The Evolving Jurisdiction of the Federal Court of Australia - Administering Justice in a Federal System

40th Anniversary of the Federal Court Act, Canada
Seminar on the Jurisdiction of the Federal Courts, National Judicial Institute, Ottawa, Ontario, Canada

By the Hon Justice SC Kenny

28 October 2011

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Federal courts in the Australian Constitution

In his 1946 publication, Federal Government, Professor K C Wheare remarked that, if the 'federal principle' were strictly applied, then a federal system of government might be expected to have a dual court system.^[1] That is, one might expect two systems of courts – one applying and interpreting the laws of the federal government and the other, the laws of the regional governments. Whilst the United States has a system like this, Australia, as many other federal systems, does not.

The evolution of the jurisdiction of the Federal Court of Australia is a product of the history of the Australian Constitution and society. On 1 January 1901, the six British colonies in Australia united in a federation under a Constitution, which was a schedule to an Act of the British Parliament. Chapter III of the Constitution contemplated that federal jurisdiction would be exercised by the High Court of Australia, by "such other federal courts as the Parliament creates", and by state courts invested with federal jurisdiction.^[2]

Under the Constitution, with respect to certain matters, the Parliament is empowered to make laws defining the jurisdiction of any federal court other than the High Court and the extent to which that jurisdiction is exclusive of the State courts.^[3] These matters include matters arising under the Constitution, matters arising under federal law, suits in which the Commonwealth is a party, and prerogative writs against Commonwealth officers.^[4] In this way, the Australian Constitution, like that of the United States, distinguishes matters of federal jurisdiction from matters of state jurisdiction, by reference to the subject matter of the action or the identity of the parties.^[5]

With respect to the exercise of judicial power, the Australian Constitution followed the United States model in many ways. There were, however, two major departures. First, in contrast to the United States Supreme Court, the Australian High Court was given jurisdiction to hear appeals from State courts exercising exclusively State jurisdiction.^[6] Secondly, the Parliament was empowered to invest State courts with federal jurisdiction.^[7] A leading Australian scholar, Professor Brian Opeskin, has called this particular departure from the United States model "a confusion of design".^[8] It created significant consequences for the organisation of federal jurisdiction in Australia.

Distribution of federal jurisdiction before 1976

For the most part, in the 75 years after federation, the Parliament left the exercise of federal jurisdiction to the State courts. ^[9] For a long time, the only two federal courts were the Australian Industrial Court and the Federal Court of Bankruptcy.^[10] The Federal Court of Bankruptcy was created in 1930 and exercised jurisdiction in only the two most populous of the six states.^[11] The Australian Industrial Court was created in 1956.^[12] As another leading Australian scholar, Professor Leslie Zines, remarked, until the 1970s, the Parliament "made regrettably liberal use of the High Court as a court of original jurisdiction".^[13] From its commencement in 1903 until 1976, the Australian High Court exercised jurisdiction either exclusively or concurrently with State courts in a broad range of federal matters.^[14] The Parliament did not begin to establish a more general federal court structure until 1976, with the creation of the Federal Court of Australia.^[15]

Until the early 1960s, it was generally accepted that Australia was better served by having essentially only one system of courts.^[16] Nonetheless, as the proponents of a general federal court came to emphasize in the later 1960s and 1970s, the Constitution did in fact provide for separate judicial systems, it being left to Parliament to decide if and when it would create federal courts other than the High Court.

Proposals for a general federal court

During the 1960s, some of Australia's leading lawyers began to advocate for a superior federal court.^[17] Proponents argued that the establishment of such a court would relieve the High Court of its increasingly heavy caseload in its original jurisdiction, so that it might devote itself to appeals and constitutional cases. Proponents also argued that a general federal court would promote uniformity in the application and interpretation of federal laws, and lift the burden from State courts exercising federal jurisdiction.

Views about the jurisdiction of this new court differed. Some favoured a court with jurisdiction over most federal law, leaving only incidental matters to the State courts. Others feared that such a general federal court would reduce the standing of the State Supreme Courts, be unduly expensive, and lead to unnecessary jurisdictional disputes.^[18] In 1967, 1973 and 1974 there were various Parliamentary Bills for the establishment of a superior federal court but all failed for one reason or another.^[19]

Creation of the Federal Court of Australia as a court of limited jurisdiction

The Federal Court of Australia Act 1976 (Cth) created the Federal Court^[20] as a Court of limited original and appellate jurisdiction.^[21] The Government of the day rejected an earlier proposal for a general federal court on account of fears that such a court would diminish the status of the State courts. The Government's position was that "only where there are special policy or perhaps historical reasons for doing so should original federal jurisdiction be vested in a federal court". ^[22] When the Court first sat on 7 February 1977,^[23] its original jurisdiction was generally limited to industrial matters, bankruptcy, judicial review of administrative decisions, and trade practices, although the Court's appellate jurisdiction extended to taxation and certain intellectual property appeals.^[24]

As it happened, however, this early jurisdiction gave the new Court an opportunity to establish itself as a permanent part of the national legal system. Spurred on by innovative legislation in the mid 1970s and 80s,^[25] the Court developed a new general administrative law. As Robert French, now Chief Justice of the High Court, said, "its administrative law jurisdiction gave the Court a foundation for developing a stature and authority not ordinarily achievable by small specialist courts".^[26] Because of the timely introduction of legislation prohibiting misleading or deceptive conduct by corporations,^[27] the Court's trade practices jurisdiction also expanded enormously, with the result that, within a relatively short time, the Court became a significant part of mainstream Australian commercial litigation.^[28]

The Federal Court transformed into a court of general federal jurisdiction

During the 1980s and 1990s, the federal Parliament expanded the Court's jurisdiction and, in consequence, it was transformed into a court of general federal civil law.^[29] In 1983, subject to certain limitations, the Court was given jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction were sought against an officer of the Commonwealth.^[30] This grant mirrored the terms of the constitutional provision conferring the same jurisdiction on the High Court with respect to the same matters.^[31]

Even more importantly, in 1997, the Court acquired original jurisdiction in respect of any matter in which the Commonwealth sought an injunction or a declaration; arising under the Constitution or involving its interpretation; or arising under any laws made by the Parliament, other than a criminal matter.^[32] The terms of this grant also followed the relevant constitutional provisions.^[33] The Explanatory Memorandum for the amending 1997 legislation^[34] specifically acknowledged that, "[t]he jurisdiction gives the Federal Court a greater role in administration of federal laws, by ensuring that the court is able to deal with all matters that are of an essentially federal nature". Thus, from 1997, the Court became a court of general federal jurisdiction in civil matters.^[35]

The words "arising under" a law made by the Parliament have been held to cover very many situations where the federal law is the asserted source of a right or of a defence.^[36] For example, the Court assumed jurisdiction over a negligence action against a patent attorney for failure to draft a patent with due skill. This was because the subject matter in dispute owed its existence to the federal Patents Act 1990.^[37]

So far as the jurisdiction of the Court was concerned, the third major legislative initiative was a national cross-vesting scheme.

In the 1980s, as Professor Opeskin has noted, there was "the perception that the prestige and status of the state Supreme Courts was deteriorating" and the expansion of the Federal Court was blamed.^[38] To meet these perceived institutional problems, a national cross-vesting scheme came into operation from 1 July 1988. It survived in tact until the High Court's 1999 decision in Re Wakim.^[39]

The scheme, which depended on federal, state and territory legislation,^[40] had two main features. First, subject to certain exceptions, the scheme cross-vested the subject matter jurisdiction of the participating courts into other participating courts. Secondly, the scheme provided for the transfer of proceedings between the participating courts. These courts included the Federal Court and the Supreme Courts of the States and two Territories. The result was that a litigant could commence most proceedings in any participating court, save that a party, the Attorney-General, or the court of its own motion might initiate transfer proceedings.

At the heyday of the scheme, jurisdictional disputes all but disappeared. Thus, for example, in one case, the Federal Court received a judicial review application under the federal Judicial Review Act for review of the Immigration Minister's decision to refuse an entry permit to a child adopted in China by Australians.^[41] At the same time, the applicants invoked the cross-vested State jurisdiction of the Court to obtain a declaration under State adoption legislation as to the legality of the child's adoption. The Federal Court made the declaration sought and remitted the federal case to the Minister for reconsideration under the federal Judicial Review Act.

The High Court's decision in Re Wakim brought to an end to part^[42] of the scheme when the Court held that the Constitution did not permit federal courts to be invested with state jurisdiction. As a former judge of the Court, Ronald Sackville, said,^[43] Re Wakim "represents the triumph of what has been described as the 'dualist' character of Australian federalism, as applied to the conferral and exercise of judicial power".

In the end, however, the High Court's ruling in Re Wakim has not diminished the work of the Federal Court or its jurisdiction. In some instances, the Federal Parliament exercised what are now broadly-construed constitutional heads of power to fill various gaps. Perhaps, more importantly, Re Wakim apparently strengthened the accrued jurisdiction doctrine.^[44]

Accrued jurisdiction

In Australia, the terms 'associated' and 'accrued' jurisdiction denote different ideas. I leave associated jurisdiction, which is today less important, to another occasion.^[45] The concept of accrued jurisdiction has played an important function in broadening the Court's power and in preventing jurisdictional disputes.

According to accepted principle, a party invoking the jurisdiction of a federal court must show that the subject-matter of the claim is a matter within the court's jurisdiction.^[46] The accrued jurisdiction doctrine removed the possibility that the work of the Federal Court would become bogged down in jurisdictional disputes about whether the Court could hear and determine a claim arising under non-federal law when joined with a federal claim. Building on a concept that had its origins in the 1940s and 1950s, the High Court developed the accrued jurisdiction doctrine for the Federal Court in a number of cases in the 1980s.^[47]

The doctrine relies principally on the constitutional notion of "matter" – meaning the justiciable controversy between the parties to it and composed of the facts and claims representing the controversy between them.^[48] The doctrine applies where a non-federal claim is joined with a non-severable (and non-colourable)^[49] federal claim, arising out of a common substratum of transactions and facts. Colourable in this context carries with it a notion of abuse of process. In the leading case of Fencott v Muller (1983),^[50] several justices said:

What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out.

The High Court has held that whether or not a non-federal claim is severable is a matter of practical judgment,^[51] with the result that related non-federal claims are rarely defeated for want of jurisdiction.^[52]

Under the accrued jurisdiction doctrine, jurisdiction over a non-federal claim is not extinguished merely because the federal claim is dismissed on its merits or even struck out.^[53] The doctrine can apply not only to claims between the plaintiff and the defendant, but also to claims against third parties.^[54] Indeed, since the federal issue is embedded in the "matter", jurisdiction does not depend on the identification of a federal issue in the first pleading. If there is truly a federal issue in the matter, it will be there irrespective of the time when it is identified.

The jurisdiction of the Federal Court today

Putting aside Re Wakim, the most pressing jurisdictional issues for the Australian Federal Court over the last decade have arisen in migration cases. This is largely because the federal Parliament has made repeated efforts to curtail what it has perceived as the excessive intervention by the Court in administrative decision-making in the migration area.

This subject is best explored slowly (and therefore on another day).^[55] Once again, it is only explicable by reference to the Australian Constitution and history. Repeated Parliamentary efforts to oust judicial review have failed. The High Court has held that, since the constitutional prerogative writs are an entrenched part of its original jurisdiction,^[56] judicial review for jurisdictional error is constitutionally protected.^[57] Migration matters initiated in the original jurisdiction of the High Court have thereafter been remitted^[58] to the Federal Court and, since 1999, the Federal Magistrates Court.^[59] The battles between the Executive and the Courts in the migration area have been costly for the justice system. They have resulted in a complex legal regime, which can baffle lawyers and litigants alike.^[60]

Today, the Court's jurisdiction remains both original and appellate. I have scarcely touched on the Court's appellate jurisdiction – which is large and diverse – and also a topic for another day.^[61] Original jurisdiction continues to expand. The 13 statutes that conferred jurisdiction in 1977 have risen to over 150 today. The bulk of the Court's case load is constituted by controversies involving intellectual property,^[62] federal administrative law,^[63] human rights,^[64] commerce,^[65] native title,^[66] industrial law,^[67] admiralty,^[68] and taxation.^[69] In late 2009, the Court was given jurisdiction in relation to indictable offences for serious cartel conduct.^[70]

The Federal Court of Australia began as a specialist court with limited jurisdiction. It has become a court of general federal law. Perhaps it has been in the nature of federal jurisdiction to expand. This may change. What this would mean for the jurisdiction of the Court is difficult to foresee. One suspects that much will depend on whether the Court can continue to satisfy its users and, through them, the broader Australian community that it can make a unique and valuable contribution to the application and interpretation of federal law. If it fails, then there are State and Territory Supreme Courts that might, perhaps, claim the Federal Court was but an aberration in Australia's history of a very largely unitary court system.

I would dispel this unhappy thought with a remark from Francis Bacon, who said "[t]hings alter for the worse spontaneously, if they [are] not altered for the better designedly". The Court must, it seems, always seek to improve if it is to continue to enjoy an expansive jurisdiction.