The Demise of Cross-Vesting
| Published date | 01 September 1999 |
| DOI | 10.22145/flr.27.3.8 |
| Date | 01 September 1999 |
| Author | Graeme Hill |
| Subject Matter | Comment |
COMMENT
THE
DEMISE
OF
CROSS-VESTING
Graente
Hill*
Cross-vesting
operated
for
over
10
years
as a
means
of
alleviating
jurisdictional
disputes
between
the different
court
systems
in
Australia.
When
the
first
challenge
to
its
constitutional
validity
resulted
in
a
3-3
split
decision
in
Gould
v
Brown
1
in
1998,
it
was
clear
that
it
would not
be
long
before
the
issue
was
tested
again. On
17
June
1999,
a
differently
constituted
High
Court
handed
down
judgment
in
four
cases,
2
deciding
by
a
majority
of
6-1
that
key
provisions
of
the
cross-vesting
schemes
under
consideration
were invalid.
BACKGROUND
The
cases
involved
challenges
to
two cross-vesting
schemes.
The
first
(the general
cross-vesting
scheme)
was contained
in the
Jurisdiction
of
Courts
(Cross-vesting)
Act
1987
of
the
Commonwealth,
the
States
and
the
Northern
Territory
(the
Cross-vesting
Acts).
It
applied
to
general
civil
matters
in
the
Federal
Court,
the
Family
Court,
the
Supreme
Court
of
each
State,
and
the Supreme Courts
of
the
Northern
Territory
and
the Australian Capital
Territory
(the
participating
courts).
The
second
(the
Corporations
Law
cross-vesting
scheme)
was
contained
in
the
Corporations
Act
1989
(Cth)
(the
Commonwealth Corporations
Act),
and
the
Corporations
Act
of
each
State
3
and
the
Northern
Territory.
It
enabled the
participating
courts
to
hear
civil
matters
arising
under
the
Corporations
Law
of
any
jurisdiction.
In
general terms,
the
schemes
enabled
participating
courts
to
exercise
jurisdiction
with
respect
to
civil
matters
within
the jurisdiction
of
other
participating
courts,
and
to
BA,
LLB(Hons)(ANU).
Constitutional
Litigation,
Australian
Government
Solicitor. The
views
expressed
in this
comment
are
those
of
the
author.
1
(1998)
193
CLR
346.
2
Re
Wakim;
Ex
parte
McNally,
Re
l/Vakin; Ex
parte
Daroall,
Re
Brown;
Ex
parte
Amann,
and
Spinks
z?
Prentice,
reported
in
(1999)
163
ALR
270.
3
For
example,
the Corporations (New
South
Wales)
Act
1990
(NSW)
(the
NSW
Corporations
Act).
Federal
Law
Review
transfer
matters
to
another
of
those
courts
where
it
was "more
appropriate"
that
the
matter
be
heard
by
that
other court.
4
The
aspects
of
the
schemes
under
challenge
were
the
provisions
which
attempted
to
vest
the
jurisdiction
of
State
and
Territory
Supreme
Courts
in
the
Federal
Court
and
Family
Court.
Re
Wakim;
Ex
parte
McNally,
Re
Wakim;
Ex
parte Darvall
The
applicants
in
the
two
Re
Wakim
matters
challenged
the
provisions
of
the general
cross-vesting
scheme
that
purported
to
enable
the
Federal
Court
to
hear
"State
matters".
5
Mr
Wakim
was
a
creditor
of a
bankrupt,
and
alleged
that
he
had
suffered
loss
because
the
Official
Trustee in
Bankruptcy
had
not
taken
steps
that
would
have
increased
the
amount
available
to
the
creditors
of
the
bankrupt's
estate.
He
commenced three
separate
actions
in
the Federal
Court
to recover
this
loss:
an
action
in
negligence
and
under
the Bankruptcy
Act
1966
(Cth) 6
against
the
Official
Trustee,
an
action
in negligence
against
the
solicitors who
had
acted
for
the
Official
Trustee
and
an
action
in
negligence
against
the
barrister
retained
by
those
solicitors.
The
solicitors
and
the
barrister
sought
prerogative
relief
against
the
Federal
Court,
stating
that
the
provisions
of
the
general cross-vesting
scheme
that
purported
to
allow
the
Court
to
hear
the
common
law
claims
brought
against
them were
invalid.
Mr
Wakim
also
argued
that,
cross-vesting
aside, the common
law
claims
against
the
applicants
came
within
the
Court's
accrued
jurisdiction.
Re
Brown;
Ex
parte
Amann
The
applicants
in
the
Antamn
matter
challenged
the
provisions
of
the
Corporations
Law
cross-vesting scheme
that
purported
to
enable
the
Federal
Court
to
exercise
powers
under
the
Corporations
Law
of
a
State.
In
1992,
the
Federal
Court
had
ordered
Anann
Aviation
Pty
Ltd
to
be
wound up,
and
in
1995
the
Court
had
ordered that
certain
persons
be
summonsed
to
attend
before
the
Court
to
be
examined
about
the
"examinable
affairs"
of
the
company.
These
orders
were
challenged
in
proceedings
that
culminated
in Gould
v
Brown,
which
upheld
the
jurisdiction
of
the
Federal
Court to
make
the
relevant orders.
7
Following the
High Court's
decision,
the examination was
completed.
The
applicants
then
sought
prerogative
relief
against
the Federal
Court
to
quash
the
winding
up
order,
and
to
prohibit
the
liquidator
from
taking
further
steps
to
wind
up
the
company.
As
one
of
the
applicants
(Mr
Gould)
was
a
party
to
Gould
v
Brawn,
a
separate question
arose
whether
he
and
the
other applicant
(Mr
Amann)
were
precluded
from
reagitating
the
issue,
on
the
grounds
of
res
judicata
or
issue
estoppel.
4
Section
5
of
the
Cross-vesting
Acts;
ss
53-53D of
the
Commonwealth Corporations
Act
and
ss 44-44D
of
the
NSW
Corporations
Act.
5
Defined
in
NSW
Cross-vesting
Act,
s
3(1)
as
"a
matter:
(a)
in
which
the
Supreme
Court
has
jurisdiction otherwise
than
by
reason
of
a
law
of
the
Commonwealth
or
of
another
State;
or
(b)
removed
to
the
Supreme
Court
under
section
8
[from
another
NSW
court
or
tribunal]".
6
See
in
particular s
176(2)(a),
which
enables
the
Court
to
direct
a
trustee
of
a
bankrupt's
estate
"to
make
good any
loss
that
the
bankrupt's
estate
has
sustained
because
of
the
[trustee's]
breach
of
duty".
7
As
the
High
Court
was
evenly
split, the
decision
of
the
Full
Court
of
the Federal
Court
upholding
validity
stood:
Judiciary
Act
1903
(Cth),
s
23(2)(a).
Volume
27
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