Did the respondents act unreasonably?
95 In order for the costs jurisdiction to be enlivened, it must relevantly be found that an "unreasonable act or omission [by one or more of the respondents] caused [Ms Bashour] to incur … costs." It is not necessary that the act or omission have occurred within the proceeding: Sydney Ferries Corporation v Australian Maritime Officers Union (2008) 178 IR 450 at [32] (Black CJ, North and Buchanan JJ). As already recorded, Ms Bashour alleged that the respondents' unreasonable act was "to seek the referral of the VCAT Proceedings to the Federal Court on the basis of submissions that the Federal Court had jurisdiction to hear the VCAT Proceedings when each of the avenues of apparent jurisdiction [was] fundamentally misconceived."
96 It is now not in contest that the VCAT's order was vitiated by error, and it was held by McDonald J in Bashour [2016] VSC 666, at [21]-[22], that the source of that error was submissions made by the respondents.
97 On 9 December 2014, the respondents applied to VCAT for (relevantly) the following orders:
"1. pursuant to section 77(1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the Act), the whole of proceeding No. H245/2014 (the proceeding) be struck out;
2. further to order 1 above, the proceeding be referred to the Federal Court of Australia pursuant to section 77(3) of the Act; …"
98 The orders ultimately made were similar:
"1 The whole of the proceeding be struck out pursuant to section 77(1) of the Victorian Civil and Administrative Tribunal Act 1998.
2 The subject matter of the proceeding be referred to the Federal Court of Australia pursuant to section 77(3) of the Victorian Civil and Administrative Tribunal Act 1998."
99 The respondents filed written submissions in the VCAT dated 16 January 2015. They submitted that "the VCAT proceeding is more appropriately dealt with in the Federal Court". It was submitted that there was a "single justiciable controversy" and a "common substratum of facts". Paragraphs [24] to [27] dealt with the question whether there was a common substratum. Reference was made to Fencott v Muller (1983) 152 CLR 570, a case concerning accrued jurisdiction. The submission at [27] was that "all the claims, federal and non-federal, should be regarded as arising in the one matter". This kind of terminology is directed at the Court's accrued jurisdiction.
100 At [34], the respondents submitted as follows:
"A critical consideration in an application to have a second, related proceeding struck out is whether the court or tribunal in which the earlier proceeding was commenced has jurisdiction to deal with everything raised in the later proceeding. There is no reason why Ms Bashour cannot prosecute her claims under the EO Act in the Federal Court. It is submitted that in this case, the Court's accrued jurisdiction confers on it the power to settle all of the issues that arise out of the controversy between the parties, including Ms Bashour's non-federal claims."
A footnote at the end of that extract referred to Fencott and said that it stood for the proposition that "a federal court has jurisdiction to hear and determine a non-federal claim under state law or common law provided it arises from the same transactions and facts, or 'single justiciable controversy'." That is a legally unobjectionable submission.
101 Ms Bashour's submissions also addressed the question of jurisdiction in language that recalled the Court's accrued jurisdiction (see, e.g., [11] and [12]). Her citations were of accrued-jurisdiction cases, such as Re Wakim; Ex parte McNally (1999) 198 CLR 511. The term "accrued jurisdiction" was used at [14].
102 In reply, the respondents likewise referred to accrued jurisdiction (see, e.g., at [23]), and used the language of "single justiciable controversy" arising from accrued jurisdiction cases. The submissions went into some detail (from [23] to [35]) concerning the commonalities in the facts alleged in the two proceedings.
103 In oral submissions to the VCAT on 24 February 2015, matters became confused. The following submissions were made by the respondents' counsel:
"Now, your Honour, the fact that the Equal Opportunity Act might give rise to certain courses of action, or certain remedies that this tribunal can grant is not the answer because the Federal Court can exercise non-federal jurisdiction. So it's - there is - it is no answer to our application to say that the applicant is shut out of anything because the Federal Court clearly has the ability in its associated jurisdiction to exercise non-federal jurisdiction, whether it be common law in relation to breaches of contract or whether it be jurisdiction in relation to State legislation. …
And what Parliament has provided is the discretion for the tribunal to refer matters elsewhere, in circumstances where it is more convenient for that to occur, and that is what we rely on. If there be any doubt about the jurisdiction of the Federal Court to deal with an equal opportunity matter it's ….. by section 32 of the Federal Court Act. … I've got a copy of that if that might assist.
…
And your Honour will see that the Federal Court has power - has jurisdiction in associated matters. So they are matters that are not otherwise within its jurisdiction but are associated with matters in its jurisdiction.
[HER HONOUR]: It says to the extent that the Constitution permits. Is that a bar?
MR FORBES: That's not a bar here.
…
[HER HONOUR]: … [I]f , for instance, the Equal Opportunity Act allowed as a remedy to put an advertisement in the newspaper but the Federal Court didn't, the Federal Court thought that it was appropriate to use that jurisdictional power under the Equal Opportunity Act, they could - the Federal Court could use section 32 in that way.
MR FORBES: If - it would always have to come within the ambit of it being an associated matter. … What the authorities say is that you do read the associated matter widely so that it embraces the entire justiciable controversy between the parties.
…
MR FORBES: … So the Federal Court Act gives the Federal Court power in relation to associated matters but it doesn't say what an associated matter is. But an associated matter are really all those matters that come within the ambit of this concept of a single justiciable controversy. … And I have referred in our submissions to the High Court authority in Fencott & Others v Muller & Others."
104 Ms Bashour dealt with the respondents' submissions in the terms in which they were put, which is to say that she referred to s 32 of the FCA Act but by reference to a "single justiciable controversy" test and to cases such as Fencott. Written submissions filed by Ms Bashour after the hearing reverted to references to "accrued jurisdiction". Written submissions filed by the respondents maintained the reference to s 32 and to associated jurisdiction. It was said that "this authorises the Federal Court to hear matters under the common law or state legislation which are 'associated' in the sense of being 'closely related' or because they have 'common transactions and facts' with the federal matters. These concepts are dealt with in the Respondents' earlier submissions."
105 It is now accepted that reliance on s 32 of the FCA Act was in error. Further, Mukhtar AsJ observed (at [28] of Bashour [2016] VSC 527) that it can be "argued strongly" that in making a referral under s 77(3) the VCAT purported to confer State jurisdiction on the Federal Court (which it could not do: Re Wakim). That observation appears to have been picked up by McDonald J at [20] of Bashour [2016] VSC 666, where his Honour said that the referral power in s 77 cannot empower the VCAT to refer a matter to a federal court. If the respondents are understood to have submitted that the VCAT could confer State jurisdiction on the Federal Court, and if they submitted that s 32 of the FCA Act was somehow the vehicle for such a conferral, they were in error.
106 I do not, however, understand the respondents to have made such a submission. In their final written submissions, at [11], they expressly disowned the submission that s 77 enabled the conferring of State jurisdiction on a Federal court:
"It is not to the point that the Victorian Parliament is not empowered to affect the jurisdiction of Commonwealth courts. The submission that the Federal Parliament retains exclusive power over the jurisdiction of federal courts is unremarkable. Respectfully, the Applicant misunderstands the operation and effect of section 77 of the VCAT Act as it does not purport to create jurisdiction in, nor intrude upon the jurisdiction of non-Victorian tribunals, courts or bodies."
107 Nor, at least in the VCAT's own mind, did it consider that it was conferring jurisdiction by exercising power under s 77(3). It said (at [73]) that it accepted the respondents' submission that s 77 "does not interfere with or purport to create a jurisdiction in the Federal Court".
108 At [12] of their final written submissions to the Tribunal, the respondents distinguished between a striking-out under s 77(1) and a referral under s 77(3):
"Where the Tribunal considers that the subject-matter of a proceeding would be more appropriately dealt with by some other tribunal, court or any other person or body, it may strike out the whole or any part of the proceeding. Furthermore, it may refer the matter to the relevant tribunal, court, person or body if it considers it appropriate to do so."
(Emphasis in original.)
109 In effect, the respondents appeared to be treating the question of strike out and referral as though it raised a forum non conveniens question. This approach is not unprecedented. In fact, it is consistent with what was said by Perry J in Qantas Airways Ltd v Lustig (2015) 228 FCR 148 at [106]:
"First, the power to "strike out" under s 77(1) of the VCAT Act is conditional on the Tribunal reaching a particular view, namely that the subject-matter of the proceeding would be "more appropriately dealt with" by a court or other tribunal. If it so decides, the discretion to refer the matter to a court or other tribunal is then enlivened under subs (3). Importantly, the use of the words "more appropriately" in subs (1) do not suggest that the power to take the necessary preceding step to a referral of striking out the proceeding is enlivened when the Tribunal has no jurisdiction to entertain the subject-matter of the proceeding. Rather it suggests that the Tribunal has, in effect, a choice between fora in the exercise of discretion based upon an evaluative judgment of the factors for and against the proceedings being heard and determined by VCAT, as opposed to the other forum. This construction accords, in my view, with the ordinary meaning of the words used, and is broadly analogous to the discretion applied by a court in conflict of law situations in determining whether or not to decline to exercise jurisdiction on forum non conveniens grounds."
110 The respondents were in error in using the language of "associated jurisdiction" and in referring to s 32 of the FCA Act. The respondents should have said "accrued jurisdiction", and should not have purported to rely on s 32. But, had this substitution in terminology been made, the submissions of the parties would have been essentially ad idem, at least as to the principles that were to be applied. All cases referred to were accrued-jurisdiction cases; the language used ("common substratum"; "single justiciable controversy") was accrued-jurisdiction language. The VCAT was not misled into thinking that those concepts were somehow irrelevant because of the existence of s 32 and associated jurisdiction: it asked itself (between [51] and [52]) whether the claims in the VCAT "arise out of the same subject matter as the Federal Court claim", and it concluded (at [60]) that "all of the claims which [Ms Bashour] makes in both proceedings form part of one controversy between the parties."
111 The respondents' submissions were legally wrong. But I do not accept that they were "fundamentally misconceived." A submission could have been made that the Federal Court probably would have accrued jurisdiction over the subject matter of the VCAT proceeding, that it was the more-suitable forum (or, perhaps, that the VCAT was a plainly unsuitable forum), and therefore that the VCAT ought to exercise its s 77(1) discretion on a kind of forum non conveniens basis. I do not say that such a submission would or should have been accepted - in light of what I think is significant doubt concerning this Court's accrued jurisdiction, perhaps the VCAT ought to have declined to exercise that power in any case (cf Bashour [2016] VSC 527 at [65]). But the submission would not have been legally erroneous, or at least not obviously so. The differences between that submission and the one that the respondents in fact made were:
(1) the respondents mistakenly referred to accrued jurisdiction as "associated jurisdiction"; and
(2) the respondents mistakenly identified the source of that jurisdiction as being in s 32 of the FCA Act.
112 These were errors. But, I do not accept that to have made submissions containing these errors was to act "unreasonably". There is no basis for concluding that they were made in wilful disregard of the law. The fundamental proposition - that the Federal Court could exercise jurisdiction over the entire justiciable controversy, and that the VCAT should exercise a power under s 77(1) to strike out the proceeding in that forum - could fairly have put without reference to s 32 of the FCA Act and using the correct terminology of accrued jurisdiction.
113 Ms Bashour's criticism of the respondents was not only that they were wrong concerning associated jurisdiction, however; it was also that "each of the avenues of apparent jurisdiction [was] fundamentally misconceived." The best way of understanding this submission is by reference to [63]-[66] of the VCAT's reasons:
"[63] The respondents asserted that the transfer could be effected in one of three ways.
[64] Firstly the present claim under the Fair Work Act 2009 could be amended to include the attributes relied on by the applicant under the Equal Opportunity Act.
[65] Secondly, the jurisdiction of the Federal Court could be invoked by the applicant under its statutory jurisdiction in associated matters. This jurisdiction arises under section 32 of the Federal Court of Australia Act 1976. This would enable the Federal Court to exercise jurisdiction under the Equal Opportunity Act 2010.
[66] Thirdly the applicant could make her claim under the Disability Discrimination Act 1992."
114 I think it is now not controversial that it is not open to Ms Bashour to pursue remedies in this Court under the Disability Discrimination Act 1992 (Cth) (see s 13), or under the Sex Discrimination Act 1984 (Cth) (see s 10), and that, although it might be possible for additional claims under the Act to be added, there are at least difficulties, perhaps barriers, raised by ss 725-733 of the Act and by Ms Bashour requiring an extension of time in order to make an antecedent application to the Fair Work Commission for a remedy.
115 Again, however, I think that Ms Bashour's submission misses something of the context of the respondents' submissions to the VCAT. In written submissions prior to hearing, the respondents relied on no source of jurisdiction other than the accrued jurisdiction. In the hearing itself, counsel for the respondents had effectively completed his submissions when the VCAT raised the following series of issues:
"MR FORBES: … Sorry, your Honour, just making sure I've dealt with everything.
[HER HONOUR]: The one matter that I do want you to go over is the question of whether there are any differences of substance between the anti-discrimination legislation in the Equal Opportunity Act and the anti-discrimination provisions of the Fair Work Act or other legislation.
…
MR FORBES: Yes. All right. The applicant seeks to engage this case on the basis of disability, parental status, and pregnancy. Now disability clearly would be open for the applicant to bring, under the Federal Disability Discrimination Act and each of parental status and pregnancy … [y]es, certainly section 351 [of the Fair Work Act] prevents an employer from taking adverse action against any person who is an employee because of the person's race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion etcetera. …
[HER HONOUR]: So I just make sure that it's clear what you just said. So what you're saying is that the amendment to the Federal Court proceeding may be as easy as adding parental status, pregnancy and disability to those attributes which are relied upon under section 351 of the Fair Work Act.
MR FORBES: Yes. I think - I'm not sure how the applicant would want to frame it but I think she could either make an amendment to the Federal Court proceeding by pleading the Equal Opportunity Act and seeking to invoke the associated jurisdiction … of the Federal Court … or, yes, it may be possible for her to abandon the Equal Opportunity Act and reframe these new allegations as allegations in breach as adverse action or breaches of section 351. But all of that is a matter for her …
[HER HONOUR]: Yes, I'm just … trying to work out the logical possibilities here. The other option is perhaps a claim under the Federal Disability Discrimination Act.
MR FORBES: Yes, there might be scope for that as well."
116 These submissions were not developed in the respondents' post-hearing written submissions. Instead, the respondents said:
"Accordingly, without having to descend into a debate about whether there is federal legislation which is comparable to the EO Act, it is open to the Applicant to prosecute an EO Act claim within the associated jurisdiction of the Federal Court. The Respondents have already indicated that they would not stand in the way of the Applicant doing so."
117 Reliance on an amendment of the pleadings in this jurisdiction so as to replicate under Federal legislation what was alleged in the VCAT under State legislation does not appear to have been part of the primary case advanced by the respondents to the VCAT. The VCAT raised that issue, and the respondents' counsel did his best to answer the VCAT's queries on his feet. The respondents again moved back to their primary position - that this Court would have accrued jurisdiction (although they called it associated jurisdiction) - in post-hearing submissions.
118 If, as appears to have been the case, the respondents had not come prepared to argue that jurisdiction might arise under the Fair Work Act or the Disability Discrimination Act, it might have been better to have submitted only that jurisdiction under those acts was not certain and in any case was not relied upon by the respondents. But, as I read the submissions of the respondents, they were nothing more than a genuine effort to assist the VCAT with its queries. By no means was reliance on those purported sources of jurisdiction the respondents' primary case. Not every wrong or incautious submission is "unreasonable" for the purposes of s 570(2)(b). In my judgment, the respondents' conduct here was not unreasonable.
119 It remains at least arguable that this Court would, in fact, have accrued jurisdiction to deal with the subject matter of Ms Bashour's VCAT claims. The questions confronting Mukhtar AsJ included whether there was an arguable case that the VCAT lacked jurisdiction to make a s 77 order, and the issue before McDonald J was whether he ought to quash the order on the basis of a want of jurisdiction. In neither case was it necessary for a final view to be expressed as to whether the Federal Court had jurisdiction. Nor would any such final view, had one been expressed, have been binding on me. Indeed, both Mukhtar AsJ and McDonald J were, with respect, appropriately cautious in their findings concerning jurisdiction. Mukhtar AsJ said as follows (Bashour [2016] VSC 527 at [30]):
"Sixthly, I do not accept Ms Doyle's measured submission that even though there was, as she described it, a 'slip' in the Bank's submissions at VCAT or even though Judge Harbison 'misspoke' when it came to s 32, her Honour's outcome was right as a practical matter. That is, she submitted and sought to show, there was in truth a single justiciable controversy and a common substratum of facts. That means, it was submitted, there was no substantial injustice because it was open for Ms Bashour to take the initiative in the Federal Court and seek to bring her State claim under its accrued jurisdiction. Maybe it was; and maybe it still is; but Ms Bashour maintained at VCAT that it was not a single justiciable controversy. And Tracey J, as matter of impression at least, appeared to see there was a question whether the two cases were one controversy although in the disorder created, it appears to me that his Honour was not really called on to give deeper serious consideration to that question."
(Emphasis added).
120 McDonald J said as follows (Bashour [2016] VSC 666 at [20]):
"State legislation cannot empower a state tribunal to refer a matter to a federal court. Whether Ms Bashour's claims under the Equal Opportunity Act are matters which enliven the Federal Court's accrued jurisdiction is a question which can only be determined by the Federal Court. Neither the Federal Court's accrued, nor its associated jurisdiction in conjunction with s 77(3) of the Act, confers power upon VCAT to refer a proceeding under the Equal Opportunity Act to the Federal Court of Australia. The second to fifth defendants' reliance upon the existence of a single justiciable controversy as enlivening the Federal Court's accrued jurisdiction is misconceived."
(Emphasis added.)
121 What McDonald J may have meant in saying that the respondents' reliance on accrued jurisdiction was misconceived is that the existence, if any, of accrued jurisdiction could not form a basis for the VCAT to refer a proceeding to the Federal Court under s 77(3). In any case, his Honour was not saying that this Court did not have accrued jurisdiction - his Honour had earlier observed that that was not a question necessary to consider.
122 I have not been called upon to rule on whether this Court has jurisdiction to deal with the allegations the subject of the VCAT application. I indicated in directions hearings that I would require persuasion that the accrued jurisdiction of the Court caught the VCAT matters. However, the expression of a view in a directions hearing is far from a statement that the accrued jurisdiction of the Court could not be invoked. In the absence of argument on the question of whether the Court does in fact have accrued jurisdiction, argued on the basis of and by reference to an amended pleading, I do not consider it appropriate to find that the respondents were unreasonable to suggest that the Court's jurisdiction could be enlivened.
123 I have said that reference to the "associated jurisdiction" and s 32 of the FCA Act were erroneous, and it is appropriate to explain why that is. The terms "accrued jurisdiction" and "associated jurisdiction", as Allsop CJ has observed extracurially, "denote different concepts, which it is important not to confuse": see "Federal jurisdiction and the jurisdiction of the Federal Court of Australia in 2002" (2002) 23 Australian Bar Review 29 at 47. His Honour continued:
"'Accrued jurisdiction' is that part of the matter which is not specifically federal. It is probably a term best avoided. The whole matter is federal if it arises under a federal law. It is apt to mislead if one thinks of State or common law jurisdiction clamping on to federal jurisdiction. It is all federal jurisdiction, if it is one controversy.
…
'Associated' jurisdiction is dealt with in s 32 of the FCAA. Section 32 is in the following terms:
To the extent that the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked.
The jurisdiction conferred by subsection (1) extends to jurisdiction to hear and determine an appeal from a judgment of a court so far as it relates to a matter that is associated with a matter in respect of which an appeal from that judgment, or another judgment of that court, is brought
Though related, in a sense, to the question of the extent of the controversy or 'accrued' jurisdiction, s 32 provides for a conferral of jurisdiction in other federal matters not otherwise conferred, but available to be conferred, if there is conferral of some jurisdiction. Thus, if there is conferral by Commonwealth statute X of some federal jurisdiction, and jurisdiction under topic Y could be conferred on the Federal Court (by reference to ss 75 and 76 of the Constitution) but has not been so conferred and it is associated with the matter conferred by statute X, s 32 confers jurisdiction on the court in respect of topic Y for the disposition this controversy.
Thus, if there is a federal element in a controversy arising under a law of the parliament (para 39B(1A)(c), from s 76(ii) of the Constitution) and the Commonwealth is being sued, s 32 would confer jurisdiction on the court, by, and in respect of, the fact that the Commonwealth is being sued, since it is a ground in s 75(iii) which could be, but otherwise has not been, conferred on the Federal Court (para 39B(1A)(a) only deals with the Commonwealth seeking certain relief). With the growth of jurisdiction by para 39B(1A)(c) the scope for the operation of s 32 has lessened, but it could be useful in clarifying the existence of express federal jurisdiction, for example if the dispute involves the diversity jurisdiction under s 75(iv) or the Commonwealth is sued making s 75(iii) relevant
The word 'associated' is not a synonym for 'accrued'. Section 32 is not referring merely to the operation of accrued jurisdiction. There is a lack of authoritative exposition of the extent of 'associated'. In Philip Morris Inc v Adam P Brown Male Fashions, Barwick CJ indicated that 'associated' embraced matters which may be disparate from each other, that is not within the 'accrued' jurisdiction within the conferred federal matter. Gaudron J in PCS Operations Pty Ltd v Maritime Union of Australia was of the view that Barwick CJ's views were implicit in the other judgments in that case. The High Court, apart from Gaudron J sitting at first instance in PCS v MUA, has not recently discussed 'associated' and s 32. Philip Morris v Adam P Brown Male Fashions remains the main High Court source of discussion on s 32. See also the article by Gummow J which outlines the history behind s 32 and which remains a fertile source of ideas as to the scope and extent of s 32."
(Citations omitted; emphasis in original.)
124 Perfect clarity has not always been maintained, in the decided cases, in the distinction between the Court's accrued and associated jurisdictions. However, reference to Philip Morris Incorporated v Adam P Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 makes the point clear, perhaps nowhere more than in the judgment of Gibbs J at 494-495:
"It follows from what has already been said that this sub-section cannot validly confer on the Federal Court jurisdiction in respect of matters other than those enumerated in ss. 75 and 76.
…
It of course follows from what I have said that the further submission by the learned Solicitor-General that the sub-section [32(1)] extends to confer on the Federal Court jurisdiction to entertain a claim based on State law cannot be accepted. Such a claim would not give rise to a matter of a kind specified in s. 75 or s. 76. The sub-section confers additional jurisdiction only in matters of the kinds described in those sections of the Constitution, and only if those matters are associated with matters already within the jurisdiction of the Federal Court."
125 Understood in that way, I can see no basis, and none was put to me, for thinking it arguable that s 32 could in fact be a source of jurisdiction.
126 However, for the reasons given above, I do not consider the respondents' conduct, upon which Ms Bashour relied, to have been unreasonable. Accordingly, the exception, provided for in s 570(2)(b) of the Act, is not engaged.