Agtrack (NT) Pty Ltd v Hatfield [2012] NSWSC 1298 | Case summary

Judgment 1By an Originating Process filed in proceedings number 2012/244703, Brentwood Village Management Pty Limited ("BVM") and Brentwood Village Services Pty Limited ("BVS") apply, under ss 69 and 75 of the Supreme Court Act 1970 (NSW), for a declaration that the Consumer, Trader and Tenancy Tribunal ("CTTT") had no jurisdiction to hear and determine proceedings brought by Mr Robert Brown and Mrs Margaret Brown in the CTTT ("Brown Application"). By a second Originating Process filed in proceedings number 2012/244750, BVM and Lend Lease Primelife Limited seek a corresponding declaration in respect of an application brought by Cameron Fairfield-Smith as Executor of the Estate of the late Valerie Fairfield-Smith ("Estate") in the CTTT ("Fairfield-Smith Application"). The two proceedings raise similar legal issues, and by consent, orders were made that they be heard together and the evidence in one be evidence in the other. 2Brentwood Village Management Pty Limited, Brentwood Village Services Pty Limited and Lend Lease Primelife Limited (together, the "BVM Parties") contended before the CTTT, and contend in this Court, that the rights or duties asserted by Mr and Mrs Brown and by the Estate (together, the "Applicants") in the applications before the CTTT arise under the Corporations Act 2001 (Cth) and owe their existence to federal law or depend on federal law for their enforcement. The BVM Parties also rely on the fact that another party in the applications before the CTTT, Brentwood Village Limited ("BVL"), seeks to rely on s 254K of the Corporations Act to found a defence or immunity from the liability or obligation alleged by the Applicants in the applications before the CTTT. BVL made brief submissions on the application, but its substantive position was that it submitted to any order of the Court as to the CTTT's jurisdiction, save as to costs. Factual background 3BVL was the owner and operator of the Brentwood Retirement Village ("Village") at the time the Applicants entered into occupation of their respective villas in the Village. Each of the Applicants was allotted a redeemable preference share in BVL at the relevant time. Mrs Fairfield-Smith was allotted one V Class redeemable preference share for an issue price of $135,000 on 19 April 1996. The rights attached to that redeemable preference share and an associated lease entitled Mrs Fairfield-Smith to occupy villa 157 in the Village and she did so until her death on 6 June 2010. Mr and Mrs Brown were allotted one V3 Class redeemable preference share for an issue price of $252,000 and one AA Class preference share (which is not presently relevant) for an issue price of $28,000 on 20 September 2004. The rights attached to the V3 Class redeemable preference share and an associated lease entitled Mr and Mrs Brown to occupy villa 225 in the Village and they did so until leaving the Village on 29 January 2011. 4The land comprising the Village was sold by BVL to Australian Property Custodian Holdings Limited in 2007, which leased the premises to BVM and, it is alleged, BVS now has management responsibilities in relation to the Village. 5Each of the Applicants took steps to obtain a refund of their ingoing contributions (as defined in the Retirement Villages Act 1999 (NSW)) as contemplated by their contractual arrangements with BVL, potentially by redemption of the redeemable preference shares, but those refunds were not made. On 5 August 2011 and 19 December 2011, the Estate and Mr and Mrs Brown respectively brought proceedings in the CTTT seeking relief under the Retirement Villages Act against BVL and the BVM Parties which they alleged are the operators of the Village for the purposes of the Act. 6The BVM Parties sought a preliminary hearing in the CTTT in relation to whether the CTTT had jurisdiction to hear and determine the respective proceedings. In a detailed decision, the CTTT held that the obligation to repay a proportion of the ingoing contribution paid by the Applicants arose under the village contract, as those terms are defined in the Retirement Villages Act; that it had jurisdiction to make orders under that Act; that the Applicants were not seeking relief that the redeemable preference shares "should or should not be redeemed" but that their ingoing contributions (as defined) be refunded in accordance with the contract between them and the operator of the Village; and, in that situation, issues arising under the Corporations Act were, in the language quoted by Windeyer J in Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367, merely "lurking in the background" or were incidental to the issues to be determined. 7The CTTT also noted that the obligations arising under the village contract could be enforced, under the Retirement Villages Act, against a subsequent operator which could not be required to redeem a redeemable preference share not issued by it but could be required to refund an ingoing contribution paid to a former operator. The CTTT also noted that it was not required to make any determination about whether or not the redeemable preference shares were to be redeemed or whether BVL was required to redeem them, since the only question for it was whether the Applicants were to be paid their ingoing contributions (as defined in the Retirement Villages Act) and, if so, which entity was to pay them. Determining whether federal jurisdiction is engaged in the CTTT proceedings 8It appears to have been common ground before the CTTT, and was conceded by the Applicants in the proceedings before this Court, that the CTTT would not have jurisdiction to determine the applications if that determination would require the exercise of federal jurisdiction, because the CTTT is not a Court of a State for the purposes of s 77(iii) of the Commonwealth Constitution, s 39 of the Judiciary Act 1903 (Cth) or s 1337E of the Corporations Act: see also Trust Company of Australia Ltd v Skiwing Pty Ltd [2006] NSWCA 185; (2006) 66 NSWLR 77 at [65]; Da Silva v Bresond Pty Ltd [2008] NSWSC 158; (2008) 71 NSWLR 556 at [11], [16]. 9A matter falls within federal jurisdiction under s 76(ii) of the Commonwealth Constitution if it is a matter "[a]rising under any laws made by the Parliament". A matter arises under a law made by the Commonwealth Parliament if the right or duty in question in the matter owes its existence to a law of the Commonwealth or depends upon a law of the Commonwealth for its enforcement or the source of a defence which asserts that the defendant is immune from the liability or obligation alleged is a law of the Commonwealth: Felton v Mulligan above at 408; LNC Industries Ltd v BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 at 581. 10In Felton v Mulligan above at 382, Menzies J noted that: "A matter arises under a law when it is necessary in litigation to determine whether that law confers a right or affords a defence which is an issue in the litigation. A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law." Windeyer J referred (at 388) to his earlier judgment in Anderson v Eric Anderson Radio & TV Pty Ltd [1965] HCA 61; (1965) 114 CLR 20 at 45 and expressed the view that a State court does not exercise federal jurisdiction whenever it has to apply or take into consideration some law made by the Parliament of the Commonwealth as part of the body of law that binds it. His Honour also referred, in a passage which the CTTT noted, to the observation of Cardozo J (delivering the opinion of the Supreme Court of the United States) in Gully, State Tax Collector for Mississippi v First National Bank in Meridian (1936) 299 US 109 that "[n]ot every question of federal law emerging in a suit is proof that a federal law is the basis of the suit" and that it is not so if "[t]he most one can say is that a question of federal law is lurking in the background". His Honour also observed that: "In my view a matter does not arise for adjudication under a law made by the Commonwealth Parliament unless a statute is relied upon as giving a right claimed or as the direct source of a defence asserted. It is not easy to formulate with precision criteria which will suffice in every case." Walsh J noted (at 408) that "The fact that the interpretation of a law is involved does not necessarily mean that there is a matter arising under the law. But, in my opinion, there is a matter arising under the law if the source of the right claimed by the plaintiff or applicant or the source of a defence which asserts that the defendant or respondent is immune from the liability or obligation alleged against him is a law of the Parliament." 11In Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 476, the plurality of the High Court observed that: "The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. So, too, federal jurisdiction is attracted if the court finds it necessary to decide whether or not a right or duty based in federal law exists, even if that matter has not been pleaded by the parties. But the converse is not true. If a federal matter is raised on the pleadings federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds." 12In LNC Industries Ltd v BMW (Australia) Ltd above at 581-582, the plurality of the High Court observed that: "It is true to say that a matter does not arise under a law made by the Parliament merely because the interpretation of the law is involved: Felton v Mulligan [1972] ALR 33; 124 CLR 367 at 374, 382, 396, 408, 416. On the other hand, a matter may arise under a law of the Parliament, although the interpretation or validity of the law is not involved: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154. The conclusion reached by Latham CJ in that case, and stated in a passage at p 154 that has often been cited with approval, is "that a matter may properly be said to arise under a federal law if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law". Equally, there is a matter arising under a federal law if the source of a defence which asserts that the defendant is immune from the liability or obligation alleged against him is a law of the Commonwealth: Felton v Mulligan (124 CLR) at 408. When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament, that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law." 13In Re McJannet; Ex parte Australian Workers' Union of Employees (Qld) (No 2) [1997] HCA 40; (1997) 189 CLR 654 at 656-657, Brennan CJ, McHugh and Gummow JJ noted that the test for determining whether a proceeding is a matter arising under Commonwealth legislation was "whether the right or the duty that is sought to be enforced owes its existence to a provision of the Act"; see also Fejo v Northern Territory [1998] HCA 58; (1998) 195 CLR 96 at 120. In Australian Solar Mesh Sales Pty Ltd v Anderson [2000] FCA 864; (2000) 101 FCR 1; 175 ALR 566 at [16]-[17], Burchett J (with whom Wilcox and Tamberlin JJ agreed) noted that a tribunal exercises federal jurisdiction when it examines a federal issue as an issue in the proceeding, and that jurisdiction embraces the whole matter once it attaches. In that case, the Court held that federal jurisdiction was established where the action sought relief involving securing a right which was the creation of federal law, namely a right to a patent for an invention, and the raising of a defence whether the appellant had an entitlement under the patents legislation invoked federal jurisdiction. 14In Griffith University v Tang [2005] HCA 7; (2005) 221 CLR 99, Gummow, Callinan and Heydon JJ similarly observed (at [67]): "Again, a matter may "arise under" a law made by the Parliament within the meaning of s 76(ii) of the Constitution if the right or duty in question owes its existence to federal law or if it depends upon federal law for its enforcement; this is so notwithstanding that the action in question is brought, for example, for breach of a contract or to enforce a trust. Thus, in LNC Industries Ltd v BMW (Australia) Ltd, a declaration was sought that a trust existed in respect of property, being import quotas created by federal law. An order was sought to enforce the trust by requiring transfer of the quotas and, in one sense, the source of the right to obtain the order for transfer was the general law respecting trusts. Nevertheless, the subject-matter of the trust owed its existence to federal law so that the litigious proceeding "arose under" that law." 15The question whether a federal matter is raised is a matter of substance and not of form, and may require at least that the matter arises for serious examination by the relevant tribunal as an issue in the proceedings: Australian Solar Mesh v Anderson at [16]. Whether federal jurisdiction is engaged in a legal proceeding is to be objectively assessed, and may require regard to the allegations pleaded and to the factual basis of the controversy: Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251 at 262-263. It is common ground between the parties that a matter may arise under federal law if the suit could have been disposed of by deciding that matter, whether or not the suit was so disposed of: Nelungaloo Pty Ltd v Commonwealth [1952] HCA 11; (1952) 85 CLR 545; Felton v Mulligan above per Barwick CJ. Whether the rights or duties in question in the proceedings in the CTTT owe their existence to federal law or depend on federal law for their enforcement 16The authorities indicate that a matter will be within federal jurisdiction where the rights or duties in question in the matter owe their existence to federal law or depend upon federal law for its enforcement. In order to address this question, it is first necessary to identify the rights or duties that are in question in the proceedings before the CTTT. 17It is first desirable to set out certain provisions of the Retirement Villages Act which are important to the CTTT's determination of the issues before it. Section 3 of the Retirement Village Act provides that its objects are to set out the particular rights and obligations of residents and operators of retirement villages. Further relevant provisions include: "4 Definitions residence contract means a contract that gives rise to a residence right. residence right of a person means the person's right to occupy residential premises in a retirement village, being a right arising from a contract: (a) under which the person purchased the residential premises, or (b) under which the person purchased shares entitling the person to occupy the residential premises, ... village contract means: (a) a residence contract, or (b) a service contract, or (c) a contract under which a resident of a retirement village obtains the right to use a garage or parking space, or a storage room, in the village, or (d) any other contract of a kind prescribed by the regulations for the purpose of this definition. Note. A residence contract, a service contract and any other village contract may be contained in a single document. 6 Meaning of "ingoing contribution" (1) For the purposes of this Act, an ingoing contribution is: (a) any money payable to the operator under a residence contract, or (b) any other money, regardless of how it is described, that is paid to the operator of a retirement village in consideration for, or in contemplation of, the person by whom (or on whose behalf) the payment was made becoming a resident of the village, regardless of whether the payment is made in a lump sum or by instalments. 40 Contractual rights of residents against new operator (1) A village contract between a resident and a former operator of a retirement village may be enforced against any operator for the time being of the village. (2) However, proceedings do not lie against the owner of land in a retirement village (not being a person involved in the management or control of the village) for the enforcement of rights under subsection (1) unless: (a) the owner is a party to the contract, or (b) the owner is a close associate of an operator involved in the management or control of the village, and an operator other than the owner has failed to satisfy a judgment given for the enforcement of those rights. 128 Order of Tribunal (1) The Tribunal may, on application by a resident (or residents) or an operator under this Act, make one or more of the following orders: (a) an order directing the resident (or residents) or operator to comply with a requirement of this Act or the regulations, (b) an order that varies or sets aside a provision of a village contract that conflicts with this Act or the regulations, ... (e) an order for the payment of an amount of money, (f) an order for compensation, ... (2) Nothing in this section limits the orders that the Tribunal may make under this Act. 181 Payments to former occupants who were not registered interest holders (1) This section applies to a former occupant of residential premises in a retirement village who is not, or was not, a registered interest holder in respect of the residential premises concerned. (2) The date on which the operator of a retirement village must make any refund of the former occupant's ingoing contribution that is required, under a village contract, to be made is: (a) the date that is 14 days after the date on which the operator receives full payment under the residence contract of an incoming resident of the premises, or (b) the date that is 14 days after the date on which the operator enters into a residential tenancy agreement with an incoming tenant of the premises, or (c) the date that is 14 days after the date on which a person takes up residence in the premises with the consent of the operator, or (d) if the Tribunal terminated the residence contract-the date that is one month after the date of the termination, or (e) if the former occupant delivered up vacant possession of the premises to the operator after receiving notice of the operator's intention to apply to the Tribunal for an order terminating the residence contract-the date that is one month after the date on which vacant possession was delivered, or (f) the date that is 6 months after the date on which the former occupant otherwise delivered up vacant possession of the premises to the operator, whichever date occurs first, or such earlier date as the operator and the former occupant may agree (unless the contract between the operator and the former occupant provides for earlier payment). ... (7) If a payment is not made to the former occupant within the time required by this section: (a) the former occupant may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to make the payment, and (b) interest is payable, at the rate prescribed by the regulations, on that unpaid amount on and from the date that the amount becomes overdue." 18The Application filed by Mr and Mrs Brown in the CTTT seeks orders under ss 128 and 180 of the Retirement Villages Act (although they have indicated in submissions that the reference to s 180 should in fact be to s 181 of the Retirement Villages Act) against the relevant BVM Parties and BVL, in their capacity as the alleged operators of the Village, for payment of redemption monies with interest and legal costs. Plainly, the reference to "redemption monies" is to the amount which would be payable on redemption of the redeemable preference share issued to Mr and Mrs Brown. However, the Brown Application does not seek any order for the redemption of that share, as distinct from an order for payment of money that would have been received by Mr and Mrs Brown had BVL redeemed that share, irrespective of whether it does so. 19The Points of Claim filed by Mr and Mrs Brown in the CTTT in turn identify the terms of the Lease and contractual terms under which Mr and Mrs Brown entered the Village and identify the terms attaching to a V3 class redeemable preference share under BVL's constitution. The Points of Claim identify the redemption entitlement arising under those contractual arrangements and note that amount remains outstanding. The Points of Claim plead that BVL retains contractual obligations to Mr and Mrs Brown to pay redemption monies outstanding arising out of the notice of redemption provided by them in accordance with their residence contract (as defined in the Retirement Villages Act). The Points of Claim allege that the residence contract is in turn enforceable against the relevant BVM Parties under s 40 of the Retirement Villages Act. The Points of Claim also indicate that orders are sought under ss 128 and 180 of the Retirement Villages Act, together with interest. A Reply filed for Mr and Mrs Brown in the CTTT invokes s 181 of the Retirement Villages Act as the basis for the return of redemption monies, on the basis that Mr and Mrs Brown were the holder of an unregistered interest in respect of the Village; redemption monies were due and payable under s 181(2) of the Act on 29 July 2011; and those redemption monies were payable by force of s 181(2) irrespective of any provision of the relevant contract and an order could be made by the CTTT pursuant to s 181(7) of the Retirement Villages Act for that payment. 20Turning now to the Fairfield-Smith Application, both the Estate and BVL have indicated that they propose to approach those proceedings on a different basis to the Points of Claim and Defence presently filed in the CTTT. I do not consider that there would be any utility in my determining these proceedings by reference to a position which the respective parties have moved away from, as distinct from the positions they now seek to advance, where the divergence between the two could readily be addressed by amendment of the Estate's Points of Claim and BVL's Defence. It seems to me that it will be consistent with the objectives of s 56 of the Civil Procedure Act 2005 (NSW) and the just, quick and cheap resolution of the real matters in dispute in these proceedings to approach the matter by reference to the substance of the case which the respective parties have identified, on the basis that any necessary amendment to the Points of Claim and Defence will be made in the CTTT in due course. 21The Application filed by the Estate in the CTTT did not seek an order for redemption of the redeemable preference share issued to Mrs Fairfield-Smith but instead an order directing the operator of the Village to make any payment required to be made to Mrs Fairfield-Smith, interest, and an order that that amount be paid to the Estate. The reasons identified in that Application for seeking that order included that Mrs Fairfield-Smith had finalised requirements to enable payment of approximately $133,518 for redemption of the redeemable preference share and liability to pay that amount had been denied. The Points of Claim filed by the Estate in turn refer to the allotment of the redeemable preference share to Mrs Fairfield-Smith; the contract arising between Mrs Fairfield-Smith and BVL in accordance with its constitution; the obligation upon BVL to redeem the preference share under the constitution; and to BVL's failure to honour that obligation upon the death of Mrs Fairfield-Smith. The present form of the Estate's Points of Claim "claims payment for the redemption of the redeemable preference share" and, in that form, appears to contemplate that the redeemable preference share will in fact be redeemed. However, Mr Stomo, who appears for the Estate, contends that the Estate seeks to put a case corresponding to that put by Mr and Mrs Brown and will seek to amend the Points of Claim to make that clear, and (the Estate contends) that is the basis on which the matter has proceeded before the CTTT. 22The rights and duties on which the Applicants rely in the CTTT turn upon, inter alia, the Retirement Villages Act and the village contract which they entered with BVL as required by that Act. I have set out the definition of that term and the associated concept of "residence contract" above. It is common ground between the parties that the Retirement Villages Act applies in respect of all Applicants although they took up occupation, paid their ingoing contributions and redeemable preference shares were issued to them prior to its commencement. The payment by the Applicants of the amount provided in respect of the redeemable preference shares fell within the definition of "ingoing contribution" in s 6 of the Act, both because it was payable under a residence contract (as defined) and because it was paid in consideration for the Applicants becoming residents of the Village. Section 24 of the Retirement Villages Act in turn provides that a resident cannot enter a retirement village unless they have a residence contract with the operator. 23No written contract between BVL and Mrs Fairfield-Smith was in evidence in these proceedings but I will assume, as the parties did in submissions before the CTTT and in this Court, that such a contract existed as the legislation required and that its terms were relevantly the same as the terms of the contract relating to Mr and Mrs Brown. 24BVL and Mr and Mrs Brown entered a residence contract and a village contract (as defined) contained in a document headed "Terms and Conditions for a Self-Care Villa No. 225". Clause 6.1 provided that: "6.1 The right to occupy a villa and use the facilities of the Village is obtained by the acquisition of 2 classes of shares in [BVL], namely a V3 Class redeemable preference share and an AA Class share. The payment for these shares is called the 'total ingoing contribution'." Clause 6.2.1 of the Terms and Conditions provided that 90% of the "ingoing contribution" paid by Mr and Mrs Brown was for the issue of a V3 class redeemable preference share. Clause 6.2.2 (which was incorrectly numbered clause 6.1.1) provided for the issue of a V3 class redeemable preference share and stated that, inter alia: "On termination of this agreement you are entitled to a refund of the V3 share. This is detailed later in this agreement." The terms "redemption payment" or "refund" were defined in cl 1.10 as "the amount payable to the shareholder by the operator following termination of this contract." The Terms and Conditions further provided that: "6.3 The rights of a V3 redeemable preference shareholder are contained in the constitution of [BVL] (enclosed)." It will be noted that cl 6.2.2 of the Terms and Conditions appears to create an entitlement or right to a refund of the V3 class redeemable preference share, which must be read as a reference to a refund of monies, namely the monies or part of the monies subscribed for that share. 25Clause 19 dealt with termination and relevantly provided that: "19.1 A residence contract is terminated on the later of: 19.1.1on the date the resident delivers vacant possession being a date that is at least one month after the date on which the resident gives the operator written notice of his/her/their intention to vacate the premises; 19.2.1 the date the resident delivers vacant possession after providing notice, or 19.3.1 on the death of the last surviving resident under the contract." It appears that this clause in turn defines the event (namely termination of the agreement) which gave rise to an entitlement to "a refund of the V3 share" as specified in cl 6.2.1. 26Clause 22 in turn provided for the calculation of the amount of the refund, or redemption, by reference to the amount paid on the purchase of the V3 share: "22.1 Particulars of the redemption payment (refund) when a resident leaves the Village, or transfers to care accommodation within the Village, are contained in article 26 V3 of Brentwood's constitution. 22.2 The redemption payment varies on the length of time the resident has been in the Village and whether or not the resident has moved to care accommodation. 22.3 There is no fees payable [sic] for any period after the resident permanently vacates the premises. 22.4 Where there is a reducing redemption amount payable, it is calculated at a daily rate. 22.5 If the resident has not exercised the right to move to care accommodation, the redemption amount is calculated according to the following table: ..." The formula contained in cl 22 of the Terms and Conditions in respect of Mr and Mrs Brown is consistent with that set out in BVL's constitution for a V3 redeemable preference share. Clause 24 of the Terms and Conditions provides for the time of payment of the refund, and those times are specified by reference to dealings with the premises, rather than by reference to any dealing with the redeemable preference share. 27The Disclosure Statement provided to Mr and Mrs Brown in turn stated that: "THE OPERATOR MUST REFUND THE RESIDENT A PERCENTAGE OF THE SHARE ISSUE PRICE OF THE "V3" OR "U3" CLASS SHARE ON THE DATE OF REDEMPTION." 28Articles 26(a) and 26.3.1 of BVL's constitution in turn provide for the Applicants to be paid "redemption monies" on a redemption of the V class and V3 class redeemable preference shares respectively on specified events, in amounts calculated under Articles 26V and 26V3 of BVL's constitution respectively. The events specified in Article 26(a) of BVL's constitution include the death of the shareholder and the expiration of 30 days notice in writing given by the shareholder to the company of his or her desire to have the share redeemed; and BVL, as a condition of payment, may require delivery of either the share certificate or evidence of its destruction or loss. Article 26.3.1 similarly provides that the company shall redeem, relevantly, V3 class preference shares upon the happening of specified events, and again may require delivery of the share certificate or evidence of its destruction or loss prior to payment. Clause 26.V3 of BVL's constitution, to which reference was made in the Terms and Conditions in the village contract in respect of Mr and Mrs Brown, in turn provided that a V3 class redeemable preference shareholder whose share was redeemed in accordance with Article 26.3 would be entitled to a specified percentage of the issue price of the share, calculated in accordance with a table set out in that clause. Analysis 29The BVM Parties contend that the Applicants "seek to recover the ingoing contribution by redemption of the preference shares and seek payment in respect of that amount" from BVL (T4.4); that the right to receive redemption monies owes its existence to and arises under the Corporations Act and is a matter within federal jurisdiction. On the other hand, the Estate and Mr and Mrs Brown contended before the CTTT and before this Court that they were not seeking relief by way of a redemption of the redeemable preference shares or to exercise any rights or property created by federal law, and were instead seeking to enforce the "village contract" as defined in the Retirement Villages Act and that the CTTT had jurisdiction to deal with their applications under that Act. 30Having regard to the provisions that I have set out above, it seems to me that the rights or duties in question in the CTTT proceedings do not owe their existence to federal law. I accept that BVL's constitution is given legal effect by s 140 of the Corporations Act and the redeemable preference shares, and the rights in respect of those shares arising under BVL's constitution, would be created by federal law: compare Sons of Gwalia Ltd v Margaretic [2007] HCA 1; (2007) 231 CLR 160 per Hayne J at [202]-[203]. However, it does not follow from the fact that those rights that arise under BVL's constitution are given effect in that manner that other rights arising from the Terms and Conditions or the Retirement Villages Act are also created by federal law, even if reference is required to BVL's constitution to determine their content. 31In my view, one potential source of a right to a refund of part of the amount paid to acquire the redeemable preferences shares arises under the Terms and Conditions which have contractual effect. The Terms and Conditions provide for payment on specified events that do not in terms require a dealing with the redeemable preference shares. The residence contract and village contract (as defined) incorporating the Terms and Conditions (and, to the extent necessary, the terms of BVL's constitution referred to in it) are in turn created by (or at least recognised by) the Retirement Villages Act, not by Commonwealth law, and that position also does not change because reference to BVL's constitution may be needed to identify the amount payable on exercise of the rights arising under the Terms and Conditions and in turn under that village contract. 32It also seems to me that the enforcement of the rights and duties in question, namely the right to receive and the obligation to pay an amount of money under the Terms and Conditions and the Retirement Villages Act, does not arise under federal law. The Applicants rely in the CTTT proceedings on s 40 of the Retirement Villages Act which provides that the rights under a village contract, as defined, are enforceable against subsequent operators. The Applicants also rely on s 128 of the Retirement Villages Act which, as noted above, authorises the CTTT to set aside or vary provisions of the village contract (as defined) or make an order requiring performance of any village contract or a payment of money or make an order for compensation. The Applicants also rely on s 181 of the Retirement Villages Act which, as noted above, provides that the CTTT may make an order for the payment to former occupants (not being a registered interest holder, as defined) of their ingoing contribution (as defined) required under a village contract if that payment is not made within the timeframes specified in that section. An order for payment by the CTTT under s 181 of the Retirement Villages Act is, in my view, a true alternative to a redemption of the redeemable preference shares by BVL, which may be made against BVL where it has not redeemed the shares or against another operator of the Village which does not have the capacity to redeem those shares. 33In these circumstances, the rights and duties in issue in the CTTT proceedings, namely the right to a refund under the Terms and Conditions and the associated "village contract" and "residence contract", are enforceable in contract and under the Retirement Villages Act and do not depend upon or involve any enforcement of BVL's constitution under s 140 of the Corporations Act. That characterisation of the rights and duties in respect of payment of a refund that are in issue in the CTTT proceedings is not, in my view, changed because other rights arising under BVL's constitution would be enforceable by the Applicants against BVL alone (although not the BVM Parties) under s 140 of the Corporations Act. Whether a relevant defence or immunity created federal jurisdiction 34The authorities also indicate that a matter is within federal jurisdiction where a law of the Commonwealth is the source of a defence on which a defendant relies to assert its immunity from the liability or obligation alleged. Federal jurisdiction may be attracted at any stage of a legal proceeding including being raised in a defence: Baxter v Commissioners of Taxation (NSW) [1907] HCA 76; (1907) 4 CLR 1087 at 1136; Felton v Mulligan above at 373; Agtrack (NT) Pty Ltd v Hatfield above at 262. A defence may convert a matter to a federal matter notwithstanding that the defence turns out not to be decisive or even significant and it is sufficient if that defence is raised bona fide, and it does not have to be correct: Troy v Wrigglesworth [1919] HCA 31; (1919) 26 CLR 305 at 311; Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219; 76 ALR 173 at 181; Australian Solar Mesh v Anderson above at [15]. 35BVL's Defence in the Brown Application refers to s 254K of the Corporations Act and pleads that: "... In accordance with the provisions of s 254K of the Corporations Act 2001 [BVL] is precluded by the operation of that section from redeeming any Redeemable Preference Shares issued by it otherwise than out of profits or the issue of new Redeemable Preference Shares." By letter dated 31 May 2012, solicitors for BVL indicated that it also intended to raise that section in its defence in the Fairfield-Smith Application. 36Section 254K of the Corporations Act relevantly provides that: "A company may only redeem redeemable preference shares: (a) if the shares are fully paid-up; and (b) out of profits or the proceeds of a new issue of shares made for the purpose of the redemption." In Heesh v Baker [2008] NSWSC 711; (2008) 67 ACSR 192, Barrett J noted that the effect of that section is that it is not lawful for a company to redeem redeemable preference shares and they must not be redeemed, despite the terms of issue, if neither "profits" nor proceeds of the kind mentioned are available at the particular time. 37There may be a question whether the right to a refund in the Terms and Conditions and the village contract (as defined in the Retirement Villages Act) is impliedly conditional upon the redemption of the redeemable preference shares, although it is by no means clear that BVL's Defence in the Brown Application, and its foreshadowed amendment in the Fairfield-Smith Application, properly raise that question in their present form. There are cases where courts have held that a contractual obligation to redeem preference shares at the plaintiff's option in specified events is not qualified by provisions corresponding to s 254K of the Corporations Act, for example, because there is an implied term that the company will do all that is necessary on its part to enable shareholders to have the benefit of the contract, and relevantly to ensure it has funds available to redeem the preference shares: for example, UOB Venture Investments Ltd v Tong Garden Holdings Pte Ltd [2001] 1 SLR 362, cited by Barrett J in Heesh v Baker at [54], and see the other cases cited by his Honour at [56]. A different view seems to have been taken by the Full Federal Court in Federal Commissioner of Taxation v Coppleson (1981) 57 FLR 234; 39 ALR 30; 6 ACLR 428. In Heesh v Baker at [58], Barrett J held that the question is ultimately one of construction of the particular contract and that the contract in that case did not impose an unconditional obligation to make payment, where that would involve a redemption in contravention of s 254K of the Corporations Act. 38However, even if the question whether the right to a refund in the Terms and Conditions and the "village contract" was impliedly conditional upon the redemption of the redeemable preference shares was properly raised before the CTTT, the question does not involve reliance on s 254K of the Corporations Act to give rise to a defence or immunity from any obligation which the Terms and Conditions or village contract otherwise imposes. The proposition that BVL cannot redeem redeemable preference shares by reason of s 254K of the Corporations Act does not in itself provide a defence to or immunity from an obligation to pay money without redeeming those shares. A question would instead be raised as to the proper construction of the Terms and Conditions and the village contract and the content of the obligation to pay a refund which it establishes, and specifically whether an apparently unqualified contractual obligation to pay that refund is impliedly qualified because s 254K of the Corporations Act prevents a redemption of the redeemable preference shares in the relevant circumstances. 39In that situation, the question of the proper scope of s 254K of the Corporations Act may be relevant to the content of the contractual obligation which is in issue, but that section is not then providing a defence to, or any immunity from, any money claim which otherwise arises under the contract or under the Retirement Villages Act, as distinct from being a matter relevant to its content. I accept the Estate's submission that, in that situation, any question as to s 254K of the Corporations Act raises, at its highest, a question of interpretation of that section as a step in construing the Terms and Conditions and the village contract, rather than any defence or immunity arising under federal law. In my view, that is not sufficient to establish federal jurisdiction or deprive the CTTT of the jurisdiction otherwise conferred on it under the Retirement Villages Act: Felton v Mulligan above per Windeyer J at 388, per Walsh J at 408. Summary, orders and costs 40For these reasons, it seems to me that the rights or duties in question in the proceedings in the CTTT owed their existence to the terms of a contract entered into between BVL and each of the Applicants, which in turn referred to provisions contained in BVL's constitution, rather than to the Corporations Act. While the Applicants also had rights and at least BVL had duties arising under BVL's constitution and enforceable under s 140 of the Corporations Act which owed their existence to the Corporations Act, those were not the rights or duties in question in the CTTT proceedings. 41The position seems to me to be a fortiori in respect of the parties joined to the proceedings in the CTTT other than BVL, since s 40 of the Retirement Villages Act provides that the rights under a village contract are enforceable against a subsequent operator of the retirement village. That subsequent operator would not be party to the statutory contract arising from BVL's constitution and would not have the ability to redeem the redeemable preference share issued by BVL. Any obligation to repay the ingoing contribution which is properly enforceable against that subsequent operator can be enforced against it without dealing with the redeemable preference share. No question of the statutory contract arising under s 140 of the Corporations Act arises in such a case. Any question of the operation of s 254K of the Corporations Act would again be relevant only to determining the scope of the relevant obligation in the manner noted in paragraphs 38-39 above, rather than giving rise to a defence or immunity arising under federal law so as to establish federal jurisdiction. 42For these reasons, the proceedings should be dismissed. In the ordinary course, the BVM Parties should pay the costs of Mr and Mrs Brown and the Estate. However, I will hear the parties as to costs.

Agtrack (NT) Pty Ltd v Hatfield

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