legislation Act. There may be difficulties about exercising some of the powers purportedly conferred by the State legislation in the event that the orders stand. Section 10 might run into problems if the orders stand, whereas there might be no such problem if the orders are quashed.

MR WHITINGTON: Your Honour, we cannot dispute that.

GAUDRON J: It just seems to me that perhaps your side has not really thought through the consequences of your argument.

MR WHITINGTON: Well, with respect, your Honour, we would like to think we have. We understand your Honour's implied criticism there. We would like to think we have. We would like, in some ways, to say, "Let us clear the slate. Let us get rid of these orders. Let us declare them void.", and that leaves the field clear for the operation of the State Act. Of course, that assumes that there can be no other attack on the validity of the State Act and there have been attacks made on the validity of the State Act outside inconsistency. So, in a sense, we are putting the proposition that we want to cover all bases, in the vernacular. But, more importantly than that, of course, we came here - - -

GAUDRON J: But what is your preferred option?

MR WHITINGTON: Our preferred option is to be able to proceed with the administrations unencumbered by this sort of litigation, your Honour, and however we get there remains to be seen.

GAUDRON J: Well, your preferred legal outcome.

MR WHITINGTON: Can I come at it another way, your Honour? Our starting point, your Honour will appreciate, when we came to this matter was the decision in Wakim. Of course, as we read Wakim it held that the orders had continuing force and effect and they were not void absolutely.

HAYNE J: But the legal landscape has changed by the fact of the Act and that being so, which card do you want to play, Mr Whitington?

MR WHITINGTON: Our first position, I think, would still be no prerogative relief at all because if the orders stand unimpaired, if your Honour pleases, then we would say they would give us ample rights to do what we are doing. If the orders are in some way to be impaired, it might be better, I suppose, from the Liquidator's point of view to have the field cleared entirely. The Liquidator would not want to be in the position where he did not have the authority of the Federal Court orders unimpaired. But those orders had not been in some way avoided because there is a kind of position in the middle of the battleground where we might get caught in the cross-fire, where the orders might not be quashed or set aside, they might be said to have some vestigial effect and not enough to enable us to operate as we would wish under the full authority of those orders but sufficient to create difficulties under the Act.

GUMMOW J: But the definition of "ineffective judgment", in a way, is misleading in section 4. Because, undoubtedly, these orders made by the Federal Court fall within that definition, do they not? They literally fall within it.

MR WHITINGTON: We would accept they do, your Honour, although, ultimately, if we were to rely on that in the Supreme Court we may have to prove that.

GUMMOW J: Yes.

GAUDRON J: I should have thought the best proof you would have of that would be the grant of prohibition or certiorari by this Court.

MR WHITINGTON: Your Honour is quite right, we could have no better proof than that. We could have no better proof than that and that would enable us, for instance, to conduct an appeal should we wish.

GAUDRON J: Well, an appeal from what?

MR WHITINGTON: Well, really, our submission is that proof of that matter only becomes material when the court seeks to vary orders under section 10 or vary orders by way of appeal under section 7. Until then, although there might be lurking in the background an ineffective judgment, which your Honour Justice Gummow says is really an inapt description, it is not necessary for a party in our position to prove that the judgment is ineffective because, if the judgment is effective, they can stand on it; if the judgment is ineffective, they can stand on their section 6 rights, which are identical, but if they wish to appeal to vary the section 6 rights, then they can only appeal where there is an ineffective judgment and that must be demonstrated.

HAYNE J: That debate seems to attach great weight to the adjective "ineffective". If the Act had called it simply a "relevant judgment", we may be less distracted by "effective", "ineffective", whatever epithet is employed.

MR WHITINGTON: Yes, we accept that and I think, if I understand your Honour Justice Gummow correctly, you are putting to me the proposition that while the draftsman has called the judgments "ineffective", that is probably, as some people have said, on a misreading of the decision in Wakim - - -

GUMMOW J: Well, I think it also proceeds on a particular view of the nullity doctrine.

MR WHITINGTON: Yes. Yes, precisely, your Honour, and we might be wrong in this, but we did not perceive that view of the nullity doctrine in the Court's decision in Re Wakim. Now, I am not trying to dodge your Honour Justice Gaudron's question or hold all my cards to my chest, but our difficulty is that it is hard for us to state our preferred position while we are in an open matrix. Until we know what the Court says about the nature of these orders and until we know what the Court says about the validity of the Act on various grounds independent of inconsistency, it would be very difficult for us to say we, if you like, abandon one position and stand on another because we might find that we are in the middle of the ocean standing on the wrong pinnacle surrounded by a raging sea. So for our part we are seeking to adopt whatever legal course is properly open to us that preserves the effect of the orders and we seek - - -

GAUDRON J: Well, that is one position. The other position is you are seeking to preserve the rights available under the Act.

MR WHITINGTON: Yes. Well, we say if the Act confers rights - - -

HAYNE J: In the end it comes down to, you say, "You are Liquidator, you want to be Liquidator and have the rights of the Liquidator."?

MR WHITINGTON: Yes.

HAYNE J: And how you get there you are not much fussed about, is what I take from this last set of exchanges.

MR WHITINGTON: Your Honour is quite right.

KIRBY J: Unfortunately we cannot be quite so partisan.

MR WHITINGTON: No.

KIRBY J: I mean, the fact is that the Court has taken a very important constitutional decision.

MR WHITINGTON: There is no doubt about that, your Honour, and we are not seeking to take the matter lightly. What we have sought to do is put arguments in the alternative so that the Court is properly assisted, but we have stepped back at the point of committing ourselves to one argument over another because that might leave us in no-man's-land, so I hope your Honour does not think that by not committing ourselves absolutely to reliance on the Act as opposed to the orders or the other way round, we are seeking to trifle with the Court. What we have sought to do is put a number of arguments, as indeed have all the other parties, particularly the interveners, on - - -

GLEESON CJ: Your function is to argue a case, not to write a draft judgment.

MR WHITINGTON: Yes, and I am glad that is my only function, if the Court pleases. My function will end very shortly. I do not think I need to say any more. There is just one other point I wanted to make in relation to prohibition and that is that the Court should not consider an order of prohibition. If, for instance, the Court were to order prohibition as to future steps, the Liquidator and the liquidations would be left in a kind of suspended animation. Things would be partly done and partly incomplete and the administrations could not go backwards and they could not go forwards. It would be an impossible position if the Liquidator were prohibited from taking further steps. What does that mean? Does that mean that the companies revert to the directors? Not necessarily, if there is no certiorari. Does that mean that funds which have been got in and expended have to be somehow recovered and given back to the original owner? We would say not necessarily. The companies will not be able to go forward and they will not be able to go backwards.

Can I briefly turn to the other order which is under challenge, the order made by his Honour Justice Mansfield in the Federal Court on 8 December 1998, in which he approved the agreements or arrangements proposed to be entered into by the Liquidator with the insurer and the bank to fund the two Supreme Court actions. Can I just clarify a preliminary point. My learned friend Mr Abbott in his submissions at paragraph 14.6.6 suggests that because his Honour made the order on 8 December 1998 and because the funding agreement was entered into on 31 August 1998, four months before the order, the parties had committed themselves without the protection of the order and therefore they did not rely on the order.

We have provided to the Court and the parties a relevant passage from the transcript of the proceedings before his Honour on 25 August 1998. I wonder whether the Court might take up that extract. The Court will see from the front page that these were proceedings on 25 August 1998. Then if I could ask the Court immediately to turn to page 21, the last page, the Court will see that his Honour intimated on that day that he proposed to make the order approving the funding arrangement. So the parties did in a sense rely on his order. He indicated the order he was going to make. He gave that indication on 25 August. The funding arrangements were entered into shortly after that, admittedly before the final order but obviously in reliance upon that foreshadowed order.

My learned friend, Mr Allsop, is obviously going to address the matter from the point of view of GIO, so can I make some very brief points, particularly from the Liquidator's point of view, about the prejudice that will be suffered if this Court were to quash the funding order. It is put against us that no prejudice is shown, first because the only prejudice alleged is a borrowing from the Commonwealth Bank, and there is no evidence the Liquidator will be obliged to repay. We answer that by saying that Mr Macks in his affidavit makes it perfectly clear that there is a borrowing and GIO make it clear in their affidavit, the affidavit of Mr Steele, that there will have to be a repayment, although the limit of the obligation to repay is confined by the assets of the companies. The Liquidator has no personal obligation to repay beyond the assets of the companies. But that is still an obligation on him and the companies to repay. The second matter put against the Liquidator is that if - - -

KIRBY J: Is that point about the Liquidator's absence a personal obligation on the assumption that the Liquidator's original appointment is valid, or has been validated? Is that a statutory immunity?

MR WHITINGTON: No, your Honour, this is a matter of private agreement between the bank who has lent the funds and the Liquidator and the companies. Under that private agreement the borrowed funds must be repaid; they must be repaid by both the companies, the 64 companies involved, and the Liquidator. But Mr Steele, in his affidavit on behalf of GIO, deposes to the fact that it is a limited recourse borrowing; it is limited to the funds in the companies available to the Liquidator.

KIRBY J: That could not be affected by the attack on the fundamental assumption that he was the Liquidator lawfully appointed?

MR WHITINGTON: Well - - -

KIRBY J: Anyway, that has not been raised so far.

MR WHITINGTON: We say that arguably does arise. But all sorts of difficulties will be created if the Liquidator's appointment is, for instance, quashed. Where does that leave him under an arrangement such as this? Can I come to the funding orders themselves - or the funding order. If the funding order is set aside, then arguably the Liquidator entered into the funding order without authority because he sought the authority of the Court.

Secondly, if the funding order is set aside, the Liquidator no longer has the protection of an order of the Court under sections 477 and 479 of the Corporations Law. Without that protection, it could conceivably be argued against the Liquidator that the funding agreement is chamtertous. Indeed, that argument was made against the Liquidator in the Foster's proceedings in Queensland, notwithstanding the existence of a funding order. But if the funding order is removed and the protection is removed, then clearly the Liquidator is exposed to that kind of attack.

Can I give the Court a reference to a decision of the Full Federal Court in passing. I will give the Court the citation: it is a decision, Magic Menu v AFA Facilitation 142 ALR 198 at 296. In that case the Full Court of the Federal Court held that notwithstanding the abolition of the torts and crimes of maintenance and champerty in the various Australian States, there was still residual public policy issues, and it was still open to a court to find the proceedings being maintained were an abuse of process and could be stayed for that reason.

So, if the funding order of Justice Mansfield is quashed and his Honour found that the funding order would give protection against the claim of maintenance or champerty, it expands or increases the risk of an attack on the Liquidator in the conduct of the Supreme Court proceedings, that they are an abuse of the court because of the maintenance and champerty.

HAYNE J: The point would be more radical, would it not? The point would be by what authority did the Liquidator commit the company?

MR WHITINGTON: Yes, certainly. That is probably a matter between the Liquidator and the company and its creditors.

HAYNE J: It may be a difficulty that the bank may encounter, I do not know.

MR WHITINGTON: Precisely, your Honour. I was going to come to that.

HAYNE J: It may drive you back to 473(9). That may or may not operate. There would seem to be a number of aspects to the problem.

MR WHITINGTON: Yes, and a number of risks. We do not have to put it any higher than risks.

HAYNE J: Just on the question of maintenance and champerty, I know that the decision you referred to I think may have been considered by the Court of Appeal in Victoria in UTSA. I cannot remember the other party.

MR WHITINGTON: Hansen, I think. Was it Hansen?

HAYNE J: Justice Hansen's judgment which went to the Court of Appeal.

MR WHITINGTON: Yes. My memory is that that case does not say anything against the proposition put. There is nothing in the UTSA decision which gainsays the proposition that there may still be a residual issue of public policy. But, if I can take up your Honour Justice Hayne's point, there is another aspect to the lack of authority. The lack of authority may itself vitiate the insurance agreement. Now, that would mean the Liquidator and the companies would be in the position where they had borrowed money from the bank; the bank had the benefit of an insurance agreement; it, itself, was insured against the possibility that the Liquidator could not repay but the insurer might say that, "You entered into this insurance agreement with the authority of the court. That authority is now found to be lacking. That vitiates the agreement. We do not have to insure the bank. That leaves the Liquidator and the companies in the position where they are directly obliged to repay the bank without the benefit of any insurance."

Of course, the other side of that coin is that the bank itself would be exposed because if the Liquidator or the companies did not have the wherewithal to repay the moneys borrowed from the bank then the bank suffers by the quashing of the order. Now, in the case of the particular funding order sought to be attacked in these proceedings, the funds advanced by the bank only amount, I think, to $280,000, but it would be unreal to suggest that a quashing of that funding order would not have implications for another funding order entered into by the Liquidator to fund the much larger Foster's proceedings and there there is evidence from Mr Steele on behalf of GIO that the bank has advanced something like $4.5 million and if this funding order were quashed, and it would seem likely that the other funding order would be at risk in the same way, and that would really put the bank at risk.

I think there is only one outstanding matter arising under the State Jurisdiction Act that we would wish to deal with if it would be of assistance to the Court. It relates to the issue of inconsistency in connection with appeals. I can briefly put our propositions. They are these: that the right of appeal granted by section 7 is, if you like, a right of appeal on the merits, if I might use shorthand. There is no right of appeal in the Federal Court system on the merits, owing to the fact that the original decision was made without jurisdiction. In our respectful submission, there can be no indirect inconsistency or covering the field inconsistency between section 7 and the Federal Court Act 1903 .

That is for these reasons: the Federal Court Act does not purport to give jurisdiction to the Federal Court in State matters, and any Commonwealth legislation purporting to do so would be constitutionally invalid and have no effect. But the Federal Court Act, in our submission, in this context, only contemplates and speaks to valid exercises of judicial power by the Federal Court and the Federal Court Act does not purport to grant a right of appeal on the merits. So we say there could be no possible - - -

GAUDRON J: I do not understand that. It may be that the Full Federal Court would set aside the order on the basis it was without jurisdiction.

MR WHITINGTON: Yes.

GAUDRON J: But you use the word "purport". I should have thought that the Federal Court Act does purport to give a right of appeal, and it would not matter whether it were on the merits or not. If the Federal Court Act does give a right of appeal, then you must face inconsistency, must you not?

MR WHITINGTON: With respect, your Honour, we would submit that if the Federal Court did extend that far, it would be unconstitutional.

HAYNE J: But the appeal is against orders, not reasons.

MR WHITINGTON: Yes, but it is against an order made in pursuance of a particular jurisdiction. If that jurisdiction has not been validly conferred, then, of course, the appeal must be in the same jurisdiction. The jurisdiction to exercise the appeal must stem not just from the Federal Court Act, but also from the legislation granting the substantive subject matter jurisdiction. The two must work in tandem, because otherwise we say the result would be achieved that the Federal Court would now have jurisdiction to hear appeals on the merits against judgments made in the exercise of an unconstitutional jurisdiction, and we should have thought that just cannot be so.

GAUDRON J: It may be that the proper exercise of judicial power would require it to set aside the order as having been made without jurisdiction, but it does not seem to me that that answers the 109 problem. You have to look to see what the Federal Court Act says.

MR WHITINGTON: Yes. I accept that the words themselves do appear to grant a full right of appeal, but - - -

GAUDRON J: Well they do appear to grant that, and that, at least, looks odd, does it not, that the decision of a Federal Court judge may be - although it is expressed in terms of the rights, but it is, in substance, the decision of the order of the Federal Court judge, it may be the subject of proceedings in the State Supreme Court.

MR WHITINGTON: I cannot take it any further than this, your Honour, and that is that, in our respectful submission, the Federal Court Act, to that extent, would have to be read down subject to the constitutional validity - - -

GAUDRON J: The Federal Court Act?

MR WHITINGTON: The Federal Court Act, yes.

GAUDRON J: No, look at it in these terms. Let us say both sides are unhappy with the particular order. Mr Jackson elects to go to the Federal Court knowing that they are going to say, "Set aside the order"; it is made without jurisdiction. You elect to go to the Full Supreme Court. Is that not an inconsistency? Is it not the very essence of an inconsistency?

MR WHITINGTON: We would respectfully submit not, because the Full Court of the Supreme Court only has jurisdiction to hear and entertain - - -

GAUDRON J: Yes, but it is going to set aside the order.

MR WHITINGTON: Not yet, your Honour.

GAUDRON J: No, no, the Full Federal Court, sorry, is going to set aside the order.

MR WHITINGTON: We say, not yet, because there is a precondition to jurisdiction and that is there must be an ineffective judgment.

GAUDRON J: The Full Federal Court is going to set aside an order.

MR WHITINGTON: I see, yes.

GAUDRON J: Let us assume the State Supreme Court is simply going to vary it.

MR WHITINGTON: Yes, but still, your Honour - - -

GAUDRON J: Is that not an inconsistency?

MR WHITINGTON: Potentially there is an operational inconsistency there, your Honour, we accept what your Honour says, but we say there is an answer to it and that is that section 7 only permits an appeal to be made against an ineffective judgment. That is a precondition for the power to hear and determine the appeal. Now, the court then has to determine there is an ineffective judgment. We say that the only way it will do that, consistent with comity and proper standards of proof, is to require the Federal Court or this Court to pronounce that it is an ineffective judgment. Until that happens there is an issue estoppel between the parties to the appeal. If we are right that when the Federal Court exercises jurisdiction, that is the judge - the court at first instance - and if we are right in asserting that that judge has implicitly made a decision as to his jurisdiction, then that creates an issue estoppel between the parties and the unsuccessful party cannot go behind that issue estoppel and assert to the Supreme Court that there is an ineffective judgment.

There is, for these purposes, an effective judgment and there is an issue estoppel to that effect. The Supreme Court can only act when somebody has authoritatively pronounced that there is an ineffective judgment. In our respectful submission, that can only be the Federal Court or this Court. The Supreme Court itself would, first of all as a matter of comity, not embark upon that exercise but, secondly, in our respectful submission, has no power.

GUMMOW J: Why not? It has got federal jurisdiction.

MR WHITINGTON: Yes, it has, your Honour. It has got jurisdiction under section 39.

GUMMOW J: Yes.

MR WHITINGTON: In our submission - - -

GUMMOW J: There are two courts with the relevant federal jurisdiction.

MR WHITINGTON: Yes.

GUMMOW J: One is the Federal Court and one is the Supreme Court.

MR WHITINGTON: We take your Honour's point and we answer it this way. We say that section 39 would be read down in this case so as not to permit the Supreme Court to hear and determine the question, "Does a federal court have jurisdiction?" We say that section 39 should not be construed as going that far.

CALLINAN J: You say it is a strict estoppel and an Anshun-type estoppel?

MR WHITINGTON: We would say a strict issue estoppel, your Honour, because we would say that it was implicit in the litigation conducted in the Federal Court. There was an implicit question, as there always is where a court has limited jurisdiction, "Does this court have jurisdiction?"

CALLINAN J: An Anshun estoppel would be sufficient for your purposes anyway, would it not?

MR WHITINGTON: Well, I think any estoppel would be sufficient for our purposes, yes, anything that would preclude the purported appellant - - -

CALLINAN J: The re-opening of the jurisdictional question in respect of the orders already made by the Federal Court?

MR WHITINGTON: Yes, quite so.

HAYNE J: And how do you relate that to the words of the definition in section 4(1)?

MR WHITINGTON: Your Honour, because we say the words only carry the matter so far. They state the proposition but they do not identify how it is to be made good.

HAYNE J: I am sorry, that does not convey much to me.

MR WHITINGTON: No, I did not put it very well. We say, your Honour, it is a really a matter of proof in the end.

HAYNE J: Of what? In terms of the definitional words?

MR WHITINGTON: Yes, yes.

HAYNE J: What words are you saying require satisfaction by proof?

MR WHITINGTON: Well, to put it in shorthand, that the Federal Court's only jurisdiction was jurisdiction under one of the identified relevant State Acts because, you see, if the Federal Court has another jurisdiction, then it will not be an ineffective judgment and it is not for the parties to assert or agree jurisdiction or not. The matter must be demonstrated properly and where one is dealing with an order of the court and jurisdiction exercise by a court it is not a matter simply for the parties to come forward and say, "We now decide and we tell you, the Supreme Court, that the Federal Court had no jurisdiction."

The Supreme Court might say, how do we know that? You say it had no jurisdiction under the Cross-vesting Act but there might have been another head of jurisdiction. How is that to be determined? But, more, you estopped from relitigating that until that issue has been, for instance, determined on appeal or otherwise determined. So the Supreme Court cannot proceed until it has properly been demonstrated that there is an ineffective judgment and, put shortly, that means a judgment made exclusively under some constitutionally invalid legislation purporting to confer jurisdiction which the Federal Court could not have exercised.

GAUDRON J: The only question that this is addressed to is whether the Full Supreme Court could entertain an appeal.

MR WHITINGTON: Yes, and, therefore, your Honour - - -

GAUDRON J: Because otherwise the rights do not depend on the Supreme Court doing anything.

MR WHITINGTON: That is right, your Honour, precisely. And, of course, this issue does not arise in our case, but we just say that by the by. Can I just finally complete my answer to your Honour Justice Gummow's point? We do, with respect, your Honour, suggest that section 39 should be read down. But if we are wrong in that, and if the Supreme Court does have the power in the exercise of federal jurisdiction to determine conclusively whether or not the Federal Court had jurisdiction, then that itself would be the exercise of the federal power under a Commonwealth enactment and no question of inconsistency would then arise. They are our submissions, if it please the Court.

GLEESON CJ: Thank you, Mr Whitington. Yes, Mr Solicitor.

MR BENNETT: Your Honours, I propose to deal with the argument in seven sections. The first and major one, we will deal with section 109; second, we will deal with Humby; the third, with appeals; the fourth, with the nature of the winding up; the fifth, with Kable; the sixth, with the void/voidable distinction; and the seventh, with the question of what order should be made. In relation to section 109, there is one key issue which, in our respectful submissions, must be borne in mind, and that is this, that there is no federal Act which says a judgment made which is by the Federal Court, without proper constitutional basis, has, nevertheless, a residual effect.

That residual effect, to use a shorthand phrase at the moment, and I will come to the argument about it, but assuming it exists as we say it does, that arises because it is a superior court under section 5 of the Federal Court Act, and because of section 71 of the Constitution and the power to set up courts. When one is looking at inconsistency, what is the field which is covered by the combination of section 71 of the Constitution, section 5 of the Federal Court Act and the common law rule which produces that result? There cannot be a field of the enforceability, until declared void, of a voidable judgment which manifests any intention to prevent the States operating in the substantive field covered by that judgment. The contrary would be nonsense.

It would suggest that the federal Parliament, in enacting section 5, was expressly or impliedly saying - and, of course, if an unconstitutional judgment is given and there is some residual effect, the States are still precluded from the field, and that simply cannot be right. That is the short answer to the section 109 point. It depends upon a taking this effect of voidability and magnifying that into some sort of field in which the Commonwealth has legislated and using that field to exclude the States from something much wider.

McHUGH J: But just let me follow this. When you talk about section 5, are you talking about section 5 of the Federal Court Act?

MR BENNETT: Yes, the word "superior", one word of the section.

McHUGH J: Supposing that you do not accept that proposition so far as what I will call the merit orders are concerned under cross-vested legislation, that section 5, section 19 of the Federal Court Act give you jurisdiction to determine whether you have jurisdiction but they are not the source of the jurisdiction to make orders on the merits in respect of the cross-vested matters. Where do you go from there?

MR BENNETT: I am sorry, your Honour, I do not fully understand the question. The "orders on the merits", do you mean the original winding up orders?

McHUGH J: Yes, they are made under cross-vested legislation and the sections which were the source of those orders are, according to Wakim, invalid.

MR BENNETT: Yes.

McHUGH J: That being so, it seems to me arguable at least that no 109 question can arise because 109 only operates when both valid laws are in existence, and Gerhardy v Brown says that and so do other cases - Carter's Case, I think. So there can be no - - -

MR BENNETT: No. One of the paradoxes of this case - and there are many paradoxes in it - is that if your Honours are against me on the void/voidable, my case on the section 109 aspect becomes much stronger.

McHUGH J: That is as it seems to me at the moment but it also creates real problems in my mind about this question of void and voidable having regard to the existence of 109 in the Constitution. The constitutional doctrine is, for example, in the industrial field that awards operate through the Conciliation and Arbitration Act. That is the 109 rule. In the Native Title Case, if I remember rightly, we held that the Minister's approval was in effect the factum upon which the Commonwealth Act operated to invalidate the Western Australian legislation. So you have to have that valid Commonwealth law at the back of these matters. I just feel quite confused about this notion that somehow or other the legislation that brings into existence the winding up orders is invalid and yet in some way it is said that these orders can impinge on the State legislation.

MR BENNETT: The only way my learned friends get there, your Honour, is to say the voidability doctrine or the residual validity doctrine, or whatever one wants to call it, the effect of the "valid till set aside" rule, comes from the word "superior" in section 5 of the Federal Court Act. Assume for the moment that is valid. Accepting that, my friends then say, "That sets up that whole doctrine and that gives us a field upon which inconsistency can operate". That is the way they put it and that is what we say does not run.

There is another aspect to what your Honour put to me. I hesitate to put this at risk of confusing the issue further, but it is an argument I was going to come to. If one takes the approach your Honour just put to me and says, "Well, for the purpose of section 109, we do not look at the word "superior" in section 5; what we look at is the order of the Federal Court winding up these companies". We say, "Is the 109 inconsistent, say, with that?", treating that as if it were a federal law, in effect.

If one takes that sort of approach, then one has to look at the overall context in which those orders were made. That context includes all the invalid sections of the Corporations Law of the States, including section 58AA, which says that any of the Courts, the Supreme Courts of the States and Territories, and the Federal Court, can make orders in an intermingled way in the course of the same winding up. You can have the winding-up order made in one court, the Liquidator changed by another court, an examination of the director in a third court, and an action against someone for a preference in a fourth.

Once the winding-up order is made in that context, one immediately says there cannot be section 109 inconsistency because the order contemplates a context in which orders, even orders inconsistent with it, may be made by State courts. That, in effect, sort of adopts what your Honour has put to me and uses it as another argument against the application of section 109.

GAUDRON J: There is another side to that argument though. It might be that those provisions of the State Corporations Law, which allow you to hop from one court to another, are themselves invalid for section 109 inconsistency so long as there is a judgment, an order of the Federal Court, which stands and with which the order sought would be inconsistent.

MR BENNETT: It becomes a question of chicken and egg, your Honour, because if one starts with the legislation, one then says that the Federal Court order cannot be inconsistent because it is made in contemplation that that will happen. Your Honours will notice, if your Honours go to the order at page 12 - I have not checked; my friend said there were two forms and I have not checked the other form, but in relation certainly to the one on page 12 of volume 1, it says "wound up by the Court under the provisions of the Corporations Law". So the order itself refers to the Corporations Law and, therefore, incorporates by reference those provisions. So it is a question of where one starts, your Honour.

GAUDRON J: One starts, surely, with section 109 for this point.

MR BENNETT: It does, your Honour, but then one has, in applying section 109, to look at the federal "thing" - to call it that for the moment - which is said to give rise to the inconsistency, and ask does that or does that not contemplate the type of State activity which we are talking about? That is, of course, a familiar exercise under section 109. Here, the words "under the Corporations Law", which includes section 58AA, clearly do. So we would submit that ultimately that is another reason why section 109 simply cannot operate.

McHUGH J: Could I just detain you on one aspect of your argument. You rely on section 5 of the Federal Court Act. The source of power to create the Federal Court is section 71, is it?

MR BENNETT: Yes, your Honour.

McHUGH J: Yes. It fulfils the role that - I think it is Article 1, section 8 has in the United States which is a specific power to create inferior courts to the Supreme Court. It is equivalent to section 51 of the Constitution.

MR BENNETT: Yes.

McHUGH J: Now, granting that there is implied in section 71 a power - I am sorry - hitherto, 71 has been regarded as simply creating - giving you a right for the bare creation of a court, has it not? It is concerned with the bare creation of a court. It has got to get its jurisdiction from 75, 76 and 77, but granted that it extends to describing the court as a superior court of record, is it your argument that 71 also authorises the Commonwealth expressly or impliedly to say that the orders of that court are valid orders for the purpose of 109 of the Constitution until they are set aside?

MR BENNETT: Yes, your Honour.

McHUGH J: Why do you say that?

MR BENNETT: Because, first of all section 71 clearly contemplates and permits the establishment of a hierarchy and it permits, we would submit, the setting up of a superior court of record or a court which is a court of record but not a superior court of record.

GUMMOW J: The Magistrates Court, I see from the Federal Act, is a court of record but not a superior court.

MR BENNETT: Yes. We have given your Honour that section for the purpose of demonstrating that it is the same form with the word "superior" omitted.

GAUDRON J: But why does not 77(i) just take you straight to the power to say it is a superior court of record meaning, thereby, it has the jurisdiction to determine its own jurisdiction?

McHUGH J: Yes, that is my problem. I would have seen the power in 77(i) rather than under 71 itself.

MR BENNETT: If one looks at the state of the law at the time of the Constitution there were two types of court and a superior court of record was a court which had - one of the incidents of which was that it had jurisdiction to determine its own jurisdiction. When one is dividing the universe into the creation of courts and the conferral of jurisdiction on them, it is, we would submit, at least as rational to say that the jurisdiction to determine jurisdiction is more an attribute of the court itself than an aspect of the substantive jurisdiction it actually exercises. Although the English word "jurisdiction" is used for both, as a matter of - when one is dividing the universe in that way, we would submit it belongs more logically in the other basket.

McHUGH J: It leads me to this problem. I can understand the argument that either from 71 or 77(i) you get a power to create a Federal Court, being a superior court, whose orders are valid until set aside.

MR BENNETT: Yes.

McHUGH J: But I think there is another question, another step. Can the Commonwealth have power to say that the orders of such court remain effective until set aside so that they can operate to invalidate State legislation. That seems to me to be a further step.

MR BENNETT: We do not submit that it goes that far, your Honour, but we - - -

McHUGH J: I think some of your opponents do, or some of the - - -

MR BENNETT: Oh, yes, but we resist that in a number of ways and I have given your Honours the way in which we do it.

McHUGH J: Yes.

GUMMOW J: How do you say it stops short, Mr Solicitor, that is what is worrying me?

MR BENNETT: Because, your Honour, it is a field which inherently, we would submit, is one in which one would expect to find permitted State activity in the substantive area. The field of temporary validity is a field which - and that has to be the field my friend is talking about, although he has not formulated what the field is - but the field of orders having an effect until set aside is not a field which one would seek to control in any expansive way which would prevent the States operating so as to assist with the substantive matters which have to be dealt with where an order is liable to be set aside.

HAYNE J: Is that then to distinguish the fields as being a field with respect to the binding effect of orders and a field with respect to the status and rights in relation to insolvent companies?

MR BENNETT: That is certainly one way of putting it, your Honour, yes.

HAYNE J: Well, it seems to me to be a distinction that might well blur at its edges.

MR BENNETT: Yes.

HAYNE J: And that unless you are trying to divide it in that way, at least at the moment, I am not understanding how you are effecting the division. You refer to the States dealing with the substantive issues. Relevantly, they are the status and rights in relation to insolvent companies, let us call it that.

MR BENNETT: Yes, your Honour, yes.

HAYNE J: You are talking about the binding effect of orders made by a Federal Court. At least at the moment I am understanding your argument as distinguishing between those two as if there can be a wall between them. It is that which I do not yet understand.

MR BENNETT: I am defining the second field more narrowly than your Honour has defined it. I am defining the second field as an almost trivial field dealing with the temporary effect of orders which are invalid, pending their actually being set aside, and I am defining my field that way. Having defined it that way, one then says, "Well, how much interference is there if the State takes the broad field of winding up and strays into that very narrow field?" We say it is inherently a field where one would expect some straying and where, subject to operational inconsistency, there is no section 109 inconsistency. I may just remind your Honour in relation to that what was said in P v P.

GAUDRON J: Does it make any difference if there is inconsistency except really at the margins?

MR BENNETT: No, your Honour, we say ultimately not.

GAUDRON J: Because assume section 5 covers the field of the binding force of all judgments or the rights - well, we will define it more broadly: the binding effect as to the relevant rights and liabilities of the parties in respect of whom the order is made. That is about as widely as we can put it. Assume section 6 intrudes into that field and is to that extent invalid. What difference does it make? The parties could presumably rely on the Federal Court orders, which could not be subject to collateral attack because of 109, and nothing matters. The field in which section 6 would then operate is that field in which this Court quashes the decisions. I mean, that does not deal with the possibility of direct inconsistency in sections 7 and 10, in 7(2) and 10, but what difference does it make if there is inconsistency for the purposes of section 6 in general terms?

MR BENNETT: One difference is a lot of work for this Court setting aside some thousands of winding-up orders.

GAUDRON J: Well, not necessarily. The only time you would need to set aside the winding-up order would be if there were an application to discharge it or to change liquidators under section 10.

GUMMOW J: Section 10(2).

HAYNE J: Terminate the winding up you might then have to otherwise the liquidator has alternative routes of title and what does it matter which the true route of title is.

MR BENNETT: Well, your Honour, I am going to come to the question of form of order. There is certainly a form of order your Honours could make which I handed up to your Honours which in a sense accommodates what your Honour Justice Gaudron has been putting to my learned friend and now to me, but I suppose it makes this difference. It causes some inconvenience in some cases but at the end of the day if your Honours accept my argument as to the context of section 58AA in which the winding-up order is made there is just no inconsistency because the field covered is what is done by the order and what is done by the order under its temporary validity is to - - -

GAUDRON J: But it seems to me that, comparing State law with State law and saying, "Is there an inconsistency?", it seems to me that that is not the way you can go.

MR BENNETT: Well, your Honour, if the federal field is a field related to the effect of Federal Court orders, in order to see if there is operational inconsistency, one has to look at that order and say, "What does the order do?"

GAUDRON J: Well, at the moment there are two aspects to this 109 argument: the first is "cover the field" inconsistency, that is the first one of which the prosecutors rely; the second argument is, direct inconsistency and you cannot read down. I do not think anyone thinks operational inconsistency is really an aspect of direct inconsistency, is it not?

MR BENNETT: Yes, your Honour, and it is a fall-back. May I just remind your Honours of what was said in P v P as to the test in this sort of case, because the test is quite applicable to the direct inconsistency argument here. P v P [1994] HCA 20; 181 CLR 583, and the passage is in the judgment of the Chief Justice and Justices Deane, Toohey and your Honour Justice Gaudron at page 602 - - -

GUMMOW J: How did the issue arise in P v P?

MR BENNETT: The issue involved sterilisation of a mentally incompetent teenage girl and - - -

GUMMOW J: No, I mean in jurisdictional terms how did it arise?

MR BENNETT: Well, because there were provisions in the State Act about the need for the director's consent to the operation and the provisions in the Family Law Act under the general provisions for the welfare of children.

At page 602 their Honours said this, in the middle paragraph on the page:

Quite apart from any question of constitutional power, the reason why a law conferring jurisdiction in general terms is to be construed in the manner indicated is that it is ordinarily to be presumed that it is the intent of the Parliament that jurisdiction conferred in general terms will be exercised in the context of, and within the confines imposed by, the ordinary criminal law of the relevant State or Territory.

Now, just stopping there and translating it to the present case, jurisdiction conferred by the Federal Court Act, in general terms, will be exercised in the context of and within the confines imposed by the State law affecting matters within - - -

GAUDRON J: I do not think the analogy is complete and it is not complete because it is a different field of the law and different things may or not be picked up by section 79 and 80 of the Judiciary Act.

MR BENNETT: Yes, they may, your Honour. But this concerned the jurisdiction of the Family Court, this case, and there was the general power of the Family Court in relation to children and a very specific provision in State law about director's consents to certain things. We would submit the analogy does have some relevance. The following paragraph, the long paragraph, which I will not read, which goes over to the next page, discusses the phrase "operational inconsistency".

GAUDRON J: Yes, but it is also talking about the exercise of jurisdiction. We are in a different field, really, once the jurisdiction has been exercised, are we not? What you are doing there is you are talking about construing a statute as to the extent of, or the method of exercise for jurisdiction. What we have to construe, on one view at least, is section 5 and the intent to be taken therefrom where the jurisdiction has been exercised.

MR BENNETT: Yes, but one is taking section 5 which is a - certainly there is a distinction to which your Honour refers and, of course, I cannot escape from it by saying it is the same, but the common feature is that one has a general procedural statute, using procedural in the broad sense of including setting up a jurisdiction and a court, and one has a substantive statute dealing with an area of law, in this case company law.

GAUDRON J: A State statute, yes.

MR BENNETT: A State statute, yes. The one as to which inconsistency is alleged. The particular operation of the federal law in this case is through an order which is made in the context of referring to and having regard to legislation which expressly permits State interference with its orders. If one is only talking of operational inconsistency, there just is not any.

GUMMOW J: Until?

MR BENNETT: No, even until, your Honour, because the - - -

McHUGH J: Well, let me give you an illustration. Supposing an action is commenced, seeking directions, in the Federal Court. One is immediately in federal jurisdiction. Section 79 would then pick up, would it not, the State legislation? Would you not have a question then arising as to what is the relevant legislation? Is it the Federal Court order or is it the State legislation?

MR BENNETT: Yes, the Federal Court order, the procedural order, might involve adopting the procedure of the State, yes. But then there could not be inconsistency. I mean, that is Dao. But what happens here is - let me go back a step. If one had a federal Act, a federal corporations law, which had section 58AA in it - - -

GUMMOW J: Yes, we would not have been here.

MR BENNETT: We would not be here, your Honour.

GAUDRON J: It seems to me the Commonwealth could have passed an Act in identical terms to the State Act.

HAYNE J: I think should be destroyed.

MR BENNETT: I am only paying for the Commissioner of Taxation today, your Honour. If that had happened, no one could have suggested that there was any inconsistency or any Chapter III problem with the Federal Court saying, "We appoint John Smith liquidator", and the State court then saying, "No, we remove John Smith and appoint Mary Brown as liquidator". No one could have had any problem with that, although you have a State order directly consistent with a federal order. That is the allocation pursuant to the Constitution of powers between courts exercising federal jurisdiction.

If one moves to this case one has an invalid order which has, on the assumption that we are assuming at the moment, a pro tanto reservation until set aside and certain aspects of it. That is made under State legislation which, though it be invalid, if it were valid would be like that Commonwealth legislation I have just decided, ergo no operational inconsistency.

McHUGH J: Supposing there was an application in the Supreme Court of South Australia to set aside the Liquidator. What law governs? Section 10 of the South Australian legislation or does the federal law govern by reason of the orders made by the Federal Court appointing the person the liquidator?

MR BENNETT: One is assuming that the Federal Court order has not been set aside. Under section 10 of the State Act - all the court is doing is varying a right imposed by section 6, which is State law. It is not affecting the federal order. It is only affecting the deemed rights and liabilities set up by section 6. It is only dealing with those, so it would be purely a State matter and there would no question of inconsistency because it is merely a deemed situation. For the reason I gave in my first sentence, there is no inconsistency because why would one assume that a jurisdiction to determine jurisdiction with a temporary operation until set aside would prevent States operating in the substantive area?

HAYNE J: What then is the status of the company if pursuant to section 10 the Supreme Court of South Australia terminates the winding up? Is the company in winding up or not at that point if the order of the Federal Court is not set aside?

MR BENNETT: The company is in winding up but the rights of all parties are as if it was not.

GAUDRON J: I do not think that avoids inconsistency. I think it describes an inconsistency.

HAYNE J: I do not know that that is playing a card, Mr Solicitor; that is playing the whole pack.

MR BENNETT: Well, your Honour, there is a second and alternative argument to it, that if your Honour accepts my section 58AA argument, then - - -

HAYNE J: The assertion by a State legislature of capacity to alter a Federal Court order reveals no inconsistency under section 109. That is what the section 58AA argument comes to, is it not?

MR BENNETT: No, your Honour, the opposite. The section 58AA argument says the Commonwealth law, which is the combination of the Constitution, the word "superior" in section 5, and the winding-up order, that Commonwealth law specifically contemplates that whatever interregnum regime is imposed, is one which would have existed had the State law been valid, and the State law includes section 58AA. So it is an order which itself contemplates its being set aside or varied by a State court, therefore, no inconsistency. So if your Honour accepts that leg of the argument, the whole problem does not arise.

GAUDRON J: But section 58A, depending where you start, has its own problems with inconsistency, perhaps.

MR BENNETT: It may, your Honour, it may. I am not for a moment defending section 58AA in relation to the Federal Court in the face of Wakim. Of course I am not. But what I am submitting is that the temporary validity, or whatever one calls it, which is given to the order must include the whole of the other invalid sections of the Corporations Law which are incorporated by reference in the wording of the order and in the context of the order. Therefore, there is no inconsistency.

The second matter - I said the first was the longest; the other six are all shorter, your Honours - is Humby. May I just say this about Humby: we have in our written submissions our answers to our learned friend's written submissions, but my learned friend, Mr Jackson, added an argument. His additional argument was that Humby, in a number of places, specifically referred to the fact that the Court could have legislated for the payment of maintenance, or indeed for divorce, by administrative decree, and therefore all the legislature was doing when it passed the validating Act was, in effect, imposing an obligation to pay maintenance as if by a court, but by administrative or legislative decree.

We say two things about that. The first is that it is exactly the same here. The mere fact that the historical fact on which the "as if" proposition is based happens to be the order of a Chapter III court cannot make any difference. The legislature would have had power to pass an Act - the South Australia legislature could have passed an Act saying, "This company is wound up". It could have passed an Act saying, "This company can be wound up by the South Australia Supreme Court". It could have passed an Act saying, "This company can be wound up by an administrative official". It would have done any of those things. What it has done is say, "This company shall be treated as if it were wound up", and in order to define the referent, it has said "as if it were wound up by an order of the Court". There is simply nothing invalid about that, and the distinction my learned friend draws is a distinction which has no effect on the argument. The relevant feature is the same, and the differentiating feature, that the ultimate historical fact is an order of a Chapter III court, just has no relevance to any step in the argument. Really, we submit that Humby is precisely on point.

Now, of course, Humby does not answer the section 109 arguments I have been dealing with and in relation to those arguments my learned friend is entitled to say, "Yes, there is a distinction." But in relation to the other aspects of his argument, in my respectful submission, it is indistinguishable. The third question - - -

HAYNE J: Just before you go to the third, can I take you back to this 58AA point just one moment, Mr Solicitor?

MR BENNETT: Yes, certainly.

HAYNE J: Is the essence of it that the order of the Federal Court, valid until set aside though it may be, is to be read as containing within itself a series of qualifications and limitations, one of which relevantly is the possibility of later change to the order by a State court?

MR BENNETT: Yes, your Honour, with this very, very slight alteration to the way your Honour formulates it. Your Honour used the phrase qualification or - - -

HAYNE J: Limitation.

MR BENNETT: - - - limitation. I would have put it rather as a characteristic rather than that. The characteristic includes the possibility of hopping between courts in accordance with section 58A.

HAYNE J: And, for example, termination of the winding up or appointment of new liquidators or the like.

MR BENNETT: Yes. It is inherent in the - - -

GUMMOW J: And you get it out of the words "under the provisions of the Corporations Law" in the actual order.

MR BENNETT: Yes, I do. Yes, and I would argue even without those words - - -

GUMMOW J: Yes, I understand.

MR BENNETT: - - - one would find it but with those words it is much easier, yes.

HAYNE J: And it is just as an interlocutory injunction may contain within itself certain inherent characteristics of subsequent change by the court ordering it.

MR BENNETT: Yes, or if one dares take analogies from other constitutional areas, under section 51(xxxi) if one has a statutory right which is inherently capable of variation as in Peverill. One can find lots of analogies to governmental Acts which contain within them the inherent ability to be varied in ways which can prevent section 109 operating.

GUMMOW J: Now, what then follows from that? Construing this order this way as having this ambulatory inherent effect, what then follows for your argument?

MR BENNETT: Suppose the order had said, your Honour, suppose it had said, "This order is subject to the possibility that in accordance with section 58AA any State or Territory court can vary it, alter it, rescind it or do what it likes to it," if the order had said that, the whole suggestion of inconsistency could never have been made and - - -

GUMMOW J: Does that then assist your operation and consistency argument?

MR BENNETT: Yes, your Honour.

GAUDRON J: So you say if you ever get to section 10(2) there is no inconsistency, but what about if you get to section 7(2)?

MR BENNETT: I am about to come appeals, your Honour, as the third proposition.

GAUDRON J: Yes.

MR BENNETT: And might I invite your Honours to look at my learned friend's diagram, my learned friend Mr Abbott's diagram. Do your Honours have it, with the orange and blue colours?

HAYNE J: Mine is coloured in. I have got nothing to do at lunchtime, Mr Solicitor.

MR BENNETT: Yes. Yes, that is so, your Honour. Well, let me fill in the dots in accordance with that because your Honours will see that there are a number of dotted lines which are intended to convey a question mark and what I propose to do is to submit the answer to my learned friend's questions. The first one is the dotted line from "Supreme Court `Statutory Judgment'" to "Full Court Judgment", the diagonal line with the appeal under section 7. Now, we answer that "yes" and what is given is under State law, which, of course, is free to do this. The State law is not bound by the restrictions in Chapter III. It says that this deemed judgment is something against which - or this deemed set of rights is something against which one can appeal to a State Full Court. So we fill in the dots on that line and make it a solid line.

GUMMOW J: Which line is this?

MR BENNETT: This is the diagonal line from the Supreme Court. It is a diagonal line moving in a north-west direction from "Supreme Court `Statutory Judgment'" to "Full Court Judgment".

GUMMOW J: Yes, thank you.

MR BENNETT: Now, the dotted line above that going in a north-east - - -

GAUDRON J: You say that involves no section 109 inconsistency?

MR BENNETT: No, your Honour, it does not, because one is only appealing against deemed rights given by the State.

GAUDRON J: But what you might have at the end of the day is rights declared by the Full Court judgment inconsistent with the rights conferred by the Federal Court judgment.

MR BENNETT: Different from, your Honour.

GAUDRON J: Different. Did I say "different to"?

MR BENNETT: No, your Honour said "inconsistent with". I would never correct your Honour's grammar. I would never presume to do that.

GAUDRON J: Well, if they are different from, then why is not that inconsistent? I mean, you have got, I think, Mr Solicitor, any number of synonyms for inconsistent which avoid the use of it.

MR BENNETT: All that is different is - and, again, both inconsistency arguments can be used.

GAUDRON J: Yes.

MR BENNETT: The first is the one which says, "Well, there is a contemplation of State alteration, any way" - well, that is the second, and the first is the argument that the field covered by the judgment having a small temporary effect until set aside is a field which is not challenged by a State setting up a permanent regime which is different to it. In either of those ways I avoid the inconsistency argument.

When one gets to the next step which is the north-easterly line going from "Full Court Judgment" to "High Court". Again, that should be filled in and answered "Yes". There is no problem with that because at that stage one has, so far as the Constitution is concerned, a first instance judgment by the Full Court.

It is true that there may well have been, and in fact there was not, a judgment, decree, order or sentence prior to the Full Court but there now is and that determines legal rights and liabilities, although it does so as a matter of original jurisdiction rather than appellate jurisdiction so far as the Constitution is concerned. So there is no problem with an appeal, the ordinary appeal provisions applying to it. So, those ones are filled in. The other two dotted lines are not filled in.

The other two dotted lines are not filled in. The two dotted lines from "Statutory Judgment" directly to the "High Court", they both proceed in a northwards direction, one slightly east and then north. Those dotted lines should be answered, "no" because in each case they are clearly inconsistent with Chapter III of the Constitution. There is no judgment, decree, order or sentence. I think that deals with what I needed to say about appeals. We do stress - - -

GAUDRON J: Of course, would it be right to say there could be no argument as to inconsistency, under 7(2) from a statutory judgment, if the Federal Court judgment were quashed and section 6 - or an ineffective judgment were construed according to its terms?

MR BENNETT: Your Honour, there may be a question which is probably not necessary to answer as to whether, if the legislature says - if the legislature says the rights and liabilities of all people are as if X was the case, and someone then sues in the Supreme Court on the basis that X is the case, that, of course, is a normal judgment from which a normal line of appeal can go. If the legislature uses the words "the rights and liabilities are the same as if there were a judgment", that rather assumes that there is not, and it is a little difficult to see how the Constitution can fasten on a judgment, decree, order or sentence that does not exist, but where there are merely rights as if it existed.

GAUDRON J: I am not talking about your northward lines. I am talking about the north-west and north-east lines.

MR BENNETT: I am sorry, well, I misunderstood, your Honour, I am sorry.

GAUDRON J: Yes. The possibility of inconsistency on your north-west line, which I adverted to in discussion with you earlier - - -

MR BENNETT: Yes.

GAUDRON J: - - - if one does not accept your view that "different from" does not equate with "inconsistent", which is the premise of your argument, would there be any inconsistency or anything to argue about or debate, in any way or in any forum, if the decision of the Full Federal Court were quashed and the definition of "ineffective judgment" were given the meaning which its terms literally bear?

MR BENNETT: Yes. If your Honour were against me on both legs of section 109 in relation to that appeal, there would be operational inconsistency in relation to that narrow situation.

GAUDRON J: But only while the judgment of the Federal Court stood.

MR BENNETT: Yes, only that.

GAUDRON J: And the inconsistency, there would be none, if it were quashed and no room for debate about people's rights if it were quashed and the definition of ineffective judgment construed according to its literal terms.

MR BENNETT: Yes, that is so, your Honour. If I can just show your Honour the section in the Act, your Honours have looked at it already, the key is the word "purported" in section 4 and the reference to "State matter", which itself, when read with Re Wakim, clearly involves invalidity.

Your Honours, the fourth matter is the question your Honour the Chief Justice and your Honour Justice Hayne asked yesterday about the continuing process involved in a winding up. If that question had been asked of a company lawyer in the 1890s or even probably the first half of this century, one would have got the answer that there are three types of winding up: there is winding up by the court, winding up under the supervision of the court and winding up aliunde.

GLEESON CJ: The creditors voluntarily winding up.

MR BENNETT: Yes, creditors or members voluntarily winding up. The liquidator was originally no doubt seen very much as an officer of the court in the full sense of the word. The modern view of that is that the winding up is done by the liquidator, not by the court. The phrase "winding up by the court" has come to refer rather to the making of the order than to the process and the reference to the liquidator as an officer of the court is a very specialised sense of those words, rather like the sense in which a legal practitioner is said to be an officer of the Supreme Court. A legal practitioner certainly is not the agent of the court to make statements on its behalf or anything like that. It is a phrase which has significance in disciplinary matters, it has ceremonial significance and - - -

GLEESON CJ: Is part of the background to section 58AA that in past times companies that were carrying on business in a number of Australian jurisdictions might be wound up in each jurisdiction and you would get a different winding-up order in New South Wales and Victoria and South Australia under different administration in those places.

MR BENNETT: Yes, that was somewhat attenuated by the doctrine of ancillary liquidation which said that any liquidation other than in the place of incorporation, the liquidator acted only as ancillary to the liquidator in the place of incorporation and his sole function was to prepare a list of local creditors, send that to the principal liquidator, and send off any assets that he was able to recover to that liquidator. So that attenuated that, but certainly there was the procedural inconvenience. Your Honours, this was dealt with by Justice Hodgson in Amann Aviation v Continental Venture Capital [1999] NSWSC 1212; (2000) 18 ACLC 277 and the passage is at page 280. It begins with paragraph 19 in the second column of page 280.

KIRBY J: Has this been the subject of any appeal, do you know?

MR BENNETT: I am not aware of any. That does not mean that there has not been one, your Honour, but I appeared in this case and I am certainly not aware of any appeal in it but I cannot assure your Honour there is not. His Honour says:

These cases do plainly establish that winding up by a court is an administration pursuant to an elaborate statutory scheme, conducted under the supervision of the Court by a liquidator who is an officer of the Court; but in my opinion, it is a mistake to say that the whole process of winding up is literally conducted by the Court.

20. The Corporations Law uses the expression "winding up by the Court" -

It gives the court an extensive role, et cetera -

21. However, in my opinion, it is plain that the ongoing process of winding up is actually conducted by the liquidator. In my opinion, it is plain that the liquidator does not act as the Court's agent in doing this. To say that the liquidator is an officer of the Court is not the same as to say that the liquidator is the agent of the Court.

It refers to solicitors and barristers and then there is a reference to "supervision of the Court" which - it is an unfortunate phrase because it was the original intermediate category, but - - -

GUMMOW J: How does this square with court-appointed receivers where, for example, an interference with the possession of a court-appointed receiver is contempt of court?

MR BENNETT: Your Honour, it has been held to be contempt of court to assault a lawyer on his or her way to or from court.

GLEESON CJ: Even if he deserved it.

MR BENNETT: Even then, your Honour. Certainly, "officer of the court" may include that. Indeed, it is a contempt of court to assault a bailiff. All sorts of people who may either have functions where they are genuinely agents of the court, or functions where they are merely ancillary to the administration of justice - - -

GUMMOW J: The point I asked you was not for anecdotes about bailiffs, it was that court-appointed receivers are said to be not the agents of the mortgagor but the agents of the court.

MR BENNETT: Yes. They may be in a different position, your Honour.

GUMMOW J: But they are different to liquidators, are they not?

MR BENNETT: Yes.

GUMMOW J: So this discussion by the chief judge does not automatically translate to other forms of insolvent administration.

MR BENNETT: It does not, your Honour. One would have to analyse the provisions about receivers closely to - but my understanding is that the receiver is in a different category, for the reason your Honour gives.

The fifth matter concerns Kable. The short answer to the Kable proposition is the one given by Justice Hodgson in the Incentive Dynamics Case.

KIRBY J: Could I trouble you to check whether those cases have been the subject of appeals.

MR BENNETT: I will have that done, your Honour. If I could have seven days to hand the document up, I will have that done. Incentive Dynamics v Robins (2000) SC(NSW) 34[2000] NSWSC 34; , 169 ALR 536. It is a passage which your Honours were taken to earlier. I will not repeat it. Your Honours recall the point. The point very simply is this, that there is a huge distinction, notwithstanding my learned friends' submissions, between on the one hand a legislature saying a decision of a political party shall be a deemed order of the Supreme Court and the legislature saying an unconstitutional but otherwise fairly fought case decided by a Federal Court judge, admittedly invalidly, shall be deemed to be a decision of the Supreme Court.

The reason is that when one goes to Kable itself the nature of the test, bringing the administration of justice into disrepute and so on, is clearly totally different in the two situations. The Kable test by its nature does not depend on fine juridical distinctions. It depends on much broader concepts and those broader concepts are simply not offended.

KIRBY J: The problem is though that once you allow the distinction that you are arguing for, you really get into difficulties that are potentially embarrassing to courts as to where you draw the line. One might say with Justice Hodgson that this case clearly falls on one side, but how do you articulate a principle that distinguishes the offensive Kable-type legislation from the innocent situation said to be dealt with here?

McHUGH J: Take a case like Eastman. Supposing, for instance, it appeared that the murder had taken place not in the ACT, as had been assumed, but in New South Wales. Would you say consistently with Kable that the New South Wales Parliament could pass legislation saying that Mr Eastman was guilty of murder as if he had been found guilty by the Supreme Court of New South Wales?

MR BENNETT: Your Honour, I do not want to saying anything that might cut across any legislation passed as a result of whatever your Honours decide in Cheng. That is the only reason I hesitate in answering the question. But certainly that would be closer to Kable than this would be. The example which might fall very squarely within Kable is the one referred to in argument yesterday about a death penalty case, assuming one still had the death penalty, and if one deemed a person who was unconstitutionally convicted to have been convicted for the purpose of imposing the death penalty, there would be real Kable problems. The reason for that, of course, is that in relation to the death penalty there was always an obligation to comply with every minutia of procedure, to the extent that if the judge got one word wrong in pronouncing sentence, the sentence was invalid.

KIRBY J: Let us just highlight that the question is whether the Kable idea, or the Kable principle, is founded on the incompatibility of Parliament usurping in one of the Australian judicature courts a function that belongs to the courts, as against whether it is simply doing something which is inconsistent with being a court within that judicature.

MR BENNETT: The phrase used - and I take it from Justice Gaudron's judgment, and it was put slightly differently by other Justices - at page 104 of Kable [1996] HCA 24; 189 CLR 51, at point 2, her Honour said:

In both cases the limitation derives from the necessity to ensure the integrity of the judicial process and the integrity of the courts specified in section 71 of the Constitution.

KIRBY J: On one view, is it not the integrity of the judicial process Parliament not making parliamentary judgements, not presuming to enter into the judicature to make judgments which are reserved to the judicature, the integrated judicature, that is established by the Constitution?

MR BENNETT: No, your Honour. First of all, a number of the Justices in Kable contemplated the possibility of an act of attainder being valid. I realise there were two views on that question. If one leaves the criminal area and comes to the civil area, there is no suggestion in any of the literature of which I am aware that Parliament could not pass a law saying "A debt is hereby created from Mr Smith to Ms Jones in the sum of $1,000, and the rights of all parties shall be as if such a debt existed". One can have a specific legislation and one can by legislation create rights and liabilities of a type which normally a court would create and which a court has to enforce.

That is really all that this legislation does. It deems the rights of parties to be as if an order which was made invalidly but made after by a Chapter III judge who heard arguments from the parties with the full panoply of judicial procedure, had been valid. Where, one asks, does that strike at the integrity of the judicial system?

KIRBY J: Well, it does in this sense, that a judge of the Supreme Court of New South Wales, the second-oldest court in the country, sitting there, receives a judgment from Justice X in the Federal Court, with which he or she might on the merits not agree and might not have made the order appointing a liquidator, or might have some view of the facts that is totally different. Yet Parliament says, "I don't care that you are a judge of the Supreme Court of New South Wales, I don't care that you make these decisions all the time. We tell you to enter judgment or we effectively make the judgment of the Federal Court your judgment". The judge of the Supreme Court has no entitlement to say "I won't".

MR BENNETT: With respect, it does not, your Honour. The legislation does not say, "There shall be entered in the South Australian Supreme Court judgment rolls as a judgment in terms of the Federal Court judgment." It does not say that. It is merely making a law about rights and liabilities. It is not directing the judge to do anything. Having determined those rights and liabilities, the judge enforces them in the same way as the judge enforces the Act saying that Mr Smith owes Ms Jones $10,000. The judge simply applies the legislation but the Act - - -

KIRBY J: This was raised in Spalvins. Could you remind me can you have an argument before the judge in the Supreme Court of South Australia which says, "Well, notwithstanding the Federal Court order, we submit that you should not proceed and enter that judgment," or that the judgment - - -

MR BENNETT: It does not arise, your Honour, because one does not go before a judge of the Supreme Court of South Australia. The rights and liabilities are defined as if the Supreme Court of South Australia had spoken. It is purely "as if". If your Honour goes to section 6, which is the key operative section for present purposes - - -

KIRBY J: Yes, go ahead.

MR BENNETT: Does your Honour have that?

KIRBY J: I did have it but - - -

MR BENNETT: I would prefer to be able to address it when your Honour has it. Your Honour sees it does not say that you go before the judge of the Supreme Court of South Australia and say, "Your Honour is commanded by this statute to enter a judgment." One does not go to the Registry of the Supreme Court of South Australia and say, "You, Mr Registrar, are bound to enter a judgment." One simply says:

The rights and liabilities of all persons are, by force of this Act, declared to be, and always to have been, the same as if -

(a) each ineffective judgment.....

had been a valid judgment of the Supreme Court constituted of a single Judge;

KIRBY J: But on one view that is even more offensive because it is just entered without any hearing, which is what courts normally do.

MR BENNETT: It is not entered. It is not entered, your Honour. It is not entered. It is defining rights and liabilities. It is no different to a law saying that where fact X is present, the person in one position will owe the person in another position $10,000. The court simply enforced the law of the land. That section says what the law is and one then is given what the - in form, so far as the appearance is concerned, one has a whole series of - I hesitate to use the word "charades" - but one has a series of actions that are made to look as if there is a judgment. One appeals to the Full Court from it.

In reality, of course, what one is doing as a matter of juridical analysis is treating the Full Court as a court of first instance and giving it certain powers as that court of first instance. In appearance one has what looks like an appeal, but that does not matter. That is just the words one used to describe something as a matter of convenience and it is an appropriate convenience from the point of view of the background reality, but there is no Kable-type interference - - -

GUMMOW J: Kable is all about the protective position respecting federal jurisdiction in Federal Courts, as it were. Here, you say, "Well, Kable does not get engaged. You had a judgment of the Federal Court. What is wrong with obliging the State law to treat that as effective? It does not affront any federal susceptibility".

MR BENNETT: Precisely, your Honour. We would so submit.

CALLINAN J: It gives the Federal Court judgment vitality that it might not otherwise have, or the effect of it vitality.

MR BENNETT: Precisely, your Honour. Indeed, one hesitates to call in aid the man in the street, but assuming that Kable does call the man or woman in the street in aid, such a person would cheer rather than be horrified by this legislation.

McHUGH J: But the end of Kable may be the protection of federal jurisdiction but what Kable perceived as hostile to that end was the identifying of the judges, or of the Supreme Court as an institution, with the government of the State, and if that exists, why is not legislation that brings about that result or appearance invalid?

MR BENNETT: Because this legislation brings about the result or appearance that a Federal Court judgment is so treated, not a decision of the legislature. All the legislature has decided is that the Federal Court judgment will be so treated. For this , one does look at what it is that one is enforcing.

McHUGH J: But, that is inconsistent with your almost concession that there would be problems about a murder conviction. If you follow the logic of your answer to me through then any judgment of the Federal Court can be imposed on the Supreme Court by the legislature of a State.

MR BENNETT: What your Honour refers to is the almost concession - it certainly was not intended to be a concession because I am very conscious of Cheng - but if Kable would apply to the murder conviction in the non-death penalty situation it would apply because of the nature of a criminal conviction rather than because of the other aspect and because of the nature of the sanctions following from that criminal conviction which are different from the sanctions and consequences of a civil judgment. The jurisprudence in relation to civil and criminal law in this area is different.

The sixth matter concerns void and voidable. I simply again adopt my submissions, but may I just remind your Honours of the two cases referred to in footnote 29 of our submissions, that is the two American cases. The Chicot County Case was a very simple example of collateral validity giving rise in that case to a complete defence. What happened was a municipal drainage board issued bonds. It then, under a federal statute, went under a form of bankruptcy which discharged it from liability on those bonds. That statute was later held invalid in another case and the plaintiff was a bond holder who simply sued on a bond and was met with the defence that the bond was discharged by the bankruptcy decision of the Federal Bankruptcy Court - I think it was that court - under the statute. The court held that the defence was good. Until the actual bankruptcy order had been set aside it could be pleaded as a defence although the statute, the equivalent of the Bankruptcy Act under which it was made, was invalid.

McHUGH J: That is a dangerous sentence in that last sentence of yours, in footnote 29, is it not, about Quick and Garran:

assumed that United States line of authority in relation to Article III would apply equally to courts created by the Commonwealth -

having regard to the fact that as at that time, Norton v Shelby County was the controlling authority and it held that an unconstitutional act is not law. It conferred no rights, imposed no duties and afforded no protection.

MR BENNETT: Yes. Perhaps the simplest course is to ask your Honours to delete that sentence.

The other case, the Willy Case [1992] USSC 23; 503 US 131 - your Honours need not go to it and I do not think it is on a list - but that is a case involving federal sanctions against a vexatious lawyer. That was a case where federal jurisdiction was invoked, the lawyer for the party invoking it did various things which are punishable by lawyers in America. He filed vexatious pleadings and did not comply with orders for discover, and matters of that sort. He was fined and then the court held in the substantive hearing that it had no jurisdiction in the substantive matter.

He then appealed against the sanctions imposed on him and said, "Well, there is no jurisdiction to sanction me either", and as your Honours can imagine, that got very short shrift. That is perhaps analogous to the normal situation which frequently occurs where a person wrongly invokes the jurisdiction of a court. The court holds it has no jurisdiction and orders costs. It is clearly an inherent function as part of the jurisdiction to determine your own jurisdiction to order costs against the person who wrongly invokes the jurisdiction. So Willy is an aspect of that, but, again, we would submit, a useful authority.

The Australian case in that area is a case called Matthews v The Australian Securities and Investments Commission [2000] FCA 288; (2000) 170 ALR 149 and also (2000) FCA 288, a decision of the Full Federal Court your Honours do not have. That is a decision which holds, again, that one can be guilty of contempt of court in relation to proceedings which are invalidated by the Wakim decision. It is analogous to Willy and it is a decision of Justices Ryan, Lee and Branson.

I have dealt generally with the void and voidable distinction. We rely on, and I dealt with this fairly extensively in the beginning of my submissions when Justice McHugh asked me some questions. What we submit is that there are, as your Honours in the majority said yesterday in Residual Assco, two streams: there is the stream of substantive jurisdiction and the stream of jurisdiction to determine jurisdiction and that stream operates in relation to superior courts and the Federal Court is created in that way.

Finally, in relation to the form of order, I have handed to your Honours a document. It does not have a heading, it just begins with the words "Provided that". I do not for the moment seek to impose my inadequate draftsmanship on the Court, but I simply give this as an example of what one would need to say by way of qualification, if prohibition went in this case.

GAUDRON J: It depends on the terms of the prohibition.

MR BENNETT: Yes, it depends which of the two forms are adopted; whether it is merely against proceeding in the Federal Court or whether it is general. But it would need to, either in its substance or by way of qualification, have these two restrictions on it. It would first need to provide - it does not preclude any application to the Federal Court to annul, rescind or declare invalid - - -

GAUDRON J: Why would that be so? If one granted prohibition, there would be implicit in that the absence of jurisdiction. Any subsequent application to the Federal Court would be otiose, surely.

MR BENNETT: Yes, I was only concerned with the effect - I suppose if the order - - -

GAUDRON J: On what grounds would we grant prohibition other than that?

MR BENNETT: No, it may be that would be unnecessary, your Honour.

GAUDRON J: There was - yes.

MR BENNETT: Yes, I take your Honour's point in relation to that but, your Honour, one would certainly need the second one.

GAUDRON J: Well, why? The Act speaks for itself.

MR BENNETT: Your Honour, the danger is - - -

GAUDRON J: It depends ultimately on the terms of the prohibition granted. If one came to the view that if you prohibited further action in the Federal Court or even by the Liquidator pursuant to the Federal Court order but you took the view - well, I am sorry, I have got my tongue in a tangle. If you took the view that section 6 operated if you quashed the Federal Court orders or granted prohibition in respect of them, what you would then do is limit the prohibition, the order for prohibition, to taking steps in the Federal Court or on the order of the Federal Court - - -

MR BENNETT: Well, your Honour, one would wish - - -

GAUDRON J: - - - and refusing the extra prohibition that is sought in these proceedings to stop them from proceeding in the action in the Supreme Court or doing anything as liquidator.

MR BENNETT: Yes. Your Honour, if on the true construction of the order of the court it had the effect of paragraph (2), I accept what your Honour puts to me. My only concern is that the imagination of people is unlimited and one would wish to put that totally beyond doubt.

GAUDRON J: Yes.

MR BENNETT: And I have done that again by the declaration which I perhaps cheekily have suggested the Court might like to make.

GAUDRON J: Well, there may be a question about its - it may not be necessary to decide its validity absolutely in this case. It may be sufficient to say that it is valid in its application in this case.

MR BENNETT: My concern is that - yes, that may be sufficient, although it is desirable, I suppose, to go a little further if the Court is satisfied. The matter has been argued as a major case with most of the States here, and in a context where it is of very great urgency in the - - -

GAUDRON J: All of that is true, but one has to look to the relief that was sought ultimately.

MR BENNETT: I understand that, but it is open to the Court to make a declaration of that sort, and it has been made in other cases involving other provisions, and we submit it would be desirable to make it here. But, your Honour, we do stress that any ambiguity in relation to the point of paragraph 2 would be disastrous.

GAUDRON J: The real question, it seems to me, or the substantive issue, is not the validity of section 6; it is its operation.

MR BENNETT: Yes, your Honour, precisely, and the danger is - - -

GAUDRON J: And you may be telling people nothing by saying it is valid, or nothing very much.

MR BENNETT: At the end of the day, your Honour, an order in this form may have no practical effect different from refusing to make an order. That is the futility argument.

GAUDRON J: Yes.

MR BENNETT: Once it is clear that section 6 has exactly the operation that it claims to have, once that is accepted, if that is accepted, then it is absolutely futile. The only effect of making a limited order for prohibition, the only effect, is to prevent my learned friend Mr Whitington standing up in the South Australian Supreme Court and saying, "I am here under the order of the Federal Court", instead of saying, "I am here under the deemed order of the Supreme Court". It is only to prevent him uttering those words that one would go to the trouble of making the order. Your Honour, that sounds dross, with respect, suspiciously like futility.

GAUDRON J: Yes.

MR BENNETT: May it please the Court.

GLEESON CJ: Yes, thank you, Mr Solicitor. Mr Solicitor for Victoria.

MR GRAHAM: May it please the Court. I just wish to address four short topics in the course of these submissions. Firstly, as to the submissions on behalf of the applicants concerning the suggested intrusion by the State legislation upon what I will call the federal judicial sphere or upon the jurisdiction of the Federal Court. In our submission, the submissions by the applicant in respect of this aspect of the case failed to acknowledge the fundamental proposition that the Federal Court, as a matter of hypothesis, had no jurisdiction at all in respect of the State matter. Such a matter, as Re Wakim shows, is purely and wholly a matter within the domain of the States, the legislatures of the States and the courts of the States.

It was never part of the jurisdiction of the Federal Court to deal with State matters and such matters could never fall within the federal judicial power, except, of course, on appeal to this Court under section 73. We would say it follows that it is clearly within the competence of the legislatures of the States to make laws with respect to State matters, which are within their sole domain, without entering forbidden territory. The territory within which - - -

GUMMOW J: They are not within their sole domain really, because you have got to think about federal diversity jurisdiction, for one thing, and accrued jurisdiction for another.

MR GRAHAM: Indeed, your Honour, perhaps I can be allowed to answer those qualifications sub silentio, but we say the territory within which the State laws operate is purely State territory and which, as it turns out, unfortunately, the Federal Court should not have entered. Viewed in that way, the arguments which have been based upon Kable and Chapter III and interference with the jurisdiction of the Federal Court fall away, and in that respect, we would reject, and ask the Court to reject, what was said in the submissions on behalf of the applicant Saint in paragraphs 40 to 53 and the applicant Johnson at paragraphs 36 to 38.

We would respectfully adopt something that fell from your Honour Justice Gaudron yesterday, which appears at transcript 64. It follows from what your Honour said that the rights and liabilities dealt with by section 6 and section 7 of the State Jurisdiction Act are exactly the same as the rights and liabilities which would have arisen if the State Corporations Law alone had been invoked by an application to the Supreme Court. So we would say, given that parallel jurisdiction available in the Supreme Court, it is not possible to say that there is some kind of inappropriate interference which is inconsistent with the integrity of the federal judicature.

The argument based upon inconsistency between the legislation which creates the Federal Court and confers jurisdiction upon it and the State remedial legislation, we submit, should also fail. The Federal Court's only jurisdiction in connection with a State matter, as this Court's decision yesterday in Residual Assco indicates, is a jurisdiction to determine that it has no jurisdiction.

If I can say then a word about the topic of void and voidable. As this Court is well aware and the reasons in Residual Assco indicate, the State of Victoria and the State of South Australia have adopted a different view on this topic from other parties. We do not wish to repeat our submissions which we made in the earlier case or which are made in our submissions in this case. If I may say so with respect to your Honour Justice Kirby, they are extremely conveniently summarised in your Honour's reason in Residual Assco.

KIRBY J: Summarised and disagreed with.

MR GRAHAM: Yes, your Honour. I realise that your Honour will not be with me on this part of the case.

KIRBY J: I might be dissuaded.

MR GRAHAM: If I can see this, your Honour, the jurisdiction of the Federal Court derives from its creation under section 71 and the powers which the Parliament has to make laws under section 77(i) to define its jurisdiction and then from section 19(1) of the Federal Court of Australia Act referring to the jurisdiction which is conferred on the Federal Court by the laws made by the Parliament and then with the specific laws conferring jurisdiction. Now, if the specific law conferring jurisdiction is held invalid, we would submit that there is no residue of jurisdiction to sustain the orders made by the court. There is only a jurisdiction to determine an absence of jurisdiction.

If one takes the alternative view that the orders of the Federal Court are voidable only it does lead to a very inconvenient position. If it is proper to say that the State Acts can only attach to an ineffective judgment if the ineffective judgment has been set aside, it logically may follow that section 6 cannot attach to any ineffective judgment of the Federal Court unless this Court has set it aside.

GAUDRON J: But why does it need to?

MR GRAHAM: We say it does not.

GAUDRON J: That is the point. It seems to me there is a lot of energy being devoted to matters of no consequence. If the Federal Court order stands you do not need section 6 to attach. If the rights and liabilities of the parties remain as set out in the Federal Court order, then there is no need for section 6 to attach at all, the rights continue. It seems to me you only need it to - subject to possibilities of direct inconsistency, you only need section 6 to attach in the event that the orders are quashed by this Court or perhaps by a Full Federal Court .

MR GRAHAM: When your Honour said that earlier this morning, if I may say so, it had great attraction, but not having had the opportunity of reflecting upon it, I am not certain that it may not have hidden problems as well.

GAUDRON J: Well, it certainly has problems with respect to possible direct inconsistencies.

MR GRAHAM: It may be, and as we would say, and has been said before, that the voidable order of the Federal Court which has not been set aside, we say may subsist consistently with the support provided by section 6. One simply does not need to inquire further unless one is troubled by inconsistency. In a minute or two I was going to say one thing about inconsistency, but before I do that, could I say something about the appeal provisions in section 7 of the State Acts.

It may be that there is no reason to consider the validity of sections 7(2) and 7(3) in this case in the absence of any attempt to appeal to the Full Court of South Australia, or indeed in the absence of any extant appeal known by anybody to appeal against any Federal Court winding up order.

GAUDRON J: If one comes to that, it is not just sections 7(2) and (3).

MR GRAHAM: It may be section 7(1) as well, your Honour, but unless there is a domino effect, then one need not enter this - - -

GAUDRON J: There will be an aspect of section 6.

MR GRAHAM: Yes. As to the possibility of appeals to this Court, we agree with what my learned friend said to Mr Bennett for obvious reasons. Those who drafted the State legislation would not purport to say anything about appeals beyond the State judicatures.

There was a point made in relation to section 7(2) which refers to "from that judgment". Let me respectfully submit that your Honour Justice Hayne provided the answer to that. One must read subsections (2) and (3) together and one discovers by that exercise that the notion of the appeal from a judgment is expanded by subsection (3). I suppose, as a matter of drafting, it might have been better to have put subsection (3) before subsection (2) and then this argument simply would not be open.

Can I then just say a word finally about inconsistency. This echoes, I believe, something your Honour Justice McHugh said this morning. As I understood it, there can only be inconsistency when there is a valid Commonwealth law. It is beside the point to say that the Federal Court orders are valid until set aside. Those orders were made in reliance upon section 56(2) of the Commonwealth Corporations Act and section 42(3) of the State Corporations Acts, which are the pair that constructed the cross-vesting scheme under the Corporations Law, and those sections have been held to be invalid.

Now, taking your Honour's point that the order is, as it were, the factum upon which the jurisdiction of the Federal Court Act operates so as to generate operational inconsistency, or the provisions of the Corporations Acts to which I have just referred, then what lies behind the orders is invalid legislation. In our submission, in the absence of valid Commonwealth legislation with which the State Jurisdiction Acts can be said to be inconsistent, then there is no inconsistency under section 109. If the Court pleases, those are our submissions.

GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for Western Australia.

MR MEADOWS: May it please the Court, as matters have transpired, we are content to rely on our written submissions.

GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for South Australia.

MR SELWAY: If it please the Court, I would hope to be about 10 minutes. Your Honours, as to Queensland, we rely upon the written submissions. Apart from a new submission related to section 109 in paragraph 5.3 of the written submissions, the written submissions are substantially the same as those put by the Solicitor-General for Queensland in the Residual Assco matter. It is unnecessary for me to say any more about them.

In relation to South Australia, we rely upon our written submissions and adopt those of Queensland and Western Australia. Our written submissions differ from those we put in Residual Assco in two ways. First, there is a submission we put on Kable. Your Honours may recall South Australia has put submissions on the meaning and operation of Kable in several previous cases. They are set out in our written submissions and unless your Honours have any question to ask of me on those submissions, I would not propose to make oral submissions in respect of them, except to make the point that South Australia argues that public perception is not an appropriate test of incompatibility.

KIRBY J: What do you say is the test?

MR SELWAY: We say it is incompatibility as such and we say if the cases are analysed there is enough of an indication within them of what incompatibility is or what might be analogous to it, that one does not need to deal with issues such as public perception. Our problem with public perception is that whilst we would see it as, if you like, a goal of judicial independence, judicial impartiality, that there would be at the end of the day a public perception that the courts were operating properly and well, to make into a test of incompatibility with functions we say is inappropriate.

We get some support for that, with respect, from the judgment of Chief Justice Brennan and your Honour Justice Hayne in Nicholas where there was some discussion of that but that is mentioned in our written submissions.

KIRBY J: Well, if it is the test of incompatibility, at least arguably it is not usual for judgments of a Supreme Court of this country to be entered by force of legislation.

MR SELWAY: No, that is certainly true, your Honour. The question here we say has to be looked at in context. It would make a difference if it was a criminal matter rather than a civil matter. It would make a difference if the factum upon which the State legislation is based was other than a judgment of a superior court and so forth. One has to look at it in context and the question looked at in context is whether this particular piece of legislation is incompatible with the judicial function of the Supreme Court and we say the answer to that is plainly no and it is no answer to that to say that if one varied it and did all sorts of other things it may end up with a different result.

Your Honours, that leads us to the void/voidable question. To make it clear our submissions as to validity are directed to the validity of the orders as a superior court, we do not deny that the Federal Court has the same jurisdiction as does any other court to determine whether or not it should proceed to hear a matter nor do we deny that the Federal Court has jurisdiction which is either inherent or implied to make orders for costs and so forth when dealing with that question.

The issue that we raise is whether the Court has power as a superior court to conclusively determine that question at least to the effect that its orders are valid until set aside. We do not understand the majority judgment in Residual Assco to prevent us putting that submission but - - -

GAUDRON J: So that could be determined in collateral proceedings?

MR SELWAY: Yes, your Honour, and, indeed a person - - -

GAUDRON J: And there would be absolutely no need for these proceedings to have been brought, it could have all been fought out in the Supreme Court of South Australia, in the first instance.

MR SELWAY: Yes, your Honour.

GAUDRON J: Yes.

MR SELWAY: Or, indeed, if the parties had wished, they could have ignored the order altogether, subject to the State Act which we say is the compelling need for the State Act to fill that problem. That is to say, we would see the order made by the Federal Court in this case as being the equivalent of an order made by a federal magistrate set up under the Federal Magistracy. In our submission, there are two question. The first is what has the relevant Parliament provided? Has it provided, in effect, that the Court should have jurisdiction conclusively to determine its own jurisdiction or not?

McHUGH J: There are problems about that, are there not, in a federation, as Justice Dawson pointed out in the DMW Case?

MR SELWAY: Yes, your Honour, we say there are problems. But the first question, we say, is what has the Parliament purported to do? We refer to that in paragraphs 12 to 15 of our written submissions. Could I merely make the point that those written submissions do not deal with the issue raised in the New South Wales submissions as to what is the effect if, for example, the Commonwealth Parliament withdraws federal jurisdiction from a State Supreme Court. We say that that, if it comes to be considered, is going to involve a comparison of US cases like Kaleb v Feuerstien [1940] USSC 81; (1940) 308 US 433 at 438 to 440 with Cameron v Cole.

But beyond that, the next question, and one with which the Court is primarily concerned, is that even where the Parliament shows an intent to confer that jurisdiction, which arguably section 5(2) of the Federal Courts Act does, the question then is: what is the validity of section 5(2), or perhaps put another way, what is its effect when no jurisdiction can be exercised constitutionally?

GAUDRON J: The presence of section 75(v) would surely indicate that section 77(i) is to be construed as authorising the Parliament to legislate to confer jurisdiction on a federal court to determine its own jurisdiction, and to determine it wrongly and to give its decisions binding force, even if it determines it wrongly.

MR SELWAY: Your Honour, what we would say to that is: effectively there are two arguments. The first one is the one put by all those against the proposition, which is that the jurisdiction is derived from section 71, something in the nature of a judicial power to determine that a court is a superior court. We say that, properly considered, this is an issue of jurisdiction, not an issue of the status of the Court, and as a question of jurisdiction, we accept what your Honour says, one has to go to section 77.

As to section 77, we just draw attention to the fact that the power under section 77 is with respect to any of the matters mentioned in section 75 and 76. We say that the Parliament does not have power and cannot get it out of section 77 to say to a court, "Even though you are acting outside of section 75 and 76, your order still has effect and significance."

GAUDRON J: But when you have regard to section 75(v), why can you not construe 77(i) in the manner indicated, namely that it can conclusively determine its own jurisdiction.

MR SELWAY: Well, we do not see 75(v) as adding an enormous amount to the issue, except that it highlights that federal courts are limited courts. To that extent, discussing them as superior courts creates, we would say, a fiction, and the question is, what does that fiction mean within the constitutional context. So, your Honours, in essence, that is our argument. One looks at section 77 to find the power, we say the power is limited with respect to the subject matter in 75 and 76, therefore the Parliament cannot enact section 5(2) to have a broader effect.

GLEESON CJ: Is that a convenient time, Mr Solicitor?

MR SELWAY: Yes, your Honour.

GLEESON CJ: We will adjourn until 2 pm.

AT 1.00 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.03 PM:

GLEESON CJ: Yes, Mr Solicitor.

MR SELWAY: If it please the Court, the Solicitor of the Commonwealth has asked me to draw the Court's attention to an addendum he has passed up which answers some questions that were asked of him and, I think, makes some correction to a couple of his written submissions.

GLEESON CJ: Thank you.

MR SELWAY: Your Honours, to summarise our submission on void/voidable, we say that where there is a matter within section 75 and 76 of the Constitution, then section 5(2) of the Federal Court Act has a valid and effective operation with the effect that an order made in excess of jurisdiction is valid until set aside. However, we say that where there is - - -

GAUDRON J: Is it the consequence of your argument that CDW was wrongly decided?

MR SELWAY: We would say not, your Honour. We would say that that was a matter, firstly, that may have fallen within 75 and 76, but, no, we would say that that matter was consistent with our submission.

GAUDRON J: Yes.

MR SELWAY: What we say, your Honours, is that where there is no matter within section 75 and 76, then the Parliament does not have power to enact section 5(2) if that section is then intended to have the effect that the order is voidable and not void. We say that in those circumstances the order is void and this case is a case where, following Wakim, there is no matter within section 75 and 76. Your Honours, the only other matters I wish to mention - my learned friend, Mr Whitington, raised the question of issue estoppel. Could I refer your Honours to paragraph 17(e) of the Western Australian written submissions where the question of issue estoppel is discussed and, in particular, the cases referred to in the footnotes?

On the question of orders: your Honours, on the approach we take, we say there is no utility in making the orders. The only purpose of perhaps making an order of certiorari is to confirm that the order is a nullity but, with respect, we would say the reasons would do that at least as well.

The final matter, your Honours, is that your Honour Justice Hayne referred yesterday to the book by McPherson relating to the status of the Liquidator. Could I, just for the sake completeness, refer the Court to the model Corporation Law Rules which were developed by the Federal Court and the Supreme Court judges last year, in particular rule 7.10 which provides that:

in carrying out various functions under 5.4B of the law the liquidator is appointed by the court as an officer of the court and subject to the control of the court.

That model rule has been adopted in the South Australian Supreme Court Rules which came into effect on 1 January and the Federal Court Rules which also came into effect on 1 January. Your Honours, those are our submissions.

GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for New South Wales.

MR SEXTON: If the Court pleases, given that all of the relevant issues appear to have been canvassed in some detail, we are content to rely on our written submissions. Can we point particularly in those written submissions to the parts relating to section 109 which incorporate the oral submissions we made in Residual Assco and go to an issue that seems to us to now be at the very heart of this case, putting aside the discretionary issues about which we have not made any submissions. Finally, in answer to Justice Kirby, appeals have been filed in relation to both Amann Aviation and Incentive Dynamics in the New South Wales Court of Appeal. If the Court pleases.

GLEESON CJ: Thank you. Mr Allsop.

MR ALLSOP: Your Honours, over lunch we handed up some material to your Honours which was as follows: A masked copy of the insurance policy which was the subject of Justice Mansfield's order of the 8 December. There is no need - I will not be taking your Honours to any particular part of that - - -

GLEESON CJ: With this Notice of Motion to be Joined as a Party, you were given leave to intervene?

MR ALLSOP: Yes, your Honour.

GLEESON CJ: Do you want to pursue a motion to be joined as a party?

MR ALLSOP: No, your Honour. The other matters that we handed up, your Honours, were the extract from McPherson that your Honour Justice Hayne referred to; rule 84 of the Queensland Rules that is referred to at footnote 118 of the extract and a copy of Article III of the American Constitution which Justice Kirby asked about yesterday.

Your Honours, the case, in our respectful submission, can be dealt with in this way: one, the remedial Act is valid in all relevant respects as argued on behalf of the relevant Attorneys, and we do not seek to add anything to that. If that be right, then the orders are either nullities or not nullities. If they are nullities, then there is no question but that the field is left to the valid State law. If they are not nullities, and adopting the submissions of the Solicitor-General for the Commonwealth and the Solicitor-General for New South Wales, there is no inconsistency, then once again the field is left to, relevantly, the State Act and such vestigial operation of the Federal Court order as may arise. But, in those circumstances, there is no need to deal with the question of whether or not the orders are nullities because the case can be dealt with on the basis that the Act is valid.

If the Act is valid and there is room for the operation of section 109 inconsistency or a significant risk of it, then there may be, or there appear to be, discretionary reasons in effect to grant certiorari to clear the ground for the operation of the otherwise valid State Act and, in our respectful submission, that should be the only circumstance in which certiorari would or should issue.

If the Act is invalid then it becomes necessary to answer the question as to the status of the Federal Court order. In our respectful submission, if the Act is found to be invalid, contrary to the submissions we make by adoption and the submissions we have made in our written submissions, then the order of the court remains binding until set aside and we have dealt with that matter in our written submissions.

KIRBY J: Your propositions all rest on a footing that one must approach this globally, in other words, that one cannot say that the provisions of 6 and 7 are valid but that provisions relating to appeals are invalid. You have suggested that you have to look at the whole Act and either the Act is valid or the Act is invalid.

MR ALLSOP: No, your Honour. The questions of appeal, in our respectful submission, do not need to be dealt with. We have put the submission in our written submissions that 6(a) is the primary submission that will give validity.

KIRBY J: There is a difficulty in severance, though, because if you deem the Federal Court judgment to be the judgment of the State Supreme Court then ordinarily you would expect the line of appeal would come to this Court.

MR ALLSOP: Yes, your Honour. In those matters I would, at this stage, adopt the submissions put by the learned Solicitor-General for the Commonwealth and for New South Wales.

Your Honours, the only matters in addition to those which we have dealt with in our written submissions, both of 22 May and 2 June, that we wish to put about the question of validity is this,that there could be no doubt about the meaning and consequence of the words "superior court of record" in section 5(2), if section 71 had said "in explication", and the other Federal Courts may be of the following type and with the following listed attributes depending on whether they are superior or inferior, and then including within those attributes the well-known attribute that if it is a superior court, its judgments would be valid until set aside.

It was not said expressly, and one would not expect that level of procedural detail in a Constitution because it would attempt to include all subdivisions of which the authority to Parliament in section 71 admits, and all means by which that authority might be carried into execution and would begin to have the prolixity of a code. But it is to be taken, and there can be no doubt, that there was a familiarity by the framers of the Constitution with the American experience. In our respectful submission, it is unthinkable that the content of section 71 is, by reason of the existence of section 75 and section 76, to be taken to be a limited authority to create only inferior courts.

McHUGH J: But hitherto the accepted doctrine has been that section 71 is only concerned with the bare creation of courts.

MR ALLSOP: Yes, and that is all it does, with respect, your Honour. It creates courts which have attributes. The attribute that that court has, if a superior court is created, is the well-known attribute, well known in a federal jurisdiction under Article III.

McHUGH J: That is not the view that has been taken, is it? The view I have always thought that has been taken is that section 71 is concerned with the bare creation of courts but that the jurisdiction of those courts has to be found elsewhere. That is in sections 75, 76 and 77 of the Constitution.

MR ALLSOP: Yes, your Honour.

McHUGH J: So does not the argument about superior courts of record depend upon the content of the power in 77(i) rather than 71 of the Constitution?

MR ALLSOP: No, with respect, your Honour, because it is not a question of jurisdiction. It is a question, in our submission, of attribute or a characteristic of the vessel. If that is wrong, then - - -

McHUGH J: But if 71 carries with it that characteristic, then surely that would prevent the Parliament from altering that characteristic because it would be a characteristic attributed by the Constitution, not by Parliament.

MR ALLSOP: With respect, your Honour, it is an authority to Parliament to create courts and it may or may not wish to create superior courts. It may create inferior courts, but its plenitude of power is one which includes the creation of superior courts, as well known at the time. We have referred to Dowell v Applegate and the previous cases up to stopping at 1900.

McHUGH J: Yes, but those American cases have to be read in the context of section 109 of the Constitution. If your argument is correct, it would seem to indicate that by virtue of the creation of a Federal Court, even though it is invalidly invested with subject matter, a court can make an order in respect of that subject matter which operates as a factum to invalidate State legislation. That is a conclusion I find difficult to accept.

MR ALLSOP: Well, your Honour, without repeating them, we adopt the submissions of the Solicitor-General for the Commonwealth and New South Wales, in particular, in relation to the question of inconsistency and it does not arise, without wanting to go over the debate that occurred this morning. Your Honours, if the Act is invalid and if the order of the court has that operation, albeit without jurisdiction, then there are powerful discretionary reasons that Mr Whitington has referred to, as to why quashing should not take place or, if there is to be prohibition, only prohibition to the Federal Court, and then the approach that can be then adopted is that identified, if I may respectfully say, by his Honour Mr Justice Hodgson in Amann Aviation v Continental Case.

McHUGH J: But why should we hesitate not to set aside orders where they lack a constitutional foundation? After all, we operate in the system which is built on a doctrine of precedent and that necessarily means that decisions operate retrospectively.

MR ALLSOP: Yes, your Honour, because the remedy is one that is discretionary and, as a matter of powerful consideration, is the regular operation and the interests of third parties that have been affected by that hitherto regular operation of the judicial system. If it be a correct foundations for the argument that the Constitution provides for that possibility, then there is no stain on the constitutional purity of the conduct, as it were, by not setting aside matters in the past, where third party rights have for many years intervened, but at the same time, using the prohibition writ to ensure that excess of jurisdiction henceforth does not occur.

Your Honour, just in very brief elaboration of what his Honour Justice Hodgson did, and picking up some things his Honour Justice Hayne referred to yesterday, under section 1283 of the Law the Australian Securities Investment Commission is empowered to keep a register of official liquidators. Once an official liquidator - yes, I withdraw that. Section 1283 has that register. Then rules such as the one we have handed up, rule 84 of the Queensland Rules, provide that if you are a person identified on that register as an official liquidator you are an officer of that Supreme Court and a number of Supreme Courts have so passed rules: South Australia, Queensland, and they are identified in the footnotes at footnote 118.

That being the case, that then gives the mechanical, as it were, capacity for the sort of intra-court supervision, if that is not an inappropriate word, of the liquidation henceforth because one can then go to the Supreme Court of South Australia and the liquidator, if he is a listed official liquidator, is an officer of the court, not arising out of the order necessarily from the Federal Court, but arising out of the fact that he is on the list and that is a background consideration of the operation of the sort of regime that was discussed in Acton and by his Honour Justice Hodgson in Amann Aviation.

KIRBY J: From a very, very fragile validity you are breathing this huge amount of life into the Liquidator. You may as well just not have had the Constitution decision in Wakim.

McHUGH J: I mean, take a case like Matthews. Matthews is found guilty of contempt because he disobeys an order which has no constitutional jurisdiction and then, if I recall correctly, Matthews was then later dealt with by Justice Windeyer and gaoled because he had a previous conviction for contempt. These orders, although they have no constitutional foundation, affect people's rights.

MR ALLSOP: Yes, your Honour, and the issue as to whether they ought be set aside is a discretionary one and that would have to be taken into account as a powerful consideration. But if the premise is correct that the terms of section 71 envisage this authority, then the fact that it is outside jurisdiction is not determinative.

McHUGH J: Yes. I must say, I cannot help but think if Martin Luther King had disobeyed some order of a southern Supreme Court, as to whether or not it would have been held to have sufficient validity to gaol him for contempt of court in the United States by doctrine of - I think, pragmatism played an important role in all of this. Lord Devlin said once, "Any legal system that does not have logic at its root will not last very long, or will not be very effective".

MR ALLSOP: Well, your Honour, I do not think I can add anything more to what I have said. Finally, your Honour, in relation to our prejudice, Mr Whitington substantially dealt with that and the matters are dealt with in the affidavits of Mr Steele and Mr Fletcher.

GLEESON CJ: Yes, thank you, Mr Allsop. Yes, Mr Jackson.

MR JACKSON: Your Honours, one of the documents that the Court requested has been supplied to the Court. That is an analysis of the statement of claim. Your Honours, could I go immediately to the question of the source of the power to make decisions in the Federal Court effective until set aside? Your Honours, section 71, undoubtedly, is the source of power to create federal courts. It says "such other federal courts as the Parliament creates". So, one sees there a power to do it.

GLEESON CJ: What is the provision in the Constitution that makes decisions of courts binding?

MR JACKSON: Your Honour, I am just about to come to that. What I was going to say was that it is section 51(xxxix). May I come to it in just a moment? Your Honours, in that regard, one sees, for example, in the Boilermakers Case [1956] HCA 10; 94 CLR 254, if I could just give your Honours the reference, a discussion of the several powers at around page 270. What I was going to say, your Honours, was that the power given by section 71 does not stand alone and if your Honours go to the terms of section 51(xxxix), your Honours will see that it gives the Parliament a legislative power with respect to:

matters incidental to the execution of any power vested by this Constitution in the Parliament -

and section 71 is such a power. Now, your Honours, in exercising the power conferred by section 71, the Parliament may or may not wish to give to a federal court the attributes which a superior court would have under the general law, if I could put it that way. Those attributes include the question whether its decisions, even if held to be made outside jurisdiction, are binding until set aside. Your Honours, in our submission, why is the determination whether that doctrine should or should not apply to a particular court created pursuant to section 71 not a matter incidental to the power to create federal courts?

McHUGH J: I do not want to delay you but is it not a rather circular argument because power there means relevantly judicial power and that really takes you back to the argument as to whether the judicial power is to be found in 75, 76 or 77 and whether or not it is there in 71 as well.

MR JACKSON: I accept entirely, of course, one goes, 71, 77, but one cannot leave out of account 51(xxxix) because it is a power to do things incidental - to make laws with respect to matters incidental to the execution of the power to create Federal Courts.

KIRBY J: I thought it had a lot of work to do in Wakim.

MR JACKSON: I know, your Honour, yes, however, others took a different view. But, giving it a somewhat more anorexic view then the result, in our submission, would still be that it is sufficient to sustain section 5, and the Parliament can choose, in our submission, to say that a particular Federal Court shall have a particular status and the incidents which follow upon that status. The particular Federal Court will not be the kind of country cousin. Parliament does so by the enactment of a provision like section 5. We would invite your Honours to note, also, that it must be section 51(xxxix), one would think, which is the source of power for section 5 of the High Court of Australia Act and its predecessors, including section 4 of the original Judiciary Act because, your Honours - and one hates to mention past unpleasantnesses - in a sense, this Court was not always the most senior court so far as the Australian judicature was concern and it was relevantly in a position, having similarities to the Federal Court now, and it was declared to be by section 4 of the original Judiciary Act 1903 to be a superior court of record.

I say it must be section 51(xxxix) because if one goes back to Chapter III, in section 71 the Federal Court is - your Honours, one sees, that there is to be a federal Supreme Court to be called the High Court of Australia, so one is not looking at the words:

and in such other federal courts as the Parliament creates -

although, no doubt, the creation of the High Court is itself contemplated by section 71. If one goes to section 77, in section 77(i) the words:

other than the High Court -

are there to be found. So that it is either section 71 itself or section 71 plus 51(xxxix) that makes this Court a superior court of record.

So that, your Honours, our submission is that one of the features that one sees is that in creating courts Parliament may choose the attributes that the courts created by it are to have, one of those is that the decisions of the court are to be binding unless set aside and it has chosen that by the traditional form of words in relation to the Federal and Family Courts. If one is looking for a source, I suppose, of inconsistency relevantly, one finds it in section 5.

Could I also say three other things in relation to this aspect of it. The first is that if I could simply adopt what we had said in reply in the Residual Assco Case. Your Honours will find it at pages 67 to 71 of the transcript of the second day of that case. The second thing is this, that there are of course cases where an appeal from a judgment which might be thought, if the matter had come to this Court, would be one outside jurisdiction, an appeal cannot go ahead, for example, in the Full Court of the Federal Court because it is out of time, lodged out of time and no extension of time is granted. In circumstances like that, absent any application to this Court under section 75(v) or otherwise, the situation is that judgment is one which sustained. It is the judgment which exists. Similarly, your Honours, in that case or in some other case, if someone comes to this Court seeking certiorari but is out of time and is not granted then an extension of time, then the judgment that is sought to be quashed is one that would continue in operation.

Could I also say this in relation to - this moves on to a different topic - the suggested difficulties that are said to be caused by the decision in Wakim. Any difficulty could of course, at least so far as the corporations in section 51(xx) are concerned, be removed by the Commonwealth legislating pursuant to section 51(xx), a situation akin to that in Humby.

GAUDRON J: And certainly under its insolvency powers with respect to companies placed in liquidation.

MR JACKSON: Quite, your Honour, yes, if that were not covered by section 51(xx) anyway.

GAUDRON J: Well, it would have to be foreign trading and financial.

MR JACKSON: Your Honour, there are not too many that are not covered by that.

KIRBY J: But query whether you could by force of that power have a federal law which by force of parliamentary law pretended to validate things that have been done in the judicature of the Commonwealth.

MR JACKSON: Well, your Honour, there is no particular reason, in our submission, why - if I could deal with it on two bases. The two possible basis are: first, completely void, on one view of it; the second possibility is that they are valid until set aside. In the first case where the judgments are said to be void, then the situation is really absolutely the same as that in Humby. It is a subject matter which could be the subject of Commonwealth legislation and it relates to decisions which, on this hypothesis, are given by persons having no authority to give them, so they have no effect. So, your Honours, that is Humby.

The second case, where the judgments have been given and are treated as being valid until set aside, there is not any reason why the Parliament, having power to legislate with respect to corporations, could not say that in futuro the situation in relation to corporations is to be changed and treated as if it had been this or that. Some difficulties might possibly arise if it was thought to change the judgments themselves. But leaving that aside, your Honour, there is no particular difficulty. I said that was one course that could be adopted, namely by Commonwealth legislation.

The second course, your Honours, is that there does not seem to be any reason why a State or the States could not legislate for the circumstances obtaining when an order of the Federal Court had been set aside. So the order is then set aside. Well, then in those circumstances, there is no reason why the State could not legislate.

GLEESON CJ: I am just not quite sure what is the significance you attach to the proposition that, by the exercise of the corporations power, the Commonwealth could remedy these difficulties. A possible point of view is that by the exercise of the corporations power the Commonwealth could have produced the result that these difficulties never arose in the first place. But what is the significance of that for the decision in the present case?

MR JACKSON: Only this, your Honour: all I am seeking to do is to say that part of the arguments of my learned friends, stated sometimes, sometimes unstated, but put as an underlying hypothesis, are that there were difficulties which are caused by the Court's decision in Wakim which have to be cured and this is the only way they can be cured. When I say "this", I mean, the State Jurisdiction Act. All I am seeking to say - and I do not really want to take the point much further - - -

GLEESON CJ: Let us suppose it were accepted that the real source of the difficulty is the Commonwealth's failure to exercise the corporations power to the full extent available to it. What is the consequence of that in terms of the proper decision to be made in the present case?

MR JACKSON: Well, your Honour, what I would seek to say about it is that the drain on the Court's heartstrings that is sought to be elicited from reliance upon there being only one way it can be effectively fixed is something that should be brought to an end and should not influence the Court. Your Honours, the - - -

GUMMOW J: Mr Jackson, can I just take you back for a little bit. You referred to section 5 of the High Court of Australia Act, which is the section that says this Court "is a superior court of record" and what do you say is the constitutional basis for that - - -

MR JACKSON: Your Honour, I would say, first, section 51 - I say two things. If section 71 and the implied power to create the High Court that is contemplated by that is not sufficient for it then 51(xxxix) is.

GUMMOW J: Well, yes, but one theory is that the Court was somehow already created by section 71 itself.

MR JACKSON: Well, your Honour, that is one theory. I accept that for a moment.

GUMMOW J: Yes.

McHUGH J: But the other view is that - or another view is that because the judicial power of the Commonwealth so far as the High Court is concerned is to be found in section 75 and 76 of the Constitution, 51(xxxix) operates in conjunction with those two sections and enables the Parliament to declare this to be a superior court of record independently of 71.

MR JACKSON: Your Honour, those are the possibilities. It is either 71 and 51(xxxix) or 71 and 77(i) and 51(xxxix) except that - - -

McHUGH J: It cannot be 77(i).

MR JACKSON: It cannot be 77(i) for this Court.

McHUGH J: Yes.

MR JACKSON: No, your Honour, no.

GUMMOW J: No, that is right.

MR JACKSON: Which makes it rather - I am sorry, your Honour.

GUMMOW J: And if section 71 is to be interpreted as itself involving the creation of the Court - - -

MR JACKSON: It has to be 51(xxxix).

GUMMOW J: Well, how does that work then? It is in aid of a legislative power.

MR JACKSON: Well, your Honour, that is where our difficulty does arise - - -

GUMMOW J: Yes.

MR JACKSON: - - - except that it cannot be - I am sorry, your Honour.

GAUDRON J: Why cannot it be in aid of - why cannot it in any event be incidental to the execution of the power vested in the federal judicature?

MR JACKSON: Well, it could be, your Honour. There are two parts of 51(xxxix) that are - - -

GUMMOW J: It would have to be that part perhaps on that particular hypothesis about 71.

MR JACKSON: On that theory, your Honour. Your Honour, could I just say in relation to the underlying theory that your Honour put to me about the Court existing before it existed, as it were. Undoubtedly section 71 contemplated there must be such a court but, of course, for the first two years after Federation there was not one.

GUMMOW J: Yes.

MR JACKSON: And it was not until there was an enactment of the Parliament by the Judiciary Act that there was a High Court.

McHUGH J: Well, section 100 contemplates an interstate commission, does it not?

MR JACKSON: Well, there was one, your Honour, once, yes.

CALLINAN J: But, Mr Jackson, why is not - - -

MR JACKSON: There has been one twice, your Honour, twice.

CALLINAN J: - - - why is not it an inevitable inference from section 73 or, indeed, section 75? It would be unthinkable that a court with those jurisdictions could not be a superior court of record.

MR JACKSON: Well, your Honour, I had not finished the answer I was going to give to one of your Honours before, but what I was going to say was another possible source of the classification of the court as one whose orders would have that effect is in the notion of the High Court itself and the concept the federal Supreme Court in section 71. Your Honours, so far as this Court is concerned, there is a number of possibilities, but the point I would seek to make about it, your Honours, is that in relation to the other Federal Courts, there is a choice for the Parliament and the choice is exercisable in the exercise of the powers under one or more of section 71, 77(i) and 51(xxxix).

Your Honours, could I then come to the Scylla and Charybdis view that your Honour Justice Gaudron was putting to me in relation to the effect of certiorari and prohibition. Your Honours, there are really two, I suppose, answers we would make to it: the first is that one has to look to sections 6 and 7 together and if it is the case that section 7 is invalid then, in our submission, section 6 is so too, and in that regard the rest of the Act, your Honour, was based on section 6. Now, in that regard, your Honours will see that the terms of section 6 are these. It says:

The rights and liabilities of all persons are -

and your Honours will see the remainder of the provision, but it goes on to say at the end of paragraphs (a) and (b):

had been a valid judgment of the Full Court of the Supreme Court.....constituted by a single judge.

And (b), of course, refers to the Full Court.

Now, your Honours, what one sees, in our submission, is that it speaks of rights and liabilities which are identified as having characteristics of an order of a Supreme Court and, in those circumstances, in our submission, there is no reason why one of the rights and liabilities that is contemplated by that concept is the ability to appeal - the right to appeal or the right to apply for leave to appeal. So that, your Honours, in our submission, it is not really quite possible to say section 7 can be just excised, leaving section 6, as it were, untouched, because the two, in our submission, do go together.

GAUDRON J: Section 7(2)?

MR JACKSON: No, your Honour, 7 - - -

GAUDRON J: 7(1) as well, yes.

MR JACKSON: I am sorry, your Honour, I am not sure if I am agreeing with something I want to agree with in what your Honour has put to me. What I am seeking - - -

GAUDRON J: It is the whole of section 7, you say, and I think you are right.

MR JACKSON: And 6, your Honour.

GAUDRON J: And that feeds back into section 6.

MR JACKSON: Yes, yes. Your Honour, what I am saying is that section 7 is no more than a - - -

GUMMOW J: It is epexegetical of section 6.

MR JACKSON: Indeed, yes it is declaratory, perhaps declaratory, but it does no more than that. That is the first answer we would seek to give your Honours. If section 7 goes, so too does section 6.

GAUDRON J: But in what circumstances does section 7 go. In particular, I can understand the argument that it would go if the Federal Court decision continued to have effect, but would 7 go to the extent that either this Court quashed or set aside or the Full Federal Court set aside a decision of the Federal Court?

MR JACKSON: Well, your Honour, that really comes to the second part - the second aspect with which I wanted to deal, and may I go first, your Honours, to two other provisions of the Act before I come to the substance of that argument. The first is section 14 and if your Honours go to section 14, paragraph (a) deals with the position of the Federal Court, paragraph (b) deals with the position of the Family Court. What section 14(a) seems to say, that the Act does not apply to:

a judgment -

of -

the Federal Court that has been declared to be invalid, or has been quashed or overruled, by a Full Court of the Federal Court -

on other than jurisdictional grounds.

GAUDRON J: Before the commencement of this 6?

MR JACKSON: Yes, your Honour, yes. So, in effect, what it seems to be saying is that, presumably, in those circumstances, the judgment that might qualify as the ineffective judgment would be the judgment of the Full Court, if otherwise made in the State jurisdiction provision, in the definition of ineffective judgment.

Now, your Honours, how necessary that provision was in the light of section 9, which is the other provision to which I would come, may perhaps be doubted because your Honours will see that, again, it speaks of the situation before the commencement of this section, and it says:

If -

(a) before the commencement of this section, a court gave or recorded an ineffective judgment ("the new judgment") on the basis that an earlier ineffective judgment ("the earlier judgment") was or might be of no effect; and

(b) the new judgment replaced the earlier judgment,

section 6 has no effect in respect of the earlier judgment.

Then the meaning of the concept "replaced the earlier judgment" is dealt with in 9(2).

So, your Honours will see both those provisions seem to have the effect that it is the later judgment but, in each case, the expression is used "before the commencement of this section" which is to be the one that might qualify as the ineffective judgment. Now, if one goes to section 4(1), and for the moment only to section 4(1), it defines an "ineffective judgment" as being, of course:

a judgment of a Federal Court in a State matter given or recorded, before the commencement of the section, in the purported exercise of jurisdiction purporting to have been conferred -

et cetera. Now, of course, if one looked at those words by themselves they are capable of referring simply to a judgment given before the Act came into force. But, of course, there is also section 4(2). Now, section 4(2) refers to the position of the Full Court and if I could just deal with 4(2)(a) for the moment:

If -

(a) a Full Court of the Federal Court of Australia in its appellate jurisdiction has purported to affirm, reverse or vary an ineffective judgement.....a reference in this Act to the ineffective judgment is a reference to the ineffective judgment in the form in which, and to the extent to which, it purports or purported to have effect from time to time.

Now, your Honours, the change in language there from the language used in, for example, sections 9 and 14 what you will see is that it speaks of "purports" or "purported" and it says also, "from time to time" and, in our submission, it is not just speaking of the past, it is also speaking of the time after the Act comes into force and if, for example - your Honours I am conscious in saying this it refers only to the Full Court, I will come to this Court in a moment - but what it does mean, in our submission, is that if, for example, after the Act has come into force, the Full Court of the Full Court of the Federal Court has "purported to affirm, reverse or vary an ineffective judgment", then the situation which obtains is that the reference to the ineffective judgment is that obtaining in futuro.

Now, as one of my learned friends said, the Act does not purport to deal with the situation applying in relation to this Court, in relation to orders of this Court, and if certiorari is granted then as - if I could give your Honours a reference to Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 to the joint reasons of Chief Justice Mason and your Honours Justices Dawson, Toohey and Gaudron. What was said was that the effect of certiorari was that the legal effect and legal consequences of the decision are gone. I would also give your Honours a reference to what was said in Craig v South Australia [1995] HCA 58; 184 CLR 163 at 175 and, in those circumstances, in our submission, as a matter of construction of the Act, the judgment having gone, there is not, we would submit, an ineffective judgment upon which the Act can operate - - -

GAUDRON J: Yes, but that might be to emphasise "ineffective".

MR JACKSON: Your Honour, with respect - - -

GAUDRON J: You say there is no judgment?

MR JACKSON: I would not for a moment suggest one treats the name given to the definition as confining what its content is but it is speaking of a "judgment of the Federal Court given", et cetera. But if that judgment is one that is quashed and quashed in the case of certiorari, then its legal effect and its legal consequences are gone and, in our submission, there is no ineffective judgment. The operation has gone. There is nothing upon which section 6 can operate.

GAUDRON J: Section 6 does not operate on anything. It operates by reference to, does it not?

MR JACKSON: Yes, it does, your Honour, but what it operates by reference to is what falls within the definition of "ineffective judgment" as appears from the usage in section 6(a). It is the condition of operation. Could we also say about that, your Honours, if the State legislatively says, "Even though the High Court has quashed the Federal Court's order, we'll treat it as good for some purposes", then - - -

GAUDRON J: But it not saying that.

MR JACKSON: No, I am sorry, your Honour, but what I am seeking to say about it is that if that is what it says - and may I come to that in just a moment - then that would seem to be, in our submission, an interference with this Court's orders. If one says that is not what it is saying, but if one looks at section 7 and says part of what it is doing is to give an appeal which in substance is an appeal from a decision that has been quashed by the decision of the Federal Court which has already been quashed by the High Court, that, in our submission, does interfere with this Court's orders. As to prohibition - - -

KIRBY J: Could I just ask before you move on to that: it was suggested by some submissions that we should not trouble ourselves about the appeal provisions or the provisions which give rise to appeal because there is no appeal at this stage in these proceedings, nor is there any other appeal, and the time to deal with that will be when it comes before the Court.

MR JACKSON: One can understand why those in the position of the - - -

KIRBY J: Take it in stages. Section 11 first, then section 6 and then we will deal with section 7 when it is a section 7 case.

MR JACKSON: Your Honour, it is fine to do that if one is considering whether to eat three separate fish at one time or at different times but if one is talking about one fish, then one really has to eat it all at once. In that regard that is the point we would seek to make, that one cannot identify the ambit of section 6 without taking into account also what is provided for by section 7. I made the argument a few moments ago. The rights and liabilities contemplated by section 6 include - and significantly, in our submission - rights in relation to appeal. I do not know that I can take that point beyond that, but that is what we would say.

Your Honours, in relation to prohibition: prohibition, of course, falls, broadly speaking, into two categories. One, the more traditional common law one which is apposite where no order has yet been made, and that is not presently relevant. Secondly, that which is presently relevant when matters remain to be done under the order. Now, your Honours, in the latter case, if prohibition is granted, in our submission, the effect is the same as certiorari in futuro and whilst section 4(2), in our submission, refers only to the operation of the - I am sorry, may I start again. In our submission, the reasons I said in relation to certiorari, the order that is contemplated by section 4(2) is one to be in force at relevant times.

Could I come then, your Honours, to another matter and that is a provision that was mentioned, I think, twice by your Honour Justice Hayne? That is section 473(9) of the Corporations Law. That is the provision which says that "the acts of a liquidator are valid notwithstanding any defects" in the Liquidator's "appointment". To put it more exactly, your Honours, it said that:

Subject to this Law, the acts of a liquidator are valid notwithstanding any defects that may afterwards be discovered in his or her appointment or qualification.

Now, your Honours, that is a provision which has some history and some counterparts. We have given your Honours, first of all, an extract from volume 1 of Robson on Corporations law at page 583 and in the first new paragraph on that page, third line, it summarises what is the provision where it said:

This only applies to a defect in an otherwise valid appointment, and not to a case where there never was any power to appoint a liquidator at all.

Your Honours, in this Court in Grant v John Grant and Sons Pty Ltd [1950] HCA 54; (1956) 82 CLR 1 - your Honours, could I just pause to say provisions like this relate to the acts of directors not properly appointed and a number of other areas. Also, one of those was an issue in Grant v John Grant and Sons. At the bottom of page 33 - your Honours, we have just extracted the relevant pages - you will see six lines from the bottom of the page a reference to section 124 of the Companies Act and it is paraphrased as providing:

that the acts of a director shall be valid notwithstanding any defect that may afterwards be discovered in his appointment.

If I could pass over the next few lines, at the top of page 34, your Honours will see in, I think, the fourth line:

The effect of this section and article was recently considered by the House of Lords in Morris v Kanssen. Lord Simonds pointed out that there is a vital distinction between (a) an appointment in which there is a defect, or, in other words, a defective appointment, and (b) no appointment at all.

Your Honours, that goes down to about point 5 on that page.

KIRBY J: Does that reflect the void/voidable debate? Can one say here that there was no appointment at all, if in fact, by the theory of section 71 that you had propounded, there is an appointment and it is valid until set aside.

MR JACKSON: Well, your Honour, I was really just dealing for the moment with the construction of the provision. The construction of the provision is one that, if I can just say this about it - sorry, your Honour, I will start again. In the cases dealing with this provision and provisions of this kind, the distinction has been drawn between appointments which are defective and no appointments at all.

McHUGH J: But in Morris v Kanssen there was no appointment at all, was there? That is my recollection of that case. There was just no appointment at all.

MR JACKSON: Yes. What I was going to say was that the terms of the provision could not, in our submission, have the effect that if the Court were to quash the appointment, that that section would in fact enliven it again, in our submission. I should have said, your Honours, Justice McTiernan agreed with Justice Williams. The other member of the Court who dealt with the issue was Justice Kitto, and your Honours will see his reasons commence in the second paragraph of his reasons at page 52 and go on to the top of page 53. He said, if I can just go particularly to the fifth line on page 53:

The section and the article presuppose an appointment in fact made by a person or body having power to appoint.

Your Honours, could I give a reference to a case where those principles were applied. It is a decision of Justice Pidgeon in Western Australia Re Kyra Nominees (1980) 5 ACLR 64.

Could I deal finally with two other points. One is the suggestion that, in relation to the State Jurisdiction Act, one must first go to the Federal Court to have the order set aside before the Act comes into operation. Well, your Honours, there seems little support for that notion, in our submission, in the Act. In the first place, the provisions, or at least some of them, appear to be operating immediately. Your Honours have seen the references to the commencement of the Act.

But, secondly, section 13, although it does not provide for an obligatory procedure, your Honours will see that it seems to provide a method of facilitation of proof of what happened in the Federal Court simply by having:

A Federal Court record, or a copy of a federal court record, of an ineffective judgment may be produced in evidence to show the existence, nature and extent of each right or liability conferred, imposed or affected by section 6.

Your Honours, finally, could I deal with the argument that was advanced, I think, principally by my learned friend, the Solicitor-General for the Commonwealth, that there is an ability to go to other courts. Other courts are referred to in section 58AA and that limits the field. Well, to an extent that is true, however, the ability to go to other courts is an ability to do so under the Corporations Law. The orders say "are made by the Federal Court to the extent to which they refer to a Corporations Law", say nothing, of course, about a State Jurisdiction Act. What is said, in effect, is that whilst the field - two things really are said: one is the field may be limited by the ability to go to other courts under the Corporations Law. Your Honours, so be it. But one is really talking about section 5 of the Federal Court Act.

But the other feature of it, your Honours, is this, that if that was relied on to say one can then go to the State Jurisdiction Act, the orders made by the Federal Court say nothing at all about the State Jurisdiction Act. Your Honours, those are our submissions.

GLEESON CJ: Thank you, Mr Jackson. Yes, Mr Abbott.

MR ABBOTT: Firstly we adopt what my learned friend, Mr Jackson, has said and I will endeavour to put matters that he has not covered by way of our reply.

Can I firstly refer the Court to a note which we prepared, as requested by Justice Gaudron, which deals with the summary of the causes of action, this document in exactly the same form, and we ask that that be taken into account. May I deal very briefly with the arguments presented against us on what I will call the Kable point. My learned friend, the Solicitor-General for the Commonwealth spoke of Parliament passing a law to create a debt between citizens. In our submission, that is one thing; Parliament can do that. It can pass laws which affect rights between citizens. What we say it cannot do is cloak them as if they were judgments of the Supreme Court of that State. We rely upon the comments in Mistretta which is set out in our written argument.

The learned Solicitor-General I think also said that the Act did not direct the judgment to be entered; it merely defined rights and liabilities. The results, in our submission, of the Act are that the rights and liabilities have to be treated as if they were a judgment and before you can take advantage of those rights and liabilities and effect them, then that does call into force the operation of the Enforcement of Judgments Act and also the provisions of the Supreme Court Act.

The other point made about Kable: it was asserted that a point of distinction was that this was a civil jurisdiction that we were looking at that was, so it was said, essentially different from the criminal jurisdiction in which Kable was founded. In our submission, if Kable is to be distinguished, and this is not the basis - the Kable principle as we apprehend it is the imposition on a court of the State of features which significantly change the status of that State court as a Chapter III court, making it, at the end of the day, an unworthy repository of the Chapter III power. Statutory judgments, in our submission, do this, whether in the civil or the criminal sphere, it is in the nature of statutory judgments that they do it, because they contain within them a complete abdication of the judicial power and, we say, this feature exists regardless of the jurisdiction in which they are created or imposed by Parliament.

The final point that was made on the Kable issue was the good courts versus bad courts, good tribunals versus bad tribunals. Your Honour Justice Kirby took this up. In our submission, one cannot use that subjective feature as a means of identifying the limits of the Kable principle. Whilst a mere declaration of rights, as possibly Humby shows us, may be one thing and may not be offensive to Kable. Declaring those rights to be judgments of the Supreme Court is, in our respectful submission, quite another thing whether the rights were originally granted purportedly in the exercise of an invalid jurisdiction of another court or not.

The learned Solicitor-General for Victoria - and indeed Mr Allsop - suggested there was no need for this Court to consider the appeal provisions. Your Honour Justice Kirby took this point up as well. In our submission, this Court will need to consider the appeal provisions in section 7 and the interaction of section 6 and I adopt what my learned friend Mr Jackson said in that regard. But it is in the existence of the appeal provisions which we say highlights our arguments which we have already put on Chapter III repugnancy and in respect of Kable.

Your Honour Justice Gaudron spoke of in what circumstances would section 7 go. Would it go if the orders ceased to exist? Your Honour I think in that regard was talking of inconsistency and the lack of inconsistency that would thereafter exist.

GAUDRON J: It might also go for repugnancy of Chapter III if there purported to be an appeal from a decision which this Court had quashed or granted prohibition.

MR ABBOTT: And also if this Court was with us on the issue of the creation of statutory judgments in the offensive way in which they interfered with a Chapter III court. Mention was made by the learned Solicitor-General for the Commonwealth to the chart which we have prepared. He suggested and submitted that note (1), that is the north-west arrow, should be answered "yes", that enactment of a State Act can give appeal rights from rights deemed by the State to exist. In our submission, if this Court holds that the broken line between the single judge Supreme Court statutory judgment and the Full Court of the Supreme Court judgment is to be answered in the affirmative, that will require consideration of whether or not the Act considered in this case impliedly amends section 50 of the Supreme Court Act which deems Acts to be judgments in the same way that section 73 of the Constitution speaks of them. In this regard I refer to the case of Caldwell v Public Trustee (1983) 33 SASR 246, a case which held that some of the orders were not orders made by the exercise of judicial power, were therefore not judgments or therefore not appealable within the meaning of section 50 of the Supreme Court Act of South Australia.

So far as my learned friend Mr Whitington's arguments on discretionary grounds, it is our submission that those discretionary issues should not stand in the way of quashing these invalid orders because these orders, in our submission, fail on constitutional grounds of invalidity. We rely in part on the case of Reg v The Federal Court of Australia; Ex parte The Western Australian National Football League reported in [1979] HCA 6; (1979) 143 CLR 190, the decision of Chief Justice Barwick at page 204, where his Honour said:

A judgment given or an order made in a matter which is outside the limited jurisdiction of the tribunal giving or making it, from which the parties do not appeal, may become a precedent. The public interest is that such a decision or order should not be allowed to stand -

citing Bodenham v Ricketts -

It is for this reason that a stranger may obtain prohibition. Such considerations apply with equal, if not greater, force with respect to matters where jurisdiction depends on constitutional competence.

My learned friend Mr Whitington's suggestion that section 4 should be read down as including the word "sole" or "only" before the words "purported exercise of jurisdiction", in our submission, is not warranted for the reasons that I previously advanced. To confine the definition of section 4(1) in the way for which he contended, in my submission, does great violence to the section and to the obvious intention of the drafter of the section. Those are our submissions, if the Court pleases.

GLEESON CJ: Thank you, Mr Abbott. We will reserve our decision in these matters.

AT 3.11 PM THE MATTER WAS ADJOURNED