Coshott v Crouch

1. [1]

   These proceedings arise out of the sale of a property in Bellevue Hill, Sydney, which formerly belonged to the plaintiff in these proceedings, Ljiljana Coshott, and her husband, Robert Gilbert Coshott. The property was purchased in 2003 and registered in their names as joint tenants in equal shares.

2. [2]

   In November 2008 Mr Coshott was made bankrupt. A dispute arose as to whether his half share of the property formed part of his bankrupt estate. This dispute was the subject of proceedings which were heard by the Federal Court. Ultimately the Federal Court found that Mr Coshott’s share of the property did form part of his bankrupt estate. In September 2014 the Federal Court made an order appointing the defendants (“the Trustees”) as trustees for the sale of the property. The sale was completed in October 2015 and realised approximately $3.39 million.

3. [3]

   These proceedings were commenced in September 2017. As co-owner of the property, Mrs Coshott alleges breach of trust on the part of the Trustees. She contends that the property was sold at an under value. The Trustees have moved the Court for an order transferring these proceedings to the Federal Court under the Jurisdiction of Courts (Cross-Vesting) legislation.

4. [4]

   For the purposes of their application, the Trustees relied on both the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). There were a number of oral hearings and sets of written submissions in December last year and February and March this year. It took some time for the parties’ ultimate positions to become clear.

5. [5]

   The Trustees now put as their primary position that the Commonwealth Act is the applicable one, on the basis that it applies to State courts exercising federal jurisdiction. The Trustees contend that these proceedings are in federal jurisdiction. They first contend that the Court is exercising jurisdiction in a “special federal matter” for the purposes of s 6 and that accordingly, in the circumstances of this case, the Court is required to transfer the proceedings to the Federal Court. Alternatively they contend that the proceedings should be transferred under the general provision for transfer contained in s 5(1).

6. [6]

   The Trustees’ contention is that the Court is exercising federal jurisdiction pursuant to the Judiciary Act 1903 (Cth), s 39(2). That provides (subject to exceptions which are not relevant for present purposes):

7. [7]

   The matters in which the High Court has original jurisdiction and in which original jurisdiction can be conferred on it are specified in the Constitution, ss 75 and 76. The Trustees rely upon s 76(ii) which refers to matters “arising under any laws made by Parliament”. The Trustees have two lines of argument. The first is that the dispute between the plaintiff and the Trustees is part of the matter which was, and remains, the subject of the ongoing Federal Court proceedings under the Bankruptcy Act 1966 (Cth). The Trustees’ alternative contention is that the proceedings involve a matter “arising under a law” of the Commonwealth in the sense that they have their origin in rights created by Commonwealth law, namely, the trust created by the orders of the Federal Court. On this view, the relevant Commonwealth law would appear to be the Judiciary Act, s 79.

8. [8]

   Mrs Coshott opposes the transfer. She disputes that the proceedings are in federal jurisdiction. On her analysis, the proceedings are in State jurisdiction; the State Act is applicable; and (so she contends) the proceedings do not meet the test for transfer set out in s 5(1) of that Act.

9. [9]

   Following some debate, it was agreed that in deciding whether the proceedings are in federal jurisdiction I would be deciding a question “arising under the Constitution or involving its interpretation”: see Felton v Mulligan (1971) 124 CLR 367 (Menzies J at 382); (Walsh J at 397). The obligation to give notice of a Constitutional matter under the Judiciary Act, s 78B, was therefore engaged. The application was adjourned to allow the relevant notices to be given. Ultimately no Attorney-General intervened, so I now proceed to determine the application on the basis of the submissions made by the parties.

Factual background

1. [10]

   The Federal Court proceedings which resulted in the appointment of the Trustees were originally commenced in this Court in June 2009. The original plaintiff was James Coshott, the son of Mr and Mrs Coshott. The defendants were Mrs Coshott and Mr Coshott. The relief sought was a declaration that Mr and Mrs Coshott held the Bellevue Hill property for trusts known as the Coshott Family Trust and the Coshott Family Superannuation Fund, together with other declarations and orders. Declarations and orders to the effect sought were made by a judge of this Court pursuant to a form of consent orders signed and lodged by the parties. But when Mr Coshott’s bankruptcy trustee found out about the orders, he protested and they were set aside. The proceedings were then reconstituted, Mrs Coshott being added as an additional plaintiff alongside James Coshott and removed as a defendant. Mr Coshott’s bankruptcy trustee was added as an additional defendant.

2. [11]

   Mr Coshott’s bankruptcy trustee filed a defence and cross-claim. The cross-defendants were James Coshott, Mrs Coshott, Mr Coshott and Schlotzsky’s Nominee Co Pty Ltd (“Schlotzsky”). Schlotzsky was joined as a cross-defendant on the basis that it was, or was allegedly, the trustee of the Coshott Family Superannuation Fund. The relief sought by Mr Coshott’s trustee included declarations that the Bellevue Hill property had been acquired by Mr and Mrs Coshott beneficially, and that Mr Coshott’s half share had passed to his trustee in bankruptcy and was an asset of his bankrupt estate. Mr Coshott’s trustee also sought an order for appointment as trustee for sale of the property.

3. [12]

   Later the proceedings were transferred to the Federal Court and came on for hearing before Buchanan J. His Honour delivered his decision in September 2013: Coshott v Coshott [2013] FCA 907. He upheld the claim by Mr Coshott’s bankruptcy trustee, dismissing the claim by James Coshott and Mrs Coshott, and making orders in accordance with the relief sought in the cross-claim. This included an order appointing Mr Coshott’s bankruptcy trustee as trustee for sale of the property.

4. [13]

   Mrs Coshott and Schlotzsky appealed. They challenged the finding that the property had been acquired beneficially. Separately, they also challenged the order appointing Mr Coshott’s bankruptcy trustee as trustee for sale. The decision of the Full Court (Siopis, Katzmann & Perry JJ) was delivered in July 2014: Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCA 450. For practical purposes, the appeal was unsuccessful. The Full Court upheld Buchanan J’s finding that Mr Coshott’s share of the Bellevue Hill property had been acquired beneficially and was part of his bankrupt estate. The order appointing Mr Coshott’s bankruptcy trustee as trustee for sale was set aside for reasons I will discuss in more detail below, but the Full Court concluded that the Federal Court did have jurisdiction to make an order appointing independent trustees for sale of the Bellevue Hill property. The proceedings were remitted to Buchanan J who, in September 2014, made the orders appointing the Trustees to which I have already referred.

5. [14]

   There were a number of subsequent applications made in the Federal Court proceedings consequential upon the appointment of the Trustees. In August 2015, Buchanan J made orders specifying steps to be taken to effect the sale; these orders were amended in October 2015. In November 2015, his Honour made orders concerning the disposal of goods (I assume originally from the Bellevue Hill property) held in a storage facility at Dapto. In March 2016, his Honour made orders for the payment into Court of sums totalling approximately $320,000 from Mrs Coshott’s share of the proceeds, on account of garnishee orders which had been obtained against Mrs Coshott.

6. [15]

   There were also proceedings concerning the quantum of the Trustees’ costs. In May 2016 a Registrar of the Federal Court issued a determination specifying the Trustees’ costs as approximately $760,000. An application was made for review of the decision which was dealt with by Bromwich J (Buchanan J having retired in the meantime) in December 2016: Coshott v Coshott [2016] FCA 966. His Honour dismissed the application for review and confirmed the Registrar’s determination, subject to updating the costs. The costs were subsequently updated to 31 January 2017, so as to total approximately $810,000.

7. [16]

   Mr and Mrs Coshott appealed against the decision of Bromwich J. The appeal was dismissed by the Full Court in August 2017: Coshott v Crouch [2017] FCAFC 135.

8. [17]

   Even now, the Federal Court proceedings have not been completed. As at September 2017, the Trustees were still holding the sum of approximately $850,000. Following a contested application, Bromwich J ordered in October 2017 that the amounts totalling approximately $320,000 paid into Court pursuant to the orders in March 2016 be paid out to creditors of Mrs Coshott: Coshott v Coshott [2017] FCA 1239. The costs of that application remain to be determined. The Trustees have been served with four more garnishee orders and expect that this will result in a further application to pay monies out of the proceeds held by them. Their costs for the period from 1 February 2017 onwards also remain to be quantified.

Matter under the Bankruptcy Act

1. [18]

   The starting point for the argument by counsel for the Trustees was the Full Court decision in Coshott v Prentice (above at [13]). The Full Court pointed out that the Federal Court proceedings were, from their inception in this Court, proceedings involving a dispute as to whether property (in this case, Mr Coshott’s half share of the Bellevue Hill property) fell into bankruptcy. The proceedings thus fell within the Bankruptcy Act, s 30(1), which relevantly provides:

2. [19]

   The Full Court concluded that the Court’s powers under s 30(1) were not wide enough to appoint a trustee for the sale of the property as a whole because Mrs Coshott’s share of the property did not fall into bankruptcy. Nevertheless, the proceedings were in federal jurisdiction. That made the Judiciary Act, s 79(1), applicable. It provides:

3. [20]

   The Conveyancing Act 1919 (NSW), s 66G, relevantly provides:

4. [21]

   Section 66F(2)(a) relevantly defines the “statutory trust for sale” as follows:

5. [22]

   In Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559, Gleeson CJ, Gaudron & Gummow JJ said (at 591-592 [68]):

6. [23]

   The Full Court in Coshott v Prentice concluded, in the light of Edensor, that s 66G was potentially available under s 79 even though textually s 66G refers only to this Court. But it was also necessary to consider whether the application for orders for sale under s 66G was part of the “matter” the subject of the Federal Court proceedings. It was argued for the appellants that the making of an order for the sale of the property, which would extend to Mrs Coshott’s half share even though she was not herself a bankrupt, was not part of the “matter” before the Court, which concerned the bankruptcy status of Mr Coshott’s half share.

7. [24]

   In Re Wakim [1999] HCA 27; 198 CLR 511 Gummow and Hayne JJ said (at 585 [140]):

8. [25]

   The Full Court in Coshott v Prentice concluded (at [122]):

9. [26]

   Counsel for the Trustees argued that this reasoning extended to Mrs Coshott’s claim for compensation against the Trustees in these proceedings. Counsel sought to characterise Mrs Coshott’s claim as one involving the administration of a trust fund under the control of the Federal Court. Counsel relied on Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, where Brennan CJ, Gaudron, McHugh and Gummow JJ said (at 473):

10. [27]

    Counsel for the Trustees submitted that, even after having made an order for sale under s 66G, the Federal Court retains an ongoing role in “supervising the conduct of the statutory trust”. This, it was argued, includes power to alter the terms of the trust under s 66G(6) (quoted at [20] above), and to provide for indemnity and remuneration out of the assets of the trust. Counsel submitted that in fact the Federal Court, in determining the proper remuneration of the Trustees, had already scrutinised the way in which the Trustees had conducted the sale. At an earlier stage, it was suggested that Mrs Coshott’s claim could be barred by res judicata or issue estoppel. I did not understand that contention to be pressed for the purposes of this application. But counsel for the Trustees did suggest that there is a “common substratum of fact” between that aspect of the Federal Court proceedings and Mrs Coshott’s claim in these proceedings.

11. [28]

    Counsel for Mrs Coshott, on the other hand, argued that her claim was completely distinct from the issues dealt with in the Federal Court. Counsel emphasised that Mrs Coshott was not seeking a general account from the Trustees. In counsel’s submission, Mrs Coshott was simply claiming her share of the compensation attributable to a discrete breach of trust by the Trustees, which concerned Mrs Coshott and the Trustees alone.

12. [29]

    In my view, this last submission by counsel for Mrs Coshott goes somewhat too far. It is true that her claim does not require a full account to be taken of all of the dealings by the Trustees in the course of their administration of the trust for sale. Since the nineteenth century, equity has allowed a beneficiary to sue the trustee for equitable compensation flowing from a single breach of trust rather than requiring a full account: see Jacobs’ Law of Trusts in Australia (8th ed, 2016) at [22-04]. But that is a short-cut which will not necessarily be permitted in every case. More importantly, just because the short-cut procedure is used does not necessarily mean that the compensation recoverable is limited to one particular beneficiary’s share.

13. [30]

    If a full account were taken, then the trustee would be obliged to restore the whole of the trust fund for the benefit of all of the beneficiaries. Subject to questions which might arise if there were differential limitation periods applicable to different beneficiaries, I see no reason why the same approach would not apply to a short-cut claim for equitable compensation. In principle, the measure of equitable compensation is the sum necessary to restore the trust fund as a whole: Re Dawson [1966] 2 NSWR 211 at 214-217.

14. [31]

    It seems to me, therefore, that if Mrs Coshott’s claim were to succeed in these proceedings any award of equitable compensation would reflect the loss suffered by the trust estate as a whole. For practical purposes the proceeds would be divided by Mrs Coshott and Mr Coshott’s bankruptcy trustee. Mr Coshott’s trustee therefore has an interest in the outcome of the claim made in these proceedings.

15. [32]

    I think, however, that counsel for Mrs Coshott is correct in saying that there are significant differences between the s 66G aspect of the Federal Court matter and the claim made in these proceedings.

16. [33]

    An order for sale under s 66G is not merely a discretionary matter of procedure. Such an order has substantive effect, depriving the parties of their proprietary interests in the property and replacing those interests with equitable interests under the trust created by the order. Although a co-owner is usually entitled to an order for sale virtually as of right, it is not always so. The statutory remedy developed out of the old equitable remedy of partition, and in some cases partition, rather than sale, may remain the appropriate order (see Oakes v Commissioner of Stamp Duties (1952) CLR 386 at 411-412). It is also possible for a co-owner to deprive himself or herself of an entitlement to an order for sale by contract, or by conduct towards the other co-owner giving rise to some equitable bar such as estoppel: Williams v Legg (1993) 29 NSWLR 687 at 693F. The Court may also require allowances to be made for occupation fees and improvements, and direct accounts for that purpose: see Forgeard v Shanahan (1994) 35 NSWLR 206. All of this shows that where a court is asked to make an order for sale, it is being asked to make an order having substantive effects on the rights of the parties based upon the application of legal rules to the past conduct of, and dealings between, the parties as co-owners.

17. [34]

    By contrast, Mrs Coshott’s claim against the Trustees focusses on their conduct in that office and depends on the terms of the trust for sale as fixed by the s 66G order. Prior dealings as co-owners between Mrs Coshott on the one hand, and Mr Coshott and his bankruptcy trustee on the other, are irrelevant.

18. [35]

    Furthermore, although the Federal Court file remains open, the relevant issue of substance, namely whether Mr Coshott’s bankruptcy trustee was entitled to an order for sale, has been determined.

19. [36]

    In my view, the further proceedings in the Federal Court since September 2014, including the proceedings concerning the Trustees’ remuneration, are properly seen as proceedings invoking the Court’s power to make consequential orders as part of the working out of the substantive orders for relief, in this case the order appointing trustees for sale. The power to make consequential orders is limited in its scope. It cannot be used to vary the substantive orders; nor can it be used to do something inconsistent with, or beyond the scope of, those orders: Katter v Melhem [2015] NSWCA 213, at [80]-[81]. In Toyama Pty Ltd v Landmark Building and Developments Pty Ltd [2006] NSWSC 83, White J (as his Honour then was) described the court’s power to allow remuneration to trustees for sale appointed under s 66G as part of its “inherent jurisdiction”. I do not see this as inconsistent with the view I have expressed that the power is consequential in nature.

20. [37]

    At first sight, it seems strange to think that the Court, having made final orders specifying the terms of the trust for sale, could then later vary those terms with substantive effect. In Dobrijevich v Burge [2001] NSWSC 1176, however, Hamilton J pointed out (at [3]) that the power under s 66G(6) is not expressed to be limited in point of time. But it is not necessary to consider this question further. Even if a power of amendment exists, there is no suggestion that it would, or could, be invoked retrospectively so as defeat the claim Mrs Coshott has now made.

21. [38]

    It is true that, in fixing the remuneration of the Trustees, their conduct in discharging the office of trustee may be relevant. In evaluating a claim by trustees under s 66G for remuneration for work undertaken by them, the Court may consider whether or not the work properly advanced the interests of the beneficiaries of the trust, and if it did not, the Court may take that into account in fixing the Trustees’ remuneration. But I am not sure that this involves the Court directly considering whether the Trustees in this case breached their obligations to maximise the value of the sale in the interests of the beneficiaries. I think it unlikely that the Court, if persuaded that there had been such a breach by the Trustees, would use the blunt instrument of depriving the Trustees of all or part of their remuneration on that account. Rather, I think the Court would do proper justice by assessing the actual loss suffered by the beneficiaries and requiring the Trustees to make that good, but at the same time allow the Trustees proper remuneration for professional work undertaken by them. In other words, the Federal Court, in assessing the Trustees’ remuneration, did not need to determine the question of breach which is the subject of the claim made by Mrs Coshott in these proceedings.

22. [39]

    In any case, events have now moved on. Even if it would have been more convenient for Mrs Coshott to have brought her claim before the Federal Court had determined the Trustees’ remuneration and for the two contests to have been dealt with together by the Federal Court, that did not happen. If an issue estoppel arises which prevents Mrs Coshott from bringing her claim, then that issue estoppel will arise wherever the claim falls to be determined. If there is no issue estoppel, then Mrs Coshott’s claim will need to be determined on the merits by whichever court hears it, and if any evidence which was before the Federal Court on the remuneration application is relevant on the merits of Mrs Coshott’s claim, that evidence will need to be evaluated afresh for that purpose.

23. [40]

    Counsel for the Trustees characterised the Federal Court proceedings as an “attempt by Mr Coshott’s trustee in Bankruptcy to account and realise for the benefit of the estate the bankrupt’s interest in the [Bellevue Hill] property”. In counsel’s submission, the resolution of Mrs Coshott’s claim is part of that process.

24. [41]

    Counsel for the Trustees relied on the decision of Merkel J in the Australian Securities and Investments Commission v Landy DFK Securities Ltd (2002) 123 FCR 548. That case concerned the affairs of a trust which ASIC contended was a managed investment fund for the purposes of the Corporations Act 2001 (Cth). ASIC obtained from the Federal Court orders at an interlocutory stage appointing new trustees. At the final hearing the Court made an order under s 601EE of the Act that the trust be wound up. The trust property included commercial premises which were the subject of the lease. A dispute arose between the trustees and the tenant concerning the tenant’s right of occupation under the lease. By interlocutory process, the trustees sought an order for possession. It was argued for the tenant that the Federal Court had no jurisdiction to entertain the trustees’ possession claim. Merkel J ultimately dismissed the trustees’ application on procedural grounds. His Honour was of the view that the application should have been made by way of fresh originating process. But he rejected the challenge to the Federal Court’s jurisdiction.

25. [42]

    Merkel J considered the earlier decision in Avamure v Fletcher Jones and Staff Pty Ltd (1996) 22 ACSR 256, the Victorian Court of Appeal considered a claim for the recovery of a debt by a liquidator of a company in voluntary liquidation. Tadgell JA (with whom Callaway JA agreed) concluded that the claim was not one “arising under the Corporations Law of Victoria”: see Corporations (Victoria) Act 1990 (Vic) s 42(1) (since repealed). The liquidator was exercising the power conferred on him under the Corporations Law to recover the company’s debts but the claim itself was one which arose under the general law. Merkel J distinguished the case on the ground that it concerned a voluntary liquidation rather than a court ordered liquidation, and that the liquidator was therefore “not a court appointed officer”.

26. [43]

    Merkel J concluded that during the period between the order appointing them as trustees of the trust and the order that the trust be wound up the trustees were not acting as officers of the Court. Rather, they were exercising rights under the general law as trustees of the trust. But his Honour considered that the winding up order altered the position. From that point forward, the trust was being wound up under an order of the Court and the Court had jurisdiction to entertain the dispute which arose between the tenant and the trustees as landlord concerning possession of the property.

27. [44]

    In a company liquidation, the winding up, as a matter of legal theory, is carried out by the appointing court itself pursuant to statutory powers; the liquidator is the court’s delegate. The orders made in the case before Merkel J under the Corporations Act, s 601EE, for the winding up of the trust must be seen as orders of the same type. The orders specifically conferred certain powers on the trustees to conduct the winding up as if the trust had been a company: see order 9 quoted at [8].

28. [45]

    I do not think that the role of the court which exercises a power to appoint trustees for sale under s 66G is comparable. The appointing court retains a supervisory role in the sense that that court can be approached for consequential orders and directions. But the source of the trustees’ powers and obligations is the trust established by the court’s order. As will be seen below, the trustees’ powers and obligations are cognisable by any court exercising equitable jurisdiction over trusts, not just the appointing court. In no relevant sense are the trustees, in effecting the sale, acting as the appointing court’s delegate or exercising statutory powers. In my view, if any comparison with a liquidator is apt, the proper comparison is with a voluntary liquidator, as in Avamure, rather than a court-appointed statutory liquidator.

29. [46]

    Counsel for the Trustees relied on the Full Court’s reasoning in Coshott v Prentice itself (quoted at [25] above) as supporting the view that the scope of the bankruptcy matter included the resolution of Mrs Coshott’s claim against the Trustees. But in my view the fact that Mrs Coshott was an active (indeed a moving) party and that those proceedings involved claims and cross-claims as to the beneficial ownership of both Mr Coshott’s and Mrs Coshott’s shares of the property, played a significant part in the Full Court’s conclusion that the s 66G application was within the “matter” the subject of the Federal Court proceedings.

30. [47]

    It is not uncommon in proceedings concerning the ownership of property for a party claiming an interest in the property to seek an order under s 66G in the event of the claim succeeding. Often, in such a case, the only substantive dispute between the parties relates to the ownership issue and the s 66G order follows as a matter of course. That is what apparently happened here. In such circumstances, the claim by Mr Coshott’s bankruptcy trustee for a s 66G order could be seen as an aspect of the overall matter. That explains the Full Court’s decision that a s 66G order could be made under s 79(1); but it does not necessarily follow that a subsequent claim against the Trustees is part of the same matter.

31. [48]

    It is true that the further applications in the Federal Court proceedings, following the order by Buchanan J in September 2014 appointing the Trustees, have resulted in the Trustees becoming parties to the Federal Court proceedings, and even to an appeal. But it is not uncommon for a person to be joined to proceedings as a party to an interlocutory application. An example is a person who receives a subpoena to the Court and applies to have the subpoena set aside. In such circumstances, the subpoenaed party becomes a party to the proceedings and orders may be made as between the party issuing the subpoena and the subpoenaed party, but this cannot expand the scope of the “matter” which originally attracted the jurisdiction of the Court. In particular, it would not make a substantive issue arising as between the issuing party and the subpoenaed party by reason of other dealings between them part of that “matter”.

32. [49]

    I do not think that the application concerning the Trustees’ remuneration expanded the scope of the “matter” involved in the Federal Court proceedings. The Trustees were not, and could not have been, parties to the claim for an order under s 66G. If, as I think, the orders fixing the remuneration were properly seen as an aspect of the Court’s power to make consequential orders to give effect to the substantive relief decreed, then such consequential proceedings were properly classified as interlocutory: see Caird Seven Pty Ltd v Attia (2016) 92 NSWLR 1452 per Emmett AJA at [15].

33. [50]

    In Rizeq v Western Australia [2017] HCA 23; 91 ALJR 707 the High Court recently considered the scope of s 79. Bell, Gageler, Keane, Nettle and Gordon JJ said at [46]:

34. [51]

    It is not necessary to determine whether the decisions of Merkel J in ASIC v Landy or the Full Court in Coshott v Prentice require reconsideration in the light of these later observations by the High Court. In my view, both decisions are distinguishable for reasons which I have given. It is true that the resolution of Mrs Coshott’s claim has the potential to benefit Mr Coshott’s bankrupt estate. But that on its own cannot be enough to make that claim part of a “case in bankruptcy”. If it were, that would be so of any claim by a bankruptcy trustee against a third party the resolution of which might benefit the bankrupt’s estate. In my view, the resolution of Mrs Coshott’s claim is not in any relevant sense incidental to the determination of the controversy which was the subject of the Federal Court proceedings. I therefore reject the Trustees’ contention.

Matter under the Judiciary Act

1. [52]

   Section 66G contains no provision permitting the owner of a property which is the subject for an order of sale to obtain compensation from a trustee who sells at under value. But counsel for the Trustees did not dispute that such compensation could be awarded by this Court pursuant to its general equitable jurisdiction over trusts. I think that concession was properly made. Toyama v Landmark (above at [36]) was such a case. And the Court’s jurisdiction is not confined to trusts which arise under the law of New South Wales. In the present case, the trust property is here, the Trustees are here, and the seat of administration of the trust is also here. This Court, therefore, has jurisdiction to entertain a claim for compensation despite the fact that the Trustees were appointed by the Federal Court.

2. [53]

   In R v Commonwealth Court of Conciliation and Arbitration; ex parte Barrett (1945) 70 CLR 141, a dispute arose as to whether the affairs of the union which was a registered organisation under the Commonwealth Conciliation and Arbitration Act 1904 (Cth) were being carried out in accordance with the rules of a union. The Act conferred jurisdiction on the Commonwealth Court of Conciliation and Arbitration to make an order directing compliance with the rules. The conferral of jurisdiction on the Court was challenged. It was argued that any right that the members of the union had to require the observance of its rules by other members of the organisation arose at common law under the agreement of the members rather than under a law made by the Parliament. The challenge was rejected by the High Court.

3. [54]

   Latham CJ said (at 151):

4. [55]

   In Felton v Mulligan (above at [9]) the dispute arose out of a property settlement between husband and wife. The settlement was recorded in a deed which included an obligation on the husband to make periodical maintenance payments. Divorce orders were then made (under the Matrimonial Causes Act 1961 (Cth)) which included an order under s 87(1)(k) of that Act sanctioning and approving the deed. The husband died and the wife brought equity proceedings seeking a declaration that the husband’s executors were obliged by the terms of the deed to continue to make the maintenance payments. The executors put forward a defence that the deed was void as a matter of public policy because it sought to oust the jurisdiction of the Court under the Matrimonial Causes Act to determine the amount of maintenance. The defence succeeded. By a four to three majority the High Court held that the equity proceedings were in federal jurisdiction, involving a matter arising under the Matrimonial Causes Act, and accordingly there was no appeal to the Privy Council.

5. [56]

   Both Barwick CJ (at 384) and Walsh J (at 408) were of the view that the public policy defence was, properly understood, based on the Matrimonial Causes Act, and that the defence thus involved a matter “arising under” that Act. McTiernan J (at 380) held that the proceedings in equity to enforce the deed were directly caught by a definition of “matrimonial cause” under the Matrimonial Causes Act. Windeyer J said at 388:

6. [57]

   In LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575, a dispute arose about quota entitlements to import cars under licences granted pursuant to regulations under the Customs Act 1901 (Cth). The plaintiff alleged that the defendant had agreed to transfer certain quota entitlements for certain years. Declarations were sought that the defendant was obliged to cause the quotas to be transferred to the plaintiff and that the defendant held the benefit of such quotas on trust for the plaintiff in the meantime. The claim was brought in this Court and was rejected. The High Court held that the proceedings were in federal jurisdiction, and accordingly there was no appeal to the Privy Council. Six members of the High Court said (at 581):

7. [58]

   The present case involves the Trustees’ obligations to Mrs Coshott as beneficiary under the trust created by the order of the Federal Court in September 2014. The claim does not directly depend upon a Commonwealth law for its enforcement or involve a defence arising under a Commonwealth law as in Felton v Mulligan. Nor is the trust property a right or benefit which owes its existence to federal law, as in LNC. But, in my view, the right or duty in question still owes its existence to federal law in the relevant sense. What are being enforced are the rights under a trust created by the exercise of federal jurisdiction under the Judiciary Act. The trust is a creature of federal law in the same way that the union rules, as registered, were a creature of federal law in Barnett.

Application for transfer

1. [59]

   It follows that these proceedings are in federal jurisdiction and the Commonwealth Cross-Vesting Act applies. As already mentioned, counsel for the Trustees contended that the proceedings involve a “special federal matter”. Section 6 requires (subject to exceptions which are not relevant to this case) to transfer such a matter to the Federal Court.

2. [60]

   The definition of special federal matter in s 3(1) is relevantly as follows:

3. [61]

   Because I have concluded that this matter is in federal jurisdiction, the Federal Court would have jurisdiction: see Judiciary Act s 39B(1A)(c). Had I accepted the argument that the proceedings involved a matter under the Bankruptcy Act, then the effect of s 27(1) of that Act would have been that this Court would not have had jurisdiction apart from the Cross-Vesting Act, and accordingly the proceedings would have involved a special federal matter: see Truthful Endeavour Pty Ltd v Condon (2015) 13 ABC (NS) 162 at [32]-[61]. But I have rejected that argument. For reasons I have given above, the Court has jurisdiction to entertain the proceedings by virtue of its general equity jurisdiction, independently of the Cross-Vesting Act. Accordingly, this is not a “special federal matter” and s 6 does not apply.

4. [62]

   This leaves s 5(1), which provides as follows:

5. [63]

   There are three independent bases for transfer set out in sub-paragraphs (i), (ii), (iii) of paragraph (b). Both sub-paragraphs (i) and (ii) require, among other things, that it be “more appropriate” for the proceedings to be determined by the Federal Court. The choice is between this Court and the Federal Court. Both are superior Courts which are fully capable of dealing with Mrs Coshott’s claim. The two Courts sit in the same city. The location of witnesses and the law to be applied are both entirely neutral factors.

6. [64]

   It is said that the determination of which court is “more appropriate” is a matter to be determined without one or other party bearing an onus. Certainly the fact that the plaintiff has chosen to bring the proceedings in one court rather than another is of itself not a factor to be taken into account: BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 425 [25]. But in my view this does not mean that in every case the applicant for cross-vesting can require the court in which the proceedings are commenced to undertake a minute analysis of the circumstances in order to discern whether another court is “more appropriate”. In Perpetual Trustee Company Ltd v Batt [2014] NSWSC 1211, Robb J said at [45]:

7. [65]

   I respectfully agree. In my opinion, the Federal Court is a no more appropriate forum for determination of Mrs Coshott’s claim than this Court. The proceedings cannot be transferred under sub-paragraphs (i) or (ii). It is therefore unnecessary to consider the argument for Mrs Coshott that there are no remaining proceedings “pending” in the Federal Court in the relevant sense, which is another requirement of sub-paragraph (i).

8. [66]

   This leaves sub-paragraph (iii), which requires only that it be “in the interests of justice” for the proceedings to be transferred to the Federal Court. This does not depend upon proceedings currently being pending in that Court: Efax Pty Ltd v Sonray Capital Markets Pty Ltd [2011] NSWSC 554 at [50].

9. [67]

   For reasons given above, I am not satisfied that there will necessarily be any evidentiary overlap between Mrs Coshott’s claim and such remaining applications as may be brought in the Federal Court. I think the possibility of such an overlap is too insubstantial to make it “in the interests of justice” that the proceedings be transferred to the Federal Court. Furthermore, the existence of a debate about the Federal Court’s jurisdiction (albeit that in my opinion it does have jurisdiction) is a factor in favour of not transferring the proceedings away from this Court, which undoubtedly has jurisdiction to entertain Mrs Coshott’s claim: Skandar v BSM Group Pty Ltd [2017] NSWSC 610 at [46]-[49].

10. [68]

    It is not necessary to consider whether the NSW version of the Jurisdiction of Courts (Cross-Vesting) Act applies when the Court is exercising federal jurisdiction. The circumstances in which transfer may be ordered under s 5(1) of the NSW Act are less extensive than those under s 5(1) of the Commonwealth Act.

Conclusion and orders

1. [69]

   I conclude that the transfer application fails and should be dismissed. I see no reason why costs should not follow the event. I will make an order for costs, but grant liberty to apply to the parties in case some different order is sought.

2. [70]

   The orders of the Court are: