Why courts from different jurisdictions are sitting together: Australia’s experimentation with joint hearings

Australian courts regularly cooperate with courts of different jurisdictions, both domestically and internationally. We see this, for example, when courts transfer proceedings to different jurisdictions, or stay proceedings to allow the continuation of proceedings in different jurisdictions.

In recent times we have also seen the rise of a more direct form of judicial cooperation: joint hearings. That is, when courts of different jurisdictions agree to hear matters concurrently.

Joint hearings in overseas cases

Joint hearings have been taking place in other countries for many years. In 1997 the Federal Judicial Centre in the United States identified numerous examples of this occurring in practice, such as a case in which a state judge from Philadelphia presided in New York City alongside a federal judge from Alabama.[1] Their investigation revealed that virtually all judges who had conducted joint hearings noted similar benefits, namely the conservation of time and resources by avoiding duplicative proceedings. As one judge remarked, “What conceivable sense is there in having … lawyers appearing in two separate courts doing the same thing twice?“[2]

Joint hearings are also expressly identified in the UNCITRAL Model Law on Cross‑Border Insolvency (Model Law) as being an appropriate means by which international courts may cooperate with one another when dealing with cross-border insolvency matters.[3]  In that regard, over the past two decades a number of joint hearings have been coordinated between the United States Bankruptcy Court (USBC) and various Canadian courts in relation to cross-border insolvency matters.[4]

Of note were the joint hearings of the Ontario Superior Court of Justice and the USBC for the District of Delaware following the collapse of the Nortel group – a multinational telecommunications group of companies headquartered in Canada with activities in the United States – in what was one of the biggest bankruptcy cases in Canadian history.

Joint hearings in Australia at a domestic level: a look at Westpac and BMW

Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, five class actions were filed against AMP – four in the Federal Court of Australia (FCA) and one in the Supreme Court of New South Wales (NSWSC). This gave rise to a messy series of interlocutory hearings in both courts after an application to have the NSWSC proceeding transferred to the FCA was refused, and the NSWSC threatened an anti-suit injunction in the event the four FCA proceedings were not transferred to the NSWSC.[5] In deliberating on these issues, Allsop CJ of the FCA noted in a judgment delivered on 29 August 2018 that:[6]

No party put the submission that two proceedings (one in this Court and one in the Supreme Court) could be managed simultaneously and co-operatively. This kind of inter-court co-operation has a precedent in large insolvency litigation in the United States and Canada in the Nortel Case…

Shortly after this, the respective Chief Justices of the FCA and the NSWSC agreed on a protocol for working together in class actions with common parties or the same or similar issues, which encourages joint hearings between the FCA and the NSWSC where appropriate.[7] Pursuant to this protocol, the FCA and NSWSC in their appellate jurisdictions then sat together in an historic two-day joint hearing on 4 and 5 February 2019. Six judges sat on the bench – three from the FCA and three from the NSWSC.

Though the judges sat together and heard the parties’ submissions concurrently, the FCA and NSWSC determined their respective appeals separately and delivered separate judgments.[8] In delivering its judgment the FCA expounded that:[9]

The issues in the two matters overlapped considerably; and, given the importance of the questions, in particular of the Constitutional questions, it was thought convenient for the administration of justice that both Courts have the advantage of written and oral argument of counsel on the same occasion.

Joint hearings in Australia at an international level: a look at Halifax

Federal legislation permits joint hearings of cross-border insolvency matters through the adoption of the Model Law in the Cross-Border Insolvency Act 2008, and also through sections 581(4) of the Corporations Act 2001 and 29(4) of the Bankruptcy Act 1966 which allow Australian courts to request a court of “a country other than Australia” that has jurisdiction in external administration matters “to act in aid of, and be auxiliary to, it in an external administration matter.” Other countries for the purposes of those Corporations Act and Bankruptcy Act provisions are: Jersey; Canada; Papua New Guinea; Malaysia; New Zealand; Singapore; Switzerland; the UK; and the USA.[10]

The ongoing Halifax case before the FCA demonstrates why joint hearings in cross-border insolvency matters may be beneficial. It relates to the liquidation of an Australian entity (Halifax AU) that owned 70% of the shares in a New Zealand subsidiary that was also placed into liquidation (Halifax NZ). Funds were frequently transferred between the companies’ Australian and New Zealand accounts with no noticeable pattern. There was therefore a substantial commingling of funds held on trust by Halifax AU and Halifax NZ. Accordingly, Halifax AU or its clients could have had claims in relation to funds held in the name of Halifax NZ and vice versa.

The liquidators of Halifax AU sought orders in the FCA for the grouping or pooling of the funds held in the accounts and proposed to seek the same orders from the High Court of New Zealand (NZHC). In Halifax (No. 5) the FCA considered a request made by the liquidators pursuant to section 581 of the Corporations Act 2001 that the FCA issue a letter to the NZHC requesting it to act in aid of and be auxiliary to the FCA by “deliberat[ing] together with the FCA so as to seek to achieve, so far as possible, an outcome in which inconsistency between the judicial advice or directions given by each Court in respect of the same commingled pool of funds is effectively eliminated.”[11] The FCA did not make the order because it was considered premature (the application was ex parte without any contradictors). However, it approved the idea in principle and noted that “the liquidators may make a further application for an order pursuant to s 581(4) in due course“.

More recently, the liquidators brought applications in the FCA and NZHC seeking a direction that they be justified in refraining from closing out certain investments, and a joint hearing of the FCA and the NZHC took place on 18 February 2020 by audio-visual link. The NZHC and FCA then delivered separate decisions on 21 February 2020 and 3 March 2020 respectively.[12]

Expectations for the future

The recent joint hearings of the FCA and the NSWSC in the Westpac and BMW matters and the FCA and the NZHC in the Halifax matter are reflective of an increased focus on judicial cooperation by the Australian judicature.

It is also telling that: the NSWSC has adopted the Judicial Insolvency Network’s “Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters” which contemplate joint hearings between various international courts and set out procedures to be followed for such hearings;[13] the FCA and Supreme Court of Victoria have agreed to their own protocol for working together in class actions;[14] and the Australian Law Reform Commission has recommended that Supreme Courts of other states and territories with representative action procedures should follow suit.[15]

We therefore expect to see increased levels of judicial cooperation in years to come and, with that, more joint hearings among domestic and international courts.

Authored by:

Guy Edgecombe, Partner
Mitchell Byram, Associate

[2] Id at p. 23, referring to an interview with Judge Carl B. Rubin from the Southern District of Ohio from 1991.

[3] See Articles 25 and 27 of the UNCITRAL Model Law on Cross-Border Insolvency 1997. Note: the Model Law has been substantially adopted by Australia (through section 6 of the Cross-Border Insolvency Act 2008) and by major trading partners in common law jurisdictions such as Canada, New Zealand, the UK and the USA.

[4] These include joint hearings in relation to the insolvencies of the Everfresh group, the Solve-Ex group, the Livent group, the Pope & Talbot group, the Quebecor World group, the Systech group and the Nortel. See United Nations Commission on International Trade Law (2010), UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation.

[5] See Wigmans v AMP Ltd [2018] NSWSC 1045 from [11] to [13] and [54].

[6] Wileypark Pty Ltd v AMP Limited [2018] FCAFC 143 at [23], referencing the decisions in Nortel Networks Corporation (Re) [2015] ONSC 2987 and In re Nortel Networks Inc., et al., Debtors 532 BR 494 (2015).

[7] Federal Court of Australia and Supreme Court of New South Wales (2018), Protocol for Communication and Cooperation between Supreme Court of New South Wales and Federal Court of Australia in Class Action Proceedings.

[8] Westpac Banking Corporation v Lenthall [2019] FCAFC 34; and Brewster v BMW Australia Ltd [2019] NSWCA 35.

[9] Westpac Banking Corporation v Lenthall [2019] FCAFC 34 at [2].

[10] Regulation 5.6.74 of the Corporations Regulations 2001; regulation 3.01 of the Bankruptcy Regulations 1996.

[11] Kelly, in the Matter of Halifax Investment Services Pty Ltd (in liq) (No 5) [2019] FCA 1341 at [32].

[12] Kelly, in the matter of Halifax Investment Services Pty Ltd (in liquidation) (No 7) [2020] FCA 248.

[13] See NSWSC (2017), Practice Note SC EQ 6.

[14] Federal Court of Australia and Supreme Court of Victoria (2019), Protocol for Communication and Cooperation between Supreme Court of Victoria and Federal Court of Australia in Class Action Proceedings.

[15] Australian Law Reform Commission (2018), Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third Party Litigation Funders. See Recommendation 6.