Federal Courts (State Jurisdiction) Bill

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [3.40 p.m.]: I move:

That this bill be now read a second time.

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There are a few preliminary matters I want to mention. It is appropriate that the House should deal expeditiously with this bill. I acknowledge the co-operation of the Opposition in relation to the processing of the bill. One technical matter was raised with me by the Law Society, and I will respond to that technical point. The Law Society apparently suggests that the bill should also provide that orders made, or directions given, in Federal Court proceedings which are transferred to the Supreme Court are to be taken to be orders or directions of the Supreme Court.

This matter has been discussed with the Parliamentary Counsel in the absence of the Solicitor General. It is noted that in relation to the transfer of proceedings, the mechanism established by the bill under clause 11 requires, first, that the Federal Court determine that it does not have jurisdiction to determine a proceeding in a State matter. Second, a party to that proceeding will apply to the Supreme Court for an order that the proceeding be treated as a proceeding of the Supreme Court. Third, that the Supreme Court make the order.

In relation to such orders, the Supreme Court is given power under clause 11 (4) of the bill to make such ancillary orders as it considers necessary for the purposes of the proceeding becoming and being recorded as a proceeding of the court. It is the view of the Parliamentary Counsel that the bill does not require a further provision along the lines suggested by the Law Society.

The broad power given to the court by clause 11 (4) has been included in the bill to enable the Supreme Court, when making an order that a former Federal Court proceeding be treated as a proceeding of the Supreme Court, to address the circumstances of each particular case and to make other appropriate orders, for example, as to evidence already received by the Federal Court where necessary. I have attempted to deal with the technical point raised by the Law Society. The Government remains satisfied that the bill adequately addresses that point on all the advice it has. I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The Federal Courts (State Jurisdiction) Bill is introduced as a matter of urgency arising from the determination of the High Court that State parliaments cannot effectively confer State jurisdiction on Federal courts and that the Commonwealth Parliament is not able to consent to the conferral of State jurisdiction on Federal courts. The main purposes of the bill are to provide that certain decisions of a Federal court in relation to State matters are taken to be judgments of the Supreme Court; to provide for the transfer to the Supreme Court of current proceedings in Federal courts in relation to State matters; and to enable State courts to deal with matters that arise under applied law schemes and that would otherwise have been dealt with by a Federal court.

On 17 June 1999 the High Court handed down its decisions in the matters of Re Wakim; Ex parte McNally, Re Wakim; Ex parte Darvall, and Re Brown; Ex parte Amman, which considered the validity of certain provisions of the Commonwealth Corporations Act 1989 and the Commonwealth Jurisdiction of Courts (Cross-Vesting) Act 1987 that provide for the cross-vesting of jurisdiction between Federal, State and Territory courts. The majority of the High Court determined that the vesting of State jurisdiction in Federal courts is ineffective. The effect of the court’s decisions is to invalidate decisions previously made by the Federal Court and the Family Court relying purely on cross-vesting arrangements and to prevent the further exercise of such jurisdiction by those Federal courts. The cross-vesting of jurisdiction between State and State, and State and Territory courts is not affected.

The High Court’s decisions impact on the general cross-vesting scheme introduced by the Jurisdiction of Courts (Cross-Vesting) Act 1987 under which State and Federal courts have reciprocal jurisdiction. Also the jurisdiction of the Federal Court under the Corporations Law, which operates throughout Australia as State and Territory law, is reliant on cross-vesting arrangements. In addition, some other State laws, in general laws associated with Commonwealth-State co-operative schemes, apply certain Federal laws as State law and also confer jurisdiction on the Federal Court. These co-operative schemes include the agriculture and veterinary chemicals scheme, competition policy scheme, gas pipeline scheme, National Crime Authority scheme and the therapeutic goods regime.

The Federal Courts (State Jurisdiction) Bill primarily deals with decisions of Federal courts made under various schemes enacted under State laws which, following the High Court’s determination, have been rendered ineffective. The existing schemes will continue to apply to the courts referred to in them, except Federal courts to the extent that the laws establishing the existing schemes are incapable of applying to Federal courts. The bill has been prepared through the Standing Committee of Attorneys-General, in conjunction with the Special Committee of Solicitors General and the Parliamentary Counsel’s Committee, as a model which all States will follow.

The bill declares that the rights and liabilities under a current judgment of the Federal Court or Family Court, including current judgments of the full Federal Court or the full court of the Family Court of Australia, in the purported exercise of State jurisdiction, are the same as if it had been a valid judgment given by the Supreme Court. The bill specifically provides that such rights and liabilities are exercisable and enforceable as if they were rights and liabilities under judgments of the Supreme Court. Similarly, any acts or omissions in relation to such rights and liabilities are taken to have the same effect and consequences as if occurring under a judgment of the Supreme Court. The Supreme Court is also given power to vary or otherwise deal with any such rights and liabilities.

In addition, the bill provides a mechanism for the transfer to the Supreme Court of current proceedings in Federal courts relating to State matters where a Federal court determines that

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it has no jurisdiction to hear the State matters. The bill makes consequential amendments to the Competition Policy Reform (NSW) Act 1995 arising from the High Court’s determination that the Federal courts cannot exercise cross-vested State jurisdiction, as it is intended that State courts will now exercise jurisdiction under the competition code. The bill also enables regulations to be made in connection with matters arising under the proposed Act. In particular, as an interim measure, regulations may be made in connection with applied law regimes for the purpose of enabling jurisdiction conferred on a Federal court by State legislation to be exercised by a State court. Regulations may also be made to validate matters arising from or ancillary to ineffective judgments of Federal courts. I commend the bill to the House.

The Hon. R. D. DYER [3.43 p.m.]: I support the Federal Courts (State Jurisdiction) Bill. I note that this legislation has become necessary as a result of a determination of the High Court on 17 June this year to the effect that State parliaments are not able to confer State jurisdiction on Federal Courts, that is, in this case, the Federal Court or the Family Court, and consequently that the Commonwealth Parliament is not able to consent to the conferral of State jurisdiction on Federal courts.

Between 1983 and 1985, a former member of this House, the late honourable Sir Adrian Solomons and I belonged to what was known as the judicature committee of the Australian Constitutional Convention. That body examined in detail - between a constitutional convention held in Adelaide in 1983, at which Sir Adrian and I were both delegates, and another convention held in Brisbane in 1985 - the question of what could be done about this jurisdictional problem.

It clearly is true to say that for a long time there has been a jurisdictional problem arising out of the exercise of Federal jurisdiction. The problem has come more sharply into focus and has worsened in recent years as Commonwealth legislation has expanded into new fields. In particular, I note that trade practices, consumer protection and family law are fields in which Commonwealth jurisdiction has increased. It is a truism to say that the affairs of individuals, and even more the affairs of corporations, cannot readily be confined within the jurisdictional boundaries of a State or Territory.

That means that litigation, where it occurs, may not necessarily be disposed of and determined in either a Federal court or a State court, as the case may be, which leads to a multiplicity of proceedings. It is, to say the least, very inconvenient if parties cannot litigate in the one court all issues of controversy between them. The Australian Constitutional Convention, via the judicature committee to which I have just referred, gave a lot of attention between 1983 and 1985 to the means to deal with this problem.

The committee spent a lot of time travelling around the country to each State capital to talk to judges of superior courts, including chief justices, regarding a model of courts that would deal with the problem. I note that as long ago as 1935 Sir Owen Dixon who could be described as a demigod in the common law world, wrote for the Law Quarterly Review a paper entitled "The law and the constitution". He stated:

. . . it would appear natural to endeavour to establish the Courts of justice as independent organs which were neither Commonwealth nor State. The basis of the system is the supremacy of the law. The Courts administering the law should all derive an independent existence and authority from the Constitution. Some practical difficulties would occur in carrying such a principle beyond the superior Courts, but it is not easy to see why the entire system of superior Courts should not have been organized and erected under the Constitution to administer the total content of the law.

More recently, in 1977, Sir Garfield Barwick dealt with this matter in an address entitled "The State of the Australian Judicature" at the nineteenth Australian Legal Convention in Sydney. His Honour’s remarks are reported in the Australian Law Journal of 1977 as follows:

Sir Garfield proposed that the appellate jurisdiction of the Federal Court of Australia might be extended to embrace both the whole area of federal jurisdiction and also appellate work which involves State law. Appellate facilities in the State courts, other than from the inferior courts, would be dispensed with.

In January 1982 at a conference of Supreme Court judges in Sydney the then Chief Justice of the Supreme Court of Western Australia, Sir Francis Burt, developed the proposal by Sir Garfield Barwick in some detail. To summarise briefly, Sir Francis Burt proposed that the High Court would be at the apex of the judicial system. Beneath the High Court there would be an Australian Court of Appeal which would have a general appellate jurisdiction to entertain appeals from the Supreme Courts of each State and Territory.

Those courts would have unlimited civil and criminal jurisdiction in all matters without identity of the law-maker - that is, they would without qualification be invested with Federal and State trial jurisdiction. Inferior courts would be invested with Federal jurisdiction within their general limits of jurisdiction. There would be an appeal as of right from all final judgments of the Supreme Court to the Australian Court of Appeal. The Supreme Courts would have no appellate jurisdiction from their own judgments.

Each Supreme Court would be administratively organised into such divisions as would be necessary
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depending upon the size of the court and the demands of business. The present structure of inferior courts, such as District Courts or Local Courts, beneath State Supreme Courts would remain in existence. The High Court and the Australian Court of Appeal would each be a Federal Court. Each would be financed by the Commonwealth and its judges would hold Commonwealth commissions. All courts beneath this court would be State courts financed by the States, and the judges of those courts would hold State commissions.

Sir Frances Burt’s proposals were extremely detailed. As I adverted to briefly, the judicature committee travelled around Australia canvassing opinion largely on the model developed by Sir Frances Burt. However, it must be said that eventually the task appeared to become too difficult to resolve quickly. Therefore the view was taken that the solution to this Federal-State jurisdictional problem lay in cross-vesting jurisdiction as between Federal and State courts. That was recommended to and adopted by the Australian Constitutional Convention. The Standing Committee of Attorneys-General took up the issue. The committee endorsed cross-vesting proposals, and the Federal and State parliaments subsequently enacted the necessary legislation to give effect to the scheme.

It is true to say that the High Court of Australia some time ago upheld the legislative scheme for cross-vesting. I do not wish to engage in an attack on the High Court, however, regrettably, due to a change in the composition of the court, the High Court reconsidered its earlier decision and struck down the cross-vesting scheme so far as it involved State courts investing Federal courts with jurisdiction in regard to State matters. That has led to an unfortunate situation which the bill is designed to rectify.

This is only a temporary measure. Given that the High Court has decided in the way that it has recently, it would seem that the matter can only be cured by one of two means: a constitutional amendment or a reference of power under the Constitution by the States and Territories to the Commonwealth. With regard to the latter alternative, I believe that would be less than likely, in that some jurisdictions might not agree to that. So one probably has to rely on the hope that the Constitution can be amended to deal with this problem.

Whether such a referendum can be carried remains to be seen. I imagine that the general electorate would find the subject matter of the constitutional change stupefyingly boring. Whether that means that the proposition would be carried or defeated is perhaps not for me to say. However, I would hope that the electorate could be persuaded that this is a sensible, perhaps mechanistic alteration of the Constitution which ought to be supported. I support the bill.

Reverend the Hon. F. J. NILE [3.54 p.m.]: The Federal Courts (State Jurisdiction) Bill is a pro forma type bill, which it is necessary for this House to pass since the High Court held that State parliaments are not able to confer State jurisdiction on Federal courts - that is, the Federal Court of Australia and the Family Court of Australia - and that the Commonwealth Parliament is able neither to confer nor to consent to the conferral of State jurisdiction on Federal courts.

The decision of the High Court has serious implications not only for the cross-vesting schemes - where provision is made for the cross-vesting of jurisdiction in a wide range of cases and specifically under the Corporations Law, and under which State jurisdiction has been conferred on the Federal Court and the Family Court - but also for certain of the applied law schemes, where laws of another jurisdiction are applied as State law, and under which State jurisdiction has been conferred on the Federal Court. The Christian Democratic Party supports the bill, the objects of which are:

(a) to provide that existing ineffective judgments of a federal court in the purported exercise of State jurisdiction are taken to be judgments of the Supreme Court, and

(b) to provide for the transfer of current proceedings before a federal court in relation to State matters to the Supreme Court, and

(c) to enable State courts to deal with matters that arise under applied law schemes and that would otherwise have been dealt with by a federal court.

The problem with the legislation because of the High Court’s decision is that the High Court is looking at the matter of the Commonwealth Constitution. As honourable members would be aware, the States existed before the Commonwealth and were Sovereign States that emerged from the colonial situation. All the powers, except those that the States transferred to the new Federal Parliament, which started in 1901, remained with the States. As we know, family law matters have always come under the State Governments. However, it was thought that they could be handled by the Federal Court and/or the Family Court.

The High Court’s ruling is a serious ruling, but obviously it is correct. However, it highlights for
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this Parliament and the State of New South Wales the importance of ensuring that, in spite of the State’s willingness to co-operate with the Commonwealth and other States, it should always seriously consider the implications of giving up the powers that it has. It may be that, in spite of being part of the Commonwealth, the State should be reluctant to relinquish those powers to the Commonwealth, so that this Parliament still has a role to play. If we were to transfer all the powers to the Federal Parliament - which would be an extreme position - there would be no point in having a State Parliament.

The Commonwealth should be restricted to limited areas. I believe in devolution of power, to return to the States some of the powers that the Commonwealth has been gradually accumulating. The States could then transfer as many of those powers as possible to local government, which would ensure that the governing body is close to the people. With the governing body based in Canberra, it seems that the politicians easily get out of touch with the wider community. In a sense, I support the High Court’s decision in this matter.

The Hon. J. P. HANNAFORD [3.59 p.m.]: The Opposition supports the Federal Courts (State Jurisdiction) Bill. As the Hon. R. D. Dyer indicated, the bill is an interim provision to deal with the issues that arise from the Wakim case and other cases before the High Court. At the time when I heard of the High Court’s decision I was appalled that the court had decided to terminate the cross-vesting arrangements that had been put in place. On reading that decision one can see the logical nature of the approach. It is clear that the Commonwealth’s legal advisers originally believed that there was a problem in this area, because section 9 of the Jurisdiction of Courts (Cross-vesting) Act indicates that the Commonwealth was expressing its consent to the conferring of power on Federal courts.

My political instinct, as distinct from my legal instinct, is that the Commonwealth drafted its unusual provision in that way after receiving advice that there was a problem and used that wording as a compromise. I use the word "compromise" advisedly, because the Corporations Law was developed as a Federal scheme with the States not ceding authority to the Commonwealth. That decision was the result of significant debate at that time. The Commonwealth wanted powers ceded to it so that Federal Court control would be beyond question. All State governments have had to pursue this legislation as an interim measure. The Hon. R. D. Dyer said that there are two alternative measures. I say there is a third option.

The Hon. R. D. Dyer outlined a constitutional amendment, or a ceding of powers to the Commonwealth, as the immediate and obvious solution. I do not have the slightest doubt that the Commonwealth wants powers ceded to it, for that has been its traditional approach. I have no doubt that in the first round of discussions by the Attorneys General that will be the first and foremost issue to be considered.

The Commonwealth will contend that the easiest way out of this would be to cede powers and thus avoid the need for a referendum. However, I agree with Reverend the Hon. F. J. Nile that ceding should be the last option. I do not agree that it is necessary to have a referendum, because the Commonwealth could legislate to give State courts jurisdiction to deal with this matter. I ask the Commonwealth, when giving the States that jurisdiction, to also give them the financial resources needed to administer the courts. In the past that has not occurred.

The Commonwealth has consistently maintained that that funding was taken up during negotiations about global funding when the cake was divided decades ago, and should not be taken into account now. I indicate that the Opposition would support an identification of the cost of servicing the State’s courts to meet Federal jurisdiction and that the Commonwealth should fully fund that service. Honourable members may recall that when I was Attorney General my department and Treasury carried out a costing of administering State courts for the benefit of the Commonwealth. The States now have the trigger to revisit those costs and to indicate that there should be an agreement between the States and the Commonwealth that the States accept jurisdiction in this area and that it should be funded by the Commonwealth on a service basis.

The Act also deals with provisions under the family law jurisdiction. I am aware that the Attorney General was considering expanding the role of the Children’s Court to take over decisions on custody under the vesting arrangements. The Commonwealth has allocated funds for a Federal magistracy; those funds will be allocated to a bureaucracy, and not allocated to magistrates. The amount allocated to that bureaucracy is an outrage; that amount could very significantly expand the magistracy service in all States and meet the total needs of delivering a speedy service in the family law area.

The Coalition would be supportive of the Government if it were to further advance proposals to give family law jurisdiction to the Children’s Court. That would allow expansion of the specialist
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Children’s Court services throughout the State, not only in Sydney, Newcastle and Wollongong. The costing for that is, to my recollection, is a few million dollars. That would also obviate the need for expansion of the Federal magistracy service and constitute compliance with the necessary reforms arising from the Wakim decisions.

In the interests of the people of New South Wales this proposal should be supported by both the Coalition and the Government as we move forward. I put those matters on record to assist the Government in its negotiations. The Commonwealth should fund the States to expand services to regional areas; that would be of benefit to all the people of New South Wales

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [4.07 p.m.], in reply: I thank all members for their constructive contributions to the debate. This urgent remedial legislation is necessary in light of the High Court’s decisions declaring invalid the cross-vesting legislation. In a sense is pleasing that this Parliament is the first to deal with this remedial legislation, which has been largely agreed to between the States. However, I understand that Western Australia is dealing with it this afternoon, although its time schedule is behind eastern standard time.

The Hon. R. T. M. Bull: We are always ahead of them.

The Hon. J. W. SHAW: We are ahead of them. I understand that the Victorian Parliament may be adjourned for some months and it may take a while to catch up with this urgent measure. With the co-operation of the Opposition this Government has been able to deal with this legislation expeditiously and appropriately. As is clear from debate, this is not the ultimate solution to the problem of co-operative Federal and State litigation but it is at least a stopgap measure that will avoid inconvenience for litigants and will assist the court system. I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.