Construction of s 7(5)
25 Read together (but without reference to their broader context), ss 7(3) and (5) appear to cover the universe of possible appeals from a single judge of a State supreme court. Those which require determination of a "matter arising under an Act specified in the Schedule" (including the Bankruptcy Act) may only be instituted in the Full Court of the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) (or the High Court, with special leave). Those which do not involve such a matter are to be "instituted only in" the appellate court of the relevant State.
26 The phrase "matter arising under" an Act or a law of the Commonwealth is used in s 76(ii) of the Constitution and has been part of the discourse of federal jurisdiction for a long time. A "matter" has been understood since the early part of the 20th century to be the subject matter for determination in a proceeding rather than the proceeding itself (In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265-266 (Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ), although precise identification of the outer boundaries of a "matter" involving claims under both Commonwealth legislation and other laws was still being worked through in the 1980s: eg Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 (and see the helpful summary in Leeming, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2nd ed, 2020), 97-106). By reference to these cases, Gummow and Hayne JJ said in Re Wakim at [139]-[140] (Gleeson CJ and Gaudron J agreeing):
The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.
… There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts", notwithstanding that the facts upon which the claims depend "do not wholly coincide". So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of another, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination.
(Citations omitted.)
27 Meanwhile, "a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law": R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 (Latham CJ). The same is true if the source of a defence is a law of the Commonwealth: Felton v Mulligan (1971) 124 CLR 367 at 408 (Walsh J) (see also at 373-374 (Barwick CJ)). It is for this reason that, in the present case, the Supreme Court was exercising federal jurisdiction under s 39(2) of the Judiciary Act.
28 The drafters of the cross-vesting legislation must be taken to have been familiar with the case law referred to above and to have chosen the phrase "matter arising under an Act" with an eye to that body of law: see, eg, Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ); Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2015] HCA 10; 254 CLR 489 at [15] (French CJ, Hayne, Kiefel, Gageler and Keane JJ). Absent some firm indication to the contrary, therefore, an appeal from a judgment of a State supreme court should be understood to involve determination of "a matter arising under an Act specified in the Schedule" if an issue agitated in the appeal depends on the operation or effect of a provision of one of those Acts. This view is supported by several decisions of the Court of Appeal, which we discuss below. In this sense, the present appeal clearly involves a "matter arising under" the Bankruptcy Act.
29 However, the question does not end there. The text of s 7(3) and (5) must be construed in their context.
30 One aspect of that context is the scope and objects of the Cross-Vesting Act, which we have discussed above. The Cross-Vesting Act deals with problems arising from the existence of State and federal court systems with overlapping jurisdictions by conferring additional federal jurisdiction on State supreme courts. Its purposes (as set out, for example, in the Preamble) do not include more far-reaching reform of the respective court systems. We return to this point below.
31 A second aspect of the context is that the cases decided by the supreme courts of the States include a number that do not involve any question that comes within ss 75 or 76 of the Constitution, and in which federal jurisdiction is therefore not involved. The legislative power of the Commonwealth to invest a court of a State with federal jurisdiction and to make laws incidental thereto (ss 77(iii) and 51(xxxix) of the Constitution), at least at first blush, does not reach those cases; yet s 7(3) of the Cross-Vesting Act, if read literally, applies to them so as to dictate the court to which an appeal may go. It does so in a way that coincides with the existing laws of each State, but that is not the point. It is not the role of the Commonwealth Parliament to dictate the flow of appeals through State courts in non-federal matters, and s 7(3) is unlikely to have been intended to do so. To avoid trespassing on the States' ability to legislate for their own court systems, the phrase "decision of a single judge of the Supreme Court of a State" needs to be understood in a way that limits s 7(3) to cases in federal jurisdiction.
32 A third aspect of the context is the pre-existing regime of federal jurisdiction conferred by s 39(2) of the Judiciary Act. A feature of the "autochthonous expedient of conferring federal jurisdiction on State courts" (as it was described in R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 268 (Dixon CJ, McTiernan, Fullagar and Kitto JJ)), including the choice of law provisions in ss 79-80 of the Judiciary Act, is that federal cases become part of the normal flow of business in those courts and usually do not even need to be consciously identified as such. Further, since Ah Yick v Lehmert (1905) 2 CLR 593, it has been understood that s 77(iii) of the Constitution includes power to confer both original and appellate jurisdiction on State courts in federal matters and that s 39(2) of the Judiciary Act does so. The reference in s 39(2) to the "several jurisdictions" of State courts, according to Griffith CJ (at 604-605), accommodates the fact that some State courts exercise appellate jurisdiction. So understood, s 39(2) provides for a case in which a State court exercises federal jurisdiction (eg because it involves the application of Commonwealth legislation) to proceed on appeal through that State's court system in accordance with the legislation of the State.
33 Read literally, therefore, s 7(3) does work that is already done by s 39(2) in so far as it applies to cases where the jurisdiction exercised by the supreme court of a State is derived from that provision. It is otiose to that extent. This tends to suggest that the intended target of the phrase "decision of a single judge of the Supreme Court of a State" was not all decisions in the exercise of federal jurisdiction, but a narrower class of decisions. The class of decisions in which s 7(3) actually has work to do is decisions in cases where the supreme court exercises the jurisdiction conferred by s 4 of the Cross-Vesting Act.
34 Also, if read literally, s 7(5) effected an implied partial repeal of s 39(2) and a fundamental change in the allocation of jurisdiction in respect of "matter[s] arising under" any of the Acts listed in the Schedule to the Cross-Vesting Act. For example, an issue might arise in a contract case concerning whether copyright subsisted in a particular work under the Copyright Act 1968 (Cth) (the Copyright Act). A State supreme court hearing that case would be exercising federal jurisdiction under s 39(2). Prior to the Cross-Vesting Act, any appeal would have gone to the State's court of appeal. However, because the Copyright Act is listed in the Schedule to the Cross-Vesting Act, a literal reading of s 7(5) would direct the appeal in that contract case to the Federal Court.
35 The Bankruptcy Act, with which we are concerned here, is a further and slightly more complicated example. As at the date of enactment of the Cross-Vesting Act, s 27 of the Bankruptcy Act invested "jurisdiction in bankruptcy" in the Federal Court and the supreme court of each State and the Northern Territory. Thus, for example, a creditor's petition or an application to set aside a bankruptcy notice could be heard and determined in any of those courts. However, under s 38 of that Act, an appeal from a judgment of a court exercising jurisdiction in bankruptcy lay only to the Federal Court. Meanwhile, a case like the present one (involving a matter "arising under" the Bankruptcy Act but not "jurisdiction in bankruptcy") would go to the relevant State supreme court under s 39(2); and, as discussed above, any appeal would proceed to that State's court of appeal.
36 It is important to note that, at that time, the Federal Court did not have the broad jurisdiction in matters arising under laws of the Commonwealth that is now found in s 39B(1A)(c) of the Judiciary Act; its jurisdiction comprised judicial review of decisions of officers of the Commonwealth (s 39B(1)) and specific grants in other legislation (of which s 27 of the Bankruptcy Act was an example). Hence, the Federal Court would not have seen cases like the present one, either at first instance or on appeal. Read literally, s 7(5) directed into the Federal Court appeals in a wide range of cases - such as cases concerning the fiduciary duties of executors - of kinds which the Court did not hear at first instance and had previously not heard on appeal.
37 Three things can be said about these effects of a literal reading of s 7(5). First, the policy rationale for such changes is far from clear. Secondly, they go well beyond the objects that appear from a broader reading of the Cross-Vesting Act. Thirdly, there is no hint in the relevant extrinsic materials that such changes were in contemplation. To the extent that the purpose of s 7(5) is discussed in those materials, the discussion suggests an intention only to prevent existing areas of exclusive appellate jurisdiction from being diluted by cross-vesting.
(a) The Explanatory Memorandum to the Jurisdiction of Courts (Cross-Vesting) Bill 1987 (Cth) (the Bill) said that the Bill contained provisions (including cl 7) to "recognise the special role of the Federal Court in matters in which it now has … exclusive original or appellate jurisdiction" (at [8]). Describing what is now s 7, it said (at [20]):
But for clause 7, the full cross-vesting of federal and State jurisdiction between the relevant courts at the appellate levels as well as at first instance could, for example, result in an appeal being taken from a single judge of a State Supreme Court to the Full Federal Court in matters that, apart from the cross-vesting legislation, would have been entirely outside the jurisdiction of the Federal Court. Similarly, the full cross-vesting could result in appeals being taken from a single judge of the Federal Court or Family Court to the Full Supreme Court of a State. Cross-vesting could also give rise to appeals from the Federal Court to the Full Family Court, or from a State Supreme Court to the Full Family Court of a State. Clause 7 is designed to prevent the cross-vesting from giving rise to any such appeals except where a matter in an appeal from a single judge of a State Supreme Court is a matter arising under a Commonwealth Act specified in the Schedule to the Bill. In such a case, the whole appeal will lie only to the Full Federal Court. The scheduled Acts are Acts, such as the Bankruptcy Act 1966 and the Commonwealth Electoral Act 1918, under which the Full Federal Court now has exclusive appellate jurisdiction.
(Original emphasis.)
(b) In the Second Reading Speech to the Bill (Commonwealth Parliamentary Debates, House of Representatives, 22 October 1986, 2556), the Attorney-General (Mr Bowen) said, in relation to appeals:
The special role of the Federal Court is also recognised in relation to appeal matters which presently lie within the exclusive appellate jurisdiction of the Federal Court. The Schedule to the Bill lists certain Acts such as the Bankruptcy Act 1966 and the Commonwealth Electoral Act 1919 [sic]. Appeals in matters under the listed Acts will remain within the exclusive appellate jurisdiction of the full Federal Court.
(Emphasis added.)
(c) The corresponding State Acts contained provisions that were the direct equivalent of s 7. The Explanatory Note to the Jurisdiction of Courts (Cross-Vesting) Bill 1987 (NSW) described cl 7 of that Bill in exactly the same way as the Commonwealth Explanatory Memorandum quoted above.
(d) Proposals for the cross-vesting of jurisdiction had a longer history, which was summarised by Kirby J in Gould v Brown [1998] HCA 6; 193 CLR 346 at [260]-[262]. A significant step in that history was the Report of the Judicature Sub-Committee of the Australian Constitutional Convention, dated October 1984, which recommended legislation to cross-vest jurisdiction at trial level. To deal with appeals, the Sub-Committee recommended the creation of an Australian Court of Appeal, while noting that it would be open instead to extend the cross-vesting of jurisdiction to appeals. It did not go into any detail about how that should be done. The proposal for an Australian Court of Appeal did not find favour. As noted in the Second Reading Speech (referred to above), the proposal for cross-vesting was then taken up by the Standing Committee of Attorneys-General, which referred the matter to the Special Committee of Solicitors-General. However, our researches have not brought to light any reports or public records of the deliberations of these bodies.
38 In themselves, the considerations mentioned in the previous paragraph might well not justify a departure from the ordinary meaning of the text enacted by the Parliament. However, the second aspect of context mentioned above (at [31]) adds significant weight to the argument for reading the provision down.
(a) As we have noted, in order to avoid an operation that constitutes an unheralded and potentially invalid intrusion into the ability of the States to legislate with respect to their judicial systems, the phrase "decision of a single judge of the Supreme Court of a State" in s 7(3) needs to be read down in some way. It must be limited to decisions concerning matters in federal jurisdiction or some subset thereof.
(b) The phrase "decision of a single judge of the Supreme Court of a State" in s 7(3) needs further reading down if it is to avoid unnecessary overlap with s 39(2). That is achieved by construing the phrase as referring to a decision in a proceeding that has come before the relevant supreme court as a result of the operation of the provisions of the Cross-Vesting Act - a construction which has the virtue of drawing on the purposes of the Act as a whole.
39 The phrase "a decision of a single judge of the Supreme Court of a State" also appears in s 7(5), and ordinary principles of construction indicate that it should be given the same meaning as it has in s 7(3): Regional Express Holdings Ltd v Australian Federation of Air Pilots [2017] HCA 55; 262 CLR 456 at [21] (Kiefel CJ, Keane, Nettle, Gordon and Edelman JJ).
40 The result of applying in s 7(5) the construction of the phrase at which we have arrived is that s 7(5) has nothing to say about proceedings involving the exercise of federal jurisdiction conferred by s 39(2). Its effect is only to prevent the cross-vesting of additional jurisdiction to State courts from eroding areas in which the Federal Court already had exclusive appellate jurisdiction. This understanding of s 7(5) gains additional support from the fact that it aligns the subsection with the purposes of the Cross-Vesting Act, accords with the understanding in the extrinsic materials, and avoids the surprising results of a literal reading referred to above.
41 In our view, therefore, s 7(5) does not apply to the present case. This is not because the appeal does not involve determination of a "matter arising under" the Bankruptcy Act. Rather, it is because s 7(5) applies only to an appeal from a decision made in the exercise of cross-vested jurisdiction. Section 7(5) operates only as an aspect of the cross-vesting scheme.