Fair work system and the federal courts

This extract from as decision of the Federal Court explains the jurisdictional link between employment cases and the federal courts, even where the principal cause of action relied upon may be a common law employment contract. It is a quite stunning reminder of the growth of the federal courts.


“Section 10(1) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) provides that the Federal Circuit Court has such original jurisdiction as is vested in it by laws made by the Parliament, either by express provision or by the application of s 15C of the Acts Interpretation Act 1901 (Cth) to a provision authorising the institution of a civil proceeding in that court in relation to a matter. Section 566 of the FW Act expressly confers jurisdiction on the Federal Circuit Court “in relation to any civil matter arising under [that] Act”. Section 15C of the Acts Interpretation Act relevantly provides that:

Where a provision of an Act, whether expressly or by implication, authorises a civil or criminal proceeding to be instituted in a particular court in relation to a matter:

(a)    that provision shall be deemed to vest that court with jurisdiction in that matter; [and]

(b)    the jurisdiction so vested is not limited by any limits to which any other jurisdiction of the court may be subject[.]

36    A matter arises under a law of the Parliament “if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law” (R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 per Latham CJ). Whether or not a matter arises under a federal law does not depend upon the form of relief sought: LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ). As Lee J observed in Mulley v Hayes (2021) 286 FCR 360 at [16], this means that federal jurisdiction is attracted in any case in which a right or duty based on a Commonwealth statute arises even if it has not been pleaded or a federal issue need not be decided.

37    For these reasons, Radeshar’s arguments were largely misconceived and the primary judge’s decision to accept them ill-advised.

38    For the following reasons federal jurisdiction was engaged in the present case.

39    First, Mr Muthu invoked the jurisdiction of the court in his originating application identifying the source of jurisdiction as the Workplace Relations Act 1996 (Cth) and the FW Act.

40    Second, while there was no evidence that he was covered by an award and no allegation that a term of an award had been breached, the primary judge appears to have accepted that Mr Muthu was making a claim to be covered by an award. Badly pleaded though it was, that claim was made in [2] of the amended statement of claim:

The respondent and its employees are at all material times covered by the State/Federal Award and minimum salary level as prescribed by the Department of Immigration and Citizenship but now known as Department of Immigration and Border Protection.

41    In her written submissions Mr Muthu’s then counsel rather unhelpfully submitted that:

There is not simply one industrial award which encompasses the work Mr Muthu did. It meets at least three or four awards within events/hospitality/ catering, driving /delivery, training/coordination and operations / office management.

42    Notwithstanding the way the allegation was pleaded, following the passage of the Industrial Relations (Commonwealth Powers) Act 2009 (NSW) and the award modernisation process any such award could only have been a federal award. The duty to comply with the terms of an award arises by force of statute (Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 419 (per Brennan CJ, Dawson and Toohey JJ), in this case the FW Act, s 45 of which provides that a person must not contravene a term of a modern award. Award rates are imported into a contract of employment “as a statutory right imposing a statutory obligation to pay them”: Byrne at 420 (Brennan CJ, Dawson and Toohey JJ). In these circumstances, the legal relations between the parties are determined in part by contract and in part by the award: ibid.

43    Third and in any event, Mr Muthu pleaded that he was employed by Radeshar and that Radeshar failed to pay him the amounts due to him in full in relation to the work he performed. That was not merely a claim in contract. It also invoked a right or duty that owed its existence to federal law.

44    Section 323 of the FW Act provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work in full (except to the extent that s 324 allows for certain deductions to be made), in money, and at least monthly. “Employer” in this context is a reference to a “national system employer” and “employee” a “national system employee”: FW Act, s 322. A constitutional corporation which employs or usually employs an individual falls within the definition of “national system employer” (FW Act, s 14) and a “national system employee” is an individual who is employed or usually employed by a national system employer except on a vocational placement (FW Act, s 13). Radeshar is a constitutional corporation and a national system employer. A constitutional corporation means a corporation to which s 51(xx) of the Constitution applies: FW Act, s 12. Section 51(xx) of the Constitution applies to both foreign corporations and trading or financial corporations formed within the limits of the Commonwealth. Moreover, ss 30B and 30C extend the meaning of national system employer and employee respectively to cover employees and employers in referring States and NSW is a referring State: see FW Act, s 30B and the Industrial Relations (Commonwealth Powers) Act.

45    Mr Muthu did not plead that Radeshar contravened s 323. Indeed, neither in his originating application nor his amended statement of claim did he apply for any relief under the FW Act. But he did claim that the Court had jurisdiction under the FW Act. And he did plead that Radeshar was a corporation, that he was employed by Radeshar, that Radeshar agreed to pay him a salary payable fortnightly and that it failed to pay that salary. That was enough to attract federal jurisdiction. In this way he was in fact invoking a right or duty that owed its existence to federal law. It is immaterial for this purpose that Mr Muthu did not refer to s 323.

46    As Barwick CJ observed in Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473, cited with approval by the plurality in Agar v Hyde (2000) 201 CLR 552 at [64]:

[In] fact pleading as it was introduced in the judicature system, there is no necessity to assert or identify a legal category of action or suit which the facts asserted may illustrate, involve or demonstrate and on which the particular relief claimed is based or to which it is relevant.

47    Fourth, it is also immaterial that Mr Muthu did not satisfy the primary judge that he was employed by Radeshar, that he did not make out a case that a federal award had been breached, or that his Honour did not consider that the evidence supported his case.

48    A “non-colourable assertion of a federal law” is generally sufficient to attract federal jurisdiction and once a matter attracts federal jurisdiction, it remains in federal jurisdiction irrespective of the manner in which the federal issue or issues are resolved: Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [7] (Gleeson CJ, Gaudron and Gummow JJ); Rana v Google Inc (2017) 254 FCR 1 at [21] (Allsop CJ, Besanko J and White J). That is so even if the only federal aspect of a matter has been struck out: Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 at 481 (Neaves, Ryan and Gummow JJ). Similarly, in Moorgate Tobacco Co Ltd v Phillip Morris Ltd (1980) 145 CLR 457, where a matter arising under the Trade Marks Act 1955 (Cth) had been pleaded but was not pressed and all other matters were non-federal, the case was considered to be wholly within federal jurisdiction. In other words, “once federal, only and ever federal”: Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23(1) Aust Bar Rev 29 at 41.

49    There is no reason to think that the assertion of federal jurisdiction in the present case was colourable. As I observed in Massarani v Kriz [2022] FCA 80 at [51]:

In this context, a colourable assertion is one which is not made in good faith (Hopper v Egg and Egg Pulp Marketing Board (Vict) (1939) 61 CLR 665 at 673 per Latham CJ) or for the improper purpose of “fabricating” jurisdiction (Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 (FC) at 219, citing Lane PH, Lane’s Commentary on the Australian Constitution (Law Book Co, 1986), pp 367–368 and the authorities mentioned there). “Improper purpose or lack of bona fides carries with it the notion of an abuse of process”: Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Aust Bar Rev 29 at 45.

50    The mere fact that a claim is untenable or misconceived does not mean that it is colourable: see Leeming M, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2012) at 40–1 and the authorities referred to there.

51    Ground 2 must therefore be upheld.”


Muthu v Radeshar Pty Ltd [2022] FCA 1157 per Katzmann J delivered 4 Oct 2022