S Pty Ltd v BV (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2018 01512

S PTY LTD	Plaintiff
v
BV	Defendant

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	21 March 2019, further submissions on 29 March 2019 and 22 November 2019
DATE OF JUDGMENT:	11 December 2019
CASE MAY BE CITED AS:	S Pty Ltd v BV (No 2)
MEDIUM NEUTRAL CITATION:	[2019] VSC 814

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PRACTICE AND PROCEDURE – Application to transfer a proceeding by a mortgagee for recovery of possession of a property to the Family Court – Where defendant to the action has commenced proceedings under the Family Law Act 1975 (Cth) for property settlement against the mortgagor on the basis that they were in a relevant de facto relationship – Where jurisdiction of the Family Court to hear the application for property settlement is disputed and not yet determined – Whether the applicant may rely on the Jurisdiction of Courts (Cross-Vesting Act) 1987 (Cth) – If so, whether the applicant may rely on s 5(1)(b)(iii) ‘interests of justice’ of that Act as a stand-alone ground – Consideration of the proper construction of s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) – Application refused.

PRACTICE AND PROCEDURE – Application for stay of proceeding pending determination of the question of jurisdiction in the Family Court proceeding – Application refused.

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) preamble, ss 4(3), 5, 9, 15 – Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) s 5(1)(b)(ii) and s 5(9) – Re Wakim: Ex parte McNally (1999) 198 CLR 511 – Valceski v Valceski (2007) 70 NSWLR 36 – Tucker v State of Victoria [2018] VSC 389 – Hurst v Koszewski [2019] SASC 67.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr C G Button SC with Ms X Teo	Arnold Bloch Leibler
For the Defendant	Mr I R Jones QC	Marshalls & Dent & Wilmoth

TABLE OF CONTENTS

Introduction and summary.............................................................................................................. 1

Outline of the facts............................................................................................................................ 2

Procedural background..................................................................................................................... 4

Cross-vesting law............................................................................................................................... 8

Re Wakim......................................................................................................................................... 9
Amendments post Re Wakim..................................................................................................... 11

Submissions...................................................................................................................................... 16

Defendant..................................................................................................................................... 16
Plaintiff......................................................................................................................................... 17

Issues.................................................................................................................................................. 18

Analysis of the legislation.............................................................................................................. 19

Issues 1 and 2: Availability of the Commonwealth Act........................................................ 19
Is the Commonwealth Act available to the applicant at all?....................................... 19
Is the whole of s 5(1)(b) of the Commonwealth Act available to the applicant?...... 24
Conclusion on the availability of the Commonwealth Act......................................... 29

Issue 3: Proper construction of s 5(1)(b)(ii) of the Commonwealth Act.............................. 29

Issue 4: Consideration of the application in light of the legal framework........................... 36

S 5(1)(b)(iii) Commonwealth Act (assuming it applies)........................................................ 36
Principles............................................................................................................................ 36
Submissions on the facts................................................................................................... 38
Overlap of issues................................................................................................................ 39
Risk of conflicting judgments.......................................................................................... 43
Efficiency, cost and delay................................................................................................. 44
Conclusion on the interests of justice as a stand-alone ground.................................. 48

S 5(1)(b)(ii) Commonwealth Act............................................................................................... 48

Issue 5: If not transferred, should the proceeding be stayed?................................................. 52

Conclusion and orders.................................................................................................................... 54

HER HONOUR:

Introduction and summary

These reasons concern the defendant’s application for transfer of this proceeding to the Family Court, or in the alternative stay of the proceeding. The plaintiff contends that it is the mortgagee of the real estate in which the defendant resides (‘the Property’), and seeks to recover possession of the Property. The defendant has instituted proceedings under the Family Law Act 1975 (Cth) against the registered proprietor/mortgagor of the Property, with whom she contends she was in a de facto relationship. The plaintiff is a company controlled by relatives of the registered proprietor. On an interim basis in the family law proceedings the defendant seeks sole occupation of the Property, with the intention of subsequently contending that the Property is part of the pool of assets to be considered for a property settlement between her and the registered proprietor. The defendant contends that the mortgage is of no effect, and was created in an endeavour to remove the Property from the asset pool.

The parties disagree as to whether a transfer or stay should be ordered, but before considering that disagreement on the facts it is necessary to first consider the significant dispute between the parties as to the legal framework that applies, including whether the Court has jurisdiction to order a transfer. That dispute has been complicated by two factors. First, by initial uncertainty and confusion as to whether the applicant for the transfer, the defendant, relies on the state or the Commonwealth cross-vesting legislation. Submissions have been made by both parties in relation to both pieces of legislation. Secondly, by the assertions of the plaintiff that the Commonwealth legislation is not available to the applicant for Constitutional reasons. The plaintiff did not make the basis for this assertion sufficiently plain in time for notices to be given to the Attorneys-General of the states and Commonwealth as required by the Judiciary Act 1903 (Cth).

In the event, I have reached the view that even on the construction of the Commonwealth Act for which the applicant contends, she has not made out her case for transfer. For that reason, it has not been necessary to reach a concluded view on the construction of that Act advanced by the plaintiff, which would require the opportunity for the Attorneys-General to be heard if they so choose. Given the breadth of the arguments put to me, however, I do express my views, albeit on a tentative basis.

I will refuse the defendant’s application for transfer of this proceeding to the Family Court. I consider it to be premature given that the Family Court has not yet determined that it has jurisdiction to hear the defendant’s application for property settlement.

I will also refuse the defendant’s alternative application for stay of the proceeding. In addition to other reasons for that outcome, a stay at this early stage of this proceeding would stop the identification by way of pleading of the issues relating to the mortgage and whether the underlying transaction was a loan or a gift. I consider the prompt articulation of those issues will be of ultimate benefit to the parties to both proceedings.

I apologise for the delay in delivery of these reasons.

Outline of the facts

As the defendant in this proceeding is a party to a proceeding in the Family Court, I will use pseudonyms for her, the plaintiff, and the registered proprietor of the Property, as I did in a previous decision in this proceeding.[1]
[1]S Pty Ltd v BV [2019] VSC 125

The plaintiff in this proceeding, S Pty Ltd, contends that it is the mortgagee of the Property in which the defendant, BV, currently resides, and that by virtue of default under the mortgage and failure to remedy that default by the mortgagor it is entitled to an order for possession. It seeks an order for the recovery of possession of the Property from the defendant. The plaintiff initially sought to obtain that order by utilising the summary procedure for eviction provided by O 53 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Chapter I Rules’). The plaintiff now concedes that its claim should be pleaded, and proposes that the proceeding continue as if commenced by writ and that the parties’ competing contentions be pleaded. That is an appropriate concession, as the facts in this case are complicated and heavily contested, and the summary procedure is accordingly unsuitable.[2]
[2]Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241.

BV contends that she is the former de facto partner of the registered proprietor of the Property. I will call the registered proprietor JP. BV contends that their relationship began in August 2012, before the Property was acquired in 2014, and that they lived there together from 2014 until their relationship ended in January 2018 when JP moved out. BV lodged a caveat on the title to the Property in April 2018, claiming an interest by virtue of an implied, resulting or constructive trust. She commenced proceedings in the Federal Circuit Court for a property settlement against JP in July 2018. Those proceedings have now been uplifted to the Family Court by order of Judge Small made 21 February 2019.[3]
[3]BV, “Second Further Submissions of the Defendant”, Submissions in S Pty Ltd v BV (No 2), S ECI 2018 01512, 29 March 2019 (‘Defendant’s Post Hearing Submissions’), per the orders attached to the submissions.

The plaintiff, S Pty Ltd, is a company of which the directors are JP’s mother and another relative of JP. A mortgage in favour of the plaintiff was registered on the Property on 26 October 2017, some three years after JP was registered as proprietor on 21 August 2014. The plaintiff’s case is that the funds secured by the mortgage were in fact borrowed by JP to acquire the Property in 2014 and that the 2017 loan agreement recited in the mortgage merely restructured the original loan. The plaintiff contends that the mortgage is now in default by virtue of JP failing to effect the removal of the defendant’s caveat, which was lodged without the consent of the plaintiff mortgagee. JP did commence a proceeding in this Court to remove the caveat, but after the defendant commenced her proceeding in the Federal Circuit Court agreed to stay that proceeding. As a result of this default by JP, the plaintiff contends that the full amount secured by the mortgage is now due. As that amount has not been paid by the mortgagor, the plaintiff contends that it is entitled to possession under the mortgage and so has standing to bring this proceeding.

BV contends that the mortgage is unenforceable or void, and that the intent of the 2017 loan agreement and mortgage is to remove the Property from the asset pool which is the subject of her family law application.

These reasons do not determine those competing allegations. They are limited to the defendant’s application for transfer of this proceeding to the Family Court, to be heard in conjunction with the defendant’s foreshadowed application for property settlement. In the alternative, the defendant seeks a stay of this recovery proceeding until the determination of the family law proceeding, or in the further alternative until the Family Court has determined the threshold issue of its jurisdiction.

Procedural background

To understand the confusion surrounding the legislative basis of the application, it is helpful to set out some of the procedural background.

The proceeding was commenced by originating motion filed 25 September 2018 which was first returnable on 15 October 2018. The parties, through their then solicitors, agreed to adjourn the first return date to February 2019 as it was anticipated by then that the question as to whether or not the defendant and the registered proprietor had been in a de facto relationship, thus conferring jurisdiction on the Federal Circuit Court, would be heard by that court in December 2018. In the event, that hearing did not proceed. This proceeding came before me for directions on 7 February 2019 at which time I heard the plaintiff’s application for access to the Property, which I refused by reasons published 4 March 2019.[4]
[4](n 1).

Prior to the adjournment of the proceeding, the defendant had foreshadowed a possible application for transfer to the Federal Circuit Court.[5] She subsequently made that application by summons filed 18 October 2018. The summons states that the defendant seeks orders for stay of this proceeding, or, in the alternative, that the proceeding be transferred to the Federal Circuit Court pursuant to ‘s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1986 [sic] (Cth)’ on the basis that ‘it in [sic] the interests of justice more appropriate that the proceeding be determined in the Federal Circuit Court’.
[5]The Orders made in this proceeding on 15 October 2018 assume that the defendant’s foreshadowed application for transfer would be made under the Victorian cross-vesting legislation.

The power to transfer a proceeding commenced in this Court to a federal court is found in both Commonwealth and state legislation - being, respectively, the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (‘Commonwealth Act’) and the Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic) (‘State Act’). The summons refers to the Commonwealth legislation, mistakenly dating it as 1986. An initial difficulty with the summons is that neither the State nor the Commonwealth Act empower this Court to transfer proceedings to the Federal Circuit Court. That jurisdiction is conferred by the legislation only in respect of transfer to the Federal or Family Court. That difficulty was overcome by the uplifting of the defendant’s proceeding to the Family Court.[6]
[6]See (n 3)

Order 13 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (‘Chapter II Rules’) applies to an application for transfer made pursuant to either Act. The effect of r 13.10 in combination with r 77. 05 of the Chapter I Rules is that a contested application for transfer must be heard by a judge of the Court, unless referred to an associate judge. On 12 October 2018 Justice Garde of this Court made an order referring the hearing and determination of the proceeding, which includes the defendant’s summons, to me.

The defendant on the hearing of her summons reversed her preference as to the orders sought, and sought transfer to the Family Court as her preferred outcome. In contrast to the summons, which on its face refers to the Commonwealth Act, the defendant in her initial written outline of submissions prior to the hearing relied on the State Act. She submitted that ‘the ‘interests of justice’ as prescribed in s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) dictate that it is more appropriate that [this proceeding] be determined by the Family Court’ (emphasis in bold added), and so should be transferred accordingly.

The plaintiff took issue in its responsive written outline prior to hearing with the availability of transfer under the State Act. The defendant then contended, in further written submissions prior to hearing and initially at the hearing, that she could rely on both the State and Commonwealth Acts. Later in the hearing the defendant sought to rely on only the Commonwealth Act.

Given the complexity of the arguments and the limited time available prior to hearing for their articulation in written submissions, I allowed the parties to file further written submissions after the hearing. In its Post Hearing Submissions,[7] the plaintiff contends that the defendant is not able to rely at all on s 5(1)(b) of the Commonwealth Act, or only able to rely on s 5(1)(b)(ii). In her post hearing submissions, the defendant confirms that she relies on the Commonwealth Act, but nevertheless continues to put submissions in relation to the operation of the State Act.
[7]S Pty Ltd, “Plaintiff’s Post-Hearing Submissions”, Submission in S Pty Ltd v BV (No 2), S ECI 2018 01512, 27 March 2019.

In this sequence of events, the plaintiff did not make plain its challenge to the availability to the defendant of s 5 (1)(b) of the Commonwealth Act, or its contention that for Constitutional reasons the section cannot be wider than the transfer provisions in the State Act, until after the hearing. Ordinarily such a contention would require the giving of a Notice of Constitutional Matter to the Attorneys-General of the Commonwealth and the states pursuant to s 78B of the Judiciary Act 1903 (Cth). That section provides that ‘it is the duty of a court’ where a proceeding ‘involves a matter arising under the Constitution or involving its interpretation’ not to proceed until notice has been given to the Attorneys-General of the Commonwealth and the States and a reasonable time has elapsed for their consideration of the question of intervention in the proceeding or removal of the proceeding to the High Court. The section places the duty upon the court, but in practice a court ordinarily relies upon a party taking appropriate steps to identify such an issue and draw it to the attention of the court in sufficient time for notices to be given. Here the plaintiff did not take any such step in this proceeding until raising the issue in its Post Hearing Submissions.

In these circumstances, the defendant contends that the Court should proceed on the basis that the Commonwealth Act is valid, and impliedly should be read as applying in all its provisions to the defendant, thus permitting reliance on sub-paragraph (iii) of s 5(1)(b).

The plaintiff submits in its Post Hearing Submissions that Notice of a Constitutional Matter should now be given if the Court were minded to order a transfer pursuant to sub-paragraph (iii) (or sub-paragraph (i)) of s 5(1)(b) of the Commonwealth Act. The plaintiff also submits that out of an abundance of caution a Notice could be given even if the Court were not minded to grant a transfer under either provision. Either course would necessarily require a further adjournment of the application.

It is regrettable that this issue was only raised after the hearing, but understandable given the confusion prior to the hearing as to whether the defendant relied on the State or the Commonwealth Act, and the haste with which submissions were then prepared. I consider the appropriate way forward is to consider the application of sub‑paragraph (iii) of s 5(1)(b) of the Commonwealth Act on the basis that it is available to the defendant. That is the provision on which the defendant relies. If I were minded to conclude that that sub-paragraph would require a transfer, an adjournment to allow an opportunity to the Attorneys-General to be heard would be required. The Notice would be required in relation to both the preliminary question raised by the plaintiff as to whether any aspect of the Commonwealth Act is available to the defendant, and the question as to the availability of s 5(1)(b)(iii).

In fairness to the defendant I will also consider whether a transfer should be ordered pursuant to s 5(1)(b)(ii) of the Commonwealth Act, assuming it is available to her, even though she does not expressly rely on that provision. Similarly, if I were minded to conclude that that sub-paragraph required a transfer, I would adjourn the proceeding to allow for a Notice to the Attorneys-General on the preliminary question raised by the plaintiff as to the availability of the Commonwealth Act.

In the course of preparation of these reasons, I became aware of a decision subsequent to the hearing, Hurst v Koszewski,[8] a single judge decision of the South Australian Supreme Court, the facts of which have relevant similarity with this case. I gave the parties an opportunity to put further submissions in relation to that case. Both parties took that opportunity.
[8][2019] SASC 67.

Cross-vesting law

When first passed, significant provisions of the Commonwealth Act and the State Act were in relevantly identical terms, as part of a mutual cross-vesting regime agreed between the Commonwealth and the states. Section 4 of the Commonwealth Act conferred on the Supreme Courts of states and territories jurisdiction of the Federal Court and the Family Court in respect of civil matters that those Supreme Courts would not otherwise have had. Sub-sections 4(1) and 4(2) of the State Act, and its counterparts in other states, purported to reciprocally confer on the Federal and Family Courts respectively, jurisdiction in respect of ‘State matters’, relevantly meaning matters in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth.

The reciprocal conferral of jurisdiction was complemented by provisions in relevantly identical terms for transfer of proceedings from, inter alia, a state Supreme Court to the Federal or Family Court, and vice versa. This provision was found in sub-section 5(1) of each of the Commonwealth and the State Acts. A further aspect of the scheme were the reciprocal provisions in each of the Commonwealth and state Acts accepting the jurisdiction so conferred, or conferring on the courts of their relevant polities the jurisdiction of the other polities.[9] Section 9(2) of the Commonwealth Act relevantly provided that the Federal or Family Court may exercise jurisdiction conferred on it by a law of a state relating to cross-vesting of jurisdiction. Section 9 of the State Act was in relevantly reciprocal terms by providing that the Supreme Court could exercise jurisdiction conferred on it by the Commonwealth Act.
[9]Re Wakim (1999) 198 CLR 511, 573 (Gummow and Hayne JJ, Gleeson CJ and Gaudron J agreeing).

Re Wakim

The constitutional validity of the cross-vesting scheme came before the High Court in Re Wakim; Ex parte McNally[10] (‘Re Wakim’). In Re Wakim, the majority of the High Court[11] held that a state legislature could not confer state jurisdiction on a federal court, even by virtue of what was intended to be a co-operative arrangement with the Commonwealth. Only the Commonwealth could confer that jurisdiction on a federal court. The majority also held that the Commonwealth could only confer jurisdiction on a federal court in accordance with the heads of federal jurisdiction as limited by Ch III of the Constitution.
[10]Ibid.
[11]Kirby J dissenting.

The decision known as Re Wakim in fact concerned four proceedings, in each of which the Federal Court purported to exercise jurisdiction under a state law, or was asked to do so by a party. In other words, the issues before the High Court in Re Wakim did not directly concern the transfer of a proceeding from a state Supreme Court to a federal court, as here. Rather, the proceedings giving rise to Re Wakim, which each concerned ‘State matters’ had already been instituted in the Federal Court. It follows that the issues in Re Wakim arose from the purported conferral of state jurisdiction on the Federal Court by virtue of s 4 of a state cross vesting Act, namely of New South Wales, and the purported consent to that conferral, or purported Commonwealth conferral of that state jurisdiction on the Federal Court, effected by s 9 of the Commonwealth Act.

Two of the proceedings which formed the subject matter of Re Wakim concerned the exercise by the Federal Court of jurisdiction under state or territory corporations legislation. It is not necessary to discuss the decision of the High Court in respect of those proceedings further for this application. The other two proceedings in Re Wakim were instituted in the Federal Court by a creditor of a bankrupt, Mr Wakim, against the solicitors, Mr McNally and another, and counsel, Mr Darvall, for the trustee of the bankrupt. The creditor sought damages in negligence (a matter of state law) against those solicitors and counsel. The creditor had also instituted a proceeding against the trustee in the Federal Court under the Bankruptcy Act (plainly a matter within the jurisdiction of the Federal Court) arising from the same facts. The question with which the High Court was concerned was whether the Federal Court had jurisdiction to hear the negligence claims.

Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ, Kirby J dissenting, held that it was only the Commonwealth, not a state, that can validly confer jurisdiction on a federal court. The reason being, as expressed by Gummow and Hayne JJ that:

What gives courts the authority to decide a matter is the law of the polity of the courts concerned, not some attempted conferral of jurisdiction on those courts by the legislature of another polity.[12]

[12]Re Wakim (n 9) 573 (Gummow and Hayne JJ).

The specific question before the Court then became whether s 9(2) of the Commonwealth Act, being the Commonwealth source of the conferral of state jurisdiction on the Federal Court, was valid. The Court held that the sub-section was invalid, in so far as it attempted to confer on the Federal Court jurisdiction that went beyond the limited matters authorised by the Constitution. The permitted matters of federal jurisdiction, said the Court, are defined by ss 75-77 of the Constitution. The effect of those sections is that the Commonwealth Parliament may define the jurisdiction, including the exclusive jurisdiction, of a federal court other than the High Court but only with respect to defined matters, which include matters arising under a Commonwealth law. It follows that the Commonwealth Parliament may not validly confer on a federal court jurisdiction with respect to a matter not listed in s 75 or s 76.[13]
[13]Ibid 558 (McHugh J); 574-575 and 582 (Gummow and Hayne JJ, with whom Gleeson CJ and Gaudron J agreed).

On the particular facts of the three proceedings instituted by Mr Wakim in the Federal Court, however, the Court held by majority[14] that the proceedings against the solicitors and counsel for the liquidator were nevertheless within the accrued jurisdiction of the Federal Court. This was because the proceedings against the solicitor and counsel arose from the same set of events as the proceeding against the liquidator and sought the same damage. In those circumstances there was a ‘common substratum of facts in each proceeding’ leading to the conclusion that the three proceedings raised a ‘single justiciable controversy’.[15]

Amendments post Re Wakim

[14]Gleeson CJ, Gaudron, Gummow and Hayne JJ. Callinan and Kirby JJ dissenting with different reasoning and McHugh J not deciding.

[15]Re Wakim (n 9) 587 (Gummow and Hayne JJ).

Following the decision in Re Wakim, both the Commonwealth and the State Acts were amended.[16] In the discussion that follows, I do not seek to set out the amendments exhaustively.
[16]The State Act was amended by Part 6 of the Federal Courts (Consequential Amendments) Act 2000 (Vic) and the Commonwealth Act by the Jurisdiction of Courts Legislation Amendment Act 2000 (Cth).

A stated intention of the amendments to the State Act, which it seems was replicated in similar bills in other states, was to remove provisions that purported to confer state jurisdiction on a federal court.[17] In particular, ss 4(1) and 4(2) of the State Act, that purported to confer, by state legislation jurisdiction in State matters on a federal court were repealed, and the power to transfer a proceeding instituted in the Supreme Court to the Federal or Family Courts conferred by s 5 of the State Act was significantly limited. Sub-section 5(9) was added to specifically provide that ‘[n]othing in this section confers on a court jurisdiction that the court would not otherwise have’.
[17]Explanatory Memorandum, Federal Courts (Consequential Amendments) Bill (Vic), Circulation Print, 13 April 2000.

Section 9 of the State Act, which provides for the Supreme Court to exercise jurisdiction conferred on it by a cross vesting law of the Commonwealth or another state was not amended. I assume that this is because s 77(iii) of the Constitution specifically empowers the Commonwealth to legislate to invest a court of a state with federal jurisdiction.

In the Commonwealth Act, the reciprocal provision dealing with the conferral of state jurisdiction on federal courts in s 4(3) was not relevantly amended. It remains in its original form as follows:

4 Additional jurisdiction of certain courts
…
(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.

Parts of s 5 in the Commonwealth Act relating to transfer of proceedings were amended after Re Wakim. The power to transfer proceedings from the Federal or Family Court to a state Supreme Court conferred by s 5(4) of the Commonwealth Act was amended and a new sub-section, sub-section (9), was added to s 5 in the same terms as the new s 5(9) of the State Act.

However, the terms of s 5(1) in the Commonwealth Act, which concern transfer of a proceeding from a state Supreme Court (as there defined) to the Federal or Family Court, were not amended. As a consequence, the power to transfer a proceeding from this Court to the Federal or Family Court conferred by s 5(1) of the State Act is now in different, and more limited terms, than the power conferred, or purportedly conferred, by s 5(1) of the Commonwealth Act.

Sub-section 5(1) of the Commonwealth Act provides, still in its original form, as follows:

5 Transfer of proceedings
(1) Where:
(a)a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court); and

(b) it appears to the first court that:
(i)the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court;

(ii) having regard to:
(A)whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross‑vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court;
(B)the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and

(C) the interests of justice;
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or
(iii)it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court;

the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

Sub-section 5 of the State Act now provides as follows:

5 Transfer of proceedings
(1) Where –
(a)a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court; and

(b)      it appears to the Supreme Court that –
*         *         *         *         *
(ii)      having regard to –
(A)whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross‑vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court;
(B)the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross‑vesting of jurisdiction; and

(C) the interests of justice –
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be –
* * * * *

the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

It follows that there are now two critical differences between the transfer provisions in the State and the Commonwealth Acts. The first is that in the State Act there is no longer the power previously conferred by s 5(1)(b)(i) to transfer a proceeding instituted in this Court to the Federal or Family Court merely because it ‘arises out of, or is related to’ a proceeding in that other court and it is ‘more appropriate’ that the proceeding to be transferred be determined in that other court. The second is that the power previously conferred by s 5(1)(b)(iii) to transfer if ‘it is otherwise in the interests of justice’ that the Supreme Court proceeding be determined by the Federal or Family Court has been repealed. Both provisions remain in the Commonwealth Act. The proper construction of s 5(1) in the State Act is in dispute here, as is whether the defendant can also or in the alternative rely on s 5(1) of the Commonwealth Act, and if so, its proper construction.

Section 9(2) of the Commonwealth Act, the provision unsuccessfully relied on in Re Wakim to confer or accept jurisdiction on the Federal Court in respect of cross-vested State matters, was amended following the decision. The effect of the amendment is to entirely remove reference in the provision to the Federal and Family Courts. That sub-section now applies only to the Supreme Court of a territory. A new sub-section relating to the Federal and the Family Courts, s 9(3) was added. Section 9 now relevantly provides (emphasis in bold added):

9 Exercise of jurisdiction pursuant to cross-vesting laws
(1)Nothing in this or any other Act is intended to override or limit the operation of a provision of a law of a State relating to cross-vesting of jurisdiction.
…
(3)The Federal Court or the Family Court may:
(a)exercise jurisdiction (whether original or appellate) conferred on that court by a provision of this Act or of a law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and
(b)hear and determine a proceeding transferred to that court under such a provision.

The proper construction of ss 4(3), 5(1) and 9(1) and (3) of the Commonwealth Act are in dispute.

The plaintiff also relies on s 15 of the Commonwealth Act, which was not amended, and provides as follows:

15 Construction of Act to be subject to Constitution
This Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that if this Act, would but for this section, have been construed as being in excess of that power, it shall nevertheless be valid to the extent to which it is not in excess of that power.

Submissions
Defendant

As noted earlier, the defendant in her summons invoked the Commonwealth Act, but in her initial written submissions relied on the State Act. The plaintiff responded prior to the hearing in its written submissions that in accordance with the decision of McDonald J in Tucker v State of Victoria[18] (‘Tucker’), the power to transfer under the State Act was not enlivened. In reply submissions before the hearing counsel for the defendant said that Tucker did not apply, referring to the effect of s 4(3) in terms that could only apply to the Commonwealth Act, and to s 5(1)(b)(iii), which appears only in the Commonwealth Act. At the hearing, counsel for the defendant submitted that the defendant could rely on either the Commonwealth or the State Act, and initially said that the defendant did so,[19] but in later oral submissions stated that the defendant relied on s 5(1)(b)(iii) of the Commonwealth Act.[20] Section 5(1)(b)(iii) is the stand alone ‘interests of justice’ provision that was originally included in the State Act, as well as the Commonwealth Act, but was removed from the State Act following Re Wakim.
[18][2018] VSC 389.
[19]Transcript of Proceedings, S Pty Ltd v BV (No 2) (Supreme Court of Victoria, S ECI 2018 01512, Lansdowne AsJ, 21 March 2019) 4, (‘Transcript’).
[20]Transcript 50-51, 57.

As noted earlier, I permitted a further exchange of written submissions following the hearing. In her post hearing reply submissions, the defendant confirmed that she did not rely on the State Act, and that various decisions of this Court supported her contention that she could rely on the Commonwealth Act.[21] Nevertheless, the defendant’s post reply submissions did contain submissions on cases relying on the various state Acts.
[21]Defendant’s Post Hearing Submissions (n 3) [4]-[5].

On the facts, the defendant contends that it is in the interests of justice pursuant to s 5(1)(b)(iii) of the Commonwealth Act to transfer this proceeding to the Family Court. The defendant has not addressed the requirements of (A) or (B) of s 5(1)(b)(ii).

Plaintiff

In relation to the Commonwealth Act, the plaintiff first submits that s 5(1) of the Commonwealth Act is not available to the defendant/applicant. The plaintiff submits that only a state can confer state jurisdiction on a federal court.[22]
[22]Transcript 73.

In the alternative, the plaintiff submits that s 5(1) of the Commonwealth Act, if available to the defendant, can only be relied upon to the same extent as s 5(1) of the State Act. In other words only s 5(1)(b)(ii) of the Commonwealth Act can apply.[23] The reason, so the plaintiff submits, is that although s 5(1) of the Commonwealth Act remains wider in its terms than the corresponding power to transfer in the State Act, it must be construed in the light of Re Wakim and the amendments made thereafter to both the State and Commonwealth Acts. Otherwise, an applicant for transfer could sidestep the limitations in the State Act by relying on the broader provisions in the Commonwealth Act, and so undermine the effect of the amendments post Re Wakim.[24] As noted earlier if, contrary to these submissions, the Court considers that s 5(1)(b)(iii) of the Commonwealth Act is available to the defendant and that it would require a transfer of the proceeding, the plaintiff submits that a Notice of Constitutional Matter should be given to the Attorneys-General of the Commonwealth and the States to allow them to be heard on the availability of that provision before orders to that effect are made.
[23]S Pty Ltd, “Plaintiff’s Post-hearing Submissions”, Submissions in S Pty Ltd v BV (No 2), S ECI 2018 01512, 27 March 2019 (‘Plaintiff’s Post Hearing Submissions’) [2].
[24]Transcript 86.

In relation to the State Act, and presumably the identical provision s 5(1)(b)(ii) of the Commonwealth Act if available to the defendant, the plaintiff relies on the decision of McDonald J in Tucker. In Tucker, McDonald J held that it was not necessary to consider the interests of justice criterion set out in s 5(1)(b)(ii)(C) unless the criteria set out in the preceding sub-paragraphs (A) or (B) were ‘satisfied’.[25] The plaintiff submits that neither (A) nor (B) are here satisfied, and so, on the basis of Tucker, the jurisdiction to transfer conferred by the State Act, and I infer the Commonwealth Act, is not here enlivened.[26]
[25]Tucker (n 18) [23].
[26]Transcript 85.

In the alternative or in addition, the plaintiff submits that it is not in the interests of justice to transfer the proceeding.

Issues

I consider that the following questions arise:

1. Whether the defendant may rely on the power to transfer apparently conferred on this Court by s 5(1) of the Commonwealth Act.

2. If so, whether she may rely on sub-paragraphs (i) and (iii) of s 5(1)(b), or only sub-paragraph (ii).

3. If the power under the Commonwealth Act is confined to s 5(1)(b)(ii) as it appears in the State Act, the proper construction of that power.

4, Consideration of the facts of this case in relation to the requirements of the Commonwealth Act.

5. If transfer cannot, or should not, be ordered, should the proceeding be stayed pending the determination of the defendant’s Family Court proceeding.

6. What further orders should be made in this proceeding.

My answers to these questions are as follows:

1. The more likely correct view is that s 5(1) of the Commonwealth Act is available to the defendant.

2. But only s 5(1)(1)(b)(ii).

3. That sub-paragraph requires consideration of each of the further sub-paragraphs (A), (B) and (C). I respectfully disagree with the analysis of the equivalent provision in the State Act in Tucker.

4. Even on the defendant’s construction of s 5(1), it is not in the interests of justice pursuant to s 5(1)(b)(iii) to transfer this proceeding to the Family Court given that the Family Court has not yet determined that it has jurisdiction to hear the foreshadowed application for property settlement.

5. Nor should a stay be ordered.

6. Orders should be for the continuation of this proceeding as if commenced by writ and for pleadings.

Analysis of the legislation
Issues 1 and 2: Availability of the Commonwealth Act
Is the Commonwealth Act available to the applicant at all?

The plaintiff does not submit that s 5 of the Commonwealth Act is invalid per se.[27] The plaintiff does submit, however, that the transfer power in the Commonwealth Act cannot be utilised by an applicant in this Court.[28] In other words, an applicant in this Court must rely on the State Act as the source of power to transfer.
[27]Transcript 154.
[28]Plaintiff’s Post Hearing Submissions [2(a)] and [35].

The plaintiff reasons to this conclusion in this way. In oral submissions, the plaintiff submits that it is self-evident that only the State can confer State jurisdiction.[29] It is implicit in this submission that the source of the power to transfer and so confer jurisdiction must be found in the State Act. Next, in its Post Hearing Submissions the plaintiff relies on the Explanatory Memorandum to the Bill for the Commonwealth Act when first enacted which says, in relation to a federal court exercising state jurisdiction, that ‘in so far as the matters are not within federal or Territory jurisdiction, the powers and duties will be conferred by complementary State legislation’.[30]
[29]Transcript 73 and 96.
[30]Explanatory Memorandum (n 17) [7] as quoted in the Plaintiff’s Post Hearing Submissions [23].

The plaintiff also relies on the observation by Gummow and Hayne JJ in Re Wakim to the effect that a law of one polity that purports to confer the jurisdiction of that polity on the courts of another polity will have no effect unless the courts of that other polity give it effect.[31]
[31]Re Wakim (n 9) [107] quoted in the Plaintiff’s Post-Hearing Submissions [23].

Finally, the plaintiff advances a possible explanation as to why the s 5(1)(b) of the Commonwealth Act still appears to provide for transfers from state Supreme Courts after the post-Re Wakim amendments. The plaintiff suggests that this is because the Commonwealth Act needs to accommodate incoming referrals from the Supreme Courts of the ACT and the Northern Territory, and the cross vesting Acts of those territories still retain ss 5(1)(b)(i) and (iii) following Re Wakim, presumably because this is not considered to infringe the Constitutional limitations on federal jurisdiction. The corresponding provisions in the Commonwealth Act apply to the ACT and the Northern Territory because the definition of ‘State’ in the Commonwealth Act includes the ACT and the Northern Territory, and the definition of ‘Territory’ in that Act excludes the ACT and the Northern Territory i.e. is confined to other Commonwealth territories. This is ‘likely to be the explanation’, according to the plaintiff, for the continued existence of (i) and (iii) in s 5(1)(b) in the Commonwealth Act.[32]
[32]Plaintiff’s Post Hearing Submissions [32].

In response to these submissions by the plaintiff, the defendant submits that no reason is shown why the Commonwealth Act should not be available to a person within the Commonwealth and relies on the fact that the Commonwealth Act has been utilised in this Court without objection.

In my view, the plaintiff puts its argument too high in submitting that the Commonwealth Act may not be relied upon in this Court at all. I necessarily reach this as a tentative conclusion, given that there has been no opportunity given to the Attorneys-General of the states and Commonwealth to be heard on the point. In my view it is likely the correct conclusion, however, for the following reasons.

First, s 5(1) of the Commonwealth Act has been utilised for consideration of a transfer of a proceeding in this Court or other state Supreme Court to a federal court in a number of previous cases, including at least three cases identified by the parties, being Caltex Australia Petroleum Pty Ltd v Calypso Haulage Pty Ltd (‘Caltex’),[33] a 2003 decision of Byrne J, Jane v Jane,[34] a 2008 decision of Hansen J, as he then was; and PCM Nominees (No 2) Pty Ltd v Brighton Bay Developments Pty Ltd[35] (‘PCM Nominees’) a decision of Hollingworth J in 2007. It was also utilised in Burman v Zillman,[36] a decision of the Supreme Court of New South Wales in relation to a transfer of a proceeding in that court to the Family Court.
[33][2003] VSC 359.
[34][2008] VSC 341.
[35][2007] VSC 17.
[36][2017] NSWSC 229.

Section 5 of the Commonwealth Act has also been utilised by this Court in relation to state to state transfers.[37] I do not discuss the state to state cases in detail, as the constitutional limitations that apply to state to federal transfers do not apply as between states. This is evident from the fact that in the case of transfers from this Court to the Supreme Court of another state, s 5(2)(b) of the State Act continues to contain the original three alternative sources of jurisdiction to transfer, contained within sub-paragraphs (i), (ii) and (iii), and is mirrored by s 5(2)(b) of the Commonwealth Act.
[37]Irwin v State of Queensland [2011] VSC 291 (Robson J); Smartscaff Pty Ltd v Capital Scaffolding Pty Ltd [2017] VSC 606 (Robson J).

The plaintiff submits that the fact that the Commonwealth Act has been used before for consideration of a proceeding in this Court or another state Supreme Court to a federal court transfer is explicable on the basis that the point has not previously been taken. I am not confident that that is correct. Certainly there is no detailed discussion in any of the three previous cases in this Court identified above of a submission that the applicant could not rely on the Commonwealth Act, but in Caltex there is brief mention that it was submitted that this Court had no power to transfer the proceeding there in question to the Federal Court.[38] In that case, Byrne J set out all three paragraphs within s 5(1)(b) of the Commonwealth Act, and held that he was satisfied that he had power to transfer the proceeding to the Federal Court if the requirements of (ii) (i.e. the equivalent of s 5(1)(b)(ii) of the State Act) were satisfied, because the subject matter of the proceeding before him ‘is or then will be within the accrued jurisdiction of that court’. He was so satisfied, and transferred the proceeding.
[38]Caltex (n 33) [8].

In Jane v Jane,[39] Hansen J also applied s 5(1)(b)(ii) of the Commonwealth Act in relation to a proposed transfer from this Court to the Family Court. The parties agreed that the Family Court had jurisdiction to hear the proceeding in the Supreme Court, and so they identified the critical question as being the interests of justice within paragraph (C). Hansen J relied on the analysis of that paragraph in Valceski v Valceski[40] (‘Valceski’), a decision of Brereton J of the New South Wales Supreme Court under the New South Wales state Act. Thus the case is an illustration of the construction of a state Act being relied upon for the purposes of the identical provision in the Commonwealth Act. Hansen J ultimately refused the transfer.
[39](n 34).
[40](2007) 70 NSWLR 36.

Similarly, in Burman v Zillman,[41] transfer of a proceeding in the New South Wales Supreme Court to the Family Court was ordered pursuant to s 5(1)(b)(ii) of the Commonwealth Act. In that case, Darke J of the New South Wales Supreme Court also relied on aspects of Valceski.
[41](n 36).

In each of these cases the portion of the Commonwealth Act relied upon was s 5(1)(b)(ii), i.e. the provision which also appears in the State Act, not (i) or (iii), which have been removed from the State Act. PCM Nominees[42] is the only case identified by the parties which (i) or (iii) of s 5(1)(b) of the Commonwealth Act was the basis for transfer for a transfer from this Court to a federal court. In that case, Hollingworth J transferred a proceeding in this Court to the Federal Court on the basis that it was related to five proceedings pending in that court (i.e. in reliance on sub-paragraph (i)) and it was also in the interests of justice to do so (i.e. in reliance on sub-paragraph (iii)). For completeness, I note that Darke J observed in passing in Burman v Zillman that he would have reached the same conclusion in relation to transfer under (iii), but it was not necessary to do so having regard to his conclusions in relation to (ii).[43]
[42](n 35).
[43](n 36) [25].

Thus reliance on the Commonwealth Act for transfer in this Court, at least in so far as it corresponds to the State Act, is supported by substantial authority.

To the extent that that is only because the issue has not previously been raised, I am not persuaded by the arguments put by the plaintiff that the reliance in those cases was without power. My view of the observations in the original Explanatory Memorandum to the Bill for the Commonwealth Act is that they went no further than recording that reciprocal legislation was required, not that the Commonwealth could not provide for transfer from a state court to a federal court at all. These observations support reading down of the Commonwealth Act, i.e. limiting its availability to s 5(1)(b)(ii), not removing its field of action entirely in relation to transfers from this Court to a federal court.

Indeed, the effect of the observations by Gummow and Hayne JJ in Re Wakim[44] on which reliance is placed is that it is only the Commonwealth that may give effect to a conferral of state jurisdiction, whether by transfer or otherwise, upon Commonwealth courts. In other words, this is consistent with reliance on the Commonwealth Act for a transfer from this Court, rather than the converse. Consistently with Re Wakim, a transfer, whether pursuant to state or federal legislation, cannot confer on a federal court jurisdiction to determine a dispute that falls outside the heads of federal judicial power in the Constitution.[45] But this does not mean, in my view, that the Commonwealth cannot by legislation effect the transfer of any matter from a state Supreme Court.
[44](n 9) 573.
[45]Ibid 558 (McHugh J); 574 and 578 (Gummow and Hayne JJ, with whom Gleeson CJ and Gaudron J agreed).

Finally, the submissions put by the plaintiff in this regard are without authority or support by way in the text of the Commonwealth Act itself, and the validity of s 5 of the Commonwealth Act and cognate state legislation were not the subject of consideration in Re Wakim. The plaintiff’s submission as to the ‘likely’ explanation for the retention of s 5(1)(b)(i) and (iii) is possibly correct, but the plaintiff does not cite any support for it by way of notation in the legislation itself or in extrinsic material. Further, even if correct, it is consistent with it to read down s 5(1)(b) of the Commonwealth Act as only conferring power on this Court by virtue of (ii). It is not necessary to remove the applicability of s 5(1)(b) entirely.

For these reasons, I consider that the defendant may rely on s 5(1)(b) in the Commonwealth Act as a source of power for this Court to transfer the proceeding to the Family Court. As I now set out, however, I consider that the better view, although necessarily tentative in the absence of a Notice of Constitutional Matter, is that she may only do so in respect of sub-paragraph (ii).

Is the whole of s 5(1)(b) of the Commonwealth Act available to the applicant?

I reach the tentative conclusion that the applicant may only rely on sub-paragraph (ii) of s 5(1)(b) for broadly three reasons.

First, there are matters of principle. I accept the plaintiff’s submission that if an applicant for transfer could rely on broader provisions for transfer that remain in the Commonwealth Act than now appear in the State Act that would undermine the intent of the amendments made to the State Act after Re Wakim. It would seem unlikely that this was intended.

Those amendments were made in an endeavour to conform the cross-vesting scheme with that decision. In my view, the risk of construing the sub-paragraphs of s 5(1)(b) that were removed from the State Act, sub-paragraphs (i) and (iii), as still available to an applicant under the Commonwealth Act is a breach of the Constitutional restrictions as to the limits of federal jurisdiction. Reliance on sub-paragraph (i), for example, would allow any matter to be transferred to a federal court if it is ‘related to’ a proceeding pending in that court, without any explicit requirement that it have a federal element. Similarly, no necessary link to federal jurisdiction is explicitly required by sub-paragraph (iii). By contrast, as I will shortly set out, sub-paragraphs (A) and (B) of s 5(1)(b)(ii) do require consideration of whether the proceeding sought to be transferred falls within federal jurisdiction.

As discussed earlier, the decision in Re Wakim concerned the purported conferral of State jurisdiction on a federal court in relation to proceedings concerning state law already instituted in the Federal Court. It follows that Re Wakim expressly concerned only s 4 of the state Act and s 9 of the Commonwealth Act. It did not expressly concern a transfer of a proceeding instituted in a state Supreme Court to a federal court pursuant to s 5 of either the state or the Commonwealth Act.

However, I agree with the plaintiff that the reasoning of the decision is not so confined. In summary, the High Court held that a state cannot effectively legislate to confer state jurisdiction in respect of a state matter on a federal court. Only the Commonwealth can do so, and, critically for present purposes, only conformably with the limits of Commonwealth judicial power found in Ch III of the Constitution. This reasoning applies to the transfer provisions in the state and Commonwealth legislation as well as to the provisions which purported to confer jurisdiction so as to permit the institution of proceedings concerning state law in a federal court. It follows in my view that s 5 of the Commonwealth Act, although still in its original form, should be read as confined to the transfer of a proceeding that would fall within a head of Commonwealth judicial power identified in ss 75 or 76 of the Constitution.

I agree with the plaintiff that this broader reading of Re Wakim is supported by the subsequent decision of the High Court in Re Australian Securities and Investments Commission: Ex parte Edensor Nominees Pty Ltd[46]. Gleeson CJ, Gaudron and Gummow JJ in that case summarised this broader reading in these words (citation omitted and emphasis in italics added):

Further, State jurisdiction may not be conferred upon a federal court as an exercise of State legislative power and the federal legislative power is limited by the content of Ch III of the Constitution. That is what follows from Re Wakim: Ex parte McNally. While the Constitution expressly enables the conferral of federal jurisdiction on State Courts, the converse does not apply.[47]

[46](2001) 204 CLR 559.

[47]Ibid 571-572.

The constitutionally permitted course, and that consistent with Re Wakim, is to regard only s 5(1)(b)(ii) of the Commonwealth Act as being available to an applicant in this Court for transfer of a proceeding to a federal court. This sub-paragraph requires consideration of the limits of federal jurisdiction, in addition to general interests of justice considerations.

Secondly, I consider that this conclusion is supported by consideration of the text of the Commonwealth Act as a whole, as amended after Re Wakim. First, the preamble was amended to qualify the aim of the Act as being cross-vesting of jurisdiction ‘so far as is constitutionally possible’. This phrase directs attention to the limits of federal jurisdiction. Next, s 5(9) was added to the transfer provision, stating explicitly that ‘[n]othing in this section confers on a court jurisdiction that the court would not otherwise have’. In the case of an application to transfer a state proceeding to a federal court, this also directs attention to the limits of federal jurisdiction.

The defendant relies on the words in s 9(3) of the Commonwealth Act as they now appear in support of her contention that all the transfer provisions in s 5(1)(b) are available to her. That provision was inserted after Re Wakim, at the same time as amendments to the former s 9(2). Prior to Re Wakim, s 9(2) of the Commonwealth Act purported to permit the Federal Court and the Family Court to exercise jurisdiction conferred on that court by way, inter alia, of transfer under either the Commonwealth Act or a law of a state relating to cross vesting of jurisdiction. This was the provision held unconstitutional in Re Wakim. The amendments to the Commonwealth Act removed reference to the Federal Court and Family Court from s 9(2) and inserted a new sub-section, s 9(3), which only empowers the Federal or Family Court to exercise jurisdiction cross vested to it by virtue of the Commonwealth Act or a cross vesting law of the ACT or Northern Territory. The reference to a cross vesting law of a state has been removed. Sub-section 9(3) now provides as follows:

(3) The Federal Court or the Family Court may:
(a)exercise jurisdiction (whether original or appellate) conferred on that court by a provision of this Act or by a law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and
(b)hear and determine a proceeding transferred to that court under such a provision.

I accept the submission of the defendant that the reference to conferral of jurisdiction by ‘a provision of this Act’ in s 9(3)(a) supports the availability of the Commonwealth Act to an applicant for transfer of a proceeding from this Court. I also agree that read alone the sub-section does not limit the availability of the Commonwealth Act to sub‑paragraph (ii) of s 5(1)(b) only. In my view, however, the words of s 9(3) must be read in conjunction with the whole of the section. Read as a whole, the section is consistent with reading down the availability of s 5(1)(b) to sub-paragraph (ii) only in the case of an application for transfer of a proceeding from this Court to a federal court. This is because of the words of s 9(1), which sub-section was not amended. It still provides:

Nothing in this or any other Act is intended to override or limit the operation of a provision of a law of a State relating to cross-vesting of jurisdiction.

As applied to Victoria, and the State Act after amendment, I accept the submission of the plaintiff that it would ‘override’ the limitations on transfer in the State Act to allow an applicant to rely on sub-paragraphs (i) and (iii) in the Commonwealth Act, in addition to sub-paragraph (ii), the only provision replicated in the State Act.

Finally, s 15 of the Commonwealth Act requires the Act to ‘be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth’. This is a further textual indication that s 5(1)(b) is to be read so as not to allow transfers that would exceed the limits on federal jurisdiction.

In her submissions to the contrary, the defendant contends that s 4(3) of the Commonwealth Act shows that reliance on all aspects of s 5(1)(b) is permitted. Sub‑section 4(3) provides that:

Where a proceeding is transferred to … the Family Court …that court has, by virtue of this sub-section, jurisdiction with respect to so many of the matters for determination in the proceeding as that court would not have apart from this subsection.

I accept that s 4(3) contains no express limitation as to which provisions within s 5(1) may be relied upon for that conferral of jurisdiction. However, in my view it must be read in the context of the whole Act. When read in that way, and as applied to the transfer of a proceeding from this Court to a federal court, I accept the submission of the plaintiff that it presupposes a valid transfer. I also accept the submission of the plaintiff that the reference to ‘jurisdiction with respect to …matters…that the court [would not otherwise have had]’ in s 4(3) makes explicit the conferral of accrued jurisdiction.

Finally, reliance on sub-paragraph (ii) of s 5(1)(b) of the Commonwealth Act only for a state to federal transfer is consistent with the majority of the cases to which I have been directed. It was the provision held available by Byrne J in Caltex, in response to a submission that the Court lacked power to transfer under the Commonwealth Act. Similarly, it was the basis of the transfer sought in Jane v Jane and the principal basis of the transfer in Burman v Zillman. The only case to which I have been directed by either party in which s 5(1)(b)(iii) of the Commonwealth Act was utilised by a state Supreme Court to transfer a proceeding to a federal court is PCM Nominees. Viewed against the main line of authority, it is an outlier. Otherwise, the cases to which I have been directed where ‘the interests of justice’ alone i.e. sub-paragraph (iii) has been the basis for a transfer as sought or ordered, whether under the State Act or the Commonwealth Act, have all been state to state transfers, in which the constitutional constraints of federal jurisdiction do not apply.

Conclusion on the availability of the Commonwealth Act

For these reasons, I consider the better view is that the defendant cannot rely as she seeks to do on sub-paragraph (iii) to s 5(1)(b) of the Commonwealth Act as the source of jurisdiction for this Court to transfer a proceeding to the Family Court. I consider the better view is that she may only rely on sub-paragraph (ii) of s 5(1)(b), as the plaintiff contends. It is, however, necessary to express this conclusion in tentative terms, in the absence of an opportunity to the Attorneys-General of the states and Commonwealth to be heard on that issue.

To determine if an adjournment and Notice of Constitutional Matter is required, I will first consider the defendant’s application on the basis that she can rely on s 5(1)(b)(iii). In the interests of completeness and fairness, I will also consider whether or not a transfer of this proceeding to the Family Court should be ordered under s 5(1)(b)(ii), although the defendant has not expressly addressed that sub-paragraph or the requirements of the further sub-paragraphs (A), (B) or (C) within it. In that regard, I will apply the defendant’s submissions in relation to ‘the interests of justice’ (s 5(1)(b)(iii)) to (C) of s 5(1)(b)(ii). For that purpose, and having regard to the argument before me, I consider below the proper construction of sub-paragraph (ii).

Issue 3: Proper construction of s 5(1)(b)(ii) of the Commonwealth Act

The plaintiff contends that s 5(1)(b)(ii) of the Commonwealth Act should be construed in the same way as the equivalent provision in the State Act, and relies on Tucker for the proper construction of that State provision. In Tucker, McDonald J held that it was unnecessary to consider the interests of justice requirement of sub-paragraph (C) of s 5(1)(b)(ii) of the State Act unless the requirements of sub-paragraphs (A) or (B) were satisfied.[48] The plaintiff submits that neither sub-paragraph (A) nor (B) of s 5(1)(b)(ii) of the Commonwealth Act are here satisfied, and so the defendant has not established the requirements for transfer pursuant to the only provision of the Commonwealth Act on which she may rely, being s 5(1)(b)(ii).
[48]Tucker (n 18) [23] and [40].

The defendant submits that Tucker is incorrectly decided, but is, in any event, irrelevant given that she relies on the Commonwealth Act.

In my view, the plaintiff is correct that the same construction should apply to s 5(1)(b)(ii) in both the State and the Commonwealth Acts. This conclusion flows from the fact that identical words are used in each provision and from the intended reciprocal nature of the cross vesting legislation. It was impliedly the approach taken by Byrne J in Caltex in his reliance for his analysis of s 5(1)(b)(ii) of the Commonwealth Act on a decision of the New South Wales Supreme Court as to the proper construction of s 5(1)(b)(ii) of the New South Wales Act.[49] It also underlined the approach taken by Hansen J, as he then was, in Jane v Jane. In that case, which turned on the Commonwealth Act, the Court applied the analysis of sub-paragraph (C) of s 5(1)(b)(ii) in the New South Wales Act, which is in identical terms to the State Act, that was undertaken by the New South Wales Supreme Court in Valceski.[50] It follows that the authorities on the construction of s 5(1)(b)(ii) of the State Act, including Tucker, are relevant to the proper construction of s 5(1)(b)(ii) of the Commonwealth Act.
[49]Caltex (n 33) [12].
[50]Jane v Jane (n 34) [10]-[11], applying Valceski (n 40).

I do not, however, entirely agree with all aspects of the reasoning of McDonald J in Tucker. In that case, the applicant sought to amend his claim in this Court arising from dismissal from his employment to include a breach of the Fair Work Act 2009 (Cth). He also sought a transfer of the proceeding to the Federal Court. The parties were in agreement that the proposed amendment to include a claim under the Fair Work Act could not be prosecuted in this Court. McDonald J refused leave to make that amendment for those reasons. In relation to the transfer application, made under s 5(1)(b)(ii) of the State Act, as noted above McDonald J accepted a submission that the Court’s jurisdiction to transfer is only enlivened if the proceeding falls within either sub-paragraph (A) or sub-paragraph (B) of s 5(1)(b)(ii).[51] In the case of the proceeding before him, McDonald J held that sub-paragraph (A) of s 5(1)(b)(ii) did not apply as the proceeding was capable of being instituted in the Supreme Court of Victoria, and nor did sub-paragraph (B) apply as the proceeding was within the jurisdiction of the Supreme Court. On the basis that the ‘interests of justice’ criteria in (C) is not a ‘stand‑alone ground empowering the Supreme Court to transfer a proceeding to the Federal Court’[52] he held that given his conclusions in relation to (A) and (B), there was ‘no utility’ in considering whether transfer would be in the interests of justice, i.e. sub‑paragraph (C).[53]
[51]Tucker (n 18) [23].
[52]Ibid [26]-[27].
[53]Ibid [40].

I agree that (C) is not a stand-alone provision. It would defeat the repeal of s 5(1)(b)(iii) of the State Act, which was such a stand-alone ‘interests of justice’ provision, to hold otherwise. As against this view, there are cases to which I have been referred in which s 5(1)(b)(ii) of a state Act has been relied upon for a state to federal transfer, yet sub‑paragraph (C) has been the sole ground relied upon by the applicant, i.e. treated effectively as a stand-alone ground, and the application has been determined on that basis.[54] It may be that in those cases the Court was directed in relation to the principles to apply to the authorities dealing with state to state transfers, in respect of which there is a distinct ‘interests of justice’ ground under s 5(2)(b)(iii).[55] The close analysis required by this application makes it plain that (iii) of s 5(1)(b) of the State Act has been repealed, and so the state to state cases should be approached with caution, whether the application is made under the State or the Commonwealth Act.
[54]In Geron v Geron [2018] VSC 582 (‘Geron’) and Ristic v Maroti [2014] VSC 29 there was no objection to this course from the other party. In DPP v Chia [2005] VSC 211 the applicant relied solely on s 5(1)(b)(ii)(C) and the Court (Habersberger J) decided the case on the basis of (C) alone notwithstanding submissions that (A) and (B) were not satisfied - see [28], [36], [58] and [68].
[55]This may have been the case in Geron. The authorities cited at [18] of Irwin v State of Queensland (n 37) and BHP Billiton Ltd v Schultz (2004) 221 CLR 400 (‘Schultz’) both concerned state to state transfers. The trial judge in Geron sought further submissions from the parties after the decision in Tucker, but reached the view that he did not need to consider them given his refusal of the application in any event - [40]-[43]. Ristic v Maroti also cites Schultz as setting out the principles to apply at [22], as does Habersberger J in DPP v Chia.

Where I respectfully disagree with the approach taken by McDonald J is his conclusion that it was not necessary to even consider (C) unless (A) or (B) were satisfied. In my view, textual analysis of the provisions and previous authority both show that the requirements of all three sub-paragraphs (A), (B) and (C) to s 5(1)(b)(ii) must be ‘considered’ (as opposed to ‘satisfied’) in determining if ‘it is more appropriate’ that the proceeding be determined by a federal court. In this regard, I accept the submissions of the defendant.

In many instances this may be a disagreement without a difference in result, as the end result may be the same whichever approach is taken. That is because, in accordance with the analysis by Brereton J of the New South Wales Supreme Court in Valceski, it will not be ‘more appropriate’ that a federal court hear a proceeding than the Supreme Court of a state if the federal court does not have jurisdiction in respect of the subject matter, and this necessary federal connection is made most explicit by sub-paragraphs (A) and (B).[56] In that sense, any difference between ‘having regard to’ the requirements of all of sub-paragraphs (A), (B) and (C), and the necessity for either (A) or (B) to be ‘satisfied’ before consideration of (C) is required, may be notional. As I will shortly elaborate, however, Valceski itself shows that the necessary federal connection can be by way of accrued jurisdiction, which is not the subject of either (A) or (B).
[56]Valceski (n 40) [20]-[21].

The first reason for my disagreement with the reasoning in Tucker in this regard is textual analysis. In my view, the use of the opening phrase ‘where…it appears to the Supreme Court that…having regard to’ in s 5(1)(b)(ii) of the State and Commonwealth Acts, followed by the use of the conjunction ‘and’ between sub-paragraphs (B) and (C), requires the Court to have regard to all three of those sub-paragraphs before reaching the conclusion as to whether or not it is ‘more appropriate’ that the proceeding be determined by the federal court in question. If the Court reaches the conclusion that it is so ‘more appropriate’, then the Court is required to transfer the proceeding. The sub-section does not in terms give pre-eminence to any one of the three sub-paragraphs, and does not require any one of them to be ‘satisfied’, as opposed to considered.

My second reason is that the preponderance of authority on the cross vesting legislation of the states and the Commonwealth in which an application has been made pursuant to s 5(1)(b)(ii) of a state Act or the Commonwealth Act favours consideration of all three sub-paragraphs. It is the approach taken in Vucic v Belosevic;[57] Caltex;[58] Valceski;[59] Jane v Jane;[60] Kosmopoulos v Kosmopoulos (‘Kosmopoulos’);[61] Lew v Priester;[62] Aspinall v Aqua Sports Pty Ltd;[63] Bob Jane Corporation Pty Ltd v Jane;[64] Burman v Zillman[65] and Hurst v Koszewski[66].
[57][2003] SASC 296.
[58](n 33).
[59](n 40).
[60](n 34).
[61][2008] VSC 402 (Warren CJ), following Valceski and distinguishing Jane v Jane on the facts.
[62][2012] VSC 57 (Pagone J), applying the principles of Valceski, Jane v Jane and Kosmopoulos but distinguishing the first two on the facts.
[63][2018] NSWSC 706 (Ward CJ in Eq), applying the principles in Valceski but distinguishing it on the facts.
[64][2014] VSC 27 (Judd J) applying the principles in Valceski, but distinguishing it on the facts.
[65](n 36) [13] (Darke J).
[66](n 8) (Parker J) applying the principles in Valceski but distinguishing it on the facts.

A particularly detailed and compelling analysis of the section was undertaken by Brereton J of the New South Wales Supreme Court in Valceski. In that case, a husband and wife were parties to proceedings for property settlement in the Family Court. The father of the husband brought a proceeding in the Supreme Court seeking to assert an interest in the former matrimonial home. The wife brought an application to transfer that proceeding to the Family Court, which was successful. Brereton J first observed that s 5(1)(b)(ii) specifies three relevant considerations, and then observed in relation to the ‘interests of justice’ consideration as follows:

However, because of s 5(9), and as Re Wakim; Ex parte McNally (1999) 198 CLR 511 held constitutionally invalid the former provisions that purported to confer on the Federal and Family Courts jurisdiction in State matters, it is a pre-requisite to a transfer order that the transferee court have jurisdiction in respect of the relevant matter. It will not be more appropriate that the relevant proceeding be determined by the proposed transferee court if it does not have jurisdiction to do so.
Moreover, it may well not be more appropriate that the relevant proceeding be determined by the proposed transferee court if it is seriously arguable that it does not have jurisdiction to do so, when the transferor court undoubtedly has jurisdiction.[67]

[67]Valceski (n 40) [20]-[21].

Brereton J then considered whether it was ‘seriously arguable’ that the Family Court did not have jurisdiction to determine the father’s claim. He held that the Family Court does have jurisdiction, for the purposes of a property settlement, to determine whether a third party has a beneficial interest in property held in the name of husband or wife, or both, and can make orders as a result of that determination binding third parties.

Brereton J then discussed the accrued jurisdiction of the Family Court, concluding, in accordance with the decision of the Full Family Court In the Marriage of Warby,[68] that it was not seriously arguable that the Family Court did not have accrued jurisdiction. The principle underlying the accrued jurisdiction of a federal court is that when a federal court is invested with jurisdiction in respect of a ‘matter’ within the meaning of the Constitution, then it has jurisdiction in respect of the whole ‘matter’, meaning the whole justiciable controversy, even though some aspects depend on state and not federal law. The test as to whether the claims arise from a single justiciable controversy is whether they arise out of common transactions and facts, or a common substratum of facts. Gummow and Hayne JJ in Re Wakim applied this reasoning to reach their conclusion that the Federal Court had jurisdiction to hear the creditor’s negligence claim against the solicitors and counsel for the trustee in bankruptcy, finding that it was part of the same justiciable controversy as the claim against the trustee arising under the Bankruptcy Act.[69]
[68](2001) 166 FLR 319.
[69](n 9) from 585.

In Valceski, Brereton J held that the father’s suit and the matrimonial proceedings shared a common substratum of facts and so the father’s suit would fall within the accrued jurisdiction of the Family Court. On the facts before him, the facts underlying the father’s suit were a subset of those underlying the property settlement proceeding in the Family Court, and, indeed, the determination of the father’s suit was essential to the determination of the property settlement because the first step in that claim was to identify the assets held by husband and wife. He reached this conclusion notwithstanding that there were other issues in the Family Court proceeding (concerning parenting orders and other property).

Brereton J then applied these conclusions to the considerations under s 5(1)(b)(ii). He noted that as the father’s suit was plainly capable of being instituted in the Supreme Court, and did not arise under any Commonwealth law, sub-paragraphs (A) and (B) suggested that the Supreme Court was the more appropriate jurisdiction. Brereton J then considered the third factor, the ‘interests of justice’ within sub-paragraph (C) and concluded that the ‘natural forum’ for the father’s suit given its context was the Family Court and on that basis transferred the suit to that Court.

In summary, the reasoning in Valceski shows that all three sub-paragraphs of s 5(1)(b)(ii) must be considered, and that the transferee federal court may still be the ‘more appropriate’ court where there is a compelling case for transfer in the interests of justice, even where factors (A) and (B) do not favour transfer. While the conclusions in relation to (A) and (B) are not identical to those in Tucker, in which the Court considered that neither (A) nor (B) was satisfied at all, the approach that all three sub‑paragraphs must be considered differs from the reasoning in Tucker.

There is no reference to Valceski in Tucker, and so it may be that the judge was not referred to it. The reasoning within Valceski has, however, been cited with approval in a number of subsequent cases in this and other state Supreme Courts, including by Hansen J in Jane v Jane and by Darke J of the New South Wales Supreme Court in Burman v Zillman (in relation to the Commonwealth Act); by Warren CJ in Kosmopoulos; by Pagone J in Lew v Priester; by Judd J in Bob Jane Corporation Pty Ltd v Jane; by Ward CJ in Eq of the New South Wales Supreme Court in Aspinall v Aqua Sports Pty Ltd and by Parker J of the South Australian Supreme Court in Hurst v Koszewski (all in relation to the relevant state Act). In Jane v Jane, there was no dispute that the Family Court had jurisdiction to hear the proceeding instituted in this Court, and so the critical factor was sub-paragraph (C). In Bob Jane Corporation Pty Ltd v Jane, Judd J expressly noted that he was required to have regard to all three sub-paragraphs, notwithstanding that both sub-paragraphs (A) and (B) did not favour transfer.[70] In relation to the interrelationship of the sub-paragraphs he noted that:

I will touch briefly on the other matters advanced by the parties. First, I am not persuaded that undue cost would necessarily be imposed on the plaintiff by requiring it to participate in litigation in the Family Court involving issues that do not concern it. It may well be that, as the defendant envisages, the Family Court could manage this by appropriate trial and pre-trial orders that distinguish between the issues involving S Pty Ltd, and those that do not.[85]
[85]Transcript 34.

Nor am I persuaded that there will necessarily be longer delay to trial in the Family Court, at least in relation to the trial of final issues, than in this Court. The proceeding in this Court is also at a very early stage, and the plaintiff now concedes that pleadings are required, which in the normal course would be followed by discovery and mediation before a trial date could be set. Further, this sequence does not take into account other possible interlocutory disputes. The fact that there have already been two such interlocutory disputes means the possibility of others cannot be discounted. I am not confident that on the current material and at the current stage of each proceeding any conclusion can be reached with confidence as the likely dates for final trial of each proceeding.

The plaintiff asserts that it will be occasioned prejudice by the greater delay likely in the Family Court, in particular in a falling property market. As I will not transfer the proceeding to that court in any event in this application, that submission does not need to be addressed in detail. However, I make the following observations.

The plaintiff relies for the assertion of a falling property market on a kerbside valuation of the Property prepared by Urbis in March of this year.[86] That report includes the statement that ‘Year on year the median unit price within the Melbourne CBD has declined -11.04%’ and expresses the view that within the next six months the market will ‘continue to experience negative sentiment’ and it will be ‘similar to worse than it is at the time of reporting’.[87] Even assuming that that prediction has remained correct, which recent events may show has not been the case, two factors suggest that the plaintiff will not be unduly prejudiced by delay in the determination of its entitlement to sell the Property.
[86]Report by Urbis dated 18 March 2019 being Exhibit LZ-59 to the affidavit of Leon Zwier sworn 18 March 2019.
[87]Ibid 15.

The first is that, as emerges from the Urbis report, this is a unique property with many noteworthy and attractive features. Even if the property market for apartments generally is declining, such a property may resist that trend.

The second relevant factor is that this is not a conventional third party loan and mortgage.[88] In any event, on the figures in evidence, there is a large amount of equity remaining in the Property after repayment of the alleged loan. The amount recorded in the 2015 balance sheet of S Pty Ltd as being a ‘house loan’ to JP and recorded in the 2017 loan agreement is, in round terms, $1,669,286.[89] Mr Zwier deposes on instructions that a slightly lesser amount, $1,635,732 (in round figures), is due and owing as at 18 March 2019.[90] The Urbis report gives a valuation of $2,184,000 for the Property.[91] I accept that the costs of enforcement would erode the difference, as would interest. However, there is no evidence to as to the rate of interest, and indeed, as noted in my earlier reasons, there is a question as to whether interest is required to be paid in fact at all.
[88]An issue that was discussed in the previous judgment in this proceeding – see (n 1) [42]-[45].
[89]Exhibit LZ-11 to the affidavit of Leon Zwier sworn 6 February 2019 and Exhibit LZ-2 to the affidavit of Leon Zwier sworn 5 February 2019, respectively.
[90]Affidavit of Leon Zwier sworn 18 March 2019 [62].
[91](n 86) 21.

Finally, the plaintiff asserts that the defendant has shown a tendency towards delay and poor compliance with Court orders. I do not agree. The delay in this proceeding has been, or will be caused, in large part by three factors. First, the agreement of the former solicitors for the plaintiff with the solicitors for the defendant to delay the progress of this proceeding until the Federal Circuit Court had determined its jurisdiction. As I observe above, this was a sensible approach. It was also agreed to by the plaintiff. Secondly, the delay between hearing of this application and these reasons. That delay is at the hands of the Court, although contributed to by the complexity of the arguments by each party as to the relevant legal framework.

Thirdly, the necessity for pleadings. The plaintiff could have commenced its claim by writ and statement of claim in the first instance, instead of endeavouring to utilise a summary procedure now conceded to be inappropriate. I do not accept the submission of the plaintiff that the necessity for pleadings has only become apparent due to the nature of the allegations that the defendant makes, and the contention that those allegations have changed over time. The inappropriateness of the summary procedure was foreseeable from the outset given the factual background. The plaintiff does not sue on a conventional third party loan and mortgage and it was evident from the breakdown of the relationship between JP and BV, the caveat lodged by BV, and her commencement of family law proceedings that she would claim an interest in the Property. I acknowledge in making these remarks that the plaintiff was represented by other solicitors when it commenced the proceeding utilising the summary procedure.

The plaintiff seeks to attribute delay to the defendant in relation to compliance with orders made on the day of the hearing of, and subsequently after the determination of, its application for access to the Property. As I noted during argument, the submission in relation to the period following the conclusion of the hearing and prior to delivery of reasons is misconceived.[92] In the period after the determination of the access application the defendant retained new solicitors. I accept that the change of solicitors and the way that process was managed caused some inconvenience to the plaintiff and its solicitors, and that the defendant did not comply with the timetable for material in this application set down by the orders made on 4 March 2019. In the event though, the defendant’s application was heard with little delay and the request of the plaintiff for time for further submissions after the hearing was accommodated. I am not persuaded that the inconvenience and cost associated with the change of solicitors and late material has caused any substantial prejudice to the plaintiff, or at least prejudice not compensable by costs.
[92]Transcript 60, 135.

Conclusion on the interests of justice as a stand-alone ground

For these reasons, even if the defendant were correct in her assertion that she can rely on s 5(1)(b)(iii) of the Commonwealth Act as a stand-alone ground for transfer, I would refuse the application. Given that conclusion, it is not necessary to further adjourn the determination of the application to give the Attorneys-General of the Commonwealth and the states the opportunity to be heard on the availability to the applicant of s 5(1)(b)(iii) of the Commonwealth Act.

S 5(1)(b)(ii) Commonwealth Act

In this portion of my reasons, I proceed on the basis that the defendant may only rely on s 5(1)(b)(ii) of the Commonwealth Act, which I consider is the more likely correct view. As set out earlier, that provision contains three sub-paragraphs (A), (B) and (C), all of which in my view must be considered. The defendant, consistently with her reliance on s 5(1)(b)(iii), has not addressed sub-paragraphs (A) or (B), but in fairness to her I will do so rather than merely accepting the plaintiff’s submissions as uncontested.

For ease of reference I set out s 5(1)(b)(ii) of the Commonwealth Act again here:

5 Transfer of proceedings
(1) Where:
(a)a proceeding (in this sub-section referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory (in this sub-section referred to as the first court); and

(b) it appears to the first court that:
…
(ii) having regard to:
(A)whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross‑vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court;
(B)the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and

(C) the interests of justice;

it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or

…

the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

Sub-paragraph (A) requires consideration as to whether the plaintiff’s proceeding for recovery of possession under a mortgage, or a substantial part of it, would have been ‘incapable of being instituted’ in this Court and ‘capable of being instituted’ in the Family Court. The sub-paragraph requires me to ignore cross-vesting legislation and accrued jurisdiction in that consideration.

The answer to the first limb is that plainly all aspects of the proceeding, both the plaintiff’s claim and the defendant’s foreshadowed challenges to it, as best those challenges can currently be determined, fall within the legal and equitable jurisdiction of this Court. The answer to the second limb is equally plainly that the proceeding could not have been commenced in the Family Court. The jurisdiction of the Family Court, apart from its accrued jurisdiction, requires a connection to a matrimonial cause as between husband and wife, or de facto partners. It does not include provision for recovery under a mortgage as between a stranger to the relationship and a party to it. I accept the plaintiff’s submissions in this regard.

Sub-paragraph (B) requires consideration of the ‘extent to which’ the ‘matters for determination’ in this proceeding (as opposed to the Family Court proceeding) arise under or involve questions ‘as to the application, interpretation or validity of a law of the Commonwealth’ which apart from cross-vesting would not be within the jurisdiction of this Court. The plaintiff relies on state legislation, being the Transfer of Land Act 1958 (Vic) and general contractual principles. The only law of the Commonwealth relied on by the defendant is the Family Law Act 1975, and that reliance is, at least to date, only in relation to the Family Court proceeding. The defendant has not foreshadowed reliance on any aspect of that Act in defence to the recovery proceeding, as opposed to reliance on state legislation and general equitable and legal principles. In Jane v Jane, Hansen J concluded that the proceeding the subject of the application did raise the application of a provision of the Family Law Act, and so (B) was satisfied to a degree, but he reached that conclusion on the basis of a specific plea in the proceeding.[93] There is no such specific reference in this case.
[93]Jane v Jane (n 34) [21].

The question as to whether or not the underlying provision of money to purchase the Property was a loan or a gift will be relevant at the stage of property settlement under the Family Law Act, assuming the Family Court determines that it has the jurisdiction to proceed to that stage. But that question will be determined according to equitable and legal principles, not by application or interpretation of the Family Law Act. In other words, the ‘matters for determination’ in this proceeding, as opposed to the Family Court proceeding, do not turn on a law of the Commonwealth. I accept the submission of the plaintiff that sub-paragraph (B) is not satisfied.

Sub-paragraph (C) requires consideration of the ‘interests of justice’. Valceski is an example of transfer, in that case pursuant to s 5(1)(b)(ii) of the New South Wales state Act, having regard to the interests of justice, notwithstanding that neither (A) nor (B) were satisfied.[94] As noted earlier, Brereton J in that case held that a determination that the transferee federal court has jurisdiction is necessary before the transferor court can be satisfied that it is ‘more appropriate’ that the proceeding be transferred to that transferee court. Jurisdiction of a federal court can be either original or accrued. Sub‑paragraph (A) requires the transferring court to ignore accrued federal jurisdiction, and so is limited to consideration of original federal jurisdiction. I conclude that accrued jurisdiction can be considered in the context of sub-paragraph (C) and, where neither (A) nor (B) favour transfer, must be found if a transfer is to be ordered. In Valceski, Brereton J considered that the Family Court would have accrued jurisdiction to determine any aspect of the dispute in the state proceeding, concerning the claimed beneficial interests of third parties in the matrimonial home, that did not fall within its original jurisdiction.[95]
[94]Valceski (n 40) [67]-[68].
[95]Ibid [60].

The final issues in this proceeding, assuming that the defendant is not able to successfully impugn the mortgage or underlying loan(s), are breach of the mortgage and the right to possession. The plaintiff does not dispute that, if the plaintiff were joined to the Family Court proceeding, the Family Court would have jurisdiction to determine if the initial advance was a loan or gift to JP. If the advance was found to be a loan, then the plaintiff allows for the further possibility that the Family Court may have jurisdiction to determine if the loan was secured i.e. potentially, the validity and efficacy of the mortgage. If, however, the determination of those issues went against BV, then the plaintiff submits that there is real doubt as to whether the final issues of breach and right to possession would fall within the accrued jurisdiction of the Family Court. This is because, once it was determined that the monies were a loan, that loan would need to come off the asset pool and it would not be necessary for the Family Court to go further and determine whether the plaintiff had a right to sell the Property as mortgagee in possession, leaving only the remaining equity as part of the asset pool.[96]
[96]Transcript 115-120

There is force to this submission. The proceedings that were transferred concerning a claim by a parent or parents to an equitable interest in property of a disputing husband and wife in Valceski[97] and Kosmopoulos[98] are distinguishable on the facts. Neither included a claim by a mortgagee to possession. I have not been directed to any instance of a mortgagee claim being transferred to the Family Court or Federal Court. As against this, the defendant in her current Amended Application in the Family Court proceeding seeks, at least on an interim basis, the right to exclusive possession of the Property. For the determination of that claim it may be necessary to determine the plaintiff’s claim to possession under the mortgage. The amount of remaining equity in the Property, if the advance is found to be a loan, may also depend on whether the costs of mortgagee sale can, or cannot, be deducted.
[97](n 40).
[98](n 61).

It is not necessary for me to reach a concluded view of this question of accrued jurisdiction as it applies to the ‘interests of justice’ within s 5(1)(b)(ii), and I do not do so. For the reasons I elaborated earlier in relation to the interests of justice pursuant to s 5(1)(b)(iii), assuming it is available to the defendant, I do not consider factors touching on the interests of justice apart from the question of accrued jurisdiction require a transfer in any event.

In conclusion, I consider the more likely correct view is that the defendant can only rely on s 5(1)(b)(ii) of the Commonwealth Act, as opposed to the interests of justice in s 5(1)(b)(iii) as a stand-alone ground. I do not need to reach a final view, however, because on either basis I would refuse the transfer as premature.

Issue 5: If not transferred, should the proceeding be stayed?

In the alternative, the defendant seeks a stay of this proceeding pursuant to s 30 of the Supreme Court Act 1986 (Vic) either until the determination of the Family Court proceeding in its entirety, or at least until the determination of the preliminary question of jurisdiction. The plaintiff opposes a stay.

Section 30 of the Supreme Court Act merely confirms the power of the Court in its inherent jurisdiction to stay a proceeding. It does not otherwise elaborate the circumstances in which a stay may be appropriate. Neither party has taken me to the principles that apply in any detail, or any authority. In a decision handed down very recently, the Court of Appeal referred to the power to stay a proceeding commenced in this Court on the basis that, compared to a foreign court, this Court is a ‘clearly inappropriate forum’ as:

a manifestation of the broader power reposed in a superior court to stay proceedings if they are oppressive, vexatious or an abuse of process, or are productive of injustice in the particular case.[99]

[99]Republica Democratica de Timor Leste v Lighthouse Corporation Limited [2019] VSCA 290, [41].

I assess the stay application on the basis that the defendant bears the onus of establishing that a stay should be granted within this ‘broader power’. I do not consider that is shown. The proceeding is not shown to be, at least at this stage, oppressive, vexatious or an abuse of process, and in fairness to the defendant, she does not make that allegation. On its face, it is a proceeding for possession commenced by a registered mortgagee who relies on breach of the mortgage. The defendant challenges those matters, and may in due course allege an ulterior motive that might go to abuse of process. However, the necessity for proof in the face of foreshadowed challenge, not yet articulated, let alone substantiated, does not show the proceeding to be an abuse of process.

As I understand the application, the defendant asserts that to allow this proceeding to continue would be productive of injustice to her for the same reasons that she seeks that it be transferred to the Family Court. I do not consider that she has shown that at this stage. A stay of this proceeding now would mean that neither the plaintiff nor the defendant would be required by the discipline of pleadings to properly articulate their respective cases. While this would save some costs for the defendant, and allow her to focus on the disputed questions in the Family Court, in particular the threshold issue of jurisdiction, it would cause injustice to the plaintiff by the delay it would cause to the progress of this proceeding. It would save the plaintiff the immediate costs of pleading its case, but could increase its eventual claim and costs of enforcement by the added delay.

Pursuant to ss 8 and 9 of the Civil Procedure Act 2010 (Vic) the Court is required to consider the overarching purpose of the just, efficient, timely and cost‑effective resolution of the proceeding in the making of any order. I do not believe that it would be just, efficient or timely to stay this proceeding at this stage, particularly if the Family Court in due course decides against the defendant on the question of jurisdiction. In that eventuality, time would have been lost to no gain in this proceeding.

Further, I consider that the articulation of issues in this proceeding by way of pleading will be of benefit to both parties and may assist with resolution.

It is not impossible that a stay application at a later date, in either this or in the Family Court proceeding, may be appropriate. I express no further view about that possibility as it will depend on the circumstances at the time. I will refuse this application for a stay.

Conclusion and orders

For these reasons, I refuse the defendant’s applications for transfer or stay of this proceeding. I will ask the parties to confer as to the appropriate orders. Those orders should include, in addition to the determination of this application, provision for the joinder of JP (or determination of his joinder if opposed), an order that the proceeding continue as if commenced by writ and pleadings, and orders relating to the costs of the defendant’s application and the plaintiff’s application for access. Ordinarily directions for a proceeding commenced by writ would also include provision for discovery and private mediation. If the parties are unable to agree on any aspect of the orders, including the costs of this application and the earlier unsuccessful application by the plaintiff for access, I will hear them further.

[2019] VSC 814

11 December 2019