Gleeson v Cavers; Cavers v Gleeson

The Preliminary Issue

1. At the commencement of the formal hearing on 22 February 2021, the Owners' counsel requested that I should not proceed to hear and determine the substantive merits of each application without first determining the Tribunal's jurisdiction to hear and determine both applications. The Owners' position is that Part 3A of the Civil and Administrative Tribunal Act 2013 NSW (NCAT Act) applies, in that the determination of the applications in both proceedings would involve an exercise of federal jurisdiction. The Builder refutes that Part 3A of the NCAT Act applies, and submits that federal jurisdiction is "colourable" and that it is not bona fide for the Owners to rely upon the ACL (Cwlth) in circumstances where the Owners could press a claim and a defence based on misleading or deceptive conduct under the Australian Consumer Law NSW (the "ACL (NSW)") which applies as the law of New South Wales by reason of s 28 of the Fair Trading Act 1987 NSW.
2. Nevertheless, the Builder's counsel accepted that the Tribunal must hear and determine the issue of jurisdiction at the commencement of the hearing. I agree a hearing on that preliminary issue is the appropriate course. As Kirby J said in Old UGC v Industrial Relations Commission in Court Session [2006] HCA 24 at [51]: Indeed, it is the first duty of judicial and quasi-judicial bodies, when a question of their jurisdiction and powers is raised to satisfy themselves as to such jurisdiction and as to their power to afford the relief claimed.
3. Accordingly, the initial question for determination at the commencement of the hearing is whether the applications in file no HB 19/57318 and file no HB 20/06029 raise a federal matter about which the Tribunal has no jurisdiction to determine.

The Law

1. Under Chapter III of the Commonwealth of Australia Constitution Act (Constitution) only a court of a State can exercise federal jurisdiction and then, only in respect of matters for which jurisdiction is not exclusive to the High Court of Australia and for which a court of a State is invested with power pursuant to s 77(iii) of the Constitution. By Part 3A of the NCAT Act (in s 34A) "federal jurisdiction" means jurisdiction of a kind referred to in s 75 or s 76 of the Constitution. Relevantly, "federal jurisdiction" includes: "any matter … arising under any law made by the [Commonwealth] Parliament": s 76(ii) of the Constitution. Such conferral is done by the Judiciary Act 1903 (Cth).
2. In Attorney General for New South Wales v Gatsby (2018) NSWCA 254 (Gatsby) the Court of Appeal declared that the Tribunal is not a "court of a State" for the purpose of Ch III of the Constitution and s 39 of the Judiciary Act. The matter before the Court of Appeal in Gatsby was then remitted to the Tribunal to be dealt with in accordance with Part 3A of the NCAT Act.
3. Since the decision in Gatsby, Part 3A of the NCAT Act has been amended. It is now titled "Federal proceedings", whereas it was formerly titled "Diversity Proceedings" and dealt with "federal diversity jurisdiction", which meant "jurisdiction of the kind referred to in s 75(iv) of the Constitution". However, the procedural requirements for leave and continuation of proceedings in an "authorised court" as defined in s 34A of the NCAT Act after leave is granted as provided in s 34B and s 34C remain the same. Section 34B provides: (1) A person with standing to make an original application or external appeal may, with the leave of an authorised court, make the application or appeal to the court instead of the Tribunal. (2) The authorised court may grant leave for the application or appeal to be made to the court only if it is satisfied that-- (a) the application or appeal was first made with the Tribunal, and (b) the determination of the application or appeal by the Tribunal would involve an exercise of federal jurisdiction, and (c) the Tribunal would otherwise have had original jurisdiction or external appellate jurisdiction enabling it to determine the application or appeal, and (d) substituted proceedings on the application or appeal would be within the jurisdictional limit of the court. (3) An application for leave must be - (a) filed with the authorised court along with - (i) an application or appeal that has been completed in the form and manner required under this Act for the kind of application or appeal concerned, and (ii) if the parties to the application or appeal have reached a settlement before leave is sought using a resolution process referred to in section 37--a copy of the terms of settlement, and (b) accompanied by the applicable fee (if any) payable in the Tribunal for the application or appeal unless it has already been paid to the Tribunal. (4) If an appeal is made under this Act in relation to any matter in issue in the application or appeal - (a) for an appeal lodged before the application for leave is made to an authorised court--the court cannot grant leave unless and until the appeal is determined, or (b) for an appeal lodged on or after leave is granted by an authorised court--proceedings in the court concerning the application or appeal are stayed until the appeal made under this Act is determined. (5) An authorised court may remit an application or appeal to the Tribunal to determine the application or appeal if the court is satisfied that the Tribunal has jurisdiction to determine it. The court may do so instead of granting leave or after granting leave. (6) An authorised court that remits an application or appeal to the Tribunal may make such orders that it considers appropriate to facilitate the determination of the application or appeal by the Tribunal. (7) The Tribunal is to determine any application or appeal that is remitted to it in accordance with any orders made by the authorised court. (8) The following provisions apply if the authorised court is the District Court - (a) the District Court may grant leave and then transfer the proceedings on the application or appeal to the Local Court in accordance with the provisions of Division 2 (Transfer of proceedings from higher to lower court) of Part 9 of the Civil Procedure Act 2005, (b) if a transfer order is made under that Division, this Part applies to the proceedings as if the Local Court had granted leave for the application or appeal to be made to it instead of the Tribunal.
4. Section 34D of the NCAT Act further states: (1) The provisions of this Part prevail to the extent of any inconsistency between those provisions and any other provisions of this Act or other legislation. (2) To avoid doubt, subsection (1) applies despite anything in a Division Schedule for a Division of the Tribunal.
5. Referring to a series of earlier authorities including Rana v Google Inc [2017] FCAFC 17 and Burgundy Royale Investments Pty Ltd (Receivers and Managers Appointed) v Westpac Banking Corporation [1987] FCA 686, the applicable principles which are applied in making the determination of what constitutes a federal matter were stated by the Appeal Panel in Murphy v Trustees of Catholic Aged Care Sydney [2018] NSWCATAP 275 (Murphy) as follows (at [22] and [38]): 1. To identify the "matter" it is necessary to identify the justiciable controversy: Murphy at [22(2}]; 2. A federal matter will arise whenever the right, duty or enforcement owes its existence to federal law: Murphy at [22(6)]; 3. A federal matter will also arise when the source of defence is a federal law: Murphy at [22(8)]; 4. It is not necessary for the form of relief sought to depend on federal law: Murphy at [22(7)]; 5. Unless a federal issue is colourable, the whole of the proceedings is a federal matter requiring the exercise of federal jurisdiction: Murphy at [22(9)].
6. In Rana v Google, the Full Federal Court said this in respect of whether a federal issue is colourable: [20] Once a matter is within federal jurisdiction, the entire matter is within federal jurisdiction: Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; 204 CLR 559 at 571 [7] per Gleeson CJ, Gaudron and Gummow JJ. There is never any concurrent exercise of federal and State jurisdiction: Felton [1971] HCA 39; 124 CLR 367 at 412-413; Moorgate 145 CLR at 471. [21] Generally, non-colourable assertion of a federal matter is enough to attract federal jurisdiction: Felton 124 CLR at 374 per Barwick CJ; Moorgate 145 CLR at 476; Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation [1987] FCA 686; 18 FCR 212 at 219; Parisienne Basket Shoes Pty Ltd v Whyte [1938] HCA 7; 59 CLR 369 at 389-391 per Dixon J. Upon the existence of federal jurisdiction, the matter remains within federal jurisdiction regardless of how the federal issue or issues within it are ultimately resolved: Moorgate 145 CLR at 476. It remains federal even if the federal claim is struck out: Unilan Holdings Pty Ltd v Kerin [1993] FCA 605; 44 FCR 481 at 481-482. Nor does dismissal of the federal claim mean that a court exercising federal jurisdiction somehow loses jurisdiction over the balance of the matter: Burgundy Royale 18 FCR at 219; Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; 104 FCR 564 at 597 [85] per French J. The same is true if the federal claim is effectively abandoned: see Moorgate [1980] HCA 32; 145 CLR 457 Indeed, a matter remains in federal jurisdiction even if a party is added and no federal claim is made against that party, provided it is all part of the same matter, the same controversy: Re Wakim 198 CLR at 587 [145] per Gummow and Hayne JJ. The position is summarised in Macteldir Pty Ltd v Dimovski [2005] FCA 1528; 226 ALR 773 at 784 [36] as follows: It is a fundamental tenet of federal jurisdiction that once a federal claim is made, even a bad one, and even one that is abandoned, or struck out, the whole matter in which that claim is made is, and remains, federal jurisdiction ...

(citations omitted) [22] The exception to this principle is where the federal claim that is made is "colourable" in the sense that it was "made for the improper purpose of fabricating jurisdiction" such that it was not made bona fide. In such a case, federal jurisdiction is not attracted: Burgundy Royale 18 FCR at 219.

Consideration

1. The Builder's counsel submitted that the Owners' claim and defence based on allegations of misleading or deceptive conduct were colourable and lacking in bona fide merits. He argued that the submissions made on behalf of the Owners as to the existence of a federal matter are an unmeritorious attempt on the Owners' part to force an adjournment of the proceedings, because they had not complied with prior orders of the Tribunal; in particular, they were still not ready to respond to the Builder's expert evidence even though the Builder's expert evidence had been served on them in August 2020. The Builder's counsel said that this is a case where the Tribunal should exercise its powers in respect of summary disposal of the proceedings because the Owners had conducted the proceedings in such a way as to unreasonably disadvantage the Builder, who had commenced his application for orders of the Tribunal in December 2019: see Schedule 4 Clause 10 of the NCAT Act.
2. The Builder's counsel further submitted the Owners' had not identified a justiciable controversy that warranted the Owners relying upon the ACL Cth, as opposed to the ACL NSW, and that simply referring in their Defence and Points of Claim dated 20 December 2020 to s 6(3) of the Consumer and Competition Act 2010 Cth was insufficient and further indicative of pleading matters for an improper purpose of fabricating jurisdiction and delaying the Builder's recovery action against the Owners.
3. I am not persuaded by the Builder's submissions.
4. I am satisfied that the Owners filed and served the Defence and Points of Claim on 20 December 2020 as they were required to do by the orders of Principal Member K Rosser made on 18 November 2020, which stated, relevantly: The Tribunal does not propose to determine jurisdiction as a preliminary issue. The builder should file and serve points of defence and its evidence in accordance with the Tribunal's directions. Whether the Tribunal has jurisdiction to determine the claim will be determined in the context of the final hearing. The Principal Member's reference to the Tribunal's orders was to the directions made by Senior Member G Blake on 13 October 2020 at a directions hearing. The orders of the Principal Member on 18 November 2020 are now the subject of an appeal to the Appeal Panel (AP 20/49959).
5. In determining whether a federal matter is a justiciable controversy, I may have regard to the pleadings and the factual basis of the claim that the Builder engaged in misleading or deceptive conduct: see Rana v Google at [16] referring to Re Wakim [1999] HCA 27; 198 CLR 511, where Gummow and Hayne JJ at [139] - [140]; 555 - 586 described a "matter", and the process of its identification. In the Defence and Points of Claim dated 20 December 2020, the Owners maintain a defence and cross application premised upon the Competition and Consumer Act 2010 (Cth) and s 18 of the ACL Cth. I am satisfied that they were entitled to elect to rely upon the federal legislation; or to put it another way, that their legal representatives made a forensic decision not to plead the Fair Trading Act 1987 NSW and the ACL NSW, and that this decision was not taken for an improper purpose. The Owners have also filed and served extensive documentary evidence (including affidavits of lay witnesses) in support of their case. I find that the claim and defence put by the Owners under the federal legislation are legitimately made and not lacking in bona fide merit. Nor do I find that the claim and defence were put by the Owners for the sole purpose of manufacturing jurisdiction. I accept that putting their claim and defence in respect of misleading or deceptive conduct under the federal legislation is consistent with a proper forensic purpose in the Owners' case. While the Tribunal does exercise judicial power it is held to a lesser evidentiary standard under the NCAT Act (see sections 36 and 38) than a court of the State. It is not the same in terms of what a litigant may be entitled to when making claims and relying on defences. I am satisfied that s 6(3) of the federal legislation expresses the scope of any contravening conduct to include the use of postal, telegraphic or telephonic services, being media which are key elements in the factual basis of the Owners' claim (see Particulars to [91] of the Respondents' Defence to Amended Points of Claim), and in a way that is not dealt with in the ACL NSW.
6. If the Owners' case based upon misleading or deceptive conduct is established, this would require making orders to award damages in consequence of a contravention of s 18 of the ACL Cth. I find that this constitutes the exercise of judicial power as it "settles for the future, as between defined persons, … [by] the existence of the right or obligation": Gatsby at [123] per Bathurst CJ. Having regard to the issues raised by the Owners in their misleading or deceptive conduct case, I further find there is a claim and defence that arises under Commonwealth law in each of the applications and that both applications require the exercise of federal jurisdiction.
7. Although it is far from clear on what legal basis the Builder relies on the Australian Consumer Law in the prosecution of his claim: see [62] of the "Further, Further Amended Points of Claim" of the Builder dated 11 December 2020, I am also satisfied that the Owners acted appropriately in assuming for the purposes of their application to the Tribunal which was dealt with by Principal Member Rosser on 18 November 2020 and is now the subject of Appeal Panel proceedings (AP 20/49959) that the proceedings were already in federal jurisdiction. I make this finding because of the Builder's statement about its Further Amended Points of Claim, which was then in the form of a proposed draft submitted to the Owners' solicitors in accordance with order 3 of Senior Member G Blake made at the directions hearing on 13 October 2020. The statement (with Emphasis Added in the text of the email reproduced below) is evidenced in an exchange of emails between the parties' solicitors on 30 October 2020 (the email of the Owners' solicitors) and on 2 November 2020 (the email of the Builder's solicitors): The 30 October 2020 email said: We are seeking further instructions in relation to the proposed Amended Points of Claim. Could you please urgently clarify whether your client relies on ACL NSW or the Federal legislation and thus federal jurisdiction? We await your urgent response. The response in the 2 November 2020 email was: I refer to your email dated 30 October 2020. I confirm that the legislation relied upon is the Federal legislation. (Emphasis Added)
8. I accept following the stay application in the Appeal Panel proceedings (AP 20/49959) which was dismissed by Principal Member A Britton on 8 December 2020 that the Owners were required to file and serve their defence and claim pleading the federal matter, as they did in the pleadings dated 20 December 2020 filed and served by them.
9. The Tribunal may not exercise judicial power to determine any part of the justiciable controversy in both proceedings; to do so would be to exercise the judicial power of the Commonwealth and that the Tribunal cannot do. It follows that the Tribunal does not have jurisdiction to determine the applications in both proceedings and it declines to do so. The Tribunal must deal with the proceedings in accordance with Part 3A of the NCAT Act.
10. In his written submissions on the jurisdiction issue which were delivered for the hearing on 22 February 2021, the Owners' counsel submitted it is "clear" from Part 3A of the NCAT Act that both proceedings may be transferred to the District Court; indeed, that transfer is, in the Owners' submission, the "proper course". I disagree. In this respect, I prefer the approach of Deputy President Harrowell in Dalton v Qantas Airways Ltd [2020] NSWCATCD 2: [36] Having determined the Tribunal did not have jurisdiction to deal with the application, the Court in Gatsby made an order remitting the proceedings to the Tribunal "to be dealt with in accordance with Part 3A of the Civil and Administrative Tribunal Act, 2013 (NSW)". I infer from this order that, while unable to determine the dispute in Gatsby, the Tribunal did have an administrative role in connection with the application made to the Tribunal in consequence of the provisions of Part 3A. Such administrative action might include: (1) declining to deal with the proceedings because the Tribunal lacks jurisdiction; (2) making an administrative decision to dismiss the application because of the lack of jurisdiction; (3) providing relevant documents to a court for the purpose of determining any leave application under s 34B(3) of the NCAT Act or for the purpose of a court determining an application under s 34C in consequence of the grant of leave; or (4) complying with any orders under s 34C(1)(b) of the NCAT Act a court which might make "in relation to the Tribunal" to "facilitate its determination of the application that might be made.
11. Transferring the proceedings immediately to the District Court is not a course referred to in Part 3A. While I accept there is the power to do so in Schedule 4 Clause 6(1) of the NCAT Act, Part 3A prevails over other provisions of the NCAT Act (s 34D) to the extent of any inconsistency. A transfer order of the Tribunal would be, in substance, a course which side steps the provisions in s 34B for leave to be sought from an authorised court (whether the District Court or the Local Court) by a person who has lodged an application in the Tribunal to continue that claim in the authorised court when the claim involves federal jurisdiction. In my opinion, the appropriate order in light of my ruling on jurisdiction is for the Tribunal to take 'administrative action' consistent with options (1) and (3) as referred to in Dalton.

Orders (including directions as to submissions on costs)

1. There remains the issue of the costs incurred to date by the parties in the conduct of both proceedings in the Tribunal. I received limited oral submissions only during the hearing on 22 February 2021.
2. I have made directions for written submissions on costs both as a matter of procedural fairness (in light of these Reasons for my decision on the jurisdiction issue) and also having regard to the following further matter. As regards any costs determination which the Tribunal may now be required to make, there are two aspects: firstly, the costs consequential upon the Tribunal's decision as to whether it is required to exercise the judicial power of the Commonwealth to decide any part of the justiciable controversy, and secondly, the costs consequential on other considerations in the proceedings; i.e. considerations that have nothing to do with the Owners' jurisdictional challenge. This might include matters relating to the submissions of the Builder's counsel that the Owners have conducted the proceedings, contrary to Schedule 4 Clause 10 of the NCAT Act, in a manner which unreasonably disadvantaged the Builder. As to the second aspect, the parties may prefer for such costs to be determined as costs of the proceedings in any court of competent jurisdiction to which a leave application is made under s 34B of the NCAT Act. However, the Court of Appeal in Wilson v Chan & Naylor Parramatta Pty Ltd [2020] NSWCA 213 (8 September 2020) by majority (Macfarlan JA, Leeming JA; White JA dissenting) have left open the possibility of the Tribunal awarding costs where the costs incurred are not of and incidental to the anterior question of jurisdiction.
3. The orders of the Tribunal are: 1. The Tribunal declines to deal with applications HB 19/57318 and HB 20/06029 as it has no jurisdiction to determine these proceedings. 2. In the event that a party makes application to an authorised court for leave under s 34B of the Civil and Administrative Tribunal Act 2013 NSW, the Divisional Registrar is to provide such documents from file nos HB 19/57318 and HB 20/06029 as the authorised court may require in order to determine the party's leave application to the authorised court. 3. If any party seeks an order for costs leave is granted to file and serve a short written submission (no more than 5 A4 size pages) on that issue only within 28 days of the date of these orders. 4. Leave is granted to the other party to file and serve a short written submission in reply (no more than 5 A4 size pages) within a further period of 28 days. 5. In any such submissions the parties are to address the matter of whether pursuant to the provisions of the Civil and Administrative Tribunal Act 2013 NSW, s 50(2), the Tribunal should dispense with a hearing on the issue of costs so that the issue is decided on the papers lodged with the Tribunal and with appearances of the parties not required.

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: 30 March 2022