Gorkowski v Turner
[2014] VSC 200
•9 May 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT LIST
No. S CI 2013 04159
| MARIA GORKOWSKI | Plaintiff |
| v | |
| DENNIS ANTHONY TURNER (AS TRUSTEE FOR THE BANKRUPT ESTATE OF RICHARD J GORKOWSKI) (A BANKRUPT) | Defendant |
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JUDGE: | VICKERY J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 April 2014 | |
DATE OF JUDGMENT: | 9 May 2014 | |
CASE MAY BE CITED AS: | Gorkowski v Turner | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 200 | |
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PRACTICE AND PROCEDURE – Whether Supreme Court has jurisdiction to deal with a matter arising from a bankruptcy – Application to transfer the proceeding to Federal Court of Australia – Whether Supreme Court has jurisdiction to make the order - Section 27 Bankruptcy Act 1966 – Section 4(1) Jurisdiction of Courts (Cross Vesting) Act 1987.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Greenway of Counsel | A.I.F Lucas & Co |
| For the Defendant | Mr J Kohn of Counsel | Voitin Lawyers |
HIS HONOUR:
Introduction
The Defendant, in this application made in the Practice Court, applies to strike out this proceeding (the ’Strike Out Application’), on the basis that the Supreme Court of Victoria does not have jurisdiction to hear and determine the matter, nor does it have jurisdiction to make any orders in the proceeding. By summons dated 25 February 2014, the Defendant seeks to dismiss the proceeding on the basis that the Supreme Court lacks jurisdiction by virtue of ss 27 and 31(1)(f) of the Bankruptcy Act 1966 (Cth) (the ‘Bankruptcy Act’), which on its face confers exclusive jurisdiction for matters ‘in bankruptcy’ on the Federal Court and Federal Circuit Court.
The Plaintiff, Mrs Gorkowski, opposes the Strike Out Application. She submits that the Supreme Court is invested with federal jurisdiction to determine the matter, and to make any necessary orders in the matter, pursuant to s 4(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (the ‘Cross Vesting Act’).
Alternatively, the Plaintiff contends that if the Court determines that it lacks jurisdiction or in the event that the Court determines that the proceeding is a ‘special federal matter’ under the Cross Vesting Act, the proceeding ought to be transferred to the Federal Court and not dismissed. To this end, Mrs Gorkowski has filed a cross application seeking an order pursuant to sub-section 5(1) of the Cross Vesting Act that in the event the Court determines it does not have jurisdiction to deal with this matter, it be transferred to the Federal Court of Australia, Melbourne Registry.
Background
The relevant facts are as follows:
a. On 14 October 2010, a sequestration order was made against the estate of Richard Gorkowski (‘Mr Gorkowski’). Mr Gorkowski is the son of the Plaintiff, Mrs Gorkowski.
b. On 14 October 2010, the Trustee, who is the Defendant, was appointed trustee of Mr Gorkowski’s estate.
c. On 14 October 2010, the Trustee caused a search to be undertaken to ascertain whether Mr Gorkowski owned any real property in Victoria. According to the search results, Mr Gorkowski was the sole registered proprietor of a property located at 6 Julie Court, Ashwood, Victoria, 3147 (the ‘Property’). According to the title search, a mortgage is secured over the Property by Mr Gorkowski’s mother, Mrs Gorkowski.
d. On 15 October 2010, the Trustee caused a Statement of Affairs to be sent to Mr Gorkowski. Mr Gorkowski failed and/or refused to complete the Statement of Affairs.
e. On 3 November 2010, the Trustee wrote to Mrs Gorkowski and requested details of the amount owing on the mortgage. No response was received to this letter.
f. On 15 December 2010, the Trustee caused to be posted to Mrs Gorkowski a Notice to Produce pursuant to s 77A of the Bankruptcy Act, seeking a copy of the mortgage and a statement of account showing the amount owing on the mortgage. No response was received to this notice.
g. On 15 March 2011, the Trustee again wrote to Mrs Gorkowski enclosing a further s 77A notice seeking a copy of the mortgage and a statement of account showing the amount owing on the mortgage. The letter and notice were personally served on Mrs Gorkowski on 31 March 2011. No response was received.
h. On 4 April 2011, Mr Gorkowski was served with a notice pursuant to s 77CA of the Bankruptcy Act along with a Statement of Affairs.
i. In May 2011 and at the Trustee’s request, a notice was issued pursuant to s 77C of the Bankruptcy Act directed to Mrs Gorkowski seeking that the title to the Property be produced to the Trustee.
j. On 20 March 2012 orders were made that a summons be issued pursuant to s 81 of the Bankruptcy Act requiring Mrs Gorkowski to:
i.Attend court to be examined on oath and to give evidence in relation to the examinable affairs of Mr Gorkowski; and
ii.Bring the following books and produce them at the examination:
1. Bank statements showing the receipt of payments by Mr Gorkowski or any other person in respect to mortgage number R668397U and for the Property for the period 3 December 1991 until the date of the examination; and
2. Statements issued by Mrs Gorkowski in respect of the Property and mortgage number R668397U for the period 3 December 1991 until the date of the examination; and
3. The Certificate of Title in respect to the Property; and
4. All books and records evidencing, recording or relating to any transaction in relation to the Property.
k. Mrs Gorkowski refused to appear at the examination despite being legally obliged to do so. Further, Mrs Gorkowski refused to produce any documents pursuant to the summons.
l. On 20 May 2013, the Trustee filed an application in the Supreme Court (Proceeding number SCI 2013 02525) seeking, inter alia, orders for the delivery up of the Certificate of Title to the Property. In the alternative, orders were sought that the Registrar of Titles issue a new Certificate of Title.
m. On 12 July 2013, orders were made pursuant to s 116A(1A) of the Transfer of Land Act1958 (Vic) that within 7 days Mr Gorkowski or Mrs Gorkowski produce Certificate of Title Volume 08319 Folio 742 to the solicitors for the Trustee.
n. Mr Gorkowski and Mrs Gorkowski refused to comply with the above orders. As a result, subsequent orders were made that:
i.The Registrar of Titles cancel Certificate of Title Volume 08319 Folio 742 containing the land in Lot 1 on Plan of Subdivision 047220.
ii.The Registrar of Titles create a new folio of the Register and Certificate of Title for the land in Certificate of Title Volume 08319 Folio 742 containing the land in Lot 1 on Plan of Subdivision 047220.
iii.The Court finds and declares for the purpose of subsection 27B(6) of the Transfer of Land Act 1958 that the Trustee is the person entitled to delivery of the Certificate of Title to be created.
o. On 13 August 2013, Mrs Gorkowski filed these proceedings in the Supreme Court of Victoria (Proceeding Number S CI 2013 04159). According to the Statement of Claim, Mrs Gorkowski alleges that it was the common intention of her and Mr Gorkowski for her to own the Property and for the beneficial interest to pass to Mr Gorkowski on Mrs Gorkowski’s death.
p. The Trustee has filed a defence.
q. The issue which arises is whether the Supreme Court has jurisdiction to hear and determine this proceeding and make orders in respect of it.
Relevant Provisions of the Bankruptcy Act
Section 58(1)(a) of the Bankruptcy Act provides that:
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee;
Section 27(1) of the Bankruptcy Act provides:
27 Bankruptcy courts
(1)The Federal Court and the Federal Circuit Court have concurrent jurisdiction in bankruptcy, and that jurisdiction is exclusive of the jurisdiction of all courts other than:
(a)the jurisdiction of the High Court under section 75 of the Constitution; or
(b)the jurisdiction of the Family Court under section 35 or 35A of this Act.
Section 5 of the Bankruptcy Act defines ‘bankruptcy’ in relation to jurisdiction to mean:
jurisdiction ... under or by virtue of this Act.
The ‘Court’ is defined by s 5 of the Bankruptcy Act as a ‘court having jurisdiction in bankruptcy under this Act’.
Further, s 31 of the Bankruptcy Act sets out examples of matters which may fall within the exercise of jurisdiction in bankruptcy to be heard in open court. Relevantly, s 31 provides that:
31 Exercise of jurisdiction
(1)In exercising jurisdiction under this Act, the Court shall hear and determine the following matters in open Court:
…
(f)applications to declare for or against the title of the trustee to any property.
The Present Proceeding
In August 2013, the Plaintiff commenced the present proceeding against the Defendant seeking a declaration that she is the beneficial owner of the Property, which is situated in Victoria. The Property was registered in the name of the Plaintiff’s son but, since his bankruptcy, has since been registered in the name of the Defendant, as trustee in bankruptcy.
Relevant Case Law on the Bankruptcy Act
It was held by the Full Federal Court in Scott v Bagshaw[1] that applications declaring for or against the title of the trustee to any property are encompassed within the concept of bankruptcy. The Full Court, Drummond, RD Nicholson and Katz JJ, considered a claim to impugn the title of the trustees in bankruptcy to property that vested in them under the Bankruptcy Act. The Court held that the proceeding was ‘under or by virtue of’ the Bankruptcy Act and was therefore within the exclusive jurisdiction of the Federal Courts pursuant to s 27(1) of the Bankruptcy Act.
[1](2000) 99 FCR 573 (‘Scott v Bagshaw’).
In Scott v Bagshaw the Full Court held that the drafters of the Bankruptcy Act intended that applications having the effect of making declarations for or against the title of the trustee to any property would be encompassed within the legislation. Their Honours considered the pleadings filed in the proceeding before them and said:[2]
... the undoubted effect of an order being made in the terms sought by the appellant would be that a declaration would be made against the title of the third respondent. Upon the third respondents’ becoming trustees, the title to the properties (and subsequently to the money representing part of the properties) became vested in them: subs 58(1) and s 132 of the Act. The consequence of any such order must therefore be that it would have a necessary adverse effect on the title of the third respondent to the extent that it is established title in the appellant. That is a matter that falls within the jurisdiction in bankruptcy.
[2]Scott v Bagshaw (2000) 99 FCR 573, 577 [20].
This reasoning has been followed in subsequent cases.
In Meriton Apartments Pty Ltd v Industrial Court of New South Wales[3] Greenwood J considered Scott v Bagshaw and the Federal Court’s jurisdiction pursuant to s 27(1) of the Bankruptcy Act. Greenwood J observed:[4]
In Scott v Bagshaw (2000) 99 FCR 573, the Full Court of this court again considered the source and scope of the court’s jurisdiction in bankruptcy in proceedings in which the trustee of a family trust asserted an equitable charge over three properties in support of a loan made to the registered proprietors, a husband and wife. The trustees in bankruptcy of the estate of the husband denied any entitlement in the appellant trustee to an equitable mortgage of Torrens title land and contended that the appellant’s claim related to a provable debt under s 82 of the Bankruptcy Act. The appellant required leave under s 58(3)(b) to commence the proceeding.
Applying the earlier authorities, the court described s 27 as the "seminal" source of the court’s jurisdiction in bankruptcy. The court held that s 27 fell to be understood in context and that s 31(1)(f) elucidated what the drafter "had in mind as falling within ‘bankruptcy’ in s 27(1) as defined in s 5(1)". Thus, applications declaring for or against the title of the trustee to any property would be encompassed within the s 27 concept of jurisdiction in bankruptcy. The court distinguished Sutherland v Brien on the ground that s 31(1)(f) made it plain that as against the trustees in bankruptcy, the proceeding before the Full Court was within s 27 as a proceeding under or by virtue of the Bankruptcy Act. In Green v Schneller [2001] NSWSC 897, Barrett J after considering Sutherland v Brien and Scott v Bagshaw made this observation at [22]:
When persons become bankrupt, it is necessary for courts to determine all kinds of questions about the consequences. Many of those questions will depend for their answers on the provisions of the Bankruptcy Act. One class of such questions relates to the nature of the rights of persons to property. Austin J held that nothing in the Bankruptcy Act precludes the exercise in such cases of the well-established jurisdiction of courts other than those mentioned in s 27(1) "to determine and declare rights to property and make orders as to its destination". But that undoubted jurisdiction will yield to any aspect of the jurisdiction for determination and declaration of such rights which the Bankruptcy Act itself places in the hands of s 27(1) courts. In Scott v Bagshaw the Full Federal Court noted that among the matters so placed in the hands of those courts, is "applications to declare for or against the title of the trustee to any property". Because this is one of the matters s 31(1) of the Act requires "the Court" to hear an open court, it is identified as a matter within the definition of "bankruptcy" and thereby seen to be within s 27(1). That aspect of the general jurisdiction "to determine and declare rights of property and to make orders as to its destination" which entails "applications to declare for or against the title of the trustee to any property" is accordingly reposed in s 27(1) courts alone.
[3](2008) 171 FCR 161.
[4]Meriton Apartments Pty Ltd v Industrial Court of New South Wales (2008) 171 FCR 161 [111]-[112].
Greenwood J’s observations have been adopted in numbers of cases such as George v Fletcher;[5] Cordes v Dr Peter Ironside Pty Ltd;[6] and National Australia Bank Ltd v Hunter.[7]
[5][2008] FCA 1848, [16]-[21].
[6][2009] QCA 302, [39]-[40].
[7][2013] NSWSC 71, [36]-[39]. See also Green v Schneller (2001) 164 FLR 82, Davies v Gertig (No 2) (2002) 83 SASR 521, Re Denby [2002] QCS 117 and Sutherland v Brien (1999) 149 FLR 321.
Further, in Green v Schneller,[8] Barrett J upheld the decision in Scott v Bradshaw. His Honour held that the general jurisdiction to determine and declare rights of property entails ‘applications to declare for or against the title of the trustee to any property’ and accordingly is reposed in the courts contemplated by s 27(1) of the Bankruptcy Act alone.
[8][2001] NSWSC 897.
A judgment of an intermediate court of appeal is effectively binding on this Court unless the Court is persuaded that the decision is plainly wrong.[9]
[9]Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, 492; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 90 [135].
Accordingly, without more, the reasoning in Scott v Bagshaw should ordinarily be followed, in which event, as conceded by the Plaintiff, the current proceeding falls under s 27(1) of the of the Bankruptcy Act as an exercise of bankruptcy jurisdiction and this Court is denied jurisdiction in respect of it.
However, in this case, the Plaintiff contends and submits that the Supreme Court is invested with federal jurisdiction by virtue of s 4(1) of the Cross Vesting Act. This point has not previously been argued or determined by any Court in Australia.
As set out in the preamble to the Cross Vesting Act the statute provides that its purpose is to establish a system of cross-vesting of jurisdiction between federal and state courts.
Relevant Provisions of the Cross Vesting Act
By operation of s 4(1) of the Cross Vesting Act, federal jurisdiction is invested in the Supreme Court in the following circumstance:
(1) where:
(a)the Federal Court … has jurisdiction with respect to a civil matter, whether that jurisdiction was conferred before or after the commencement of this Act; and
(b)the Supreme Court of a State … would not, apart from this section, have jurisdiction with respect to that matter:
then:
(c)in the case of the Supreme Court of a State – that court is invested with federal jurisdiction with respect to that matter.
Set out below is the full text of s 4 of the Cross Vesting Act as it appears in the statute:
4 Additional jurisdiction of certain courts
(1)Where:
(a)the Federal Court or the Family Court has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b)the Supreme Court of a State or Territory would not, apart from this section, have jurisdiction with respect to that matter;
then:
(c)in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory)--that court is invested with federal jurisdiction with respect to that matter; or
(d)in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory) jurisdiction is conferred on that court with respect to that matter.
(2)Where:
(a)the Supreme Court of a Territory has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b)the Federal Court, the Family Court or the Supreme Court of a State or of another Territory would not, apart from this section, have jurisdiction with respect to that matter;
jurisdiction is conferred on the court referred to in paragraph (b) with respect to that matter.
(3)Where a proceeding is transferred to the Federal Court, the Family Court or a State Family Court of a State, that court has, by virtue of this subsection, jurisdiction with respect to so many of the matters for determination in the proceeding as that court would not have apart from this subsection.
(4)This section does not apply to a matter arising under:
(a)the Conciliation and Arbitration Act 1904; or
(ab)the Fair Work Act 2009; or
(aba)the Fair Work (Building Industry) Act 2012; or
(ac)the Fair Work (Registered Organisations) Act 2009; or
(ad)the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009; or
(b)the Workplace Relations Act 1996; or
(ba) the Native Title Act 1993; or
(c)section 45D, 45DA, 45DB, 45E, 45EA,46A, 155A or 155B of the Competition and Consumer Act 2010; or
(d)a provision of Part VI or XII of the Competition and Consumer Act 2010 so far as the provision relates to section 46A, 155A or 155B of that Act.
The Plaintiff submitted that it follows that s 4(1) will only invest jurisdiction, if apart from that section, the Supreme Court did not have jurisdiction in the matter.
Section 4 of the Cross Vesting Act needs to be considered together with s 6 of that Act. Section 6 relevantly provides that:
(1) If:
(a)a matter for determination in a proceeding that is pending in the Supreme Court of a State or Territory is a special federal matter; and
(b)the court does not make an order under subsection (3) in respect of the matter;
the court must transfer the proceeding in accordance with this section to the Federal Court or a court mentioned in paragraph (2)(b).
Section 3(1) of the Cross Vesting Act defines ‘special federal matter’ as meaning, inter alia, the following:
(e)a matter that is within the original jurisdiction of the Federal Court by virtue of section 39B of the Judiciary Act 1903, being a matter in respect of which the Supreme Court of a State or Territory would not, apart from this Act, have jurisdiction.
Section 39B of the Judiciary Act 1903 (Cth) provides:
(1A)The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter:
(c)arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter.
Section 19(1) of the Federal Court of Australia Act1976 provides that the Federal Court has such original jurisdiction as is vested in it by laws made by the Commonwealth Parliament.
The Bankruptcy Act is a law made by the Commonwealth Parliament.
Case Law on the Cross Vesting Act
In relation to s 4(4) of the Cross Vesting Act, the Full Court of the Federal Court observed in NEC Information Systems v Iveson that:[10]
[T]here are matters in which the [Federal] Court has exclusive jurisdiction conferred by other laws, being jurisdiction to which the [Cross Vesting Act] does not apply. Section 4(4) of the [Cross Vesting Act] specifies as falling within this special category matters arising under the Industrial Relations Act 1988 (Cth), the Conciliation and Arbitration Act 1904 (Cth) and ss 45D and 45E of the Trade Practices Act … In these cases, what (in another context) Higgins J called the “manifest object” of the Act is not to disturb the exclusive conferral of jurisdiction upon this court: George Hudson Ltd v Australian Timber Workers’ Union (1923) 32 CLR 413, 444.
[10](1992) 108 ALR 561, 567.
It is notable, and central to the Plaintiff’s argument, that s 4(4) of the Cross Vesting Act does not exclude matters under the Bankruptcy Act from the operation of s 4(1).
It was on this basis that the Plaintiff contended that, as matters arising under the Bankruptcy Act are not excluded from the operation of s 4(1) of the Cross Vesting Act, the Supreme Court of Victoria is invested with the appropriate federal jurisdiction to hear and determine the proceeding and make binding orders in relation to it.
In support of her submission, the Plaintiff relied upon the reasoning of the Full Federal Court in Re Wilcox, Ex parte Venture Industries Pty Ltd & ors.[11] In that case the Full Court of the Federal Court concluded that:[12]
In our view the legislative history of s 4 demonstrates a clear legislative intention that if the exclusivity of jurisdiction of the Federal Court provided for in other legislation was not to be disturbed by the CVA, then that was to be achieved by the exclusion of such matters from s 4(1) by means of those matters being stated as excluded under s 4(4).
[11](1996) 137 ALR 47.
[12]Re Wilcox, Ex parte Venture Industries Pty Ltd & ors (1996) 137 ALR 47, 58-59.
Further, the Plaintiff referred to the cross-vesting of bankruptcy jurisdiction being, in fact, contemplated in the Explanatory Memorandum prepared in relation to the Bankruptcy Legislation Amendment Bill 1996 which, at paragraph 81, states:[13]
Bankruptcy matters will still be able to be dealt with by Supreme Court of the States and the Northern Territory under the Jurisdiction of Courts (Cross-vesting) Act 1987 in appropriate cases.
[13]Bankruptcy Legislation Amendment Bill 1996 was assented to on October 29 1996, and enacted as the Bankruptcy Legislation Amendment Act 1996 (Cth).
Nygh’s Conflict of Laws in Australia[14] makes the following reference to cross-vesting and bankruptcy in terms which are to the same effect as the Explanatory Memorandum:
Under the Bankruptcy Act, concurrent jurisdiction in bankruptcy ‘throughout Australia’ is vested in the Federal Court of Australia and the Federal Magistrates’ Court [as it then was]. The Supreme Courts of the states and territories no longer have original jurisdiction in bankruptcy, as they once did, but they may deal with bankruptcy matters by virtue of the cross-vesting legislation.
[14]M Davies, A Bell, P Brereton, Nygh’s Conflict of Laws in Australia (LexisNexis 2013), p 741 [36.47].
Principal Contention of the Defendant
It was the principal contention of the Defendant that in the present case, s 58 of the Bankruptcy Act gives the Trustee a right, which he claimed, to the Property. It was submitted that for Mrs Gorkowski to succeed the Supreme Court would have to make a declaration “against the title of the trustee” to the Property. Mrs Gorkowski cannot succeed without the Supreme Court finding that Mr Gorkowski’s interest in the Property did not vest in the Trustee on Mr Gorkowski’s bankruptcy. In the circumstances, this matter is a special federal matter arising under the Bankruptcy Act which cannot be determined by the Supreme Court.[15]
[15]See also National Australia Bank Limited v Hunter Anor [2013] NSWSC 71.
For this reason it was submitted that the Supreme Court would not, apart from relying on s 4 of the Cross Vesting Act, have jurisdiction in this matter. There are no special reasons for the Supreme Court to determine this matter and therefore the matter ought to be struck out or, subject to the threshold requirements set out in the Cross Vesting Act being satisfied, transferred to the Federal Court or the Federal Circuit Court.
Jurisdiction under s 4(1) Cross Vesting Act
For the reasons advanced by the Plaintiff, I am satisfied that pursuant to s 4(1) of the Cross Vesting Act, the Supreme Court of Victoria does have jurisdiction to hear and determine and make orders in relation to the proceeding which is presently before it in this matter.
Whether Proceeding a ‘Special Federal Matter’
Further, although the Bankruptcy Act by virtue of s 27 provides that the jurisdiction of the Federal Court of Australia and the Federal Magistrates Court is ‘exclusive of the jurisdiction of all courts other than the jurisdiction of the High Court under section 75 of the Constitution’ or ‘the jurisdiction of the Family Court under section 35 or 35A of’ the Act’, bankruptcy is not a ‘special federal matter’ for the purposes of Cross Vesting Act.
The definition of ‘special federal matter’ is set out in s 3 of the Cross Vesting Act. Matters arising under the Bankruptcy Act are not included within the definition.
The only potentially relevant section is sub-paragraph (e) of s 3 which states that a special federal matter means:
(e)a matter that is within the original jurisdiction of the Federal Court by virtue of section 39B of the Judiciary Act 1903.
Section 39B(1A)(c) of the Judiciary Act 1903 confers original jurisdiction on the Federal Court in any matter “arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter”.
However, the present proceeding is not a matter ‘arising under’ the Bankruptcy Act.
The test for determining whether a matter “arises under a federal law” was set out by the High Court in R v Commonwealth Court of Conciliation; Ex parte Barrett[16] where Latham CJ said:[17]
… 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.
[16](1945) 70 CLR 141.
[17]Above at p.154.
To similar effect is Felton v Mulligan,[18] where the High Court considered what was necessary for a matter to arise under a Federal law.
[18](1971) 124 CLR 367.
Menzies J said in Felton:[19]
A matter arises under a law when it is necessary in litigation to determine whether that law confers a right or affords a defence which is an issue in the litigation. A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law.
[19]Above at p.382.
In the same case, Windeyer J said to similar effect:[20]
In my view a matter does not arise for adjudication under a law made by the Commonwealth Parliament unless a statute is relied upon as giving a right claimed or as the direct source of a defence asserted.
[20]Above at p.388.
In the present case, although the outcome of the proceeding will affect the property of the Trustee in Bankruptcy, the proceeding does not owe its existence to the Bankruptcy Act in the relevant sense. The issue in question in this proceeding does not owe its existence to any Federal law or nor will the outcome depend upon Federal law for its enforcement. No provision of the Bankruptcy Act is relied upon by either the Plaintiff or the Defendant in the pleadings either to found the Plaintiff’s causes of action or to provide a defence to the Defendant, other than paragraph [16] of the defence which pleads that this Court does not have jurisdiction to hear this dispute, founded upon s 27 of the Bankruptcy Act.
The proceeding involves the exercise of the Supreme Court’s general jurisdiction to determine equitable property rights between two individuals, one of whom happens to be a bankruptcy trustee.
Accordingly, the present proceeding is not a ‘special federal matter’ under the Cross Vesting Act and the Supreme Court of Victoria is invested with jurisdiction to determine it.
Orders
I will make Orders consistently with these reasons to give effect to my determination that the Supreme Court of Victoria has jurisdiction to hear and determine this proceeding before it and make all necessary orders in the course of case management of the matter as it progresses to trial.
The summons of the Defendant dated 25 February 2014 is dismissed.
I will hear the parties on the question of costs.
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