Borg v Aware Super Pty Limited

Federal Jurisdiction

1. Section 76(ii) of the Constitution provides: "The Parliament may make laws conferring original jurisdiction on the High Court in any matter: … (ii) arising under any laws made by the Parliament; …"
2. Section 77 of the Constitution provides: "With respect to any of the matters mentioned in the last two sections the Parliament may make laws: (i) defining the jurisdiction of any federal court other than the High Court; (ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States; (iii) investing any court of a State with federal jurisdiction."
3. In the event that the proceedings constitute a matter arising under a Federal law (i.e. a Federal matter), only a court of a State, as contemplated by the Constitution, has authority to hear and determine the proceedings. Accordingly, there are two questions that must be answered: 1. whether these proceedings constitute a "matter", as contemplated by s.77 of the Constitution; and, if so, 2. whether the Tribunal is a court of a State such that it is invested with adjudicating authority.

Is the Tribunal a "court of a State"?

1. Turning to the second question first, it is clear that the Tribunal is not a court of a State: see, for example, the decision of the Court of Appeal of the NSW Supreme Court in Attorney-General for New South Wales v Gatsby [2018] NSWCA 254. The High Court confirmed in Burns v Corbett Burns v Gaynor Attorney-General for New South Wales v Burns Attorney-General for New South Wales v Burns New South Wales v Burns (2018) 265 CLR 304; [2018] HCA 15 at [49]; 92 ALJR 423 per Kiefel CJ, Bell and Keane JJ that the Tribunal is not a court of a State..

General Principles

1. The Appeal Panel set out a non-exhaustive list of principles in Murphy v Trustees of Catholic Aged Care Sydney [2018] NSWCATAP 275 (Murphy) at [22]: "22. Drawing from a raft of cases, the following non-exhaustive set of principles, relevant to this case, emerge: 1. Not every proceeding that is touched by a Commonwealth law is a federal matter. For instance, a matter that requires only the interpretation of a federal law will not render the proceedings a federal matter. Similarly, it is not sufficient if the federal statute arises in an incidental fashion: Felton v Mulligan (1971) 124 CLR 367 at 408 (Walsh J); [1971] HCA 39; Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 476 (Stephen, Mason, Aickin and Wilson JJ); [1980] HCA 32; LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ); [1983] HCA 31. 2. The question of whether a federal matter arises is one of substance and not form: Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 101 FCR 1; [2000] FCA 864 at [16] (Burchett J, Wilcox and Tamberlin JJ agreeing); Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473 (Barwick CJ); [1981] HCA 7. 3. To identify the "matter" it is necessary to identify the justiciable controversy: Smith v Smith (1986) 161 CLR 217 at 237 (per curiam); [1986] HCA 36; Re Wakim (1999) 198 CLR 511; [1999] HCA 27 at [139] (Gummow and Hayne JJ). 4. It is sufficient if the matter could be decided by reference to the federal law, it is not necessary that the matter be disposed of in that way: Felton v Mulligan at 374 (Barwick CJ); Rana v Google Inc (2017) 254 FCR 1; [2017] FCAFC 156 at [21] (per curiam). 5. A federal issue may arise even where the parties have not directly asserted it, but where the court must nevertheless examine whether a right or duty under federal law exists: Moorgate at 476 (Stephen, Mason, Aickin and Wilson JJ). 6. A federal matter will arise whenever the right, duty or enforcement owes its existence to federal law: LNC at 581; Re McJannet; Ex parte Australian Workers' Union of Employees (Qld) (1997) 189 CLR 654 at 656-7 (per curiam); [1997] HCA 40. 7. It is not necessary for the form of relief sought to depend on federal law; it is sufficient if the source of the right or subject matter of the claim exists as a result of federal law: LNC at 581-2 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ). 8. A federal matter will also arise where the source of a defence is a federal law: Felton v Mulligan at 375 (Barwick CJ) and 408 (Walsh J); LNC at 581 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ). 9. Unless a federal issue is colourable, there is a federal "matter": ie: the whole of the proceedings is a federal matter requiring the exercise of federal jurisdiction: Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd at 499 (Gibbs J); Felton v Mulligan at 373 (Barwick CJ) and 408 (Walsh J); Fencott v Muller (1983) 152 CLR 570 at 606 (Mason, Murphy, Brennan and Deane JJ); [1983] HCA 12; Smith at 237 (per curiam); Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 at [7] (Gleeson CJ, Gaudron and Gummow JJ); Rana v Google Inc at [20]."
2. Pursuant to s.76(ii) of the Constitution, the Commonwealth Parliament passed the Judiciary Act 1903 (Cth) whereby, pursuant to s.39, the Commonwealth Parliament first deprives a court of a State of jurisdiction where the High Court has original jurisdiction and then invests the court with that jurisdiction subject to certain conditions. Only a court of a State may be invested with Federal jurisdiction: by contrast, a tribunal cannot be so invested. This means, so far as jurisdiction is concerned, there can never be an inconsistency between State and Federal law, such that under s.109 of the Constitution the State law must be read down.
3. As a result, to the extent the proceedings in the Tribunal involve a matter arising under a Federal law (i.e., a Federal matter), the Tribunal has no jurisdiction to determine the proceedings and the Complaint.

The Super Fund's Submissions

1. The Super Fund asserts in its Defence to the Complaint that it is regulated by: 1. the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), which requires the Super Fund to be registered with the Australian Prudential Regulation Authority (APRA) as a registrable superannuation entity (RSE), and requires the Super Fund to hold an RSE licence issued by APRA (which is responsible for the prudential regulations of RSEs and RSE licensees); and 2. is required to comply with the conditions of its RSE licence which include that it complies with "RSE licensing law", which includes, among other things, the SIS Act, the Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations) and the Prudential Standards issued by APRA.
2. Ms Byrnes, counsel for the Super Fund, submits that the Tribunal has no jurisdiction to determine the Complaint because its Defence raises the determination of Federal matters involving the interpretation of Federal law which is outside the jurisdiction of the Tribunal. In this regard, Ms Byrnes points to the Super Fund's Points of Defence which pleads that the Super Fund's actions were not unlawful by virtue of s.54 of the ADA and s.49ZYS(1)(a) of the ADA due to: 1. the discrimination occurring because of the application of a requirement under the SIS Act, having regard to: 2. s.31(1) of the SIS Act, which provides that the SIS Regulations may prescribe standards applicable to the operation of regulating superannuation funds; and 3. Reg 4.07E of the SIS Regulations, which is a prescribed operating standard for the purposes of s.31(1) of the SIS Act, and requires the Super Fund to only provide insurance to its members in accordance with the terms of any insuring policy; and 4. the Super Fund's obligations to comply with certain provisions of the SIS Act, each of which apply to the Super Fund's appointment of the relevant insurer of the Super Fund and the Super Fund's approval of the terms of the Policy, including: 5. by operation of s.52(2)(c), a covenant to perform the Super Fund's duties as trustee of the Fund and exercise the Super Fund's powers as trustee of the Fund in the best financial interests of the Fund beneficiaries (the best interest duties); 6. by operation of s.52(2)(e)-(f), a covenant to act fairly in dealing with classes of beneficiaries with a fund and to act fairly in dealing with beneficiaries within a class (the fairness duties); and 7. by operation of s.52(7)(b)-(c), a covenant to consider the cost to all beneficiaries of the Fund of offering or requiring insurance of a particular kind, or at a particular level, and to only offer or require insurance of a particular kind, or at a particular level, if the cost of the insurance does not inappropriately erode the retirement income of beneficiaries (the insurance cost duties).
3. Section 52(2)(c) of the SIS Act provides that each trustee of the entity must perform the trustee's duties and exercise the trustee's powers in the best interests of the beneficiaries.
4. Ms Byrnes submits that the Super Fund was at all times required to comply with the relevant superannuation duties, including the best interest duty, the fairness duties and insurance cost duties. Further, a trustee that contravenes an obligation to comply with a s.52 covenant is subject to a civil penalty: see subsection 54B(1) and s.193 of the SIS Act.
5. The Points of Defence allege that to the extent that the Super Fund could be liable under s.49ZYN of the ADA (which is denied), the Super Fund says that s.49ZYN of the ADA is inconsistent with the relevant sections of the SIS Act and the SIS Regulations means the Super Fund's actions were not unlawful by virtue of s.54 of the ADA and s.49ZYS(1)(a) of the ADA.
6. The Points of Defence also pleads that the provision of life insurance, including death cover, was an ancillary feature of the Fund, but the main purpose of the Fund was (and remains) to be a superannuation fund for retirement savings. The Super Fund cannot operate the Fund in a manner that is inconsistent with the "sole purpose" test contained in s.62(1) of the SIS Act. It provides that the trustee of a regulated super fund must ensure that the fund is maintained solely for one or more of what are called the core purposes, or alternatively, one or more of the core purposes and ancillary purposes.
7. A core purpose is to maintain the Fund to provide benefits for each member of the Fund on or after: 1. the member's retirement from any business, trade, occupation or employment; 2. the member's attainment of a prescribed age; 3. the earlier of the member's retirement from any business, trade, occupation or employment, or the attainment of a prescribed age; or 4. the member's death, if the death occurred before they attained a prescribed age or retirement, when benefits are provided to the member's dependants or legal representative.
8. An ancillary purpose is to provide benefits for each member on or after: 1. the termination of the member's employment with an employer who, at any time, had made contributions to the Fund for that member; 2. cessation of employment due to ill health; 3. death of the member after retirement where benefits are paid to the member's dependants or legal representative; 4. death of the member after attaining a prescribed age where the benefits are paid to the member's dependants or legal representative; or 5. other ancillary benefits approved in writing by the Regulator.
9. Ms Byrnes submits that the Tribunal is required in the proceedings to determine matters that relate to the scope and application of the relevant Commonwealth statutory provisions raised by the Super Fund's Points of Defence, which would require the Tribunal to exercise Federal jurisdiction, which it is not permitted to do: Burns v Corbett [2018] HCA 15.

Mr Borg's Submissions

1. Mr Borg represented himself at the Tribunal. He candidly accepted as a non-lawyer that he was not in a position to make realistic submissions on the question of whether or not the Tribunal had jurisdiction to hear and determine the Complaint that is before the Tribunal. We note, however, that Mr Borg did supply what he described as "just a few comments and rely on the Tribunal to come to its conclusion without further contribution from me". The Tribunal has read and carefully considered those "comments".
2. As the Tribunal understands these written submissions, Mr Borg suggests that the Tribunal can determine the relevant interpretation of the relevant Commonwealth legislation as raised by the Super Fund in its Defence without this involving an exercise of Federal jurisdiction, in particular, because such defences are not viable or available reasonably to the Super Fund to be relied upon.
3. We note that Mr Borg wishes to modify his Points of Claim, and in particular wishes to replace the word "refusal" in his original pleading of a refusal to offer life insurance with the word "absence", along with other related changes. Ms Byrnes for the Super Fund did not oppose such amendments. Accordingly, the Tribunal granted leave to Mr Borg to rely upon his Amended Points of Claim.

Consideration

1. In Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216; [2022] HCA 16 (Citta), the plurality of the High Court reinforced that where a party to proceedings involving the exercise of judicial power in the Tribunal raises a defence that relies on a Commonwealth law to give rise to a matter as described in s.76(ii) of the Constitution, the Tribunal is then deprived of jurisdiction. The only condition is that the defence is "genuinely raised and not incapable on its face of legal argument": Citta at [35].
2. Further, the plurality held, at [35]: "The resolution in principle is that for a claim or defence in reliance on a Commonwealth law or in reliance on the Constitution to give rise to a matter of the description in s.76(i) or s.76(ii) of the Constitution, it is enough that the claim or defence be genuinely in controversy and that it give rise to an issue capable of judicial determination. That is to say, it is enough that the claim or defence be genuinely raised and not incapable on its face of legal argument."
3. The plurality went on to say, at [37], that: "Examination of what the prospects of success of a legally coherent claim or defence might be, were that claim or defence to be judicially determined on its merits, forms no part of the requisite assessment."
4. To similar effect, Edelman J said that "It is not necessary in order to identify the existence of a matter "arising under this Constitution for a court or tribunal to resolve the issue arising under the Constitution", and that "[i]t is sufficient that the court or tribunal considers that the dispute arises": at [67]. His Honour said that the issue "arises" if the constitutional argument that is advanced is not "manifestly hopeless" at [81].
5. We note that where the Tribunal lacks jurisdiction to hear and determine a matter on its merits due to Federal jurisdiction being engaged, the Tribunal retains anterior jurisdiction to determine the limits of its authority, and to determine that issue in the exercise of a conferral of State judicial power: see Citta at [27] and Australian Postal Corporation v Lux Cuttings Pty Ltd [2023] NSWCATAP 316 at [60].
6. Further, we note that if a Federal issue is raised in proceedings and that issue affects the determination of a claim that is otherwise justiciable in the proceedings, the whole of the matter is a Federal matter and it is not possible to fragment the issues for adjudication by ignoring, for the purposes of proceedings in the Tribunal, any Federal elements that, if the matter were to be adjudicated in a court, would affect the determination of the claim: see Murphy at [39]; Rana v Google Inc [2017] 254 FCR 1 at [20]-[22]; Johnson v Dibbin; Gatsby v Gatsby [2018] NSWCATAP 45 at [51]; Fencott v Muller (1983) 152 CLR 570 at 608.
7. In order to determine whether there is a Federal matter, it is necessary to consider the nature of the justiciable controversy. It is the Tribunal's view that the judicial controversy between the parties, and, in particular, the defences raised by the Super Fund involves necessarily the Tribunal having to determine the scope and application of the relevant provisions of the SIS Act and the SIS Regulations and that the quelling of that judicial controversy necessarily requires the Tribunal to exercise Federal jurisdiction.
8. In the Tribunal's view, the proper characterisation and effect of the SIS Act and the SIS Regulations for relevant purposes involves a Federal matter and cannot be sued in this Tribunal. The Federal issue arises even if the relevant Commonwealth legislation does not provide the Super Fund with a defence on the merits; it is sufficient if it is raised in a genuine way or, as the plurality in Citta put it at [35], the Tribunal is satisfied that the Super Fund's defence in reliance on Commonwealth statute is genuinely in controversy and that aspect of its defence gives rise to an issue capable of judicial determination. The Tribunal is satisfied that the Super Fund's defence in this regard is genuinely raised and not incapable on its face of legal argument.
9. Further, the Tribunal is satisfied that the dispute between the parties as to the proper interpretation and construction of the Commonwealth legislation relied upon by the Super Fund is a dispute which "arises" in the sense used by Edelman J in Citta at [67], and is not "manifestly hopeless": at [81].
10. In conclusion, the Tribunal is satisfied that the defence being raised in reliance on the SIS Act and SIS Regulations renders the current matter before the Tribunal (i.e., the whole of the justiciable controversy) a Federal matter. Accordingly, the Tribunal is satisfied that this matter is a Federal matter and, accordingly, the Tribunal has no jurisdiction to determine the Complaint.
11. At the hearing Mr Borg was asked whether, if the Tribunal decided that it lacked jurisdiction to hear the Complaint, he wished to have his claim transferred to an available court: see NCAT Act, Schedule 4, clause 6; Wilson v Chan & Naylor Parramatta Pty Ltd atf Chan & Naylor Parramatta Trust [2018] NSWCATAP 311 at [56]. Mr Borg indicated that he may wish to seek such a transfer.
12. In such circumstances, we will not order any transfer to any available court. The Tribunal, however, notes that pursuant to Part 3A, s.34B of the NCAT Act, a person with standing to make an original application may, with the leave of an authorised court, make an application to the Court instead of the Tribunal, where the application was first made with the Tribunal and where the determination of the application would involve an exercise of Federal jurisdiction where the Tribunal otherwise would have had original jurisdiction and the substitute proceedings on the Complaint would be within the jurisdictional limit of that Court. In order to allow Mr Borg to potentially exercise his rights under that section, we will stay our order dismissing the Complaint for 28 days.

Disposition

1. The orders are as follows: 1. The complaint is dismissed in whole as the Tribunal lacks jurisdiction. 2. Order (1) is stayed for 28 days.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2024