FEDERAL COURT OF AUSTRALIA

Qantas Airways Limited v Lustig [2015] FCA 253

THE COURT DECLARES THAT:

1.    The Victorian Civil and Administrative Tribunal lacks jurisdiction to entertain the applications made by the first and second respondents in proceedings C2022/2012 and C2377/2012 respectively.

THE COURT ORDERS THAT:

2.    A writ of prohibition issue restraining the Victorian Civil and Administrative Tribunal from taking any further step in proceedings C2022/2012 and C2377/2012 other than making orders for the dismissal of the proceedings and costs.

3.    The question of costs is reserved.

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

REASONS FOR JUDGMENT

1.    INTRODUCTION

1.1    The issues

1    This is an application by Qantas Airways Limited (Qantas) seeking a declaration, writ of prohibition and injunction in relation to proceedings currently before the Victorian Civil and Administrative Tribunal (VCAT/Tribunal) instituted by the first and second respondents, Peter Lustig and Guiseppe De Simone. By those proceedings, Messrs Lustig and De Simone sought relief against Qantas under the Fair Trading Act 1999 (Vic) (FTA) pursuant to that Act and the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act).

2    Qantas, however, alleges that VCAT lacks jurisdiction over the matter because it is vested with State jurisdiction only and the proceedings arise in federal jurisdiction. The matter is said to be federal in character by reason of the federal defence to all of the claims on which Qantas relies under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (Carriers’ Liability Act) or because the claims allegedly arise out of conduct occurring at Sydney Airport, being a Commonwealth place.

3    Messrs Lustig and De Simone appeared in person. While not disputing that VCAT is not a court and could not be vested with federal judicial power, they contested the proposition that the matter before VCAT was federal in nature. In their submission, once they abandoned a claim for damages for the events on 6 April 2006, the remaining aspects of their claim primarily related to subsequent action taken by Qantas falling outside the Carriers’ Liability Act and which did not take place at the airport, including the issue by Qantas of the “cannot fly” letters, banning them from flying again with the Qantas Group. They also alleged that the claims of false, deceptive and misleading conduct by Qantas commenced many years before the events at the airport when they still received the benefits and privileges of frequent flyer status and Qantas Club membership.

4    In the alternative, Messrs Lustig and De Simone sought orders that this Court decline to make findings and strike the proceedings out on the basis that the Supreme Court of Victoria is the “correct forum”. In the further alternative, they sought orders that this Court remit the matter to VCAT leaving it open to the parties to request that the matter be transferred to the Supreme Court of Victoria. They therefore opposed the issue of a writ of prohibition.

5    The Attorney General of Victoria (the State) intervened pursuant to s 78A of the Judiciary Act 1903 (Cth) (Judiciary Act). In large part, the State’s submissions aligned with those made by Qantas on the issues of principle save that it considered that VCAT retained power to refer the proceedings to the Supreme Court of Victoria despite lacking jurisdiction over the proceedings, if they were properly characterised as federal in nature.

6    The third respondent, VCAT, filed a submitting appearance, save as to costs.

1.2    Summary of conclusions

7    In my view, there is no basis on which this Court could decline to exercise jurisdiction of which it is properly seized and none was identified by the first and second respondents. Furthermore, to the extent to which they made submissions on matters they described as disputed facts relating to the events on 6 April 2006 at the Sydney Airport, it is not for this Court to determine those issues as Messrs Lustig and De Simone also acknowledged in their written submissions.

8    For the reasons given below, Qantas’ contention that VCAT lacks jurisdiction because of the federal defence raised by Qantas is correct. As VCAT is not a court of a State for the purposes of s 77(iii) of the Commonwealth Constitution, it cannot be vested with the judicial power of the Commonwealth. Nor do I consider that the defence is colourable or fabricated. That being so, as this Court is seized only of the jurisdictional issue, it is not appropriate to go further and to consider otherwise whether the defence is valid. Nor is it necessary for me to consider whether the claims instituted in VCAT were necessarily federal on the alternative basis put by Qantas by reason of the events of 6 April 2006 having occurred in a Commonwealth place.

9    It follows, in my view, that VCAT has power only to dismiss the proceedings and deal with any questions as to costs to the extent to which they may arise. Contrary to the submissions by Messrs Lustig and De Simone and the State, VCAT has no power to transfer the proceedings to a court under s 77 of the VCAT Act. It is therefore appropriate not only to make a declaration that VCAT lacks jurisdiction to entertain the applications, but also to issue a writ of prohibition as sought by Qantas directing that VCAT take no further step in the proceedings other than making orders for dismissal of the proceedings. I do not, however, consider that any case was made out for the injunctions sought by Qantas against Messrs Lustig and De Simone to restrain them from taking any further step in the VCAT proceedings otherwise than for the purpose of obtaining or consenting to the orders for dismissal of the proceedings.

2.    BACKGROUND

10    This proceeding finds its genesis in an incident at Sydney’s Kingsford Smith Airport on 6 April 2006. While fully accepting that there is controversy as to events occurring on that day and that it is not appropriate in these proceedings to endeavour to resolve those issues, the following is set out by way of general background, drawing upon the recitation of facts in Lustig v R [2009] NSWCCA 143; (2009) 195 A Crim R 310 (Lustig v R) at [6]-[17].

11    On 6 April 2006, Messrs Lustig and De Simone sought to board an aircraft operated by Qantas on flight QF431 from Sydney to Melbourne.

12    Mr Lustig is a solicitor and Mr De Simone was his client at the time. Members of Mr Lustig’s family were also present and preceded the first and second respondents in boarding the aircraft. The first and second respondents both held economy class tickets for the flight. Upon boarding the aircraft the first and second respondents were greeted by a Qantas flight attendant and were required to walk through the business class section of the plane in order to reach their allocated seating in the economy section. A coat locker was located near the aircraft’s point of entry and one of the respondents asked the flight attendant whether they could hang certain items in the locker. Whatever the article was and whoever made the request, the flight attendant declined the respondent’s request to use the coat locker and indicated that there was no room in the locker for economy class passengers’ items. One of the respondents then proceeded to open the coat locker, which was not full at the time. A verbal altercation then occurred between the flight attendant and the first and second respondents during which the Qantas employee indicated that passage may be refused as a result of the first and second respondents’ conduct on the aircraft and directed the first and second respondents to disembark onto the aerobridge connecting to the terminal.

13    At some point shortly thereafter, whilst on the aerobridge Mr Lustig was informed that he would not be allowed to travel to Melbourne on the flight. At approximately the same time, Mr De Simone re-entered the aircraft and took his seat in economy class. Mr Lustig also re-entered the aircraft from the aerobridge and, following another altercation on board the aircraft between Mr Lustig and a flight attendant, made an announcement to certain passengers on board before proceeding to take his own seat in economy class. Airport personnel and security staff were called to attend on board the aircraft and requested Mr Lustig and Mr De Simone disembark from the aircraft. Approximately 10 to 15 minutes later, the first and second respondents agreed to leave the aircraft and were arrested and charged by the Australian Federal Police shortly after disembarking.

14    Mr Lustig was charged with an offence under the Crimes (Aviation) Act 1991 (Cth). His conviction was subsequently quashed on 15 May 2009 by the Court of Criminal Appeal, New South Wales Supreme Court, and a new trial was ordered: see Lustig v R.

15    Shortly after the incident in Sydney on 6 April 2006, Qantas notified the first and second respondents that the airline had decided not to carry Mr Lustig or Mr De Simone on any Qantas Group services. The first and second respondents contend that they were both members of the Qantas Frequent Flyer programme at the time that Qantas decided to place them on a “no-fly” list. Mr Lustig also claimed that he was a member of the Qantas Club.

3.    VCAT PROCEEDINGS

3.1    The claims by Mr Lustig

16    Some 6 years later, Mr Lustig filed an application in VCAT on 23 March 2012 seeking relief against Qantas under the FTA (Case No. C2022/2012). In his application, Mr Lustig sought payment of money, damages for misleading and deceptive conduct and other relief. Specifically, Mr Lustig sought “damages of $4.50 for a bus ticket (to change terminals at Mascot), $170.82 for a Virgin flight back to Melbourne and such further amount limited to $9,000 as may be adjudged appropriate”. In addition Mr Lustig sought exemplary and/or punitive damages, a written apology from Qantas, a retraction of the airline’s notification that he is prohibited from using their services, and “by way of enlivening the apology, reinstatement of Frequent Flyer and Qantas Club status together with 10 million frequent flyer points…”.

17    The date of the contract was identified as 10 March 2006 and of the dispute, as 6 April 2006, with the goods or services purchased or provided described as “[a]n air ticket from Sydney to Melbourne”. The dispute is described in the application in the following terms:

QANTAS FLIGHT 431 – 6 APRIL 2006

Customer Service Manager on the flight mistakenly identified me as being disruptive and refused to allow me to fly. Required to leave the flight on threat of having the AFP forcibly remove me and on promise that if I voluntarily left, there would be no charges and I would be on the next flight to Melbourne. On leaving, I was arrested and charged with interfering with a crew member … Later Respondent refused to allow me to fly, rendering my Qantas Club and Frequent Flyer status useless. Charges eventually not proceeded with. Qantas now not responding to requests to lift ban.

3.2    The claims by Mr De Simone

18    A second application was filed against Qantas in VCAT on 5 April 2012 by Mr De Simone (Case No. C2377/2012). By his application, Mr De Simone specified the value of his claim as $300, ticking boxes identifying as the matters which he wanted VCAT to decide and order:

(1)    Payment of money (including damages);

(2)    Order that a debt is owed or not owed;

(3)    Order to comply with a contract;

(4)    Damages or other orders for misleading and deceptive conduct, false representation or unconscionable conduct; and

(5)    “Other”.

19    The goods or services purchased or provided were identified as “Air travel”, and the date of contract and the date of dispute was identified as 6 April 2006.

20    Mr De Simone also requested a written apology, together with the reinstatement of his Frequent Flyer status and a credit by Qantas of 50 million Frequent Flyer points to his account.

21    In his application Mr De Simone stated that:

When I put a coat bag in the locker as I was entitled to due to my FF status, I was asked to accompany the customer service manager where upon I was assaulted by him and then required to leave the aircraft on threat of being removed by force. I subsequently suffered hurt and humiliation and wrongful arrest and charging by the Australian Federal Police. Those charges were incepted as a result of the malicious complaint of Qantas to the AFP.

The service rendered by Qantas was not of merchantable quality and in breach of the representation as future conduct made by it that because of my status as a frequent flyer I would be treated with special privileges which I was denied. Qantas also failed to complete the terms of the contract I had entered into which required it to transport me from Sydney to Melbourne in accordance with the effective terms of my purchase from them.

22    The reference to the “special privileges” allegedly claimed is understood to be a reference to the alleged entitlement to place items in the locker due to Mr De Simone’s Frequent Flyer status.

23    The Act pursuant to which the claim was made was identified as the FTA.

3.3    The application by Qantas to VCAT to strike out the claims

24    On 29 May 2012, Qantas applied to VCAT pursuant to s 75 of the VCAT Act for an order that the whole of Mr Lustig’s claim be struck out on the ground that VCAT lacks jurisdiction, and that the proceeding is vexatious, misconceived and lacking in substance, and is an abuse of process. In this regard, Qantas alleged that:

(1)    Part IV of the Carriers’ Liability Act applied and any right of action under the Carriers’ Liability Act has been extinguished because an action was not commenced within two years as required by s 34 of that Act, and any other civil liability of Qantas under any law is excluded by s 36;

(2)    the Carriers’ Liability Act is not an enabling Act for the purposes of the VCAT Act and does not purport to confer jurisdiction on the Tribunal; and

(3)    the circumstances alleged were in federal jurisdiction which the Tribunal is unable to exercise.

25    In the alternative, Qantas requested that VCAT summarily dismiss or strike out certain of Mr Lustig’s claims for relief on the ground that they were vexatious, misconceived, lacking in substance and an abuse of process.

26    On 6 June 2012, Qantas filed an application to dismiss Mr De Simone’s application.

27    Mr De Simone, initially by an email dated 24 July 2012 and particulars on 22 September 2012, and Mr Lustig, by an email dated 24 July 2012, and particulars dated 5 December 2012 and amended particulars dated 17 December, sought to reformulate their claims so as to “disavow” any claim for personal injury, and to shift the focus from the events on 6 April 2006 to anterior facts and circumstances. The apparent intention was to avoid the application of federal laws and meet the contention that the proceedings attracted federal jurisdiction. The effectiveness of the revised focus of the claims was challenged by Qantas, which responded in its submissions in the Tribunal that “the fact is they are claiming general damages for events which occurred onboard the aircraft or during embarkation or disembarkation …”.

3.4    Dismissal of the application for summary dismissal by VCAT

28    On 20 June 2013, VCAT dismissed Qantas’ applications for summary dismissal of first and second respondents’ VCAT claims. The Tribunal member who decided the case was a full time member of VCAT but not a judge.

29    First, the Tribunal found at [59] of its reasons that Mr Lustig and Mr De Simone had withdrawn any claim for damages arising out of personal injury. While accepting that it lacked jurisdiction over any remaining claims characterised as damage sustained by reason of any bodily injury suffered by a passenger resulting from an accident on board or in the course of embarking or disembarking (at [60]), the Tribunal did not consider that the remaining claims had that character so long as the claim for Frequent Flyer points related only the alleged breach of contract, misrepresentations and unconscionable conduct (at [62]-[66]).

30    Secondly, the Tribunal rejected Qantas’ submission that it could not consider whether the Carriers’ Liability Act operates to prevent any claims from being made against Qantas except for those set out in Part IV of the Carriers’ Liability Act because in doing so, the Tribunal is exercising federal jurisdiction. Rather, the Tribunal found that it had power to consider whether the defences raised by Qantas are valid (at [67]-[70]). As to their validity, the Tribunal concluded relevantly at [72] that:

Whilst I accept that there are cases which suggest that the Montreal Convention extinguishes all claims for damages arising out of international travel other than those for personal injuries and damage to baggage, there is nothing in the wording of Part IV of the Civil Aviation Act to support Mr Mackrell’s submission that when Part IV of the Civil Aviation Act is engaged, all other claims are extinguished. In addition, Mr Mackrell could not provide the Tribunal with any authorities to support this submission other than the authorities which related to the application of the Montreal Convention. In my view, this is a “fanciful” defence and the claims should not be struck out on this basis. (references omitted)

31    Thirdly, the Tribunal rejected the submission that it was being asked impermissibly to exercise federal jurisdiction by reason of the fact that the events in question took place in a Commonwealth place. In this regard, the Tribunal was satisfied at [91] that the incident on 6 April 2006 took place on Qantas’ aircraft, which was located in a Commonwealth place as defined by s 3 of the Commonwealth Places (Application of Laws) Act 1970 (Cth) (Commonwealth Places Act). It also (correctly) accepted that “[t]he effect of section 4 of the Commonwealth Places Act is that the laws of Victoria (in this case, the FTA) are applied as Commonwealth law and the Tribunal cannot exercise federal jurisdiction” (at [91]). However, the Tribunal concluded that, while the incident on 6 April 2006 was clearly the source of the dispute between the parties, the claim was “too broad to be confined by the Commonwealth Places Act.” The Tribunal’s reasons for so concluding are that (at [92]- [93]):

The history of the [sic] act is relevant to whether the claims made by Mr Lustig and Mr De Simone are covered by the act to the extent that it demonstrates the types of causes of action that the Commonwealth Places Act was intended to cover – a defined cause of action arising out of a defined event as a Commonwealth Place.

It seems to me that the claims made by Mr Lustig and Mr De Simone cannot be described as a defined cause of action arising out of a defined event at a Commonwealth Place. The claims made by Mr Lustig and Mr De Simone appear to arise out of a generalised contractual relationship between each of them and Qantas. Whilst it is clear that Mr Lustig and Mr De Simone claim that their contracts were breached on 6 April 2006, and that they formed the view that Qantas’ representations were false as a result of what took place on the aircraft on 6 April 2006, I am not satisfied that this is sufficient to bring their claims within the jurisdiction of the Commonwealth Places Act. It is clear from Mr Lustig’s and Mr De Simone’s particulars that they entered into the contract with Qantas in Melbourne some days before the flight, which they claim was part of an ongoing contractual relationship, and that they allege they relied on representations made by [sic] to them by Qantas over a number [sic] years. In addition, a significant aspect of their claims is Qantas’ decision not to allow them to fly with Qantas in the future, which appears to have been made by Qantas some time after the incident on 6 April 2006.

32    Finally, the Tribunal expressed doubt about whether it had power to order Qantas to give Mr Lustig and Mr De Simone 10 million and 50 million Frequent Flyer points respectively by way of exemplary damages. While it is not necessary to determine the point here, I consider that the Tribunal’s doubt in this regard is well placed. However, the Tribunal considered that the issue was one to be determined at the hearing of the claims (at [96]). It also observed that, as the claim was presently particularised limiting the claims for damages for $9999.00 so as to engage the small claims jurisdiction of the Tribunal, Mr Lustig and Mr De Simone could not obtain an order from the Tribunal for damages in Frequent Flyer points greater than the total value of $9999.00 if (contrary to their submissions) the Tribunal considered that it was appropriate to place a value on the Frequent Flyer points claimed (at [97]).

4.    CONSIDERATION

4.1    VCAT

33    VCAT is established by s 8(1) of the VCAT Act. The Tribunal is not described as a court but has an official seal (s 8(2), VCAT Act) of which all courts must take judicial notice when affixed to a document (s 142).

34    The Tribunal comprises a President, Vice Presidents and Deputy Presidents, senior members and ordinary members (s 9, VCAT Act, since repealed). The President must be a judge of the Supreme Court, while each Vice President must be a judge of the County Court. The President and each Vice President hold office for a period not exceeding five years and their appointment does not affect the tenure of office, status or remuneration as a judge of the Supreme Court or County Court as the case may be (ss 10 and 11, VCAT Act).

35    While Deputy Presidents must be admitted to legal practice for no less than five years, there is no requirement that senior and ordinary members be admitted to legal practice. Where the member has not, however, been admitted to legal practice, the person must, in the Minister’s opinion, have “extensive knowledge or experience in relation to any class of matter in respect of which functions may be exercised by the Tribunal”. Each Deputy President, senior member and ordinary member must be appointed for a term expiring seven years after the date of appointment (or on attaining 70 years of age) and may be appointed on a full-time or part-time basis (ss 12, 13 and 14, VCAT Act). Furthermore, members are eligible reappointment under s 16 and for internal promotion (s 16A).

36    All members are appointed by the Governor in Council on the recommendation of the Minister (s 16) but in the case of the President and each Vice President, the Minister must first consult with the Chief Justice or Chief Judge as applicable (s 10(1) and 11(2), VCAT Act). Non-judicial members (being members other than the President or a Vice-President) may be removed from office by the Governor in Council on the recommendation of the Minister after an investigation into the member’s conduct by a person nominated by the President and appointed by the Minister (ss 23 and 24, VCAT Act). All members have the same protection and immunity as a judge of the Supreme Court in the performance of their duties (s 143).

37    VCAT has two types of jurisdiction, being described in s 40 of the Act as “original” and “review” jurisdiction. Review jurisdiction is jurisdiction conferred on the Tribunal by or under an enabling enactment to review a decision made by the decision-maker (s 42). In the exercise of that jurisdiction, the Tribunal effectively stands in the shoes of the administrative decision-maker exercising the decision-maker’s function and making a decision deemed to be that of the original decision-maker (s 51, VCAT Act). In so far as the Tribunal exercises its “review” jurisdiction, the Tribunal “is plainly engaged in a purely administrative task”: Morris v Riverwild Management Pty Ltd [2011] VSCA 283; (2011) 284 ALR 413 at 427 [59] (Weinberg JA).

38    Mr Lustig and Mr De Simone brought their claims in the VCAT Civil Claims Division in the original jurisdiction of the Tribunal. Section 43 of the VCAT Act provides that the original jurisdiction of the Tribunal is invoked:

(a)    by a person who is entitled by or under an enabling enactment to do so applying to the Tribunal in accordance with section 67; or

(b)    by a matter being referred to the Tribunal under an enabling enactment in accordance with section 69; or

(c)    in any other way permitted or provided for by the enabling enactment.

39    An “enabling enactment” is defined in s 3 of the VCAT Act to mean “an enactment by or under which jurisdiction is conferred on the Tribunal.”

40    In exercising its jurisdiction, the Tribunal is required to act fairly and according to the substantial merits of the case, and is not bound by the rules of evidence (ss 97 and 98, VCAT Act). Its powers include the granting of injunctions, including interim injunctions, the award of damages, and the making of declarations (ss 123 and 124, VCAT Act).

41    Finally, an order made by VCAT requiring money to be paid may be enforced on filing as of right in an appropriate Court and “must be taken to be an order of the appropriate court and may be enforced accordingly”: VCAT Act s 121(3). Equally, under s 122, non-monetary orders may be enforced on filing the orders in the Supreme Court whereupon they are “…taken to be an order of the Supreme Court, and may be enforced accordingly.” These features in particular, as I later explain, indicate that, in the exercise of original jurisdiction, the Tribunal is vested with judicial power.

4.2    Jurisdiction conferred by the Fair Trading Act 1999 (Vic)

42    At the relevant time, s 108(1) of the FTA conferred jurisdiction on the Tribunal to “hear and determine a consumer and trader dispute” and was therefore an enabling enactment for the purposes of s 43 of the VCAT Act. While not relevant to these proceedings, the FTA was repealed on 1 July 2012 by s 233 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

43    The term “consumer and trader dispute” is defined in s 107(1) of the FTA to mean:

… a dispute or claim arising between a purchaser or possible purchaser of goods or services and a supplier or possible supplier of goods or services in relation to a supply or possible supply of goods or services.

44    “Services” is defined broadly in s 3 of the FTA to include:

any rights…, benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, including the rights, benefits, privileges or facilities that are, or are to be provided, granted or conferred under a contract for or in relation to –

(a)    the performance of work (including work of a professional nature) whether with or without the supply of goods; or

(b)    the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction;…

45    Section 107(2) and (3) expand upon the definition in subsection (1) as follows:

(2)    For the purposes of subsection (1), a dispute or claim includes any dispute or claim in negligence, nuisance or trespass that relates to the supply or possible supply of goods or services but (except as provided in subsection (3)) does not include a dispute or claim related to a personal injury.

(3)    For the purposes of sub-section (1), a dispute or claim includes a claim related to personal injuries if –

(a)    the claim is for an amount not exceeding $10 000; and

(b)    the claim relates to a supply or possible supply of goods or services; and

(c)    the supply or possible supply of goods or services is the subject of a related consumer and trader dispute.

46    The end result is that disputes or claims related to a personal injury may be the subject of proceedings in the Tribunal only where the conditions in s 107(3) are met.

47    The powers conferred on the Tribunal under s 108(2) in relation to a consumer and trader dispute include to:

(b)     order the payment of a sum of money –

(i)    found to be owing by one party to another party;

(ii)    by way of damages (including exemplary damages and damages in the nature of interest);

(iii)    by way of restitution;

…

(e)     order the refund of any money paid under a contract or under a void contract;

(f)     make an order in the nature of an order for specific performance of a contract;

(g)     order rescission of a contract;

(h)     order rectification of a contract;

(i)     declare that a debt is, or is not, owing;

(j)     order a party to do or refrain from doing something.

48    By s 111, once an application has been made to the Tribunal under the VCAT Act, the issues are not justiciable by a court unless, among other things, earlier proceedings had been instituted in a court, the application to the Tribunal is struck out for want of jurisdiction, or the Tribunal refers the proceeding to the court under s 77 of the VCAT Act. Conversely, s 112 of the FTA provides that a court must stay proceedings if the proceedings could be heard by the Tribunal under the FTA and the Court is satisfied that the proceedings could be heard by VCAT and would “more appropriately” be dealt with by the Tribunal.

4.3    VCAT cannot exercise the judicial power of the Commonwealth

49    The heart of the issues relate to the proper characterisation of the first and second respondents’ claims in VCAT, i.e., whether they were federal in nature, and as to the relief that might be granted.

50    Qantas and the State made detailed submissions in support of the propositions that:

(a)    VCAT was called upon to exercise judicial power in the resolution of the claims before it;

(b)     VCAT was not a “court of a State” for the purposes of Chapter III of the Constitution and could not therefore be vested with federal judicial power; and

(c)    VCAT had wrongly embarked upon an exercise of federal jurisdiction in considering the merits of the defence on which Qantas relied.

51    As I explain below, I consider that these submissions were correctly made.

52    The first and second respondents accept the proposition that VCAT is not a court. They also proceeded on the basis that VCAT could not exercise Commonwealth judicial power. However, they took issue with the validity of Qantas’ defence, arguing among other things that it was “unsupported in law” and could not be an answer to their reformulated claims before VCAT. As such, the first and second respondents’ submissions assumed that the validity of the defence was an answer to the jurisdictional question. For the reasons I explain below, that approach is not correct.

4.3.1    The judicial power of the Commonwealth is invested only in Chapter III courts

53    Chapter III of the Constitution is the exclusive source of legislative power to confer the judicial power of the Commonwealth: The Queen v Kirby; ex parte Boilermakers’ Society of Australia [1956] HCA 10; (1956) 94 CLR 254 (Boilermakers’ Case) at 270 (Dixon CJ, McTiernan, Fullagar and Kitto JJ); Re Wakim; ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 (Re Wakim) at 555 [52] (McHugh J), 573 [108], 574-575 [110]-[111] (Gummow and Hayne JJ); Forge v Australian Securities and Investments Commission [2006] HCA 44; (2006) 228 CLR 45 (Forge) at 73 [56] (Gummow, Hayne and Crennan JJ). The heads of Commonwealth judicial power are contained in ss 75 and 76 of the Constitution, and include any matter “[a]rising under this Constitution, or involving its interpretation” or “[a]rising under any laws made by the Parliament” (ss 76(i) and (ii) respectively).

54    The power to confer federal jurisdiction extends to the “autochthonous expedient of conferring federal jurisdiction on State courts” by s 77(iii) of the Constitution, pursuant to which the Commonwealth Parliament may invest “any court of the State with federal jurisdiction”: Boilermakers’ Case at 268 (Dixon CJ, McTiernan, Fullagar and Kitto JJ). As such, the source of a State court’s authority to decide matters within federal jurisdiction can derive from Commonwealth law only and not from the sovereign power of the State (Re Wakim).

55    Conversely, State courts cannot exercise State judicial power in respect of the heads of federal jurisdiction in ss 75 and 76 of the Constitution. The effect of s 39 of the Judiciary Act conferring jurisdiction on State courts with respect to the subject-matter of ss 75 and 76 of the Constitution is to exclude any concurrent State jurisdiction in respect of those subject matters. This is so even when State laws are applied in the matter: Re Wakim at 555 [51] McHugh J. As Barwick CJ held in Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 (Felton) at 373:

…if federal jurisdiction is attracted at any stage of the proceedings, there is no room for the exercise of a State jurisdiction which apart from any operation of the Judiciary Act the State court would have had. … there is no State jurisdiction capable of concurrent exercise with the federal jurisdiction invested in the State court.

(Approved in Australian Securities and Investments Commission v Edensor Nominees Pty Limited [2001] HCA 1; (2001) 204 CLR 559 at 571 [7] (Gleeson CJ, Gaudron and Gummow JJ (with whose reasons Hayne and Callinan JJ relevantly agreed at 637 [213]))).

56    The same conclusion must follow so as to preclude the vesting of Commonwealth judicial power in a State executive body: Attorney-General (NSW) v 2UE Sydney Pty Ltd [2006] NSWCA 349; (2006) 236 ALR 385 at 395-396 [56] (Spigelman CJ (with whose reasons Ipp JA agreed at 405 [118])); Commonwealth v Anti-Discrimination Tribunal (Tas) [2008] FCAFC 104; (2008) 169 FCR 85 (ADT (Tas)) at 137-138 [220]-[222] (Kenny J).

57    Furthermore, insofar as the heads of jurisdiction in ss 75 and 76 of the Constitution identify controversies unknown in the anterior jurisprudence of the colonies, there is no occasion for federal laws to define under s 77(ii) of the Constitution the extent to which the jurisdiction of any federal court is exclusive of that which “belongs to” the courts of the States and no cause, therefore, for s 109 of the Constitution to apply (MZXOT v Minister for Immigration and Citizenship (the Remitter Case) [2008] HCA 28; (2008) 233 CLR 601 at 619 [25] (Gleeson CJ, Gummow and Hayne JJ); but cf the approach of McHugh J in Re Wakim at 558 [59]). Examples of such heads of jurisdiction include matters arising under the Constitution or involving its interpretation, or arising under any laws made by the Commonwealth Parliament: Kruger v Commonwealth [1997] HCA 27; (1997) 190 CLR 1 at 171 (Gummow J). Such matters are of their nature necessarily federal in character.

58    In short, as Jacobs J explained in Commonwealth v Queensland [1975] HCA 43; (1975) 134 CLR 298 at 327:

… the judicial power delineated in Ch. III is exhaustive of the manner in and the extent to which judicial power may be conferred on or exercised by any court in respect of the subject matters set forth in ss. 75 and 76, “matters” in those sections meaning “subject matters”. This is so not only in respect of federal courts but also in respect of State courts whether or not they are exercising federal jurisdiction conferred on them under s. 77(iii). In respect of the subject matters set out in ss. 75 and 76 judicial power may only be exercised within the limits of the kind of judicial power envisaged in Ch. III …

59    It follows from these principles that the judicial power of the Commonwealth is defined by reference to its source, being the “the authority to adjudicate derived from the Commonwealth Constitution and laws”, while State judicial power is “the authority which State Courts possess to adjudicate under the State Constitution and laws.” (Baxter v Commissioners of Taxation (NSW) (1907) 4 CLR 1087 at 1142 (subsequently overruled but on different issues))

60    It also follows that federal jurisdiction is identified by reference to its subject-matter (by which I include, depending upon the head of jurisdiction, the remedy sought or identity of a party). In addition, once federal jurisdiction exists, it extends over the whole of the controversy of which the federal claim forms a part, even if certain claims which form part of the single matter would not otherwise fall within federal jurisdiction: Re Wakim at 583-586 [125]-[141] (Gummow and Hayne JJ).

61    Importantly for reasons which I presently explain, the separate and distinct vesting of Commonwealth judicial power precludes the vesting of such power in any body or persons other than a Chapter III court, being a court created pursuant to s 71 of the Constitution constituted in accordance with the requirements of s 72, or a court of a State: Huddart Parker & Co Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330; Waterside Workers’ Federal of Australia v J W Alexander Ltd [1918] HCA 56; (1918) 25 CLR 434; Boilermakers at 270; Forge at 73 [56].

62    Finally, while the constitutional implication prevents a State tribunal from exercising Commonwealth judicial power, it does not preclude a State (or Commonwealth) tribunal from forming an opinion on a federal constitutional issue: Sunol v Collier [2012] NSWCA 14; (2012) 81 NSWLR 619 (Sunol) at 623-624 [17]-[20] (the Court); see also by analogy Re Adams and Tax Agents’ Board (1976) 1 ALD 251 (Re Adams) (Brennan J (as President of the Administrative Appeals Tribunal)).

4.3.2    VCAT is not a court within s 77(iii) of the Constitution

63    It is well established, as Spigelman CJ has held, “that the word “court” has a protean quality and takes its meaning from its context”: Trust Company of Australia Ltd (T/as Stockland) v Skiwing Pty Ltd [2006] NSWCA 185; (2006) 66 NSWLR 77 (Skiwing) at 81 [17] (see also 82 [21]-[23]) (with whose reasons Hodgson and Bryson JJA agreed). In this case, as in Skiwing, the concept takes its meaning from its constitutional context.

64    This is not to say that that “a court of a State” for the purposes of Chapter III must possess the attributes necessary for the establishment of a federal court expressed in s 72 of the Constitution and designed to secure the institutional independence of the court and its judges: K-Generation Pty Limited v Liquor Licensing Court [2009] HCA 4; (2009) 237 CLR 501 (K-Generation) at 529 [84] (French CJ); Fardon v Attorney-General (Qld) [2004] HCA 46; (2004) 223 CLR 575 at 598 [36] (McHugh J). Rather, it is well established, as French CJ explained in K-Generation at 529 [88], that:

The Parliament of the Commonwealth must, of course, take the courts of the States as it finds them. There is, consistently with the constitutional scheme for the exercise of the judicial power of the Commonwealth, a degree of institutional and procedural flexibility on the part of the Parliaments of the States, which may travel beyond the limits permissible in federal courts created by the Parliament.

65    In this regard, it is true that in many respects VCAT resembles a court exercising judicial power. It decides controversies between parties by the determination of rights and duties based on existing facts and the law as (relevantly) contained in the FTA. It has broad powers to grant remedies akin to those which a court may grant including damages, punitive and exemplary damages, declarations and injunctions. Its members also have the same immunities and protections as a judge of the Supreme Court of Victoria. That the Tribunal is vested with State judicial power is confirmed, in my view, by the provisions for the enforcement of Tribunal orders as an order of the court on filing with the appropriate court. Given the similarity between these provisions and the scheme for the enforcement of determinations by the (then) Human Rights and Equal Opportunity Commission on registration with the Federal Court held invalid in Brandy as an impermissible conferral of federal judicial power, together with the other features referred to, it is plain in my view that VCAT is vested with judicial (as well as non-judicial) power: Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 at 269-270 (Deane, Dawson, Gaudron and McHugh JJ); see also Director of Housing v Sudi [2011] VSCA 266; (2011) 33 VR 559 (Sudi) at 595 [204]-[208] (Weinberg J) and, by analogy, ADT (Tas) at [207] (Kenny J).

66    As such, in my view, the State rightly submitted that VCAT was vested with judicial power and that, insofar as that judicial power was State judicial power, the provisions of the VCAT Act and FTA did not infringe any constitutional limitation. There is no doctrine of the separation of judicial power applicable to the States, in contrast to the position with respect to the Commonwealth: K-Generation at 529-530 [88] (French CJ), 544 [153] (Gummow, Hayne, Heydon, Crennan and Kiefel JJ); Wainohu v New South Wales [2011] HCA 24; (2011) 243 CLR 181 at 212 [52] (French CJ and Kiefel J).

67    However, such features are not necessarily determinative of whether a Tribunal is a court of a State for the purposes of the Constitution: ADT (Tas) at 139-141 [226]-[231] (Kenny J); Sudi at [184]-[199] (Weinberg J); Orellana-Fuentes v Standard Knitting Mills Pty Ltd [2003] NSWCA 146; (2003) 57 NSWLR 282 at 290 [39] (Ipp JA (with whom the remainder of the Court agreed)); cf the approach of Heerey J in Commonwealth v Wood [2006] FCA 60; (2006) 148 FCR 276. As Spigelman CJ explained in Skiwing at 82 [21]-[23], in holding that the Administrative Decisions Tribunal (NSW) is not a court of a State:

The exercise of judicial power is a necessary but not a sufficient condition for the characterisation of a decision-making body as a court, even in a context where there is no constitutional overlay. Furthermore, many powers may be either judicial or executive and their classification may depend on the nature of the body which exercises them. Such powers are neutral as indicia for the characterisation of the decision-maker.

In Shell Co of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530 at 543–544, Viscount Dunedin, delivering the advice of the Privy Council on appeal from the High Court of Australia, said:

“…The authorities are clear to show that there are tribunals with many of the trappings of a Court which, nevertheless, are not Courts in the strict sense of exercising judicial powers.In that connection it may be useful to enumerate some negative propositions on this subject: (1) A tribunal is not necessarily a Court in the strict sense because it gives a final decision; (2) nor because it hears witnesses on oath; (3) nor because two or more contending parties appear before it between whom it has to decide; (4) nor because it gives decisions which affect the rights of subjects; (5) nor because there is an appeal to a Court; (6) nor because it is a body to which a matter is referred by another body.”

In Attorney-General v British Broadcasting Corporation [1981] AC 303 at 348, Lord Edmund-Davies added a list of further matters which were similarly not decisive:

“(1) The fact that the tribunal is called a ‘court ’

(2) The necessity of sitting in public.

(3) The fact that the tribunal has power to administer oaths and hear evidence

on oath.

(4) The fact that the prerogative writs may issue in relation to the tribunal’s proceedings.

(5) The fact that absolute privilege against an action for defamation protects those participating in its proceedings.”

(See also per Lord Scarman (at 356C–E, 358C–E, 359G–360B).)

68    Despite, therefore, the fact that VCAT has many of the “trappings” of a court, I agree with Weinberg J that VCAT is plainly not a court of a State within s 77(iii) of the Constitution and cannot therefore be vested with the judicial power of the Commonwealth: Sudi at 591 [182] (Weinberg J (Warren CJ and Maxwell P not deciding)). Further, while lacking precedential value, this is also the position that VCAT itself has taken: ABY, ABZ v Patient Review Panel (Health and Privacy) [2011] VCAT 905 at [13] (Ross J (in his capacity as President)).

69    Given the detailed analysis of Weinberg J in Sudi, it suffices for present purposes to highlight three characteristics relevant to that conclusion.

70    First, while not necessarily determinative, VCAT is not established as a court in its enacting legislation: see ADT (Tas) at [247] (Kenny J); Sudi at 592-593 (Weinberg JA); cf the body considered in K-Generation at 529 [85] (French CJ), 563 [221] (Kirby J). It also exercises a pure merits review jurisdiction in which it stands in the shoes of an administrative decision-maker.

71    Secondly and crucially, “[f]or a body to answer the description of a court it must satisfy minimum requirements of independence and impartiality. That is a stable principle, founded on the text of the Constitution.”: Forge at 67 [41] (Gleeson CJ); see also at 76-77 [63]-[65] and 79-81 [73]-[78] (Gummow, Hayne and Crennan JJ); K-Generation at 544 [153] (Gummow, Hayne, Heydon, Crennan and Kiefel JJ). However, I agree with Weinberg J in Sudi at 594 [201] that VCAT does not satisfy these requirements. As his Honour held:

VCAT is, of course, an independent statutory body. None the less, it is a fact that its members, apart from the President and Vice President, do not enjoy judicial independence. They have nothing remotely approaching the tenure conferred by provisions modelled upon the Act of Settlement 1700 (UK). Non-judicial members are appointed for fixed terms, and of particular concern is the fact that they are eligible for re-appointment. As a consequence, there will always be a perception that VCAT as a whole is comprised of members who are beholden to the government, and therefore not independent. I should emphasise that this is a matter of perception. I do not intend to suggest in any way the members of VCAT act other than with complete integrity in the discharge of their functions.

72    In particular, as Qantas submitted:

(a)    members are generally appointed for a period of seven years (ss 13(3) and 14(3), VCAT Act) and are eligible for reappointment (s 16(2));

(b)    members are eligible for internal promotion within the Tribunal (s 16A);

(c)    aside from judicial members, members are entitled to remuneration and allowances fixed from time to time by the Governor in Council with no express proscription on reductions, and different remuneration and allowances may be fixed for different classes of members (s 17); and

(d)    the Tribunal must act in accordance with certificates issued by the Premier as to disclosure of information about specified matters or matters contained in a document in circumstances covered by s 53 of the VCAT Act, and with statements of Government policy in respect of which a certificate is given under s 57.

73    Finally, the members of VCAT are not limited to judges and the office held by them is not described as judicial office. Ultimately, however, it may well be that the question of whether members of a tribunal are “judges” may be no more than a different way of posing the question of whether the tribunal meets the minimum criteria of independence and impartiality so as to be a “court of a State” within Chapter III, as Kenny J suggested in ADT (Tas) at 142-143 [237].

4.3.3    Reading down the FTA

74    The State and Qantas contended that neither the VCAT Act nor the FTA purported to confer jurisdiction on the VCAT to determine proceedings within federal jurisdiction. Notwithstanding the breadth of the terms in which jurisdiction conferred by s 108 of the FTA is expressed and the lack of any express exclusion of matters within federal jurisdiction, that construction is in my view the preferable one.

75    First, applying s 6 of the Interpretation of Legislation Act 1984 (Vic), the provisions conferring jurisdiction on VCAT should be construed “as operating to the full extent of, but so as not to exceed, the legislative power of the State of Victoria” and therefore, not so as to seek impermissibly to confer federal jurisdiction but as limited to claims liable to be determined in the exercise of State judicial power: see by analogy Sunol at 624 [19] with respect to the power of the Administrative Decisions Tribunal (NSW) to refer questions of law to the Supreme Court. This does not, in my view, involve any impermissible rewriting by the Court: cf e.g. Momcilovic v The Queen [2011] HCA 34; (2011) 245 CLR 1 at 97 [188] (Gummow J), 159 [399] (Heydon J). It is unlikely in the extreme that the State Parliament intended to vest federal judicial power in a tribunal that was plainly not “a court of a State” and which in any event, the State has no power to vest. As, for example, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ held in Residual Assco Group Limited v Spalvins [2000] HCA 33; (2000) 202 CLR 629 at 644 [28]:

If the choice is between reading a statutory provision in a way that will invalidate it and reading it in a way that will not, the court must always choose the latter course when it is reasonably open. Courts in a federation should approach issues of statutory construction on the basis that it is a fundamental rule of construction that the legislatures of the federation intend to enact legislation that is valid and not legislation that is invalid.

76    Put another way, the construction which I consider to be correct ultimately involves no more than a sensible reading of the provision in its context as a State law conferring jurisdiction on a State tribunal.

77    Secondly and consistently with this, neither the VCAT Act nor the FTA assume a complete correspondence of jurisdiction over consumer and trader disputes between a court of the State in which federal jurisdiction is conferred, on the one hand, and VCAT where it may not be conferred, on the other hand. In particular, s 111(1) of the FTA specifically envisages that the issues in dispute may be justiciable in the Supreme Court despite an application in the Tribunal having been struck out for want of jurisdiction.

78    Thirdly, I accept Qantas’ submission that a construction which conferred on VCAT jurisdiction to hear and “determine” federal matters but only in the exercise of non-judicial power, while those within State jurisdiction would be determined in the exercise of State judicial power, would radically alter the operation of the law in any proceedings otherwise raising issues in federal jurisdiction. There is no foothold in the Act for such a differential operation.

4.4    Does the matter before VCAT arise under federal law?

4.4.1    Principles by which it is determined whether a matter arises under federal law

79    In the present case, Qantas allege that the matter before VCAT is federal in character because it involves a matter arising under federal law, being the Carriers’ Liability Act and/or the Commonwealth Places Act: see s 76(ii), the Constitution. The principles by which it is determined whether a matter arises under a law of the Commonwealth and its implications for the determination of the matter are well settled.

80    First, a matter arises 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.”: LNC Industries Ltd v BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 (LNC Industries) at 581 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ) (quoting with approval R v Commonwealth Court of Conciliation and Arbitration; ex parte Barrett (1945) 70 CLR 141 at 154 (Latham CJ)). As their Honours further explained, this does not mean that the question turns on the form of relief sought or even upon whether the relief depends on federal law (ibid). Thus even if, as in LNC Industries, a claim is made for relief of a kind available under State law (e.g. for damages for breach of a contract) the claim will arise under federal law if the contract is in respect of a right or property (e.g. a trademark) which is the creation of federal law. Equally, a matter arises under federal law “if the source of a defence which asserts that the defendant is immune from the liability or obligation alleged against him is a law of the Commonwealth”: LNC Industries at 581 (emphasis added).

81    Secondly, federal jurisdiction is plainly attracted where the right or duty based in federal law “is directly asserted by the plaintiff or defendant”, even though it may also exist in other cases such as where the court finds it necessary nonetheless to decide whether or not a right or duty based in federal law exists: Moorgate Tobacco Co Ltd v Phillip Morris Ltd (1980) 145 CLR 457 (Moorgate) at 476 (Stephen, Mason, Aickin and Wilson JJ (Barwick CJ agreeing at 467)).

82    Thirdly, once a federal defence is raised in a court vested with the judicial power of the Commonwealth, the whole of the matter is determined by it in the exercise of federal judicial power unless there is some completely disparate claim constituting in substance a separate proceeding: Felton at 373 (Barwick CJ); Moorgate at 476 (Stephen, Mason, Aickin and Wilson JJ (Barwick CJ agreeing)); Sunol at 621 [7] (the Court). As Mason, Murphy, Brennan and Deane JJ explained in Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 (Fencott) at 606:

…the ambit of a matter arising under a federal law may extend beyond claims which arise under that law or which are to be determined by reference to that law alone. As Windeyer J said in Felton v Mulligan (1971) 124 CLR 367 at 393:

“The existence of federal jurisdiction depends upon the grant of an authority to adjudicate rather than upon the law to be applied or the subject of adjudication.”

83    Once attracted, therefore, the jurisdiction exercised by the court is co-extensive with the content of the “matter”. Nor is federal jurisdiction lost by subsequent disclaimer of the federal claim, or by fact that the court ultimately rejects the federal claim or finds it unnecessary to determine: Moorgate at 476-477 (Stephen, Mason, Aickin and Wilson JJ (Barwick CJ agreeing)). As the Full Court observed in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 (Burgundy Royale) at 219, “…the jurisdiction is to entertain, and determine, all claims constituting a ‘matter’, whatever their ultimate fate. Any other approach would involve the extremely inconvenient result that the existence or absence of jurisdiction to deal with a particular claim would depend upon the substantive result of that claim” (emphasis added).

84    However, it does not follow that these principles would apply to the case of a body, such as VCAT, vested with State judicial power which is incapable of exercising federal judicial power. In such a case, it seems to me that the issues in State jurisdiction would retain their character as such, notwithstanding that federal issues are raised. By analogy, the Full Court of the Federal Court held in Petrotimor Companhia de Petroleos SARL v Commonwealth [2003] FCAFC 83; (2003) 128 FCR 507 (Petrotimor) at 512 [21] that, the controversy said to constitute the federal matter being non-justiciable, “there is no federal matter at all. It follows in our view that, the Court not being seised of any ‘matter’ in the constitutional sense, there can be no accrued jurisdiction.” (emphasis added).

85    This question is raised by Qantas in contending that all of the claims made by Messrs Lustig and De Simone were federal as the source of the claims lies in FTA as applied as a “surrogate” Commonwealth law by the Commonwealth Places Act. It does not, in other words, apply of its own force as a law of the State. However, there is no need for me to resolve these issues here. This is because, as explained below, Qantas raised a federal defence to all of the claims raised by Messrs Lustig and De Simone and the whole of matter was therefore federal on any view, subject only to the question of whether the defence was colourable.

4.4.2    Does the matter arise under a federal law by reason of the source of Qantas’ defence to the claims?

86    Qantas relies upon Part IV of the Carriers’ Liability Act as a complete defence to the claims by Messrs Lustig and De Simone – a defence which is self-evidently sourced in a law of the Commonwealth. Specifically, in its application to strike out the application in VCAT, Qantas contended that:

(1)    the claim by Messrs Lustig and De Simone is in respect of Qantas’ alleged conduct in requiring them to disembark from an aircraft operated by it whilst they were in the course of embarkation for interstate carriage by air from Sydney to Melbourne on flight QF431;

(2)    the carriage of Messrs Lustig and De Simone was pursuant to an agreement for carriage between a place in a State and a place in another State in an aircraft operated by the holder of an Air Operator’s Certificate in force under the Civil Aviation Act 1988 (Cth) authorising airline operations in the course of commercial airline operations;

(3)    the 1999 Montreal Convention, the Warsaw Convention, the Hague Protocol, the Montreal Protocol No 4, and the Guadalajara Convention as defined in Carriers’ Liability Act do not apply to the carriage;

(4)    by virtue of s 27, Part IV of the Carriers’ Liability Act applies to the carriage;

(5)    any right of action under the Carriers’ Liability Act has been extinguished because an action was not commenced within two years as required by s 34; and

(6)    by virtue of s 36, the remedy afforded under the Carriers’ Liability Act is an exclusive remedy in substitution for any remedy under any other law.

87    It follows that this is not a case where the federal claim (or, relevantly here, the federal defence) is so “trivial or insubstantial” in its relationship to the controversy as a whole that the non-federal aspects are not translated to, or do not “accrue”, federal jurisdiction: cf e.g. Fencott at 609 (Mason, Murphy, Brennan and Deane JJ). That leaves only the question of whether the defence is colourable.

4.4.1    Was the federal defence colourable?

88    The raising of a federal claim will ordinarily give rise to a federal matter unless it is colourable in the sense that it is made for “the improper purpose of “fabricating” jurisdiction”: Burgundy Royale at 219 (the Court). The question, therefore, of whether a claim is tenable will be relevant to that question but not determinative save (rarely) where a claim is so obviously untenable, and would have been so to those who propounded it, that the claim is found to be colourable: Cook v Pasminco [2000] FCA 677; (2000) 99 FCR 548 at 550 [14] and [16] (Lindgren J); Ahmed v Harbour Radio Pty Ltd [2009] FCA 1113; (2009) 180 FCR 313 at 327-329 [58] –[64] (Foster J). For example, in Johnson Tiles Pty Ltd v Esso Australia [2000] FCA 1572; (2000) 104 FCR 564 (Johnson Tiles), French J (with whose reasons Beaumont and Finkelstein JJ agreed) explained at 598-599 [88] that:

In the ordinary course the contention that a claim is not tenable will not go to jurisdiction unless dependent upon a submission that the claim is outside jurisdiction. And indeed, within that class a claim may be untenable because its very nature denies its character as an element of any matter or controversy in respect of which the Court can exercise jurisdiction. So a proceeding based upon the proposition that the Commonwealth Constitution is invalid does not disclose a matter arising under the Constitution or involving its interpretation – Nikolic v MGICA Ltd [1999] FCA 849. A claim may also be a sham reflecting no genuine controversy and therefore establishing no matter in respect of which the Court may exercise its jurisdiction. There has been discussion of so called “colourable” claims made under the Trade Practices Act for the improper purpose of fabricating jurisdiction. The mere fact that a claim is struck out as untenable does not mean it is colourable in that sense.

89    Thus in that case, the Court held that the pleading of the Trade Practices Act claim advanced the legitimate forensic purpose of endeavouring to establish a cause of action which would not require proof of a duty of care. Notwithstanding, therefore, what French J described as “its precipitate initiation and chequered history”, his Honour was not satisfied that the claim was colourable in the sense that would deprive the Court of jurisdiction to deal with the matter including any non-federal claims that may form part of it: Johnson Tiles at 599 [88].

90    Both the State and Qantas submitted that the same test of colourability applies to the question here, as to whether the raising of a federal defence gives rise to the matter arising under a Commonwealth law so as to take the matter outside VCAT’s jurisdiction. Messrs Lustig and De Simone appeared to accept the test although it is clear that they took a much broader view of when a defence might be “colourable”. Their submissions assumed that the Court (and VCAT) could find that no federal defence was raised where it was not supported in law or otherwise valid which does not accord with the authorities to which I referred and must be rejected.

91    In this regard, all parties accepted that VCAT has power to form a view as to the existence of its own jurisdiction and therefore as to whether a federal defence to a claim is or is not colourable. I agree with that position. As the State pointed out in its submissions, there is a well-recognised distinction between jurisdiction (in the sense of authority) to determine jurisdiction, and jurisdiction to determine the substance of the matter: see e.g. Petrotimor at [12] (Black CJ and Hill J). As VCAT is not a court, its opinion on the question of jurisdiction is not binding in the sense of an authoritative decision of a court, although that does not prevent VCAT from forming an opinion: Re Adams. However, the State rightly submitted that the Tribunal fell into error in dealing with the merits of the federal defence raised by Qantas and did not confine itself to forming a view on the jurisdictional issue. That is apparent from the Tribunal’s conclusion at [70] that it had power to determine whether the defences raised by Qantas are “valid defences” and of its subsequent assessment of the “validity” of Qantas’ defences: see further at [30] above. While, therefore, the Tribunal described the defence raised by Qantas in reliance on the Carriers’ Liability Act as “fanciful”, its reasoning does not suggest that the Tribunal intended thereby to find that the defence was “colourable” in the relevant sense. I reject the submission of Messrs Lustig and De Simone to the contrary.

92    While the State submitted that one option was for this Court to remit the matter to the Tribunal to address the correct question, i.e. whether the federal defence was colourable in the sense which I have explained, I do not consider that there is any point in so doing. I consider that the defences are plainly not colourable. There is nothing which lends any support in my view to any suggestion that they were not raised genuinely by Qantas in good faith.

93    First, Qantas has consistently raised the defence in answer to the first and second respondents’ claims not only before the proceedings were instituted, but also in prior correspondence. In this regard, on 1 June 2011 before instituting the VCAT proceedings, the (then) solicitors for Messrs Lustig and De Simone wrote to Qantas advising that they had suffered “grave and substantial losses” arising from the events on 6 April 2006 which, “if litigated in the traditional way”, would include substantial claims in damages based on a range of statutory and common law causes of action. The letter also stated that Messrs Lustig and De Simone “are prepared in the absence of a proper commercial settlement to litigate the matter through the Courts” (emphasis added) but sought Qantas’ agreement to undergo alternative dispute resolution.

94    Qantas replied through its solicitors on 18 July 2011. It advised that there were a number of reasons as to why Qantas was not liable, the first being that the Carriers’ Liability Act “applies to the exclusion of any other right of action and precludes an action after the expiry of two years” (emphasis added). Qantas then identified a number of additional reasons including that:

(ii)    The limitation periods under the Limitation Act 1969 (NSW) and the Limitation of Actions Act 1958 (Vic) also operate to preclude any action.

(iii)    Clause 10 of the Qantas Conditions of Carriage Permits Qantas to refuse to carry a passenger in the circumstances which occurred.

(iv)    Under the Conditions of Carriage, Qantas is permitted to remove the passenger from the flight without any liability on the part of Qantas.

(v)    The nature of your clients’ purported claims under the Competition and Consumer Act 2010 (Cth) and Fair Trading Act 1999 (Vic) are unclear but appear unmeritorious. (emphasis added)

95    Nonetheless it is clear from the tenor of the letter that even at this early stage, Qantas regarded the Carriers’ Liability Act potentially as a complete answer to the alleged claims.

96    Significantly, in this early correspondence Messrs Lustig and De Simone did not indicate that they intended to pursue litigation through VCAT but referred only to “litigat[ing] the matter through the Courts.” Significantly also it is apparent that a number of the claims which Messrs Lustig and De Simone identified in the letter dated 1 June 2011 fell outside the jurisdiction of the VCAT, notably the foreshadowed claims under the Trade Practices Act 1974 (Cth), being a federal claim, and in defamation, and could have been pursued only in the Federal Court or a State court. Clearly, therefore, Qantas was not raising the defence under the Carriers’ Liability Act at this stage in order to take the matter outside the jurisdiction of the VCAT. This is consistent with it raising the defence later in good faith once the VCAT proceedings were instituted.

97    Secondly, in its written submissions in support of the application to strike out the VCAT proceedings, Qantas put detailed submissions in support of its defence based upon its construction of s 36 of the Carriers’ Liability Act and whether it should be construed as excluding any civil liability of a carrier apart from that for personal injury for which s 28 of the Act provides. Section 36 appears in Part IV of the Carriers’ Liability Act which is concerned with domestic interstate carriage but is based on Article 24 of the Warsaw Convention. As such, Qantas contended that overseas authorities interpreting Article 24 of the Convention were relevant to the interpretation of Part IV of the Carriers’ Liability Act, citing two decisions in support of that approach to construction, namely, Agtrack v Hatfield [2005] HCA 38; (2005) 223 CLR 251 at [45]-[51] and Mount Beauty Riding Club v Jacob [2004] VSCA 151; (2004) 10 VR 312. In this regard, I also note that in Povey v Qantas Airways Limited [2005] HCA 33; (2005) 223 CLR 189 (Povey) at [25], Gleeson CJ, Gummow, Hayne and Heydon JJ considered that “[i]mportantly, international treaties should be interpreted uniformly by contracting states. But, of course, the ultimate questions are, and must remain: what does the relevant treaty provide, and how is that international obligation carried into effect in Australian municipal law?” (references omitted).

98    Qantas relied in particular upon the decision of the House of Lords in Sidhu v British Airways [1997] AC 430 and the United States Supreme Court in El Al Israel Airlines Ltd v Tseng 525 US 155 (1999) for the proposition that the Convention provided the exclusive remedy for damages arising out of events occurring during carriage or in the course of embarkation or disembarkation. Qantas also relied upon a decision of the US District Court of New Jersey in Rogers v Continental Airlines given on 21 September 2011 said to be “particularly relevant because the circumstances are similar to the present case”.

99    Qantas also contended in this Court that the High Court has left open the question of whether the decisions in Tseng and Sidhu should be followed in Povey. In that case, the High Court dealt with a claim arising out of international carriage governed by the Warsaw Convention (as modified by the Hague Protocol and Montreal Protocol No. 4) and Part IIIC of the Act. With respect to the operation of s 25L of the Carriers’ Liability Act which picked up and applied certain provisions of the Act, including s 36, to Montréal No. 4 Convention cases, Gleeson CJ, Gummow, Hayne and Heydon JJ stated at [14] that:

In particular, the liability of the carrier in respect of personal injury, when the carriage is subject to Montreal No. 4, is in substitution for any civil liability of the carrier under any other law in respect of the injury. (Emphasis in the original)

100    Their Honours further said at [27] that:

There is no occasion to consider whether, as was held in Tseng and in Sidhu, in cases where the relevant Convention provides no remedy, no other remedy is available either at common law or otherwise, or to consider whether that conclusion would present any constitutional question.

101    Nothing in these submissions suggests that the defence raised is colourable or fabricated in the sense which I have explained, and therefore that it did not take the matter before VCAT beyond its jurisdiction. It would be inappropriate for me to go further in these proceedings to consider the validity of the defence for the reasons I have already articulated.

4.5    What relief should lie?

102    In view of the conclusion I have reached, it is appropriate to make a declaration that VCAT lacks jurisdiction to entertain the applications by Messrs Lustig and De Simone in the terms sought by Qantas.

103    Qantas also sought a writ of prohibition or an injunction directing VCAT to take no further step in the proceedings other than making orders for their dismissal, and an injunction restraining the first and second respondents from taking any further step in the VCAT proceedings other than for the purpose of obtaining or consenting to orders for dismissal of the proceedings. Against this, the State contended that the appropriate course would be instead to remit the matter to VCAT to determine whether or not to refer the proceedings to a court in the exercise of its discretion under s 77(3) of the VCAT Act. In this regard the State contended that there is no impermissible exercise of State judicial power in respect of a federal matter merely by transferring the proceeding to a court. The State’s submissions in this regard were supported by Messrs Lustig and De Simone.

104    Section 77 of the VCAT Act provides (and has provided since coming into force relevantly on 1 July 1998) that:

(1)    At any time, the Tribunal may make an order striking out all, or any part, of a proceeding (other than a proceeding for review of a decision) if it considers that the subject-matter of the proceeding would be more appropriately dealt with by a tribunal (other than the Tribunal), a court or any other person or body.

(2)    The Tribunal’s power to make an order under subsection (1) is exercisable only by judicial member.

(3)    If the Tribunal makes an order under sub-section (1), it may refer the matter to the relevant tribunal, court, person or body if it considers it appropriate to do so.

(4)    An order under sub-section (1) may be made on the application of a party or on the Tribunal’s own initiative. (emphasis added)

105    With respect, I do not consider that it is open to me to adopt the alternative course urged by the State. In my opinion, s 77(3) has no application in circumstances where the Tribunal lacks jurisdiction to entertain the matter in the first instance.

106    First, the power to “strike out” under s 77(1) of the VCAT Act is conditional on the Tribunal reaching a particular view, namely that the subject matter of the proceeding would be “more appropriately dealt with” by a court or other tribunal. If it so decides, the discretion to refer the matter to a court or other tribunal is then enlivened under subs (3). Importantly, the use of the words “more appropriately” in subs (1) do not suggest that the power to take the necessary preceding step to a referral of striking out the proceeding is enlivened when the Tribunal has no jurisdiction to entertain the subject matter of the proceeding. Rather it suggests that the Tribunal has, in effect, a choice between fora in the exercise of discretion based upon an evaluative judgment of the factors for and against the proceedings being heard and determined by VCAT, as opposed to the other forum. This construction accords, in my view, with the ordinary meaning of the words used, and is broadly analogous to the discretion applied by a court in conflict of law situations in determining whether or not to decline to exercise jurisdiction on forum non conveniens grounds.

107    This is not to suggest that the principles by which a court undertakes such an evaluative judgment in the context of conflicts of law governs the exercise of discretion in s 77(1) of the VCAT Act. The test for determining whether an Australian court should decline to exercise jurisdiction regularly invoked by a plaintiff by staying proceedings on forum non conveniens grounds is not to ask which is the more appropriate forum, but rather whether the defendant satisfies the court that the forum is “clearly inappropriate”: Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 559 (Mason CJ, Deane, Dawson and Gaudron JJ); Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265; cf the “more appropriate” forum test adopted in the United Kingdom in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 at 476, and in s 112 of the FTA. Nonetheless, while the test is different, the nature of the discretion conferred by s 77(1) is appropriately encapsulated in the description by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay of the power to stay proceedings in a court on these grounds as discretionary “in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment and, to a significant extent, matters of impression.”: (1988) 165 CLR 197 at 247-248.

108    Secondly, the construction which I favour is supported by the fact that, if the Tribunal has no jurisdiction over any part of the proceedings, there is no “matter” before it to refer under s 77(3). Thus, by analogy it has been held in the context of proceedings before a court that “[t]o remit or transfer proceedings is to exercise jurisdiction in respect of it”: McIntosh v National Australia Bank (1988) 17 FCR 482 at 483 (Gummow J) (citing Johnstone v Commonwealth [1979] HCA 13; (1979) 143 CLR 398 and Pozniak v Smith (1982) 151 CLR 38). As such, Gummow J rejected a construction of s 86A of the Trade Practices Act 1974 (Cth) that would authorise the transfer of proceedings in the Federal Court to a State court on the basis that uncertainty as to the existence of jurisdiction in the Federal Court rendered the transfer “in the interests of justice”: McIntosh at 483-484. Similarly, in Sunol, the New South Wales Court of Appeal held that s 118 of the Administrative Decisions Tribunal Act (NSW) authorising an Appeal Panel to refer “a question of law arising in the appeal” to the Supreme Court authorised only the referral of questions of State law, and not questions as to the constitutional validity of a provision of State law being issues in federal jurisdiction. In so holding, the Court held at 624 [19] that:

Thus, although the Tribunal must take account of constitutional limitations, in accordance with the covering cl 5 of the Constitution Act, it does not follow that such questions arise in an appeal before it, nor that it has power to refer such questions to the Supreme Court. The better view is that they do not arise in the appeal because they are not matters in respect of which it has jurisdiction under the Administrative Decisions Tribunal Act.

109    This is not to say that the State could not have legislated to confer power on the Tribunal to transfer part or all of proceedings instituted in the Tribunal, but over which it lacks jurisdiction, to another court or decision-making body. However, in my view, there is nothing in the language of s 77(1) suggesting that Parliament intended to do so. It follows that Qantas correctly submitted that, absent jurisdiction, the Tribunal has power only to dismiss the proceedings and to make any consequential costs order: see by analogy Peacock v Newtown Marrickville & General Co-operative Building Society No 4 Limited [1943] HCA 13; (1943) 67 CLR 25 at 41 (Latham CJ); Mercator Property Consultants Pty Ltd v Christmas Island Resort [1999] FCA 1572; (1999) 94 FCR 384 at 389 [20]-[21] (French J). In short, “without jurisdiction”, as Kirby J said in Hearne v Street, “other issues fall away. If there is no jurisdiction, a court normally has no business entering into arguments about any substantive or procedural questions, except perhaps the consequential disposition of costs”: [2008] HCA 36; (2008) 235 CLR 125 at 135 [17].

110    Thirdly, Qantas sought to place weight on the distinction drawn in s 111 of the FTA between a proceeding being struck out for want of jurisdiction, on the one hand, and proceedings being referred under s 77 of the VCAT Act, on the other hand. Section 111(1) renders the jurisdiction of the Tribunal exclusive in respect of a consumer and trader dispute in providing that once an application has been made to the Tribunal in accordance with the VCAT Act:

…the issues in dispute are not justiciable at any time by a court unless –

(a)    the proceeding in that court was commenced before the application to the Tribunal was made and that proceeding is still pending; or

(b)    the application to the Tribunal is withdrawn or struck out for want of jurisdiction; or

(c)    the Tribunal refers the proceeding to that court under section 77 of the Victorian Civil and Administrative Tribunal Act 1998.

111    Furthermore by subsection (2), “Sub-section (1) applies to all the issues in dispute, whether as shown in the application or emerging in the course of the proceeding in the Tribunal.”

112    Ultimately, however, little weight can be given to the provision. First, the Tribunal may strike out an application under s 77(1) of the VCAT Act without referring it to a court or other tribunal under s 77(3). Secondly and in any event, the VCAT Act came into force relevantly on 1 July 1998. The FTA (including s 111(1)(a) and (b) and (2)) commenced later, relevantly on 1 September 1999, with s 111(1)(c) being inserted in 2003.

113    In the fourth place, I also note that the construction of s 77 of the VCAT Act which I prefer accords with the manner in which VCAT itself has interpreted the power: see Wurzel v Ryan [2003] VCAT 470 at [6]-[8]; McLeod v Marina Operations (Aust) Pty Ltd [2006] VCAT 2537 at [32]; Schulller v Kleinman (Civil Claims) [2008] VCAT 581 at [6].

114    Finally, contrary to the State’s submission, I consider that the decision of Stone J in Fisher v Minister for Immigration and Citizenship [2007] FCA 591; (2007) 162 FCR 299 is distinguishable. In that case, the Federal Magistrates Court lacked jurisdiction by s 476(2)(b) of the Migration Act 1958 (Cth) to hear an application for judicial review because it related to a decision of the Administrative Appeals Tribunal. The Federal Magistrates Court, upon realising its lack of jurisdiction, made orders purportedly transferring the proceeding to the Federal Court under s 39 of the Federal Magistrates Act 1999 (Cth). That section relevantly provided that, “[i]f a proceeding is pending” the Federal Magistrates Court may, by order, transfer a proceeding from that Court to the Federal Court (emphasis added). Stone J held that the word “pending” should be given its ordinary meaning as including “remaining undecided, awaiting decision” and that this was an appropriate description of the proceeding until the Federal Magistrate made an order disposing of it (at 305 [24]). Her Honour could find no reason why the jurisdiction of the Federal Magistrate should not extend to a disposition of the proceeding not only by dismissing it, but in the alternative by transferring it to the Federal Court. Her Honour also found support for that construction in a consideration of the whole of the Migration Act provisions for judicial review (at 305 [26]).

115    As such, the decision in Fisher turned upon a construction of the particular provision for the transfer of proceedings and lends little assistance, in my view, to the interpretation of s 77(3) of the VCAT Act which is in very different terms. It does not provide for the transfer of “pending proceedings” but for the transfer of “the matter” itself.

1.    CONCLUSION

116    It follows for these reasons that this Court should make a declaration that VCAT lacks jurisdiction to entertain the applications instituted by the Messrs Lustig and De Simone, and a writ of prohibition should issue against VCAT directing that VCAT take no further step in the proceedings save for making orders for the dismissal of the proceedings. I do not consider that grounds have been made out for the making of injunctions against Messrs Lustig and De Simone restraining them from taking any further step in the VCAT proceedings save for obtaining or consenting to orders for dismissal of the proceedings. That would seem an unnecessary step in view of the issue of the writ of prohibition against VCAT.

117    The question of costs is reserved in order to afford the parties the opportunity to make submissions.

Associate:

Dated:    25 March 2015