Federal Court of Australia

AgriWealth Capital Limited v Australian Financial Complaints Authority Limited [2023] FCAFC 118

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondents’ costs of the appeal.

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

REASONS FOR JUDGMENT

THE COURT:

1    AgriWealth Capital Limited (ACL) and Australian Forestry Management Limited (AFM) appeal from the whole of the judgment and orders made by the primary judge on 10 November 2022: AgriWealth Capital Limited v Australian Financial Complaints Authority Limited [2022] FCA 1336 (J).

2    The Australian Financial Complaints Authority Limited (AFCA) is the first respondent and Mr Steven Kirby is named as the second respondent in this appeal. Both at first instance and in the appeal, AFCA has taken an active role, but Mr Kirby has not.

3    For the following reasons, the appeal should be dismissed.

Relevant background

4    Since 2006, ACL has held Australian Financial Services Licence (AFSL) No. 317238 which authorises it to carry on a financial services business in the capacity of a responsible entity, relevantly, to operate certain registered managed investment schemes, including the “Australian Forestry Management 2005 Land Trust” (2005 Land Trust) scheme and the “Australian Forestry Management 2005 Plantation Investment” (2005 Plantation Investment) scheme, which together comprised the Australian Forestry Management 2005 Softwood Project.

5    AFM does not hold an AFSL and is not a member of AFCA.

6    AFCA operates the external dispute resolution scheme which financial services licensees are required to be members of under Parts 7.6 and 7.10A of the Corporations Act 2001 (Cth) (Corporations Act). The statutory regime under which that occurs is discussed in more detail below.

7    In accordance with AFCA’s Constitution, AFCA adopts rules for complaints “for resolving complaints in or regarding the Industry”, which means “the financial services, and superannuation industries and any similar or related or associated industries in which the Members and their Related Bodies Corporate carry on business”. AFCA members are bound by the rules that apply to a member in respect of a complaint, which, together with AFCA’s Constitution, form a binding contract between each member and AFCA.

8    The Australian Financial Complaints Authority Complaint Resolution Scheme Rules (AFCA Rules) are dated 25 April 2020 and are summarised at [46]–[55] J. A person who submits a complaint to AFCA (a Complainant) is deemed to have agreed to have the complaint considered under the AFCA Rules, which form part of a contract between AFCA, ‘Financial Firms’ and Complainants (rr A.1.2 and A.3.1). A Financial Firm means, relevantly, a person who is a member of AFCA: r E.1.1.

9    The AFCA Rules define the limits of AFCA’s authority. They form a binding tripartite contract between the Complainant, AFCA and the member the subject of the complaint and “the question of AFCA’s authority, jurisdiction or power to deal with [a] complaint is to be determined by reference to the proper construction” of that contract: DH Flinders Pty Ltd v Australian Financial Complaints Authority Limited [2020] NSWSC 1690 at [12], [54]; see also Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWSC 285; 365 FLR 163 (Notesco) at [127].

10    Sections B and C of the AFCA Rules relate to AFCA’s jurisdiction to resolve complaints.

11    Mr Kirby was an investor in the 2005 Land Trust and the 2005 Plantation Investment schemes, which were affected by bushfires in 2019–2020. The relevant events following these bushfires were identified by the primary judge at [20]–[27] J, and it is not necessary to set those facts out here. In summary, Mr Kirby received invoices from AFM for various costs and fees relating to rehabilitation and other works required to be performed as a consequence of the bushfires.

12    On 21 July 2020, Mr Kirby submitted a written complaint to AFCA (the complaint). By that document, Mr Kirby stated that his complaint was with ACL in relation to “Investments”. In the “Complaint summary”, amongst other matters, Mr Kirby complained that:

Agriwealth has invoiced me for fees and charges which are contrary to clear representations in the marketing section of the PDS that there would be no ongoing fees. This action wilfully ignores the clearly stated and fundamental underlying nature of the investment that (a) is fully prepaid, and (b) that investors are both ‘tree growers’ and land owners (via a unit trust). …

13    In a decision dated 30 June 2021, a decision maker within AFCA concluded that Mr Kirby’s complaints were outside AFCA’s jurisdiction, other than his claims relating to whether the schemes’ governing documents allowed certain fees to be charged and retained, which were within AFCA’s jurisdiction under r B.2.1(a) and/or r B.2.1(e) (jurisdiction decision).

14    The decision maker determined as follows:

[Mr Kirby’s] claims relating to whether the schemes’ governing documents allow:

76.1.    charges for rehabilitation and other costs that were deducted from insurance proceeds payable to affected investors for the 2004 retail scheme and/or the 2005 retail scheme

76.2.    invoices issued for further rehabilitation and other charges for the 2004 retail scheme and/or the 2005 retail scheme

76.3.    management fees deducted from the proceeds of the “first thinnings” that were to be paid into the sinking fund, if on Company A’s termination of the Forestry Right Interests (FRIs) the sinking fund became the (pro-rata) personal property of each investor, and

76.4.    failure to pay out the sinking fund to investors in the 2005 scheme, in breach of scheme governing documents.

are within AFCA’s jurisdiction under Rule B.2.1(a) and/or (e).

15    On 5 August 2021, ACL and AFM commenced proceedings in this Court seeking to challenge the jurisdiction decision, which challenge was dismissed by the primary judge.

16    The critical findings by the primary judge were that the relevant part of the complaint was within r B.2.1(a) and r B.2.1(e) (see [69]–[87] J) and that the complaint was not required to be excluded by AFCA under r C.1.5(b) (see [93] J).

17    ACL and AFM appeal from the decision of the primary judge.

Jurisdiction

18    At the commencement of the hearing of the appeal, we raised with the parties a question as to the basis upon which the Federal Court had original jurisdiction in the matter. The point had not been canvassed before the primary judge. The hearing was adjourned to allow the parties to consider the issue and file written submissions. The active parties submitted that the Federal Court did have jurisdiction. In these circumstances, the Court appointed Ms J E Davidson of counsel to act as contradictor. We wish to record our thanks to Ms Davidson and to Mr J Cooper, who appeared with her, for their assistance.

19    We have come to the view that the Federal Court did have jurisdiction in the matter. Our reasons are as follows.

20    By force of s 1337B(1) of the Corporations Act, the Federal Court has civil jurisdiction in “civil matters arising under the Corporations legislation”. The “Corporations legislation” is defined in a way that includes the Corporations Act itself. Division 9.6A of the Corporations Act, in which s 1337B is found, operates to the exclusion of s 39B of the Judiciary Act 1903 (Cth): s 1337A(2)(b). Section 1337B is therefore the only potential source of jurisdiction. However, it runs in parallel with s 39B(1A)(c) in that it confers jurisdiction in matters “arising under” a Commonwealth law. Conferral of federal jurisdiction in these terms is authorised by s 76(ii) of the Constitution, which refers to matters “arising under any laws made by the Parliament”.

21    The central concept of a matter “arising under” a law of the Commonwealth was enunciated by Latham CJ in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 (Barrett), as follows:

[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.

22    As noted earlier, decisions made by AFCA on complaints made to it have contractual, not statutory, force. This was usefully explained by Bell CJ and Meagher JA in Australia Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Limited [2022] NSWCA 204; 164 ACSR 215 (ACFM) at [1]–[5], [7]–[10] as follows:

The Australian Financial Complaints Authority Ltd (AFCA) is a company limited by guarantee and is the operator of the “AFCA scheme”, which is a financial services external dispute resolution scheme authorised under s 1050 of the [Corporations Act].

Section 1051(4) of the [Corporations Act] specifies various operational requirements for the scheme which include that, pursuant to s 912A(1)(g)(i), a financial services licensee that provides financial services to persons as retail clients is required to have a dispute resolution system complying with s 912A(2) of the [Corporations Act], which relevantly requires membership of the AFCA scheme.

AFCA’s Constitution cl 3.2(g) provides that each member of AFCA agrees to be bound by the AFCA Complaint Resolution Scheme Rules (AFCA Rules). Once a complaint is made to AFCA, the AFCA Rules form a binding tripartite contract between the complainant, AFCA and the member the subject of the complaint (referred to in the Rules as the “Financial Firm”): see AFCA Constitution, cl 12.1(d); AFCA Rules, r A.1.2. This in turn has ramifications for the bases upon which any determination ultimately made by AFCA can be challenged in Court proceedings, as shall be explained below.

Section B of the AFCA Rules, which are set out in further detail later in these reasons, provides the requirements that must be met in order for AFCA to be able to consider a complaint that is submitted to it by a person eligible to make a complaint. Section C and rr C.1.2–C.1.6 specify categories of complaints that AFCA must exclude unless all parties to the complaint and AFCA agree to AFCA considering the complaint.

Sections B and C of the AFCA Rules collectively may be described as going to AFCA’s “jurisdiction” to resolve complaints by eligible persons about AFCA members. Those Rules provide that a “complaint is within AFCA’s jurisdiction provided it meets the requirements (as set out in section B) unless it is outside jurisdiction (as set out in section C)”.

…

Once a complaint is made to AFCA, its Rules form a contract between the complainant, AFCA and the Financial Firm. AFCA’s determination of the complaint is “final”, and binding on both parties if accepted by the complainant within 30 days of receipt (r A.15.3).

Notwithstanding the complainant’s right to elect not to accept AFCA’s determination, upon the submission of a complaint the parties in dispute are bound in contract to observe the Rules and entitled to require that AFCA proceed in accordance with them.

As Ball J (the primary judge) held at [4]:

A determination by AFCA is not susceptible to judicial review. AFCA’s jurisdiction, powers and obligations are governed solely by the contract set out in the AFCA Rules; and any challenge to a determination by AFCA depends largely on whether the determination was made in accordance with the terms of that contract.

By their agreement that AFCA’s determination is to be final, the parties accept that the “determination will not be subject to review unless affected by fraud or dishonesty or lack of good faith or (by analogy with jurisdictional error) unless it is otherwise apparent that the determination has not been carried out in accordance with the agreement”. That will be the case if the outcome is one that no reasonable decision-maker could have reached.

(citations omitted; emphasis original.)

23    The question that arises in the present case is whether, in coming to the view that part of Mr Kirby’s complaint was within its “jurisdiction”, AFCA interpreted its rules correctly. The rights and duties that are in issue are therefore rights that owe their existence (if they do exist) to a contract between AFCA, ACL and Mr Kirby. They are not statutory rights. The “matter” which formed the subject matter of the proceeding before the primary judge therefore did not “arise under” the Corporations Act in the sense identified in Barrett.

24    However, the statement of Latham CJ in Barrett is not the last word on what is encompassed by references to a matter “arising under” a Commonwealth law. LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 (LNC) was an application for contractual remedies where the contract in issue was for the transfer of rights associated with a quota for the importation of motor vehicles under the Customs Act 1901 (Cth). Such rights existed only because of Regulations made under that Act. The High Court (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ, Murphy J agreeing) said (at 581):

When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law.

25    Their Honours went on to observe (at 582) that “[t]he present case is not, to use the words of Windeyer J in [Felton v Mulligan (1971) 124 CLR 367], one in which the Regulations are merely ‘lurking in the background’”.

26    The circumstances in which a matter is seen to “arise under” a Commonwealth law now appear to be somewhat broader still, in the light of Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5; 96 ALJR 234 (Hobart International Airport). In issue in that appeal was whether the Federal Court had jurisdiction to decide applications by two local councils for declarations concerning the interpretation of certain leases. The leases were “airport leases”, entered into in accordance with the Airports (Transitional) Act 1996 (Cth) (the Transitional Act), between the Commonwealth as lessor and certain corporate entities as lessees. The main issue was whether there was a “matter” at all, which turned on whether the councils (not being parties to the leases) had a sufficient interest to seek declaratory relief. However, it was also necessary to establish that the controversy was one “arising under” a law made by the Parliament for the purposes of s 39B(1A)(c).

27    That question might possibly have been resolved on the basis that the areas of land the subject of the leases were Commonwealth places, so that the entire legal regime relating to interests in the land, to the extent not specifically provided for by other Commonwealth enactments, had its foundation in laws made by the Commonwealth including s 4 of the Commonwealth Places (Application of Laws) Act 1970 (Cth). However, the Court approached the issue on a broader basis, emphasising provisions in the Transitional Act which provided a framework for the privatisation of Commonwealth-owned airports including the grant of leases of the relevant kind. Kiefel CJ, Keane and Gordon JJ held that the claims arose under a Commonwealth law because “[the] rights and obligations of the Commonwealth and the Lessees under the Leases owe their existence to a Commonwealth law, the Transitional Act” (at [27]). The other members of the majority, Gageler and Gleeson JJ, said at [50] (footnotes omitted):

If that controversy is justiciable, so as to constitute a matter within the central conception of that term, then that justiciable controversy is properly characterised as a matter arising under a law made by the Parliament on the basis that the contract imposing the obligation came into existence as an incident of the exercise of a capacity to “grant an airport lease” conferred on the Commonwealth by a law made by the Parliament.

28    Their Honours’ reliance on the Transitional Act indicates that they regarded federal jurisdiction as attracted by the fact that the contract in issue was of a kind that was specifically envisaged by that Act. Gageler and Gleeson JJ cited s 22 of the Transitional Act, which provided that the Commonwealth “may grant an airport lease under this section”. “Airport lease” was a defined term, but simply meant a lease of the whole or part of an airport site. The Commonwealth, as owner of the land, probably did not need that provision in order to have the capacity to grant a lease. However, the grant of the leases had clearly occurred in the course of carrying into effect s 22 and the scheme of the Transitional Act more generally.

29    The Victorian Court of Appeal in Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226; 407 ALR 187 at [110] (Thurin), understood this aspect of the decision in Hobart International Airport to have rested on the basis that “the subject matter of the lease was so closely regulated by the Transitional Act (and, through it, the Airports Act) that the rights and obligations of the parties to the leases owed their existence to that legislation”, and not on s 22 of the Transitional Act having conferred “bare capacity” to grant the leases. We agree with that understanding. The Court went on to refer to Hobart International Airport as a case where a contractual dispute came within federal jurisdiction because “the contract is regulated by a Commonwealth law” (at [112]). This probably puts the point too generally, and should not be regarded as stating a test, but was sufficient for the purposes of the issue raised in Thurin.

30    Two contracts are present in the circumstances of the present case. One is AFCA’s Constitution, which has contractual force as between AFCA and each member (including ACL) by operation of s 140(1) of the Corporations Act (the statutory contract). However, both the parties and the contradictor resisted the characterisation of the present dispute as one concerning the rights of the parties to that statutory contract (as to the scope of ACL’s obligation under cl 3.2(g) to comply with “Applicable Rules”), which clearly would be a matter “arising under” the Corporations Act. Their preferred analysis was that the lodging of a complaint by Mr Kirby gave rise to the “tripartite contract” constituted by the AFCA Rules, referred to in ACFM at [3], and that the issues in the present case concerned (in effect) the construction of that contract. It was common ground between the parties that Finkelstein J correctly held, in Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805; 157 FCR 229 at [42]–[43], that the statutory contract between a company and one of its members cannot require the member to submit to a dispute resolution scheme. There was therefore no reliance placed on the statutory contract and no issue “arising”, in the Barrett sense, “under” s 140(1).

31    The tripartite contract mentioned above is a contract in the ordinary sense and does not derive its legal effect from the Corporations Act. However, it is enmeshed in the scheme of the Corporations Act to such an extent that, in the light of Hobart International Airport, a dispute concerning its effect should be regarded as one “arising under” the Corporations Act.

32    It is useful to begin with the rights that formed the basis for the dispute between Mr Kirby and ACL, whose resolution is the subject matter of the tripartite contract in this case. The dispute arises out of Mr Kirby’s interest in a “managed investment scheme” (see r B.2.1(e)(i) of the AFCA Rules) and arises between him (as the holder of the interest) and ACL (as the “Responsible Entity” under the scheme’s constitution). In order to become the responsible entity of the scheme, and thus to enter into the relationship that became the subject of dispute, it was necessary for ACL to hold an AFSL issued under the Corporations Act (s 601FA). This does not mean that the subject matter of the parties’ rights under the tripartite contract “arose and existed” under the Corporations Act (in the sense discussed in LNC). That subject matter was a dispute, which, if within the scope of the AFCA Rules, was required to be settled having regard to (but not necessarily strictly in accordance with) the legal rights of the parties (r A.14.2). However, it is relevant that the dispute which is the subject matter of the contract is one arising out of transactions that were regulated by, and required authorisation under, the Corporations Act.

33    A financial services licensee who provides financial services to persons as retail clients is required, by s 912A(1)(g)(i) of the Corporations Act, to “have a dispute resolution system complying with subsection (2)”. To comply with s 912A(2), a dispute resolution system must consist of an internal dispute resolution procedure (with certain characteristics) and, relevantly here, “membership of the AFCA scheme” (s 912A(2)(c)). The “AFCA scheme” is defined (by s 761A) to mean “the external dispute resolution scheme for which an authorisation under Part 7.10A is in force”, and “AFCA (short for the Australian Financial Complaints Authority)” is defined to mean “the operator of the AFCA scheme”. It is apparent from the use of the word “the” in these definitions, and in s 912A(2)(c), that there is only one scheme at any time that qualifies as the “AFCA scheme”. This is made explicit by s 1050(3). (This is an important difference from a licensing requirement that simply requires the licensee to obtain, for example, professional indemnity insurance or the services of an auditor.)

34    Section 1050, which is in Part 7.10A, confers power on the Minister to “authorise” an external dispute resolution scheme (which then, as a result of the definitions referred to above, becomes the “AFCA scheme” for the purposes of the Corporations Act). Section 1051 sets out “mandatory requirements” for the scheme, which include that membership is open to every entity required by a law of the Commonwealth to be a member of a scheme authorised under Part 7.10A (s 1051(2)(a)), that the scheme is financed by contributions from members (s 1051(2)(b)), that the operator is a company limited by guarantee (s 1051(3)(b)), that the scheme resolves complaints in a way that is “fair, efficient, timely and independent” (s 1051(4)(b)), and that determinations are binding on members of the scheme but not on complainants (s 1051(4)(e)). Other “general considerations” which the Minister must take into account in deciding whether to approve a scheme are set out in s 1051A.

35    Division 2 of Part 7.10A is headed “Regulating the AFCA scheme”. It provides for the Australian Securities and Investments Commission (ASIC) to issue “regulatory requirements” and “directions” on a range of matters to AFCA, and to approve changes to the AFCA scheme proposed by AFCA. Implicit in the last of those provisions (s 1052D) is that the content of the AFCA Rules is not a matter for negotiation between the parties to the contract constituted by those Rules in the case of each complaint, but instead is a matter for approval by the Minister and amendment only with the approval of ASIC.

36    In some circumstances, determinations by AFCA have direct statutory consequences. Regulation 7.6.03C of the Corporations Regulations 2001 (Cth) (the Regulations) imposes a requirement to take reasonable steps to cooperate with AFCA in resolving complaints, compliance with which is an obligation of a financial services licensee under s 912A(1)(j). Contravention of s 912A(1)(j) exposes a person to a civil penalty (s 912A(5A)) and provides a ground for suspension or cancellation of an AFSL (s 915C(1)(a)).

37    In the light of these features of the Corporations Act (and the Regulations), to hold that the justiciable controversy in the present case is not one “arising under” the Corporations Act would be to elevate form over substance. The subject matter of the parties’ underlying dispute was a relationship entered into under and regulated by the Corporations Act; ACL was required by the Corporations Act not merely to enter into a dispute resolution contract, but to bind itself to a contract in the specific terms of the AFCA Rules and with a specific entity (AFCA); and failure to cooperate with AFCA had specific consequences under the Corporations Act. The tripartite contract that arose in the present case on the making of Mr Kirby’s complaint was both required and shaped by the Corporations Act. It was a mechanism by which the Corporations Act sought to carry forward its objects. To adopt the language of the plurality in Hobart International Airport, the rights of the parties under the tripartite contract “owe their existence to” the Corporations Act.

38    We now turn to the issues raised on the substantive appeal.

Notice of appeal

39    By their Notice of Appeal, the appellants advance the following grounds:

1.    Her Honour erred in concluding that the First Respondent had jurisdiction to determine Complaint Reference No. 743181 lodged with the First Respondent on 23 July 2020 by the Second Respondent pursuant to the Complaint Resolution Scheme Rules (AFCA Rules) of the First Respondent (Kirby Complaint).

2.    Her Honour erred in overlooking the nature of the relief that the Second Respondent had sought in the Kirby Complaint namely the “refund” by the Second Appellant to the Second Respondent of money to which the Second Appellant was contractually entitled and that invoices rendered by the Second Appellant to the Second Respondent should be “rescinded” in circumstances where the First Respondent had no power under the AFCA Rules to award such a remedy.

3.    Her Honour erred in holding that the Kirby Complaint was one that “arose from or related to” the provision of a Financial Service by the First Appellant within the meaning of Rule B2.1(a) of the AFCA Rules at Reasons for Judgment [74] to [87].

4.    Her Honour erred in holding that the Kirby Complaint was one which “arose from or related to……. a legal or beneficial interest of the Second Respondent arising out of… his financial investment” within the meaning of Rule B2.1(e) of the AFCA Rules at Reasons for Judgment [72].

5.    Her Honour erred in evaluating the question whether the Kirby Complaint fell within Rule B2.1(e) of the AFCA Rules by applying a test whether there was “a connection” between the complaint and the “provision of the relevant services” at Reasons for Judgment [66].

6.    Her Honour erred at in [sic] concluding that there was a requisite degree of “connection” between the subject matter of the Kirby Complaint in light of the remedy sought under the AFCA Rules and the provision of a Financial Service by the First Appellant to the Second Respondent.

7.    Her Honour erred in failing to apply the exclusionary rule rising [sic] under AFCA Rule C1.5(b) to exclude the Kirby Complaint from jurisdiction of the First Respondent on the basis that the complaint related to the management of the AFM 2005 Softwood Project as a whole in that the charges invoiced by the Second Appellant which were the subject of the Kirby Complaint were charges claimed against all participants in the Project without discrimination made payable by the common provisions of the Forestry Management Agreements concluded between each participant and the Appellants.

8.    Her Honour erred in concluding at Reasons for Judgment [93] that AFCA Rule C1.5(b) had no application to exclude the Kirby Complaint because the invoicing of charges against all investors including the Second Respondent was a management decision taken by AFM for the whole of the 2005 Project which followed from the decision to terminate the 2005 Project in respect of the areas of the forestry plantation destroyed by fire, to rehabilitate the affected land and sell it which management decision affected all participating investors in the same way.

(emphasis original.)

Consideration

Primary judge’s consideration of r B.2.1(a) and r B.2.1(e)

40    Grounds 1 to 6 assert various errors by the primary judge in connection with her Honour’s interpretation of r B.2.1(a) and r B.2.1(e) of the AFCA Rules. It is therefore convenient to address those grounds together.

Whether primary judge applied an incorrect test

41    Rule B.2.1 relevantly provided:

A complaint (other than a Superannuation Complaint) must arise from or relate to:

a)    the provision of a Financial Service by the Financial Firm to the Complainant;

…

e)    a legal or beneficial interest of the Complainant arising out of:

(i)    a financial investment (such as life insurance, a security or an interest in a managed investment scheme or a superannuation fund) …

42    When considering the meaning of the phrase “arise from or relate to” in the chapeau to r B.2.1, the primary judge referred at [66] J to the need for there to be a connection between the complaint and the provision of the relevant service, and then cited the decision of Notesco at [130]–[131] (Rees J), which case considered the meaning of that phrase within r B.2.1. The relevant extract, which appears in [67] J, was as follows:

130.    As Brereton J observed in respect of the phrase “arising from” in Quintano v BW Rose Pty Ltd [2008] NSWSC 793, the words require that there be some causal connection, with the requisite nexus being a less proximate relationship than that required by the phrase “caused by”; it is sufficient if it originates in, springs from, or has it foundation in the matter, “In my view, a claim can be said to arise from a matter – at least – if it has a foundation in that matter, so that the matter is one of the underlying facts that, if they exist, together justify the claim”: at [7]-[8].

131.    The phrase “relate to” gathers meaning from the context in which it appears; it is that context which will determine the matters to which it extends: Transtar Linehaul Pty Ltd v Deputy Commissioner of Taxation (2011) 169 FCR 271; [2011] FCA 856 at [56] (per Robertson J), citing Workers’ Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642 at 653-654. As French CJ and Hayne J observed in Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510; [2010] HCA 33 at [25]:

It may readily be accepted that “in relation to” is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ (HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 at 563 [35] per Hill J). It may also be accepted that “the subject matter of the inquiry, the legislative history, and the facts of the case” are all matters that will bear upon the judgment of what relationship must be shown in order to conclude that there is a supply “in relation to” rights.

43    Contrary to ground 5 and having regard to [67] J which followed and must be read with [66] J, it is incorrect to say, as the appellants do, that the primary judge merely applied a test of whether there was simply “a connection” between the complaint and the “provision of the relevant services”. That this is so is further demonstrated by other parts of the primary judge’s reasons, as addressed below. Ground 5 must therefore fail.

The nature of the relief sought

44    By grounds 2 and 6, the appellants contend that the primary judge erred because her Honour had “overlooked” the nature of the relief Mr Kirby had sought in his complaint in “circumstances where [AFCA] had no power under the AFCA Rules to award such a remedy”.

45    In the field of the complaint entitled “What I think is a fair and reasonable outcome”, Mr Kirby stated:

I want a refund of amounts already deducted from insurance proceeds (being $14,480.04) and for the remaining invoices outstanding (being $43,823.81) to be rescinded…

46    The appellants submit that:

(1)    the relevant invoices were rendered by AFM (not ACL) to Mr Kirby and were payable to AFM (not ACL);

(2)    the relationship between Mr Kirby and AFM was one of principal and independent contractor;

(3)    AFCA could not direct AFM to “refund” anything and nor could it direct AFM to “rescind” any invoices.

47    However, no error by the primary judge has been shown for the following reasons.

48    First, the terms of the invoices required payment to a bank account in the name of ACL rather than to AFM. That may, as counsel suggested, indicate a normal treasury arrangement; but, if so, it serves to emphasise the central role played by ACL in the investment schemes. There was nothing untoward in Mr Kirby seeking a “refund” from the entity to which he had made the payments, particularly where that entity was the responsible entity for the schemes.

49    Second, the relief in fact sought by Mr Kirby was articulated in a different and earlier part of the complaint in response to a question, “What outcome are you seeking?”. In response to that question, his answer was that he was “seeking compensation” in the amount of $58,303.85. That he sought this relief was not “overlooked”, but was referred to by the primary judge at [28(4)] J.

50    Third, there can be no question that AFCA had jurisdiction to award compensation, and the appellants did not contend otherwise. The AFCA Rules confer a very broad remedial power on its decision makers, who are required to do what they consider is “fair in all the circumstances” by reference to certain considerations: see r A.14.2. Rule D.2.1 provides that “[a]n AFCA Decision Maker may decide that the Financial Firm or the Complainant must undertake a course of action to resolve the complaint” and sets out a non-exhaustive list of remedies including “the payment of a sum of money”: r D.2.1(a). Rule D.3 also empowers an AFCA decision maker to decide that a Financial Firm is to compensate a complainant for direct, or indirect, financial loss. It follows that one of the remedies which AFCA could award would be to require ACL to provide compensation to Mr Kirby.

51    Fourth, the appellants’ approach assumes that AFCA was bound by the terms of Mr Kirby’s complaint as to the nature of the remedy which it could decide to award. This is misconceived, as it is contrary to the express terms of the AFCA Rules as referred to above and no proper foundation to make such an assumption exists in any event.

52    Finally, to be within AFCA’s jurisdiction, the complaint “must arise from or relate to” a matter which is outlined in r B.2.1. Nothing in the text of that rule makes AFCA’s jurisdiction conditional on the type of relief referred to in the complaint to AFCA.

Rule B.2.1(e)

53    Rule B.2.1(e) was the first basis on which the primary judge decided that AFCA had jurisdiction. Her Honour’s findings in this respect are challenged by grounds 4 and 5 of the notice of appeal.

54    At [69]–[73] J, the primary judge addressed r B.2.1(e):

I turn first to consider rule B.2.1(e). That rule provides that AFCA can consider a complaint arising from or in relation to a legal or beneficial interest of the complainant, i.e. Mr Kirby, arising out of a financial investment such as, relevantly, an interest in a managed investment scheme. The applicants made no submissions about the availability of rule B.2.1(e) as a source of AFCA’s jurisdiction.

Having regard to the terms of rule B.2.1(e) I am satisfied that it provides a proper basis for AFCA to assume jurisdiction in relation to the relevant part of the Kirby Complaint, as it did. That is for the following reasons:

(1)    as set out at [18] above, the Constitution establishes the scheme and provides that it is to be administered for the benefit of “Growers”, appoints the responsible entity and records the responsible entity’s agreement to act as agent, attorney and/or trustee;

(2)    the Constitution provides that a “Grower” is a person who has entered into a forestry right agreement and a management agreement;

(3)    clause 1.2 of the Constitution provides that the “interest of a Grower in the ‘Scheme’ includes” the Grower’s right, title and interest under the management agreement which he or she is required by cl 3.5 of the Constitution to execute in order to participate in the Scheme;

(4)    the “Scheme” is the “Australian Forestry Management 2005 Plantation Investment”. It is part of the project known as the “Australian Forestry Management 2005 Softwood Project” (i.e. the 2005 Softwood Project) which is constituted by the “Scheme” and the scheme known as the ‘”Australian Forestry Management 2005 Land Trust”;

(5)    it was not in dispute that the Australian Forestry Management 2005 Plantation Investment is a managed investment scheme for the purposes of the Corporations Act: see s 9 of the Corporation Act; and

(6)    it follows that Mr Kirby’s interest in the Australian Forestry Management 2005 Plantation Investment (and his interest in 2005 Softwood Project which includes his interest in that investment) includes his rights under the Management Agreement.

The Kirby Complaint, insofar as the AFCA found it had jurisdiction in relation to it, concerned charges and fees, and/or deductions from insurance proceeds, made pursuant to the Management Agreement the rights under which, as I have already found, are part of Mr Kirby’s interest in a managed investment scheme, i.e. the Australian Forestry Management 2005 Plantation Investment and, in turn, the 2005 Softwood Project.

Therefore the Kirby Complaint (or so much of it in relation to which AFCA determined it had jurisdiction) arises from, in that it clearly has its origins or foundations in, or relates to Mr Kirby’s legal or beneficial interest in a financial investment, the Australian Forestry Management 2005 Plantation Investment, of which the Management Agreement forms a part.

Subject to considering whether the exclusion under rule C.1.5(b) of the AFCA Rules applies, that is a complete answer to the applicants’ objection to AFCA’s jurisdiction…

(emphasis added.)

55    As the emphasised words in this extract make clear, the trial judge did not apply a test under r B.2.1(e) whether there was simply “a connection” between the complaint and the “provision of the relevant services”. This fortifies our conclusion concerning ground 5.

56    Further, the facts recited in the primary judge’s reasons above, and the interpretation placed on the documents by the primary judge, were not challenged on the appeal.

57    That AFM as manager of the schemes made particular decisions which had certain financial consequences for Mr Kirby does not have the consequence that his complaint about that conduct did not arise from or was not in relation to a legal or beneficial interest held by him arising out of a financial investment within the meaning of r B.2.1(e).

58    The appellants have failed to demonstrate any error by the primary judge in relation to r B.2.1(e).

Rule B.2.1(a)

59    The alternative basis upon which the primary judge found that AFCA had jurisdiction was by reason of r B.2.1(a). Complaint is made about this finding in ground 3.

60    However, because of the view which we have reached in relation to the primary judge’s decision based on r B.2.1(e), it is not necessary to consider this alternative basis on which AFCA was found to have jurisdiction.

Primary judge’s consideration of r C.1.5(b)

61    Grounds 7 and 8 assert errors by the primary judge in connection with her Honour’s interpretation of r C.1.5(b) of the AFCA Rules, and her Honour’s failure to hold that Mr Kirby’s complaint was excluded from AFCA’s jurisdiction.

62    Rule C.1.5(b) of the AFCA Rules provides that AFCA must exclude “[a] complaint relating to the management of a fund or scheme as a whole”.

63    As to the application of this rule, the primary judge stated at [93] J:

Here the part of the Kirby Complaint in relation to which AFCA assumed jurisdiction concerned charges invoiced to Mr Kirby, which he disputed. It does not follow that, because ACL has levied the same charges, and made deductions from insurance proceeds otherwise payable, to other Growers participating in the 2005 Softwood Project, the Kirby Complaint relates to the management of the scheme as a whole. The Kirby Complaint concerns the way in which Mr Kirby’s interest in the scheme was dealt with and his objection to the charges and deduction that were made. That is, it is about Mr Kirby’s own investment in the scheme and its ultimate value. It is not about a decision made by ACL that affects the whole of the scheme for example about the adoption of an investment policy or a decision about the way the scheme will be managed that would affect all Growers.

64    In seeking to demonstrate error, the appellants submitted that the “management of the scheme in this case stemmed directly from the decision of AFM as Manager to levy all Growers proportionately to their interests for a contribution to land remediation and associated costs which directly arose from the bushfire damage to the plantation land”. Further, they submitted that this decision was not discriminatory as between Growers, and that Mr Kirby experienced no special treatment or disadvantage in that process. They submitted that, for these reasons, the contested charges fell within the exemption.

65    For the reasons that follow, no error by the primary judge has been shown.

66    First, the aspect of Mr Kirby’s complaint in relation to which AFCA determined that it had jurisdiction related to specific charges which had been imposed on him.

67    Second, the fact that other Growers were also treated in a like way to Mr Kirby does not have the consequence that his complaint related to the management of the schemes as a whole.

68    As to these matters, we agree with the approach taken by Young J in Vision Super Pty Ltd v Poulter [2006] FCA 849; 154 FCR 185 at [51]–[52] and [59] and of Gray J in Merkel v Superannuation Complaints Tribunal [2010] FCA 564 at [57]–[58] which were cited and relied upon by the primary judge at [90]–[92] J. These decisions contain helpful observations concerning the jurisdiction of the Superannuation Complaints Tribunal by reference to s 14 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) which relevantly provided that the “Tribunal cannot deal with a complaint under this section that relates to the management of a fund as a whole”.

Conclusion

69    The appeal should be dismissed. Costs should follow the event.

Associate:

Dated:    28 July 2023