Whether application seeking a declaration for or against the title of the trustee to a trustee in bankruptcy under s 58(1)(a) of the Bankruptcy Act 1966 (Cth) is a ‘special federal matter’ within the meaning of s 6(1) of the Jurisdiction of Courts (Cross Vesting Act) 1987 (Cth).
On appeal, the Victorian Supreme Court of Appeal transferred a proceeding initiated in the Supreme Court to the Federal Court.
The applicant, Dennis Anthony Turner (as Trustee for the Bankrupt Estate of Richard J Gorkowski) sought leave to appeal against the decision of a trial division judge holding that the Supreme Court has jurisdiction to hear and determine a claim by Mrs Gorkowski, to an interest in a property) and that the matter is not a ‘special federal matter’ which the Supreme Court is required to transfer to the Federal Court under s 6(1) of the Jurisdiction of Courts (Cross Vesting Act) 1987 (Cth) (CVA), unless it makes an order to the contrary under s 6(3).
On appeal the Applicant contended amongst others that:
His Honour erred in law in failing to hold that proceeding raises a ‘special federal matter’ arising under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
That the proceedings fell within the exclusive jurisdiction of the Federal Court conferred by section 27 of the Bankruptcy Act, on the basis that under s 5 of the Bankruptcy Act: ‘bankruptcy’ in relation to jurisdiction or proceedings means ‘any jurisdiction or proceedings under and by virtue of this Act.
That if a matter falls within the jurisdiction ‘in bankruptcy’ under s 27 it necessarily falls within the definition of a ‘special federal matter’.
The Court held the proceeding ‘….. is within the original jurisdiction of the Federal Court by virtue of s 39B of the Judiciary Act 1903 (Cth)’ and it is, by reason of the definition contained in paragraph (e) of s 3(1) of the CVA, a ‘special federal matter’.
The Court of Appeal held that the proceeding was a ‘special federal matter’, on the basis that it was necessary for the trustee in bankruptcy to rely on the sequestration order made under the Bankruptcy Act and the title conferred on him as a consequence of that order, to resist the claim.
Although his title was not ‘a defence’ to Mrs Gorkowski’s claim, s 58 of the Bankruptcy Act, which vested the property of the bankrupt in him, was the basis on which the proceedings had to be brought against the trustee. The onus lay on Mrs Gorkowski to establish her interest in the property, which the trustee claimed was vested in him.
The Court held that a broad interpretation of the words ‘special federal matter’ would not expand the jurisdiction of this Court, but rather require it to transfer the matter to the Federal Court, unless the Supreme Court orders to the contrary, having been satisfied that s 6(3) applies.
The Court further noted that, if the proceedings had been initiated before the sequestration order was made, it may consider that it could be difficult to contend that the proceedings were a ‘special federal matter’ which the Supreme Court had to transfer under s 6(1) of the CVA.
Caution should be properly exercised when considering initiating a proceeding, claiming an equitable interest in the property of a bankrupt outside of the Commonwealth jurisdiction.