Federal Court of Australia

HBSY Pty Ltd v Lewis [2023] FCAFC 109

ORDERS

THE COURT ORDERS THAT:

1.    The application for an extension of time is dismissed as incompetent.

2.    The applicant is to pay the respondent’s costs of the application as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

introduction

1    The applicant (HBSY) seeks an extension of time in which to appeal from a judgment of the Supreme Court of New South Wales (the Supreme Court). Both that application and the substantive appeal (if an extension is granted) are listed before us.

2    The respondent, Geoffrey Lewis, argues that this Court does not have jurisdiction to determine either the extension of time application or the appeal. (Like the primary judge, without any disrespect, we will refer to members of the Lewis family by their first names.) He does not articulate other grounds of opposition to the grant of an extension of time, but submits that if an extension is granted the substantive appeal should be dismissed. Detailed submissions have been made on the issues in the substantive appeal.

3    Marjorie Lewis died on 15 August 2008. Apart from a legacy of $5,000, her estate fell into residue. The residuary beneficiaries were her brother Allan and his four sons, including Geoffrey and Anthony. The named executors were Allan and Anthony, but each renounced his executorship before obtaining probate. Letters of administration were later granted to Geoffrey.

4    Anthony was also a director of Lewis Securities Ltd (Lewis Securities), a broking and investments business. Marjorie had invested with that business for some time, and at the date of her death her portfolio was valued at around $305,000.

5    The estate’s largest asset was an amount of around $550,000 owing to it by the Sir Moses Montefiore Jewish Home (the Montefiore sum). Anthony made contact with the debtor and procured payment of the Montefiore sum by cheque, which he deposited with Lewis Securities. Lewis Securities entered liquidation on 6 February 2009 and the Montefiore sum, together with an additional $20,000 of the estate’s money, was lost.

6    As a result, Anthony was liable to the estate in the sum of $571,084.93. However, he was declared bankrupt on 2 April 2009.

7    On 21 July 2011, HBSY purchased various assets from Anthony’s trustee in bankruptcy for $275,000. One of these was Anthony’s interest in the residue of the estate. It was common ground that this transaction was effective, but also that it was “subject to the equities” including Anthony’s liability to the estate.

8    Anthony was discharged from bankruptcy on 3 April 2012. The estate remains in administration, with no distributions to beneficiaries having been made.

9    By a statement of claim filed in the Supreme Court on 23 August 2019, HBSY sought orders revoking the letters of administration granted to Geoffrey, or alternatively an order that he be replaced as trustee. Geoffrey cross-claimed, seeking declarations that HBSY was not entitled to be paid Anthony’s share of the estate on the basis that:

(a)    Anthony is deemed to have received a distribution of $502,554.74 and interest thereon; or

(b)    Anthony cannot participate in or receive a distribution from the estate without having paid that sum (and interest thereon) to the estate.

10    Anthony had been named as an executor in Marjorie’s will and, in any case, had made himself an executor de son tort by his intervention in obtaining payment of the Montefiore sum. There was thus no real doubt before the primary judge that Anthony owed fiduciary duties, which he had breached by depositing the Montefiore sum in the account of a company in which he had an interest. In the ordinary course, he would need to make good the resulting loss before he could expect to receive any sum in his capacity as a beneficiary. It was also clear that HBSY could have no better claim than Anthony.

11    Whether or not the position changed as a result of Anthony’s bankruptcy and discharge was therefore an important issue for the primary judge.

(a)    HBSY’s defence to the cross-claim relied on s 153(1) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), which provides as follows:

Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally.

(b)    Geoffrey’s reply to the cross-claim raised (albeit in an attenuated fashion, the detail of which need not be described here) s 153(2)(b) of the Bankruptcy Act, which provides that s 153(1) does not release the bankrupt from a debt incurred “by means of fraud or a fraudulent breach of trust”.

12    The primary judge delivered detailed reasons on 24 June 2022 in which he upheld Geoffrey’s submissions (HBSY Pty Ltd v Lewis [2022] NSWSC 841; 108 NSWLR 558). Final orders dismissing the statement of claim, and making a declaration consistent with the second of Geoffrey’s alternative positions, were pronounced on 1 July 2022.

13    On 27 July 2022, HBSY filed and served a notice of intention to appeal from the judgment to the New South Wales Court of Appeal (the Court of Appeal). Pursuant to the Uniform Civil Procedure Rules 2005 (NSW), that gave HBSY until 1 October 2022 to file a notice of appeal or summons seeking leave to appeal.

14    However, on 31 August 2022, while preparing the relevant papers, HBSY’s legal advisers came to the view that the appeal would concern a matter arising under the Bankruptcy Act and would therefore have to be brought in this Court. The basis of that view and whether it is correct will be discussed below. By that time, the deadline for filing a notice of appeal under r 36.03 of the Federal Court Rules 2011 (Cth) (the Rules) had passed. HBSY therefore filed an application for an extension of time to appeal to this Court, with a draft notice of appeal, on 2 September 2022.

the jurisdictional issue and the extension of time

15    The circumstances in which HBSY came to seek an extension of time are not in dispute. Nor has it been suggested that HBSY’s arguments in the substantive appeal have insufficient prospects to warrant a grant of leave. Therefore, subject to the question concerning whether it is this Court or the Court of Appeal that has jurisdiction to hear the appeal, we would grant the extension.

16    The jurisdiction of this Court is statutory. Its appellate jurisdiction is conferred by s 24 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) and includes, relevantly, “in such cases as are provided by any other Act, appeals from judgments of a court (other than a Full Court of the Supreme Court) of a State … exercising federal jurisdiction” (s 24(1)(c)).

The jurisdiction exercised by the Supreme Court

17    There is no doubt that the Supreme Court was exercising federal jurisdiction in the present case.

(a)    Because the outcome of the case turned in part on whether or not s 153(1) of the Bankruptcy Act had operated to discharge Anthony from his liability to the estate, the proceeding involved a matter “arising under” a law made by the Parliament within the meaning of s 76(ii) of the Constitution. It was therefore within the scope of the broad conferral of federal jurisdiction on State courts that is effected by s 39(2) of the Judiciary Act 1903 (Cth) (the Judiciary Act). By s 39(1), any other jurisdiction the Supreme Court would have had is excluded; so that it could exercise only federal jurisdiction in the matter. It is useful to set out s 39 in full.

39      Federal jurisdiction of State Courts in other matters

(1)    The jurisdiction of the High Court, so far as it is not exclusive of the jurisdiction of any Court of a State by virtue of section 38, shall be exclusive of the jurisdiction of the several Courts of the States, except as provided in this section.

(2)    The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it, except as provided in section 38, and subject to the following conditions and restrictions:

(a)    A decision of a Court of a State, whether in original or in appellate jurisdiction, shall not be subject to appeal to Her Majesty in Council, whether by special leave or otherwise.

Special leave to appeal from decisions of State Courts though State law prohibits appeal

(c)    The High Court may grant special leave to appeal to the High Court from any decision of any Court or Judge of a State notwithstanding that the law of the State may prohibit any appeal from such Court or Judge.

(b)    Meanwhile, the Bankruptcy Act confers jurisdiction on this Court and the Federal Circuit and Family Court of Australia (Division 2) “in bankruptcy” (s 27), with “bankruptcy” defined to mean, in relation to jurisdiction or proceedings, “any jurisdiction or proceedings under or by virtue of this Act” (s 5). Section 27 makes that jurisdiction “in bankruptcy” exclusive of all other courts other than the High Court (exercising jurisdiction under s 75 of the Constitution) and the Federal Circuit and Family Court of Australia (Division 1) (exercising jurisdiction under ss 35 or 35A of the Bankruptcy Act). The precise boundaries of the jurisdiction “in bankruptcy” are somewhat unclear, but it is a different and narrower concept than matters “arising under” the Bankruptcy Act: see, eg, Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2008] FCAFC 172; 171 FCR 380 at [172], [185]-[193] (Perram J). The present case did not involve an application made or determined under any provision of the Bankruptcy Act, or any controversy as to the rights of a trustee in bankruptcy or the administration of a bankrupt estate; rather, it involved deciding what effect s 153(1) had in a dispute concerning a deceased estate. The Bankruptcy Act did not exclude the present case from the jurisdiction conferred on the Supreme Court by s 39(2) of the Judiciary Act.

18    However, that is not sufficient to bring the present appeal within this Court’s jurisdiction. As noted above, the Court has jurisdiction in appeals from a court of a State only “in such cases as are provided by any other Act”: s 24(1)(c) of the Federal Court Act.

19    HBSY submits that s 7(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (the Cross-Vesting Act) has that effect. Before coming to s 7(5) it is useful to say a little about the scheme of the Cross-Vesting Act. (Because the issues in this case concern a proceeding in a State court, we do not refer to the position of Territory courts in this discussion.)

20    The intention of the Cross-Vesting Act, and the corresponding legislation in each State, was to eliminate what were regarded as “arid” jurisdictional disputes that arose from the conferral on the Federal Court of significant areas of federal jurisdiction (including exclusive jurisdiction in some classes of matter), while the supreme courts of the States retained their non-federal jurisdiction and their jurisdiction under s 39 of the Judiciary Act. Section 4(1) of the Cross-Vesting Act confers additional federal jurisdiction on the supreme court of each State that corresponds to the jurisdiction of the Federal Court, subject to the exceptions set out in s 4(4). Meanwhile, each State Cross-Vesting Act conferred jurisdiction on the Federal Court equivalent to that of the State’s supreme court. Provision was made in each jurisdiction for the transfer of proceedings between courts in certain circumstances. The conferral of jurisdiction on the Federal Court by State legislatures was held to be invalid in Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511 (Re Wakim). However, s 4 of the Cross-Vesting Act remains in force and allows the exercise of federal jurisdiction by State courts in some circumstances in which jurisdiction is not conferred by s 39(2).

21    Notably, s 4(1) is expressed to apply where the Supreme Court of a State “would not, apart from this section, have jurisdiction with respect to that matter”. Section 4(1) was not engaged here, because the matter was within the Supreme Court’s jurisdiction under s 39.

Section 7(5) of the Cross-Vesting Act

22    Section 7 of the Cross-Vesting Act concerns the institution and hearing of appeals. Although none of its provisions is expressed to apply only to cases decided in the additional jurisdiction conferred on courts by the cross-vesting legislation, it was evidently intended to deal with potential consequences of that jurisdiction having been conferred. For the most part, it directs appeals into the court system in which the court that heard the case at first instance is located. For present purposes, the provisions of relevance are sub-ss (3) and (5), which are as follows:

(3)     Where it appears that the only matters for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory are matters other than matters arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by, the Full Court of the Supreme Court of that State or Territory.

…

(5)     Subject to subsections (7) and (8), where it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory (not being a proceeding to which subsection (6) applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by:

(a)     the Full Court of the Federal Court or of the Federal Circuit and Family Court of Australia (Division 1), as the case requires; or

(b)     with special leave of the High Court, the High Court.

23    Subsections (6), (7) and (8) are not relevant here. Subsection (6) applies to a decision of a judge of a State Family Court. Subsections (7) and (8) deal with circumstances in which an appeal to which sub-s (5) applies has been inadvertently commenced in a State or Territory appellate court.

24    Thirteen Commonwealth Acts are listed in the Schedule. They include the Bankruptcy Act.

Construction of s 7(5)

25    Read together (but without reference to their broader context), ss 7(3) and (5) appear to cover the universe of possible appeals from a single judge of a State supreme court. Those which require determination of a “matter arising under an Act specified in the Schedule” (including the Bankruptcy Act) may only be instituted in the Full Court of the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) (or the High Court, with special leave). Those which do not involve such a matter are to be “instituted only in” the appellate court of the relevant State.

26    The phrase “matter arising under” an Act or a law of the Commonwealth is used in s 76(ii) of the Constitution and has been part of the discourse of federal jurisdiction for a long time. A “matter” has been understood since the early part of the 20th century to be the subject matter for determination in a proceeding rather than the proceeding itself (In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265–266 (Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ), although precise identification of the outer boundaries of a “matter” involving claims under both Commonwealth legislation and other laws was still being worked through in the 1980s: eg Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 (and see the helpful summary in Leeming, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2nd ed, 2020), 97–106). By reference to these cases, Gummow and Hayne JJ said in Re Wakim at [139]–[140] (Gleeson CJ and Gaudron J agreeing):

The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.

… There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of another, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination.

(Citations omitted.)

27    Meanwhile, “a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law”: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 (Latham CJ). The same is true if the source of a defence is a law of the Commonwealth: Felton v Mulligan (1971) 124 CLR 367 at 408 (Walsh J) (see also at 373–374 (Barwick CJ)). It is for this reason that, in the present case, the Supreme Court was exercising federal jurisdiction under s 39(2) of the Judiciary Act.

28    The drafters of the cross-vesting legislation must be taken to have been familiar with the case law referred to above and to have chosen the phrase “matter arising under an Act” with an eye to that body of law: see, eg, Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ); Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2015] HCA 10; 254 CLR 489 at [15] (French CJ, Hayne, Kiefel, Gageler and Keane JJ). Absent some firm indication to the contrary, therefore, an appeal from a judgment of a State supreme court should be understood to involve determination of “a matter arising under an Act specified in the Schedule” if an issue agitated in the appeal depends on the operation or effect of a provision of one of those Acts. This view is supported by several decisions of the Court of Appeal, which we discuss below. In this sense, the present appeal clearly involves a “matter arising under” the Bankruptcy Act.

29    However, the question does not end there. The text of s 7(3) and (5) must be construed in their context.

30    One aspect of that context is the scope and objects of the Cross-Vesting Act, which we have discussed above. The Cross-Vesting Act deals with problems arising from the existence of State and federal court systems with overlapping jurisdictions by conferring additional federal jurisdiction on State supreme courts. Its purposes (as set out, for example, in the Preamble) do not include more far-reaching reform of the respective court systems. We return to this point below.

31    A second aspect of the context is that the cases decided by the supreme courts of the States include a number that do not involve any question that comes within ss 75 or 76 of the Constitution, and in which federal jurisdiction is therefore not involved. The legislative power of the Commonwealth to invest a court of a State with federal jurisdiction and to make laws incidental thereto (ss 77(iii) and 51(xxxix) of the Constitution), at least at first blush, does not reach those cases; yet s 7(3) of the Cross-Vesting Act, if read literally, applies to them so as to dictate the court to which an appeal may go. It does so in a way that coincides with the existing laws of each State, but that is not the point. It is not the role of the Commonwealth Parliament to dictate the flow of appeals through State courts in non-federal matters, and s 7(3) is unlikely to have been intended to do so. To avoid trespassing on the States’ ability to legislate for their own court systems, the phrase “decision of a single judge of the Supreme Court of a State” needs to be understood in a way that limits s 7(3) to cases in federal jurisdiction.

32    A third aspect of the context is the pre-existing regime of federal jurisdiction conferred by s 39(2) of the Judiciary Act. A feature of the “autochthonous expedient of conferring federal jurisdiction on State courts” (as it was described in R v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254 at 268 (Dixon CJ, McTiernan, Fullagar and Kitto JJ)), including the choice of law provisions in ss 79–80 of the Judiciary Act, is that federal cases become part of the normal flow of business in those courts and usually do not even need to be consciously identified as such. Further, since Ah Yick v Lehmert (1905) 2 CLR 593, it has been understood that s 77(iii) of the Constitution includes power to confer both original and appellate jurisdiction on State courts in federal matters and that s 39(2) of the Judiciary Act does so. The reference in s 39(2) to the “several jurisdictions” of State courts, according to Griffith CJ (at 604–605), accommodates the fact that some State courts exercise appellate jurisdiction. So understood, s 39(2) provides for a case in which a State court exercises federal jurisdiction (eg because it involves the application of Commonwealth legislation) to proceed on appeal through that State’s court system in accordance with the legislation of the State.

33    Read literally, therefore, s 7(3) does work that is already done by s 39(2) in so far as it applies to cases where the jurisdiction exercised by the supreme court of a State is derived from that provision. It is otiose to that extent. This tends to suggest that the intended target of the phrase “decision of a single judge of the Supreme Court of a State” was not all decisions in the exercise of federal jurisdiction, but a narrower class of decisions. The class of decisions in which s 7(3) actually has work to do is decisions in cases where the supreme court exercises the jurisdiction conferred by s 4 of the Cross-Vesting Act.

34    Also, if read literally, s 7(5) effected an implied partial repeal of s 39(2) and a fundamental change in the allocation of jurisdiction in respect of “matter[s] arising under” any of the Acts listed in the Schedule to the Cross-Vesting Act. For example, an issue might arise in a contract case concerning whether copyright subsisted in a particular work under the Copyright Act 1968 (Cth) (the Copyright Act). A State supreme court hearing that case would be exercising federal jurisdiction under s 39(2). Prior to the Cross-Vesting Act, any appeal would have gone to the State’s court of appeal. However, because the Copyright Act is listed in the Schedule to the Cross-Vesting Act, a literal reading of s 7(5) would direct the appeal in that contract case to the Federal Court.

35    The Bankruptcy Act, with which we are concerned here, is a further and slightly more complicated example. As at the date of enactment of the Cross-Vesting Act, s 27 of the Bankruptcy Act invested “jurisdiction in bankruptcy” in the Federal Court and the supreme court of each State and the Northern Territory. Thus, for example, a creditor’s petition or an application to set aside a bankruptcy notice could be heard and determined in any of those courts. However, under s 38 of that Act, an appeal from a judgment of a court exercising jurisdiction in bankruptcy lay only to the Federal Court. Meanwhile, a case like the present one (involving a matter “arising under” the Bankruptcy Act but not “jurisdiction in bankruptcy”) would go to the relevant State supreme court under s 39(2); and, as discussed above, any appeal would proceed to that State’s court of appeal.

36    It is important to note that, at that time, the Federal Court did not have the broad jurisdiction in matters arising under laws of the Commonwealth that is now found in s 39B(1A)(c) of the Judiciary Act; its jurisdiction comprised judicial review of decisions of officers of the Commonwealth (s 39B(1)) and specific grants in other legislation (of which s 27 of the Bankruptcy Act was an example). Hence, the Federal Court would not have seen cases like the present one, either at first instance or on appeal. Read literally, s 7(5) directed into the Federal Court appeals in a wide range of cases – such as cases concerning the fiduciary duties of executors – of kinds which the Court did not hear at first instance and had previously not heard on appeal.

37    Three things can be said about these effects of a literal reading of s 7(5). First, the policy rationale for such changes is far from clear. Secondly, they go well beyond the objects that appear from a broader reading of the Cross-Vesting Act. Thirdly, there is no hint in the relevant extrinsic materials that such changes were in contemplation. To the extent that the purpose of s 7(5) is discussed in those materials, the discussion suggests an intention only to prevent existing areas of exclusive appellate jurisdiction from being diluted by cross-vesting.

(a)    The Explanatory Memorandum to the Jurisdiction of Courts (Cross-Vesting) Bill 1987 (Cth) (the Bill) said that the Bill contained provisions (including cl 7) to “recognise the special role of the Federal Court in matters in which it now has … exclusive original or appellate jurisdiction” (at [8]). Describing what is now s 7, it said (at [20]):

But for clause 7, the full cross-vesting of federal and State jurisdiction between the relevant courts at the appellate levels as well as at first instance could, for example, result in an appeal being taken from a single judge of a State Supreme Court to the Full Federal Court in matters that, apart from the cross-vesting legislation, would have been entirely outside the jurisdiction of the Federal Court. Similarly, the full cross-vesting could result in appeals being taken from a single judge of the Federal Court or Family Court to the Full Supreme Court of a State. Cross-vesting could also give rise to appeals from the Federal Court to the Full Family Court, or from a State Supreme Court to the Full Family Court of a State. Clause 7 is designed to prevent the cross-vesting from giving rise to any such appeals except where a matter in an appeal from a single judge of a State Supreme Court is a matter arising under a Commonwealth Act specified in the Schedule to the Bill. In such a case, the whole appeal will lie only to the Full Federal Court. The scheduled Acts are Acts, such as the Bankruptcy Act 1966 and the Commonwealth Electoral Act 1918, under which the Full Federal Court now has exclusive appellate jurisdiction.

(Original emphasis.)

(b)    In the Second Reading Speech to the Bill (Commonwealth Parliamentary Debates, House of Representatives, 22 October 1986, 2556), the Attorney-General (Mr Bowen) said, in relation to appeals:

The special role of the Federal Court is also recognised in relation to appeal matters which presently lie within the exclusive appellate jurisdiction of the Federal Court. The Schedule to the Bill lists certain Acts such as the Bankruptcy Act 1966 and the Commonwealth Electoral Act 1919 [sic]. Appeals in matters under the listed Acts will remain within the exclusive appellate jurisdiction of the full Federal Court.

(Emphasis added.)

(c)    The corresponding State Acts contained provisions that were the direct equivalent of s 7. The Explanatory Note to the Jurisdiction of Courts (Cross-Vesting) Bill 1987 (NSW) described cl 7 of that Bill in exactly the same way as the Commonwealth Explanatory Memorandum quoted above.

(d)    Proposals for the cross-vesting of jurisdiction had a longer history, which was summarised by Kirby J in Gould v Brown [1998] HCA 6; 193 CLR 346 at [260]–[262]. A significant step in that history was the Report of the Judicature Sub-Committee of the Australian Constitutional Convention, dated October 1984, which recommended legislation to cross-vest jurisdiction at trial level. To deal with appeals, the Sub-Committee recommended the creation of an Australian Court of Appeal, while noting that it would be open instead to extend the cross-vesting of jurisdiction to appeals. It did not go into any detail about how that should be done. The proposal for an Australian Court of Appeal did not find favour. As noted in the Second Reading Speech (referred to above), the proposal for cross-vesting was then taken up by the Standing Committee of Attorneys-General, which referred the matter to the Special Committee of Solicitors-General. However, our researches have not brought to light any reports or public records of the deliberations of these bodies.

38    In themselves, the considerations mentioned in the previous paragraph might well not justify a departure from the ordinary meaning of the text enacted by the Parliament. However, the second aspect of context mentioned above (at [31]) adds significant weight to the argument for reading the provision down.

(a)    As we have noted, in order to avoid an operation that constitutes an unheralded and potentially invalid intrusion into the ability of the States to legislate with respect to their judicial systems, the phrase “decision of a single judge of the Supreme Court of a State” in s 7(3) needs to be read down in some way. It must be limited to decisions concerning matters in federal jurisdiction or some subset thereof.

(b)    The phrase “decision of a single judge of the Supreme Court of a State” in s 7(3) needs further reading down if it is to avoid unnecessary overlap with s 39(2). That is achieved by construing the phrase as referring to a decision in a proceeding that has come before the relevant supreme court as a result of the operation of the provisions of the Cross-Vesting Act – a construction which has the virtue of drawing on the purposes of the Act as a whole.

39    The phrase “a decision of a single judge of the Supreme Court of a State” also appears in s 7(5), and ordinary principles of construction indicate that it should be given the same meaning as it has in s 7(3): Regional Express Holdings Ltd v Australian Federation of Air Pilots [2017] HCA 55; 262 CLR 456 at [21] (Kiefel CJ, Keane, Nettle, Gordon and Edelman JJ).

40    The result of applying in s 7(5) the construction of the phrase at which we have arrived is that s 7(5) has nothing to say about proceedings involving the exercise of federal jurisdiction conferred by s 39(2). Its effect is only to prevent the cross-vesting of additional jurisdiction to State courts from eroding areas in which the Federal Court already had exclusive appellate jurisdiction. This understanding of s 7(5) gains additional support from the fact that it aligns the subsection with the purposes of the Cross-Vesting Act, accords with the understanding in the extrinsic materials, and avoids the surprising results of a literal reading referred to above.

41    In our view, therefore, s 7(5) does not apply to the present case. This is not because the appeal does not involve determination of a “matter arising under” the Bankruptcy Act. Rather, it is because s 7(5) applies only to an appeal from a decision made in the exercise of cross-vested jurisdiction. Section 7(5) operates only as an aspect of the cross-vesting scheme.

Authorities

42    The reasoning and conclusion we have set out above accord with those of Brereton JA in Singh v Khan [2021] NSWCA 281; 363 FLR 88 at [17]–[23] (Singh). In Singh, a judge in the Common Law Division of the Supreme Court had stayed a proceeding (involving leave to appeal from a decision of the New South Wales Civil and Administrative Appeals Tribunal) as a result of the operation of s 60 of the Bankruptcy Act (the respondent having become bankrupt). The appellant filed a notice of appeal to the Court of Appeal from the stay, and the Registrar raised a question as to whether the appeal was competent. Brereton JA, sitting alone but exercising powers of the Court of Appeal, was therefore determining the competency of the appeal – both as to whether it was in the right court (in the light of s 7(5)) and as to whether leave was required (because the decision to grant a stay was interlocutory). His Honour held that s 7(5) did not apply, but that leave was required (and the appeal would therefore be dismissed if no leave application was filed).

43    A different view was expressed in some earlier decisions in New South Wales.

44    In Bramco Electronics Pty Ltd v ATF Mining Electrics Pty Ltd [2013] NSWCA 392; 86 NSWLR 115 (Bramco), the parties had settled patent infringement proceedings in the Federal Court by entering into a written agreement. The patent owner commenced proceedings in the Supreme Court alleging breach of the agreement, which were successful. The other party sought leave to appeal to the Court of Appeal. The potential application of s 7(5) was raised by the Court.

(a)    Barrett JA considered s 7(5) at [49]–[52]. His Honour held that the application for leave was a “proceeding by way of an appeal” within the meaning of s 7(5) (which seems correct, with respect) and then regarded the application of s 7(5) as flowing inevitably from the conclusion that the proceeding involved a “matter arising under” the Patents Act 1990 (Cth). Ward JA agreed at [132].

(b)    Meagher JA agreed generally with Barrett JA. At [5], his Honour said:

The expression “arising under” as used in that subsection is to be given the same meaning as it has in Ch III of the Commonwealth Constitution. To read that expression more narrowly in this context, and as referring only to matters which have been the subject of an express conferral of federal jurisdiction by the legislation specified in the Schedule, would involve reading into the subsection words which are not there. It would also have the unlikely consequence, in relation to their application to the Patents Act (Cth), that the subject matter which would attract the operation of the subsection would be, by s 158(4), one in respect of which an appeal would not lie to this Court.

(Original emphasis.)

(c)    Because the proceeding had already been commenced, s 7(7) of the Cross-Vesting Act applied and required the Court to consider whether the interests of justice required it to proceed to determine the appeal. The matter was stood over for that to occur.

45    Argument in Bramco appears to have focused on the content of the expression “arising under” (as to which, for reasons outlined above, we agree with both Meagher and Barrett JJA: it is to be taken to have the same meaning as it has in Chapter III). To the extent that Meagher JA criticised an alternative construction on the ground that it “would involve reading into the subsection words which are not there”, it appears that his Honour was addressing an alternative construction of that phrase. Reading down of the phrase “a decision of a single judge of the Supreme Court of a State or Territory” does not seem to have been discussed.

46    In any event, although it is a “strong thing” (Thompson (Pauper) v Goold & Co [1910] AC 409 at 420 (Lord Mersey)), reading a statutory text as if it contained additional words is far from unknown. In Taylor v Owners – Strata Plan 11564 [2014] HCA 9; 253 CLR 531 at [35] (Taylor), the majority (French CJ, Crennan and Bell JJ) referred to R v Young [1999] NSWCCA 166; 46 NSWLR 681 at [15]–[16], where Spigelman CJ observed that reading the words used by the legislature in “their total context” can involve treating general words as if a limitation on them were included (which is what we consider should occur here). The approach of Spigelman CJ had been criticised as too narrow by the Victorian Court of Appeal in Director of Public Prosecutions v Leys [2012] VSCA 304; 44 VR 1 at [92]–[98] (Redlich and Tate JJA and T Forrest AJA) (Leys), in that his Honour did not think words could ever be read into a statute so as to expand its operation. The majority in Taylor preferred the approach in Leys in that respect, and said at [37]–[38]:

Consistently with this Court’s rejection of the adoption of rigid rules in statutory construction, it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. As the review of the authorities in Leys demonstrates, it is possible to point to decisions in which courts have adopted a purposive construction having that effect. And as their Honours observed by reference to the legislation considered in Carr v Western Australia, the question of whether a construction “reads up” a provision, giving it an extended operation, or “reads down” a provision, confining its operation, may be moot.

The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation” or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”.

(Citations omitted.)

47    Boensch v Pascoe [2016] NSWCA 191; 311 FLR 101 (Boensch) appears not to have been a case requiring leave to appeal. However, a threshold issue as to the competency of the appeal was determined by Leeming JA sitting alone. In view of the dispositive reasoning of the primary judge in that case, his Honour regarded it as clear that there was a matter for determination in the appeal “arising under” the Bankruptcy Act (at [14]–[15]). That conclusion could not be avoided by the appellant’s submission that there was a preliminary issue that, if determined a particular way, would avoid the Bankruptcy Act questions (at [16]–[22]). His Honour’s reasoning on the operation of s 7(5) itself was very brief and did not canvass the issues we have discussed above. The entirety of that reasoning was (at [11]):

If it appears that the “only matters for determination” are matters which do not arise under an Act in the Schedule, an appeal from a decision of a single judge lies to the Full Court of the Supreme Court. However, where it appears that “a matter for determination” in an appeal is a matter arising under an Act specified in the Schedule, then the dual prohibitions in s 7(5) apply. The appellant is prohibited from instituting an appeal other than in an appropriate federal court, and a State or Territory court is prohibited from determining an appeal, should an appeal be instituted in a non-federal court in contravention of the first prohibition.

(Original emphasis.)

48    The conclusion was repeated at [18]. His Honour thus proceeded on a literal interpretation of s 7(5), seemingly without having been invited to consider a different interpretation. Bramco was cited, but on a different point (at [22]).

49    In Morris Finance Ltd v Brown [2016] NSWCA 343; 93 NSWLR 551 (Morris Finance), the applicant sought leave to appeal from a decision in which the primary judge had determined that leave was required to commence proceedings because of s 58 of the Bankruptcy Act. Payne JA regarded the case as materially indistinguishable from Boensch and agreed with the reasoning in that case (at [22]). His Honour went on to consider a number of issues concerning whether an issue for determination in the proceeding was one “arising under” the Bankruptcy Act in the relevant sense. Questions concerning whether s 7(5) is limited in its operation to cases that have been heard in the exercise of jurisdiction under the Cross-Vesting Act do not appear to have been canvassed. Basten JA agreed with Payne JA.

50    Guan v Li [2022] NSWCA 173; 371 FLR 531 involved an application for leave to appeal against a freezing order. As observed in the headnote, “[t]he issue was whether some of the proposed grounds of appeal gave rise to a matter arising under” the Family Law Act 1975 (Cth) (the Family Law Act). That issue was canvassed in detail by Bell CJ (with whom Ward P and Meagher JA agreed). It was held that, if one of the grounds of appeal (which the applicant was content to abandon) was excised, no issue for determination in the appeal would “arise under” the Family Law Act (at [61]). Thus, the application for leave was dismissed but leave was granted to file a fresh application. What had been stated without elaboration in Boensch – in effect that s 7(5) is engaged in every case where an appeal from a decision of the Supreme Court involves a matter “arising under” an Act listed in the Schedule – was taken to be correct (at [41]); however, the proposition did not need to be tested because Boensch was distinguished (at [60]).

51    In Singh, Brereton JA referred to Bramco and Morris Finance (at [17]), but only for the proposition that “arising under an Act” has the same meaning in s 7(5) as in s 76(ii) of the Constitution (a proposition with which we also agree, as noted above). His Honour was thus aware of those cases, but did not regard them as standing in the way of the reasoning that he then proceeded to set out. Morris Finance, as noted above, had applied Boensch. The later case of Guan proceeded on the basis that Boensch was correct, but distinguished that case, without citing Singh. (Other than Singh, none of the cases mentioned here gave express consideration to whether the primary judge had been exercising cross-vested jurisdiction. The decisions in Bramco, Boensch and Morris Finance would each be reconcilable with our view (and with Singh) if that were the case. However, it appears to us that all of these cases involved the exercise of s 39 jurisdiction.)

52    There are therefore discordant decisions in the Court of Appeal. It is no doubt arguable that, as a matter of comity, Brereton JA ought to have decided the application in Singh in accordance with the statements of principle – extremely brief though they are – in Bramco and Boensch. However, he did not; and his Honour’s reasons in Singh constitute the only considered treatment of the present issue at appellate level. We would be slow to conclude that Brereton JA, having cited Bramco and Morris Finance, was unaware of what was decided in those cases or what had been said concerning the construction of s 7(5); or that his Honour deliberately departed from fully reasoned decisions of the Court of Appeal. We understand his Honour to have proceeded on the basis that the point was not the subject of argument in the earlier cases, and attention had focused simply on whether there was an issue “arising under” the relevant Commonwealth statute (cf, eg, CSR Ltd v Eddy [2005] HCA 64; 226 CLR 1 at [13] (Gleeson CJ, Gummow and Heydon JJ)). Be that as it may, in the light of the lack of consensus that emerges, we do not consider that the question is to be resolved here simply by applying the observation in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492 that an intermediate appellate court should not depart from an interpretation placed on uniform legislation (or Commonwealth legislation) by another intermediate appellate court unless convinced that that interpretation is plainly wrong. While we hesitate to disagree with the learned judges who have applied s 7(5) according to its literal terms, we have come to a conclusion that accords with the view of Brereton JA.

Determination of the application for extension of time

53    On the construction of s 7(5) that we prefer, that provision does not require (or permit) an appeal to be commenced in this Court from the decision of the primary judge in the present case. The consequence is that the proposed appeal does not engage the Court’s jurisdiction under s 24(1)(c) of the Federal Court Act.

54    The time limit that the applicant seeks to have extended is, as noted above, contained in r 36.03 of the Rules. In principle, it would not be possible for a rule of court made under s 59 of the Federal Court Act to cut down or modify the jurisdiction conferred on the Court by s 24(1) (which is not expressed to be subject to such rules). For that reason, we think that the enforcement of r 36.03 must be regarded as something done as part of the exercise of the Court’s appellate jurisdiction rather than something that prevents the jurisdiction being successfully invoked. If that is correct, it is the extension application that invokes the Court’s jurisdiction (in contrast to the position of an application for special leave to appeal to the High Court, as to which see Collins (alias Hass) v The Queen (1975) 133 CLR 120 at 122); and, conversely, no question of extending time arises in the case of a proposed appeal that does not come within s 24(1) of the Federal Court Act. Accordingly, we would dismiss the application for extension of time as incompetent.

55    If the understanding set out in the previous paragraph were not correct, we would refuse the application for extension of time on the ground that the substantive appeal would be incompetent, and an extension would therefore have no utility. Costs should follow the event.

56    In the light of this disposition of its application, HBSY may wish to revive the process that it had commenced in the Court of Appeal. It is therefore preferable that we express no view on the issues arising in the substantive appeal.

Associate:

Dated:    14 July 2023