Eberstaller v Poulos

Judgment

1. JUDGMENT OF THE COURT delivered by LEEMING JA: The first duty of every court is to determine whether or not it has jurisdiction. In cases where federal law has made some classes of the matters enumerated in ss 75 and 76 of the Constitution within the exclusive jurisdiction of particular federal courts (which include cases concerned with bankruptcy, native title, some forms of anticompetitive conduct, and family law), and proceedings are commenced in a State court, it will be necessary to consider jurisdiction by reference to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth). In those cases, two things need to be appreciated. The first is the relatively complex structure of conferral and investment of jurisdiction effected by federal law. The second is the nature of a "matter" for the purposes of Chapter III of the Constitution.
2. Although the procedural history of this litigation is lengthy and complex, it will be seen that the resolution of the threshold question of jurisdiction is straightforward, once those two things are appreciated. The substance of the proceedings before the primary judge was the enforcement of consent orders made in the Family Court of Australia. Those orders resolved the dispute arising under the Family Law Act 1975 (Cth) between husband and wife as to the matrimonial property. Proceedings to enforce such a settlement comprise a matter arising under federal law. It follows that the appeal to this Court was filed contrary to the statutory command in s 7(5) of the Jurisdiction of Courts (Cross-vesting) Act, and should be dismissed.
3. The factual background to this appeal, and the decisions supporting the legal propositions summarised above, are outlined below.

Factual and procedural background

1. The appellant and first respondent are husband and wife. They have been separated for some years. The husband's application for divorce was filed on 24 April 2014 and appears not to have been determined; it is convenient therefore to refer to them as the "husband" and the "wife".
2. There were proceedings in the Family Court of Australia, the details of which do not appear from the materials presently before the Court, but which were ostensibly resolved by consent orders made on 25 October 2012. I say "ostensibly" because on 29 January 2013 the husband applied to vary the consent orders. His application was dismissed, summarily, on 24 May 2013, but he has appealed and his appeal remains undetermined more than a year later (the Court was told that it was listed for hearing later this year). That said, there is nothing in the materials to suggest that the orders do not remain in force.
3. The orders made on 25 October 2012 are lengthy. In essence, they required the husband to transfer his interest in the family home in Bellevue Hill, in Sydney, to the wife upon her discharging the existing indebtedness on the property.
4. After a series of delays of which the primary judge (who saw the husband give evidence) was highly critical, his Honour found that late in the evening of 12 August 2013, the husband purported to transfer the property to the second respondent to the appeal. The primary judge stated that the second respondent paid no deposit and had never inspected the property, and was critical of his limited separate representation at the trial: [2013] NSWSC 1849 at [3] and [40].
5. The wife sought and obtained urgent injunctive relief the following week: [2013] NSWSC 1509. The matter proceeded in the Expedition List, where, after a two day hearing in December 2013, the primary judge set aside the contract between the husband and the second respondent, and ordered that the husband deliver a duly executed transfer of the property: [2013] NSWSC 1849. His Honour found that the husband's contract had been entered into in order to "hinder, delay or defeat" the wife's rights as a creditor within the meaning of s 37A of the Conveyancing Act 1919 (NSW). In short, the court made orders enforcing the 25 October 2012 settlement.
6. Subsequently, the primary judge made a lump sum costs order in favour of the wife. His Honour acknowledged at [4] that the proceedings "may arguably, and coincidentally, satisfy the definition of 'matrimonial cause'" under the Family Law Act but said (at [7]) that the broad discretionary power under s 98 of the Civil Procedure Act 2005 (NSW) applied: "It would not have mattered whether the underlying obligation arose out of consent orders of the District Court, the Land and Environment Court or the New South Wales Administrative Tribunal. Whatever the original source of the cause of action, the hearing in a case such as this involves the exercise of the jurisdiction of this court. That includes the broad discretionary power to award costs pursuant to Section 98 of the Civil Procedure Act 2005 (NSW)."
7. His Honour added that if s 117 of the Family Law Act applied, he would nevertheless have exercised that power in the same way so as to reach the same result: at [8].
8. The husband has appealed to this Court, purportedly pursuant to s 101 of the Supreme Court Act 1970 (NSW), from both judgments of the primary judge. He joined the second respondent, who (so the Court was told) although having been served did not appear.
9. The husband applied, by notice of motion, to transfer his appeal to the Full Court of the Family Court, pursuant to s 7(7) of the Jurisdiction of Courts (Cross-vesting) Act. Alternatively, he seeks to amend that motion so as to rely on s 5 of that Act to support a transfer of the appeal.
10. By separate notice of motion, the wife applied for the husband's notice of motion to be stood over to be determined at the hearing of the appeal. The point of doing so was to attempt to engage the power in s 7(7) to permit this Court to determine the appeal.

Jurisdiction at first instance and on appeal

1. I respectfully disagree with the statement of the primary judge at [7] extracted above. It does matter whether the underlying obligation arose out of orders of a State court or tribunal or a federal court. It matters decisively in this case. As this Court said in CSL Australia Pty Ltd v Formosa [2009] NSWCA 363; 261 ALR 441 at [22] (original emphasis): "A fundamental question necessary to be considered in every case [is] the identification of the character of the jurisdiction being exercised by the court - whether State or federal. The importance of this early enquiry, in every case, is that the answer to it may affect the law applicable to the controversy." That decision is one of many supporting the proposition in the opening sentence of these reasons about the first duty of every court; others are collected in Zhang v Zemin [2010] NSWCA 255; 79 NSWLR 513 at [39]-[46].
2. The primary judge heard and determined proceedings whose substance was to enforce the agreement embodied in the consent orders of the Family Court of Australia. His Honour said, with respect correctly, "[i]t was a quintessential Equity proceeding": [2014] NSWSC 235 at [6]. But that is not the relevant characterisation, even though counsel for the husband asserted, unsupported by authority or reference to statute, that the fact that orders had been made under s 37A of the Conveyancing Act was sufficient to give this Court jurisdiction. But federal courts, from which no appeal to this Court lies, hear and determine matters involving claims under s 37A. The presently relevant question is not the nature of the litigation, but the source and character of the authority exercised by the court to determine it. A quintessentially equitable suit like Blomley v Ryan (1956) 99 CLR 362 was determined in the exercise of federal jurisdiction, the source of which was s 75(iv) of the Constitution.
3. Here too, his Honour was exercising federal jurisdiction, for at least two reasons. The first was that the proceedings were seeking to enforce the agreement between husband and wife resolving their dispute which arose under the Family Law Act. As Allsop J said in Macteldir Pty Ltd v Dimovski [2005] FCA 1528; 226 ALR 773 at [95], a passage to which the Court directed the parties' attention in advance of the hearing: "The enforcement of a contract to settle a case (at least between the parties to the suit) concerning rights owing their existence to Commonwealth law, and hitherto sought to be vindicated in the Federal Court under the FCA Act or the Judiciary Act or another Commonwealth Act will be a matter arising under a law of the Parliament: LNC Industries v BMW, if it is not (as it may well be) part of the original matter.
4. See also Bramco Electronics Pty Ltd v ATF Mining Electrics Pty Ltd [2013] NSWCA 392 at [33]. No argument was advanced by the husband contrary to that proposition. The submission was put on behalf of the wife, diffidently, and by reference to passages in Felton v Mulligan (1971) 124 CLR 357, that the rights under the contract were not sufficiently closely connected with federal law so as to arise under it. The short answer to that submission is that subsequently decisions have taken a more expansive course. Those decisions, commencing with LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575, are referred to below, and were relied on by Allsop J in the formulation of principle in Macteldir.
5. As will be seen shortly, it is not necessary for present purposes to say anything about the concluding words of the proposition from Macteldir reproduced above, namely, whether the enforcement proceedings were part of the same matter, or a separate matter. It is sufficient to observe that the dispute remained a matter arising under the Family Law Act.
6. Secondly, the dispute before the primary judge answered the description of a "matrimonial cause" within the meaning of s 4 of the Family Law Act. This was common ground between the parties when the appeal was heard. For the reasons given by Brereton J in Young v Lalic [2006] NSWSC 18; 197 FLR 27 at [37]-[39], the source of the Court's authority to decide the summons brought by the wife was s 4 of the Jurisdiction of Courts (Cross-vesting) Act.
7. As this Court indicated in CSL Australia v Formosa, the foregoing inquiry was necessary in order to determine the applicable law. That question became acute when debate arose as to whether s 117 (which confers a power to order costs in different terms from that under State law) applied. However, it is neither necessary nor appropriate for present purposes to say anything on the substantive aspect of the appeal purportedly brought by the husband which extends to the costs order. Indeed, it is inappropriate to do so, because the appeal has not commenced to be heard, and the first question is whether the husband has validly invoked the jurisdiction of this Court. That question can only be answered by inquiring as to the nature of the jurisdiction purportedly invoked.
8. Section 7(5) of the Jurisdiction of Courts (Cross-vesting) Act imposes two prohibitions: prohibitions on instituting, and on determining, certain classes of appeals. It relevantly provides: "Subject to subsections (7) and (8), where it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory (not being a proceeding to which subsection (6) applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by: (a) the Full Court of the Federal Court or of the Family Court, as the case requires …"
9. It is clear that the subject matter of the appeal is a matter arising under the Family Law Act (which is an Act specified in the Schedule), no differently from the position before the primary judge. Although that conclusion is strengthened by the fact that the husband claims that the primary judge committed appellable error in failing to apply s 117 of the Family Law Act, it is fundamentally a consequence of the fact that the proceedings were an enforcement of a compromise of rights arising under the Family Law Act.
10. In LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581, Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ said: "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."
11. In Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421 at [45], Heydon J said, with the agreement of five other members of the Court: "While a claim to damages for breach of contract is a claim for relief under State law, if the contract is in respect of a right which is a creature of federal law, the claim arises under the federal law."
12. The whole of the subject matter of the appeal is a matter arising under the Family Law Act. It follows that s 7(5) applies, for the provision uses the language of s 76(ii) of the Constitution: "matter" and "arising under", and was enacted well after the formative decisions on federal jurisdiction in the 1980s, culminating in Fencott v Muller (1983) 152 CLR 570 and Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261. There is no reason for it not to bear the meaning established by those decisions in respect of precisely the same language in the same context. Accordingly, the proceeding "shall be instituted only in", and "shall be determined only by" the Family Court. It was put orally on behalf of the husband that the words were merely procedural or directory. There is nothing in the statutory text to deny those words their ordinary meaning. The husband's submission to the contrary turned on the general words of s 5, which do not apply for reasons which are addressed below.
13. True it is that in such cases where a State court proceeds to commence hearing an appeal, then s 7(7) applies, which is in these terms: "(7) Where: (a) the Full Court of the Supreme Court of a State or Territory commences to hear a proceeding by way of an appeal; and (b) before the Court determines the proceeding, it appears to the Court that the proceeding is a proceeding to which subsection (5) applies; the Court shall, unless the interests of justice require that the Court proceed to determine the proceeding, transfer the proceeding to the Full Court of the Federal Court or of the Family Court, as the case requires."
14. In those circumstances, the court is not merely empowered but also obliged to transfer the proceeding to the appropriate federal court, "unless the interests of justice require that the Court proceed to determine the proceeding". However, and contrary to the wife's written submissions, it would be wrong to permit the appeal to commence being heard, such that, if the interests of justice so required, it could be heard and determined by this Court. The wife submitted, inter alia, that the appeal would be heard much more quickly in this Court than by the Full Court of the Family Court, which, given her personal circumstances, was highly material. That may or may not be so, but it is irrelevant. Sympathetic though one may be for the circumstances in which the wife finds herself, both of the parties are, no differently from this Court (see covering clause 5 of the Constitution), bound by s 7(5). The commands in s 7(5) against instituting and determining certain classes of proceedings are not to be side-stepped by hearing the proceeding so as to engage s 7(7).
15. Section 7(7) is, in truth, a limited investment of jurisdiction to hear and determine certain appeals. Its preconditions are not presently satisfied. Contrary to the husband's application, s 7 is not available to transfer the appeal he has commenced contrary to its terms, but whose hearing has not commenced. The husband's appeal should be dismissed for want of jurisdiction.
16. The husband also sought to transfer the appeal pursuant to s 5 of the Jurisdiction of Courts (Cross-vesting) Act. That is the general provision permitting transfer of proceedings between State and Federal Courts. The general power conferred by it is inconsistent with the specific provisions in s 7 which are confined to appeals. That may readily be seen by contrasting the evaluative discretionary power to transfer a proceedings commenced in an "inappropriate" court with the mandatory language of s 7(5) reproduced above. Further, as Meagher JA observed during the hearing, it may also be seen from the fact that s 5 in terms has regard to whether a proceeding would, but for the Jurisdiction of Courts (Cross-vesting) Act, be incapable of being instituted in the State court, while s 7 in terms provides that appeals may not be instituted in State courts.
17. Applying orthodox principles of construction, the specific provision prevails. Section 7 is "an example of a specific regime which, in cases where it applies, excludes more general provisions which otherwise might be engaged": Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation [2009] HCA 32; 239 CLR 346 at [17].
18. Against that conclusion, the husband's written submissions pointed to two other decisions of appellate courts which, so it was said, "invoked or considered invoking" s 5. The first was WFA v Hobart City Council [2000] NSWCA 43 at [14] where the appeal was dismissed as an abuse of process, without any consideration of s 5 that it was a fallback submission. The second was Lewis v Hall [2005] FCAFC 251, where reference may be found to the fact that an appeal was transferred by consent to the Federal Court. True it is that there is a statement, unnecessary to the decision and unsupported by any reasoning such as that relied on above, that s 4 invests appellate jurisdiction. Neither decision provides any authority to the contrary of what is referred to above, and the Court was not taken to any other authority in support of the husband's submission.
19. The foregoing is wholly consistent with the reasons and orders in Grace v Grace [2014] NSWCA 86. The husband also contended that Grace v Grace was wrongly decided, because s 5 was neither argued nor referred to. It follows from the reasons already given that the husband's final contention must be rejected. Section 5 is not presently relevant, nor was it relevant in Grace v Grace. The submission that was put that the hearing on the question of jurisdiction was sufficient to engage the words "commences to hear a proceeding by way of appeal" is, self-evidently, wrong, as well as having unpalatable consequences in relation to compliance with s 7(5) and the ability of State courts to deal with matters wrongly purporting to invoke their appellate jurisdiction.

Orders

1. For those reasons, the appeal must be dismissed. This hearing as to jurisdiction does not answer the description of "proceedings under this Act" within the meaning of s 117, which accordingly has no application. Because the husband wrongly invoked this Court's jurisdiction, he should pay the wife's costs: Grace v Grace and see Khatri v Price [1999] FCA 1289; 95 FCR 287.

Amendments 08 September 2014 - The reference to "Zhang v Zemin [2010] NSWCA 36" deleted, and "Zhang v Zemin [2010] NSWCA 255" inserted. Amended paragraphs: [14] 16 April 2015 - In [12] the reference to 7(6) replaced by 7(7).

In [1], [2], [12], [19], [21] and [29] "Cross-Vesting" replaced with "Cross-vesting". 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: 16 April 2015