ZURICH INSURANCE GROUP LTD Introduction
The
The Federal Court has made clear that the FCFCoA only has jurisdiction to hear and determine claims when power has been expressly given to it pursuant to legislation; and that absent such power, proceedings in that jurisdiction are a nullity.
On the contrary, the Federal Court has clear and undisputed jurisdiction arising in the exercise of Federal civil jurisdiction irrespective of any specific grant under legislation.
Background to Case
On
The applicant in this matter had brought proceedings in the
This was a claim for dual insurance between insurers of an Insured pursuant to equitable principals, for the costs of settlement of a claim against their mutual insured.
The claim against the parties' mutual insured by the third party was made under Section 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act'), thus raising a Federal civil jurisdiction dispute attracting Federal jurisdiction.
The applicant also relied on provisions in the Insurance Contracts Act 1984 (Cth) ('Insurance Act').
The applicant insurer had commenced proceedings in the FCFCoA in the belief that costs of that dispute would be minimised because it is a more informal process than in the
The applicant insurer became aware, after issuing proceedings, that there was no express power within the FCFCoA to determine the dispute. It therefore sought orders to transfer the proceedings from the FCFCoA into the
Judgment of Allsop CJ
- Did the FCFCoA have jurisdiction to determine the dispute?
-
If not, should and could the proceedings be transferred to the
Federal Court of Australia ?
For the reasons outlined below, His Honour found that the FCFCoA had no jurisdiction. He determined that the proceedings in the FCFCoA were a nullity, and could not be transferred.
However, it remained open to the applicant to commence fresh proceedings in the
As outlined by Allsop CJ, the
However, the FCFCoA does not have the same jurisdictional powers. It only has power when jurisdiction is expressly conferred by federal statute.
The claim by the applicant insurer for dual insurance in this case arose because there was an allegation made against the mutual insured alleging breach of Section 12DA of the ASIC Act.
Allsop CJ held that had the proceedings been brought in the Federal Court, Section 12DA of the ASIC Act would have given that Court power to reside over the whole matter. However, that legislation did not give any power to the FCFCoA to determine such a dispute. Similarly, the provisions of the Insurance Act which had been relied upon did not extend jurisdiction to the FCFCoA.
Examples of when the FCFCoA has power include:
- when dealing with an anti-discrimination claim pursuant to the Section 46CO(1) of the Australian Human Rights Commission Act 1986 (Commonwealth), or;
- when dealing with a dispute concerning the application of the small claims procedure between consumers and regulated credit providers pursuant to National Consumer Credit Protection Act 2009.
However, absent an express statutory power given to FCFCoA to determine a dispute, proceedings in that Court are a nullity and the Court has no jurisdiction.
His Honour then turned his mind to consider whether proceedings brought in the FCFCoA could (or should) be transferred to the
Application of case
The effect of this decision was that the applicant insurer was required to commence fresh proceedings in the
This meant that if any limitation period had expired, the applicant would have been out of time.
Whilst the informal procedure in the FCFCoA and the timely way in which the disputes are determined in that forum without formality is desirable, a party commencing proceedings in that jurisdiction must be careful to ensure that the Court has power to determine the dispute.
Similarly, the party which is named as a respondent to proceedings in that Court might take strategic and tactical advantage if it can challenge the jurisdiction in the event that no express power is found to give that Court authority to determine a dispute.
Irrespective of the merits of any cause of action, the parties and their lawyers must be careful to ensure that jurisdiction is properly invoked. Where it is not properly invoked, consideration must then be given to how, and the best way, to use that failure to strategically resolve the proceedings at an early point in time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Level
2000
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