Matland Holdings Pty Ltd v NTZ Pty Ltd [1999] VSC 333

35. In considering whether it is appropriate that the proceeding be transferred to the Federal Court the relevant provisions pleaded in the current defence and counterclaim of the defendants raise a matter arising under Part IV of the Trade Practices Act. Accordingly, they are a "special Federal matter" within the meaning of s.3(1) of the Jurisdiction of Courts (Cross-Vesting) Act. As such, it is irrelevant to consider whether a discretion should be exercised to transfer the proceeding under s.5 of the Act. Section 6(1) of the Act renders it mandatory for a proceeding that is a special Federal matter to be transferred to the Federal Court unless, pursuant to s.6(3), the Supreme Court determines that there are special reasons for ordering that the proceeding be determined by the Supreme Court. Such reasons are other than reasons relating to the convenience of the parties.

38. The only substantive reason put forward by the defendants is that they would be deprived of a trial by jury in the Federal Court if the matter is transferred. I observe that a trial before a jury in a matter concerned with breach of contract has not occurred in this court for many years and so far as I am aware a trial has not been conducted at any point before a jury in this court where the proceeding raised matters under the Trade Practices Act. If the matter is transferred to the Federal Court it was submitted that the onus would shift to the defendants to satisfy that court of whether there should be a jury trial rather than a jury trial by right in this court. Sections 39 and 40 of the Federal Court Act enable the Federal Court to order that a proceeding be tried by a jury. It has been observed on a number of occasions that the normal method or mode of trial in the Federal Court is by judge alone (see Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Insurance Commissioner v Australian Associated Motor Insurers Ltd (No. 2) & Ors (1982) 49 ALR 714.) On the basis of the authorities it appears unlikely that the Federal Court would order a trial by jury in a proceeding of the present type. However, that is a matter for the Federal Court if and when the issue arises. I enquired of Mr C. Connor who appeared for the defendants as to whether he could direct my attention to a trial before jury in this court in a proceeding concerned with contractual and related commercial matters in modern times. He was unable to assist me.

41. In my view the argument that the defendants may be deprived of a trial by a jury is not a sufficient basis upon which to determine the proceeding should stay within the Supreme Court. I consider it extremely unlikely that a trial judge in this court would be persuaded to direct that a proceeding of this type raising the issue that it does of an apparently complex commercial transaction alleging matters such as collateral warranties and agreements, misleading and deceptive conduct, collusive dealing, price fixing and maintenance are appropriate to go before a jury in any event. I consider that a judge of this court would be as equally as difficult to persuade that the matter should proceed by way of trial by jury as would a judge of the Federal Court. In any event there is no absolute right to trial by jury in a civil proceeding in this State. It is a matter to be considered by the trial judge in each instance. See Pezzimenti v Seamer [1995] VicRp 42; (1995) 2 VR 32. Accordingly, I do not consider that the assertion on behalf of the defendants that they will be deprived of their opportunity for a trial by jury is an appropriate basis to determine that the proceeding should remain within this court.

44. The second matter relied upon by the defendants in their opposition to the application is the delay by the plaintiffs in seeking to transfer the proceedings. In my view this is not a proper basis upon which to reject the application. I consider that it is necessary and appropriate to determine whether the proceeding is one that ought or must be transferred to the Federal Court. In any event, the proceeding is not at a stage that any party would suffer prejudice by the transfer of the proceedings to the Federal Court. It follows that I reject the ground of delay relied upon by the defendants.

47. It follows from s.6(1) of the Act that I am obliged to transfer the proceeding to the Federal Court unless special reasons for not so doing are made out under s.6(3) of the Act.

50. The only basis upon which I would be satisfied of special reasons under s.6(3) of the Jurisdiction of Courts (Cross-Vesting) Act (Vic) in this proceeding would be if I considered the Supreme Court lacked power to transfer the proceeding or if the power to do so was subject to such doubt that it would be undesirable to transfer the proceeding at this point in time.

53. The only relevant issue in my view in this entire application is whether or not the consequences arising from the High Court judgment in Wakim preclude me from transferring the matter to the Federal Court. In Re Wakim the High Court had before it four sets of proceedings: ex p. McNally; ex p. Darvall; ex p. Amann; and Spinks v Prentice. In McNally and Darvall a creditor of a bankrupt brought proceedings in the Federal Court against the Official Trustee in Bankruptcy seeking orders under the Bankruptcy Act 1966 and relief by way of damages for professional negligence against solicitors and a barrister who had advised the Trustee. The solicitors and the barrister contended that the Federal Court had no jurisdiction to hear the negligence action and sought a writ of prohibition. In Amann the Federal Court had ordered that the applicant be summonsed to the court for the purpose of being examined about the affairs of a company. Amann sought orders that the Federal Court had no jurisdiction to make winding-up orders or to order the conduct of the investigation. In Spinks the applicants were summonsed to attend an examination in relation to the winding up of a company. The applicants contended that the Federal Court did not have validly conferred jurisdiction under the Corporations Law. Each of the four proceedings concerned the jurisdiction of the Federal Court in relation to cross-vesting. The High Court considered the validity of the cross-vesting legislative scheme and the corporations legislative scheme.

56. The majority of the High Court (Gleeson CJ, Gaudron, Gummow and Hayne JJ) held that the Commonwealth legislation that purported to confer State jurisdiction on Federal courts is invalid. McHugh J, with whom Callinan J agreed, held that the Jurisdiction of Courts (Cross-Vesting) Acts of the Commonwealth and each of the States are invalid insofar as they purport to give the Federal Court jurisdiction to exercise State judicial power.

"Sections 75, 76 and 77 of Ch. III of the Constitution give the Parliament that legislative power by empowering it to confer jurisdiction on Federal Courts in respect of the 'matters' specified in ss.75 and 76. State jurisdiction or State judicial power is not one of those 'matters'. If a Federal Court, or for that matter a State court, is invested with jurisdiction to determine a matter under ss.75 and 76, it is exercising Federal jurisdiction even when State law must be applied in the proceedings. If State law is determinative in a legal proceeding but there is no 'matter' within the meaning of ss.75 and 76, the court determining the rights and liabilities of the parties is exercising State judicial power and its authority to decide those rights and liabilities is an exercise of State jurisdiction."

"What prevents a State conferring jurisdiction on a Federal Court in respect of a matter specified in ss.75 or 76 is not s.109, but the negative implications arising from Ch. III of the Constitution. By granting power to the Parliament of the Commonwealth to create Federal Courts and by expressly stating the matters in respect of which the Parliament may confer jurisdiction on those courts, Ch. III impliedly forbids the conferring of any other jurisdiction on those courts by the Commonwealth or the States. The express statement of those 'matters' would be pointless if the Parliament or the States could disregard them. Moreover, the reasons that show that the States cannot confer jurisdiction on a Federal Court in respect of ss.75 and 76 matters point just as strongly, perhaps moreso because of s.77(iii), to the conclusion that the States cannot confer State jurisdiction on Federal Courts. ... Federal Courts are created pursuant to the power conferred upon the Commonwealth by s.71 ... They are not created under s.71 as courts of general jurisdiction waiting to receive grants of Federal and non-Federal jurisdiction. They are created for the express purpose of exercising Federal jurisdiction. Neither the Parliament of the Commonwealth nor the legislatures of the States can give them any other jurisdiction. With all respect to those who think that the States can do it and that the Parliament of the Commonwealth can consent to it being done, I can only say that it seemed to me to be a bizarre conclusion."

"If the sub-stratum of fact which gives rise to a matter in Federal jurisdiction cannot be effectively disposed of without the application of State law, the issues of State law are determined in the exercise of Federal jurisdiction (Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Fencott v Muller (1983) 152 CLR 570; Stack v Coast Securities (No. 9) Pty Ltd [1983] HCA 36; (1983) 154 CLR 261 ... The determination of State law issues in such circumstances is part of the 'accrued jurisdiction' of the Federal Courts. Federal Courts do not need the States, with or without the consent of the Parliament of the Commonwealth, to confer jurisdiction upon them before they can determine issues arising under their accrued jurisdiction. But the jurisdiction which the legislation in the present proceedings purports to confer upon the Federal Courts is not accrued Federal jurisdiction. It is an attempt to confer State jurisdiction in respect of controversies that fall outside the realm of Federal jurisdiction. ... Whether an issue, whose resolution depends upon the State law or the common law, is within the accrued jurisdiction of the Federal Court depends upon whether it is part of a 'matter' arising under s.75 or s.76 of the constitution. To be part of that 'matter' it must be part of a single controversy. And as the court said in Fencott v Muller, that 'depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. As the court went on to say in that case, 'in the end, it is a matter of impression and of practical judgment whether a non-Federal claim and a Federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter'."

71. The observations made by McHugh J in Wakim (at 856) apply in the present proceeding insofar as the issues can be gleaned from the pleadings. In the McNally and Darvall applications in Wakim the High Court dismissed the applications on the ground that the applicants had failed to show that the cases did not fall within the accrued jurisdiction of the Federal Court. In McNally and Darvall the claim against the Official Trustee was based on a Federal statute. The claims against the solicitors and the barrister were based on the common law. McHugh J observed (at 836) that such differences might point strongly against the applications being a "matter". The learned judge noted that there was nevertheless a single controversy and therefore a "matter" for the purposes of Ch. III of the Constitution where all the claims arose out of "a common sub-stratum of facts". (See also Phillip Morris Inc v Adam P. Brown Male Fashions Pty Ltd, supra at 512).

74. In considering the same issue Gummow and Hayne JJ (and with whom Gleeson CJ and Gaudon J concurred) observed (at 869):

"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. ......................................... In Fencott it was said that: 'In the end, it is a matter of impression and of practical judgment ... ' The references to 'impression' and 'practical judgment' cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy 'depends on what the parties have done, the relationships between them or among them and the laws which attach rights or liabilities to their conduct and relationships' (Philip Morris). There is but a single matter if differing claims arise out of 'common transactions and facts' or 'a common sub-stratum of facts' (Philip Morris) notwithstanding that the facts upon which the claims depend 'do not wholly coincide' (Fencott). Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter".

78. In the course of submissions before me the correct application of the principles expressed by the High Court in Wakim were not fully ventilated. Rather, the submission was made that whereas in Wakim the issue before the court was whether States could confer State power on the Federal Court in the present proceeding the State court was required to embark on a different task, namely, transfer a federal matter to the Federal Court. Such submission misconceives the analysis that is required following the judgment of the High Court in Wakim and, in particular, the observations of McHugh J and Gummow and Hayne JJ as to whether there is accrued jurisdiction. There is no evidence before me about the claims in the proceeding and hence I must determine the matter on the basis of the current pleadings. Here the plaintiffs claim breach of a collateral contract, negligence and misleading and deceptive conduct against the defendants arising out of transactions relating to the operation of a service station at Oakleigh. I will refer to the plaintiffs' claim as "the non-federal claim". The defendants attack the very agreement relied upon by the plaintiffs and allege that if there was any agreement it was null and void under Federal law. I will refer to the defendants' claim as "the federal claim". On the basis of the pleadings I am able to form the impression and reach the practical judgment that the non-federal claim and the federal claim fall within one and the same controversy and are within the ambit of a matter for the purposes of Ch III of the Constitution because the claims arise from a common transaction and a common "sub-stratum of facts". Furthermore, bearing in mind the observations of Gummow and Hayne JJ in Wakim (at 869) if the plaintiffs' claim and the defendants' claim were tried in different courts. There could be conflict in findings on issues common to the two claims. In addition, I consider it is apparent that both claims are properly joined in the one proceeding. These observations reinforce my conclusion that both claims fall within the same controversy.

81. Before turning to my conclusions it is appropriate to consider the approaches adopted by this court and other courts with respect to the cross-vesting of proceedings. Since Wakim this court has considered an application to cross-vest a proceeding to the Family Court of Australia. In Norwich Investment Management Ltd v Burke & Anor, unreported judgment of Beach J dated 12 August 1999; (1999) VSC 283, the application for cross-vesting was refused. The refusal was based upon the view that the Family Court does not have jurisdiction to determine cross-vested matters as a result of the judgment in Wakim. The facts of the proceeding in Norwich are not recited in the judgment. However, there are no matters expressed in the judgment to lead me to conclude that it bears upon the present matter. In Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation & Ors [1993] VicRp 50; (1993) 1 VR 700 Ormiston J (as he then was) considered an almost identical application to the present matter and determined that it was appropriate for the proceeding to be transferred. However, that case and other authorities were decided under different provisions. See NEC Information Systems Australia Pty Ltd v Lockhart & Ors (1992) 108 ALR 561; Metroplaza Pty Ltd v Gervan NSW Pty Ltd (in liq) and Ors (1991) 24 NSWLR 718. Section 6 of the Jurisdiction of Courts (Cross-Vesting) Act (Vic) was amended to its present form by s.5 of the Courts (General Amendment) Act 1995. The effect of the amendment was to render the transfer of a special federal matter as mandatory unless the State court determining the application was satisfied that there were special reasons to retain the proceeding in that State court. Prior to the amendment the State court exercised a different discretion.

84. I am satisfied that the proceeding as constituted by the present pleadings invokes the accrued jurisdiction of the Federal Court. It follows that I am satisfied that there is no obstacle to the transfer of the proceeding to the Federal Court arising from the judgment of the High Court in Wakim. It follows, further, that I cannot be satisfied that there are special reasons for determining that the proceeding should be determined by the Supreme Court as provided in s.6(3) of the Jurisdiction of Courts (Cross-Vesting) Act (Vic). As a consequence, pursuant to s.6(1) of the Act I am obliged to transfer the proceeding to the Federal Court.

87. However, before doing so it would be necessary for reasonable written notice to be given to the Attorneys-General of the Commonwealth and the State in accordance with s.6(4) of the Act and Order 13.06 of Ch II of the Rules of the Supreme Court. Section 6(3) of the Act provides that before an order is made that the proceeding be determined by the Supreme Court I must be satisfied that pursuant to s.6(4) reasonable written notice specifying the nature of the special federal matter has been given to the Attorneys-General for the Commonwealth and the State. That has not been done. However, directions can be made to effect such notice. I will hear the parties as to the appropriate form of order to be made to effect reasonable written notice upon the Attorneys-General. The application will be re-fixed for mention after a reasonable time has elapsed for the giving of such notice and I will make orders with respect to the timing of the notice pursuant to s.6(5) of the Jurisdiction of Courts (Cross-Vesting) Act (Vic).

I certify that this and the 11 preceding pages are a true copy of the reasons for judgment of Warren J of the Supreme Court of Victoria delivered on 7 September 1999.

1. By 4.00 p.m. on 8 September 1999 the plaintiff serve on each of the Attornies-General of the Commonwealth of Australia and the State of Victoria:

(a) notice in writing of the proceeding in accordance with s.6(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and Order 13.06 of Ch II of the General Rules of Procedure in Civil Proceedings;

(b) a copy of this order.

2. The further hearing of the plaintiffs' summons dated 1999 is adjourned for mention before the Hon. Justice Warren at 9.30 a.m. on 28 September 1999.

2. Costs reserved.

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