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Wednesday, 5 April 2000
Page: 15305


Ms JULIE BISHOP (4:59 PM) —The federal nature of our nation gives rise to levels of cooperation between the Commonwealth and state governments in a range of political and economic activities. This is a matter of necessity as the Commonwealth government has limited authority to govern the whole of Australia and state governments are limited to their respective jurisdictions and to the powers that have not been transferred to the Commonwealth government.

The need for what has been termed `cooperative federalism' has been highlighted by the federal nature of the Australian court system. Each of the nine governments in Australia—the Commonwealth, six state and two territory governments—has its own court system. This has over the years exposed some gaps in the governing process. This has also over the years given rise to jurisdictional disputes between the courts and court systems in Australia. It was not always clear which court had power to determine a dispute. There were occasions when no single court had authority to determine the whole of a dispute.

It was deemed necessary to invoke what is called cross-vesting. It is not an inconsistent concept, embracing both federalism and cooperation. The Jurisdiction of Courts (Cross-Vesting) Acts of 1987 of both the federal and state parliaments were complementary laws, vesting, with some exceptions, all of the jurisdictions of the several state and territory supreme courts, the Federal Court of Australia and the Family Court in each other. In effect courts could consider matters irrespective of the jurisdiction of the laws affecting the matters. Matters could be transferred to courts considered best able to deal with them. So, in general terms, a cross-vesting scheme enabled participating courts to exercise jurisdiction with respect to civil matters within the jurisdiction of other participating courts and to transfer matters to another of those courts where it is more appropriate that the matter be heard by that court.

Essentially, the cross-vesting of jurisdiction required, first, the Commonwealth parliament vesting jurisdiction on state courts. This is possible as the Commonwealth has powers under section 77(ii) of the Constitution to make laws to invest federal jurisdiction in any state court and the state constitutions do not prevent state parliaments consenting to the investing of federal jurisdiction on their courts. So far so good. But the cross-vesting of jurisdiction in the manner anticipated by the 1987 acts also required the state parliaments vesting jurisdiction on federal courts and, as a next step, the Commonwealth parliament consenting to the conferring of jurisdiction by the states on federal courts or conferring the judicial powers of the states on federal courts.

It was in these two areas where the problem for cross-vesting arose—but not before other legislation was passed in the wake of the cross-vesting acts of 1987. Following on from these acts, a separate cross-vesting scheme was established for matters arising under the Corporations Law. Although the Corporations Law is agreed upon by the federal and state governments, it is in fact, in legality, a series of state acts of parliament passed in like form. The Corporations Law as state law vested jurisdiction to hear matters under the Corporations Law in each state and territory Supreme Court and the Federal Court of Australia. This scheme included the Australian Securities and Investments Commission as national regulator and produced over the years a stable and nationally regulated corporations scheme with uniform regulation and national enforcement.

Other cooperative schemes came into existence—the competition policy scheme, the therapeutic goods scheme, the National Crime Authority scheme and the agricultural and veterinary chemicals scheme, amongst others. For some 10 years or more these schemes worked well. They were in the main welcomed and applauded by participants in the court system—the litigants, practitioners, court administrators and judges. But, as has been attributed to Chief Justice Spigleman, tongue in cheek somewhat, it was too good a scheme to be legal. Indeed, there was always a problem inherent in the Commonwealth Constitution, which established our federation.

While cooperation between the Commonwealth and state governments can achieve objects which are beyond any one parliament to achieve, each parliament must have the constitutional power to participate. The first challenge to the constitutional validity of the cross-vesting schemes came in 1998 in Gould v. Brown, but that case resulted in a three-three split of the High Court. On 17 June 1999 a differently constituted High Court handed down judgment in four cases, deciding by a majority of six to one, that key provisions of the cross-vesting schemes under consideration were invalid. The judgment is cited as re Wakim ex parte McNally, but in fact there were four separate and distinct cases argued together. Three concerned the power of the Federal Court to deal with matters under the Corporations Law generally and the fourth concerned the power of that court to deal with Corporations Law matters that arose in the Supreme Court of the Australian Capital Territory.

The issues before the High Court were constitutionally complex and will no doubt exercise the minds of constitutional lawyers for some time yet. But the consequences of recent High Court cases testing the validity of these schemes is a far broader matter. It is because of the High Court judgment in re Wakim that this proposed legislation, the Jurisdiction of Courts Legislation Amendment Bill 2000, and the foreshadowed government amendments to the bill have been introduced, in the main. For the purposes of the debate and to put in context what the particular legislation is able, and conversely not able, to achieve in terms of the previous cross-vesting regime and any future direction, I will consider some of the elements of the decision of the majority of the court.

In essence, the High Court decided that the federal courts could not be given a general power to hear state matters and, consequently, the provisions which attempted to do so were invalid. Specifically, the court found that state legislatures have powers to invest state jurisdiction or judicial power in federal courts but this will have no effect unless the federal courts can give effect to it. This depends upon what the Commonwealth law provides. The Commonwealth Constitution does not permit the Commonwealth parliament to consent to the vesting of state jurisdiction in federal courts. Chapter III of the Constitution exhaustively defines—according to the High Court—the matters that may be the subject of the judicial power of the Commonwealth and exhaustively defines the matters that the parliament of the Commonwealth may invest in the federal courts it creates. The majority said, and I quote from the reasons of Justices Gummow and Hayne:

It may be right to say that there is no reason why the Parliament of a State cannot pass a law that provides (in effect) that the courts of another polity within or outside the federation are to have jurisdiction over certain kinds of matters. But the law will be of no effect unless the courts of the other polity give it effect. And that directs attention to what the law of the other polity provides.

Their Honours went on to say:

But whatever may be the content of any legislative power implied from the creation and exercise of the Commonwealth as the national polity, that power does not authorise the Parliament to consent to the vesting of State jurisdiction in federal courts.

The Chief Justice said:

The Parliaments of the Commonwealth, the States and the Territories cannot by cooperation amend the Constitution.

And even more pointedly, Mr Justice McHugh said:

Where constitutional power does not exist, no cry of cooperative federalism can supply it. If the object lies outside the reach or effect of what a State or Commonwealth can constitutionally do, the subject matter is beyond the reach of the legislatures of Australia.

So the majority concluded:

The Commonwealth legislation that purports to confer State jurisdiction on Federal Courts is invalid.

Questions that arose for determination from the four cases included: can states confer jurisdiction on federal courts in any circumstances? According to the majority, no. The only matters which federal courts can be given jurisdiction to hear are those set out in chapter III of the Constitution. It was said that, if sections 75 and 76 of the Constitution impliedly forbid the Commonwealth from adding to the original jurisdiction of the federal courts, those provisions must also logically forbid the states from doing so. I do not happen to think that this is an inevitable conclusion, but were it otherwise we could have the curious result that the states would have greater power to confer functions on the federal courts than the polity that created them.

Can the Commonwealth confer state jurisdiction on federal courts? Clearly, the Commonwealth has no express power to do so, according to the High Court. The judgments of their Honours is quite illuminating insofar as they went to the very heart of the notion of cross-vesting schemes, schemes that were designed to increase the efficiency and convenience of the Australian court system overall—an entirely justifiable aim. There were arguments that sought to invoke the express incidental power, but the High Court rejected that provisions conferring state jurisdiction on federal courts were incidental to the power to create federal courts or, indeed, the power to confer federal jurisdiction, and these arguments were rejected. It held it could hardly be incidental to the power to confer federal jurisdiction to confer state jurisdiction as well.

I must say that, despite a spirited argument that the cross-vesting schemes conferred only sufficient state jurisdiction to avoid jurisdictional disputes, the court found that conferring power on federal courts to exercise state jurisdiction did not make the exercise of federal jurisdiction more effective. At best, it made the exercise of state jurisdiction more effective. This line of reasoning rejected any consideration of the overall benefit in increased efficiencies and functioning of the Australian court system or any consideration of the global market in which Australia now operates, which of course impacts on our Corporations Law.

This approach is reminiscent perhaps of the cases determining whether a law affecting intrastate trade and commerce is incidental to section 51(i) in those airline cases when the court rejected arguments that economic efficiency was sufficient to justify regulating or engaging in intrastate trade or commerce—rejecting it because to do otherwise would be to erase the constitutionally mandated distinction between interstate and intrastate trade or commerce.

Similarly, in Wakim's case it was immaterial to the court's reasoning that all the governments of Australia were of the opinion that cross-vesting achieved a desirable outcome for the court systems in Australia. And there had been over the past decade a significant growth in national cooperation between the states and between the states and the Commonwealth by virtue of the cross-vesting arrangement—particularly necessary, I suggest, in the Corporations Law context. Those who take an interest in the perceived activism of the High Court in recent years might be interested in the statement of Justices Gummow and Hayne, who said:

The court is entrusted with the preservation and application of constitutional distinctions. Were the court to discard those distinctions, on the ground that at a particular time and to some minds they appear inconvenient or otherwise unsatisfactory, the court would not only fail in its task but would exceed its authority.

All laudatory words in the context of strict and complete legalism, but I doubt that I will be the last person to draw upon those words in analysing or interpreting the direction of the current High Court in terms of activism versus strict legalism—certainly shades of Sir Owen Dixon, although Mr Justice McHugh did comment that the judiciary had no power to amend or modernise the Constitution to give effect to what judges think is in the public interest. That course is preserved for the people of Australia by way of referendum. In pursuing the restoration of cross-vesting schemes, that is no easy solution—the opposition's proposed amendments would otherwise suggest—in terms of convincing a majority of voters in a majority of states of the benefits of cross-vesting in the context of the court system. Again, it would involve that vexed question of the balance of Commonwealth and state powers.

Where did Wakim leave the cross-vesting schemes? The provisions empowering federal courts to transfer matters to state courts was not affected, nor was the power of one state supreme court to transfer cases to another state supreme court. But now state Corporations Law matters must generally be heard by state supreme courts rather than the Federal Court. This undermines significantly the Federal Court's involvement in the Corporations Law scheme, which had been regarded as fundamental to a fully integrated system of state, territory and federal adjudication, as contemplated by the corporations agreement.

In light of the Wakim decision, the federal government has acted to do what it can to make sense of the cross-vesting scheme, following this constitutional interpretation. The findings on the limitations of Commonwealth parliament means that not all of the elements of the cross-vesting schemes can be restored by legislation. The parliament lacks the constitutional power to do so. But what this parliament can do and seeks to do by this bill is, first, repeal the now invalid provisions of the Commonwealth laws that purport to consent to the conferral of state jurisdiction on federal courts.

The bill also seeks to confer jurisdiction on any court to review decisions made by Commonwealth officers. Commonwealth officers and authorities are invested with powers by state law under various cooperative arrangements whereby the Federal Court is given jurisdiction. So post the Wakim decision this legislation will amend the Administrative Decisions (Judicial Review) Act and the Administrative Appeals Tribunal Act to bring the decisions and actions of Commonwealth officers and authorities made under state acts within the scope of these Commonwealth acts. What that will mean is when the Federal Court exercises its jurisdiction in relation to the review of these decisions and actions it will be exercising federal, not state, jurisdiction. That will allow the Federal Court to continue to be the primary forum for the review of actions and decisions of Commonwealth officers and authorities.

While addressing the role of the Federal Court, the other provisions in this bill include a schedule 2, which deals with judicial review of the decisions under federal laws in federal, state and territory laws but in the context of criminal prosecutions, in effect restricting a defendant's access to collateral federal administrative law procedures and remedies. I note the reservation of the member for Barton, but what this in effect means is that defendants will not be able to access the AD(JR) Act to challenge decisions to prosecute, nor will defendants in state and territory courts be able to rely on section 39B of the Judiciary Act to bring an application in the Federal Court to review decisions of Commonwealth officers made in the prosecution process.

The Corporations Act 1989 will also be amended in this context. This means that all decisions in the prosecution process will be made within the system that the prosecution is brought and so ensure that these federal acts are not used as an avenue to a different court system, in this case the Federal Court system, for the purposes of delaying, frustrating or disrupting the proper progress of a prosecution in the court system in which it was initiated. This will and must improve the efficiency of the criminal justice process. As is apparent, the provisions of this bill do not and cannot reinstate the pre-Wakim cross-vesting schemes in their entirety. The provisions, including the foreshadowed amendments, go some way to restoring clarity to the role of the Federal Court, but the fate of the cross-vesting schemes lies with the states to some extent.

Legislation has been passed in the states to overcome some of the effects of Wakim, to in effect declare that the rights and responsibilities under a current judgment of the Federal Court or the Family Court in purported exercise of state jurisdiction are the same as if it had been a valid judgment given by the Supreme Court. This state legislation also provides a mechanism for the transfer to the Supreme Court of current proceedings in the federal courts relating to state matters where a federal court determines that it has no jurisdiction to hear it. But this goes part of the way only. In the future the opportunity to restore the cross-vesting schemes in their entirety, should future state, territory and Commonwealth governments believe that to be still desirable, lies with either a referral from each state under section 51(xxxvii) of the Constitution or a change to the Constitution. Both will require a transfer of powers between the states and the Commonwealth. Neither path is an easy one, but both are worthy of consideration. I commend the bill to the House.